Transcripts For CSPAN3 House Judiciary Subcommittee Hearing On Online Data Privacy 20240713

The subcommittee will come to order. The chair is authorized to declare recesses at any time. This one on the role of data and privacy in competition. I recognize myself for an opening statement. I should state the obvious, im not the chairman of the subcommittee. The chairman of the subcommittee will be here in a few minutes. Digital technologies have provided americans are a remarkable array of services. It has never been easier to share news and information, to publish content and communicate with loved ones. As with technological revolutions of the past this has up ended the balance of power across our country. Its important to understand how these imbalances are affecting americans. The committees ongoing oversight of competition in Digital Markets is a key part of this process. Todays hearing will examine the role that data plays in creating rolls of power and how this affects competition. As previous hearings have shown, its controlled by a small number of companies. They are perfectly positioned to track each communication that passes through their channels. Intermediaries have long collected information, the large firms of the Digital Economy have unprecedented opportunity. The time they wake up and go to sleep, a precise location at the each hour of the day, and the content of their private communications. Several of these platforms receive must be, they have an incentive to collect as much information as possible so they can target consumers with precision. This trove of personal information can be used by companies to discriminate based on the users race, gender or income or to intrude on personal privacy. In light of these trends, there are two questions that i hope will be addressed in todays hearing, first, how are Digital Technologies and the 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. Maximizing Data Collection can provide a company with a significant advantage. A large and continually growing set of consumer data, allows them to expand into new lines of business often with a competitive edge. Frequently, the most dominated companies are the ones who have captured the most data from as many sources as possible. In recent years, scholars have described this as leader take all, crushing any potential competition. In other words, competitors of Digital Markets have a strong incentive to collect as much quickly on users as quickly as possible as part of a strategy to compete in the marketplace and to achieve market dominance. This raises serious questions about whether it is good for society, for Data Collection to be the key dimension on which companies are looking to outcome pete one another. Several platforms make money by selling advertisements, heightened those incentives. The second question is how Data Collection increases the way that dominant companies can abuse their market power. Does the collection and use of data enable new conduct. For example, platforms that serve as intermediaries for commerce have insight into their rivals Business Models, a dynamic that raises significant concerns. With these issues in mind, i look forward to hearing from our panel of Witnesses Today. I yield back the balance of my time and i recognize for his opening statement, the distinguished Ranking Member, mr. Sensenbrenner of wisconsin. Thank you. We continue our oversight in the state of competition in the tech sector. Our primary focus has concerned large on line platforms. The specific topics we address today, the roles that data and data privacy play in competition and the ways in which we can better protect the privacy of consumers online data concern these same platforms. Data is in many ways the life blood of the internet. Numerous issues are swirling around the use of this data. For example, these include allegations that, one, platform needs for very large accumulations of data can operate as a barrier to market entry by new platforms. Platforms can leverage that data to compete unfairly with thirdparty competitors that are dependent upon their platforms. Three, incumbent platforms, pursue mergers in order to kill off competition for Data Acquisition and market shares. It is my hope our hearing can help us determine fact from fiction when it comes to these allegations. I have stressed 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 end up punishing success. Its a pressing innovation and limiting consumers welfare. The supplies not just the issue concerning competition for data, it applies to issues concerning privacy. If were going to address data privacy through legislation, we must get it right. I do not say this in a vacuum, governments have already begun to lay down laws to address these issues. The most predominant example to date is the European Unions general Data Protection regulation gdpr. Following in the footsteps has the California Consumer privacy act or ccpa which is modeled on the gdpr. The testimony offered before the Senate Judiciary committee in march by one of our Witnesses Today, constituted a powerful indictment of the gdpr. However well intentioned, the gdpr is already producing substantial Collateral Damage to consumer welfare in the health of the Digital Economy. Its likely that the ccpa will have the same affects. All of these effects are avoidable. We need to put in a better means of protecting consumers privacy on line. I hope our Witnesses Today can help us work our way through these important issues and before yielding back, let me ask unanimous consent to insert in the record a number of statements and submissions to the record that i have received, one from the center of george mason university. Without objection. A joint statement by the national cta, ctia and u. S. Telecom. Without objection. A letter thats been sengt to myself from epic. Org. The Vice President and general counsel of net choice. Without objection. I now yield back the balance of my time. I thank the chairman for opening the hearing. I recognize myself for an opening statement. In june this committee launched a bipartisan investigation into the state of competition. The purpose of this is to document conduct online, to examine whether firms are engaging in bad conduct. Since launching the investigation, the committee has held a series of bipartisan hearings as part of this top to bottom review. Most recently, i have requested documents, communication relevant to the four dominant platforms. On monday, the Committee Received tens of thousands of documents. And we expect to receive and review additional materials in the weeks ahead. Well continue to hold hearings and round tables and conduct oversight to insure the goals of the investigation are met. As i said before, this work is essentially to the constitutional responsibility to conduct oversight of our antitrust laws to insure theyre working. Congress, not the courts, agencies or private companies enacted the antitrust laws. Congress must be responsible for determining the current laws or enforcement levels are keeping up with the Digital Markets. We have much work ahead of us, but im proud of the work of my colleagues, along with their dedicated staffs and look forward to continuing this important bipartisan work together. Todays hearing is an opportunity to advance our understanding and keep competition online. The role of data and privacy. Over the past year, several leading International Competition experts have published reports that have focused on this issue. As th these reports have noted competition is important. 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 Markets to expand into adjacent markets. The united kingdoms expert panel similarly reported that large throes of data tip markets in favor of a single platform, killing off competition. Data plays an Important Role in the ability of startups to obtain venture capital. The panel of experts reported that investors evaluate startups based on their access to data. A new entrant starved of data quantitatively speaking to a tech giant is at a disadvantage and investors will be unlikely to invest if they view the data deficit as in surmountable. This is consequences for entrepreneurs and startups that get locked out the market and mer never get a chance to compete. Theres broad agreement among antitrust experts data can be abused for anticompetitive purposes. These tactics have create an innovation kill zone around dominant firms. Whether its facebooks use of inova to spy on its compet iters, amazons ability to identify clones being sold in its marketplace. We know the abuse of data has seriousi serious ramifications. Theres a growing consensus in the United States and abroad that privacy is an important dimension of competition online. While many Online Services claim to be free, we know people pay in the form of their personal information and their attention which are both critical for Online Advertising revenue. In a statement submitted for todays hearing, market c consolidated harm consumers by diminishing quality by privacy terms. The misuse of data and harm to privacy is not only an indicator of low quality caused bide lack of competition, but it also can be used to cement a firms dominance in the market as well. In other words, in a market that has vibrant competition, firms have strong incentived to respond to consumer demand. Incumbents have no incentive to deliver users privacy. I had the pressure lers of disc this who reinforces the market dominance. Its clear the relationship between competition and privacy is not either or, they are concepts that must be at the forefront as we consider proposals to resore ttore. Id like to take one moment to thank the chairman rod simms for his statements. Chairman simms is unable to attend today. I want to thank him and his team for all their hard work in advance of this hearing on this issue. Now its my pleasure to introduce the todays witnesses for todays hearing. Our first witness is the honorable chapra, the Democratic Commission at the federal trade commission. Before joining the ftc, he was instrumental in establishing the Consumer Financial protection bureau. He worked on the agencys Implementation Team after the passage of the dodd frank act and became the First Student loan ombudsman. He made significant in roads towards addressing the student loan crisis in the United States. He was nominated by President Trump to serve as an ftc commissioner in 2018 and was confirmed unanimously by the senate on april 26th, 2018. Commissioner received his b. A. From Harvard University and his mba from the university of pennsylvania. Our second witness has been a professional of economics at the Imperial College of london since 2007. He served as the chief competition economist for the European Commission for three years where he focused on competition and Digital Markets. He served as a professional of economics at the university of rome and still served as a visiting professional of economics. He is currently a Research Fellow at the center for Economic Policy research and the Manheim Center of innovation. In addition to his work as an economist, he also received his diploma from the [speaking in a Foreign Language] our third witness is jason thurman, a professor of the practice of Economic Policy at the Harvard Kennedy school. Before joining the faculty in 2017, professor thurman served as chair of the Economic Advisor during president obamas second term. He was an assistant to the president and Principle Deputy director. He currently served as a nonresident fellow as well as an advisor on digital market university. He received his phd from Harvard University as well as his masters in science from the London School of economics. Our final witness is rosalyn lawton. She served as a visiting researcher at a Vice President of stran consort before continuing with aei, dr. Layton worked as the director of Search Agency services at ibm. Shes published dozens of times of numerous publications including forbes, u. S. News and world report and served on President Trumps Transition Team in 2016 helping to establish his federal communications commission. Dr. Layton received her ba from American University, and her phd fr from auberg university. If you would please rise i would begin by swearing you in. Tmesis raise your right hands. Do you swear or affirm under penalty of perjury the testimony youre about to give is true and correct so help you god . Let the record show the witnesses answered in the affirmative. Thank you you may be seated. Know that each of your written statements will be entered into the record in its entirety. Summarize your testimony within five minutes. When the light switches from green to yellow you have one minute to end your testimony. Commissioner, you may begin. Thank you, mr. Chairman. Ranking member sensenbrenner. I serve as the federal trade commissioner. Oversight from congress is a pillper 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, conflicts of interest, contracts and capture. Market power is concentrated with a few giants in so many industries. Conflicts of interest allow these dominant firms to sometimes rig the market in their favor at the expense of upstarts and new businesses that fairly compete. One sided 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 valuable asset with very unique economic features we need to take into account. Our personal data is powering the profits of Tech Companies that offer basic searches 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 in australia, the united kingdom, 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, its important that the federal trade commission conduct a rigorous review of quantitative market data and an analysis of the financial incentives driving market distorting behavior. Since joining the commission, i have argued that the ftc should be using our authority under section 6b 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 enforcements, i