How Platform Transparency Might Assist Construct Antitrust Circumstances
Concern about the power of the Silicon Valley oligopolies over American society is growing. Amazon alone controls 72% of US adult book sales, Airbnb accounts for one-fifth of domestic housing spending, and Facebook accounts for nearly three-quarters of social media visits. Only two companies, Apple and Google, act as gatekeepers for 99% of smartphones, while two others, Uber and Lyft, control 98% of the ridesharing market in the US the kind of data they are currently lacking: documentation of the damage they are doing Market consolidation inflicts on consumers. A new RealClearFoundation report offers a look at how changing Section 230 of the Communications Decency Act to require platform transparency could aid such antitrust efforts.
When it comes to Silicon Valley’s social media platforms, they have long argued that antitrust laws don’t apply to them because their services are provided for free. In reality, users pay for their services: with their data, not with their money. Businesses today collect huge amounts of private information about their users every day and use that data to invisibly push their users to buy and advertise, or the companies simply sell that data directly.
The question arises: If the volume and intimacy of this data increases with a company’s dominance of the market, are the antitrust conditions for rising “prices” met?
In addition, the same data is increasingly being used to determine what we are paying for goods and services through differential pricing. When Amazon experimented with charging different users different prices for the same items in 2000 (although the differences were chosen at random and not personalized), it only had 20 million users. Today Amazon’s market share is over 40%, and while the company claims not to use differential pricing, ecommerce platforms are increasingly basing pricing on factors as diverse as search history, home address, in-store vs. online, and even Mac vs. PC usage, to name a few to name little. With big brands like Target moving to contextual pricing too, it’s only a matter of time before the majority of ecommerce platforms embrace this.
Price as well as the increasing consolidation of entire industries into just a handful of companies means that the policies of these companies can have an overwhelming economic impact on American life, often in unexpected ways.
In 2019, I asked Uber how it made sure that the ratings its drivers assign to passengers don’t unduly disadvantage older and disabled drivers who need extra time to get on and off, as low ratings result in a driving ban can. A spokesman noted its non-discrimination policy, but noted that Community Guidelines specifically state that drivers “always try to be on time for their trip … because nobody likes to wait”; The spokesman did not comment on the impact of this directive on people with disabilities. Last month, the Department of Justice sued Uber for charging waiting fees from disabled users in violation of the Americans With Disabilities Act.
Similarly, in 2018, I asked Facebook to explain why it built its advertising system to explicitly exclude women, the elderly and minorities and cut them off from economic opportunity in violation of federal law and its own guidelines . A spokesman stressed that it was advertisers’ responsibility to comply with anti-discrimination laws and did not comment when asked why these protected ad class options weren’t simply removed. It wasn’t until the following year, after settling a number of lawsuits from civil rights organizations, that the company finally removed the ability for advertisers to exclude legally protected groups from viewing apartment, job and loan advertisements. But just months later, it became apparent that the company’s algorithms had learned to continue targeting ads based on these removed categories by identifying unprotected demographic and interest information that was highly correlated with them.
Uber’s decision to impose a “wait-and-see” fee meant higher costs for disabled people in 69% of the American ride-hailing market. Facebook’s decision to allow ads for apartment, job, and credit ads to explicitly target or exclude users based on age, race, and gender, and to revive redlining with pinpoint geofencing, impacted economic opportunity that 69% of Americans Adults saw.
A common theme across all of these examples, from Amazon’s price experiment in 2000 to Uber and Facebook’s discriminatory policies, is that they came to light not through voluntary disclosures by companies, but through external audits and data. However, these discoveries remain the exceptions. Despite their huge internal databases, companies usually refuse to confirm even the most basic statistics, like the number of tweets sent daily or the criteria their algorithms use to set prices.
What if companies were forced to share basic pricing information? After the federal government asked hospitals earlier this year to pass on their previously confidential price data, journalists and researchers were able to document significant differences between the costs of different patients for the same procedure and provide political decision-makers with critical insights. Imagine if all ecommerce sites with more than a certain number of users had to post hourly snapshots of the maximum and minimum prices they charged for each item on their site, which allows for a similar external review. Such data could be embargoed and released monthly to prevent competitive abuse while providing critical visibility into how much price differentials affect American consumers.
What if “free” ad-supported platforms with more than a certain number of users had to offer each of their users a monthly report detailing every purchase, sale, or collection of their personal information and how much money, including ad revenue, they made? from this user and all companies and governments that have acquired access to their data? This would make it possible to keep track of how the amount and value of our data, which we essentially exchange for access to these platforms, is steadily increasing and would provide information on whether the hidden price we pay for social platforms is steadily increasing .
As suggested by TikTok, future top social media and e-commerce platforms may not be American companies or even have a physical or financial presence in the US, making antitrust law enforcement difficult. Changing these transparency requirements in Section 230 would ensure disclosure even for such companies and provide policy makers with critical visibility to understand its impact on American society.
In the end, antitrust regulation will be tough until policymakers and the public can see for the first time the true economic costs of ever-increasing consolidation in Silicon Valley.
RealClear Media Fellow Kalev Leetaru is a Senior Fellow at the George Washington University Center for Cyber & Homeland Security. His previous roles included a fellow-in-residence at the Edmund A. Walsh School of Foreign Service at Georgetown University and a member of the World Economic Forum’s Global Agenda Council on the Future of Government.