The Case Against Facebook

Episode Notes

Transcript

Law Technology Now

The Case Against Facebook

12/23/2020

[Music]

Dan Rodriguez: Hello and welcome to another edition of Law Technology Now. My name is Dan Rodriguez and I’ll be the host for today’s show. I’m delighted to welcome my colleague and friend, Professor James Spader, who is the Interim Dean and a professor at Northwestern University Pritzker School of Law. He’s going to talk to us today about the Facebook lawsuit and in Big Tech and legal regulation. He is exactly the right person to talk about it being an expert in among other areas administrative law, telecommunications, and I know he has followed this remarkable story evolving story of the Facebook litigation closely. Before we get into our show today, I want to take a minute to thank our sponsors. Thanks first to our sponsor Acumasc, Patent and Trademark renewal payments made easy. Find out how acumasc.com can take the stress out of annuities and save you money on European patent validations today. Thanks also to our sponsor LogiKcull, instant discovery software for modern legal teams. Logikcull offers perfectly predictable pricing in just $250 dollars per matter per month. Create your free account anytime at logikcull.com. That’s logikcull.com/ltn. Before I get into my conversation with James, I actually wanted to start by reporting to our listeners some sad news, and that is the passing earlier this morning of my friend and our friend Paula Littlewood. When we were scheduling recordings for this month, we had scheduled Legal Talk Network had scheduled a conversation with Paula who had been a guest on this show before. And I’ll simply say that many of us who work on legal innovation and reform and legal services knew of Paula’s tremendous work and her courage and her passion on behalf of access to justice. She had worked as the Executive Director of the Washington State Bar, and I had the privilege to serve with her on the commission on the future of legal services and also on the Board of Responsive Law. It’s a sad passing. I’m sorry that we didn’t get to do this last recording, and I just know that she’ll be very much missed by all of us and our listeners. So James, Facebook, the Facebook litigation, were you surprised when you heard the news? We’ll talk about the details, but those of us who are not aficionados of this area of law woke up that morning and said “Oh my God, where did this come from?” Was this lawsuit by the states and by the federal government a surprise?

James Spader: I think it was a surprise when it happened. That is to say “so late in the Trump administration.” Now it was somewhat less of a surprise given the lawsuit filed just a few weeks earlier by the Department of Justice against Google on very similar antitrust grounds. So the timing, yes, but there have been ongoing antitrust investigations of Facebook for a number of years, and so, the fact that a lawsuit was filed at some point in time that itself wasn’t a surprise.

Dan Rodriguez: So let’s get immediately in the weeds on this, just so when I’m going to recollect without too much PTSD, my time studying the antitrust law back in law school. So fair warning, I may get this all wrong, but Department of Justice brings a lawsuit against Google under the Sherman Act, I gathered which prohibits restraints of trade of various kinds and monopoly but this is not a lawsuit brought by the Department of Justice, this mean the Facebook suit, right? This is a lawsuit, as I understand, it brought by two parties the states and the attorney’s general. We’ll talk about that but by the Federal Trade Commission and bringing that claim under the Federal Trade Commission Act. Do I have that right?

James Spader: You have that exactly right. The federal Trade Commission does have largely parallel authority to enforce the antitrust laws, although, they’re bringing the suit under their own organic statute, the Federal Trade Commission Act, but they have largely parallel authority with the Department of Justice to enforce the antitrust laws. And in fact, the Federal Trade Commission was created in 1914 because at the time, congress was somewhat dissatisfied with the Department of Justice’s antitrust enforcement. And so, we have essentially two different agencies in the United States government that enforced the antitrust laws.

Dan Rodriguez: Now I mean, a little glib in in putting it this way but it’s not like they’ve divided the world between one aspect of Big Tech Facebook and another Google and said “Hey, Department of Justice you get this company and we get that company, right? It’s nothing like that. So what explains why the Google lawsuit is brought by the Department of Justice which it was as you mentioned, but the Facebook lawsuit at the federal level is brought by the Federal Trade Commission.

