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Welcome to The Corner. In this issue, we explore ways to break Google and Facebook’s power in digital advertising and how to address the dangers of Amazon Web Services’ and Facebook’s crypto asset pilot.

How to Break the Google-Facebook Ad Duopoly: Insights From Digital Ad Expert Jason Kint

Karina Montoya

Google’s and Facebook’s dominance over digital advertising markets continues to grow with increasingly dire consequences for the financing of independent journalism. Publishers now face additional daunting challenges with developments such as Google’s phaseout of third-party cookies [[link removed]] to shore up its own user tracking on the Web, and Apple’s new iOS ask-first data-tracking system [[link removed]].

To get a take on how Google and Facebook are further concentrating their power and control, and what to do about it, Open Markets sought out Jason Kint [[link removed]], CEO of Digital Content Next [[link removed]] — the trade association serving 57 major media companies [[link removed]] and hundreds of brands that include dailies, Bloomberg, AP and PBS. In this interview, Kint, who serves as an adviser to the Center for Journalism & Liberty [[link removed]], addresses how antitrust and data policy regulators figure into the future of digital advertising. Here are some highlights:

On why surveillance advertising not only violates consumer privacy, but also doesn’t work very well for publishers and advertisers:

“The market has become out of step with consumers’ expectations around how data is used. At the same time, it overinflates the value of data and of targeting of users and is rigged in favor of two companies, Google and Facebook — which I’ve historically called the duopoly. The digital ad market is neither delivering fair value to the companies investing in creating trust in news and entertainment, nor serving the advertisers’ needs to build desire and demand for their brands in the long term.

On how publishers need to transition to a web with more privacy protections:

“To meet consumers’ expectations, research shows [[link removed]] that we first need to ensure that their data is used only in the context they gave the assent to. No one should use my data for other purposes downstream. The European Commission’s GDPR [ General [[link removed]] Data Protection Regulation [[link removed]]] and California law [[link removed]], if properly enforced, are aligned with this. This approach should boost a virtuous cycle that creates value for the user, the publisher, and advertisers.

“Second, integrate data privacy policy in antitrust analysis. Because if you’re going to have real privacy, you need to deal with the giant companies, like Google and Facebook, that have the ability to circumvent privacy laws. Companies that serve as gatekeepers should not be able to collect and leverage third-party data that passes through their gates. If you’re a gatekeeper, your data collection and use should be limited only to the services you actually provide yourself — with Google and Facebook being the poster child.

On the European Union’s effort to curb the power of digital gatekeepers through the Digital Markets Act:

“The DMA [[link removed]] will be a positive step forward in reining in surveillance advertising as much as it integrates data policy and competition policy. But a significant hurdle will be avoiding a potentially destructive, if not fatal, loophole, which allows gatekeepers to resume their tracking practices based on a single consent. Lawmakers and regulators around the globe are calling into question the validity of “consent” when it’s provided to, or more accurately seized by, powerful gatekeepers. The champions of the DMA, the whole of industry, and government need to make certain this doesn’t happen.”

Read more of our interview with Kint here [[link removed]].

Open Markets Urges Financial Regulators to Target Amazon Web Services and Facebook’s Crypto Asset Pilot

Consolidation in the financial markets not only hurts consumers, workers, and small business and aggravates inequality, but it can also exacerbate financial crises. In recent weeks, Open Markets has pushed regulators to use their authority to tackle these dangers.

Last week, Open Markets urged regulators [[link removed]] to take into account the risks created by Amazon Web Services’ (AWS) growing dominance of America’s financial infrastructure. The Financial Stability Oversight Council (FSOC), comprised of the heads of all the financial regulators, have the authority to directly regulate any private corporations whose potential failure could upend the nation’s financial infrastructure. Open Markets, joined by 14 other organizations, urged the FSOC to use this authority to designate AWS as a Systemically Important Financial Market Utility and bring it under direct supervision by the Federal Reserve. N [[link removed]] ew [[link removed]] s [[link removed]]this week that the Nasdaq stock exchange plans to locate all its North American markets on AWS servers only underscores the urgent need for the FSOC to act immediately to address the risks AWS presents to financial stability and continuity.

Open Markets also sounded the alarm regarding Facebook’s plans to launch a crypto asset pilot project focused on payments sent by people in the U.S. to people in foreign nations. In a letter to financial regulators, Open Markets documented the many risks of Facebook’s pilot, including its potential for predatory pricing, conflicts of interest, concentrations of corporate power, and legal and regulatory challenges. The Open Markets letter builds on a warning issued by a group of five Senate Democrats, who recently urged [[link removed]] Facebook to immediately discontinue the project.

