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Broadband Roundup: AT&T-DirecTV Merger and its Impact on the Marketplace

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WASHINGTON, May 19, 2014 – AT&T announced that it would acquire DirecTV in a $48.5 billion deal, according to multiple sources. The agreement may allow AT&T to position itself in a way to rival cable firms. AT& would acquire about 20 million of DirecTV’s customers. The Washington Post recounts that the stated goal of the merger is to gain more customers in the high-speed internet, phone, and pay-TV subscriptions market.

Reuters reports that little overlap is shared between AT&T and DirecTV, permitting the telephone giant to tap into the video market more than ever before, including all of DirecTV’s programming. DirecTV, on the other hand, would be able to offer its customers enhanced broadband internet service.

The New York Times speculates that AT&T’s bid is likely in response to Comcast’s announcement of its intent to purchase Time Warner Cable in February for $45 billion. It’s not the first time either that AT&T has attempted this big of a merger: three years ago, the company tried to acquire T-Mobile for $39, only to have the deal fall apart because of antitrust concerns.

“The media chessboard is moving more this year than it has in the past decade,” The Times quotes Richard Greenfield, a media analyst with the brokerage firm BTIG “You’re seeing major shifts. Everyone is jockeying for position.”

The merger first needs approval from federal regulators, who may be unlikely to approve out because of concerns about the possibility of higher prices in the face of less choices. The Post further reports that “in 2012, U.S. cable-TV bills increased 5.1 percent, to an average of $64 a month, triple the rate of inflation, according to a government report.”

The advocacy group Public Knowledge criticized the proposed merger, with senior staff attorney John Bergmayer saying, “The industry needs more competition, not more mergers. The burden is on AT&T and DirecTV to show otherwise…to explain how this merger wouldn’t harm wireless competition, and how whatever new services it plans to offer by combining with DirecTV would offset any harms to wireless and video competition.”

USA Today said that AT&T’s proposed merger with DirecTV would be different from Comcast’s merger with Time Warner Cable, in that the former eliminates a competitor in AT&T’s U-Verse market. In in the aftermath of the FCC’s proposal on net neutrality, concerns have been raised that the “increased concentration of power among the few who provide broadband would give AT&T more leverage if… ISPs are ultimately allowed to charge for “fast lanes” of the Internet for content providers that are willing to pay for them.”

Additionally, Recode reports that Cisco Systems CEO John Chambers recently sent a letter to President Obama requesting that the National Security Agency “curtail” its surveillance activities.

This comes in the wake of recent documents leaked by former NSA contractor Edward Snowden claiming that the NSA “intercepted equipment from Cisco and other manufacturers and loaded them with surveillance software.” Cisco has stated that this was not voluntary cooperation on its part.

“We simply cannot operate this way; our customers trust us to be able to deliver to their doorsteps products that meet the highest standards of integrity and security,” Chambers wrote. “We understand the real and significant threats that exist in this world, but we must also respect the industry’s relationship of trust with our customers.”

Big Tech

Breaking Up Big Tech Alone Won’t Solve Systemic Issues, Authors of New Book Argue

If Washington wants to break up big companies, then it must address the roots of what they’re trying to tackle.

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Rob Reich, one of three authors of a new book on Big Tech.

WASHINGTON, September 27, 2021 – Authors of a book about systemic problems in Big Tech argued Friday that antitrust regulators simply pushing for the breaking up of large companies will not solve the inherent problems that will inevitably spawn more of the same.

In an online event on Friday, professor at Stanford, Rob Reich, Mehran Sahami, and Jeremy Weinstein — in discussing a book they wrote and published earlier month called System Error: Where Big Tech Went Wrong and How We Can Reboot — said we won’t find a silver bullet in antirust or data privacy law when it comes to dealing with big tech.

“We’re actually going to have to tackle these issues by looking at the ethic of responsibility in technology companies, thinking about the corporate power that has been concentrated in a small number of firms, but also how we set in place a set of democratic institutions that are capable of governing tech.”

Breaking up a “couple large companies” or enacting a hypothetical “data privacy law” without addressing the underlying systemic roots of these issues, the authors’ said, will only doom the next great technological change to make the same types of massive generational harms which we’re tackling now.

