Her series of hearings investigating competition Digital Markets. This one on the role of data and privacy and competition. I now recognize myself for an opening statement. I should state the obvious, im not the chairman of the subcommittee. The chairman will be in a few minutes. Digital technologies have provide americans with remarkable array of services. It is never been easy to share news and information to publish content and to commit it with loved ones. All at a moments notice. As the technological revolutions of the mask of this transmission has opened up about the power across our economy. It is support for congress to study understand of these imbalances are affecting americans when it is causing these asymmetries of power and whether these new and growing inequalities are compatible with our democratic values. The committee ongoing oversight of competition Digital Markets is a key part of this process. Todays hearing was examined the role that data plays in creating and maintaining inequalities of power and how this affects competition. As previous hearings have shown, growing share of Commerce Communications is now controlled by a small number of companies. Because these platforms are in essence large intermediaries, they are perfectly positioned to closely track each transaction and communication that passes through their channels. Intermediaries have long collect information on the Economic Activity that flows through the platforms, the large firms and the digital Digital Economy hae unprecedented ability to track and surveillance users across india. This collection includes information not only across a persons shopping and reading house but also about the time they wake up and go to sleep, the precise location each hour of the day and the content of the most private communications. First, how are Digital Technologies in the constant Data Collection they enable affecting competition . Is there something unique about Digital Markets that enables firms to acquire and maintain market power in novel ways . In Digital Markets max was a Data Collection can provide a company with Significant Competitive advantage. A large and costly growing set of user data allows firms both to improve existing Privacy Services and to expand into new lines of business often with a competitive edge. Frequently the most dominated countries in the Digital Economy are those that have captured the most data from as many sources as possible. In recent your scholars have described as dynamic as leading to winner take all markets with a firstcome get established competitive lead wins the market crushing any potential competition. In other words, competitors in Digital Markets have strong incentive to collect as much information on users as possible as quickly as possible, as part of a longterm strategy to compete in the marketplace and to achieve market dominance. This racist is question of whether it is good to society for unrelenting Data Collection to be the key dimension on which companies are looking to outcompete one another. The fact several major digital platforms make most of the profits by selling targeted advertisements heightens those incentives. Second question i hope will be addressed at todays hearing is how Data Collection increases the number of ways the dominant companies can abuse their market power. Does the collection use data enable new forms of conduct that lawmakers are regularly should recognize as anticompetitive . For example, platforms service in the meters of commerce have critical insight into the rifles Business Models, the dynamic the raise significant competition concerns. With these issues in my i look for to hearing from our esteemed panel of Witnesses Today. I yield back the bouts balancey time and i now recognize for his opening statement, the distinguished Ranking Member former chairman of the committee mr. Sensenbrenner of wisconsin. Thank you, mr. Chairman. Today we continue our oversight in the state competition in the tech sector. To date our primary focus is concerned large online platforms. The specific topics we address today, the roles the data and data privacy plate in competition and the ways in which we can better protect the privacy of consumers online data come largely concern the saints platforms. Data is in many ways the lifeblood of the internet. Numerous issues are swirling around the use of this data. For example, these include allegations that, one, platforms mean very large chelation data can operate as a barrier to market entry by new platforms. Two, platforms holding large databases can leverage that data to compete and further with thirdparty competitors that are dependent upon the platforms. Three, the incumbent platforms have pursued mergers with emerging competitors in order to kill off competition for Data Acquisition and market shares. It is my hope are here can help us determine fact from fiction when it comes to these allegations. As i stress before, antitrust laws do not exist to punish success but to foster it. Congress and antitrust enforcement agencies need to be careful not to overreach to extend or apply antitrust laws in ways that indepth punishing success. Suppressing innovation and ultimately limiting consumer welfare. The supply is not just the issues concerning competition for data but also applies the issues concerning privacy. If were going to address data and consumers data privacy through legislation we must get it right. I do not say this in a vacuum. Governments and the United States and europe have already begun to lay down laws to address these issues. Most prominent example to date is the European