Category Archives: Big Tech

The push to regulate tech giants like Facebook and Google is a flashpoint between the US government, tech and innovation.

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The Democrats are pushing several bills in Congress to try to rein in the influence of tech giants such as Meta, Google and Apple before the midterms. In addition, the FTC under Lina Khan is pursuing action against them in the courts.

BRINK spoke to professor Randal Picker of the University of Chicago Law School, who focuses on antitrust law, to find out where things stand.

PICKER: The current antitrust landscape in the U.S. is exploding. On the legislative front, we have a number of bills in both the House and the Senate of different status. Some of them are out of committee, some of them are more extreme than others, but sometimes having extreme bills on the table makes something that would otherwise look pretty extreme seem much less so. House Speaker Nancy Pelosi is very clear that she only brings things up when theyre ready to be passed. She clearly hasnt done that with this legislation yet.

On the Senate side, Senator Klobuchar, my former law school classmate, got one of her bills through her committee in the last few weeks. Another one of her bills is up for markup. Again, its not clear where thats going to go once we turn to the full floor of the Senate, and obviously theyve got a legislative clock that is ticking incredibly rapidly as we head into the midterm elections.

BRINK: Are any of these bills more likely than others to make it into law before the midterms?

PICKER: Even knowing exactly what the bills would accomplish is contested right now. Can Amazon Prime continue to function in the way that it does? I think its plausible to read this legislation as making substantial changes to the devices we have in our hands, and thats what would make it a big deal.

One issue is whether Apple can continue to provide a device that comes with Apple Music pre-installed, or with Safari pre-installed. Thats a question about who gets to design the product. Or if Apple wants to do that, do they also have to have it come with every browser in the land, and with Spotify and other music services? On this question of what you can pre-install, I think there are natural readings of these bills that would block that.

BRINK: Theres talk about the FTC pursuing these companies for unfairly restricting vendors as much as consumers is that accurate?

PICKER: Theres never been any doubt that U.S. antitrust law applies equivalently to monopolistic practices and monopsonistic practices, i.e., practices which unlawfully restrict both consumers and sellers.

It is completely fair to say that there have been many more cases brought to bear on monopoly than on monopsony, but I think youre now seeing across the U.S. administration, both DoJ and the FTC, a greater emphasis on potential monopsonistic practices.

We should be concerned about efforts by people to interfere with how markets are functioning, whether those are efforts to change whats happening as to products, the traditional focus of monopoly, or whether thats a change with regard to inputs or labor, which is the traditional focus of monopsony.

Lets not forget that each of the firms were talking about did something at the beginning which was completely valued by the public. Theres a core to these businesses that represents an American success story. Thats not to say they cant step beyond that and get in trouble, but the ability to create great products that people value, thats hard to do.

I think the administrations plan right now is: Lets test the boundaries, and well see what the court system is going to say about it.

BRINK: Do you think these companies have the ability or the will to be able to police themselves?

PICKER: Im not sure any of us are good at self-policing, I say as I reach for the next piece of cake, right? The question is: Do we think antitrust is the right tool? At its core, antitrust law is a system based on fault. Its not a system historically that is based upon mere success and being big.

U.S. antitrust laws never said being big is a problem as long as you dont abuse that power. The bills we started this conversation with, even though theyre discussed as antitrust bills, theyre much closer to a sort of public utility-regulated industries model, and thats a different approach to how we want to regulate these firms.

BRINK: One of the arguments that has been made by these companies is that it could dampen innovation and cede national security grounds to China. Is that a real threat in your mind?

PICKER: I would say that we are at our fourth flashpoint between the government, tech and innovation. Computers were created in World War II, and the government was heavily involved in that. The Cold War between the United States and the Soviet Union then led to DARPA (Defense Advanced Research Projects Agency), the whole rise of integrated circuits, and eventually to CPUs and the like. All of that sort of emerges as part of that conflict. Thats two.

Then, in the 80s, there was much more of an economic rivalry with Japan with this fear that we were falling behind in our ability to produce chips in the way that the Japanese could. That was the third moment, and now I do think we are in the fourth such conflict. And in each of those moments, weve thought about this not only in product market terms, but about broader geopolitical questions.

I think thats the right thing to do. I hope members of Congress will make sure that they are focusing not only on United States issues, but these larger issues as well.

