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Welcome to The Corner. In this issue, we take a closer look at Facebook’s smart-glasses partnership with the eyewear monopolist Luxottica, Alexis Goldstein’s testimony on regulatory gaps in cryptocurrency, and Jonathan Kanter’s confirmation to lead the DOJ’s Antitrust Division.

The Release of Facebook’s Ray-Ban Glasses Renews Concerns About Data Collection

Luke Goldstein

In 2017 when Mark Zuckerberg made his first effort to drum up enthusiasm for Facebook's virtual reality initiative, it didn't go so well. The company's promo video was widely panned as tone-deaf for featuring Zuckerberg as an animated character giving a virtual tour of storm-ravaged Puerto Rico right after Hurricane Maria.

While Facebook's PR stunts this fall for the “metaverse” haven't been as inflammatory, they've still raised an outcry. Now branded as Meta, the company has begun rolling out the first product on the long march to implementing full-scale virtual reality and a new surveillance future: Ray-Ban Stories glasses.

As the promo video [[link removed]] tells us, the glasses look exactly like regular Ray-Bans, except with a camera on the side for taking photos or videos incognito. All images are downloaded to an app on your phone called Facebook View, where they can then be shared to different social media platforms. Priced at $299, the glasses also have audio capabilities for taking phone calls and listening to music.

Through a partnership with Luxottica, which owns Ray-Ban, this new Facebook product is a crossbreeding from two of the most dominant monopolies operating today.

Indeed, Luxottica's eyewear empire came to epitomize today’s monopoly crisis long before Facebook itself rose to power. The corporation control [[link removed]] s [[link removed]] about 80% of major eyeglasses brands, accounts [[link removed]] for 60% of all eyeglass sales, dominates lens production following its 2017 merger with Essilor, controls most eyewear retail in the U.S., and uses its monopoly power to set prices at exorbitantly high rates.

For Facebook, the result is win-win. Not only does the deal help forge a partnership with the biggest and most wide-ranging business in eyewear, but it helps cement the corporation’s digital advertising dominance. Indeed, a recent patent claim by Facebook reveals [[link removed]] that it will use VR technology to collect as much data as possible about user engagement to sell to advertisers and even sell products directly online.

Further, Ray-Ban Stories glasses can be viewed as Facebook’s first step toward conditioning consumers to embrace its new “metaverse” brand, and to collecting video that will help Facebook build its new platform. Zuckerberg has promoted Ray-Ban "smart" glasses as a matter of enhancing the consumer's experience by sparing them the inconvenience of needing to pull out a smartphone to capture fleeting moments. But as Marcus Carter, a digital cultures expert at the Socio-Tech Futures Lab at the University of Sydney, write [[link removed]] s [[link removed]] in a new paper, the glasses are actually outsourcing the work of collecting first-person footage to help train the artificial intelligence algorithm running the metaverse.

"Technologies like Ray-Ban glasses are going to help create the data-sets to train the computer vision and AI systems that are going to power the surveillance technologies of the metaverse," Carter told Open Markets by email.

For the metaverse to work, the AI that powers it needs to become far more developed. One of the easiest ways to improve the system is to feed it more video footage to enhance the machine learning capabilities. Wearers of Ray-Ban Stories will be supplying Facebook with this data.

Of course, this strategy hinges on the glasses gaining enough traction with the public. So far other smart glasses like Google Glass and Snapchat Spectacles [[link removed]] have [[link removed]] [[link removed]] failed [[link removed]] miserably.

Facebook is banking on the fact that the Ray-Ban brand name and its timeless "cool" aesthetic will help the product catch on with consumers. While Google glasses were clunky and clearly identifiable, the Facebook glasses look virtually indistinguishable from regular Ray-Ban eyewear.

Ray-Ban glasses could be the first test for the commercial prospects of Facebook's long-term project to build out the metaverse. The consequences for privacy and individual liberty are deeply troubling.