Union general Data Protection regulation, or gdpr. Following in its footsteps has been californias recently passed California Consumer privacy act, or ccpa, which is substantially modeled on the gdpr. Testimony offered before the Senate Judiciary committee in march by one of our Witnesses Today constitute a powerful indictment of the gdpr. However, well wellintentionede gdpr is already producing substantial Collateral Damage to consumer welfare, innovation, at the health of the Digital Economy. It is likely that the ccpa will have the same effects. All of these effects are avoidable. It is imperative that we in the United States identified and put in place a better means of protecting consumers privacy online. I hope our Witnesses Today can help us work our way through these important issues. And before yielding back let me ask anonymous consent to insert in the record a number of statements, summation for the record that i have received. One from the Mercatus Center without objection. Second, i joint statement by the national cpa, ctia and u. S. Telecom. Without objection. A letter that is been sent to the chairman and myself from epic. Org. Without objection. A letter for the record from carl szabo, Vice President and general counsel of choice. Without objection. I now yield back the bounce of my time. I think the chairman of the full committee for opening think i nebuchadnezzar myself for opening statement. In june this commit committee d a historic bipartisan investigation into the stiff competition in the digital marketplace. The purpose of this investigation is to document anticompetitive online, with a firms engaging in anticompetitive conduct and to assess whether our antitrust laws and Court Enforcement levels are adequate to address these problems. Since launching investigation with codis is a bipartisan hearings, briefings and roundtables as part of this top to bottom review. We have requested documents, communication and information relevant to the investigation. On monday degree received its First Tranche of responses, tens of thousands of documents and we expect receipt and review additional material as part of his request. We will continue to hold hearings and roundtables and quebec oversight to ensure the goals are met. As i said before this work is essential to the committees like semantic and constitutional responsibly to conduct oversight to ensure they are working. Congress not the courts, agencies or private companies enacted the antitrust laws. Congress must be responsible for determining whether the current laws and enforcement levels are keeping up with a Digital Markets. We have much work ahead of us but im proud of the efforts of my colleagues along with their dedicated staff to continue this bipartisan work together. Todays hearing is an important opportunity to death our understanding of a key component of competition online. The role of data and privacy. Several leading International Competition authorities and antitrust experts have published groundbreaking reports that focus on this issue. As noted eight is a part of competition online. For example, an exhaustive report by the show in competition and Consumer Commission concluded, the breadth and depth of user Data Collected by the incumbent digital platforms provides them with a strong competitive advantage creating barriers to rivals entering and expanding in relevant markets and allowing the incumbent digital platforms to expand into adjacent markets. The united kingdoms expert panel similarly reported large trove of dad went to my with network, tip markets in favor of a single dominant platform killing off competition. Data plays an Important Role in the ability to start to attract Venture Capital to compete in these markets. A panel of experts led by professor morten reported investors often if i would access to data as they explain a new entrance start of data quantitatively and qualitatively speaking relative to a tech giant is at a Significant Competitive disadvantage and investors will be unlikely to invest if they do that data deficit is insurmountable. This is real consequences for our to peruse and starts to get locked out of the market and never get a chance to compete on the merits to offer new and innovative services. There is broad agreement among antitrust experts that data can be abused by platforms for anticompetitive purposes. These tactics have created the innovation kill zone around dominant firms. Whether its facebooks use of to spy, amazons ability to identify and close popular products to be sold or the weaponization of api to block competitors, we know the abuse of data a series ramification for competition. This represents an opportunity to examine the role of privacy and antitrust enforcement and competition online. Theres a growing consensus that privacy is an important dimension of data online. In in a statement cement for the record, market consolidation of dump platforms to harm consumers quote not by escalating prices but rather by diminishing quality by a voting privacy terms. Furthermore as uk Digital Competition Expert Panel reported, the nice use of data harm to privacy is not only an indicator of low quality cost by competition but it needs it can use a firms dominant in the marketer in other words, a market that is vibrant competition, firms have strong incentives to respond to consumer demand by improving the privacy safeguards to the products. Without competition and have no incentive to use privacy. I had the pleasure discussing this with the Harvard School of business was recently about the rise of surveillance capitalism. The point she made