Lina Khan
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Lina Khan's tech agenda

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Good morning! FTC Chair Lina Khan is pushing forward an aggressive tech agenda, no matter what Congress does. Also: Meta is facing lawsuits that put Section 230 back in the spotlight. Happy Thursday! Let’s dive in, shall we?

The FTC takes aim at tech

FTC Chair Lina Khan is coming up on the end of her first year in office, but she’s just getting started. Khan has long been preparing to write regulations that would force tech companies to severely curtail their data collection practices — among other big changes. And now that the FTC has a third Democratic commissioner, Khan’s finally getting into the details about her Big Tech priorities.

Khan spoke to Protocol’s Ben Brody about her Year Two agenda this week, and she had a lot to say.

Khan is hoping her agency will use its powers to force data privacy changes, despite the fact that Congress is getting closer to some kind of agreement on how it wants to regulate data usage.

  • The bill would give the FTC power over what kinds of sensitive data need the most protection, a say in how companies can minimize the information they collect and oversight of data relating to kids and teens.
  • But available legislative days are rapidly dwindling on Capitol Hill, making it possible the U.S. will continue without a national privacy law for years to come.
  • Khan wants to write regulations that would ban the collection of certain kinds of data, as well as tackle algorithmic discrimination. She’s also complained repeatedly about behavioral advertising.

Under Khan, the FTC may also take labor issues into account when evaluating M&A. Deals that have evaded scrutiny because they didn’t raise prices for consumers may be getting a closer look — or blocked altogether.

  • Her recent efforts to collect information on the results of consolidation, including in tech, have highlighted how mergers and acquisitions “can really degrade working conditions for people,” she said.
  • 2022 has been a big year for M&A, particularly on the tech front. It’s unclear how much mergers help or harm workers — it depends on the particular deal, and who you ask.
  • Some M&A activity has clearly been viewed as cutting prices — and thus, good for competition — because it would eliminate jobs. Those mergers may no longer get a pass.

The FTC is now paying close attention to the video game market, due in part to that same M&A activity. The industry has seen an almost unprecedented level of consolidation over the past few years, and Khan said it’s now "top of mind" — especially fast-growing markets such as augmented and virtual reality.

  • Six of the 10 largest video game acquisitions in history have happened or been announced since early 2020.
  • Despite generating nearly $200 billion of global revenue in 2021, the gaming industry has largely gone unchecked over the past few decades.
  • Khan and the FTC are in the process of investigating Microsoft's Activision deal, as well as Sony's much smaller proposed acquisition of Destiny developer Bungie.
  • "We take a lot of care to make sure that we are being attentive to not just some of the past harms that have already been identified, but some of the new and oncoming harms," Khan told Protocol.

U.S. lawmakers may not be ready to make all of their tech regulatory dreams come true just yet, but under Khan, the FTC will be taking a much more aggressive stance — and tackling plenty of what Congress might leave unfinished. Tech companies — especially the ones hanging their hopes on Washington gridlock — should take notice and get ready.

Ben Brody (email | twitter), Lizzy Lawrence (email | twitter) and Nick Statt (email | twitter)

Algorithm under fire

Meta has been slapped with eight different complaints filed in as many states in the past week, alleging that its algorithms have contributed to mental health issues like eating disorders, sleeplessness and suicidal thoughts or tendencies. Social media companies are under fire lately, and Section 230 is no longer a solid defense.

There's a risk of serious mental health problems from spending too much time on Instagram and Facebook, the complaints allege. One plaintiff said that Meta “misrepresented the safety, utility, and non-addictive properties” of its platforms.

  • Both Meta and Snap were sued in January after claims that “extreme addiction” to the platforms led to the death of an 11-year-old girl. In November, a group of state attorneys general began investigating Instagram for the ways that it keeps young people engaged.
  • Facebook whistleblower Frances Haugen also testified last year that Meta wasn’t forthcoming about Instagram’s effect on young people, even after internal research showed that the app exacerbated mental health issues for teen girls in particular.
  • “They include addictive design, features, algorithmic amplifications of disturbing content,” Common Sense Media CEO Jim Steyer told me. “Those are just some of the tactics that social media platforms like Meta use.”

