Transcripts For CSPAN3 House Judiciary Subcommittee Hearing On Online Data Privacy - Part 1 20240713

One on the role of data and prime fancy into competition. I recognize myself, i should state the obvious im, not bitter of the subcommittee, and chairs the subcommittee, the chair of the committee will be here in a few minutes. It has never been easier to share news and information that content and communicate with loved ones, all at a moments notice. Given the technological recognitions it, has added to the balance of power in our economy. Its important for us to understand how this affects americans, what is causing the asymmetries of power and whether these new and growing inequalities are compatible with our democratic values. The committees ongoing is a key part of this practice. Todays hearing, we will examine the role that data plays and maintaining any qualities of power, and how this affects competition. As previous hearings have shown, the growing share of Congress Communications is now controlled by a small number of companies. These platforms are innocent, largely intermediaries, perfectly positioned throughout each communication that passed through its channels. Well intermediaries have collected information on the platforms, they have an unprecedented ability to surveil users across the internet. This Data Collection includes information not only about the shopping habits, but also about the time that they wake up and go to sleep, the precise location of each hour of the day, and the content of the most private communications. Several of these platforms amassed their revenue through digital advertising, these firms also have an incentive to connect as much information as possible, so that they can target consumers with precision. This can also be used by companies and more nefarious ways, distributing information based on race, gender and income, or otherwise intrude on personal privacy. I hope this will be addressed in todays hearings. First, how our Digital Technologies and the constant Digital Technologies enabled affecting competition . In Digital Markets, maximizing days a can provide a significant advantage, a large growing set of use allowed farms to improve existing private services to expand with a competitive edge. The most nominated companies are those that have captured the most data from as many sources as possible. We are the First Company to establish a competitive league, winning the market, crushing any competition. In other words, competitive in Digital Markets are ensuring as much information as possible, as part of a Long Term Strategy to achieve market dominance. This raises serious questions about whether it is good for society, for unrelenting Data Collection on which companies are looking to oust, as he pointed out. The fact that several major platforms make most of their profits by selling, items those incentives. The second question i hope will be addressed, its how Data Collection increases the number of ways the dominant companies can abuse their market power. Theres the collection of data enable what they should recognize us anti competitive, for example platforms that service intermediaries and critical insight into their Business Models, a dynamic that raises significant competition concerns. These issues in mind, able forward this to our Witnesses Today, and i now recognize this Opening Statement to the breaking member, former chairman of the committee. Thank you for this. We continue our oversight in the tech industry, to date, our primary focus is on line platforms. The role that Data Platform play in competition in the ways in which we can better protect the privacy of consumers online data, largely concerning these platforms. Data is most of the internet, numbers issues for all around the use of this, for example, these include allegations that, one, platforms can operate as a barrier to market buy new platforms. To, platforms hold large data bases can leverage that data to compete unfairly with thirdparty competitors that are dependent upon their platforms. Three, the incumbent platforms can kill off competition, for Data Acquisition and market shares. Its my hope we can determine fact from fiction when it comes to these allegations, and i have stress beforehand i trust these laws will not exist to punish success but to foster it. Congress an anti trust enforcement agencies need to be careful not to over reach, to extend or apply Anti Trust Laws in ways that in the punishing success. Surprising innovation and limiting consumer welfare. The supply is not the issues concerning competition for data, but also it applies to the issues concerning privacy. If youre going to address the data and Consumer Data Privacy through legislation we might get it right. I did not say this in a vacuum. Governments in the United States and europe have already begun to lay down loss to address these issues. The most prominent example being in the European Unions general Data Protection regulation, or gdpr. Following in its footsteps they have passed the California Consumer privacy act, which is substantially modeled on the gdpr. Testimony offered before the Senate Judiciary committee in march, one of our Witnesses Today offered a powerful indictment of the gdp our. However, they are producing substantial Collateral Damage to consumer welfare, innovation, and the health of the digital economy. It is likely that the ccpc will have the same effects. All of these effects are avoidable. Its imperative that we identify and put into place a better means for protecting Consumer Privacy online. I hope our Witnesses Today can help us work through these important issues. Before yielding back, let me put a number of statement to the record that i have received one from georgetown university, the second is a joint statement by the national cta and u. S. Telecoms, a letter that has been sent to the chairman and myself, a letter for that choice. I think the chairman of the four committee for opening this. In june we launched a historic investigation into the state of the competition in the digital marketplace, the purpose of this investigation is to document conduct online and to examine the dominant farms are engaging, and to assess whether we are adequate to address these claims. We felt as a top to bottom review. Most recently, we have had documents from the dominant platforms. On monday, tens of thousands of documents and we expect and review additional hearings as well. To ensure that the goals of the investigation are met. As ive said, this is essential to the constitutional responsibility to conduct the oversight enjoy theyre working. We enacted the Anti Trust Laws and Congress Must be responsible for determining whether the current laws or enforcement levels are keeping up with the Digital Markets. We have a lot of work ahead of us, but i am proud of the efforts of my colleagues, along with their dedicated staff to continue this bipartisan work together. Todays hearings will advance a key online. We have published groundbreaking reports that focused on this issue. As the support of noted, that is at the heart of competition online. An exhaustive report concluded, and i quote, that the breadth and depth of our user data, collected by the incumbent digital platforms, advise them with a strong competitive advantage, create barriers to rivals entering and expanding in market, and allowing the incumbent digital platform to expand into adjacent markets, in quote. One of our seemed witnesses here today, suddenly reporters that large tariffs of data made tip markets in favor of a single dominant platform, killing of competition. That played an Important Role in the ability of startups to attract capital to compete with forms in this market. A panel of experts led by protector scott morton for the university of chicago reporter that investor as, they explained a new entrance starved of data, quantitatively speaking, relative to a tech giant, is at a competitive and they view the data deficit as uncomfortable. They will get locked out the market and never offer innovative, that data can be abused by platforms for purposes, they have created an innovation kill zone around dominant firms. Whether its facebooks use of an over, and the weaponization of api to block competitors, the abuse of data has serious ramifications for competition. This persons an opportunity to examine the role of privacy online, as a growing consensus that privacy as an important. This is critical for revenue. And a statement, we know that market consolidation allowed platform that buy escalating prices but by diminishing quality. Furthermore as weve reported, misuse of data not only indicator of a lack of competition, but also since the farm dominance in the market as well. In a market that has viper competition, farms have strong incentives to respond to demands by improving the safeguards to the products, without a competition and no incentive to deliver privacy. I recently had the pleasure of discussing this with the Harvard School business, who has written about the rise of surveillance capitalism. The point that she made that struck me was at the pattern of automating business for more clicks and better predictions is itself a market extra allergy, there is no consumer demand for this service. Americans dont want to have their data mind so they can be shown another advertisement. Theres no escape, because theres no alternative. People are stuck with bad options, or no options at all, which is evidence of a market failure. Furthermore, companies i want to compete by Offering Services that deny, which enforces the market dominance of the farm. Its increasingly clear that the relationship is not either or, their mutually beneficial concepts that must be at the