that strictly is the pattern of automating Consumer Behavior from more clicks is itself a market externality. Theres no consumer demand for this. Americans dont want other information mind just that they can be shown another advertisement or nudge towards a political candidate. Theres no escape because this alternative. People are stuck with that options or no options at all which is evidenced by the market belly. Companies that want to get beat by Offering Services to product that do not rely on surveillance are disadvantaged which reinforces the market dominance of the dom firms. Its clear the relationship between competition privacy is not either or. They are mutually reinforcing concept that must be at the forefront as we consider proposals to restore the internet to its full promised and i approached today sings with these these concerns of my. Id like to take one look to thank the commissioner of European Commission and chairman sims for the statements of it for todays hearing. The chairman was scheduled to testify but due to an unfortunate change in our schedule is unable to attend. I want to thank him and his team for all of the hard work. Now it is my pleasure to introduce todays witnesses for todays hearing. Our first witness is the honorable rohit chopra, the Democratic Commission at the federal trade commission since 2018. Before joining the ftc commissioner shopper was instrumental in establishing the Consumer FinancialProtection Bureau who worked on agencies that limitation team after the passage of the doddfrank act in 2010 and became the First Student loan on boston. He went on to serve as assistant director the cfpb any significant inroads toward stressing the student loan crisis in the United States. He was now made by trump to serve as a commissioner on family 28th, 2018 and was confirmed unanimously. He received his ba from harvard and his mba from the universe uy pennsylvania our second witness, mr. Tommaso valletti is professor of economics at the cause of money since 2007. He served as chief competition comes from European Commission for three years we focused extensively on competition in Digital Markets. He has served as a professor of economics and management at the university of rome where he still serves as a visiting professor. Hes a Research Fellow at the center of policy research and a fenced in for competition and innovation. He received both masters and phd from the London School of economics in addition to his work as an economist, he received his flute diploma from the musical conservatory. Our third witnesses jason furman third witness is jason furman, a professor of the practice examples of the Harvard Kennedy school. Before that, professor from an d served as chair of the council of economic by string present of him second term from 20092013 he was insistent to the president printable Deputy Director of the National Economic council picky serves as a nonresident senior fellow at the Peterson Institute for interNational Economics as was invited on digital market of uk government. He received his ba, ma and phd from harvard as was his masters in science and the London School of economics. Our final witness on the panel is roslyn layton, a visiting scholar with the American Enterprise institute pitch he served as a visiting researcher at Aalborg University and a Vice President in copenhagen. She worked as a director for Search Agency services at ibm. Published dozens of times and numerous publications and served on president trumps Transition Team in 2016 helping to establish the specialty medications commission. She received her ba from american university, and her phd from welcome. Thank you for persisting in todays hearing. Now if you would please rise i will begin by swearing you in. Please raise your right hand. [witnesses were sworn in] let the record show the witnesses answered in the affirmative. Hankypanky may proceed. Please note each of your written statements will be entered in the record in its entirely. I ask you to summer should test one in five minutes. Thats a timely on your table. When the light switches from green to yellow to one minute to conclude when the light turns red signal your fibers has expired. Thank you, mr. Chairman. Ranking member sensenbrenner and members of the subcommittee. My name is United States and to serve as a federal trade commission are. Oversight from congress is a pillar of sound transparent government, and ive been honored to testify many, many times before members of congress, including before chairman elijah cummings, whose energy and passion will be missed by so many of us. Todays topic could not be more important or timely as it seems almost daily we learn of problems stemming from the lack of competition. To this end i think we need to focus on four ways that companies undercut competition, concentration, couplets of interest, contracts, and capture. Market power is concentrated with a few giants in so many industries. Conflict of interest allow these dominant firms to sometimes rig the market in the favor, at the expense of upstarts and new businesses that fairly compete. Onesided take it or leave it contracts and online terms of service impose selfserving regulations on consumers and Small Businesses. And all too often the government is too captured by those incumbents who use their power to dictate their preferred policies. In my testimony i discuss how competition in the Technology Market is structured around data, a a valuable asset with their unique economic features we need to take into account. Our personal data is powering the profits and dominance of Tech Companies that