Do these lawsuits have a leg to stand on? One significant ruling may help us predict the outcome of these cases.

  • Under Sec. 230, Meta can’t be held accountable for third-party content posted on its platform. But these complaints are blaming the algorithm, not the content itself.
  • Last year’s ruling in Lemmon v. Snap stated that Snap could be sued for a speed filter that allegedly encouraged reckless driving, and that Snap wasn’t protected under Sec. 230. This ruling opened the floodgates to people attempting Sec. 230 workarounds, Eric Goldman, co-director of the High Tech Law Institute at Santa Clara University, told me.
  • The plaintiffs suing Meta are alleging algorithmic wrongdoing, so Goldman said the Snap ruling and these cases are “qualitatively different” because the algorithm and the content it serves are “all the same thing.”
  • “The algorithm only directs people to see content,” he told me. “Ultimately, it's the content that's the problem. Then we're back to the fact that that's really a Sec. 230 lawsuit.”

More cases like these are likely to pop up. A bill passed by the California State Assembly in late May would give parents the right to hold social media platforms responsible if their children become addicted. “We're at a watershed moment, and in the next few years, we are finally going to see major action on multiple fronts,” Steyer said.

If states continue to pass legislation to hold social media platforms responsible for content posted on their platforms, Congress or the Supreme Court may need to step in to clarify Sec. 230. That could reshape the way social media companies operate altogether.

— Nat Rubio-Licht (email | twitter)

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People are talking

Andy Jassy said Amazon warehouse workers are “better off” without a union:

  • “We need to continue to provide the right benefits and we need to continue to work on safety, and that’s our intention.”

Unity CEO John Riccitiello doesn’t think the metaverse will be all about avatars:

  • “If I was trying to make a hotel reservation online, I wouldn't physically want to embody an avatar and stand in line for 15 seconds and have an avatar check me in.”

Robinhood’s Dan Gallagher is concerned about the SEC’s proposed stock-trading changes:

  • “It is a really good climate for retail, so to go in and muck with it right now, to me, is a little worrisome.”

Making moves

Amazon’s Dave Clark is joining Flexport as co-CEO. Clark oversaw Amazon’s worldwide consumer division.

ByteDance executive Joshua Ma is “stepping backafter he reportedly made comments that he “didn’t believe” in maternity leave.

Digital asset company Grayscale hired Donald Verrilli Jr., a former top Obama administration lawyer, to join its legal team.

Meta engineering head David Mortenson is leaving. VP of Engineering Santosh Janardhan will take over.

In other news

Twitter is giving Elon Musk access to its data so he can figure out once and for all what the deal is with bots on the platform. If he goes ahead, the shareholder vote to approve the deal now has a time frame: late July or early August.

We didn't get the headset update we were looking for at WWDC. Apple barely even talked about its AR efforts, but maybe those plans are still in the works.

Microsoft will stop enforcing non-compete clauses for U.S. employees, and drop NDAs in settlement and separation agreements. The company is also committing to a civil rights audit of its workforce policies in 2023.

Canada got its first video game worker union. QA contractors working with EA-owned BioWare unanimously voted to unionize.

Goodbye gasoline cars: New diesel and gasoline vehicles won't be sold in the EU starting in 2035, making Europe's EV push even more pressing.

Spotify's brought in around $215 million in its podcast push. But it’s spent around $1 billion, and is still in “investment mode,” with plans to expand into audiobooks.

Apple is going solo on its new “buy now, pay later” service instead of relying on banking partners.

Better.com is facing a whistleblower complaint from former executive vice president for Sales and Operations Sarah Pierce who says she was pushed out for confronting CEO Vishal Garg.

Does college matter?

Many people think that a degree from Stanford or an Ivy League university automatically translates to a highly skilled worker. But research shows that fancy computer science degrees don’t always make for the best coders — and recruiters at major tech firms should be taking note.

When hiring talent, how much emphasis do you place on where an applicant got their degree? Is experience just as important, if not more? Respond to this email and let us know, and we’ll round up our favorite responses in the Sunday edition of Source Code.

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