Hello, and welcome to Protocol Policy! Punxsutawney Phil says the gloom will continue six more weeks, and Groundhog Day seems like a good time to go back to talking about Microsoft and antitrust. Plus the continued fusillade of anti-tech bills, the fate of Wordle and where Neil Young is going now.
Acquirer beware
Freedom, as the hippies told us, is just another word for nothing left to lose. If so, Lina Khan seems to feel the FTC is mighty free — and that should make Microsoft (and the rest of tech) nervous about the antitrust fights to come.
The conventional reason for the FTC, which will be probing Microsoft’s acquisition of Activision Blizzard, to not file lawsuits goes like this:
- Litigation is expensive, so government agencies should only use tax dollars to start a fight they can actually win.
- Plus, losses in court don’t just mess up a particular enforcement action; they create precedent that can spoil a whole line of potential future cases.
Khan doesn’t buy that logic. She would say it’s not going to court that’s the real danger — a “you lose all the shots you don't take” approach, as Khan herself put it in her recent CNBC interview.
- “Taking action is still worth it even if it's not a slam-dunk case,” Khan said in her interview, lamenting “severe costs” to restraint. “You might win.”
- Sure, this is a little about street cred and making sure companies don’t just see the FTC as a nuisance that can’t back up its threats.
- But a lot of it goes back to precedent: Courts have spent at least four decades narrowing the broad terms of antitrust law, even as business models changed drastically.
- Khan and her ilk feel that the only option they have left is to bring new theories about new markets and new practices to court. They’re hoping to set new precedents that will govern the new ways things work.
Either they’ll win when traditionalists said they couldn’t, or Congress will see the U.S. needs new laws.
This approach already seems to be working: One of the few tests so far was the FTC’s incorporation of privacy into its antitrust case against Meta, which was actually pretty positive for the side favoring innovation in litigation.
So where does this all leave Microsoft and Xbox?
- The FTC will be probing its proposed purchase of Activision Blizzard, according to Bloomberg, with a likely focus on whether Microsoft will be blocking rivals by limiting access to Activision Blizzard’s games.
- Platforms’ potential use of in-house suppliers against competitors didn’t used to get enforcers’ hackles up too often, but now, even Republicans are increasingly concerned about it.
- More to the point, Microsoft isn’t alone: Now that Sony is also hoping to buy Bungie, it’s clear we’re facing a wave of consolidation in video games and — as my colleagues over at Protocol Gaming put it — the race is on “to build out more expansive software and services ecosystems” and secure a future amid subscription gaming and the cloud.
None of this means there will be a lawsuit, of course. But if Microsoft thinks it can coast on its reputation as the fairest Big Tech competitor since its antitrust saga ended in 2001, it might find it has a lot more to lose than it thinks.
In Washington
Sen. Ben Ray Luján, a New Mexico Democrat, suffered a recent stroke, scuttling a planned Wednesday committee vote on two Biden tech nominees needed to give Democrats the ability to carry out their agendas — Gigi Sohn at the FCC and Alvaro Bedoya at the FTC. Luján is expected to make a full recovery, according to his office.
The Senate’s antitrust fusillade against Big Tech continues tomorrow as the Judiciary Committee considers advancing a bipartisan bill led by Sen. Richard Blumenthal. The measure would upend Apple and Google app stores, protecting sideloading, forcing the companies to embrace third-party marketplaces and letting apps communicate with users about prices. As you might imagine, the companies and their allies aren’t too keen on it.
Blumenthal also reintroduced his EARN IT Act, which would amend Section 230 to create more liability for platforms for child sexual abuse material. The bill, which is scheduled for a quick markup, has widespread bipartisan support in the Senate — and a whole lot of haters in tech and civil liberties circles who worry it will undermine encryption.
Meanwhile, Sen. Amy Klobuchar is also convening a hearing later today on Big Tech’s effect on the local news industry. Klobuchar has introduced three bills in the last year to try to boost the news business, including a bipartisan measure to amend antitrust law so that news publishers can band together to negotiate more favorable terms from online platforms.
Big Tech has a Big Think: Amazon, Apple, Google and Meta have been boosting their giving to prominent Washington think tanks in recent years. Some of the groups aren’t even particularly shy about the purpose of the donations: to explore strategic competition between the U.S. and China. Why would the companies care? They’re defending against antitrust scrutiny by arguing their economic power delivers innovation that’s key to U.S. supremacy.
A MESSAGE FROM CHAMBER OF PROGRESS
From Florida to Texas to Oklahoma, lawmakers are introducing and passing legislation aimed squarely at social media platforms’ content moderation policies in an effort to keep hate speech and misinformation online. Read the latest on the spread of anti-content-moderation bills in the states.
On Protocol
Here’s a look behind the scenes of a unionization push within Activision Blizzard. Activision Blizzard decided to not voluntarily recognize the union, which was formed following Activision's firing of 12 employees within their division. That led to a walkout, and a petition from the union with the National Labor Relations Board seeking a vote for legal recognition.
The climate software market is booming. Companies that set energy initiatives need software to help collect, aggregate and analyze their environmental impact — at least, their impact as they define it. That sector also experienced a flurry of dealmaking in recent months.
Around the world
Indian government officials have chastised Meta, Google and Twitter behind closed doors for not acting on what the government deems “fake news.” That has led the Indian government to order the companies to remove speech. The news comes as a prominent Indian opposition leader, Rahul Gandhi, has accused Twitter of “unwitting complicity in curbing free and fair speech in India.”
Amazon and Microsoft are talking out both sides of their mouths on China. They’re sounding the alarm about China’s AI capabilities, while simultaneously building their own AI hubs there.
A whistleblower said NSO Group offered him “bags of cash” in exchange for access to global cellular networks while he was working for the security company Mobileum. NSO’s response? The company told The Washington Post it “does not do business using cash as a form of payment.”
Biden needs to push back against Europe’s Digital Services Act and Digital Markets Act, Sens. Ron Wyden and Mike Crapo argued in a letter: “It is critical that U.S. innovators, and the American workers and internet users behind them, are not placed at an unfair disadvantage by discriminatory trade policies,” the letter reads. We’re not saying we told you so, but...
Authorities in Belgium ruled those ubiquitous consent banners blanketing the internet violate GDPR. The ruling could have a ripple effect across the Atlantic, sending a message to U.S. lawmakers who have pointed to banner pollution as a failure of Europe's privacy regime.
A MESSAGE FROM CHAMBER OF PROGRESS
The numbers are in. Voters want new regulations harnessing the power of America’s tech sector, but there’s a wide gap between where they stand and the tech legislation in Congress. When asked about their top priorities for tech regulation:
- Top Choice: Cybersecurity (35%)
- Second Choice: Protecting data privacy (12%)
In the media, culture, and metaverse
Never let a good culture war go to waste. Neil Young apparently partnered with Amazon to promote a discounted Amazon Music subscription. Young boycotted Spotify last week because he said it was “spreading fake information” by continuing to support Joe Rogan.
Crisis Text Line said it would no longer share data from interactions with its for-profit spinoff. The service came under fire following a report questioning the ethics of extracting consent from those in dire straits. Crisis Text Line at first dismissed concerns by outlining its anonymization techniques.
Break up Big Wordle?
Antitrust anti-hipsters had a little fun with the Times’s new investment.
The NYTimes has a word puzzle monopoly that is making it difficult for small mom & pop puzzle makers to succeed. Will this #FTC step in to stop this killer acquisition? Or will they be a feckless doormat for #BigMedia ? https://t.co/7hafpxqVj2
— Shane Tews (@ShaneTews) February 1, 2022
Thanks for reading — see you Friday!