forefront as we continue to consider prospects of the internet to beautiful promise. Before closing, i want to thank commissioner and chairman for their statements submitted for todays hearings. He was originally scheduled to testify between change in our schedule he cannot attend. Nevertheless, i think kevin his team for their hard work against this issue. Now its my pleasure to introduce todays witnesses for todays hearing. Our first witness is the honorable reheat chopra, before joining the ftc he was instrumental in working on the, and became the First Student loan lawmen. He made significant inroads towards addressing the, he was nominated to serve as an ftc commission and was confirmed unanimously by the senate on april 26th. He received his ba from harvard university, and is in the a from university of pennsylvania. He is a professor in london since 2007. Before, he served as a chief economist for three years, where he focused on competition and Digital Markets. He has served as a professor in the university of warm, he is also a research fellow, and received his masters and ph. D. From the London School of economics, in addition to his work as an economist, he also received his flute diploma from the musical conservatory in toronto. Our third witness is, a professor, the chair of economic advisers during present a lot of second term. He was insistent to the president of the National Security council, he serves as a non resident senior fellow, as well as an adviser for the uk government. He received his ba, and may, increase the from harvard university, as well as his masters and science from the London School of economics. Finally, this is a visiting scholar, he also served as a visiting researcher at Albright University as Vice President in copenhagen, before her tenure, she worked at ibm, and has published multiple publications including four reports and served as president trumps Transition Team in 2016, helping to establish his federal communications commission. Doctor layton received her nba from layton, her nba from rotterdam, and ph. D. From altright university. Thank you for participating in todays hearing, and now if you will please rise out begin by swearing un. Please raise your right hands. Do you swear that your testimony is true and correct to the best of your knowledge, so help you god . Let the record show the witnesses answers a formative, thank you. You must be in seeded. Accordantly, i ask you summarize your testimony. Its a timing on the table, when it switches from green, you have one minute to conclude your testimony. Commissioner chopper, you may begin. Thank you. My name is robbie chopra and i served as a federal trade commissioner. Oversight from congress is a pillar of sound transparent government, and i have been honored to testify many times before members of congress, including before chairman elijah cummings, whos energy and passion will be missed by so many of us. Todays topic could not be more important for timely as it seems almost daily we learn a problem stemming from lack of concentration. We need to focus on four ways their companies undercut competition, concentration, conflicts of interest, contracts and capture. Market power is concentrated with a few giant in so many industries, conflicts of interests allow these dominant firms to sometimes read the market in their favor, at the expend of upstart and new businesses that fairly compete. Onesided, take it or leave it contracts and online terms of service impose self serving regulations on consumers and Small Businesses. All too often, the government is to captured by those incumbents to use their power to dictate their preferred policies. In my testimony, i discuss how competition in the market is structured around data, a valuable asset with a very unique economic futures, we need to take this into account. Our personal data is powering the profits and dominance of Tech Companies that offer basic Services Like email, search or photo sharing that are not truly free. Fortunately, many of my colleagues around the world are also pushing forward. Reports from regulators and australia, the united kingdom, the European Union, are must rates for this committee and everyone concerned about the future of our vigil 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. As we do, its important that the federal trade commission conduct a rigorous review of quantitative market data and analysts sense of the financial incentives dragging market behavior. Since during the commission, i have argued that the ftc should be using our authority under section six be 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 of states, both republican and democrat are teaming up to investigate anti competitive conduct. In this moment, it is all hands on deck, and i stay in constant communication with that. Decades ago, our state eighties played a pivotal role in ending microsoft chokehold over the future of the internet, and without that action, there would likely be no google, no facebook, and no amazon. While the ftc is a recent settlements with facebook and Googles Youtube included finds that made for a great headlines, they did little to fix the core problems that fueled these companies to data abuses. Big fines are not big penalties for the worlds biggest companies, and as weve seen time and again when a template company can pay a fine from its gains this is not a penalty, this is an incentive. As congress, federal anti trust enforcers and state attorneys all pursue their investigations we will need to pursue remedies that reduced concentration, eliminated conflicts of interest, or send abusive contract terms against Small Businesses and limit capture. For example, recent scholarship has revealed that anti trust actions that separated lines of businesses are required, for ordered more patent available for public use after competitive conduct, all elected massive innovation, Small Business entry and economic growth. These are useful tools in the tool box for policymakers and enforcers to consider went looking to build the remedy and prevent arm. In conclusion, while some believe that lax enforcement and absentee government at the ingredients of innovation, history teaches us it is the opposite. Without a vigilant and active government promoting competition markets, sometimes that means providing corporations with benefits, like limited liability, license contracts and other opportunities, but free and fair markets wont work without meaningful consequences for lawbreakers. And in action as a price we cannot afford to pay. Thank you. Thank you, i now recognize doctor Tommaso Valletti for five minutes. Good morning and thank you very much for inviting me. My name is Tommaso Valletti and i professor of economics at the Imperial College in london. And i was the chief commission economist of the European Commission. In that role, and let the Economic Analysis of several cases involving digital platforms, including google, facebook apple, microsoft and others. I would like to make four points. My first is about data. Some commentators have argued that its the new oil, others have argued that its as common as water or air. These generations are not useful. Data is key to digital platforms, and a few gatekeepers are in a position to control the linking up a fierce across platforms, online services, and websites. They can combine several data sets and created super profiles of individuals. This is a market for individual attention, where analysis has to be conducted, as an example. If we open all of our Facebook Accounts if we have one and looked at the ads popping up, you would see totally different hands. This is completely different from traditional media. Unfortunately, the debate is not helped by the lack of public empirical studies in the field of economics. I know already the Silicon Valley part of this to say they are all like that, this would not be true, i can think of airlines, and cunning data sets that would be available in those sectors. If it really is paradoxical for this data economy, which is simply unprecedented amounts of data. My second point concerns the extent to which enforces such concern concerns over private laws. Privacy is at the core of the economics of digital platforms and competition and shaped around it. Competition takes place alongside several dimensions, only one of them is quality, choice and innovation. In fact, wind dealing with digital platforms, it is not make sense to focus on prices. The Business Models is to give something away for free and order tomorrow denies advertising, quality will be relevant for consumers of this. Lack of competition, we need to reduce quality, a reduction in protection. My third point is that privacy degradation can lead to real consumer harm. Data breach, identity theft, but also conservative profiling that is not done in the interests of consumers. Part of the problem is that incumbents have the ability to impose terms of service that are not understood but accepted by consumers because of a lack of alternative. This is an indication of market power. What is red and obscure terms, what did they mean . Think of phrases like we may share your data with trusted businesses. They see the benefits of clicking yes we cannot assess the implications of giving away their data that are banned by designed the service. This undermines the role played by consumers and by competitors. My last point my conclusion is that anti trust cases involving data and privacy can be, as an exploitative conduct. This is captured by the current law, another church to actions it is not. And the u. S. It is not. Still it, would be wrong to ignore exploited of conduct. The data, privacy are not separable. They should be considered and any assessment of