James Spader: There is a little bit of history to it and the history is actually a history of the Department of Justice in the Federal Trade Commission over the past decades becoming more cooperative as opposed to competitors and antitrust enforcement.

(00:4:59)

And so they have informal understandings of which agencies cover, which industries, and which companies in my earlier day as a Telecom Lawyer before we called ourselves Internet Lawyers, the Department of Justice covered the telecom industry and the Federal Trade Commission covered the cable industry. Now, both are internet companies but there’s a little bit of history as well as, you know, sort of behind the scenes agreement. One of the statutes that’s going to be important here is the so-called Hart-Scott-Radino Antitrust Improvement Act, which creates a procedure whereby big mergers have to be submitted to the government in advance, and that statute in fact says, “you have to submit your pre-clearance information to both the Department of Justice and the Federal Trade Commission and then the companies sort of wait to hear, which agency is going to take the lead on any particular investigation.” It’s a really strange quirk of administrative governance but it is the case, we have two antitrust enforcers.

Dan Rodriguez: Both of these entities, I’m saying entities rather than agencies, because we might quibble about whether the Department of Justice is rightly called an agency are within the executive branch, or they not, right? So, you’re basically dealing with two executive branch institutions?

James Spader: They are. Although, the Federal Trade Commission is set up as an independent agency and that was one of the things congress did in 1914 to create an entity that was more separate from the president and the executive branch. And so with the progressive era and the new deal, sort of, agencies as you’re very familiar with the Federal Trade Commission is set up as an independent agency with five commissioners, three from one party and two from another party to have some more independence from the Department of Justice and the executive branch, generally.

Dan Rodriguez: Right. And a brief digression into Administrative Law 101 which is at least of interest to the two of us. There is, of course, that famous Supreme Court case from so many decades ago. Humphreys Executor that made clear that congress could impose limitations on removability at will of FTC commissioners. So with that in mind, let’s return to the Trump administration, would it be accurate to say that the FTC as an agency had some practical independence from the White House in ways that the Department of Justice would not?

James Spader: Yes, it does. It does. Now, by long tradition and law in many cases, the party that holds the presidency also holds a majority of the positions on an independent commission, so there are three republican commissioners and two democratic commissioners on the Federal Trade Commission at least until we get into the Biden administration in January. But there is independence and that independence came to the forefront relatively recently in the Qualcomm antitrust litigation which was brought in California where the Federal Trade Commission brought the case against Qualcomm, and there were certain points in the case where the Department of Justice appeared to take an opposite position from the Federal Trade Commission in the same litigation. An unusual circumstance where the U.S. government is saying different things from two different agencies, but it is something that can happen and it is because of that independence of the Federal Trade Commission.

Dan Rodriguez: In that case I understand it has been resolved, right? So that case is at an end for now. Whose position prevailed? That’s between the two competing positions. I know they were completely competing all the time, but at least. Who would get the trophy?

James Spader: Well, Qualcomm gets the trophy.

Dan Rodriguez: Right, okay. Fair enough. All right, enough procedure at least enough procedure for now. Let’s look at what the complaint is about. What is the gravamen as we lawyers say of the complaint against Facebook?

James Spader: The gravamen of the complaint against Facebook is that they have monopolized the market for personal social network services, that’s how it’s described

in the complaint, and there are three particular acts that the Federal Trade Commission identifies as contributing to that monopolization. The first of which is the 2012 Facebook acquisition of Instagram. The second is the 2014 Facebook acquisition of WhatsApp. And the third is a set of practices by which companies that do business on the Facebook platform through advertising the development of apps for the Facebook platform, et cetera, agree that as a condition of having access to the Facebook platform they will not develop services that are in competition with Facebook itself. And the complaint alleges that the combination of these actions by Facebook caused it to monopolize and to firm up its monopoly in the market for social network services.

Dan Rodriguez: So, the factual assumption there is that in the absence of acquisition that either Instagram or WhatsApp or both would be competitors with Facebook? So both that they’re in the same market and they would maybe rise up and have been competitive?

