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Daniel Hanley: Google and Facebook Are Essential, Let’s Regulate Them That Way

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The author of this Expert Opinion is Daniel Hanley, a policy analyst at the Open Markets Institute

Google and Facebook have extraordinary control over information and communications systems in the United States. These two corporations dominate internet search, social media, and digital advertising, and each one serves as the gateway to the internet for billions of people. Google and Facebook have even become the dominant sources for how most Americans obtain their news. Google and Facebook have maintained their dominant position in these markets for more than a decade.

These two corporations can – and do – arbitrarily exercise their unrivaled monopoly power to suppress competition and crush smaller, dependent rivals. They have deprived and locked out rivals’ access to their platforms and manipulated their platforms to favor their services at the expense of smaller and dependent competitors. Without access to data and their platforms more generally, dependent competitors can find themselves unable to compete effectively, create desirable applications for consumers, provide critical product features, or even catch the attention of potential customers.

But antitrust enforcers can stop this harmful concentration of power with laws already on the books, by declaring Facebook and Google essential facilities. The Federal Trade Commission or Department of Justice could litigate an antitrust case designating Facebook and Google as essential facilities, or the courts could do so in response to a lawsuit from private citizens.

The goal of regulating corporations as essential facilities is to ensure fair competition by decreasing the power of dominant firms over smaller firms. An essential facilities designation would mandate that rivals have equal access to the corporation’s facilities or ensure that dependent firms are charged equal prices for the corporation’s goods or services.

The role of the essential facilities doctrine in antitrust

The essential facilities doctrine is based on the principle that a dominant firm should not be allowed to deny rivals access to its infrastructure. When a dominant firm is deemed an essential facility, the firm loses the ability to decide which firms to do business with, because access to the dominant firm’s facilities are necessary for competition to exist in the first place.

Historically, the essential facilities doctrine has been applied by courts and other antitrust enforcers to critical aspects of infrastructure, such as railroads, trucking, electrical facilities, news syndicates, and telecommunications firms, including telephone and telegraph companies. By withholding access to a platform, such as communications wires or railroad tracks, dominant companies stymied competitors, entrenched their monopoly positions, and often extended their dominance to adjacent markets.

Federal and state legislators have also deployed a similar regulatory designation. Legislators have designated some industries, such as hospitals, pipelines, and electrical plants, as natural monopolies, and so these industries were managed as public utilities. Similar to an essential facilities designation, lawmakers decided that they had to classify certain firms and industries as public utilities because of the difficulty of supporting competition in the industry and because of the likelihood that a dominant corporation would crush smaller rivals or exclude dependents.

Similar to railroad tracks and telephone wires, the source of Google’s and Facebook’s dominance is that each controls critical gateways to the internet – internet search and social networking, respectively – and controls extensive, unparalleled, and nonreplicable data collection infrastructure that they have woven into every aspect of the internet, far beyond their own websites.

Facebook’s familiar Like button is embedded into more than 8 million websites, from which the corporation collects extensive data on users who visit pages with the Like button embedded into it and from users who click on it.

Google has embedded tracking code in 85 percent of websites and 94 percent of Android Play Store applications. Google’s information collection efforts are so extensive and frequent that the corporation can determine whether a user is running or walking.

Google and Facebook’s data repositories serve as a choke-point

Google’s and Facebook’s data repositories are so extensive they have become critical avenues for academic research, and they form the foundation for countless software applications and enhanced software features such as frictionless user sign-on. Google’s and Facebook’s data also provide these corporations with the ability to engage in highly targeted advertising campaigns to attract the attention of the right audiences to use or purchase an advertised product or service. Access to Google’s and Facebook’s data infrastructure is necessary for any internet upstart to become a viable company in the technology sector.

Google and Facebook exploit their duopoly control over critical information and communications systems, using anti-competitive practices against current and potential rivals. Google and Facebook have routinely denied access to their essential data troves and platforms, for example. In 2013, Facebook CEO Mark Zuckerberg personally approved revoking the video application Vine’s access to Facebook’s Friends List. This cut off Vine’s access to the dominant social network, which it needed to reach potential users to become a viable competitor.

This was not the first time that Facebook abused its power. Internal Facebook documents reveal that the corporation has routinely used access to its data as a bargaining chip to leverage its dominance over potential rivals to win favorable partnerships. A recently filed class action alleges similar conduct, as the lawyer representing the plaintiffs against Facebook says that “Facebook deliberately leveraged its developer platform, an infrastructure of spyware and surveillance, and its economic power to destroy or acquire anyone that competed with them.”