offer basic Services Like email, search or photo sharing that are not truly free. Fortunately, many of my colleagues around the world are also pushing forward. Reports from regulators and australia, the united kingdom, the European Union are must reads for this committee and everyone concerned about the future of our Digital Economy. In the United States as you know, our efforts are a work in progress, and i agree that we need to take a fresh look at our policies and guidance. And as we do it is important that federal trade commission conduct a rigorous review of quantitative market data and an analysis of the financial incentives driving market destroying behavior. Since joining the commission i argued that the ftc should be using our authority under section 60 of our act to get the data we need to effectively police these markets and report our findings to you and the public. When it comes to enforcement, i am optimistic. Now that scores of states attorney general both republican and democrat are teaming up to investigate anticompetitive conduct in the Digital Economy. In this moment it is all hands on deck, and i stay in constant communication with them. Decades ago our state ags played a pivotal role in ending microsofts chokehold over the future of the internet. Without without the action theyd likely be no google, though facebook, and no amazon. While the ftcs recent settlement with facebook and Google Youtube included fines that make for great headlines, they did little to fix the core problems that fuel these companies date abuses. Big fines are not big penalties for the worlds biggest companies. And as weve s s s s se and again, when a company can simy pay a fine of its illgotten gains, this isnt a penalty. This is incentive. As congress, federal antitrust enforcers Estates Attorney generals all pursue the investigations, we will need to pursue remedies that reduce concentration, eliminate topics of interest, resend abusive contract terms against Small Businesses and consumers, and limit capture. For example, recent scholarship has revealed that antitrust action that separated lines of business are required interoperable standards or order or patterns available for public use after anticompetitive conduct all lead to massive innovation, Small Business entry, and economic growth. These are useful tools in the toolbox for policymakers and enforcers to consider when looking for both remedy and prevent harm. In conclusion, while some believe that lax enforcement and absentee government are the ingredients of innovation, history teaches us its the opposite. Without officially an active government promoting competition markets cannot thrive. Sometimes that means providing corporations with benefits like limited liability, license contracts and other opportunities, free and fair markets will not work without meaningful consequences for lawbreakers, and inaction is a price we simply cannot afford to pay. Thank you, mr. Chairman. Thank you. I now recognize Tommaso Valletti for five minutes. Mr. Chairman, Ranking Member sensenbrenner and the members of the subcommittee, good morning and thank you very much for inviting me. My name is Tommaso Valletti and im purpose of economics. Between september 60 august 19 i was chief, to share a comment of the European Commission. In that role, i let Economic Analysis of several cases involving digital platforms including google, facebook, amazon, apple, microsoft and others. Today i would like to make four points. My first point is about data some, to argued date is the new oil others have gone to the opposite extreme bike claiming it strong as you. These are not very useful. It is since evident that date is key for these platforms and also only a few gatekeepers are in a position to control the tracking and linking of behaviors across platforms, Online Services and websites. They can combine several data sets and create super profiles of individuals. This is a market for individual attention analysis has to be conducted as an example if we open all of us in this remote our facebook accounts, if you have one and we just look at the ads popping up, you would see totally different ads. This is completely different from traditional media. Unfortunately the debate over the lack of data is not held by the lack of economics. The large digital players have not made any Data Available through independent researchers ever. And already the Silicon Valley part of his, one could say they are all like that. This will not be true. I can think of airlines, i could be several that would be available to independent researchers online competition it is really paradoxical windows look from the socalled data economy which is setting a precedent months of data. My second point concerns the extent to which enforces comprehensive , answer is yes, privacy is at the core of the economics of these platforms and competition is shaped around it. Competition takes place alongside several dimensions, pricing only one of them. Wally, choice, innovation are also important aspects. In fact, when dealing with digital platforms it does not make sense to focus on prices instead of zero by choice. The Business Models is to get something away for free in order to monetize another related market advertising in a particular events quality will be relevant. Lack of competition conversely will lead to reduce quality. In this case a reduction in privacy protection. My third point is that privacy degradation can lead to real consumer harm. Data breach, identity theft, but also consumer profiling that is not done in the interest of consumers. Part of the problem is the digital