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James Spader: Well, that’s exactly right. The theory of the complaint is that Instagram or WhatsApp or both of them were on a trajectory to become competing social networks to Facebook. And in fact, the complaint is littered with quotes from Mark Zuckerberg and other insiders at Facebook saying things like “Instagram is growing, Instagram is going to become a competitor to us. Instagram is going to be a threat to us. Let’s buy Instagram to head off that threat or at least to give us more time to develop competing services” and similar quotations with respect to WhatsApp. It’s a little hard in the vacuum to know what the context was for those quotations, but that is in fact the story that’s told in the complaint.

Dan Rodriguez: You mentioned two interesting dates 2012, 2014, they both share this in common. They’re quite a lot of time before 2020, right? In one case eight years, and another six years. And so, the federal government not to mention the state governments had every opportunity to challenge those mergers, you mentioned the pre-clearance requirement from the time of pre-clearance to now, haven’t they sort of been sitting on their hands for all this particular period of time and ought that to matter?

James Spader: They have in the sense that they did have the opportunity to challenge it. And just to give some more detail here, the HSR, the pre-clearance process requires the companies to file notice that they intend to merge and then to wait, and then to give the government information if the government asks for additional information which it did in these cases to a certain degree and it gives the government an opportunity to sue, to block the merger before it ever happens. And in both cases the government did not.

Dan Rodriguez: Does it put a deadline? I just want to jump in. Does it put a deadline on how long the government can wait before it brings its claim?

James Spader: It is. It’s just a 30-day deadline unless the government asks for information, what we call in the business issues a second request for information and it’s called a second request because as you file initially to give the government notice that you’re planning a big merger, you have to provide a bunch of information right off the bat. But if the government files a request with the companies for more information, then that 30-day clock is told until such time as all the information comes in and honestly and I practiced in this area for a while, companies want to cooperate with the government so that the government will clear the deal and not sue. So they often enter into agreements to toll the 30-day clock, while the government thinks through the case and they try to convince the government that there really is no case, et cetera. But your fundamental point is exactly right. The government could have sued to block the Instagram merger in 2012, it could have sued to block the WhatsApp merger in 2014, it could have sued at any point since then to unwind the merger which is what is doing now in 2020. It is suing to unwind the merger.

Dan Rodriguez: So, one might have feared and you mentioned it when you were talking about the competition. One might have feared that Facebook bought up Instagram and WhatsApp in order to kill them, so-called killer acquisitions, right? We’re going to deal with competition this way, buy them up, and kill them the buy and bury strategy, I think it was mentioned, but they didn’t do that, right. And so, they continued to have these apps up until now. So speculation, does that strengthen Facebook’s cases that they basically acquired these companies and they’ve continued to let them run or does it weaken Facebook’s case?

James Spader: If you were the Federal Trade Commission, the story you would tell is this “Instagram and WhatsApp were developing functionality that was not yet inside Facebook, right?” The pictures from your cellphone, technology of Instagram, the messaging technology of WhatsApp were technologies that were drawing customers away from the Facebook platform, and therefore, creating a new place in which customers sold their data to a social network for the ability of that social network than to attract advertisers. But when Facebook acquires Instagram, or acquires WhatsApp even though they keep it separate, a separate service, a separate brand, et cetera. The data on the back end is now part of the Facebook enterprise, and there’s not competition with Facebook in the same way. That’s why one of the overall stories here when you think about that Facebook customer is really quite tricky because the Facebook customer isn’t paying Facebook any money to use Facebook, they’re paying for the use of Facebook by giving the personal data that then Facebook can use to sell behavioral advertising.

Dan Rodriguez: Interesting. So I guess we could look at it in two ways, but these are independent and supplement the government’s argument. The government would argue that this these mergers and their unfair practices damaged consumers, right? The customers as it were but also advertisers. Is that sort of the essence of the complaint that advertisers are worse off than they would be if there was an open marketplace with these companies thriving?