the state of competition and of market powers of online platforms. Lower Data Protection can lead to a standard of exclusionary behavior, from dominance to privacy, this money can be used to scrutinize competitors. And can further force the data incumbent by cross linking data and create a vicious circle. These are conduct that in my opinion should be investigated. Thank you for your time and i look forward to your questions. Thank you, and i recognize doctor furman for five minutes. My name is jason furman, professor of Economic Policy at the Harvard Kennedy school. I recently chair the uk digital competition expert panel, which produced a report unlocking digital competition. One of our recommendations was that the uk established a digital market unit, and served as an unpaid adviser to the uk government as we move forward with accepting that recommendation that my panel made. Today, i am 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 that data can serve as a barrier to entry, behavioural by as hes on the part of consumers. The access to capital and brands. Many of those are present and many markets but the combination of them and the extremes of all of them is unique to the digital platforms and makes it very difficult to have competition in the market. The question of whether there can be competitions for the market is a more speculative one but theres a number of reasons, including the persistence of the major platforms, and believe that the competition will be difficult, absent policy changes. My second point, which was covered is that this has cost to consumers. The services are not free, and consumers may have been compensated, theyre paying in the form of data, 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 its because the benefits that consumers get from scale and scope. You want to preserve the ability to consumers to have this benefit. Some of the reasons is because of unfair competition and because of what is not organic growth due to mergers that have been improved, often without any scrutiny. The key to policy is to preserve while competition is a source of innovation unless the private sector drives that innovation. To that end, my third point is that merger enforcement needs to be more robust in the digital sector. Much of the growth we have seen has not been organic growth due to efficiency but has been acquisition. There has been no efforts, but there have been errors in allowing acquisitions to go forward that have harmed consumers. And approach should have more, so they have to Technical Expertise to deal with this. The merger analysis cannot focus on short run static effects, but also on potential competition, innovation, and take very seriously data as the barrier to entry. Third the, increasingly high bar for blocking mergers probably needs to be addressed in a legislative manner and sums for up shifting the burden of proof. Finally, my fourth point is that even with all of that merger enforcement will not be sufficient to deal with the horses that have already left the bar. Anti trust groups can help but it can be slow, can have a hard time addressing behavioral remedies and that is why i proposed in the uk, and i think what makes sense in the United States, the establishment of a digital market unit. Im optimistic about whether its an existing body like the ftc, the important thing is to functions. A code of conduct that was backed up by enforcement authorities, the second function would be systems with open standards and data mobility, which would enable more entry and competition, and the third function will be a greater degree of data openness. With this approach, we could avoid some of the more extreme market disruptive steps. Im sure consumers get all the benefits a fair competition but, also enable new entrance to compete, and through the market and even deliver further benefits above and beyond what we have seen today. Thank you. Thank you, i recognize daughter layton for five minutes. Good morning and thank you. Chairman adler, chairman cicilline and Ranking Member, im honored to join these Panel Members and contribute to this important conversation. I want to recognize and thank the Committee Staffers to prepare for preparing for this hearing. This testimony represents my own views. As professor Tommaso Valletti lays out, we know nothing about privacy. The qualification of harm and how many violations regulations would deter. Without these key points of women situation, its illadvised to build a regime that pursues that regulators are in the no. The best numbers i have come from , who estimates there are a few violations per year, a small number given the size of the economy. Given the good policy informations available, regulatory advocates look for other arguments to justify their preferred approach, such as competition. Many wellintentioned policies are promoted on this premise that they will 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 sliding off an access, harnessing a controlled point is a powerful way to govern a system. Commissioner chopra suggested theres a royalty controlling our system, but theres also a commissioners loyalty controlling our politics. The reality is that regulation false markets access. Theres no surprise that anti trust authorities around the world and across the u. S. Are looking at our politics. This may make nationality by using the bully pulpit of the state. Fortunately, congress can tamper the self interested actors so that no one state can dictate the commercial terms of our national economy. Im extremely grateful that this congress is considering updating the privacy framework for the digital age. We can learn a lot from the European Union, which has had a two decade natural experiment and regulating the tech economy. The long term trends and outcomes are clear, by looking at the European Commission scoreboard and the euro stats surveys. While large enterprises, small and long, they have a hard time growing. They dont invest in information technology, and they transact little across borders. After 18 months, we can see that the largest advertising platforms, whether fledgling rivals have lost ground. They propose a set of six costs. Only the largest players can afford the requirements of, fees audits impact assessments, Software Updates and so on. Last in half of all companies can comply with these regulations that cost 3 Million Dollars perform. Consumers are no better off, there at the lowest point since 2006. And contrast, the United States welcomed 40,000 new internet start ups last year alone. We have been fortunate to have a Single Market from our, founding and a tradition of bottomup roles that were based upon real world harm. With its 77 regulations on enterprise, they have 22 more obligations in the gdpr. A preliminary cost benefit analysis prepared by the California Department of justice suggests that cost exceeds benefits by a factor of 14. It notes 70 billion dollars and start up and running costs for compliance. These costs go to privacy lawyers and consultants. The consumer benefits are estimated generally at it we are five billion dollars. Its hard to see what is progressive about giving a windfall to the privacy bar at the expense of consumers and Small Businesses. These are companies plus 500 employees or less, they make up 99 of the california businesses. These other companies that will bear the brunt of regulations, which are dreamed up by the regulatory royalty and emir month. Take appeal to justify this regulation on human rights is part of an attempt to avoid the fourth discussion about the costs. In closing, there the right way and a wrong way to do Privacy Protection. Gdp are the wrong way. Good regulation should cause little to implement, a little to understand, i appreciate this committee is considering alternatives. We and strengthen the largest players. Im optimistic because the market we are talking about is a third of our national economy, the other percentage is where our opportunities are. That is where the Data Revolution has not come and where we have the opportunities to grow, where we can transform legging industries in health and transportation. So the important part is if we want these new companies to emerge, and we want to emerge the status quo we have to make sure we dont kill it and the great aware regulations that stop the innovator at the gate. Thank you, i will proceed under the five role and i recognize mr. Nadler for five minutes. Thank you. Professor valletti, the largest tech platforms have acquired accompanies globally without any chance from antitrust enforcers. Is there any evidence to suggest this exemption was a mistake . This is my personal opinion. Please use your microphone. Sorry. There has been anti trust immunity in the tech sector for far too long, Google Facebook had, very few happen that it. You will notify some mergers if theyre above a certain threshold and the threshold is dictated on the turnover of companies in the past three years, but also pharmaceutical companies have turnover are not yet there. You dont have the two to intervene. Yes, i do think we have severely under enforced in the area, which means not necessarily those markets were bad. But we should have investigated them for. Sure i ask you the same question. What with our world look like if google had not bought youtube . Or amazon had not bought many of these acquisitions that many believed could grow on their own to be their own big giant. I agree that under enforcement can really kill innovation and kill entry because when its harder and harder to break in, that suggest that for Small Business, and bad for all of us. Thank you. Professor valletti, was it antitrust in be doing to ensure dominant platforms are not following up