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Lina Khan’s timely tech skepticism makes for a refreshingly friendly FTC confirmation hearing

One never knows how a confirmation hearing will go these days, especially one for a young outsider nominated to an important position despite challenging the status quo and big business. Lina Khan, just such a person up for the position of FTC Commissioner, had a surprisingly pleasant time of it during today’s Senate Commerce Committee confirmation hearing — possibly because her iconoclastic approach to antitrust makes for good politics these days.

Khan, an associate professor of law at Columbia, is best known in the tech community for her incisive essay “Amazon Antitrust’s Paradox,” which laid out the failings of regulatory doctrine that have allowed the retail giant to progressively dominate more and more markets. (She also recently contributed to a House report on tech policy.)

When it was published, in 2018, the feeling that Amazon had begun to abuse its position was, though commonplace in some circles, not really popular in the Capitol. But the growing sense that laissez-faire or insufficient regulations have created monsters in Amazon, Google, and Facebook (to start) has led to a rare bipartisan agreement that we must find some way, any way will do, of putting these upstart corporations back in their place.

This in turn led to a sense of shared purpose and camaraderie in the confirmation hearing, which was a triple header: Khan joined Bill Nelson, nominated to lead NASA, and Leslie Kiernan, who would join the Commerce Department as General Counsel, for a really nice little three-hour chat.

Khan is one of several in the Biden administration who signal a new approach to taking on Big Tech and other businesses that have gotten out of hand, and the questions posed to her by Senators from both sides of the aisle seemed genuine and got genuinely satisfactory answers from a confident Khan.

She deftly avoided a few attempts to bait her — including one involving Section 230; wrong Commission, Senator — and her answers primarily reaffirmed her professional opinion that the FTC should be better informed and more preemptive in its approach to regulating these secretive, powerful corporations.

Here are a few snippets representative of the questioning and indicative of her positions on a few major issues (answers lightly edited for clarity):

On the FTC getting involved in the fight between Google, Facebook, and news providers:

“Everything needs to be on the table. Obviously local journalism is in crisis, and i think the current COVID moment has really underscored the deep democratic emergency that is resulting when we don’t have reliable sources of local news.”

She also cited the increasing concentration of ad markets and the arbitrary nature of, for example, algorithm changes that can have wide-ranging effects on entire industries.

Lina Khan, commissioner of the Federal Trade Commission (FTC) nominee for U.S. President Joe Biden, speaks during a Senate Commerce, Science and Transportation Committee confirmation hearing in Washington, D.C.

Image Credits: Graeme Jennings/Washington Examiner/Bloomberg / Getty Images

On Clarence Thomas’s troubling suggestion that social media companies should be considered “common carriers”:

“I think it prompted a lot of interesting discussion,” she said, very diplomatically. “In the Amazon article, I identified two potential pathways forward when thinking about these dominant digital platforms. One is enforcing competition laws and ensuring that these markets are competitive.” (i.e. using antitrust rules)

“The other is, if we instead recognize that perhaps there are certain economies of scale, network externalities that will lead these markets to stay dominated by a very few number of companies, then we need to apply a different set of rules. We have a long legal tradition of thinking about what types of checks can be applied when there’s a lot of concentration and common carriage is one of those tools.”

“I should clarify that some of these firms are now integrated in so many markets that you may reach for a different set of tools depending on which specific market you’re looking at.”

 

(This was a very polite way of saying common carriage and existing antitrust rules are totally unsuitable for the job.)

On potentially reviewing past mergers the FTC approved:

“The resources of the commission have not really kept pace with the increasing size of the economy, as well as the increasing size and complexity of the deals the commission is reviewing.”

“There was an assumption that digital markets in particular are fast moving so we don’t need to be concerned about potential concentration in the markets, because any exercise of power will get disciplined by entry and new competition. Now of course we know that in the markets you actually have significant network externalities in ways that make them more sticky. In hindsight there’s a growing sense that those merger reviews were a missed opportunity.”

(Here Senator Blackburn (R-TN) in one of the few negative moments fretted about Khan’s “lack of experience in coming to that position” before asking about a spectrum plan — wrong Commission, Senator.)

On the difficulty of enforcing something like an order against Facebook:

“One of the challenges is the deep information asymmetry that exists between some of these firms and enforcers and regulators. I think it’s clear that in some instances the agencies have been a little slow to catch up to the underlying business realities and the empirical realities of how these markets work. So at the very least ensuring the agencies are doing everything they can to keep pace is gonna be important.”

“In social media we have these black box algorithms, proprietary algorithms that can sometimes make it difficult to know what’s really going on. The FTC needs to be using its information gathering capacities to mitigate some of these gaps.”

On extending protections for children and other vulnerable groups online:

Some of these dangers are heightened given some of the ways in which the pandemic has rendered families and children especially dependent on some of these [education] technologies. So I think we need to be especially vigilant here. The previous rules should be the floor, not the ceiling.


Overall there was little partisan bickering and a lot of feeling from both sides that Khan was, if not technically experienced at the job (not rare with a coveted position like FTC Commissioner), about as competent a nominee as anyone could ask for. Not only that but her highly considered and fairly assertive positions on matters of antitrust and competition could help put Amazon and Google, already in the regulatory doghouse, on the defensive for once.

Daily Crunch: Google Meet will get a new look and new features

Google announces upgrades to Google Meet, Amazon is bringing its palm scanner to Whole Foods and Microsoft looks at the effect of video calls on our brains. This is your Daily Crunch for April 21, 2021.

The big story: Google Meet will get a new look and new features

Google Meet is getting a number of updates, including a new user interface that should make the controls more visible (rather than hiding them in menus), the ability to pin multiple video feeds, autozoom (which will automatically place you in the center of the frame) and background replacement, starting with just a few scenes.