BRINK: Where do you think we will be in 12 months time?

PICKER: The pace of litigation is frighteningly slow. Some of these cases arent even scheduled to go to trial before 2023. The Apple case with Epic, thats in the ninth circuit, so sooner maybe. But legislation seems to me to be the faster front if 12 months is our time horizon, but maybe the window will close after the midterms.

I think theres a chance one of these bills will get through, and that would be a big deal, but I also know stuff can take a decade to get through.

Related Reading

BRINK: Do you think that it would be a good idea for institutions to try to get ahead of what is happening in the tech space, such as the metaverse, and try to regulate for that, rather than playing catch up?

PICKER: The thing I say in class is you cant regulate it if you dont understand it. The next step is, you cant regulate it if were not even sure what it is.

I guess I think that getting ahead of these developments would be incredibly hard to do. I think regulators tend to work best when they have a pretty precise problem in front of them, and Im not sure if thats where we are yet.

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Is US Antitrust Action Against Big Tech Likely This Year? - BRINK

Big Tech is an enemy of the American people. The largest corporations of our information economy wield unparalleled power over Americans lives. They enjoy almost unfettered access to our personal information. And they exercise more immediate control over our speech and livelihoods than even the government itself.

Theyve had years to prove themselves responsible stewards of this power, by using it transparently and equitably, in the public interest and for the common good. Theyve chosen not to.

Internationally, Big Tech has partnered with the Chinese Communist Party, helping Beijings genocidal regime develop surveillance technologies to oppress its own people and military technologies that threaten ours. Domestically, they have colluded with government agencies and left-wing activists to silence conservative voices, de-platform conservative ideas or frankly any idea that challenges the opinions of our elites, and manipulate political discourse to undermine conservative candidates and causes.

These corporations, many valued at more than $1 trillion, have grown orders-of-magnitude more powerful and dangerous than anyone could ever dream of.

At this advanced stage, Big Tech barely tries to hide or justify its bullying abuses or totalitarian impulses. It is long past time for policymakers to protect the American people from both.

As The Heritage Foundations groundbreaking new report, Combating Big Techs Totalitarianism, makes clear, the tipping point in Big Techs evolution from potential danger to the republic to the clear-and-present one it now represents was when it collectively embraced the bigoted, bellicose progressivism now ascendant on the elite left.

This recent merger of Big Tech and woke ideology has motivated the long train of abuses that now call us to action.

There is Twitter and Facebooks selective enforcement of standards that has censored Republican members of Congress at a rate of 53-to-1 compared to Democrats, and suspended Trump supporters 21 times as often as Clinton supporters.

There is the routine, partisan deplatforming of disinformation that often boils down to differences of opinion.

There is the discrimination against conservative books and media: Amazons ban on scholar Ryan T. Andersons book on gender dysphoria, or its unexplained removal of a documentary about Supreme Court Justice Clarence Thomas from its Prime Video streaming service.

There is the collusion between Big Tech and government officials to strangle dissent, in line with White House Press Secretary Jen Psakis chilling assertion that violators shouldnt be banned from one platform and not others. Spotify, MailChimp, GoDaddy, GoFundMe have now joined their trillion-dollar industry leaders in discriminating against customers and entrepreneurs who insist on thinking for themselves. Just ask Joe Rogan.

This is not fair market competition. It is systematic, collusive market capture. And its perpetrators, remember, are engaged in high-tech, misogynistic child abuse on a global scale. Its no coincidence that as Big Techs market capitalization has exploded in the smart-phone era, so has teen depression, with girls rates double those of boys. Its the same reason tech CEOs severely restrict their own kids screen time.

Given the stakes, and the enemys resources, we must weigh every policy option. The time to act is now: We need to win the war Big Tech launched against us many years ago.

Federal antitrust law must be enforced, not simply to regulate future mergers, but to correct the monopolistic abuses Big Tech firms already commit including its ad tech model. Antitrust law must also be enforced and modernized to account for the damage firms can do even with nominally free services. And the American people will be better off if Big Tech executives are held personally liable for their companies crimes.