Google’s anti-competitive strategy of demoting links of rival sites

Google engages in similarly anti-competitive practices. In an internal memo accidentally sent to The Wall Street Journal, FTC staff stated that Google “adopted a strategy of demoting or refusing to display” links to certain rival websites. The report concluded that Google’s conduct resulted in “real harm to consumers and to innovation.”

Google and Facebook have also repeatedly abused their dominant market positions to engage in self-dealingpromoting their own products over those of rivals. For example, a 2017 analysis by The Wall Street Journal found that 91 percent of 25,000 product searches on Google search featured Google products in the first advertisement slot. The study also found that 43 percent of the searches featured Google products in the top two advertisement slots. An analysis conduct by The Markup on Tuesday showed that 41 percent of the search results on Google search were for Google’s own services.

This ability to manipulate its dominant platforms ultimately gives Google’s services an unbeatable comparative advantage, suppresses competition, and snuffs out the innovations of alternative services. In short, Google and Facebook can leverage their platforms to pick the winners and losers in the marketplace – and they pick themselves whenever possible. Consumers are deprived of alternative services that have better features, and we are all deprived of the innovations that fair and robust competition would provide.

The COVID-19 pandemic is only heightening users’ dependence on Google and Facebook

In sum, Facebook’s and Google’s services are as critical to both work and leisure as public utilities and the telephone were in the 20th century for energy and communications. The COVID-19 pandemic has only exacerbated users’ dependence on these services. Facebook’s user base has increased by more than 11 percent since last year, and the number of monthly active users have increased by 10 percent.

The number of users of Google Classroom doubled to 100 million in March alone. Google’s videoconferencing service has experienced a 30-fold increase since January. News organizations have flocked to YouTube to broadcast their content, evidenced by a 75% increase in the number of users watching news sources from certain outlets.

Our increased reliance on these platforms only increases the need for essential facilities regulation. This designation would promote additional accountability and scrutiny over Google’s and Facebook’s conduct to ensure that their policies are equitable and fair for all users, so that rival platforms could not be arbitrarily blocked by Google and Facebook. Such accountability may also help lawmakers understand the effects of Google’s and Facebook’s conduct and promote additional regulatory actions, such as limiting their invasions of privacy for their panopticons of data collection and ad targeting.

The testimony during the House of Representatives’ investigation into online platforms on Wednesday revealed the depth of lawmakers’ concern with the economy-wide repercussions resulting from any decision made by Google and Facebook without public oversight. An essential facilities designation from enforcers would resolve most of their concerns.

The FTC has applied an essential facilities-like designation on corporations with far less power than Facebook and Google. In January, a federal judge refused to dismiss a case by the FTC against Surescripts, the dominant provider of a “must-have” e-prescribing software used by medical professionals and pharmacies, for denying rivals’ access to their essential platform by using exclusionary contracts. In deeming Surescripts as “must-have,” the FTC argued that it is an essential service for both prescribers and pharmacies.

Also, in February, the Seventh Circuit Court of Appeals affirmed the use of a closely related legal doctrine against Comcast for leveraging its dominant position to exclude Viamedia from access to for cable-television advertising services. Comcast’s actions caused Viamedia’s customers to abandon Viamedia as a supplier of advertising. Viamedia’s situation is similar to how Facebook and Google shut off access to their platforms and data, preventing rivals from becoming viable competitors in the industry.

Google and Facebook are facing at least five antitrust investigations, including a review of Google’s and Facebook’s business operations by the House of Representatives. These investigations should provide rich evidence to support later antitrust litigants such as private parties, federal agencies, and state attorneys general to impose essential facilities requirements on Google and Facebook.

This designation would invigorate competition in the sectors dominated by Google and Facebook, and it would restrain them from abusing their dominant market power to stifle competition and harm rivals.

Daniel A. Hanley is a policy analyst at the Open Markets Institute. You can follow him on Twitter @danielahanleyThis piece is exclusive to Broadband Breakfast.

BroadbandBreakfast.com accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC. 

Broadband Breakfast is a decade-old news organization based in Washington that is building a community of interest around broadband policy and internet technology, with a particular focus on better broadband infrastructure, the politics of privacy and the regulation of social media. Learn more about Broadband Breakfast.

Broadband's Impact

Julio Fuentes: Access Delayed Was Access Denied to the Poorest Americans

Big Telecom companies caused months and months of delays in the rollout of the Emergency Broadband Benefit.

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The author of this Expert Opinion is Julio Fuentes, president and CEO of the Florida State Hispanic Chamber of Commerce

Remember when millions of students in dense urban areas and less-populated rural areas weren’t dependent on home broadband access so they could attend school?

Remember when we didn’t need telehealth appointments, and broadband access in urban and outlying areas was an issue that could be dealt with another day?

Remember when the capability to work remotely in underserved communities wasn’t the difference between keeping a job and losing it?