It sounds like these changes aren’t happening all at once, but will roll out gradually over the next few months. Google said the goal is to make online meetings “more immersive, inclusive and productive.”

The tech giants

Foxconn’s Wisconsin factory plans scaled back dramatically — The Taiwanese manufacturing giant is scaling back its investment from $10 billion to $672 million.

Amazon is bringing its Amazon One palm scanner to select Whole Foods as a payment option — That means Whole Foods customers could choose to scan their palm over the reader to pay for their purchases.

Instagram launches tools to filter out abusive DMs based on keywords and emojis — It will also allow users to proactively block people, even if they try to make contact from a new account.

Startups, funding and venture capital

Remote hiring startup Deel raises $156M at a $1.25B valuation after 20x growth in 2020 — Deel aims to allow businesses “to hire anyone, anywhere, in a compliant manner.”

Discount grocery startup Misfits Market raises $200M — This round moves the startup known for selling “ugly” fruits and vegetables into unicorn territory.

AppOmni raises $40M for tools to secure enterprise SaaS apps — The startup has built a platform to help monitor SaaS apps and their activity, provide guidance to warn or block when things might go wrong and fix problems when they do occur.

Advice and analysis from Extra Crunch

Four ways martech will shift in 2021 — First and foremost, differentiation is going to be imperative.

Micromobility’s next big business is software, not vehicles — The days of the shared, dockless micromobility model are numbered, at least according to Puneeth Meruva of Trucks Venture Capital.

Dear Sophie: How can I get my startup off the ground and visit the US? — The latest edition of Dear Sophie, the advice column that answers immigration-related questions about working at technology companies.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Everything else

This is your brain on Zoom — Microsoft has done a little brain science and found out that yeah, constant video calls do increase your stress and brain noise.

New privacy bill would end law enforcement practice of buying data from brokers — A new bill known as the Fourth Amendment is Not for Sale Act would seal up a loophole that intelligence and law enforcement agencies use to obtain troves of sensitive and identifying information.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

Apple and Google pressed in antitrust hearing on whether app stores share data with product development teams

In today’s antitrust hearing in the U.S. Senate, Apple and Google representatives were questioned on whether they have a “strict firewall” or other internal policies in place that prevent them from leveraging the data from third-party businesses operating on their app stores to inform the development of their own competitive products. Apple, in particular, was called out for the practice of copying other apps by Senator Richard Blumenthal (D-CT), who said the practice had become so common that it earned a nickname with Apple’s developer community: “sherlocking.”

Sherlock, which has its own Wikipedia entry under software, comes from Apple’s search tool in the early 2000’s called Sherlock. A third-party developer, Karelia Software, created an alternative tool called Watson. Following the success of Karelia’s product, Apple added Watson’s same functionality into its own search tool, and Watson was effectively put out of business. The nickname “Sherlock” later became shorthand for any time Apple copies an idea from a third-party developer that threatens to or even destroys their business.

Over the years, developers claimed Apple has “sherlocked” a number of apps including Konfabulator (desktop widgets), iPodderX (podcast manager), Sandvox (app for building websites), Growl (a notification system for Mac OS X), and in more recent years, F.lux (blue light reduction tool for screens) Duet and Luna (apps that makes iPad a secondary display), as well as various screen time management tools. Now Tile claims Apple has also unfairly entered its market with AirTag.

During his questioning, Blumenthal asked Apple and Google’s representatives at the hearing — Mr. Kyle Andeer, Apple’s
Chief Compliance Officer and Mr. Wilson White, Google’s Senior Director Public Policy & Government Relations, respectively — if they employed any sort of “firewall” in between their app stores and their business strategy.

Andeer somewhat dodged the question, saying, “Senator, if I understand the question correctly, we have separate teams that manage the App Store and that are engaged in product development strategy here at Apple.”

Blumenthal then clarified what he meant by “firewall.” He explained that it doesn’t mean whether or not there are separate teams in place, but whether there’s an internal prohibition on sharing data between the App Store and the people who run Apple’s other businesses.

Andeer then answered, “Senator, we have controls in place.”

He went on to note that over the past twelve years, Apple has only introduced “a handful of applications and services,” and in every instance, there are “dozens of alternatives” on the App Store. And, sometimes, the alternatives are more popular than Apple’s own product, he noted.

“We don’t copy. We don’t kill. What we do is offer up a new choice and a new innovation,” Andeer stated.

His argument may hold true when there are strong rivalries, like Spotify versus Apple Music, or Netflix versus Apple TV+, or Kindle versus Apple Books. But it’s harder to stretch it to areas where Apple makes smaller enhancements — like when Apple introduced Sidecar, a feature that allowed users to make their iPad a secondary display. Sidecar ended the need for a third-party app, after apps like Duet and Luna first proved the market.

Another example was when Apple built screen time controls into its iOS software, but didn’t provide the makers of third-party screen time apps with an API so consumers could use their preferred apps to configure Apple’s Screen Time settings via the third-party’s specialized interface or take advantage of other unique features.

Blumenthal said he interpreted Andeer’s response as to whether Apple has a “data firewall” as a “no.”

Posed the same question, Google’s representative, Mr. White said his understanding was that Google had “data access controls in place that govern how data from our third-party services are used.”

Blumenthal pressed him to clarify if this was a “firewall,” meaning, he clarified again, “do you have a prohibition against access?”

“We have a prohibition against using our third-party services to compete directly with our first-party services,” Mr. White said, adding that Google has “internal policies that govern that.”

The Senator said he would follow up on this matter with written questions, as his time expired.