am more optimistic. Now that scores of states attorneys general both republican and democrat are teaming up to investigate anticompetitive conduct in the Digital Economy. In this moment, it is an all its 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 that action, there would likely be more facebook, google or amazon. While the ftcs recent settlements with Googles Youtube gave headlines, they did little to fix the problems that fuel these Companies Data abuses. Big fines are not big penalties for the worlds biggest companies. As weve seen time and again, when a company can simply pay a fine from its ill gotten gains, this isnt a penalty, this is a incenti incentive. As congress, federal antitrust enforcers and state attorneys general are pursue their investigations, we will need to pursue remedies that reduce concentration, eliminate conflicts of interest, rescind abusive contract terms and limit capture. For example, recent scholarship has revealed that antitrust actions that separated lines of business or required interoperability of standards or ordered more patents available for public use after anticompetitive conduct all led to massive innovation, Small Business entry and economic growth. These are useful tools in the toolbox for policy makers and enforcers to consider when looking to both remedy and prevent harm. In conclusion, while some believe that lax enforcement and absentee government for the ingredients of innovation. History teaches us its the opposite. Without a vigilant and active government promoting competition, markets cannot thrive. Sometimes that means providing corporations with benefits like limited liability, licensed contracts and other opportunities, but free and fair markets wont work without meaningful consequences for law breakers and inaction is a price we simply cannot afford to pay. Thank you, mr. Chair. Thank you, commissioner. I now recognize the doctor for five minutes. Mr. Chairman, Ranking Member, and the members of the subcommittee, good morning and thank you very much for inviting me. I am a professor of economics at Peter College in london. Between september 16 and august 19 i was the chief competition economist of the European Commission. I led the analysis of several pl platforms, including google, amazon, apple and others. Today id like to make four points. The first point is obviously about data. Some commentators have argued that data is the new oil. Others have claimed data is as common as water, as air. This sweeping generalization is not very useful. Its selfevident that data is key to digital platforms and a few gatekeepers are in a position to control the tracking and linking of behaviors across platforms, Online Service and websites. They can combine several data sets and create analysis for individuals. As an example, if we open our Facebook Accounts, if you had one and we just looked at the ads popping up youll see totally different ads. This is different from traditional media. Unfortunately the debate is not helped in the field of competition economics. The large digital players have not made any Data Available to independent researchers ever. I know already one could say theyre all like that. This would not be true. I think think of pharma, airlines, i could name others that would be be available to independent researchers. It really is paradoxical we know so little from this data economy, which is sitting on unprecedented amounts of data. Enforcers should consider Privacy Concerns, my answer is, yes, privacy is at the core of the economics of digital platforms and competition is shaped around it. Competition generally speaking takes place alongside the dimension, price being one of them. Quality, choice, innovation are important aspects for competition for consumers. In fact, when dealing with digital platforms, it does not make sense to focus on prizes thats been set at zero by choice. The Business Model is to give something away for free, in order to monetize another related market advertising. Quality will be a relevant focus of competition. Lack of competition conversely will lead to reduced quality. In this case, a reduction in Privacy Protection. My third point is that privacy degradation can lead to consumer harm. Data breach, identity theft, but also consumer profiling thats not done in the interest of the consumers. Part of the problem is that theyre enforcing a term of service. This is an indication of market power. A lengthy and obscure privacy terms, what do they mean . Think of common phrases we may collect your information for marketing purposes or may share your data with trusted businesses. Consumers see the innocent benefits of clicking yes but cannot see the implications of giving away their data. This practice undermine the role played by consumers and competition. My last point and my conclusion to all this is that antitrust cases involving data and privacy can be run. Low quality can be seen in competition as an exploitive conduct. Still, it would be wrong to ignore exploitive conducts, data privacy and competition are not separab separable. Privacy should be considered in any assessment of the state of competition and market power of online platforms. Lower Data Protection can lead to exclusionary behavior. Here the chain goes for dominance to bad privacy terms to data advantage compared to y rivals. This mine can be used to exclude competitors. Tying with other Digital Products can further enforce the data advantage of the dominating incumbent by cross linking the Data Collected across Services Creating a vicious circle. These are conducts that could, in my opinion, personal opinion, should be investigated. Thank you for your time, i look forward to your questions. Thank you, doctor. I now recognize dr. Thurman for five minutes. Thank you, mr. Chairman. Ranking members and members of the committee. My name is jason thurman, im a professor of the practice of Economic Policy at the Harvard Kennedy school. I recently chaired the uks Digital Competition Expert Panel which produced a report unlocking digital competition. One of our recommendations was that the uk stab a Digital Markets unit and im currently serving as an unpaid advisor to the uk government as they move forward with accepting that recommendation that my panel made. To me, of course, im testifying with my own views and ideas drawing on the report that we did. I thank you for your kind comments about it. I want to make four points in my testimony. The first is that the major digital platforms are highly concentrated. And that concentration is likely to persist. Its due to a combination of factors. Economies of scale and scope. The way data can serve as barrier to entry. Behavioral biases 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 inextre the extremes of all of them is unique to the digital platform and make 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 to maso is this has cost to consumers. The services arent free. Consumers might have been compensated. Theyre paying in the form of data, theyre losing out on quality and variety 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 to 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 and lets the private sector drive 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 due to efficiency, but has been acquisiti acquisitions, there have been essentially no errors 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 the ftc so they have the Technical Expertise to deal with us. Merger analysis cant focus on short term effects and take very seriously data as a barrier to entry. 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 wont be sufficient to deal with, you know, the horses that have already left the barn. Antitrust scrutiny can help, but it can also be slow. It can have a hard time addressing, you know, behavioral remedies. Thats why i proposed in the uk and i think it would make sense in the United States the establishment of a Digital Markets unit. 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 insure 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. I think with this approach, we could avoid some of the more extreme market disruptive steps, insure consumers get all the benefits of fair competition, but also enable new entrants to compete and enter the market and even deliver further benefits above and beyond what weve seen to date. Thank you. Thank you, dr. ,therman. I recognize dr. Layton for five minutes. Good morning and thank you. Chairman nadler, and Ranking Member, im honored to join these distinguished panelists today and to contribute to this important inquiry on data and privacy. And i also want to recognize and thank the Committee Staffers for all their work to prepare for this hearing. This testimony represents my own views. As the professor laid out, we know very little about the economics of privacy. The number and suvaeverity of violations and how many violations regulation would deter. Without these key points of information, its ill advised to build a command and control Regulatory Regime which presumed that regregulatators are in the know. Given the good policy information is not available, regulatory advocates look for other arguments to justify their preferred approach, such as competition. Now many wellintentioned policies are promoted on this premise, that theyll level the playing field. We must look at the actual effects, not just the theory and argumentation, however compelling it may be. My testimony introduces an engineering concept of control points. Just as a linchpin keeps a wheel from coming off an axle, now the commissioner suggested theres a corporate royal controlling our economy. Similarly, theres a regulatory royalty controlling our politics. The conventional wisdom is the follows market failure. Antitrust authorities around the world and across the u. S. Are looking at the american tech sector because its where the money is. Its a source of political power because it brings revenue to various states through litigation fees. We can the activities of state attorneys general who wish to use the bully pulpit of their state. Congress can make sure that no one state dictate the 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. The longterm outcomes are clear by looking at the digital scoreboard and the euro stats surveys. While large enterprise moved along, small and Medium Sized Companies have a hard time growing. They dont invest in Information Technology, and they transact little across borders. After 18 months of the gdpr in effect, we can see the largest advertising platforms have gained market share, while their fledging rivals have lost ground. Gdpr imposes a set of fixed cross across all enterprises. Only the largest players can afford the costly requirements of lawyers fees, chief privacy officers, audits, impact assessments, Software Updates and so on. Less than half of all companies can comply. One fifth of companies will never comply. Consumers are no better off. Online trust is at its lowest point since 2006. The United States welcomed 40,000 new internet startups last year alone. We have been fortunate to have a Single National market from our founding, and a 220 year tradition of carefully constructive bottom up privacy rules that were democratically decided and based upon real world harms. The ccpa with its 77 regulation on enterprise has 22 more obligations than the gdpr. The preliminary cost benefit analysis prepared by the California Department of justice suggest the cost exceed benefits by a factor of 14. It notes 70 billion and startup and running cost for compliance. Most of these costs go to privacy lawyers and consultants. The consumer benefits are estimated generously at a mere 5 billion. Now its hard to see whats progressive about giving a wind fall to the privacy bar at the expense of consumers and Small Business. These are companies with 500 employees or less. They make up 99 of the california businesses. These are the companies who are going to bear the brunt of regulations which are dreamed up by the regulatory royalty in a mere month. Now the appeal to justify this regulation on human rights is part of an attempt to avoid the fourth right discussion about the costs. Now in closing, theres a right way and wrong way to do Privacy Protection. Gdpr is the wrong way. Good regulation should cost little to implement. It should be easy to understand. I appreciate this committee is considering alternatives. If were concerned about competition we should stop adopting rules that strengthen the largest players. In the end, im optimistic because the market were talking about today is maybe a third of our national economy. The other 70 of our economy is where our opportunities are. That is where the Data Revolution has not come. Thats where we have the opportunities to grow. Where we can transform lagging industries in health and transportation. So the important part is if we want these kind of new companies to emerge, we want to replace the status quo, we have to make sure we dont kill it in the cradle by regulation that stops the innovator at the gate. Thank you, dr. Layton. Well now provide under the five minute rule. I recognize the chair of the full committee, mr. Nadler for five minutes. Thank you, mr. Chairman. Professor, over the last ten years, the five largest tech platforms have acquired over 400 Companies Globally without any real challenge from antitrust enforcers. Professor, is there any evidence to suggest that this de facto exemption from antitrust scrutiny was a mistake . This is my personal opinion please your microphone. This is my personal opinion. There has been an antitrust immunity in the tech sector for far too long. Google and facebook have acquired hundreds of companies and very few have been vetted. You notify mergers only about a certain threshold and the threshold is dictated on the turnover of companies in the past three years. When it comes to the digital platform, but pharmaceutical companies, this turnover is