Less than a week after Open Markets published our letter documenting the concerns with Facebook’s pilot, the head of Facebook’s Novi project, David Marcus, announced he was leaving the company. As our financial policy director Alexis Goldstein told [[link removed]] T [[link removed]] he N [[link removed]] ew [[link removed]] Y [[link removed]] ork [[link removed]] Times [[link removed]], “Marcus’ departure just six weeks after announcing the pilot shows the gravity of the legal, operational and political challenges inherent in Facebook’s cryptocurrency pilot.” The letter was also mentioned in Politico [[link removed]] and Pennsylvania News Today [[link removed]].

🔊 ANTI-MONOPOLY RISING: On Thursday, the Federal Trade Commission (FTC) announced that it plans to block an attempt by semiconductor corporation Nvidia to buy the U.K. semiconductor corporation ARM for $40 billion. The FTC said that the deal would result in “reduced product quality, reduced innovation, higher prices, and less choice.” Read Open Markets' statement on the FTC action here [[link removed]].

Last week, the Department of Justice announced it would sue to block the acquisition of Imperial Sugar by its rival United States Sugar Corporation (U.S. Sugar). The complaint filed by the DOJ, in the District Court for the District of Delaware, argues that the deal would result in higher prices, and also create supply chokepoints that pose dangers to the American public. Open Markets issued a statement [[link removed]] applauding DOJ’s action. ( Department [[link removed]] of Justice [[link removed]])

Earlier this week, the U.K. competition regulator announced that it would block Facebook’s acquisition of New York-based gif platform Giphy. In June of last year, the regulator began investigating the acquisition and has since argued that the deal would prevent Meta rivals from accessing gifs and force them to give more data to Meta. The deal is the first time the U.K. regulator has reversed a deal involving tech firms. ( Financial [[link removed]] Times [[link removed]])

On Tuesday the FTC, under section 6(b) of the FTC Act, ordered an investigation into rising prices and supply chain bottlenecks affecting major retailers. The commission ordered nine major retailers to disclose information on their supply chain issues. The investigation will include sales volumes, market shares, profit margins, and supply chain and order backlog. ( Nextgov [[link removed]])

On Tuesday, U.S. District Judge Amos Mazzant III rejected a bid to dismiss charges in an antitrust case alleging wage-fixing for physical therapy services in Texas. The case was brought by the Department of Justice against the owner of a therapist staffing company and a contractor of the company, who were charged with conspiring to lower the wages paid to in-home therapists. The case has attracted national attention as an example of the broad reach, in markets such as labor, of price-fixing cases to be pursued by antitrust enforcers. ( Reuters [[link removed]])

German software company Nextcloud filed an antitrust complaint last week against Microsoft with the European Commission and the German competition regulator. The company alleges that Microsoft illegally bundles their OneDrive storage services onto its Windows platform, giving Microsoft an advantage against rivals. The complaint is being supported by a coalition of 30 smaller tech companies in the EU. ( Politico [[link removed]])

📝 WHAT WE'VE BEEN UP TO:

Garphil Julien published an article in The Washington Monthly [[link removed]] about how Wall Street financiers bent on short-term profits are largely responsible for the long-term decline of America’s semiconductor industry, as well as the present dangerous shortage of semiconductors and other key materials. With Congress now debating a $52 billion program to subsidize the reconstruction of America’s semiconductor industry, Julien asks, “Before we offer them more subsidies, how about demanding some accountability?”

Brian Callaci published a review in Boston Review [[link removed]] of Eric A. Posner’s book, How Antitrust Failed Workers [[link removed]], asserting that while Posner expertly lays out how antitrust can do better by workers, his view is way too narrow. “The role of market concentration in contributing to monopsony power is important because it implicates lax enforcement of antitrust law as one cause of wage suppression,” Callaci wrote.

Daniel Hanley published an article in Noema Magazine [[link removed]] arguing that federal agencies can take immediate action against climate change using antimonopoly laws and rules. “Through anti-monopoly policy, the climate movement has many largely underused tactics at its disposal for pushing the government to protect markets, workers, communities and the environment,” Hanley wrote.

Barry Lynn and Open Markets’ role in pushing President Joe Biden toward stronger antitrust and anti-monopoly policy was detailed in an article in The Economist [[link removed]] and The Economist’s Checks and Balance [[link removed]] newsletter. “I tell the story of Barry Lynn of the Open Markets Institute, a think-tank, to illustrate how dramatically tech’s standing in Washington, DC has changed. Only four years ago, Mr Lynn’s critiques of platform monopolies and his support for breaking them up were on the political fringe. Today Mr Lynn’s wariness of big tech has gone mainstream, and his allies have been appointed to top posts for enforcing American antitrust law and guiding competition policy.”