Goldstein Testifies on Systemic Risk in Cryptocurrency Space

This week, Open Markets Financial Policy Director Alexis Goldstein [[link removed]] testified at the U.S. Congress Joint Economic Committee hearing on “ Demystifying [[link removed]] Crypto: Digital Assets and the Role of Government [[link removed]].” In her testimony, Goldstein addressed consumer and investor protections, concentration and centralization, cybersecurity, and national security concerns. During the hearing, Goldstein discussed [[link removed]] how various financial regulatory agencies could help deter the conversion of ransomware payments. Goldstein also emphasized [[link removed]] how the bipartisan infrastructure bill will make it easier for individual cryptocurrency investors to compile their annual taxes.

Goldstein’s testimony was mentioned in Today UK News [[link removed]], Investing.com [[link removed]], Coin Telegraph [[link removed]], Lawfare Blog [[link removed]], The Daily Hodl [[link removed]], The Block [[link removed]], and IP Watchdog [[link removed]]. You can watch the complete hearing video here [[link removed]] and read Goldstein’s written testimony here [[link removed]].

Senate Confirms Kanter to Lead DOJ Antitrust Division

The Senate voted [[link removed]] 68-29 Tuesday to confirm Jonathan Kanter to run the Justice Department's Antitrust Division. Open Markets issued a statement [[link removed]] celebrating the bipartisan vote: “Coming on the heels of the European Commission’s big victory against Google this week, and the terrifying revelations about Facebook’s society-destroying algorithms, the Senate’s vote means it’s time for Big Tech executives to figure out how to make a living by actually serving the American people, rather than picking their pockets and poisoning their minds.”

🔊 ANTI-MONOPOLY RISING:

The Luxembourg-based General Court last week upheld a 2017 ruling by the European Commission that found that Google’s search engine illegally favored its own shopping service over rivals. The court stated that Google’s general results page on its search engine displayed its shopping service in a more favorable display and positioning. Google was fined $2.8 billion for by the European Commission as a result of this self-preferencing. ( T [[link removed]] he [[link removed]] New York Times [[link removed]])

Texas and a group of U.S. states amended and filed an antitrust complaint last week against Google in federal court in New York. The complaint details how Google has attempted to monopolize the online advertising industry by using coercive tactics and violating antitrust laws. The group of states allege that Google, through its ad exchange services for publishers, used advertising data to change the bids made by advertisers on the exchange. This was done in order to increase advertisers’ chances of winning auctions on their service compared to rival services. ( Reuters [[link removed]])

On Wednesday, President Joe Biden urged the Federal Trade Commission to investigate “illegal conduct” by oil and gas companies that may be contributing to increased fuel prices, contributing to inflation. Oil supply is below pre-pandemic peaks, yet the two largest American oil and gas companies, Exxon and Chevron, have doubled their net income since 2019. ( Reuters [[link removed]])

The U.K. Competition and Markets Authority announced Tuesday a “phase 2” investigation into semiconductor company Nvidia’s $40 billion acquisition of chip designer Arm, citing competition and national security concerns. Regulators have expressed concern that the acquisition could result in higher prices and less innovation and choice in the semiconductor industry by restricting access to Arm’s chip designs. ( CNBC [[link removed]])

Last week, a bipartisan group of members of the U.S. House of Representatives introduced a bill that would give users of online platforms the option to opt out of curated content based on their personal data. The Filter Bubble Transparency Act requires online platforms to allow users to use versions of their services that do not use algorithms to display user content based on personal data. The act has also been introduced in the Senate. ( Axios [[link removed]])

📝 WHAT WE'VE BEEN UP TO:

Open Markets sent a joint letter [[link removed]] with Better Markets to federal antitrust and financial regulators raising serious concerns about a potential merger between the CME Group Inc. and Cboe Global Markets. “Any potential merger of two of the few remaining competitors in the U.S. derivatives markets must be reviewed with an exacting scrutiny commensurate with the potential implications for our economy, financial markets, and working families.”