not yet there. You dont have the tools to intervene. Yes, i do think we have surveyly underenforced in the merger area which means not necessarily that those mergers were bad but we should have investigated them. I actually wonder quite a bit what would our world look like if google had not bought youtube . Or amazon had not bought zappos or many of these acquisitions that many believed could grow on their own, to be their own big giant. And i agreed that under enforcement can really kill innovation and kill entry because when its harder and harder to break in, thats just bad for Small Business. Its bad for all of us. Thank you. Professor, what should antitrust enforcers be doing to insure the dominant platforms are not swallowing up potential competitors . The sopen cases to investiga. The point is, there is a response that some entrepreneurs want to be bought. This is an exit strategy they want to cash in on their own innovation. My point is not that this shouldnt happen, but dominant companies should not be allowed today buy those. They can be bought my someone else. What can be done is to open use financial evaluation, run through internal documents. Spyware that facebook was using to buy, so theres a lot of things we can do to improve. Youve also argued that a dominant platform can use Privacy Policy to entrench dominance. Can you explain how that strategy works . So there are different ways. One way could be for instance, a company which is dominant, doesnt have alternatives. Thats why its dominant. You cannot find alternatives. Its dominant company and you need the service, well ask you to sign up for whatever you ask you. You dont see through the terms, you dont know where your data is going, you dont know whats going to happen with your data. You data may be used for yourself, maybe for yourself in the present period if its something genetic, it will be your offsprings. Money is going to be made from this advertising. Once you have money you can do lots of strategies to preserve your dominance. Can you explain why its a factor in competition law . Because the laws of competition is multifaceted. It can be prices, innovation, quality. Since consumers seem to care about privacy, i would say its one of the primary things a healthy market should give. Healthy privacy to individuals. Thank you. Professor thurman, in your view is big data creating barriers that prevent entrepreneurs from rai raising capital . Yes, i think big data is creating entry barriers, if you tried to guess what the next industry is going to be. We had a succession from ibm to microsoft to google, et cetera. The next is likely to be ai, machine learning. The companys best poised to take advantage are the ones that are the large larger because they have the data . Exactly which is what is needed for the next stage in the economy. And that may lead to my next question, which is why is data still a barrier to entry, even though its not rivalerous . Its rivalerous, but there are companies that keep that data and keep that data to themselves that have economies of scale. Theres things you can do once you have large amounts of data that are even much, much more than you could do with a medium or a small amount of data. I think a lot of that is a function of Public Policy choices weve made about what data is and is not open. To compete with them, new entrants would have to assemble its own data starting from way back . Yes, they would, congressman. Thank you very much. The gentleman yields back. Well have the gentlemen from colorado be recognized for five minutes and then well adjourn with the indulgence of the witnesses and come back immediately after votes. We apologize for the interruption. I want to thank the chair of the economy acommittee and subc for holding this meeting. A couple quick questions. Im going to go real basic because thats about my understanding of this area. If im sitting in front of my desktop and i want to go to the u. S. House of representatives website, i type in something in my browser. U. S. House, up pops the area, i click on that and a resolver i want to make sure my friends understand when i use the word resolver. Not revolver. Im not trying to get into a gun debate. 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 with that . So i think the issue that youre talking about is the dns https protocol. New standard being proposed by google and mozilla. Just let me frame this issue, i have discussed it in my testimony. I think its a great example of where we have a challenge with our privacy regulation between the persons right to privacy and the publics right to know. So weve seen from gdpr and other things like this that a number of valuable resources that weve had on the internet for Law Enforcement, for copyright protections, for public information, they have been masked and clouded because of techniques taken on by regulation. In this particular case where youre looking at whats called the doh, is that in an effort to incrypt the traffic, which people want to do to protect their privacy, its changing the architecture of the internet which used to be very distributed and modular. A number of parties would perform this redirect task that you talk about when you say a number of parties, were talking about tens of thousands . Tens of thousands. And theyre very important because individuals can put certain settings and preferences. Whether they want to block certain content. Law enforcement uses these things to find various criminals and so on. All of that information would be lost. The reason is its done is because google and mozilla want to be able to get Marketing Data in that process, pull that control point, as i described into their own network. Where normally it would reside outside of their network. This is just a coding tweak that can upset that entire balance weve built up to date over all these decades. We no longer have tens of thousands of providers in this particular area . Right. I think it would eliminate the cdn industry overnight by one coding tweak. Its quite staggering how much a simple click like that not a click, but a coding tweak can change it. Theres some consumers who like that they have that choice now . The default now, youre right. You can choose safe search, these different settings. But what were making worse off are all of the Law Enforcement, parents, families who are trying to set up permissions to protect their own privacy and their own, you know, preferences. Okay. 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 . Will we once again well, i mean, you can imagine you could have a kind of world where google consumes the internet because of the way that things are coded. More and more things could be encrypted. 70 is encrypted today because Consumers Want to have more privacy. Prior to encryption, large platforms can look at the data thats there and theyre able to use that to get them, that information. I dont have the number of how many dns resolvers are available. There are parties out there. Any thoughts of that . Congressman buck, i think youre raising important questions about who gets to decide this. If its just when we just have one or two browsers that dominate the market, and can make coding tweaks maybe for selfserving purposes, thats something we have to be wary of. Conflicts of interest with this level of market power have to be top of mind because its not just about our economy. Like dr. Layton said, it raises questions about how do we protect children, how do we enforce our laws. To me, i think these types of regulations can be decided by congress, not necessarily a company with a conflict of interest. Thank you very much for your time, i yield back. I thank the gentleman. The chair will recognize the gentleman from georgia who is anxious to ask questions before the break. Thank the witnesses for being here today. Thank you. Any big Tech Companies have touted their interportability as the reason they cant be anticompetitive, but few if any are truly interoperable. Professor thurman, interoperability is different from portability, isnt it . Yes, it is. It enables you to operate on multiple systems simultaneously. And would you agree one would allow more competition than the other . Yes. I use the words systems with open standards and data mobility, theres ways to do 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 more choices, to switch more easily, to use multiple services. It also enables new entrants to come in and build on a lot of the things and networks youve already accumulated on the incumbents. Doctor, what would it look like to have a social media platform be truly interoperable . Do you believe that that can happen . Ill give you an example. One thats truly interoperable right now which is email. If email have been invented by a single company, it would have had its own protocols and you could only email other people that use that same companys email. 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, one could argue that privacy violations and other monopolistic behavior is incentives by the ad based model. Meaning, that more data a company has, the more data a company has, the more company a data can collect and the more dominant it can become. Can you speak to some of the compounding problems with the ad based model . One of the objections i had to the ftcs settlement with facebook for the companys early and repeated violations of a 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 in my testimony. And we need to start thinking not just about ticky tack privacy rules. But whats the reason why companies invade our privacy . One of those reasons is that behavioral advertising model. Which is not of an ad we all get, but its an ad targeted at one person and its often manipulative. 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. And mr. Chairman, in the interest of time, ill yield back so my other colleagues will have an opportunity. I thank the gentleman. I want to recognize mr. Buck for a unanimous consent request. I ask unanimous consent and two letters entered the record with centralizing domain name systems and one from 20 different Child Advocacy groups. Without objection. The committee will stand in recess and re come back into session immediately afterwards. I thank you the witnessthe witn indulgence. This hearing is in a break so Committee Members can go vote on the house floor. Live coverage from this subcommittee will continue after those votes wrap up. In the meantime, heres a look at the Opening Statements from this online data and privacy hearing. Subcommittee will come to order without onlbjection. The chair is authorized to declare recess at any time. This one on the role of data and privacy and competition. I recognize myself for an opening statement. I should state the obvious, im the chairman of the full committee, the chair of the subcommittee will be here in a few minutes. Digital technologies have provided americans with remarkable away of services. Its never been easy to publish content and communicate with loved ones. All at a moments notice. The technicological revolutions of the past, this transformation as ended the balance of power across our economy. Its important for congress to study and understand how these imbalances are affecting americans. Why its causing these asymmetries of power and whether they are compatible with our democratic values. Its a key part of this process. Todays hearing will examine the role data plays in creating and maintaining inequality to power and how this affects competition. Previous hearings have shown a growing share of commerce and communication is controlled by a small number of kaemz. Because these platforms are in essence large intermediaries, theyre perfectly positioned to closely track each transaction and communication that passes through their channels. Intermediaries have long collected information on the Economic Activity that throws through their platforms, they have unprecedented ability to track users across the internet. This collection includes information not only by the persons shopping and reading habits, but also the time they wake up and go to sleep. The precise location each hour of the day. These firms also have an incentive to collect as much information as possible, so that they can target consumers with precision. This trove of personal information can also be held in nefarious ways to discriminate on the persons race, gender or income. I hope this will be addressed in todays hearing. First, how a Digital Technology and the constant Data Collection they enable affect competition . Is there something you know eke about Digital Markets that enables firms to acquire and maintain market power in novel way . Digital markets maximizing Data Collection can provide a company with a Significant Competitive advantage. A large and constantly growing set of user data allows firms to improve existing products and services and to expand into new lines of business. Often with a competitive edge. Frequently the most dominant companies in the Digital Economy are those that have captured the most data from as many sources as possible. In recent years, scholars have described this dynamic as leading to winner take all markets with the First Company to establish a calm competitive lead holds the market. This is part of a longterm strategy to compete in the marketplace and to achieve market dominance. This raises serious questions about whether it is good for society, for unrelenting Data Collection to be the key dimension on which companies are looking to out the compete one another. The fact that several platforms make most of their products by selling targeted advertisements heightens those incentives. How Data Collection increases the number of ways that dominant companies can abuse their market power. The collection and use of data enable new forms of conduct that lawmakers and regulators should recognize as anticompetitive. For example, platforms and Services Intermediaries for