but initial competitors . The simple answer is run open cases and investigate. The point is, i already know there is a response, that entrepreneurs want to be bought, this is an exit strategy they want to capture on their own invasion. Dominic company should not be allowed to buy those. They cannot be bought by those. The chairman before mentioned it, spyware that facebook was using to buy some rivals, so theres a lot of things that we can. Do you also argue that the dominant platform tries to see policy to intrench and dominance. Explain how that works. There are different ways. One way could be for instance a company which is dominant and does not have alternatives, thats why its dominant, because you cannot find alternatives. This dominant company and you need to service will, ask you to sign up for whatever. You dont know where your data is going in jail know what will happen with your data. We did are going to be used to monetize something else, if its something genetic, even youre offspring. Money is going to be made from this high protected advertising. Once youve managed it you can do lots to prevent it. Why do you think that privacy is an appropriate factor to consider under competition law . The notion of competition is multifaceted. Since consumers care about privacy thats one of the major things that they have to give. Healthy privacy to individuals. Your view is beta big data creating barriers to break into markets. Big data is creating Entry Barriers and if you try to guess what the next industry is going to be, weve had success in from ibm to microsoft to google and etc, next is likely to be ai and Machine Learning and the companys best voice to take advantage of that out the larger incumbents now. The larger because if the data . Yes. Thats whats needed for this next stage in the economy. That may lead to my next question which is why is it is still a barrier to entry even though its not rivalries . Its not unravel roads but there are companies that keep that data and keep that data to themselves. They have economies of scale. This thing to do watch a large amount of data that are even much more then you can do with a medium or a small amount of data. A lot of that as a function of Public Policy choices that we have made about what data is and is not open to. A new entrants would have to assemble its own data starting from scratch . Yes. We are going to have the gentleman from colorado recognized for five minutes in the region with the intelligent of the witnesses and come back immediately after. Mr. Buck . I want to thank you for holding this hearing, i appreciate this. Doctor layton a couple of quick questions. Im going to go really basic. If im sitting in from my desktop and i want to go to the u. S. House of representatives website, or type in something on my browser, he was house up top of the area i click on it and a resolve or, a resolve or takes me to the website that im looking for. My understanding is that weve had a change in that to add inscription to the area. Can you explain why the change was necessary and where were going with that . The issue that you are talking about is the protocol, a new standard being proposed by google and mozilla. Let me from this issue. Ive discussed it in my testimony but 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. Weve seen from gdpr and other things like this that a number of viable resources that weve had on the internet for Law Enforcement, for copyright protections from Public Information, they have been masks and clouded because of techniques taken on by regulation. In this case where, you look at whats called the doh, in an effort to protect the privacy, is changing the architecture of the internet, which piece to be very distributed and modular. A number of parties would perform this redirect ask that you talk about what is the number of parties . We talked about tens of thousands. Whether they want to block militias content, and Law Enforcement uses this to find criminals and so on. This would all be subsumed into the information that the parties would use would be. Lost the reason is done because google and mozilla want to be able to get Marketing Data in that process, and pull that control point, as i described, into their own network, would normally would it would reside outside. This is just a coating tweak that can upset the entire balance we have built up today over all these decades. We no longer have tens of thousands of providers in this particular area . It would eliminate the industry overnight. Despite one major coating tweak. Its quite staggering how much a simple click like that, or not nicholas to, put a coating tweak can change it. Theres some users who may like it, who they want to have all my whole experience to being google, fair enough, but they have that choice . Now they have the default now. Yes. You can choose safe search, you can choose the difference settings. But what we are making worse off are all the Law Enforcement, parents, families who are trying to set up permission to protect their own privacy and their own preferences. Do we have any idea how many of these providers there will be in the future . Will it just be three or four, or will be once again you can imagine, you can have a kind of world where google consumes the internet test because of the way the things are coated. More things could be in encrypted. 70 of the internet is encrypted today because Consumers Want to have more privacy. But prior to encryption, large platforms can look at today that is there. Theyre able to use that to get the marketing information. So i dont have the number of how many dennis resolve are bailable today but there will be fewer. Its one of the Services Offered by a number of other parties out there. Mr. Chopra, thoughts on that . I think raising some important questions about who gets to decide this. When we just have one or two browsers that dominate the market and can make a coating tweaks, maybe for self serving purposes, thats something we have to be weary of. Conflicts of interest with this level of market power have to be top of mind because its not just about our economy. Like doctor layton said, it raises questions about how to protect children . How do we enforce our laws . To me, i think these kinds of regulations should be decided by congress, not a company with a conflict of interest. Thank you for your time. And i yield back. The chair recognizes the gentleman from georgia, who is anxious to ask questions before the break. Thank you. Thank you to the witnesses for being here today. Especially mr. Valletti, a long journey. Thank you. Many big Tech Companies have touted their data portability as the reason they cant be anti competitive, but few if any, are impenetrable. Professor furman, . They can operate on multiple systems simultaneously. Would you agree that one of them promote more competition than the other . Yes. I think the Technical Details about how, we use the word systems with open standards and data mobility, ways to do that that enable switching and multiple homing and other ways that force traceability to do that. How can interrupt ability promote competition . It enables abilities to have more choices, switch more entrance to come in and that youve accumulated. What would look like to have a social media platform to be truly into rubble. One its an email interpreter . If the email had been invented by a single company, it would have had its own protocols and you can only email people with the same email system. You cannot worry about whether there on the same email system, thats a true form of interoperability that enables more choice. Commissioner chopra, one could argue that privacy violations and other monopolistic behavior is incentivized by the ad based model. More data accompany as, the more data that accompany has the more company data can collapse and the more dominant again become. Can you speak to some of the compounding problems with the ad base model . One of the objects and i had to the ftc settlement with facebook for the companies early and repeated violations of a Law Enforcement order was their desire to maintain their dominance by collecting more and more data, because guess what . It gets more valuable as you get more. I talk about this in my testimony. We need to start thinking not just about privacy rules, but whats the reason why companies invade our privacy . One of those reasons is the behavioural advertising model, which is not an ad that we all get, but one that is targeted at one person, and its often manipulative. We have to think about how these businesses are incentivizing structures if we want to get to the root cause of massive surveillance in our economy today. Thank you. Mister chairman, in the interest of time, i yield back so that my other colleagues will have an opportunity i think. You i represent mr. Book before we recess. I have two questions about centralizing, and the second from 20 different advocacy groups. Objection. The committee will stand a recess and come back into after. I think the witnesses for their intelligence. A common refrain we hear from Tech Companies is, during the course of the investigation, but also on my own, since i have minute them in my district is that they cant be violating Anti Trust Laws and the primary argument is that many of their products are cheap or free, and therefore they are inherently benefiting. We have talked about this, to me the big question is its free really free . Consumers are paying for the product that they use, paying ended up, paying in privacy that they give up and often dont know they are giving up. The big Tech Companies and use that data to build these massive empires of information about consumers that give them spectacular advantage