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James Spader: That that’s exactly right. That’s exactly right. With respect to consumers, the consumer harm argument that the government will put forward and it’s a consumer harm argument that they’re going to put forward in the Google case, as well. Is that limited competition means that customers don’t have choices among social networks based on those social networks privacy policies, right? The only social network that they can pick is Facebook and Facebook has extraordinarily, let’s say, at acquisitive privacy policies. They acquire the data of customers really quite completely, whereas if there were competition, consumers might be able to choose a social network that has a better privacy policies more pro-consumer on privacy policies. On the other side of the market, the advertiser side of the market, it means that Facebook doesn’t face as much competition in behavioral advertising because it’s one of the only places with a significant amount of social network personal data.

Dan Rodriguez: Okay. Let’s take a break and we’ll come back to talk about the Facebook litigation some more.

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Dan Rodriguez: I’m back with Professor James Spader. We’re talking about the Facebook litigation. So James, you might tell me that this is irrelevant, but let me throw it out there. Facebook competes the service and the industry it’s in with WeChat, right? With this mega Chinese company in the same marketplace, et cetera. Maybe this sounds like a script written by Mark Zuckerberg, but bear with me. So, they’re acquiring companies and they’re looking to become bigger and more powerful and all of that because they’re looking to compete in an increasingly global marketplace in which WeChat has enormous power by virtue of the Chinese economy much less by way of rules and restrictions, not to mention privacy, not to mention other kinds of issues. Does that matter for the antitrust claim and the unfair practice claim that Facebook is really looking to compete against this Chinese behemoth?

James Spader: I think it does matter and I find one of the interesting issues in the case, the definition of the geographic market. To take half a step back in order to prove the claim that they’ve reduced competition, one of the fundamental questions is reduced competition in what market? And the market then has to be defined in two ways, the first of which is the product market. What is the thing being sold or the service being sold? The second is the geographic market. And the government the Federal Trade Commission in this case defines the social networking market geographically as the United States, but Facebook is a worldwide phenomenon as the complaint itself says. There are more than 3 billion Facebook users around the world, and if you think about the global internet platforms, WeChat is the most similar platform to Facebook. Now WeChat does a number of things Facebook doesn’t do it also behaves in some different ways, but it’s also the case that unless you’re a U.S. citizen who has a reason to be in communication with Chinese mainland or the Chinese diaspora around the world, you’re rat on WeChat, right? So, there are not a lot of users who are moving back and forth between Facebook and WeChat, except for Chinese who are living in the United States. At least that’s the data that I’ve seen. But you’re right. One of the competitive stories that Facebook will tell is we needed to bulk up our functionality because we’re in a worldwide battle and when you look at the market for social networking platforms, you shouldn’t just look at the United States.

(00:20:02)

Dan Rodriguez: Well, let me ask a follow-up to that. Do advertisers who look to advertise on Facebook decide between Facebook or WeChat? I imagine those were two very different markets as well, right? I mean, in support of the government’s position, yes, there may be two social media platforms but they’re on different planets in terms of accessibility and negotiability among advertisers.

James Spader: Yeah, I think that’s the key question. I don’t have any insight into that data although, I’m sure that the lawyers and the economists who are working on these cases are going to be asking exactly that question. What is the substitutability that advertisers might see among those platforms? If what I’ve seen about the fact that consumers don’t move between the platforms is more or less right then advertiser probably don’t move between Facebook and WeChat in the same way. But your question reveals a more fundamental issue with respect to the advertising market, which is if it’s the advertisers that we care about maybe advertisers aren’t choosing between Facebook and WeChat but at least in the United States they could choose between behavioral advertising services from Facebook and behavioral advertising  services from Google, behavioral advertising services from Twitter, behavioral advertising services in some case from Amazon. There are a number of other big platforms that have access to substantial amounts of personal information that can provide targeted advertising services.

Dan Rodriguez: Well, that’s one of the ironies. I mean, I don’t work and dwell in this

area but when I think of, sort of, be careful what you wish for if the government is successful in breaking up Facebook, right? In kind of unraveling this merger, it’s not like the government has succeeded in breaking up Big Tech, right, and the great beneficiaries just as you know might be other Big Tech companies no more so than Google and Amazon and who knows maybe even Twitter. So that strikes me as one of the perils of the government strategy.