commerce have insight into their rivals Business Models that raises significant concern. With these issues in mind i look forward to hearing from our esteemed panel of Witnesses Today. I yield back the balance of my time and i now recognize for his opening statement, the distinguished Ranking Member, the former chairman of the committee. Thank you, mr. Chairman. Today we continue our oversight in the tech sector. To date, our primary focus is concerned large online platforms. The specific topics we address today, the roles that data and data privacy play in competition and the ways in which we can better protect the privacy of consumers online data, largely concern these same platforms. Data is the lifeblood of the internet. Numerous issues are swirling around. For example, these include allegations that, one, platform needs for very large accumulations of data could operate as barrier to market entry by a new platform. Two, platforms holding large databases can leverage that data to compete unfairly with third party competitors that are dependent upon their platforms. Three, the incumbent platforms have pursued mergers with emerging competitors in order to kill off competition for Data Acquisition and market shares. Its my hope our hearing can help us determine fact from fiction when it comes to these allegations. As i have stressed before, antitrust laws do not exist to punish success, but to foster it. Congress and the antitrust enforcement agencies need to be careful, not to overreach to extend or apply antitrust laws in ways that end up punishing success. Suppressing innovation and ultimately limiting consumer welfare. The supply is not just the issues concerning competition for data, it also applies to issues concerning privacy. If youre going to address data and consumers data privacy through legislation we must get it right. I do not say this in a vacuum. Governments in the United States and europe have begun to lay down laws to address these issues. The most prominent example to date is the European Unions 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, dr. Layton, constituted a indictment of the gdpr. The gdpr is producing Collateral Damage to the health of the Digital Economy. Its likely the ccpa will have the same effects. All of these effects are avoidable. Its imparaative that we in the United States identify 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 unanimous consent to insert in the record a number of statements and submissions for the record i have received. One from george mason university. Without objection. Second a joint statement by the national cta, ctia and u. S. Telecom. Without objection. A letter thats been sent to the chairman and myself from epic. Org. Without objection. A letter for the record from the Vice President of general counsel of net choice. Without objection. I now yield back the balance of my time. Thank you. I thank the chairman for opening the hearing, i recognize myself for an opening statement. In june, this committee launched a historic bipartisan investigation into the state of competition in the digital mrthplace. The purpose of this investigation is to document anticompetitive conduct online, to examine what dominant firms are engaging in anticompetitive conduct adequate to address these problems. Since launching, congress has launched hearings. Most recently ive requested documents, communications and information relevant to the investigation from the four dominant platforms. On monday, the Committee Received the first responses to the requests, tens of thousands of documents. And we expect to receive and review additional materials as part of this request in the weeks ahead. Well continue to hold hearings and round tables and conduct oversight to insure the goals of the investigation are met. This work is essentially to the committees constitutional responsibility to conduct oversight of our antitrust laws and competition policies to insure that theyre working. Congress, not the courts, agencies or private companies enacted the antitrust laws. And Congress Must be responsible for determining whether the current laws are keeping up with the Digital Markets. We have much work ahead of us but im proud of the efforts of my colleagues chairman nadler, along with their dedicated staffs and i look forward to continuing this important bipartisan work together. Todays hearing is an important opportunity to advance our understanding of a key component online. Several leading International Experts have published ground are breaking reports that have focused on this issue. These reports have noted data is at the heart of competition online. For example, an exhaustive report by the australian competition and Consumer Commission clundoncluding, data provides them with a strong competitive advantage, creating barriers to rivals entering and expanding in relevant markets and allowing the digital platforms to expand into adjacent markets, end quote. The united kingdoms expert panel, which was chair bied by of our Witnesses Today. Data plays an Important Role in the ability of staurt startups to compete. A panel of experts led by professor morton at the university of chicago reported that investors often evaluate startups based on their access to data. As they explain new entrants starved of data, quantitatively speaking relative to a tech giant is at a Significant Competitive disadvantage and investors will be up likely to invest if they view that deficit as in surmountable. This is real consequences for startups that get locked out of the market and never get a chance to compete. Theres broad agreement among antitrust experts that data can be abused by platforms for anticompetitive purposes. These teactics have created a kill zone around dominant firms. Whether its facebooks spying on its competitors, or the weaponization of api we know the abuse of data has serious ramifications for competition. This hearing also presents an opportunity important opportunities to example the role to examine privacy only. Theres a growing consensus that privacy is an important dimension of competition online. Many Services Claim to be free, we know that people pay in the form of their personal information and their attention which are both critical for Online Advertising revenue. In a statement submitted for the record for todays hearing, market consulidatiolidation can consumers not by escalating prices but by eroding privacy terms. The uks Digital Panel has reported the misuse of data and harm to privacy is not only an indicator of low quality, but it can be used to cement a firms dominance in the market as well. In a market that has vibrant competition firms have strong incentive to improve the privacy of their products. I recently had the pleasure of discussing this by someone who has written about the rise of surveillance capitalism. The pattern of automating Consumer Behavior for more clicks is itself a americans dont want their information to be mined so they can be nudged toward which is evidence of a marked failure. Furthermore, companies that want to compete by Offering Services and products that do not rely on surveillance are disadvantaged by this Business Model which reinforces the market dominance of the dominant firms. Its increasingly clear that the relationship between privacy is not must be at the forefront as we consider proposals to restore the internet at its full promise. Before closing, id like to take one moment to thank commissioner messier of the European Commission and consumer rob for their statements before todays hearing. Chairman simmons was originally due to testify in this hearing, but due to a change in our schedule, he is unable to attend here today. Now it is my pleasure to introduce todays witnesses for todays hearing. First guest is honorable rohid chapra. He was instrumental in establishing the Consumer Financial production bureau. He worked on the Implementation Team after doddfrank. He went on to serve as assistant director of the cfpb and made significant inroads towards addressing the student loan crisis in the United States. He was confirmed unanimously by the senate on april 26th, 2018. Offer received his ba from Harvard University and his mba from the university of pennsylvania opinion. Professor alerte is our next witness. He focused extensively on competition and Digital Markets. He served as a professor t university of rome where he still serves as a visiting professor of economics. He received both his masters in ph. D. From the London School of economics. He received hesitate flute diploma from the concertidario demusico. [ speaking Foreign Language ]. That was an applause line. No. Our third witness is the professor of dmk practice of the Harvard Kennedy school before joining the faculty in 2017, professor terman served as chair during president obamas second term from 2009 to 2013. Profess profess professor firman was an assistant. As well as an adviser on Digital Markets from the uk government. He received his ba, ma, and ph. D. From Harvard University as well as his masters of science from the London School of economics. Dr. Lawton is currently a visiting scholar with the American Enterprise institute. She serves as a visiting researcher at alburg university and as the Vice President of stran consult in copenhagen. Dr. Layton worked as the director at ibm corametrics. She has published dozens of times including forbes, u. S. News and world report and served on President Trumps Transition Team helping to establish his federal communications commission. Welcome all of the incredibly distinguished witnesses on our panel. Thank you for participating in todays hearing. Do you swear under penalty of perjury that the testimony youre about to give is true and correct to the best of your knowledge, information and belief so help you god . Let the record show the witnesses answered in the affirmative. Thank you. You may be seated. Inglitiel 8 i ask you to summarize your testimony within five minutes. There is a timing light on your table. When the light switches from green to yellow, you have one minute to conclude your testimony. When the light turns red, it signals your five minutes has expired. Commissioner, you may begin. Thank you, mr. Chairman, Ranking Member sensen, brenner and members of the subcommittee. My name is rohib chopra. 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 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 from problems stemming from the lack of competition. To this end, i think we need to focus on four ways that companies undercut competition. Concentration, conflicts of interest, contracts and capital temperature. Market power is concentrated with a few giants in so many industries. Conflicts of interest allow these firms to sometimes rig the market in their favor at the expense of upstarts and new businesses that fairley compete. One sided take it or leave it contracts and online terms of service impose selfserving regulations on consumers and Small Businesses. 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 valuable asset with unique economic features we need to take into account. Our personal data is powering the dominance of Tech Companies that offer basic Services Like email, search or photo sharing that are not truly free. Many of my colleagues around the world are pushing forward. Reports from regulators in australia, the united kingdom, the European Union are mustreads for this committee and everyone concerned about the future of our Digital Economy. In the United States, 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 the federal trade commission conduct a rigorous review of quantitative market data and an analysis of the financial incentives driving market distorting behavior. Since joining the commission, i have argued that the ftc should be using our authority under section 6b 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 more optimistic now that scores 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 take in constant communication with them. Decades ago, we played a pivotal role in ending microsofts hold over the internet. While the ftcs requirements did great for headlines, they did little to fix the core problems that fuel these companys data abuses. Big fines are not big penalties for the worlds biggest companies. As we have seen time and again, when a company can simply pay a fine from its ill gotten gains, this is not a penalty, this is an incense i. As congress, federal antitrust enforcers and stay attorneys general all pursue their investigations, we will need to pursue remedies that reduce concentration, eliminate conflicts of interest, resend abuse of contract terms against Small Businesses and consumers and limit capture. For example, recent scholarship has revealed that antitrust actions that separated lines of business are required inoperability of standards or order patented required for competitive use, all led to massive innovation, Small Business entry and economic growth. These are useful tools in the toolbox. While some believe lax enforcement and absentee government are the ingredients of innovation, history teaches us its the opposite. Without a vigilant and active market, companies cannot survive. Sometimes that means provided companies with benefits, but free and fair markets wont work without meaningful znss and inaction is a price we simply cannot afford to pay. Thank you. Mr. Chairman, Ranking Member and members of the subcommittee, good morning and thank you very much for inviting me. I am professor of economics at Imperial College in london. Between september 15 and august 19, i was the chief economist of the European Commission. In that role, i led the analysis of several platforms including google, amazon, microsoft and others. My first point is obviously about data. Some commentators have argued that data is the new oil. Others have gone to the opposite extreme by claiming data is as common as water, as air. These sweeping generalizations are not