Platforms that deliberately censor based on viewpoint alone should be stripped of their liability protection under Section 230, and the real impacts of these firms vaunted algorithms should be transparent for consumers. Government should be strictly prohibited from leveraging Big Tech to silence dissent, and these corporations, which receive significant benefits as American businesses, should be prohibited from continuing its lucrative partnerships with Beijings surveillance state and entities linked to the Peoples Liberation Army.

If these proposals sound aggressive, thats the idea. Americans have underestimated the threat these firms pose. They are not competing within a market; they have become the market and are increasingly assuming the additional role of government resting atop the market.

Their control, their leverage over our lives, politics, public discourse, their profiteering from childrens mental anguish and Chinas Orwellian oppression, and their embrace of woke intolerance demand a vigorous and comprehensive constitutional response.

It is time to take Big Tech on, and as necessary, take them down.

Kevin Roberts is the president of The Heritage Foundation (heritage.org).

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It's time to win the war against Big Tech - Today's News-Herald

Where there's smoke...

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A year ago, I argued that tech stocks would likely underperform the broader market over the subsequent seven years and that leadership would likely pass to more cyclical sectors, most notably energy, and I reiterated that in October on Seeking Alpha. Particularly with the price action year-to-date, the energy sector has outperformed the Nasdaq by about 30%, and this is likely only the beginning. In this article, I am going to take things a step further by arguing that the Nasdaq 100 will likely be sharply negative over both the short-term (the next two to three years) and the long-term (the next seven years).

First, I will briefly summarize and update the long-term sectoral thesis, and then place this thesis in the context of my long-term negative outlook on the wider market. I will then augment this with an analysis of the tech sector's current valuation and finally write about what shorter-term cyclical indicators are signaling.

There are a few key indicators of when a long-term sectoral rotation is about to commence.

First, a high degree of sectoral dispersion in long-term performance.

Chart A. Sectoral dispersion leads to sectoral rotation (Own calculations from Fama-French data)

This chart is based on the Fama-French 12-sector large-cap data going back to 1926. The shaded areas represent the respective performances of these various sectors relative to an average of all twelve. The green Business Equipment sector (BusEq) is our proxy for big tech, although it should be noted that in many of the previous peaks, other sectors also participated. For example, in the dot.com boom of the 1990s, Telecommunications outperformed much of the market. In the late 1920s, although a lack of data makes it difficult to be sure, Utilities were strong. And in the last few years, the Durable goods sector (roughly equivalent to the more modern Consumer Discretionary index (XLY)) has exploded almost entirely under the leadership of the auto sector (most notably Tesla (TSLA). At any rate, the Business Equipment sector is composed of "computers, software, and electronic equipment". It is the most consistent proxy for the tech sector.

The black line is a measure of the sectoral dispersion. This has declined modestly over the last year but remains elevated. These divergences almost always involve either the tech or energy sectors and frequently both. In fact, if we strip out every other sector other than Business Equipment, Energy, and Health (which often seems to play the role of caretaker in the transition from one sectoral regime to another), we can observe this relationship between these key sectors and the broader sectoral divergence.

Chart B. Sectoral divergences involve the usual sectoral suspects (Own calculations from Fama-French data)

The red line in this chart is the same thing as the black line in Chart A.

Peaks in the standard deviations tend to precede reversals in the sectoral hierarchy, especially when tech and energy have been moving in opposite directions, as they have in recent years.

Compare these patterns to those in the following chart.

Chart C. Sector rotations and sectoral hierarchies (Own calculations from Fama-French data)

In this chart, the red line measures the correlation between the sectoral hierarchy of the previous seven years with that of the subsequent seven years. The right-hand axis is inverted. Where the red line is high on the chart, the correlation is strongly negative, suggesting that hierarchies were almost entirely inverted in the following seven years.

Notice the similarities between the sectoral dispersions and the sectoral rotations in charts B and C.

This is highlighted in the following chart.

Chart D. Sectoral dispersions versus sectoral rotations (Own calculations from Fama-French data)

As I argued in my previous articles, the energy sector appears to be the most critical one. Not only is it involved in nearly every major rotation, either as king (such as in the 2000s) or vassal (as in the 2010s), but it seems to have a key relationship with the performance of the overall market.

Chart E. Sectors have relationships with overall market performance (Own calculations from Fama-French data)

Notice, for example, in Chart E that, typically, when the energy sector is strong on a relative basis, the broader market is underperforming. The light red line represents an equal-weighted index of the twelve sectors, essentially a proxy for the S&P Composite.

