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Privacy Lapses Could Be Part of Google, Facebook Antitrust Cases in the US

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Antitrust authorities probing Facebook and Alphabet’s Google have struggled with scrutinising companies whose products are popular and free. Now they may have a solution: Use privacy as a test. As the US Justice Department, Federal Trade Commission, Congress and the states investigate whether Internet companies are flouting antitrust laws, academics and even some regulators are pushing to go beyond the traditional focus on price as a determinant of harm. Enforcers, they say, should also consider privacy lapses as a proxy for anti-competitive behaviour.

Their legal reasoning goes like this: Monopolists generally stop innovating, let product quality slip and treat customers poorly, knowing no competitor has the ability to grab market share. Repeated privacy lapses can be a sign that a company — Facebook is often cited as a prime example — has let product quality and customer service slip, knowing its social-media dominance is unassailable.

Sen. Josh Hawley, the Republican senator from Missouri, buys this argument. Facebook, he said, has suffered few real consequences despite its shoddy record on protecting users’ privacy. Consumers have nowhere else to go to get the totality of what Facebook offers — a classic antitrust problem of degrading quality.

“One of the reasons data privacy concerns are so pressing is because these companies are monopoly size,” Hawley, a big-tech antagonist who sued Google when he was his state’s attorney general, told Bloomberg last week. “If we had a viable alternative to Facebook that wasn’t scooping up someone’s data, that wasn’t selling our information without telling us, then I would be less concerned.”

Hawley echoed a view that is gaining traction with federal and state antitrust enforcers, as well as the leaders of a congressional probe into big Internet platforms. One advantage of the privacy-erosion-is-antitrust theory is that no new laws are needed to enforce it.

Days after the Justice Department’s Google probe was revealed in June, for instance, its antitrust chief, Makan Delrahim, linked the two issues, noting that quality can figure in antitrust analysis in addition to price and that “privacy can be an important dimension of quality.”

Delrahim noted that the 1998 case against Microsoft didn’t revolve around higher prices. Instead, the US alleged that the software company illegally maintained a monopoly over personal-computer operating systems by blocking manufacturers from installing a browser that competed with its own. Both browsers were free to consumers.

Including privacy in the investigations would expand the range of issues enforcers are known to be looking at, including Facebook’s past acquisitions and Google’s conduct in the digital advertising market. Facebook and Google declined to comment.

Rep. David Cicilline, the Rhode Island Democrat leading the House probe of the tech sector, referred in a hearing earlier in November to “the obvious cost to personal privacy that has resulted from consolidation in the digital marketplace.”

Privacy and competition have long been treated as distinct areas of the law. Google and Facebook have agreed to pay fines for privacy violations under consumer-protection statutes, but they have faced little antitrust action.

One reason is that federal courts have clung to the consumer-welfare standard and often demand evidence of higher prices before deciding cases in favour of enforcers. Just last year, the US Supreme Court ruled 5-4 for American Express Co. and against the US and 11 states alleging that cardholders were harmed when American Express prohibited merchants from steering customers to cards with lower fees. The majority’s rationale? There was no evidence that American Express’s policy harmed consumers by pushing up the price of credit-card transactions.

Now, Hawley, Delrahim and Cicilline are signalling a shift in the way the government thinks about antitrust enforcement, particularly in technology. State attorneys general are exploring similar ideas.

New York Attorney General Letitia James, who is leading the states’ Facebook probe, said the coalition will “use every investigative tool at our disposal to determine whether Facebook’s actions may have endangered consumer data, reduced the quality of consumers’ choices, or increased the price of advertising.”

The public interest in the overlap is relatively new, said Dina Srinivasan, a former digital ad executive who has written that Facebook’s data practices could form the basis of an antitrust case.

“We’ve seen this momentum in many of those circles since the beginning of the year,” she said.

Srinivasan argued in a February article in the Berkeley Business Law Journal that consumers were able to rebuff Facebook’s tracking of users on third-party websites when the social media market was competitive. After the demise of rivals such as MySpace, Facebook expanded tracking to millions of websites to further its advertising business despite consumer pushback, she noted. A truly competitive market would swiftly punish such practices, Srinivasan wrote.