very useful. Only a few gatekeepers are controlled to behavior across Online Services and websites and platforms. This is the market for individual attention where the analysis has to be conducted. As an example, if we open all of us our Facebook Accounts if you have one and we looked at the ads popping out, you would see totally different ads this is different from tradition media. The large digital players have not made any Data Available through independent researchers ever. I know the rebuttal to this. I can immediately name serve data sets that would be available to independent researchers. It is paradoxical. My second point concerns the extent to which enforces should consider privacy. Competition, generally speaking, takes place along serve dimensions, prize being only one of them. When dealing with digital platforms, it does not make sense to focus the analysis on prices as prices have been set to zero by choice. The Business Model is to give something away for free to monetize in other markets. Quality will often be a revant focus of competition. This can lead to real data harm. Consumer profiling that is not done in the interest of consumers. Part of the problem is this is still accepted by consumers because of a lack of alternatives. This is an indication of market power. What do they mean . Think of common phrases like we may collect your information for marketing purposes or we may share your data with trusted businesses. Consumers can see the benefit, but cannot assess the data that is abandon by design to the servers. This undermine tess role played by consumers and competition. In europe, this is captured by the common law. In other jurisdictions, it is not. In the u. S. , it is not. Still, it would be wrong to ignore exploitive conducts. Diminished competition in privacy should be considered in assessment in the state of competition and in the market power of online platforms. Here the chain goes from dominance to Privacy Concerns, money is being made. Tieing with other Digital Products can further reinforce this by cross linking the data creating quite a vicious circle. These are conducts that could and should, in my opinion, be investigated. Thank you for your time. Thank you. Mr. Chairman, Ranking Members and members of the committee, my name is jason ferman. Im a professor at the har ford kennedy school. I recently chaired the uks Digital Competition Expert Panel which produced a report unlocking digital competition. Im currently serving as an unpaid adviser 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 about it. I want to make four points in my testimony. First, the major digital platforms are highly concentrated and that concentration is likely to persist. Its due to a combination of factors, economies of scale and scope, the behavior biases on the part of consumers who dont shift the way we think they should. The importance of access to capital and brands. The combination of them and the extremes of all of them are unique to the digital platforms and makes it 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 to bleefz that that competition for the market will be difficult absent policy changes. My second point is that this has cost to consumers. The services arent free. Consumers are paying in the way of data, losing out on variety and the lack of competition stuns 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 from scope. You want to preserve the ability to consumers to have those benefits. Some of the reason, though, is because of unfair competition and because of what is not organic growth due to efficiency but mergers that have been improved. So the key to position, competition is the source of innovation lets the private sector drive that competition. To that end, my third point is that merger enforcement needs to be more robust in the digital sector. Many of the growth weve seen has not been organic growth, but has been acquisitions. There have been essentially no errors in blocking an acquisition that would have been benefit to consumers, but there probably have been record in allowing acquisitions to go forward that have ultimately harmed consumers. It can focus on 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, even with all of that, merger enforcement wont be sufficient to deal with the horses that have already left the barn. Antitrust scrutiny can help, but it can also be slow. It can have a hard time addressing, you know, behavioral remedies and that is why i proposed in the uk and i think it would make sense in the United States the establishment of an antimarkets union. Whether its a new body or an existing body, what is important is the functions. The first would be a code of conduct to ensure no anticompetitive conduct backed up by enforcement authority. The second function would be systems with open standards and data mobilitity which wood 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 avoice some of the more extreme market disruptive steps, ensure consumers get all benefits of fair competition and enable new entrants to compete, enter the market and even deliver further benefits above and beyond what weve seen to date. Thank you. Thank you. Good morning and thank you. Chairman nadler, chairman sisillini and Ranking Members, im honored to join these distinguished panelists today and to contranscript to this important inquiry on privacy and data. I want to recognize and thank the Committee Staffers for their work to prepare for this hearing. This testimony represents my own views. We know very little. Without these key points of information, its ill advised to build a command and control regime which presumes regulators are in the know. The best numbers i have estimate there are a few hundred privacy violations per year, which is a small number given the size of the Digital Economy. Regulatory advocates look for other arguments to justify their approach, such as competition. We must look at the actual effects, not just the theory and argumentation. However compelling it may be. My testimony introduces the engineering concept of control points. Harnessing a control point is a way to govern a system. Theres a regulatory royalty monitoring our politics. Its no surprise antitrust authorities around the world and across the u. S. Are looking at the american tech sector because thats where the money is. This is a source of political power because it brings revenue to various days through litigation fees. And we can see the activities of state attorneys general who wish to make National Policy by using the bully pull pit of their state. Fortunately, congress can temper the selfinterested actors so no one state can dictate the terms of our economy. Im extremely grateful 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 twodecade experiment in regulating the tech economy. The longterm trends and outcomes are clear by looking at the digital scoreboard and the euro steps surveys. Smile and Medium Sized Companies have a hard time growing. They dont invest in Information Technology and they transact little across boarders. The largest platforms have gained share. Gdpr imposes a fixed cross across all enterprises. One fifth 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. We had a 220 year tradition of carefully constructed bottom up privacy rules that were democratically decided and based upon real world harms. The ccpa with its 77 regulations on enterprise has 22 more obligations than the gdpr. A preliminary cost benefit analysis prepared by the California Department of justice suggests the costs exceed benefits by a factor of 14. It nodes 70 billion in startup and running cost for compliance. Most of these costs go to privacy lawyers and consultants. The consumer benefits are estimated generously at a mere 5 billion. Its hard to see what is 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. They make up 99 of the california businesses. These are dreamed up by mayor royalty in a month. This is part of an attempt to avoid the forthright discussion about the costs. There is a right way and a wrong way to do privacy production. Gdpr and cca are the wrong way. Good regulation should cost little to implement. It should be easy to understand. I appreciate that this committee is considering alternatives. If we are concerned about competition, we should stop putting in place rules that strength rc strengthen the largest market players. 70 of our economy is where the Data Revolution has not come. That is where we have the opportunities to grow, where we can transform lagging industries in 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 that we dont kill it in the cradle by regulation that stops the innovator at the gate. Thank you, dr. Layton. I now recognize the chair of the full committee, mr. Nadler, for five minutes. Thank you, mr. Chairman. Professor, over the last ten years, the five largest tech platforms have acquired over 400 Companies Globally without any challenge from antitrust enforcers. Is there evidence to suggest this was a mistake . This is my personal opinion, of course. I do think there has been an antitrust immunity in general in the tech sector for far too long. Google, facebook, have acquired hundreds of companies and very few have been vetted. There are some technical reasons, sometimes, for instance, you notify some mergers only theyre above a certain threshold and the threshold is dictated on the turnover of companies in the past three years. When it comes to digital platforms, but also pharmaceutical companies. These turnovers are not yet there, so you dont have the tools to intervene. But yes, i think we have severely underenforced in the merger area, which means not necessarily that those mergers were bad, but we should have investigated them, for sure. The same question. I wonder quite a bit what would our world look like if google had not bought youtube or amazon had not bought zappos or many of these acquisitions that many believed could grow on their own to be their own big giant. And i agree that underenforcement can kill innovation and kill entry because when its harder and harder to break in, that is just bad for Small Business and its bad for all of us. Thank you. And professor, what should be done to make sure competitors are not swallowing competitors . The point is i already know there is a response that some entrepreneurs want to be bought. This is a strategy is they want to cash in on their own innovation. My point is not that that shouldnt a happen, but simply dominant companies should not be allowed to buy those. They can be bought by someone else. What can be done is to cases open, use financial evaluation, run through internal documents. The chairman mentioned the spyware that facebook was using to buy some rivals. There is a lot of things we can do to improve. And can you explain how that strategy works. There are different ways. One way would be a company that doesnt have alternatives. You need the service and it will ask you to sign up for whatever they ask you. You dont see the terms, you dont know what is going to happen with your data. Your data is going to be used to monetize somewhere else. Even some of your off springs. So money is going to be made from this targeted advertising. Once you have money, you can do lots of strategies to preserve your dominant. Can you explain why you view this as a privacy factor under the competition law . Yes. It can be prices, can be innovation, can be quality. Since consumers seem to care about sprieft sis, this is one of the things that a healthy market should give, healthy privacy to individuals. And is big data creating barriers that prevent entrepreneurs from raising capital and breaking into Technology Markets . Yes, i think big data is creating entry barriers. And if you tried to guess what the next industry is going to be, we had a succession from ibm to microsoft or google, the next is to be ai, machine learning, and the company is best poised to take advantage of that. Why is data still a barrier to entry even though its nonrival russ . Its nonrival russ, but there are companies that keep that data and keep that data to themselves. They have economies of scale. Those things ruk do once you have large amounts of data that are even much, much more than you can do with a medium or a small amount of data. And i think a lot of that is a function on of Public Policy choices weve made. Yes, they would, congressman. Thank you very much. I yield back. We apologize for the interruption as we come back for votes. Thank you very much. Thank you very much. Youve all touched on this, but a common refrain we hear from Tech Companies is during the course of this committees vision and just on my own is that they cant possibly be violating antitrust laws and the primary argument is that many other products are cheap or free and consumers are inheritly benefiting. To me, the big question is free really free . And consumers, i think its increase intl clear are paying for the products that they use, theyre paying in data, theyre paying in privacy that they give up and often dont know that theyre giving up. And then the big Tech Companies use that information which gives them spectacular advantage over newcomer businesses, allow this is companies to create and sell the companies that have the best chance of being the most successful. Dr. Veletti, you mentioned the acquisitions and the history of acquisitions. As of 12018, facebook had made 67 unchallenged acquisitions. Amazon made 97 unvalged acquisitions and google had made 214 largely unchallenged acquisitions. Two questions, what kiemnds of information do these companies have to consumers as a result of those acquisitions. Do the thresholds need to change if we are to challenge some of these acquisitions . Thank you very much for the question, congresswoman. Do the thresholds have to change . To the extent that people have the powers to look into these acquisitions, that is fine with me. Even in favor of change a little bit presumption, when