Open Markets issued a statement [[link removed]] in support of Professor Saule Omarova’s nomination as head of the Office of the Comptroller of the Currency. “Professor Omarova’s experience, research, and expertise in finance, digital assets, and banking law uniquely positions her to lead the Comptroller of the Currency, and to ensure that America’s bankers serve the interests of entrepreneurs, communities, families, and consumers across the United States,” the statement said.

Open Markets filed a comment [[link removed]] letter with the Department of Commerce urging action to address ICT supply chain concentration. “The Biden administration should use trade law, export controls and other related tools to encourage diversification in global production of ICT hardware.”

Claire Kelloway’s work was profiled in a Vox [[link removed]] video about the concentrated chicken industry’s worker safety problem. The video was reported on by the English-language South African online news publication, News 24 [[link removed]], and in SwiftHeadline [[link removed]].

Luke Goldstein published an article in The Washington Monthly [[link removed]] about how billionaire tycoons are seizing control over America’s public satellite systems. “New space technologies could immensely benefit humanity, but to realize the benefits we can’t hand over this valuable resource to the domineering control of Elon Musk and Jeff Bezos. Instead, the government needs to establish rigorous oversight and enforce fair and efficient terms of competition so space junk and monopolization don’t ruin the final frontier forever.”

Sandeep Vaheesan authored an article in ProMarket [[link removed]] examining the Sherman Act and urging the Federal Trade Commission to codify and strengthen the courts’ restrictions of unfair competition. “The merits of an aggressive FTC competition policymaking agenda in general and its particulars can and will be debated, but this prospect reveals a basic truth: Lawmakers, regulators, and the public need to ask not whether the law promotes competition, but what types of competition it promotes.”

Brian Callaci published a piece in The Law and Political Economy [[link removed]] [[link removed]] (LPE) [[link removed]] Project [[link removed]] about how vertical restraints work within the franchise model. “By substituting vertical contracts for direct ownership and employment, franchisees use the legal boundaries of the firm as instruments of exclusion, keeping participants in the production process from accessing a share of product market rents. The end result is siphoning wealth upwards to shareholders in dominant brands.”

Daniel Hanley wrote an op-ed in Common Dreams [[link removed]] detailing how the FTC can use congressionally delegated powers to prohibit specific corporate conduct and force Facebook to use more publicly acceptable business practices. “Without significant structural regulatory action, it is practically inevitable that the same scandal-media outcry cycle will repeat itself and Facebook's business model will only be further tolerated and enabled. The FTC can act, and it should do so now.”

Phillip Longman’s writing on the consequences of airline and railroad deregulation was mentioned in The American Prospect [[link removed]] and in a Washington Monthly [[link removed]] piece about Jimmy Carter. “There’s a $66 billion investment in rail, much of which will be buried in needed upgrades. There’s an easy way to increase service, but as Phil Longman has explained, Amtrak piggybacks off train tracks owned by consolidated rail giants, who would rather prioritize their freight service.”

Alexis Goldstein was interviewed on BNN Bloomberg [[link removed]] about how further consolidation of financial exchanges could shrink market competition and harm consumers. “We want the regulators to be looking at: Is there reduced competition? Is there potential where you may eliminate some of the products that are in the marketplace now and merge them into one? Could there be increased prices? Is there going to be any kind of a gatekeeping role and what are essentially the harms that could go down either to consumers or to more sophisticated financial market participants?”

Johnny Ryan was mentioned in Private Internet ACCESS [[link removed]] for his work with his group, the Irish Council for Civil Liberties, on sustainable publishing and tracking-based advertising. “Ryan claimed that over 100 trillion pieces of personal data were sent out over the Internet as part of the RTB system in a year. His new report seeks to rebut the main arguments of those in favor of surveillance advertising.” Ryan and ICCL’s work on third-party tracking was also mentioned in The Irish Times [[link removed]], Tech Crunch [[link removed]], Digital Nation [[link removed]], and DataNews [[link removed]].