over newcomer businesses, allowing the companies to scrutinize every aspect of peoples lives, create and sell products that have the best chance of being successful. You mentioned the history of acquisitions. Facebook at made 67 on talents acquisitions, amazon has made 97, and google had made 214, mostly unchallenged acquisitions. You presided over the investigation of google, amazon and facebook. Two kinds of access, what kind of access to the half as a result and you talked about the threshold being one of the potential problems for why investigations arent opened. Do the threshold of investigations need to change, if we are able to challenge these acquisitions. Thank you very much for the question. Im very pragmatic, to the extent that people have the powers to look into those acquisitions, its fine by me. Im even in favor of changing very strategic platforms with such a big market power, i would wonder instead of asking the authorities to prove there is anticompetitive, then they could rebut with efficiencies to say you guys are not going to merge with anybody unless you prove to us this is going to create efficiencies. So i would change a little bit the burden of proof. In terms of investigations, i cannot disclose any information on any case. But my understanding of those cases, is some of the claims we hear is one click available, i didnt see that in the data at all. I didnt see anybody going and clicking on search results on page 2. So everybody being stuck with the defaults in the installation. So the fact some of us may have choices doesnt represent the consumer too. So its something that its a difference between theory and practice. But in theory they can do that. But consumers dont act ton practices, just fall on defaults. Thank you. Commissioner chopra, several of the platforms serve as gate keepers while competing with the businesses on those platforms. Amazon has a third market marketplace but own goods. When i met with them recently and in committee, they really testified that this dual structure doesnt have any conflict of interests and say its common for people to offer private label products alongside third party. Whats your response to that . I think we hear these analogies to comparing it to Grocery Store cereals and it doesnt work. 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 the small firms that want to enter. So we need to look deeply, thats why i mentioned South Carolina shun 6 b of the ftc act to scrutinize big picture. Of course, individual companies we will look if there is anticompetitive conduct, we have to go after it and fix it. But 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, my time is expired, but related to that, what is the tools that ftc is not using that you could be using . Well, there are so many things that congress has equipped us with. And one of the pieces that i hope we will use much more aggressively and thought fully is competition rule making. It doesnt need to put any burden on any company but it can clarify the law about whats legal and whats not so that we dont have to spend millions of dollars on paid economists and litigateors that slow down decisions and may ultimately harm a lot of people in the process. And we need to resuscitate the use of that tool. Thank you very much. Thank you. I now recognize armstrong for five minutes. Thank you very much. Armstrong. Miss layton, i want to talk fw about data portability. You say its over rated. Can you explain that a little bit . I think we have the premise of number portability. We know from the Telecom World youll 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, that doesnt, 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 something thats come up in this hearing, i think we are overrating the value of data overall. Because as a person who worked in the analytics industry, i had interfaced with 2,000 companies, they actually after time the data degrades. And if you are an innovator, its less interesting for you to get a platform status. So data portability is i think overrated. I also seen this in studies is that users dont value data portability. And i have said that too, the basic framework is you should have control over your own data. But since ive been here, ive learned way more about this. Part of the reason, its fairly complicated as to what is there. And i think thats part of the reason. Like when you say consumers dont really necessarily see this as a benefit, is it because they dont understand what it is . Or because of how you said it . Well, for one thing there are switching costs. I think thats a fair point other panelists have raised. But if we think we should have five major Search Engines, this is somehow makes it competitive. What makes competition in this industry is new technology, doing Something Better and different and more efficiently. So where i this i we should focus on is innovators look at other things in the economy. Its not like it is today will be this way forever. I guess whether we talk about data portability, we are talking about it moving, right . In other areas there is entire market niche. So when you are dealing with this data portability, has anybody looked at the liability shift as we move from one person to another . Yes. Because if there is a breach, which part of the Privacy Concern is breach of data and usually ends up with a Credit Card Company or a bank. But if its portable, i mean more than one person is handling that data as it moves from whether its microsoft, amazon, facebook, to somebody else. Yeah, thats a fair point. If i may, just, yes. Then my question is, along with that portability portion, is the cost of compliance flot for Large Companies who quite frankly we have seen this, and i want to ask you about an analogy before im done. Larger companies arent necessarily scared of regulation. What they want is certainty. Smaller companies that employ four or five people when you are dealing with data portability now have a cost associated with that. While we are trying to regulate this, we have to be very concerned that we dont regulate we dont have the inverse effect where the cost of regulation makes it prohibited. The European Experience with gpr, california solution now, let me clarify first this is very new so having empirical evidence is a long shot because this has been happening for a short period of time. Lets remind our its been introduced because fundamental principal of privacy individuals want to ensure. So any time you do a cost benefit analysis, surely you want to see it on firms. But also there is a benefit we get whatever privacy regulation is enforced properly. And the second point is that im very skeptical when i hear some of these numbers which are typically coming from institution which are funded by google, facebook. The european evidence is that google and facebook lost on the advertising side after the introduction of gdpr. So it is a cost of compliance, but whether its the only small firms, the narrative that you hear is from the big guys, not the small guys. Im going to bring the analogy back and ask mr. Chopra here. We dont have big banks, with the exception of some companies, north dakota, we are Small Business state. Single thing ive heard, the decade, 11 years since todd frank was introduced, in our realm to regulate what are really bad actors, the dakota bank is caught up in that. So are there any lessons we can learn in our quest to do whatever it is we dont sweep up the little guys in regulation . If you have 37 compliance officers on the fifth floor and go to 40, its not the end of the world. If you have two employees and go to five employees, you may not have a local. One thing i would really urge you to think about is complicated rules, they actually benefit those who have a lot of lawyers and lobbyists to get around it and lobby for exemptions. In my testimony i talked about the importance of bright line rules and even bans. Because you know what, ive had those same conversations with community bankers. They will say if im banned from doing it, fine. Because thats easy to understand. But if its so complicated, guess what, the largest banks in the world, they find their way in and get their exemptions. They win. And the small guys lose. And thats 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 we have negative fine. No, go ahead. Congressman, i think you make an important point and i think you are absolutely right about worrying about the Small Businesses. I think sometimes in regulation its tricky because there is a tradeoff something that might be harmful for any size business to do, you make the rule, easier for the large one to comply than the small one, and you end up entrenching the incombants. In this area of competition, you can make sure that doesnt happen, because if you are talking about rules, code of conduct, as ive proposed for dig mall market to do, digital market to do. You cant prioritize your own products. Those rules would only apply to companies that i would designate as having strategic market status, only apply to the largest companies. If you are a Small Company and want to keep people off your platform, want to make rules about what other platforms they go, you can do any of that. We are only worried about if you have some bottleneck power abusing it. Thank you, dr. Furman. I have a unanimous consent to put Ranking Member collins statement into the record. Without objection. I now recognize the distinguished lady from florida, ms. Demings for five minutes. Thank you very much to the distinguished gentleman from colorado. I want to thank you, mr. Chairman, and thank to all of you for being with us today. Thank you for your patience as we go to cast our votes. I want to start with mr. Chopra. And several of