that are not well understood but still accepted by consumers because of a lack of alternatives. These are an indication of market power. The last point in my conclusion to all this is that involving data and privacy came to be ran. Low quality can be seen in competition longterm and exploitative conduct is captured by the canon law and in other jurisdictions it is not. Back in the us it is not. It would be wrong to explore exploitative conduct. Diminished competition and privacy should be considered in any assessment of the state of competition and market power. Protection can lead into the exclusionary behavior should the chain go from dominance too bad private returns, data advantage, money being made, these monies can be used to exclude competitors or to leverage neighboring markets. Further enforce the data handled by cross linking the Data Collected across Services Creating a vicious circle. These are conduct that could and in my personal opinion we should investigate. Thank you for your time. Iq doctor valletti and i recognized doctor furman five minutes. Thank you mister chairman, Ranking Members and members of the committee, my name is jason furman, a professor of economics and Public Policy at the Harvard School and i chaired the uks Digital Competition Expert Panel which produced a report unlocking digital competition. One of our recommendations was that the uk establish a Digital Markets unit and im serving as an unpaid advisor to the uk government as they move forward with accepting that recommendation that my panel made. Today of course im testifying with my own views and ideas drawing on the report that we did. I thank you for your kind comments. I want to make four points in my testimony. The first is the major digital platforms are highly concentrated and that concentration is likelyto persist. Its due to acombination of factors. Economies of scale and scope. The way that data can serve as a barrier to entry. Behavioral bias on the part of consumers who dont shift the way we think they should. The importance of access to capital and brands. Many of those individually are present in many markets but the combination of them and the extremes of all of them is unique to the digital platform and makes it very difficult to have competition in the market. The question of whether there can be competition for the market is a more speculative one, but theres a number of reasons including the persistence of the major platforms to believe that that competition for the market will be difficult absent policy changes. My second point which was covered by tommaso is this has cost to consumers. The services arent free, consumers might have been compensated, they are paying in the form of data, theyre losing out on variety and quality and the lack of competition stunts innovation. The question is what we should do about this. Some of the reasons why you have only a few platforms is because the benefits that consumers get from scale and scope. You want to preserve the ability for consumers to have those benefits. Some of the reason though is because of unfair competition and because of whats not organic growth due to efficiency, but mergers that have been improved often without very much scrutiny. So the key to policy is to preserve the good while enabling as much competition, because competition is the source of innovation unless the private sector drives that innovation. To that end my third point is that merger enforcement needs to be more robust in the digital sector. Much of the growth weve seen has not been organic growth dueto efficiency but has been acquisition. There have been essentially no errors in blocking an acquisition that would have been beneficial to consumers but there probably have been errors in allowing acquisitions to go forward that have ultimately harmed consumers. An approach should include more resources for the doj, antitrust division and fcc so they have the Technical Expertise to dealwith this. That merger analysis cant just focus on short run static effects but also potential competition, innovation and take seriously data as a barrier to entry and third the increasingly high bar for blocking mergers probably needs to be addressed in a legislative manner with some form of shifting the burden of proof. Finally, my fourth point is that even with all of that merger enforcement, that will be sufficient to deal with the forces that have already left the barn. Antitrust scrutiny can help but it can also be slow. It can have a hard time addressing behavioral remedies and thats why i propose in the uk and i think it would be make sense in the United States the establishment of the Digital Markets unit area im agnostic about whether this is a new body or whether its an existing body like the ftc. Whats important is the functions. The first would be a code of conduct to ensure no anticompetitive conduct that was backed up by enforcement authority. The second function would be systems with open standards and data mobility which would enable more entry and competition and the third function would be a greater degree of data openness and i think with this approach we could avoid some of the more extreme market disruptive steps, ensure consumers get all the benefits of fair competition but also enable new entrants to compete, enter the market and even deliver further benefits above and beyond what weve seen today. Thank you doctor furman and i recognized doctor layton for five minutes. Good morning and thank you. Chairman nadler, chairman sicily and Ranking Members, im honored to join these distinguished panelists today and to contribute to this important