Not anymore.

Education. Health care. Employment. The COVID-19 pandemic affected them all, and taking care of a family in every respect required broadband access and technology to get through large stretches of the pandemic.

You’d think the Federal Communications Commission and its then-acting chairwoman would have pulled out all the stops to make sure that this type of service was available to as many people as possible, as soon as possible — especially when there’s a targeted federally funded program for that important purpose.

Alas, by all appearances, some Big Telecom companies threw their weight around and caused months and months of delays, denying this life-changing access to the people who needed it most — at the time they needed it most.

The program in question is the federally funded Emergency Broadband Benefit program. The EBB offered eligible households — often the poorest Americans — a discount of up to $50 per month toward broadband service, and those households can also receive a one-time discount of up to $100 to purchase a laptop or other computer if they contribute just $10 to the purchase. Huge value and benefits for technology that should no longer be the privilege of only those with resources.

Seems fairly straightforward, right?

It should have been. But FCC Chairwoman Jessica Rosenworcel slammed on the brakes. Why? It turns out that Big Telecom giants wanted more time to get ready to grab a piece of the action — a lot more time. While the program was ready to go in February, it didn’t actually launch until several months later.

That’s months of unnecessary delay.

But it wasn’t providers who were waiting. It was Americans in underserved and rural areas, desperate for a connection to the world.

Here are some numbers for Rosenworcel to consider:

  • As recently as March, 58% of white elementary students were enrolled for full-time in-person instruction, while only 36% of Black students, 35% of Latino students, and 18% of Asian peers were able to attend school in person.
  • Greater portions of families of color and low-income families reportedly fell out of contact with their children’s schools during the pandemic. In one national survey in spring 2020, nearly 30% of principals from schools serving “large populations of students of color and students from lower-income households” said they had difficulty reaching some of their students and/or families — in contrast to the 14% of principals who said the same in wealthier, predominantly white schools.
  • In fall 2020, only 61% of households with income under $25,000 reported that the internet was “always available” for their children to use for educational purposes; this share was 86% among households with incomes above $75,000.

And all of these numbers cut across other key issues such as health care and maintaining employment.

Access delayed was access denied to the poorest, most isolated Americans during the worst pandemic in generations.

Allowing Big Telecom companies to get their ducks in a row (and soak up as many federal dollars as possible) left poor and rural Americans with no options, for months. Who knows how many children went without school instruction? Or how many illnesses went undiagnosed? Or how many jobs were terminated?

This delay was appalling, and Chairwoman Rosenworcel should have to answer for her actions to the Senate Commerce Committee as it considers her nomination for another term as commissioner. Rather than expedite important help to people who needed it most, she led the agency’s delay — for the benefit of giant providers, not the public.

Hopefully, the committee moves with more dispatch than she did in considering her actual fitness to be FCC chairwoman for another term.

Julio Fuentes is president and CEO of the Florida State Hispanic Chamber of Commerce. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Sunne McPeak: Achieving True Digital Equity Requires Strong Leadership and Sincere Collaboration

Collaboration between community leaders will be essential in ensuring success of the Biden infrastructure bill in California.

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The author of this Expert Opinion is Sunne Wright McPeak

This week, President Joe Biden signed the infrastructure bill, which includes $65 billion for expanding broadband deployment and access for all Americans.

The national plan is described as the most significant infrastructure upgrade in the three decades since the Cold War. “This is an opportunity to create an Eisenhower national highway system for the information age,” says a former White House National Security Council senior director.

For California – the nation’s largest state – it means a minimum $100 million for broadband infrastructure that is designed to expand high-speed internet access for at least 545,000 residents, particularly in unserved and underserved communities, according to the White House. The federal funding will support California’s $6 billion broadband infrastructure plan.

Closing the digital divide and achieving true digital equity requires strong leadership and sincere collaboration among public agencies, internet service providers and civic leaders to seize this unique opportunity to achieve strategic priorities in education, telehealth, transportation and economic development. The 2021 USC-CETF Statewide Survey on Broadband Adoption highlighted that a significant number of Californians will be left behind because they are unable to access the internet and other digital functionality needed for vital activities.