your statements youve argued that the core problem that leads to dominant platforms, that leads dominant platforms platforms is data and involves them in engagement. What problems do you see with the behavioral advertisement Business Model . Well, i think we are seeing more and more evidence that behavioral advertising, again, that is 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 that behavioral advertising model is inconsistent with how we have thought about immunity online. Right now we give broad immunities under section 230. I support that immunity, but i dont know if its consistent with this behavioral ad model and surveillance. Mr. Chopra, what do you see as the solution . What role can how can congress ply a bigger role in dealing with this problem . Well, part of it, obviously, is through Better Privacy protection. Ill just speak about how i looked at the Facebook Order 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 limitations on their use or sharing of data. And for repeat offenders, there needs to be some bans on this type of behavior. Because if they are going to break the law, we need to look at the economic incentive that is driving it. I think you said earlier when you have billions and billions of dollars, 5 billion in a settlement, there is not much incentive to change your narritive. Thats right. Big fines are not big penalties for big p cans. I worry its not a penalty. Its an incentive. I also want to urge congress to think about how do we beef up individual liability. Ftc facebook settlement, we did not depose mr. Zuckerberg or sandberg, but guess what . They got fuel immunity in the settlement. And if the Court Approves that what kind of standard are we setting . I think thats fundamentally wrong. Dr. Valletti, i want to ask you about that, but some have argued that heightened concern about digital monopolies is misguided given that Companies Like ibm, yahoo and blackberry, were all once viewed as dominant, but ultimately were taken over by new firms. And i know we talked a little bit, without naming the specific companies early. But can you just kind of, do you agree with that view . Or whats your feelings about that . Its almost an act of faith. Do we believe in competition . Sure, as a principle. But then i see the empirical evidence. When it comes to social networks, this has been going on for almost a decade. So is that long enough to have a tworry . Yes, i think. In the long run we are all dead but i hope we can fix problems before we are dead. laughs thank you for that bit of hope and sunshine. Im going to move on to dr. Furman. In your view, how readily available is highly quality data to new entrants if an entrepreneur wants to launch a new Search Engine. I know we talked about this space, protecting privacy, competition. But i just 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. Yeah. Google has a very good algorithm. Google also 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 type of data in order to make it work nearly as well as google works today. Thank you. And mr. Chair, if i could just, id also like to hear from miss layton, just in response to either of the questions that i asked that you would just like to respond to. Well, thank you. I appreciate that opportunity. I would agree with dr. Furman, that when we look at artificial intelligence, that this is a greenfield. Hes absolutely correct that a scientist sitting in the garage or in the lab could come up with a life changing or transformative kind of algorithm. I am, in contrast to the other panelists, i dont believe data is a bottleneck. Because of having been a person working in the industry, the data you collect degrades over time. So if you are a new innovator, youll looking for spaces where there are opportunities. Its less interesting to look in the past. You want to look to the future to say how would i where could be a place where i would add value in the future . Health care. Its one of the most efficient industries. Takes up one fifth of our gdp. Thats where need to have it efficient and lower the cost. What i want us to do is look forward. I dont want to do adopt regulations deter scientists from making tomorrows regulations because they have to have all these permissions and releases from everyone. Now they may not look at personal data. There are other areas where there is no personal data involved. Quantum computing, astronomy, so on, they may go in those fields. But probably the biggest area to create the benefit is on human health. For example, in iceland, they have a registry of genomic data, can you find the cancer treatments, can you look at a lot of the new innovations. We dont know now because that was not collected under the gdpr environment. There again, thats the question that i would have. So health is an area where we need to see are we putting the bottleneck on the innovation. Thank you so much. Thank you, mr. Chairman. Thank you. I now recognize myself for five minutes. Commissioner chopra, one of the questions we are grappling with in this investigation is whether or not our antitrust agencies like the ftc have fallen short in the beat on this digital marketplace and whether or not that is due to insufficient legal authority, whether its due to weak leadership, or as i looic to refer to it the need foreign thus assic and creative leadership. Is it partly result of regulatory capture . What is your view . What should we be thinking about as we look at this inadequate enforcement of our antitrust agencies particularly ftc. What do you see as the source of that . Mr. Chairman, one of the things i reflect on a lot is how did the ftc miss much of the sub prime 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 one of the things i think i took away from what ive learned on that is, number one, we need to use the tools we have much more energetically. Two, we need to be much more analytical 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. We can use more resources. But the number one thing we need to do is energetically use the tools we have. And for you to think about, and dr. Valletti mentioned this too, should we be thinking about changing presumptions . Should the largest firms on the planet, should the burden be on them to show why their merger or roll up of of tons of companies is in that interest . So there are ways that you can change the way courts are acting. And i urge you to do that. The but i also urge you to conduct oversight that makes sure agencies are using every tool you have equipped us with. Great. In february, commissioner, 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 to create conditions for scores of startups to intero accelerate and flourish. While we often focus on the cost of action and regulation, we should also be asking ourselves about the cost of inaction, end quote. Do you believe lawmakers should be considering remedies like the wunds imposed on bell labs, particularly since a lot of the focus of this investigation has been impact of this market concentration on innovation startups, kind of the opportunity to make the next space for the next Great Technology platform . Yeah. I appreciate that. One of your areas of inquiry in the investigation is whether spinoffs or divestitures of firms may be useful. Some call it breaking up. But there are many many other remedies we need to think hard about. Should we be opening up intellectual property that has been abused by dominant firms . And how much could that incubate in new activity . There is all sorts of history about how we have pursued this and the benefits from 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 toolkit as well. Im going to stay with you commissioner because well do a second round. Because obviously i have questions for the other witnesses. But i want to transition to some of the resent privacy settlements that the ftc have critisized publicly. 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 inefficiency because it didnt address facebook Business Model which got facebook to engage in the violations in the first place. What do you think the effective remedies . What was your criticism of that and what do you think that should lack like . So, i think of this in multiple buckets. First we should start with this is a case of recidivism, repeat offender, so not just the first time, oops. And in my view of the evidence it was clear that there was multiple early violations and floj of knowledge of those. I think of it number one where is the individual accountability . The officers and directors who called the shots to violate the law so that they could put money in their own pockets. Without individual liability, you will not see the level of deterrence. You need. And the federal rules of civil procedures in our courts bind officers and directors to federal enforcement orders. Two, what is the Economic Relief . To me, there should have been 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 important, but u. S. Consumers did not get a penny of that. So im not sure that head line 5 billion is going to do much. Thank you commissioner. I now recognize the gentleman from oh, im sorry, from, pennsylvania, miss scanlan. I want to thank all the witnesses for joining us today and your testimony. Consumer privacy is an important issue for all of us both as individuals and as representatives for our constituents. But the way that data is collected and used by the large platforms, obviously impacts the ability of consumers to maintain their privacy and the options they have to make informed decisions about their online activity. Dr. Valletti, i wonder if you could expand a little bit on the third point that you made regarding privacy degradation to detriment to consumers. I think you said imposing weak