inquiry on data and privacy and i want to recognize and thank the Committee Staffers for all their work. This testimony represents my ownviews. As professor valenti lays out we know little about the economics of privacy. The quantification of harm and how many violations regulations would deter. Without these key points, its well advised to build a commandandcontrol Regulatory Regime which preserves the regulators are in the know. The best numbers i have come from sasha romanowski grand estimates there are a few hundred Information Privacy violations per year which is a small number given the size of the Digital Economy. Given the good policy information not available regulatory advocates look for other arguments to justify their preferred approach such as competition. Many wellintentionedpolicies are promoted on this premise that they will level the Playing Field but we mustlook at the actual effects , not just theory and argumentation however compelling. My testimony introduces an engineering concept of control points just as a linchpin keeps a wheel from sliding off and axle, harnessing a control point is an efficient way to govern system area commissioner chopra suggest theres a corporate loyalty controlling our economy but theres a regulatory royaltycontrolling our politics. Conventional wisdom is regulation follows market failure. The reality is regulation all is market success. Its no surprise antitrust authorities around the world and across the us are looking at the tech sector in america because thats where the money is. This is a source of political power because it brings revenue to state through litigation fees and we can see the activities of state attorney general who wish to make National Policy by using the bully pulpit of their state. Fortunately congress can for the selfinterested actors though that no one state and dictate the commercial terms of our National Economy. Im extremely grateful that this congress is considering updating the privacy framework for the digital age. We can learn a lot from the European Union which has had a two decade natural experiment in regulating the tech economy. Longterm trends and outcomes are clear by looking at the European Commission digital floorboard and eurostat survey read while large enterprise moves along mall and Mediumsized Companies have a hard time growing. They dont invest in Information Technology and transact little across borders. After 18 months of the gdp are an effect you can see the largest advertising platforms have gained market share while their fledgling rivals have lost ground. G tbr imposes fixed cross across all enterprises, only the largest players for the requirements of lawyers fees, privacy officers, Software Updates and so on. Less than half of all companies who comply with these regulations across 3 million per firm and one set of companies will never comply and consumers are no better off. Online trust is at its lowest point since 2006. In contrast the United States welcomed 40,000 new internet startups last year alone. Weve been fortunate to have a Single National market from our founding and a 220 year tradition of constructing bottomup privacy rules that were democratically decided andbased on realworld harms. This ecpa with its 77 regulations on enterprise as 22 more obligations than the gdpr. A preliminary cost benefit analysis prepared by the department of justice suggests the costs exceed benefits by a factor of 14. It knows 70 billion in startup and running off for compliance, most of these costs go to private lawyers and consultants. The consumer benefits are estimated generously and 5 billion. Its hard to see whats progressive about giving a windfall to the privacy bar at the expense of consumers and Small Business. These are companies with 500 employees or less and make up 99 percent of the california businesses. These are the companies who will bear the brunt of regulations which are dreamed up by the regulatory royalty in a mere month. The appeals to justify this regulation on human rights is part of an attempt toavoid the forthright discussion about the cost. In closing theres a rightway and a wrong way to do privacy protection. Gdpr and cppa are the wrong ways really good regulation should be easy to understand. I appreciate this committee isconsidering alternatives. If were concerned about competition we should stop adopting rules that unwittingly strengthen the largest players. In the end im optimistic because the market were talking about today maybe a third of our National Economy and the other 70 percent is where our opportunities are. That is where the Data Revolution has not come. That is where we have the opportunity to grow. Where we can transform Lighting Industries in health and transportation. So the important part is if we want these kind of new companies to emerge , we have to, and we want to replace the status quo we have to make sure we dont kill it in the cradle i regulation stops the innovator at the gate. Thank you doctor hayden and we will proceed and i recognize the chair of the full committee mister nadler for five minutes. Thank you mister chairman and professor valletti, the five largest tech platforms have acquired over 400 Companies Globally without any real challenge from antitrust enforcers. Is there any evidence to suggest that this de facto exemption from antitrust scrutiny was a mistake . In my personal opinion of course. Sorry. In my personal opinion of course. I think there has been asort of antitrust immunity in the tech sector for far too long. Google, facebook have acquired tons of the companies i just said andvery few have been