Washington is on the cusp of a potentially monumental change in how it approaches big technology companies and the alleged market concentration of a handful from out west.

The House has before it six antitrust bills targeting big technology companies, which passed the chamber’s judiciary committee in June. The goal of the bills is to rein in the power of Big Tech through new antitrust liability provisions, including new merger and acquisition review, measures to prevent anticompetitive activity, and providing government enforcers more power to break-up or separate big businesses.

At the helm of the Federal Trade Commission, which has taken Facebook to court over alleged anticompetitive practices, is Amazon critic Lina Khan. And enlisted to help with the Department of Justice’s antitrust matters is Google critic Jonathan Kanter.

At an Institute for Policy Innovation event on Wednesday, observers were worried that there is emerging a drastic approach by Washington that views “big is bad,” and that attitude could stunt smaller companies wanting to make it big.

One systemic issue Reich raised is that while technology is often seen as objective and value neutral, it is truly encoded with the values of the technologists who created it. Technologists are the only ones who have “a say” in the trade-offs and decisions made at a fundamental level in the creation of new algorithms, machines and platforms. “Any technology encodes within it a set of important choices that we all ought to have a say in refereeing,” he argues.

Questions of specific regulatory and policy decisions are fraught with drawbacks and reconsiderations. In this vein, Sahami stated that “sometimes people wonder if I took Facebook and broke it up into 10 little Facebooks would that solve the problem? And by itself it probably wouldn’t unless we got some really strong interoperability guarantees that allowed for information to migrate between different platforms.”

Without such interoperability, Mehran worries, we would just see a “reconsolidation” of the platforms.

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Big Tech

Washington’s Antitrust Push Could Create ‘Chilling Effect’ on Startups, Observers Say

There is concern that an FTC focused on ‘big is bad’ will stunt economic growth in the future.

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FTC Chairwoman Lina Khan

WASHINGTON, September 23, 2021 – Advocates for less government encroachment on big technology companies are warning that antitrust is being weaponized for political ends that may end up placing a “chilling effect” on innovative businesses.

The Institute for Policy Innovation held a web event Wednesday to discuss antitrust and the modern economy. Panelists noted their concern that antitrust law may be welded with political aims that will ultimately create a precedent whereby the federal government will stifle innovators who get too big.

Jessica Melugin, the director of the Center for Technology and Innovation, said technology companies could see what’s happening in Washington – with lots of talk of breaking up companies deemed too big – and be uncertain of the future.

She noted that growing companies largely seek one of two things to make it big: grow to file an initial public offering, where the company’s shares are publicly traded, or wait until a large company buys you out. She said talk emanating from the White House and Washington generally about regulating the industry could deter larger companies from acquiring them, and onerous financial regulations could put a damper on IPO dreams.

“If you start robbing companies of other smaller companies they purchased, it’s going to give a lot of entrepreneurs and a lot of funders in Silicon Valley pause,” Melugin said. “If another path to success gets blocked – the IPO is now harder, and now acquisitions are a little bit questionable…that’s a chilling effect.”

President Joe Biden has made a number of appointments to key positions that is bringing more attention on Big Tech, including known Amazon critic Lina Khan to chair the Federal Trade Commission, which recently filed an amended case against Facebook for alleged anticompetitive practices. He also appointed antitrust expert and Google critic Jonathan Kanter as assistant attorney general in the Justice Department’s antitrust division.

FTC could set a bad precedent if focus is ‘big is bad’ 

Christopher Koopman, the executive director at the Center for Growth and Opportunity at Utah State University, said he’s concerned about the precedent Khan could set for big companies.

He said the odds are that once Khan starts, she will continue down “this path of ‘big is bad’ because that’s a prior that she has and she’s continued to operate on her entire professional career. It just so happens that the focus of this is on tech companies.

“We may be building a regulatory apparatus that will continue to burrow a hole right down the middle of the American economy before we even have a chance to ask if that’s really what we want,” Koopman added. “We just have to recognize that it doesn’t matter, really, who is running the FTC – once we tell the FTC to go break up big companies, they’re going to go break up big companies.”

And the concern for Carl Szabo, vice president and general counsel of lobby group NetChoice, which advocates for less government regulation on the future of technology, is not just a domestic problem, but an international one, too.