Not all legal experts agree that privacy violations could be part of any antitrust suit. A case that’s “based on a data privacy theory of harm is not in the cards,” said Jim Tierney, who oversaw tech-sector antitrust enforcement at the Justice Department from 2006 to 2016 and is now a partner at Orrick Herrington & Sutcliff, a law firm that counts Facebook as a client. Tierney said he doesn’t do any work for the company.

Others see a different problem. “Consumers seem just willing to give up the data,” said Sam Weinstein, a professor at Cardozo Law School. “If that’s what’s happening, it’s hard to see antitrust interceding.”

Some non-US jurisdictions have sought to twin privacy and antitrust, with mixed results. Germany’s competition authority, the Federal Cartel Office, in February ordered Facebook to overhaul how it tracks users off its site over allegations that the company used its dominance to force consumers to accept unfair terms. Facebook responded that the agency misapplied German law because the company faces “fierce competition.”

In August, however, a German court suspended the ruling, expressing “serious doubts about the legality” of the order. The agency is appealing.

© 2019 Bloomberg LP

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Helping Prevent Discrimination in Ads that Offer Housing, Employment or Credit Opportunities.

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iscrimination has no place on Facebook, and our advertising policies have long prohibited unlawful discrimination. Over the last year, our auditors have released two progress updates on Facebook’s Civil Rights Audit and we reached a historic settlement with leading civil rights organizations. As part of the settlement, we introduced a new process for how advertisers based in the US, or trying to reach audiences in the US, can buy ads that offer housing, employment or credit opportunities. These ads are known as Special Ad Categories and are restricted from using the following targeting criteria: age, gender, ZIP code, multicultural affinity or any detailed options describing or appearing to relate to protected characteristics.The Latest News from Facebook for Business

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Facebook Brings WhatsApp Integration to Its Revamped Crisis Response Tool

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Social network giant Facebook is adding a WhatsApp button to crisis response tool, its disaster-reporting and communications feature where a user requests or offers help during a time of emergency. The tool is being used in 300 crises in more than 80 countries presently.

The new feature will allow people in affected areas to provide real-time information related to any disaster, TechCrunch.com reported on Tuesday.

Formerly, replies to requests on Facebook’s crisis response pages could only be sent with Facebook Messenger.

The update allow the social network to provide this information to state and local officials, as well as federal relief agencies such as Direct Relief and the National Alliance for Public Safety GIS Foundation.

Facebook is also expanding its Data for Good tools, using its data to provide relief organisations with information on where to distribute supplies, based on aggregated, anonymised data.

Additionally, Facebook is also updating its disaster maps to be more accurate in collaboration with agencies such as the International Displacement Monitoring Centre.

The new features will allow for photo and video sharing within the Crisis Response centre on Facebook.

Crisis Response originally developed out of a handful of features that help family, friends and communities support one another in the wake of a disaster.

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Facebook to Allow Transfer of Photos, Videos to Google, Other Rivals

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Facebook started testing a tool on Monday that lets users move their images more easily to other online services, as it faces pressure from regulators to loosen its grip on data. The social network’s new tool will allow people to transfer their photos and videos directly to competing platforms, starting with Google Photos. The company said it will first be available to people in Ireland and will be refined based on user feedback.

The tool will then be rolled out worldwide in the first half of 2020.

US and European regulators have been examining Facebook’s control of personal data such as images as they look into whether the tech giant’s dominance is stifling competition and limiting choice for consumers. Facebook CEO Mark Zuckerberg has reacted by calling for new rules to address “data portability” and other issues.

Facebook said that as it worked on a new set of data portability tools, it had discussions with policymakers, regulators, and academics in the UK, Germany, Brazil, and Singapore to learn about which data should be portable and how to protect privacy.

The company is developing products that “take into account the feedback we’ve received and will help drive data portability policies forward by giving people and experts a tool to assess,” Steve Satterfield, director of privacy and public policy, said in a blog post.

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