vetted. There are technical reasons sometimes touches you will notify some mergers about a certain threshold and the threshold is dictated on the turnoverof companies in the past three years. But also pharmaceutical companies , they are not yet there so you dont have the tools to intervene but yes. I do think we have severely under enforced the merger area. Not that those mergers are bad but we should investigate them for sure. Mister chopra, can you comment on the same question . I wonder our world would look like if google had not bought you to amazon had not bought zappos or many of these acquisitions that many believed to grow on their own to be their own big giant. And i agree that under enforcement can really kill innovation and kill entry, because when its harder to break in, thats just bad for Small Business and its bad for all of us. Iq, professor valletti, what should antitrust enforcers be doing to make sure platforms are not swelling up potential . The simplest answer is is and investigate. The point is that i written a response that some entrepreneurs want to be bought, this is they want to capitalize on their own innovation. My point is not that they shouldnt happen, i think that a dominant company should not be allowed to buy those, they can bebought by someone else to what can be done is to , when i open, use financial evaluation, run through internal documents, the chairman before mentioned spyware that facebook was using to buy some rivals so theres a lot of things we can do to improve. Youve also argued that a platform can use itsprivacy policy to entrenchits dominance. Can you explain . There are different ways. One way could be for instance, a company which is dominant that doesnt have an alternative. Thats why its dominant because you cannot find alternatives area you need the service and they will ask you to sign up for whatever you ask and you dont see through theterms, you dont know where your data is going. Thats going to be used the monetized someone else, maybe yourself in the present. If you do something genetic, maybe even your offspring. So money is going to be made from this all the time and once you have money you can do lots of strategies to preserve your dominance. And you explain why you view privatization as a factor to consider in constitutional law . Competition is the market facet that can be innovation and quality and since consumers seem to care about privacy i would say it is one of the primary things that the competitive markets shouldkeep as privacy to individuals. Professor furman in your view is big data creating Entry Barriers thatprevent entrepreneurs from breaking into Technology Markets . I think big data is creating Entry Barriers and if you try to guess what the next industry is going to be, weve had succession from ibm to microsoft to google. The next is likely to be ai, Machine Learning and the Companies Best employed to take advantageare the ones that have have large incumbents now. Because they have the data, exactly which is whats needed for this next stage in theeconomy. That may lead to my next question which is why is data a barrier to entry even though its nonarrival is . Its nonrivalrous but there are companies that keep that data and keep that data to themselves. I have economies of scale. There are things you can do once you have large amounts of data that are much more than you could do with a medium or a small amount of data and a lot ofthat is a function of Public Policy choices weve made about what data is and is not open. A new entrant would have to assemble its own data. Yes they would. Thank you very much, i yelled back. Votes have been called, were going to have the gentleman from colorado recognized for five minutes and we will adjourn to come back immediately after the vote and weapologize for the interruption. I want to thank the chair of the committee and chair of the subcommittee for holding this hearing, i appreciate this opportunity area doctor aiken, a couple of questions and im going to go real basic, because thats about my understanding of this area. If i am sitting in front of my desktop and i want to go to the ushouse of representatives website, i type in something on my browser. Us house, up pops the area. I click on that and a resolver, i want to make sure my friends understand i use the word resolver, not revolver but a resolver takes me to the website that im looking for. And my understanding is that recently, we have had a change in that to add encryption to the area. Can you explain why the change was necessary and where are we going withthat . I think the issue youre talking about is the dns or ht pps protocol. Its a new standard being proposed by google and mozilla. Just let me frame this issue, ive discussed it in my testimony but i think its a great example of where we have a challenge with our privacy regulations to the persons right to privacy and a publics right to know so weve seen from gdpr and other things that a number of valuable resources weve had on the internet for Law Enforcement, or copyright protection, for public information, they have been massed and clouded because of techniques taken on by regulation in this case where youre looking at whats called the doh, in an effort to encrypt the traffic it is changing the architecture of the internet which used to be very distributive and modular so a number of parties would perform this redirect task that you talk about. When you say a number of parties were taking about tens of thousands. Their importance because individuals can flip certain settings and preferences whether they want to block malicious conduct