“I really do worry about us shanking our innovation and essentially giving a free kick to our competitors and that seems to be what we’re doing,” Szabo said. “Right now, we lead the world.

“This is an international issue, this is a national issue, and we really need to – whether Conservative or Democrat – as Americans we need to see the forest from the trees. And if we want to put corporations ahead of competitors and think those are good democratic values, go ahead and do it.

The House has before it six antitrust bills targeting big technology companies, which passed the chamber’s judiciary committee in June. The goal of the bills is to rein in the power of Big Tech through new antitrust liability provisions, including new merger and acquisition review, measures to prevent anticompetitive activity, and providing government enforcers more power to break-up or separate big businesses.

Federal Communications Commissioner Brendan Carr said earlier this year that Big Tech has too much influence and power, citing the ability of Apple and Google to remove applications like controversial chat website Parler from its app stores.  Carr recently recommended that Big Tech contribute to the Universal Service Fund, which supports broadband expansion in low-income and rural areas of the country, because these companies benefit from broadband.

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Big Tech

Tread Carefully on Tech Platform Data Portability, Conference Hears

Politico panel debates merit of allowing tech platform users to migrate data freely.

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Public Knowledge's Charlotte Slaiman before a Senate committee on September 21, 2021.

WASHINGTON, September 23, 2021 – Panelists debated Monday the merits of forcing companies to allow users to migrate their data from one platform to another, with some lauding the proposal and others cautioning Congress not to stifle innovators by taking a blanket approach.

The Politico Tech Summit hosted a panel discussing legislation before the House – H.R. 3849 – that would force companies to allow users to move their data from one platform to another. The idea behind the concept of data portability is to instigate competition by reducing the barrier for users to use other services that they would otherwise avoid because they cannot take their contacts, connections, and photos with them to the new platform.

Experts say such a portability mandate would be welcomed by younger internet platforms that are competing to grow their networks, but admonished by larger firms like Facebook and TikTok, who would argue that they grew their networks organically and don’t wield any uncompetitive pressures by keeping their networks private.

“[Anti-trust legislation] is really about opening up markets for innovative competitors to enter,” said Charlotte Slaiman, competition policy director for public interest group Public Knowledge.

“Network effects are very powerful in many of these dominant digital platforms. Network effects means it’s very difficult for a person to leave a network. Even if you’re upset with Facebook, you don’t want to leave because of your one thousand connections or whatever.

“If you think about it from the perspective of an entrepreneur, they’re facing this problem times a million users,” Slaiman added. “The sources of funding know it, the venture capitalists know…interoperability is about addressing those network effects.” Interoperability is the extent to which a platform’s infrastructure works with others, which can facilitate data portability.

And more competition is emerging in the online platform space. For example, sites like Parler and Vero have emerged as social networking alternatives to the likes of Facebook, while video sites like Rumble and Locals have emerged as alternatives to YouTube.

Slaiman argues that platforms should compete on the features and user experiences they offer, not on owning a pool of users and profiles.

Slaiman testified similarly before the Senate Judiciary Committee’s Subcommittee on Competition Policy, Antitrust, and Consumer Rights on Tuesday.

Caution for portability legislation

Zach Graves, head of public policy for the think tank Lincoln Network, said there are a lot of cases where mandated portability “makes a lot of sense.

“If you look at the telecom context, you know the fact that you can take your phone number and port it to a different carrier. But we should approach this with caution. There are tradeoffs… I think there’s sort of a category error in how they’re constructing this that big is bad and that’s how we should regulate it,” he said.

“I would prefer a more sector specific approach,” Graves added. “If we’re talking about online retail, we should regulate online retail. If we’re talking about online ads, we should regulate online ads. The fact that we’re saying these companies are big and we should scrutinize them and give them a special framework I don’t agree with.”

Steve DelBianco, CEO of lobby group NetChoice, which pushes for a tech future free from onerous government regulation, was more blunt.

“The interoperability mandate will be a disaster for competition, for privacy and for data security,” he said. “There’s a complete difference between phone number portability and data portability compared to having interoperability where you open a hole into your application which means that any competitor can see data that violates your own privacy requirements. [That creates] security problems.

“People can join multiple social networks at the same time. The theory of network effects really falls down on this.”

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