Now, the question is how to ensure the public’s funds will be used as effectively and efficiently as possible. California must implement a thoughtful, aggressive strategy that will maximize immediate impact and optimize return on investment. Separately, for several years, CETF has been calling for broadband deployment as a green strategy for sustainability; that urgency only grows in the wake of the COP26 climate meetings. As leaders begin to make historic investments, they should embrace these key principles for action:

  • Prioritize and drive infrastructure construction to the hardest-to-reach residents — rural unserved areas, tribal lands, and poor urban neighborhoods — and then connect all locations, especially anchor institutions (schools, libraries and health care facilities), along the path of deployment.
  • Require open-access fiber middle-mile infrastructure with end-user internet speeds sufficient to support distance learning and telehealth.
  • Strive to achieve ubiquitous deployment in each region to avoid cherry picking for more lucrative areas.
  • Encourage coordination among local governments and regional agencies to streamline permitting and achieve economies of scale.
  • Develop an open competitive process to achieve the most cost-effective investment of new dollars by optimizing use of existing infrastructure that ratepayers and taxpayers already have built.

To learn more, please contact Sunne Wright McPeak at sunne.mcpeak@cetfund.org

Sunne Wright McPeak is President and CEO of California Emerging Technology Fund, a statewide non-profit foundation with 15 years of experience addressing broadband issues to close the Digital Divide in California. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC. 

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Frank Gornick: Valley Leaders Join State to Bring Ubiquitous Broadband to the San Joaquin Valley

Bringing internet capability to communities throughout the San Joaquin Valley is the focus of a new effort.

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The author of this Expert Opinion is Frank Gornick.

As the pandemic begins to recede, it leaves behind warnings of weak links in our overall health as a functioning society. The signs are everywhere: health care, water, infrastructure, education, supply chains and equitable access to technology and opportunity.

Under the guidance of the San Joaquin Regional Broadband Consortium, and with support from the California Emerging Technology Fund, our goal is to bring ubiquitous broadband to the eight counties that compromise the San Joaquin Valley, among the most underserved regions of the state and underestimated in ability to lead and drive change.

And we will do it within a year — a bold but doable achievement.

As a start, we are announcing a new partnership, #SanJoaquinValleyNetwork, which will seek the necessary resources to deliver a world class internet to enhance the economic and human conditions because our leaders want no less for our citizens.

To be clear, this is a significant undertaking with many moving parts. Therefore, understanding the players and the territory is essential.

Understanding the infrastructure landscape is critical

It begins by identifying what internet infrastructure currently exists and assessing the internet’s capacity in the eight counties. Where is it robust and, where is it lacking.

Why this year? There is political will and the funds to do it.

In July, the governor signed SB 156, which authorizes the state to work with counties, internet service providers, school districts, hospitals, libraries, businesses, manufacturers, farmers and municipalities. The goal is to develop a statewide open-access, middle-mile broadband network, including creating rural exchange points with last-mile access to homes, businesses and essential services.

The good news is that we are building upon the existing network, not starting over. Therefore, these expenditures will be much more efficient and effective.

In addition to the clearly stated intent of the legislation, state leaders have provided $6 billion for implementation.

Continuing into November, the San Joaquin Valley counties will be organizing and planning under the auspices of SJVRBC to obtain the maximum amount of financial assistance to implement the goals of #SanJoaquinValleyNetwork.

Applying for federal grant dollars in San Joaquin Valley

As this effort gets underway, #SanJoaquinValleyNetwork will begin applying for federal and state dollars to realize our goal, bringing ubiquitous broadband to the Valley in a year.

What outcomes can we expect? First, as we have learned from the pandemic, we must do more to expand deployment and access because it is critical for so many people to have reliable, robust connections to the services they need and to access new opportunities. However, not everyone has equal access.

The internet has provided greater access to health care, but not everyone has equal access, particularly seniors, low income households and rural residents. Students at all grades for the past 18 months have had to adjust to online learning, but not everyone has equal access or capacity required to succeed and gain the skills to join the workforce of the future.

Our economic engine, the agricultural industry, has relied on breakthrough technologies that depend on high speed internet, and dependability and access to the internet is necessary for growth and productivity.

The investment to extend broadband to the most remote and underserved communities will raise the standard of living of many — and the quality of life for everyone in the San Joaquin Valley.

Billions of dollars in California and across the country will be invested in deploying internet infrastructure to rural, tribal and urban neighborhoods in poverty. Construction of publicly subsidized, open-access middle-mile infrastructure that includes last-mile deployment achieves the best of both objectives — ensuring immediate internet access for businesses and residents. That’s why business, education and civic leaders throughout the San Joaquin Valley are applauding this effort.

We urge leaders in Kern, Tulare, Kings, Fresno, Madera, Merced, Stanislaus, and San Joaquin counties to join this effort.

For more information on the #SanJoaquinValleyPartnership, please contact Dr. Frank Gornick at frankgornick@comcast.net, 559-281-5200.

Dr. Frank Gornick is the chancellor emeritus of West Hills Community College District, where he served as chancellor for 16 years. He is the project manager of the #SanJoaquinValleyNetwork and lives in Lemoore. This piece is reprinted from The Fresno Bee with permission.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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