James Spader: Yeah. One answer to that, of course, is to say “well, they got it right to sue Google, they got it right to sue Facebook, they should be suing amazon.” The European antitrust authorities often talk about the GAFA, the Google, Apple, Facebook, Amazon as the platforms that are all anti-competitive. That is less a common description in the United States, but for the past few years, there has been increased attention to the platforms as a whole. Is Amazon the next antitrust case to be brought in the United States? I don’t know the answer to that, but it is already the case that the European antitrust authorities have brought a case against Amazon following on cases that they’ve been bringing against Google and Facebook for some time.

Dan Rodriguez: Interesting. This may be a question more germane to the Google lawsuit than the Facebook lawsuit. That is with the arrival of the new administration, the Biden administration which of course is going to announce an attorney general, any day now and the Department of Justice. FTC as you know, it is more independent and so it’s more complicated in this respect. Is there a possibility the Biden administration will just bring this all to an end? Say, never mind and withdraw the suit

against Google and then maybe even look at the Facebook litigation and how likely would that be?

James Spader: I think there’s a possibility. My own view is that it’s rather unlikely. And one of the reasons that I think it’s unlikely, well two reasons, the first of which is if you think back to the democratic primary however, long ago that was.

Dan Rodriguez: It seems like a lifetime ago.

James Spader: There were a number of candidates, Elizabeth Warren, most prominently but a number of other candidates who talked a lot about a reinvigoration of antitrust and talks specifically about the use of antitrust against the platforms and in fairly aggressive strokes. And I think that that wing of the democratic party is still around and it’s going to put some pressure on the Biden administration. The second piece of evidence that I would point to is one of the reasons you have 40 states or 40 plus state attorney generals is the state attorney generals are showing us. There’s a bipartisan support for taking some action here. Interestingly, those on the progressive left and those on the right have a different set of complaints usually about the practices of the platforms, but there’s a fair group of people on both the left and the right who think “something must be done” about —

Dan Rodriguez: Well, that’s a real striking element of that. And let’s shift a little bit from the feds to the states and what is the, you mentioned the politics the very interesting politics and may be even the electoral politics that exists within the states, as a matter of law though, what do the AG’s complaints if anything add to the mix that’s not provided by the FTC lawsuit?

(00:24:53)

James Spader: Nothing as a matter of substance that is to say the theories of anti-competitive action are very much the same. They’re not a hundred percent the same, but the theories of anti-competitive action are very much the same. The states have

parens patriae authority that the parent of the people authority to bring cases under the federal antitrust laws. So, I said before, there are two federal agencies. There are two federal agencies, they are all the state attorney generals, there’s private litigation.

One of the features or bugs, if you prefer of our antitrust laws is that it has multiple possible enforcers and the states are enforcers of the federal antitrust law and they are also enforcers of their own state antitrust laws, although in most cases those state

antitrust laws are very similar to the federal law.

Dan Rodriguez: Are they very similar with respect to damages and remedy? I recall that under the Sherman Act, you get treble damages if you prevail. Is that does exist under state law such there could be supplementary damages, that could be enormous if Facebook were to lose this case, right?

James Spader: Absolutely. And in in fact, under state law, some forms of damages are available that are not available under federal law. How big the total amount of damages could be is a story yet to be told, but it could be in the hundreds of billions of dollars or more. This is about the company case for Facebook just as the Google cases about the company case for Google.

Dan Rodriguez: So among Facebook’s challenges there’s a fundamental, I don’t

Know, whether to call it a procedural challenge but they have to negotiate against many many parties, right? So if the FTC says “well, never mind” that doesn’t end AG lawsuit, right? And there’s all these different attorneys general. We’ve seen that in the context of tobacco litigation, the opioid crisis. It’s a big tent. So, your task with negotiating this on behalf of Facebook, I’m thinking of a settlement. You basically have to get all the parties in the room to make everybody happy?