it comes to strategic platforms with humongous market power, i would wonder whether they could rebut with efficiency to say you guys are not going to merge with anybody unless you prove to us that this is going to create efficiency. So in terms of that, my understanding is some of the claims we hear a lot of times, competition is one click away, i didnt see that in the data at all. I didnt see anybody going and clicking on search results on page two. So i saw a lot of stickiness. The fact that some one of us may make those choices doesnt represent the consumer there. In theory, they can do that. But in practice, consumers never act on those choices, its just follow default. Serve of the dominant platforms compete with the businesses that are dependant on those platforms. Both in committee and when i met with them recently, they testified that this structure doesnt pose any conflicts of interest and say that its common for retailers to offer private labeled products along third party products. Whats your response to that . Well, i think we hear these analogies of comparing it to Grocery Store cereals and the white label cereal and it just doesnt work. I am so worried when i hear from investors and venture capitalists who say im not even going to fund a business that needs to distribute through these platforms, because guess what . As soon as it takes off, it will be copied and all the business will be steered elsewhere and that worries me. For all of those small firms who want to enter. So we need to look deeply to scrutinize big picture. Individual companies, we will look. If theres anticompetitive conduct, we have to go after it and fix it. But writ large across these markets, we all need to understand how this works so we can figure out how to maintain our economy that is vibrant and thriving. And related to that, h hhow what are the tools the ftc is using and you could be using . There are so many Things Congress has equipped us with. One of the things i hope we will use more aggressively and thoughtfully is competition rule making. It doesnt need to put any burden on any company. But it can clarify the law about what is legal and what is not so we dont have to spend millions of dollars on paid economists and litigators that slow down decisions and ultimately may harm a lot of people in the process. And we need to resuscitate the use of that tool. Thank you very much. I yield back. I thank the gentle lady. I now recognize mr. Armstrong for five minutes. Thank you. I appreciate it. Welcome to the room. Er ye er. Ms. Layton, i want to talk about data fortbility. And you say its overrated. Can you explain that a little bit. So we have the premise of number portability. Youre going to go from one mobile carrier to another, you want to take your phone number. Thats fine. But i think when you look at the internet world where you have multiple kinds of platforms, so if you have social network data from facebook, it doesnt necessarily map to amazon. So there is the data is not really valuable to another platform. The bigger thing, i think, is i think were overvaluing the value of data. I had interface with 2,000 companies. After time, the data degrades. If you are an innovator, it is less interesting for you. Data portability i think is overrated. Ive seen this in some of the economist studies in gdpr, as well, is that users dote value data portability. And ive said that, too, the basic framework is you should have control over your own data. Its fairley complicated as to what is there and i think thats part of the reason. Is it because they dont understand what it is or how you said well, for one thing, there are switching costs. I think thats a fair point that other panelists have raise dollars. But i guess what id say is the value to having if we think we should have five major Search Engines and that somehow makes it competitive, what makes competition in this industry is something better. So where i think we should focus on is there are green fields, impact. And then, i guess, when we talk about data portability, were talking about it moving, right . When its insurance, litigation, bells of lading, free on board, when youre dealing with this data portability, has anybody looked at the liability shift as we move from one person to the other . Because if theres a breach, which is part of the Privacy Concern is breach of data and it usually ends up with a Credit Card Company or a bank. If its portable, more than one person is handling that data as it moves. That is a fair point. If i may, just yeah. And then my question is, the cost of compliance not for Large Companies who quite frankly weve seen this and i want to ask you a question about it before im done, larger Companies Want regulatory certainty. While were trying to regulate this, we have to be concerned that we dont have the inverse effect where the cost of regulation makes it prohibitive. Lets me clarify first that this is very new, so having im pierceal evidence is a long shot. Lets remind ours, its been introduced because there is a fundamental principal of privacy. Surely i want to see the impact on firms, but there is a benefit that we get if gdpr is enforced publicly. I am very skeptical. The european evidence is that google and facebook lost after the on the advertising size and the gdpr. It is a cost of compliance, but whether its only the small firms, etcetera, etcetera, the narrative that you hear is from the big guys, not from the small guys. Im going to bring an analogy back. We dont have, with the exception of some national companies, big business in north dakota. The single biggest thing i hear is in our realm to regulate what we think are bad actors, and we were, Dakota National bank is caught up in that. And they are. If you have 37 compliance officers on the third floor, its not a big deal. If you have two employees and you have to go to five employees, you may no longer have a bank. What i would urge you to think about is complicated rules, they actually benefit those who have a lot of lawyers and lobbyists. When i i have had those same conversations with community bankers. They will say, if i am banned from doing it, fine. But if it is so complicated, the largest banks in the world, they find their way in and get their exemptions. They win and the small guys lose and that is not a system or a country i want to live in. Mr. Chairman, i dont know if there is time for me to add to that because with were very negative time. No, im sure mr. Armstrong is interested. Congressman, i think you make a very important point and i think youre right about worrying about the Small Businesses. I think sometimes in regulation its strictky because there is a tradeoff. You make the rule, its easier for the larmer one to comply than the small ones. Here, if youre talking about rules, a ked of conduct as ive proposed for a digital market to do, you cant keep people off your platform. You cant pry orb advertise your own products, those rules would only apply to companies that i would designate as having strategic status. If youre a Small Company and you want to prioritize your own products, you want to keep people off your platform, you can do any of that. Were only worried about if you have some bottleneck power abusing it. Thank you, dr. I have a unanimous consent just to put ranking collins statement in the record. Without objection. Thank you so much to the distinguished gentleman from colorado. I want to thank you, mr. Chairman, and thank you to all of you for being with us today. Thank you for your patience as we went to cast our votes. In several of your statements, you argued the core problem is the Business Model which relies on monetizing data to engage in constant surveillance. What problems do you see with the currents advertising Business Model . Behavior advertising to a demographic of one exposes us to a whole lot of risks, including manipulation and shenanigans in our democracy. It is very, very profitable, though. Facebook earned 55 billion in revenue. Google even more. The advertising business is big and im concerned that behavior advertising model is inconsistent with how we have thought about immunity online. Right now, we give broad immunities. I support that immunity, but i dont know if its consistent with this behavioral ad model and surveillance. So what do you see as the solution . How can Congress Play a greater role in dealing with this problem . Ill speak to how i looked at the Facebook Order of violations. The repeated and early violations of that order, that settlement not only completely let executives off the hook and they paid a small fine and their stock went up, there is no substantive limitation on their use or sharing of data and for repeat offenders, there needs to be some ban owes this type of behavior because if theyre going to break the law, we have to look at the economic incentive that is driving it. I think you said earlier that when you have billions and billions of dollars in a settlement, theres not much incentive to change your behavior. Thats right. When these big fines are not big benefits for these companies, i wonder if its not a penalty, its an incentive. Allow do we beef up individual liability . In the ftps settlement, we did not depose mr. Zuckerberg or ms. Sandberg, but guess what . They got full immunity. If the Court Approves that, what sort of standard are we setting . I think thats fundamentally wrong. Some have argued that heightened concern about digital monopolies is misguided. Ultimately, they were taken over by new firms and i know we talked without naming the specific companies early, but could you just kind of do you agree with that view . What are your feeling about that . Its almost an act of faith. Do we believe in dynamic competition . Sure, but then i see the empirical elements. This dominance has been going on for almost a decade. In the long run, were all dead, but i hope we will fix some problems before were all dead. Thank you for that bit of hope and sunshine. In light auto of your forget that. Im going move on to dr. Firman. In your view, how readily available is high quality data to new entrants . If an entrepreneur wants to launch a new Search Engine, for example, what challenges can he or she expect to face in light of googles existing dominance . And we have kind of talked about this face, but i want to make sure its clear to not just the people in congress, but to the listening public, as well, who is directly being impacted by the decisions made. Yes. Xwoolg has a very good algorithm. Cooling has a huge amount of data about how consumers search to train that algorithm. A bright kid in a garage could come up with a good algorithm, but they wouldnt have anything like that data of data to make it work nearly as well as google works today. Thank you. And mr. Chair, id like to hear from ms. Layton, just any response to either of the questions that i asked that you would like to respond to. Thank you. I appreciate that opportunity. I would agree when we look at artificial intelligence, this is a green field. Hes absolutely correct that a scientist sitting in the garage or in the lab could come up with a life changing or transformative algorithm. In contrast to the other panelists, i dont believe the data is a bottle neck because of having been a person working in the industry that the data that you collected degrades over time. Its less interesting to look to the past. You want to look to the future to say where could be a place i could add value in the future . Health care. That where we need to have data to lower costs. Now, they may not look at personal data. Theres other areas where theres no personal data involved, you know, quantum computing, astrongmy and so on and they may go in those fields, but probably the biggest area where we can create that is in human health. Can you look at a lot of the new innovations . We dont know know. There again, thats the question that i would have. Health is an area where we need to see are we putting the bottleneck on the innovation. Commissioner chopra, one of the questions we are grappling with is whether or not our antitrust agencies have fallen short in this digital marketplace and whether or not that is due to inefficient legal authority, whether its due to weak leadership or as i like to refer to it, the need for enthusiastic and kraevcreative leadership. Is it partly from regulatory capture. But what is your view . What should we be looking at as we think about the inadequacy. What do you see as a source of that . One of the things i reflect on a lot is how did the ftc miss much of the subprime mortgage crisis that originated in the nonbank sector . The ftc was really the only cop on the beat there and we saw what happened. So number one, we need to use the tools we have much more energetically. Two, we need to be much more ang lit kal and not think in the world of theoretical economic models, but real evidence and look at how markets actually work. So, of course, we can use more authority and more resources, but the number one thing we need to do is energetically use the tools that we have. And for you to think about and dr. Voletti mentioned this, too, should we be thinking about changing presumptions . Shoor should the burden be on them to show where can their merger or their roll up or tons of companies is in that interest. So there ways you can change the way courts are acting and i urge you to do that, but i urge you to use oversight to ensure every tool you have equipped us with. In february, you gave remarks to a conference at the university of colorado where you said and i quote competition Enforcement Actions like the bell labs Consent Decree created the conditions for scores of startups to innovate and flourish. We should also be asking ourselves about the cost of inaction, end quote. Do you believe end forces or lawmakers should be considering these forces. On innovation, startups, kind of the opportunity to make the space for the