and also lawenforcement uses these things found various criminals and so on but all that would be subsumed into, it would be all that information that a number of parties use would be lost. The reason its done is because google and mozilla want to get Marketing Data in that process and pull that control point as i described into their own network where normally it would reside out of their network so this is just a coating to that can upset that entire balance that we built up over all these decades. So we would no longer have tens of thousands of providers. I think it would eliminate the cdn industry overnight so its staggering how much a single click or not a quick but a coating to can change it. Theres users who may like it. They say i want my whole experience to be in google, fair enough. They have that choice now. Have a default now. You can choose safe search and choose these different settings but what were making worse off all the good families who are trying to set up for their own privacy and their own preferences. And how many, do we have any idea how many of these providers there will be in the future . Will it just be three or four or will be once again . You can imagine you could have a kind of world where google consumes the internet just because of the way things are coded area that more and more things could be encrypted to 70 percent of the internet is encrypted today because Consumers Want to have more privacy but prior to encryption Large Companies can look at the data thats there and they can use that to get the marketing information so i dont have the number of how many dns resolvers are available todaybut there would be many fewer. If one of the Services Offered by isps is offered by a number of other parties out there. Mister chopra, any questions on that . Your raising important questions on who gets to decide this. If we have one or two browser dominate the market and can make coding tweaks maybe for selfserving purposes, thats something we have to be wary of area conflicts of interest with this level of market power have to be top of mind as its not just about our economy. Like doctor layton said, it raises questions about how do we protect children . How do we enforce our laws and to me, i think these types of regulations should be decided by congress, not necessarily a company with a conflict of interest. Thank you for your time and i yelled back. The chair will not recognize the gentleman from georgia whos anxious to ask questions before the break. Thanked the witness for being here today. Especially mister, doctor valletti, thank you. Many big Tech Companies have touted data portability as the reason they cant be anticompetitive but few if any are truly interoperable. Officer transit furman, interoperability is different from portability, isnt it . Yes it is, it allows you to operate on multiple systems simultaneously. Would you agree that one of them promote more competition in the other . Yes, i think the Technical Details about how, i use the word system with open standards and mobility, theres ways to do that that enable switching and multihoming and ways to do it that frustrate the ability to do that. How can interoperability promote competition . It enables consumers to have choices, to switch more easily, to use multiple services and also enables new entrants to come in and build on a lot of the things and networks that youve already accumulated. And doctor, what would it look like to have a social media platform the truly interoperable . Do you believe that can happen without Government Intervention . Out give you an example of one right now which is email read email and then invented by a single company, it would have had its own protocols and you can only email other people who used that same companys email and you couldnt use people that use different email systems i dont worry when i email someone about what company theyre on, whether theyre on the email system or not. Thats a true form of interoperability that enables more choice and competition. Thats a great example. Commissioner chopra, one could argue privacy violations and other monopolistic behavior is incentivized by the adbased model , meaning that more data the company has, the more data a company has, the more data a company can collect the more dominant it can become. Can you some of the compounding problems with the adbased model . One of the objections is to the ftc settlement with facebook where the companies early and repeated violations of all Law Enforcement order was their desire to maintain their dominance by collecting more and more and more data because guess what . It gets more valuable as you get more. I talk about this on my testimony and we need to start thinking not about to keep privacy rules but whats the reason whycompanies invade our privacy . One of those reasons is the behavioral advertising model which is not an ad we all get what its an ad targeted at one person and its often manipulative. So we have to think about how these businesses are incentivized and structured if we want to get to the root cause of massive surveillance in our economy today. Thank you mister chairman in the interest of time i will yield back so that my other colleagues will have an opportunity. I think you and i want to recognize mister buck for a unanimous consent request. Has consent to have two letters issuing centralizing domain name systems from cta and us telecom and the second from 20 different Child Advocacy groups. Without objection and the committee will stand in recess and come back into session immediately after and i thank the witnesses for their indulgence