Privacy Protection that is not well understood but accepted by con um zooers because of lack of alternatives has to do with market power. Can you talk a little bit about that and what kind of remedies you might suggest . On consumer harm, as i write in my written piece, it can be risk of data breach, identity theft. But interesting also, consumer profiling which is not done in the interests of consumer, for instance, discrimination, scoring, just are hooked up, these devices are pleentmeant to keep us online as possible so they learn about. And we buy whatever the thing is that is offered to us and underlying auction. And only one platform. Of course, if you are look fog are a car that would take much longer kind of period. So its a bit different. And 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 interests of american people. And its american institutions should come up with a solution. Congresswoman, just one point. When facebook started, there was another social media platform called my space. I remember. And 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 have these terms, thats a price hike. We are paying for that data. And more competition should be critical how we think about protecting privacy. I wonder in other contexts we have seen, you can change the dynamic by having an opt in rather than an opt out. Is there any possibility of doing Something Like that in this sphere . So for example opting in, having to opt out of a savings plan rather than opting in . 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. So shifting the burden to companies, i think, would be a great way to really reduce the burden on all of us. And actually if Consumers Want to share their data proactively and really want to renew that, let them tell that company and give them permission. Okay. Ive also 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 they like to talk about is moving your Music Library from apple to spotify. Mr. Furman, can you talk about the idea of implementing data portability and whether thats something that we should be exploring . Yes, i think absolutely you should be exploring that. And 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 in doing this through steps like the digital transfer project. I think in part they are making that progress because they think regulation is coming and they are responding to it. And to do this is not just simply passing a law saying you have to do it. You have to roll up your sleeves a little bit and go through use case to figure out how to balance the different concerns. But if you can do that and create more values for consumers and more competition. Thank you. I yield back. I recognize the gentleman from north dakota mr. Armstrong. Thank you. And i think the chairman actually does have a myspace account. So dr. Layton you seemed you wanted to respond to that question so ill give you a chance. Thank you. I wanted to say miss scanlan to piggy back on dr. Veil, he does have a pain ser looking at the prices for auctions. I think its interesting. I merten Search Engine marketers. And i think its a fallacy to think just because the ad appears at the top of the page in Google Search is highest bid. Typically its lowest bid. What is driving the page is what is relevant. So what google is rewarding is quality of advertising. And brings an interesting case. A Plumbing Service wants to create an ad. Well that is also an issue of who amongst the plumbing industry is organized to invest in google. You know, and it could be this also reflects the competition of the plumbing side. And the other part is if you are the consumer, you want to have the information, that ad format actually gives you a lot of things to look things to look at. So i say its not a fact that the highest top level pays the most. In some fields like asbestos those words could be worth a lot of money. Ment so there is many other areas not used at all. And a click could be a cent. So you have to look at the data. Im going to move to something different. In your Senate Testimony you said gdpr revoved crimes and Search Engines. And footnote said finished Court Decision right to be forgotten has convicted murder tears Public Information from google listings. Before you answer, ill say i support the ban. I think its fantastic. I have some thoughts on that when we are done. But we also have a First Amendment. So lets take First Amendment issues a side and can you expand on that a little bit. Sure. For those particular reasons, and also right to be forgotten has been pushed back by the european courts. But this issue about people being able to expunge data that they dont like, well, you know, 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 you have seen in the European Union are dirty politicians who have bad articles about them, they get removed from the media, they get removed from the Google Searches, murders, child predators, all these terrible characters are able to weaponize the gdpr for those reasons. And i think thats within one of the reasons within ban the box we need to understand as members of congress, is that still only gets you past the first stage. And you can ban anything from google, you can ban it from facebook search, but i can tell you my private investigator could find it in three seconds. So if you go in second stage offal interview, and working for the federal government, you have to have stuff. Haz mat drivers license, these are good concepts but sometimes we use the availability of that. The world we live in now and if you have a conviction, you cant. If it happened in 1970 you could move to madison, wisconsin and start your life over. Because no one would look up records. But we use this availability of information a little bit as a scapegoat. Bass as i said any job you are applying for that has any kind of insurance issue, regulatory issue, framework issue is going to find it anyway. So we need to address the fact like with companies, with insurance companies, listen, we support this from a congressional level and broad bipartisan support. But we also have to change insurance culture and hiring culture and allowing those things to happen. And the fact that its not a Google Search doesnt mean its not going to agree. I agree. 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. There is a boundary between your private self and outside world. What do you think you want to share with your family, community, friends or not even with them. When it comes to digital space, this idea that there is not a choice. That we have borrowed from other industries is not out there any longer. So these boundaries are so blurred you must look into that. And i agree with that. Because when we were talking about opt in and opt out, shortly after there was some congressional testimonies before i was here, you started seeing these windows pop up on your social media platform, and yes and no. And whenever i talk to High School Age kids after that happened, i would ask them did any of you check no. And none. Sometimes you cant check no. Yeah, but not a single hand goes up. So how people define privacy in the next generation is also something that is changing dramatically. I recognize myself for five minutes. I want to build on the fact that mr. Chopra made on consent that would be a fulltime job. And i think as it turns out, even if you devoted your time to it as a fulltime job, you still would run into the situation which you have the take it or leave it things where basically if you dont agree to a certain amount of collection you dont get the service. So the consumer, the user in this context doesnt really have the power, even if you devoted full time navigating. And you wonder why we dont create the kind of consent we require in most other contents. If its medical consent or not guilty plea in a court, its the knowing consent, its actually the person knowing what they are consenting to and an affirmatively consenting. And why we have complete turning on its head where everyone is presumed to consent to everything about them unless they can find a way to object is kind of curious. So this is an important area. Dr. Valletti i want to turn to you for a moment. Google has 2 billion users on android and facebook has over 2. 5 billion users. And what we hear often is these services are very popular and people have no problem with the kind of corporate surveillance. And isnt the fact that these numbers are so great evidence there is not really a problem . That the popularity of these services proves we dont need to worry about this . What do you say about this . That these are popular is evident. But nobody cares. One of the points i make in my written piece is also that con psalmers are not put in a position to understand what the costs might be because they cannot see where the data is going. Because they just dont know. And they cannot make comparisons because there is a lack of competition. Going back to your original remark, you are probably aware earlier this year germany had a case against facebook, and this is on appeal in the court now, but exactly said that the consent, that the customers want to be on facebook have to give also to cross link data with whatsapp and instagram which belong to the same company. They said you didnt tell them what you were going to do, you cannot do it unless you inform them in some appropriate way. And if you do not, if you dont consent, you cannot deny access to the service to facebook because you dont need that consent to supply the primary service. Thank you. In july, as part of this investigation, google testified before the subcommittee that it faces, and i quote, formidable competition around the world, end quote. Google stated that users can choose from a menu of search providers including