This is illustrated in the following table. The relative performance of the Energy sector is negatively correlated with the absolute performance of the FF12 Index.

Table 1. Relative performance in energy stocks is negatively correlated with stock market's absolute performance (Own calculations from Fama-French data)

Notice also in Chart E that the Business Equipment sector's peak performances tend to occur when the broader index is strong, and especially at the conclusion of bull markets. The table shows that the relative performance of the Business Equipment sector is most strongly correlated with the overall performance of the market.

Table 2. Relative performance in tech stocks is positively correlated with stock market index (Own calculations from Fama-French)

Although this is a separate issue from the one at hand, the relative performances of the Business Equipment sector and the Nondurable sector (this appears to be composed almost entirely of food producers and would be closely aligned with the defensive Consumer Staples sector) have always been inversely correlated.

Chart F. Relative performances in staples and tech are strongly inversely correlated (Own calculations from Fama-French data)

There is, finally, one more signal that a sector rotation is about to begin.

Chart G. Oil shocks tend to occur at the beginning of sectoral rotations (Own calculations from Fama-French data; St Louis Fed)

Here again we have historical sectoral rotations, but this time set beside year-on-year changes in the price of crude oil. Not every spike in oil is followed by a sector rotation, but every sector rotation has begun with a spike in oil, at least for as far back as we have data.

The reason for this appears to be that transitions from one energy regime to another (bullish to bearish, or bearish to bullish, or bearish even to flatish) has apparently always coincided with a sudden spike in oil prices. Thus, the spikes in oil prices in 2008 and 2010 were the conclusions of the oil boom of the 2000s, and the oil spike of 2021 is the end of a heretofore unrelenting bear market. Incidentally, although I think the historical evidence points to a relative outperformance of the energy sector in the 2020s, as I argued in my recent piece on the Energy sector, I believe we are transitioning not from a secular bear market to a secular bull market in energy but from a secular bear market to a secular flat market. You can find that piece here.

This is my sectoral transition thesis in a nutshell. The update shows that some of these pressures have perhaps eased slightly in recent months, but we are effectively at the same place we were last year. Dispersions are still high. Tech sector performance has softened but not changed the order of the hierarchy, and oil prices are still at 'shock' levels.

Keep in mind, renewed strength in the energy sector will likely imply declining absolute performance in the wider market and relative weakness in the tech sector. This is also suggested by the tech sector's history of peaking right at the conclusion of secular bull markets in the broader market.

So, if the S&P 500 were to remain flat for the remainder of the decade, we might expect tech stocks to be negative.

But, how bad are things likely to get?

My target for the S&P 500 in the Year 2029 (that is, seven years from now) is 3000. This is based on extrapolations of the history of growth and valuations in the S&P Composite index since 1871, which I described in "The Death of Irrational Exuberance".

Chart H. Historically implied price and earnings levels for 2020s (John Overstreet)

This is, in essence, a 1930s-style scenario. As difficult as it is to imagine now with inflation at 7.5%, it appears to me that we are still in a low-inflation/low-yield regime and that bouts of high cyclical inflation are likely to be followed by deflationary, or at least disinflationary, shocks.

As I argued in the irrational exuberance series, history suggests that bouts of high earnings growth in low-inflation/low-yield regimes tend to be followed by growth shocks. That will be the first blow to markets. What follows is powerful cyclical swings in growth and inflation. The second blow will be when one of those swings catches fire, raising growth, inflation, and yields but lowering PE multiples.

Now, if the S&P 500 is going to be as low as 3000 in 2029, that would be 33% lower than current levels. If we use a relatively modest estimate of the degree to which tech stocks will underperform the broader indices, say 25% (the relative rate of Business Equipment from 1929-1936), that would put the Nasdaq 100 index 50% below recent levels, somewhere in the neighborhood of 7000-8000 points.

If that seems unduly bearish, recall that the S&P 500 was effectively flat during the 2000s while the Nasdaq 100 ranged between -50% and -80% from 2000 to 2010.

This is not to say that the tech sector will not be profitable over the coming decade.

One thing I read in comments sections of articles about tech stocks is that the difference between 2000 and today is that tech stocks are now able to produce cash, but I am not sure that is a bullish sign.