Barry Lynn was extensively quoted in The New Yorker [[link removed]] in a detailed piece about Lina Khan’s work to rein in Big Tech. “When she walked in that door, she had no idea what this entailed or what she would become,” Lynn told me. “She was just a fantastically smart person who was very curious.” Open Markets was mentioned in other coverage of Lina Khan, including in Common Dreams [[link removed]] and Progressive Magazine [[link removed]].

Daniel Hanley co-wrote an op-ed [[link removed]] with Chris Hicks, Senior Policy Advisor at Student Borrower Protection Center (SBPC), about how employers are increasingly using predatory student debt to trap workers in jobs. Open Markets and SBPC also sent a related letter [[link removed]] to the Consumer Financial Protection Bureau urging immediate action.

Claire Kelloway was featured on Fair World Project’s “ For [[link removed]] a Better World [[link removed]]” podcast discussing dairy farm monopolies. Kelloway detailed “what the push to ‘get big or get out’ means for farmers, workers, and consumers,” the podcast said.

Common Dreams published [[link removed]] Open Markets’ press release encouraging President Biden to name former Federal Reserve Governor Sarah Bloom Raskin and economist Lisa Cook to open Fed seats. Alexis Goldstein, Open Markets’ financial policy director, said in the release: “It is more critical than ever that the Biden administration nominate candidates to the Federal Reserve Board with the ability to tackle the critical issues of our time: corporate concentration that harms working people, independent businesses, innovation, and growth, and that increases climate risk; racial economic inequality, unemployment, climate change, wasteful and dangerous speculation, and predatory lending.”

Broadband and Breakfast [[link removed]] cited Daniel Hanley’s opinion piece [[link removed]] criticizing the Verizon TracFone merger. In that piece, Hanley wrote that “The FCC should not allow Verizon to use its dominant financial position to acquire a critical competitor and market participant and forgo operational investments and other necessary market research to expand its network.”

Daniel Hanley was quoted in S&P Global [[link removed]] commenting on U.S. lawmakers' focus on recommender algorithms. “Social media giants such as Beijing ByteDance Telecommunications Co. Ltd.'s TikTok Inc., Meta Platforms Inc. and Twitter Inc. among others, have the resources to innovate and find ways to capture more screen time, even with users controlling the content they see,” Hanley said.

Alexis Goldstein’s testimony at the Joint Economic Committee Hearing on “ Demystifying [[link removed]] Crypto: Digital Assets and the Role of Government [[link removed]]” was quoted in Financial Regulation News [[link removed]], saying “Congress should continue to examine if there are regulatory gaps that require new legislation to ensure consumer and investor protection in the cryptocurrency space.”

Barry Lynn’s analysis that concentration would create weak supply chains was cited in an opinion piece in Idaho State Journal [[link removed]] about the current supply chain issues. “Lynn warned governments and CEOs that this same thing could happen if a crisis like this came around again, but no one listened. This time it came in the form of a pandemic, and factories all across Asia either shut down, or, like in China where the virus was contained early, they switched to making personal protective equipment.”

Johnny Ryan’s presentation at a European Parliament’s internal market and consumer protection (IMCO) committee hearing [[link removed]] to discuss targeted advertising was mentioned in Tech Crunch [[link removed]] and EU Observer [[link removed]]. “Johnny Ryan, a former adtech industry insider (now a fellow at the ICCL [[link removed]]) … kicked off his presentation with a pointed debunking of industry spin, telling MEPs that the issue isn’t, as the title of the session had it, ’targeted ads’; rather the problem boils down to ‘tracking-based ads.’”

Open Markets was mentioned in coverage of Jonathan Kanter’s confirmation [[link removed]] as the head of the DOJ’s Antitrust Division, including in Mondaq [[link removed]] and Lewis Brisbois [[link removed]]. “Mr. Kanter’s confirmation complements that of FTC Chair Kahn [sic] in June of this year.”

Jody Brannon was quoted in a press release [[link removed]] from Congressman Mark DeSaulnier (D-Calif.) about his introduction of legislation aimed at supporting and protecting local journalism.

Nikki Usher commented on the identity complex that affects journalists in a Poynter [[link removed]] article. “Society, too, has expectations for journalists, which influences how we perceive ourselves. Nikki Usher, a professor who studies journalists at The University of Illinois Urbana-Champaign, said that the public tends to view us as a ‘special, rarified type of person,’ which can create a sense of superiority and distance from everyone else.”

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

DONATE [[link removed]] 📈 VITAL STAT: $9.4 billion

The value of the display advertising market in the U.K.; Facebook controls about half of this market, according to the Competition and Markets Authority. ( Business Insider [[link removed]])

📚 WHAT WE'RE READING: “Amazon’s Toll Road” [[link removed]] [[link removed]] (ILSR, [[link removed]] Stacy Mitchell) [[link removed]]: Mitchell details how Amazon exploits its dominant market position in e-commerce by increasing the amount of fees it imposes on its third-party retailers.

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?

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

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