James Spader: Yes. That’s exactly it and in my experience both prior to this as prior to becoming a professor as a practitioner and more recently in just watching these cases, you will negotiate with everyone. You may break them into pieces negotiate with the federal government first and then a coalition of states, but you’re never going to get a hundred percent of all the private parties to agree to the same settlement. So, this is the kind of case with enough parties and enough possible follow on litigation that even if Facebook and Google reach an agreement with the federal government, there’s likely to be continuation. However, the presence of the federal government as a plaintiff in an antitrust case is something that carries a lot of weight with the court, right? It doesn’t carry a lot of weight with the court as a formal evidentiary matter, right. This isn’t administrative law, there’s no presumption that the government’s decision to bring a lawsuit is the correct decision, but nevertheless, the courts particularly the federal courts understand the Department of Justice and the Federal Trade Commission to be the most sophisticated litigants with top economists and top technologists and if they get out of the way that is to say, they settle the case for

relatively little change in behavior. The whole tenor of the state in private cases will change and they’ll become easier to settle if you’re Google or Facebook.

Dan Rodriguez: Interesting. So, have you seen the film A Few Good Men, right? We tend to over quoted at all times I’m thinking of the colonel and the witness stand. colonel says “as he’s being cross-examined by Tom Cruise, you’ve just weakened the country today, Kathy.” So, I’m going to ask this question this way. So Facebook may have been responsible for these bad practices, maybe the mergers were more than unwise they raised anti-competitive effects, but ought we to be sympathetic to Facebook in this sense, the breakup of Facebook, the ultimate relief that’s being called for, does truly portend the weakening of a tech company that has been of so enormous

benefit from demand for among the public. Who will never have an access to WeChat or never having access to any of the smaller companies? And that the result and the remedy may be an enormous setback for consumer demand. Now I know that I’m giving a sympathetic speech on behalf of Facebook, but I’m thinking about it from the advantage point of the American citizenry. Is that a risk we run?

James Spader: That’s absolutely a risk. I mean the five biggest global companies right now in terms of market value are Google, Amazon, Facebook, Microsoft and Apple, right? And there are the competitive success stories, the worldwide competitive success stories. You haven’t actually asked me yet what I think of the litigation but I think that’s something very serious to worry about. It was a worry that was put forward in the Qualcomm case in a very similar manner. Qualcomm is one of the world’s most important tech companies. And the issue of whether antitrust remedies against Qualcomm would have limited its ability to compete on a worldwide stage against tech companies from other countries in particular was front and center.

(00:30:00)

And I think those issues are quite present here. I think that the more you talk about the five platforms the more you can see that there are competitive overlaps between those platforms. Do they do separate things sure? Certainly, none of the companies delivers physical goods the way that Amazon does, and none of the companies delivers video the way YouTube and Google does, but there are very strong similarities and those similarities end up on the back end with respect to the relationships between consumers and their data. So, I think this issue of overall competitiveness is both really important in evaluating whether the government should be suing. But also, it is important in evaluating whether Facebook can really be described as just a social networking company that is standing independently and in a completely separate market from these other platforms.

Dan Rodriguez: Great, that’s excellent. Just by way of wrap up, if I could pivot from that to the larger question you’ve touched on it when you mentioned Elizabeth Warren and others we’ve got this raging conversation, right? About Big Tech and the role of Big Tech and whether it’s the evil empire or something else and it’s an interesting Venn diagram, right? As you noted in the context of the state AAG’s between sort of populous on the so-called political right of the spectrum and very far on the left. So I want to ask you this, in having this public discussion among sort of we, the people, are we asking the right questions? Are we really asking the right questions about Big Tech and the role of Big Tech, or there some different questions that we’re not asked that might lead us to a more sense and common sense in dealing with these issues?