I looked at long-term growth in dividends for each of the Fama-French 12 sectors, the closest historical proxy I can find for earnings growth, and their respective relationships with their dividend yields (the closest proxy I could find for valuations) and price performance (and implicitly total returns).

What I found was that the Business Equipment sector was the only sector to have a consistently negative correlation between 7.5-year dividend growth and price performance. The dividend yield also had a strong negative correlation with that dividend growth (a close third place among the twelve), suggesting that high valuations such as we have now are followed by high rates of earnings growth. The yield also had a middling correlation with price performance and a strong correlation with total returns.

In sum, high valuations in tech stocks had the unique combination among the twelve sectors of resulting in high growth and low returns. Note that the dividend yield is not as low as it was in 2000 in the Business Equipment sector but that the Durable goods sector has nearly reached that level.

Chart I. Dividend yields for tech stocks are approaching record lows (Own calculations from Fama-French)

The tech sector may be able to produce cash over the next decade, but this will likely be more than offset by a collapse in stock prices.

Over the short-term (say over the next two to three years), I see three indicators pointing to negative returns. Two of them are applicable to markets in general and one is applicable to the Nasdaq 100 specifically.

The first has to do with the interplay between growth and valuations described in the "The Death of Irrational Exuberance" series and suggests that the S&P 500 could go as low as 2500 points over the next two years.

The second has to do with the spike in oil prices that we described above. I showed that spikes in oil prices typically occur during transitions in energy price regimes and sectoral hierarchies. But, these spikes also tend to occur before general market crashes. As I wrote in previous treatments of sectoral rotations, it almost appears as if stock market crashes are part of the ecology of long-term rotations.

Chart J. Stock markets tend to crash around the time that rotations begin (Own calculations from Fama-French and Shiller data)

In this chart, I illustrate the relationship between rotations and stock market crashes. The latter tend to occur early on in the process of the former, and energy seems to be part of what links them.

Below is the relationship between sectoral divergences and market crashes.

Chart K. Stock market crashes seem to help resolve sectoral dispersions (Own calculations from Fama-French data and Shiller data)

From this angle, it appears that market crashes reduce the 'pressure' of sectoral divergence. By the time the crash has run its course, the divergence is reduced to much more normal levels. One might imagine, then, that those sectors that were most in favor during the boom might be the most severely punished during the crash.

In any case, the point is that markets are likely to see negative returns over the short-term, and it is unlikely that tech stocks will be immune from this.

The third reason I am bearish on tech stocks and the Nasdaq 100 in particular over the short-term is because of a set of short-term algorithms I have been working on over the last two weeks. Each of these sets is now signaling 'sell'.

Having backtested these algorithms against roughly 150 data sets spanning stocks, commodities, and bonds up to 150 years back, I feel rather confident that they are robust. (If there is sufficient interest in the comment section, I would like to write about them in greater detail in the future).

The following chart, perhaps somewhat unorthodox in its presentation, shows the log value of the average monthly alpha produced by one of these algorithms in the Business Equipment sector. Since these are log values, a '0' is equivalent to an alpha of '1'. It is not easy to think in terms of log values. At these levels, however, the percentage increases are roughly equivalent to the log values. That is, a log value of 0.01 is about 1% per month.

Chart L. Seeking alpha in tech stocks (Own calculations from Fama-French data)

There are a number of things I can say about this data.

First, alpha here is defined as being relative to the Business Equipment index itself rather than a benchmark index like the S&P 500. That is, implementing this formula on the Business Equipment index has only been demonstrated to beat the Business Equipment index. Second, over the last 90 years or so, if this algorithm were blindly followed, it would produce positive alpha over the entire period. The average alpha of the entire period is just over 1.4% per year over the last 90 years. Third, that alpha is generated primarily during bear markets. Fourth, it appears that inflationary bear markets like the 1970s permit less alpha than deflationary or lowflationary regimes as in the 1930s and 2000s, respectively. Fifth, it can be finnicky at tops and bottoms. That is, it can blink on and off from month to month at transitions, so it does not allow one to simply "call a top". Therefore, next week or next month, this signal could change. For now, however, this is where they stand.