bing and yahoo. Dr. Alletti in light of your work, do you agree there is immense competition . Thats a very general statement. So i will be more precise. When it comes to say general search, competition is not there. In europe 93 of european searches are done by a one Search Engine. And this possibility that consumers have to do something else, to change the defaults, to change all the behavior we mentioned several times, they are clear in the data. I do see people actually sticking all the time and never changing the default. Dr. Furman, i have a couple of questions. You can respond quickly. One quick point to add. Google wouldnt pay so much money to be the default Search Engine on things like ios if it was really easy for consumers to switch. Right. And so dr. Furman, what role do you think information asymmetries play in how we should understand Digital Markets . Corporations routinely have more information. But digital platforms have astronomical advantage. How should this effect policy if at all . First of all, i think the enforcers need more resources. The cma in the u. K. Has actually 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 asymmetry between some of the big platforms, their competitors, and the public and regulators. I think many of you have made this point. This can be compliments such that more competition can incentivize firms with more privacy. But also at odds that data portability could expose to a broader set of corporations. So how should enforcers and policy makers, particularly congress, strike this balance . I think the answer to that is going to be on a case by case basis. First of all, you said a lot of case is compliments. A lot of cases only one is impla end implemented. You cant just think about policy 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 tv regulators or something that would have both of those objectives. I want to know if you wanted to respond to any of what ive asked . No. Good. Mr. Chairman, i would just add when there is so few dominant players, that opens up more abuses of privacy. And im worried that our economy in this sphere is just drifting toward the chinese model where there is just massive amount of information on people collected without their consent and can be used to manipulate. And i just reject this argument that 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 dont want that system. I agree. At this time id ask unanimous consent that the following statements be introduced into the record, written statement from the australian and Commission Chair sims into the digital platforms. Without objection. A written statement from dina discussing the inter section of competition and privacy. Without objection. A letter from Consumer Reports privacy and data in competition. No objection. Written statement from maurice digital platform economies effects on antitrust and privacy policy. Without objection. And a statement from the European Union commissioner for competition, margaret vesair with her expertise on the digital economy. Without objection. And with that ill conclude the hearing with gratitude for our extraordinary witnesses for being here today and contributing significantly to our ongoing investigation. And with that, the committee is adjourned. It leads to the use of that data in a way that is predicting the behavior of users in a way that advantages their own services or products. So this is very alarming. I think this is consistent with the other things weve heard during the course of this investigation. You know, i think it gives us an opportunity to also hear about some of the remedies or some of the things we should be thinking about, both in terms of resources of the ftc, whether or not we need to make changes in statutes, or better mechanism for people to consent to the collection of their data. But also implication on the economy broadly and entrepreneurship and the availability of startups to enter the market and survive. So interesting testimony from real experts. Well, the commissioner did hint hes worried about regulatory capture in federal agencies and probably his own federal agency. Do you share that concern . Yes. Do you share that concern that large Tech Companies have captured the ftc . I think there is great concern that the Large Technology companies have disproportionate influence offer the regulatory process. I mean, part of that is kind of larger function of when you have these things its followed by political power. So the election people who also share those views that come out as regulatory capture on the regulatory side. So i think the commissions concerns are serious and i share them. And i think those are some of the issues we need to look at. What do you think of the argument from commissioner philips from the ftc, that you have it all wrong . There are tradeoffs between privacy and competition. If you cut off access to certain third parties for consumer data, that it helps privacy, actually makes it harder to have a competing service . What do you think of that argument that there is a tradeoff . Look, i dont think there is a tradeoff. Again, i think that presumes that people aric ma are making that choice. I think there is no evidence to support that. Also when you take a look at these take it or leave it contracts for services, very often their refusal to consent to that collection means they dont access the service or products. So i dont think you have a marketplace where consumers are getting this information and then knowingly consenting to its collection. And, you know, i think we are seeing more and more evidence of this massive collection of data. And the presumption seems to be, in the current model, that companies can collect everything they want from you, and that if you are going to protect yourself, you are going to safe guard your privacy, you have to figure out some way to spend a lot of time to try to instruct them to do it, if you can even do it, and then run the risk of not getting access to the services. We ought to be thinking about why we are beginning this argument with this were starting with the argument that these big Companies Get to take all these valuable information from the consumers and the consumer has to defend against it. Its most other areas, consent means the person consenting know knows what he or she is consenting to. This is the reverse. It allows the collection of enormous amounts of private information about every Single Person in this country. I think one of the things that the investigation has to look at is that the right model. Ought we be creating different presumptions that safeguard the privacy interest of consumers. If youre concerned its suffering regulatory capture, does that mean the ftc should be an object of investigation of the committee . One of the things the investigation is looking at is 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 antitrust and the resources to determine if they have sufficient resources, are they staffed with people who are enthusiastic and aggressively enforcing antitrust. And do they have the resources necessary to do that. The ftc is under investigation then . I wouldnt say theyre under investigation. This is not an prosecution, this is an investigation that relates to collecting information so we can make informed judgments with respect to policy, regulation and legislation. This is 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. And that include, of course, looking at the ftc. Its not a prosecution kind of an investigation, but theyre part of our review in this. Do you see a timeline for the investigation overall given on whats on the committees plate. Our hope is to conclude our evidence collection into this year, beginning of next year with the idea well have a final report instead of recommendations and the first part of nebs year, providing us enough time to act on that in this congress. Youve gotten the first batch of documents. Have you also gotten the documents you were seeking from the competitorssmaller companies . I cannot comment on that at this point. If you were on the Financial Services committee, what question would you ask mark i think thats something we dont look at underestimation where we place to protect consumers so that they have real control over their data and they want to protect their privacy and they have the ability to do that. Most important, this digital marketplace is a base a solution that will bring new interest in this market and different of protections. Its more attracted to a concern where a mauve to go there rather than be left in the garden address now. To put it into the privacy space. Theres a lot of overlap the thing so its separate in a lot of ways and i expect will continue to work closely with the committee as we craft the system. They dont have to more. Theyre done. One more. Can you give us an idea of what got you up from the big four . No. laughs were just in the process. I was interested in hearing a reaction to hear about markers october expedient or day. He has a very par charm offense. I didnt see what he said yesterday and im making it clear that i take mr. Zuckerbergs commitment to take this investigation seriously. He made that commitment to me directly at a facetoface meeting and has proven to be true so far. Ill take him at his word and its a work in progress. Im also very clear about the content of facebook and the resent of his arm and i consider that serious and i think in many ways theyve been a bad actor in the space to understand what has allowed this to happen on the enforcement side. Iran with the enactors inaccuracies but these companies but been very clear about that that this investigation doesnt see around one company but part of this committee was part of it to. Thank you