Federal Trade Commission chair Lina Khan outlined a series of concerns regarding Big Tech firms launching their own payment platforms. In comments to the Consumer Financial Protection Bureau, Khan argues these platforms are not only anticompetitive, but they can also exacerbate discrimination and bias and "concentrate risk" in financial services.
Khan submitted her comments Wednesday in response to the CFPB's ongoing inquiry into Big Tech fintech platforms. "Big Tech companies’ moves into payments and financial services markets demand close scrutiny, and I commend the Bureau for its timely inquiry on this topic," Khan wrote. "As you note, these developments raise key questions around how firms may wield their market power and how they may deploy data acquired through financial surveillance."
In her comments, Khan outlined three main concerns with Big Tech firms' push into fintech. The first has to do with the impact on competition. Tech giants already have so much granular data on their users. Pairing that information with spending data, she wrote, "could increase their ability to target and profile consumers."
"Critically, keeping consumers within their ecosystem throughout the ecommerce lifecycle translates to additional data streams about consumer spending behavior and advertising effectiveness that could potentially be leveraged by these companies for further market expansion and finely-grained consumer profiling and targeting," Khan, who once likened unchecked data collection to environmental pollution, wrote.
She noted that some companies, including Uber and Amazon, also act as both "employer and lender" because of the financial services they offer their own workers. "As enforcers, we must be especially attentive to potentially extractive loan terms that might lock workers into longer hours and lower pay, or that otherwise harness Big Tech’s information and power asymmetries to tailor unfair and exploitative lending services and pay rates," Khan wrote.
Khan also raised concerns about how algorithmic decision-making in financial services can lead to discrimination and bias. The CFPB recently raised this same concern, asking tech workers who observe these patterns to blow the whistle on their own employers.
"[A]s these companies turn to credit markets and alternative credit-scoring techniques to produce a profile of someone’s 'digital character,' potentially skewed data and assumptions used to inform these profiles could entrench, naturalize, and amplify discriminatory determinations," Khan wrote.
Finally, Khan called attention to the fact that some of the very platforms that are moving into payments and financial services also provide identity authentication through single-sign on. Allowing one company to both authenticate a user and provide financial services to that user risks creating "single points of failure," Khan argued. "It could mean, for example, that one social networking platform’s decision to disable the account of a small business for a reason unrelated to their financials—an alleged violation of community guidelines, for example, or running afoul of content policies—could also cut off the business from core financial services also provided by that platform," she wrote.
Khan pointed to the fact that Facebook's customer service has been known to be so shoddy that blocked users have at times resorted to buying Oculus VR headsets just to get through to customer support. If users' finances were also tied to that account, she argued, the inability to resolve these issues would be that much worse.
CFPB is currently looking into a number of different facets of the fintech space. Last week, the bureau sent letters to five leading "buy now, pay later" providers, asking for more information about their business practices.
Climate TRACE's data show emissions at the facility-level.Image: Climate TRACE