It suggests that investors should shift to less risky equities (almost anything other than tech at this point, but staples (XLP) might hold up well in light of Chart F) or even commodities or bonds. I have been shorting the Nasdaq 100 through the QID ETF since November and because of the size of the downside risk, I added SOXS last week based on my reading of these tea leaves. I also balanced this with positions in XLRE and CMDY, even though I am bearish on commodities.

It appears to me that nearly everything, long term and short term, is stacked against the tech sector. That does not mean that tech companies will no longer continue to produce great products for customers or cash for investors, but that does not necessarily translate into price performance or total returns. I think another 40% down is likely, probably with even sharper cuts along the way. Eventually, the downward pressure being felt in tech stocks will spill over into other sectors and asset classes, but for now those places are less risky than tech.

Excerpt from:

Big Tech Has A Lot Farther To Fall - Seeking Alpha

Young Mark Zuckerberg, when he still exalted the virtues of an open internet. Photo: Justin Sullivan (Getty Images)

2021 was a bad PR year for Big Tech. Lawmakers, advocates, and scholars filled pages of books and held hours of hearing exalting what they viewed as an industry being strangled by a handful of players using anti-competitive practices to solidify their position as kings. Ironically, those exact same tactics were vehemently opposed by the Big Tech companies themselves less than a decade ago. Like an aging punk throwing out their raggedy jean jacket for a blazer, Big Tech sold out.

Thats according to a new report by the Tech Oversight Project shared exclusively with Gizmodo. The reporttitled Whiplash: Inside Big Techs Open Internet Flip-Floplays out a laundry list of times where Big Tech companies have seemingly expressed support for many of the same policy goals theyre currently fighting to quash. It also comes as Congress muses over several key pieces of antitrust legislation taking aim at Big Techs alleged monopolistic business practices.

The report spotlights Google, Amazon, and Facebooks fierce defense of net neutrality in 2014 where the companies repeatedly cited an open internet as a critical component to innovation and economic growth. Techs biggest players, as a New York Times article from the time states, put their reputations and financial clout behind the challenge.

These high-minded priorities for an open internet were shouted from the rooftops by Big Techs most prominent voices at the time. The internet has created this remarkable set of free markets, open competition, and competitive growth, and we need to keep it free and open, Former Google CEO Eric Schmidt said in a 2007 address to the Progress and Freedom Foundation Aspen Summit. Its actually important! Then, in a 2017 Facebook post thats almost laughably absurd hearing it now, Meta CEO and aspiring Metverse overlord Mark Zuckerberg espoused the urgent need to keep the internet free and open.

Now, both of those companies are among the top opponents of burgeoning antitrust measures.

So what changed? Well, according to the Tech Oversight Projects Executive Director, Sacha Haworth, Big Tech somewhere along the way saw an avenue to entrench their status and in doing so chose money and consolidation over their past principles.

These Big Tech platforms endorsed an open internet when it suited them and now that they are monopolies they want to effectively close the door and lock it behind them to prevent anyone else from becoming as successful as they have been, Haworth said. Haworth went on to draw a through-line between Big Techs skyrocketing market valuations and their pivot toward gatekeeping business practices. At the time of writing, Apple, Microsoft, and Alphabet had achieved valuations of $3 trillion, $2.2 trillion, and $1.8 trillion respectively.

The recently launched Tech Oversight Project sees brewing antitrust legislation as a key component to reigning back Big Techs influence. The group, which The Washington Post notes receives funding from eBay founder Pierre Omidyars left of center Omidyar Network, told Gizmodo its focused on a campaign-style approach to holding tech behemoths accountable. That push comes on the heels of increased spending and lobbying efforts from tech giants.

The Tech Oversight Project sees a strong public appetite for antitrust efforts. The organization pointed Gizmodo towards a new Data for Progress poll where 71% of Democrats and 44% of Republican likely voters said they supported the American Innovation and Choice Online (AICO) Act, one of the new antitrust measures. Other polling released this week from Morning Consult found that 38% of adults thought the federal government should regulate tech more, compared to 29% in 2019. And unlike most other issues, antitrust has broad bipartisan support, both among the public and with lawmakers, which has made it all the more appealing for groups looking for ways to direct Big Techs influence.