Nikki Usher was quoted in Yes! Magazine [[link removed]] discussing her book, News for the Rich, White, and Blue: How Place and Power Distort American Journalism. “The current media landscape serves the population who can pay for the news. That population is White, wealthy, and mostly liberal,” Usher said. “That’s dangerous,” Usher explains, “because it creates inequity in the stories that get told.”

Phillip Longman’s book, Best Care Anywhere: Why VA Health Care Is Better Than Yours, was mentioned in a News-Review [[link removed]] letter in favor of the Veterans Affairs medical system. “Some years ago, Phillip Longman published Best Care Anywhere: Why VA Health Care Is Better Than Yours. There have been challenges to the Veterans Administration since that time, particularly with regard to appointments and insufficient funding. But it is still true that veterans objectively get the best medical care available from any medical care organization in the country.”

Open Markets’ concentration data on hearing aids was cited in a MarketWatch [[link removed]] piece about Tim Wu’s speech about the Biden administration prioritizing promoting competition and fighting monopoly power. “According to the Open Markets Institute, the market for hearing aids is dominated by just four companies: William Demant, Starkey Hearing Technologies, Sonova and Sivantos.”

Claire Kelloway’s article about how monopolies are crushing the online grocery business was cited in a Food & Water Watch [[link removed]] report on the economic cost of food monopolies. “Major players like Walmart and Instacart are cornering the delivery market by operating at razor-thin or negative margins — and off the backs of gig workers. Smaller chains and independent co-ops simply cannot compete.”

We appreciate your readership. Please consider making a contribution to support the continued publication of this newsletter.

DONATE [[link removed]] 📈 VITAL STAT: 13.5%

“Corporate pre-tax profits as a share of total US output has … reached a multi-year high of 13.5% in the second quarter,” according to Business Insider [[link removed]].

📚 WHAT WE'RE READING:

“ How To Hide A Price-Fixing Conspiracy: Denial, Deception, and Destruction of Evidence [[link removed]]” (Christopher Leslie, University of Illinois Law Review): The author explains how the federal courts have unwittingly rewarded the various concealment methods commonly employed by price-fixing conspirators because many federal judges are too quick to dismiss price-fixing claims or grant summary judgment to price-fixing defendants.

NIKKI USHER'S

NEW BOOK

News for the Rich, White, and Blue: How Place and Power Distort American Journalism

Nikki Usher, a senior fellow at Open Markets Institute’s Center for Journalism & Liberty [[link removed]], has released her third book, News for the Rich, White, and Blue: How Place and Power Distort American Journalism [[link removed]]. In her latest work, Usher offers a frank examination of the inequalities driving not just America’s journalism crisis but also certain portions of the movement to save it.

“We need to radically rethink the core functions of journalism, leverage expertise, and consider how to take the best of what the newspaper ethos of journalism can offer to places that have lost geographically specific news, “ says Usher, an associate professor at the University of Illinois-Champaign. “The news that powers democracy can be more inclusive.”

Usher is also the author of Making News at The New York Times (2014) and Interactive Journalism: Hackers, Data, and Code (2016).

News for the Rich, White, and Blue, published by Columbia University Press, is available as a hardback, paperback and e-book. You can order your copy here [[link removed]].

🔎 TIPS? COMMENTS? SUGGESTIONS?

We would love to hear from you—just reply to this e-mail and drop us a line. Give us your feedback, alert us to competition policy news, or let us know your favorite story from this issue.

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Written and edited by: Barry C. Lynn, LaRonda Peterson, Phillip Longman, Jody Brannon, Jackie Filson, Daniel A. Hanley, Alexis Goldstein, Garphil Julien, Luke Goldstein, and Ezmeralda Makhamreh.

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