next Great Technology platform . Yeah. I appreciate that. One of your areas of inquiry in the investigation is whether spinoffs or diverse temperatures of firms may be useful. We call it breaking up. But should we look at that as it has been abused by dominant firms and how much could that incubate in new activity . There is all sorts of history about how we pursue this and the benefits of it. Can we look to separate lines of business to end those conflicts of interest and create more Economic Activity. So we should work with you on all of that, but the discussion must be bigger than breakups, but, of course, breakups must be in the tool kit, as well. Im going to stay with you commissioner because were going to do a second round because i have questions for the other witnesses. I want to transition to some of the recent privacy settlements of the ftc that i have criticized publicly. You recently dissented along with commissioner slaughter, you stated that the settlement gives facebook a lot to celebrate which was similar to what i said. Can you explain what your concerns are with the settlement. I know that you said in part that the 5 billion settlement was insufficient because it didnt address facebooks surveillance and Business Model which is what incentivized facebook to engage in the violations in the first place. What do you think the effective remedies are like . What do you think the remedies would look like . This is a repeat offender, so its not just a first time, oops, and in my view of the evidence, it was clear that there was multiple early violations and there was knowledge of those. I think of it, number one, where is the individual accountability. The officers who did that so they could put money in their own pockets. Without individual liabilities, you will not see enforcement orders. Two, what is the equal conduct relief that goes at the core economic incentives . And to me, there should be some real thought on actually banning some of the worst Data Collection use and sharing practices and we have to think, of course, monetary relief is porchbt, but the but u. S. Consumers did not get a penny of that. So im not sure that headline, 5 billion, is going to do much. Thank you, commissioner. My time is expired. Now i recognize the gentlemen lady from pennsylvania, miss scanlon. Thank you very much. Consumers privacy is an important issue for all of us, both as individuals and representatives for our constituents. But the way data is collected and used by the large platforms, obviously, impacts the ability of consumers to maintain their privacy and the options about making informed decisions about online activity. Dr. Voletti, i wonder if you could expand on privacy information leading to detriment to consumers. And i think you said that imposing terms of service with weak Privacy Protection that is not well understood, but is accepted by consumers because of a lack of alternatives, it has to do with market power. Can you just talk about that a little bit and any perceived remedies that you might suggest. So on objective consumer harm, as i write in my written piece, it can be risk of data breach, identity theft, but interesting, also, a consumer profiling, discrimination, scoring, or being shown more expensive results. So in this moment, your dishwasher breaks down and youre going to type dishwasher repair in my area, youre going to be shown most likely one result with nice graphic interface because there is a realtime auction that most likely google will be doing and who are they going to select . The one that pays the most because, again, they get a fee. We have lost the original function of the internet to offer us choices. Behaviorally speaking, consumers dont go to page two and page three. You just have hooked up. These devices are meant to keep us as online as possible so they learn but say, and then we buy whatever is the thing which is offered to us and there is an underlying auction offered to you. There is only one platform for that. If youre looking for a car, that is a choice that would take a longer kind period, and so its a its a bit different. For remedies, the most important thing i would start from is really try to think carefully about privacy. So, having privacy regulations, which is done in the interest of American People and its american institutions should come up with a solution. Congresswoman, with your permission, just one point. When facebook started, there was another social media platform called myspace. I remember. And one of the one of the reasons that facebook was able to unseat myspace was, partially on privacy and control of data. That you will be able to control who sees your information. We should want firms to compete on privacy. These changes to terms of service hidden in the fine print where they can collect more and more data and unilaterally impose these terms, that is a price hike. We are paying with our data and that valuable data. And more competition will also be critical to how we think about protecting privacy. Im wondering, another context weve seen that you can change the dynamic by having an optin rather than an optout. Is there any possibility of doing Something Like that in this sphere . For example, opting having to opt out of a savings plan rather than opting in. Well, we do know behavioral defaults are highly influential. And typically right now Companies Get to take everything from you and you have to figure out a way to opt out. Its kind of like a fulltime job with all the websites you have. Shifting the burden to compan s companies, i think, would be a great way to reduce the burden on us. Actually, if Consumers Want to share their data proactively and really want to renew that, let them tell that company and give them permission. Ive also had had conversations with my kids and other constituents about the power over consumer data, putting that back in the hands of consumers and the example that they like to talk to me about is moving your Music Library possibly from apple to spotify. Mr. Furman can you talk about implementing data portability and if thats something we should be exploring. I think, yes, absolutely, you should be exploring that. Its not just downloading your data, its really being able to port and move it over in a simple and transparent manner. The companies are making some progress like the digital transfer project. I think in part theyre making that progress because they think regulation is coming and theyre responding to it. And to do this is not simply passing a law, you have to roll up your case and go use case through use case and figure out how to balance the concerns and create a lot of value for consumers and create competition. Thank you. I yield back. I thank you the gentle lady and recognize the gentleman from north dakota, mr. Armstrong. I think the chairman actually does have a myspace account. Dr. Layton, it seemed like you wanted to respond. Miss scanlon, to let me piggyback on dr. Valletti, he has a paper on prices for auction. I have experience in this. I think theres a fallacy to think just because the ad appears at the top of the skempb on Google Search its the highest bid. That is the lowest paid bid. What is driving the price is very much the quality of the ad. Its how well its written. Whether the landing page where the ad goes to is relevant. What google is rewarding is the quality of advertising. He brings an interesting case. A Plumbing Service wants to create an ad. That is also an issue of, who amongst the Plumbing Industries is organized to invest in google . You know, it could be theres also reflects the competition of the plumbing side. The other part is, if youre the consumer, you want to have the information. That ad format gives you a lot of things to look at. I only say that is it isnt the its not a fact that the highest toplevel ads pay the most. In some fields, like asbestos, those keywords could be worth 5,000 a click. Theyre many other areas that are not used at all. And the clicks could be a krece. Its hard to generalize that. You actually have to look at the data. Im going to move into something a little different. In your Senate Testimony you testified gdpr has convicted felons removing crimes from Search Engines and your footnote stated the Finnish Court provides the right to be forgotten has convicted murderers, information removed from google listings. Before i let you answer this, i want to say, i support ban the box. I think its fantastic. I have some thoughts on that when were done, but we also have a first amendment. First amendment rights aside, can you expound on that a little bit . We dont translate the gdpr perfectly to the United States for those particular reasons. Also right to be forgotten has been pushed back by the european courts. This issue about people being able to expunge data they dont like, maybe its a nice idea in theory but we have in the United States, we have a respect for the publics right to know. So, for example, what youve seen in the European Union are dirty politicians who have bad articles about them. They get removed from the searches, murderers, child predators. All these terrible characters are able to weaponize the gdpr for those reasons. I think thats one of the things with ban the box we need understand as members of congress is that still only gets you past the first stage. You can ban anything from google. You can ban it from a facebook search. My private investigator would find it in three seconds. If you go into the second stage of an interview and youre doing work for the federal government, you have to have a certain insurance designation, any kind of as simple as a hazmat commercial drivers license, these are good concepts but i think sometimes we use the availability of information as a scapegoat. If were serious about this if youre 19 and have a nonviolent felony on your record, the world we live in compared to two generations ago is so different, you can never outrun that conviction. You cant. If it happened in dixon son, north dakota, in 1970, you could move to madison, wisconsin, and start your life over because no one from madison, wisconsin, was going to drive to the stark county courthouse and look up records. We use this availability of information as a scapegoat because any job youre applying for that has any insurance issue, Regulatory Framework is going to find it anyway. We need to address the fact with Insurance Companies and say, listen, we support this from a congressional we have to change it from a hiring culture and allowing those things to happen. The fact its not it doesnt hit on a Google Search doesnt mean its not going to exist. I agree. Just i think we are mixing a few things here. One thing is gdpr, one thing is right to be forgotten. The first step is for you to understand what you interpret as privacy. These are boundary between your private self and the outside world. What do you think you want to share only with your family, with your community, with your friends or not even with them . When it comes to digital space, this idea there is no choice. We have borrowed from other industries is not out there any longer. These boundaries are so blurred that you must look into that. You must have recognition of the problem. I agree with that. When we were talking about opt in and opt out, shortly after there was congressional testimonies before i was here, you saw these windows pop up on your social media platform, yes and no. Whenever i talk to a high school or college age group of kids after that happened, i would ask you, did any of you check no . Sometimes you cant check no. Yeah, but not a single hand goes up. How people define privacy in the next generation is also something that is changing dramatically. I think the gentleman. I recognize myself for five minutes. I want to build upon that case that mr. Chopra made about consent would be trying to find out what youre consenting to would be a fulltime job. Even if you devoted your time to it as a fulltime job, you would still run into the situation where you have these take it or leave it contracts. If you dont agree to a certain amount of collection, you just dont get the service. So, you know, the consumer the user in this context doesnt really have the power. Each be if you devoted full time to navigating and you wonder why we dont create the kind of consent we require in other context. If its medical consent, consent to withdrawal a not guilty plea, its the knowing consent, its the person knowing what theyre consenting to and affirmly consenting and why we have the complete turning on their head where everyone is presumed to consent to the total collection of everything about them unless they can find some way to object to it. Its kind of curious. I think this is a really important area for us to look at. Dr. Valletti, i want to turn to you for a moment. Google has 2 billion users on android and google has 2 billion users. What we hear often are these services are very popular and people really have no problem with the kind of corporate surveillance and these loose privacy controls. And isnt the fact these numbers are so great evidence that theres not a problem, that the popularity of these services proves we dont need to worry about this . What do you say to that argument . These services are very popular, its evident. They are very Good Services but nobody cares. One of the point i make in my written piece is also that consumers are not put in the a position to understand what the cost may be. They dont see where the data is going. We dont know whether something is coming back because they dont know. Going back to your original remark, youre probably aware earlier this year germany had a case against facebook and this is under appeal in the court now. They exactly said the content, the Consumers Want to be on facebook had to given to crosslink data to whatsapp and instagram. You didnt tell us what youre going to do. You cannot do it unless you inform them in a proper way. If you do not if you dont conse consent, you deny access to the service of facebook because you dont need that consent to supply the primary service. Thank you. In july as part of this investigation, google testified before this subcommittee that it faces, i quote, formidable competition around the world, end quote. Google stated they can choose from bing, duckduckgo and yahoo . Do you agree theres intense competition in online search, whether it be in europe or the United States . You such a general statement. Its a very general statement. Will be more precise when it comes to general search, this competition is not there in europe. 