Companies like Google, Amazon, Facebook, and Apple prove themselves hypocritical monopolists time and time again, Tech Oversight Project spokesperson Kyle Morse said. We deserve a level playing field and clear rules of the road that encourage competition, spark the next big idea, and provide consumers with a choice in how they use the internet.

Big Techs supposed policy flip-flopping goes beyond milk toast statements or blog posts. Last month, in the days leading up to the Senate Judiciary Committees mark-up of the American Innovation and Choice Online Act, Apple and Google, in particular, spoke out publicly against the bill with Google saying the antitrust efforts would somehow break many of its most used services. The giants were so concerned that CEOs Sundar Pichai and Tim Cook reportedly personally contacted multiple lawmakers urging them to oppose the legislation. Similar frantic calls to lawmakers were dished out last year after a bipartisan group of House members introduced five antitrust bills taking direct aim at the companies.

Those specific cases are part of a much broader lobbying effort involving staggering amounts of cash. Big Tech lobbying shot up last year once antitrust efforts began gaining more steam, particularly among the companies most likely to find themselves on the receiving end of pro-competition policies. Last year, Meta reportedly spent an all-time high record of $20.1 million on lobbyists while Alphabet spent around $9.6 million. Alphabets spending marked a 27.5% increase from the previous year. Meta and Amazon meanwhile both increased their lobbying expenditures by 7% compared to 2020 figures. Apple, for what its worth, spent slightly less in 2021 despite a relatively high level of scrutiny from lawmakers and regulators.

All that money waving has contributed to the fracturing of the tech industry writ large which collectively once shared a broader set of policy interests. That change was made clear late last year following the death of The Internet Association which once stood largely unchallenged as the tech industrys top lobbying arm. Part of IAs downfall came because its biggest previous members, like Meta and Alphabet, were reportedly at odds with smaller, and even not-so-small firms who wanted the lobbying firm to advocate for more open internet policies.

2021 was the year academics and lawmakers proved theres an appetite for antitrust. Now, in 2022, those same forces will have to prove if that appetite is enough to ward off whats shaping to be a year of combative pushback from some of the countrys most powerful companies.

The tectonic plate has shifted away from smaller companies that have fought against some of these anti-competitive practices monopolizers engage in, Haworth said. Theres a reorientation of alliances here with the monopolies fighting to maintain their monopolies, versus pretty much everyone else.

You can read the full report embedded below.

Continued here:

Big Tech Sold Out on Its Promise of an Open Internet - Gizmodo

Image: Getty Images

Meta, formerly Facebook, made headlines last week for "threatening" to pull its services out of Europe. The threat, slotted into the company's annual 10-K filing to the US Securities and Exchange Commission, said it "would likely" pull Facebook and Instagram from the region if a new EU-US transatlantic data transfer framework could not be formed.

The threat was made in response to the US-EU Safe HarbourandPrivacy Shield agreements being struck down by the European Court of Justice in recent years. The court struck down those agreements as it found US laws did not offer enough data protection safeguards to meet European standards, making it illegal for companies to gather data about European citizens and transfer it to US shores for analysis and sale to advertisers.

This isn't the first time Meta has made threats to leave a particular market. Last year, Meta temporarily blocked people and publishers in Australia from sharing news as part of a scare tactic to make the Australian government amend its media bargaining code. Among Meta's fellow big tech brethren, Google similarly threatened to pull Search from Australiaunder similar motives, while Apple said last year it could leave the UK due to patent concerns.

What's different this time, however, has been Meta backpedalling from its comments. In a blog post, Meta said it is "absolutely not threatening to leave Europe".

"Meta is not wanting or 'threatening' to leave Europe and any reporting that implies we do is simply not true. Much like 70 other EU and US companies, we are identifying a business risk resulting from uncertainty around international data transfers," said Markus Reinisch, Meta Europe public policy VP.

See also: Meta receives its first ever criminal charges from Australian billionaire Andrew Forrest

So what's changed? Capital strikes aren't anything new; whether it's oil companies or chemical companiesthreatening to leave a market, big foreign direct investors have long lobbied against tighter regulations that restrict their market power.

But over the last couple of years, many governments, particularly through their competition regulators, are sharing information with each other on how to handle big tech issues. What's ensued has been a stream of regulatory headwinds against Meta, ranging from the aforementioned ban of trans-Atlantic data flows to stronger privacy laws to expanded requirements for monitoring abhorrent material.