James Spader: Well, I think we do when I ask the question whether these platforms are engaged in certain kinds of anti-competitive practices. I am reluctant to conclude that what we should do is to break up the platforms, but there are some contracting practices these access restrictions that I referred to earlier the third part of the Federal Trade Commission’s case could provide some grounds to open up the scope of competition. And I think that those sorts of remedies which would stop short of breaking up the companies are very important and our part should be a more central part of the conversation, but the other piece of the conversation that these cases require and I think hasn’t really come to the fore yet, is the debate over privacy regulation, right?

Dan Rodriguez: Okay.

James Spader: What we’re talking about here is fundamental concerns about the use of consumer data and how it interacts with behavioral advertising, and it seems to me a quite open question that even if the market were more competitive would it actually be more protective of consumer privacy? I have my doubts. And I have my doubts largely because I don’t think that it is possible for individual consumers to attends to privacy in the way that we think could be beneficial. And so, what I predict is that as these cases go forward, the government and the parties will begin to talk in more serious regard about privacy regulation, and that would be a good conversation. And in fact, what we say in general is if we can regulate the harm directly, let’s regulate the harm directly if it’s a privacy harm, instead of breaking up the companies through the way big hammer of antitrust law.

Dan Rodriguez: Let me ask you one additional question, it actually harkens back to your mentioning of the political battle within the states that centers on maybe the role of Big Tech, and you mentioned also Elizabeth Warren before. I guess I want to ask the question this way. We focus on what the remedy should be with respect to Facebook and the attempt to break up Big Tech and all of that, I’m wondering your thoughts about whether we’re asking the question about the role of Big Tech and the role of law in protecting us from Big Tech or enabling Big Tech to function in the right sort of way. And how we might ask those questions in a way that would be ultimately more fruitful?

James Spader: Yes. I think there are two ways that I would approach this that I think are more productive than the question of breaking up Big Tech writ large. And the first is to focus on what is the third part of the Federal Trade Commission case, the competitive practices that they have that restrict the ability of a new social network or a new competitor to come into the market and those are the contractual restrictions. Let’s say, if you want to do business with Facebook, you can’t do certain things that might down the line turn you into a competitor to Facebook. And so, I would like to focus on those sorts of walls around competition that the platforms build as opposed to talking about breaking them up writ large. But the second that I think even more important conversation is a conversation around privacy regulation

(00:35:00)

One of the fundamental assumptions of the government’s case is that consumers are being injured by the way their data is being used and that it would be better if consumers had a competitive market and could, therefore choose how their data was

going to be used. But I don’t have the same confidence in the markets being able to

solve the harms that arise from the use of consumer data. In fact, I think it is more like health and safety regulation than it is like market regulation. And so, in those circumstances I’d like us to have a really serious discussion about what sorts of

privacy regulations we should put on the use of consumer data, and in fact, my prediction is as these cases go on, the government and the companies will have that

conversation and that may be where the settlement for the antitrust cases actually comes. Agreements about how to treat consumer data.

Dan Rodriguez: And I take it that even out of those agreements that may come from settlement or relief, those conversations need also to happen in congress, right? Within the White House and within the administrative agencies just to be able to tackle these issues in ways that however, Herculean the efforts of courts and lawyers need more folks at the table.

James Spader: Absolutely. And congress is really the key piece in this puzzle for almost a decade. The Federal Trade Commission has been publishing reports, holding workshops, giving testimony in congress, and saying to congress “we really need you to bite down on the question of privacy regulation in the internet and more particularly in the large platforms” and there hasn’t been that movement in congress. I don’t know whether to be optimistic or pessimistic that congress will come to the table, but there the key actor, right now.

Dan Rodriguez: Well, thanks so much James. It looks like we’ve reached the end of our time for this episode. I want to thank Dean James Spader for joining us today. If our listeners have questions or wish to follow up with you. How can they reach you?

James Spader: They can find my email on the northwestern website [email protected].

Dan Rodriguez: His professional life is an open book. And I want to thank our listeners for tuning in. If you like what you heard, please rate and review us in Apple podcast, Google podcast, Spotify, or your favorite podcasting app. I’m Dan Rodriguez signing off for Law Technology Now until next time. Thank you for listening.

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