93 of european searches are done by one Search Engine. This possibility that consumers have to do Something Else to change the defaults, to change the all this behavior biases we already mentioned several times, they are clear in the data. I do see people sticking all the time and never changing the default. Dr. Furman, i have a couple questions. You can respond to that quickly. One quick point to add. Google wouldnt pay on so much to be the default Search Engine on things like ios if it was easy for consumers to switch. Correct. Dr. Furman, what role do you think information assem triplays in how we understand Digital Markets . Corporations routinely have more information than regulators and the public but digital platforms seem to enjoy an astronomical advantage. First of all, i think the enforcers need more resources. The cma in the uk has created a digital unit with excellent staff in terms of Data Analytics and the like. And we also need to design policies around data openness that reduce some of that assem tribetween some of the big platforms, their competitors and the public and regulators. I think many of you made this point. Competition and privacy can be complements such that competition can incentivize firms for more privacy but they can be at odds such as tat that portability could expose user data to a broader set of corporations. How should enforcers and policy makers, particularly the congress, strike this balance . I think the answer to that is going to be on a casebycase basis. As you said a lot of cases are really complements. A lot of cases only one of them is implicated. The other one barely is. You need to have both objectives. You cant just think about privacy and completely ignore competition and you cant just think about competition and completely ignore privacy. Thats part of why you would want to establish a unit, a body, a regulator, something that would have both of those objectives. I want to know if you wanted to respond to any of what ive asked. No, okay, great. I would just add when theres so few dominant players, that opens up more abuses of privacy. Im worried that our economy in this sphere is just drifting towards the chinese model where theres just massive amount of information on people collected without their consent and can be used to manipulate. I just reject this argument if we want to compete with china we need to have our Companies Look like them. The beauty of our country is when new trends come in and challenge the dominant ones. I just dont want that system. I agree. At this time id ask unanimous consent that the following statements be introduced in the record, a written statement from the australian competition and Consumer Commission chair rod simms discussing his investigation into the digital platforms without object jectionz, a written statement from dina discussing the intersection of competition and privacy without objection, a letter from Consumer Reports detailing their priorities in examining data and privacy in competition without objection, written statement from Maurice Stuckey and ariel, the digital platform economies affects on antitrust and Privacy Policy without objection and a statement from the European Union commissioner for competition margaret vestareyr with her expertise on the Digital Economy without objection. I thank the extraordinary witnesses. Thank you for being here and contributing significantly to our ongoing investigation. With that the committee is adjourned. To prevent it. And it leads to the use of that data in a way that, you know, is is predicting the behavior of users in a way that advantages their own services or products. This is very alarming. I think this is consistent with the other things weve heard throughout the course of this investigation. I think it gave us an opportunity to also hear about some of the remedies or some things we should be thinking about both in terms of resources of the ftc whether or not we need to make some changes in statutes to change presumptions, whether we need to provide a better mechanism for people to consent to the collection of their data. Most importantly, what the implications are not just on the consumers but the implication on the economy broadly and on innovation and entrepreneur ships and startups to enter the marketplace and survive. It was a useful, productive hearing with compelling testimony from real experts. It 150e78d like well, the commissioner did hint that he was worried about federal capture in federal agencies. Do you concern that concern . Yes. Do you share the concern that large Tech Companies have captured the ftc . I think theres a concern that large Tech Companies have a disproportionate influence over the regulatory process. Part of that is larger functions of when you have these tremendous concentrations of economic power, so the election people who also share those views that come out as regulatory capture on the regulatory side. I think this is i think the commissioners concerns are serious and i share them. And i think its something we need to look at. What do you make of the argument from commissioner phillips that the ftc, that actually you have it all wrong, there are tradeoffs between privacy and competition, that if you cut off access to third parties for consumer data, it helps with privacy, it makes them harder to provide a platform. What do you make of that argument that its a tradeoff look, i dont think theres a tradeoff. I think that presumes people are making that choice knowingly and voluntarily. I think theres no evidence to support that and a lot of times people are consenting those. When you look at the take it or leave it contracts or services, very often their refusal to consent to that collection means they dont access the service or the products. So i just dont think you have a marketplace where consumers are getting this information and then knowingly consenting to its collection. And, you know, i think were seeing more and more evidence of this massive collection of data and the presumption seems to be, in the current model that, you know, companies can collect everything they want from you. If youre going to protect yourself from that collection, safeguard your privacy, you have to figure out some way to do if. You have to spend a lot of time to try to instruct them to do it, if you can even do it and then you run the risk of not getting access to the services. We ought to be thinking about why we are beginning this argument with this presumption that the these big Companies Get to take this valuable information and that it is consumer has the burden of somehow refuting that or acting against it. Its an odd presumption. Most all areas, consenting means the person consenting knows what he or she is consenting to. This is the reverse. It involves the collection of enormous amounts of very private information about every Single Person in this country. I think one thing the investigation has to look at is, is that the right model and ought we be creating presumptions that safeguard the privacy of consumers. If youre truly concerned that its suffering regulatory capture, does that mean the ftc should be an object of investigation of the committee . I think we one of the things the investigation is looking at, and i said this from the very beginning of the investigation, were looking at the existing antitrust statutes, whether they need to be modernized and updated. Were looking at the work of our antitrust agencies, do they have sufficient resources, are they staffed with people that are sufficiently enthusiastic and aggressively enforcing antihigh trust and do they have the resources necessary to do that . So the ftc is under investigation, then . I wouldnt say theyre under investigation. In is not a prosecution. This is an investigation that relates to collecting information so we can make informed judgments with respect to policy, legislation, regulation. And this is kind of an investigation where were collecting a lot of information so we have the best data and the best information to make good judgments about how we respond to this. That includes, of course, looking at the way the ftc operates. Its not a prosecution type of investigation but theyre part of our review in this comprehensive investigation. Do you have an updated timeline for the investigation . Its a busy committee. Our hope is to conclude our evidence collection by the end of this year so we have a final report and set recommendations in the first part of next year, providing us enough time to act on that in this congress. Youve gotten the first trench of documents you mentioned. Yes. Have you also gotten the documents you were seeking from the competitors, the Smaller Companies . Have we i cannot comment on that at this point. If you were on the Financial Services committee, what question would you ask Mark Zuckerberg next wednesday . You can ask him yourself when he testifies before your committee. I look at the questions i would ask for both the ceo of facebook but also some of the other leaders of these Technology Companies will come later in this investigation. I wouldnt work through the Financial Services, but thank you for the question. What about the commissioners comments that the changes in services, that thats the price hike . Do you agree with that . If so, what do you do about it . I think its clear that that is correct and i think thats one of the things well look at in the course of the investigation, what are the kind of things we can put in place, again, to protect consumers so they have real control over their data. To the extent they want to protect their privacy and prevent the collection of data, they have the ability to do that. Most importantly that this digital marketplace is working so there are competitionbased solutions that will create new instances for market that may offer a different range of protections that are more attractive to a consumer, that they have the ability to actually go there rather than being left in the called garden theyre in now. Doesnt that mean you need to wade into the privacy space . Look, i think theres a lot of overlap as you think about these issues. Theyre not so separate. I think theyre connected in a lot of ways. I expect well continue to work closely with the energy and Commerce Committee as we craft legislative responses to this. Time for two more. Theyre done. One more. Can you give me an idea of what documents you have gotten and havent gotten from the big four without divulging too much . No. I cant. I mean, were just in the process. I was sort of interested in hearing your reaction. Were you able to hear about or listen in on Mark Zuckerbergs speech yesterday . Hes sort of on this very public charm offensive. I wanted to hear what you have to say about that. I have not. I did not see what he said yesterday. Ive been very clear. I take mr. Zuckerbergs commitment to cooperate with this investigation seriously. He made that commitment to me directly in our facetoface meeting. That has proven to be true so far. Ill take him at his word. Its a work in progress. Ive been very clear about the conduct of facebook and the recidivism that was referenced in the testimony today from our testimony. I consider that serious and i think in many ways they have been a bad actor in this space and we need to understand what has allowed this to happen, whether it be on the enforcement side or inadequacies in regulation or bad actor companies. This investigation doesnt center around one company, but they are an important part of this committees review. Thanks, everybody. Thank you. Cspans campaign 2020 coverage continues. Today at 6 00 p. M. , live on cspan, Elizabeth Warren holds a town hall in norfolk, virginia. And Live Saturday at 1 00 p. M. Eastern, senator Bernie Sanders with a bernies back rally in new york city. Watch on cspan, any time on cspan. Org and listen be wherever you are using the free cspan radio app. Sunday night on q a, American University distinguished professor of history, alan kraut looks back at policies on managing immigration. I would argue the current wave of xenophobe yeah is not different from what weve seen in the past. While it seems to us to be peppered with acts of violence and veracity, there have been other acts of violence. Antiimmigrant riots before the civil war, antiimmigrant riots in the 1880s. There have been a lot of moments in American History when the antiimmigrant sentiment has been translated into true ugliness. Watch sunday night at 8 00 p. M. Eastern on cspans q a. Facebook ceo and cofounder, Mark Zuckerberg, testifies next week about his companys leeb bra cryptocurrency. Thats live wednesday at 10 00 a. M. Eastern on cspan3. A reminder you can watch online at cspan. Org or listen with the free cspan radio app. Cspan and ipsos have released a new survey on voting and elections. The poll shows that just over a third of americans believe inperson voter fraud is a problem. And just as many disagree. Republicans at 44 are more likely to believe its an issue than are democrats and independents but it doesnt reach a majority among any of those groups. Almost half of americans believe that voter discrimination is still a problem in the United States. While a quarter disagree. There is nearly a 50point gap between republicans and democrats on that question. 24 of republicans and 72 of