It's no longer a race to the bottom among governments, like when a sea of tech giants over a decade ago made Ireland their European headquarters for lower taxes.

Digital platform companies, like Meta, are also unique in that they are heavily dependent on network effects, said Rob Nicholls, University of New South Wales associate professor and competition policy expert.

"Google, Apple, Facebook, Amazon, Microsoft, they all rely on network effects and taking out parts of the network in order to make a regulatory point is likely to be more harmful than it would be if you were just a manufacturer where you shift manufacturing to a lower cost, lower regulatory burden cost country. It's different," Nicholls explained.

"The actual nature of [Meta's] business means that the threat is a little bit more hollow than it would be for a manufacturing business. And the coordination between governments means making those threats and following through with them are much, much harder."

For example, if Meta's platforms were to be pulled from Europe, people who live in Australia that communicate with family and friends in Europe using Instagram or WhatsApp might move to another platform to keep those communications despite still having access to Instagram or WhatsApp. If Meta were to cut off a substantial portion of its network, the move would not just adversely affect its revenue, but also the stability of its network too.

With governments becoming more confident in not caving to big tech demands, Meta is in a bind, especially with 98% of its revenuesstill coming from digital advertising.

Big drop: Meta lost over a quarter of its value in a single day. That's almost $240 billion

It's a growing concern for Meta, which revealed during its Q4 conference call earlier this month that its number of daily active users fell by 500,000. If the dip is the beginning of a pattern, it's significant.

Facebook seems to be aware of the problem, having rebranded to Meta last year to try and diversify towards web3 technology. But its bid to pivot has been lacklustre thus far. Meta's cryptocurrency play, Diem, was shut down a fortnight ago after it "became clear" regulators would never let the project move ahead.

Meta's also seeing more competition in grabbing people's attention, particularly from TikTok. During the Q4 earnings call, Meta founder and CEO Mark Zuckerberg said people have more choices for how they spend their time online than before.

"Apps like TikTok are growing very quickly," Zuckerberg said.

"The thing that is somewhat unique here is that TikTok is so big as a competitor already and also continues to grow at quite a fast rate off of a very large base."

Historically, Meta's platforms have excelled more than its competitors in placing ads about products or apps that users did not know existed. While TikTok is not a social network, the short-form video platform has done well to compete against Meta's platforms in this area.

"That discovery mechanism, though, doesn't just depend on data; it also depends on attention. This is where the TikTok challenge looms large TikTok and the loss of attention are [an] existential risk," tech analyst Ben Thompson said.

Coming back to Meta's threat to leave Europe last week, if the EU and US are unable to arrive at a mutually acceptable solution for a data transfer framework, Facebook realistically has two options -- both of which are stark.

See also: Meta sued in excess of $150 billion for its role in Rohingya genocide

The first is pulling some of its services from the EU. That's not an attractive option given that the EU has a population comparable to the US, even if it has a lower GDP per capita than the US. In the most recent quarter, almost 25% of the company's advertising revenue came from Europe.

The other alternative would be for Meta to change its business processes to comply with the relevant orders from the European Court and the General Data Protection Regulation of not sharing EU citizen data with a US entity. This option would be costly, however, as it would entail Meta effectively needing to have large and separate data centressomewhere in Europe.

How Meta will move forward is unclear, but what seems clear is regardless of whether Meta's threat holds any water, governments no longer feel the pressure of Meta like they used to.

Last Wednesday, French Finance Minister Bruno Le Maire reportedly said he would be fine if Meta pulled its platforms out of Europe.

"I can confirm that life is very good without Facebook and that we would live very well without Facebook," he said.

The Monday Morning Opener is our opening salvo for the week in tech. Since we run a global site, this editorial publishes on Monday at 8:00am AEST in Sydney, Australia, which is 6:00pm Eastern Time on Sunday in the US. A member writes it of ZDNet's global editorial board, which is comprised of our lead editors across Asia, Australia, Europe, and North America.

Link:

Meta's threat to leave Europe hints at waning big tech influence - ZDNet

Cyber warfare has reached new levels - with attacks now disrupting supply chains, infiltrating governments, and affecting national infrastructure. And cyber threats at a national level have significantly bigger consequences than an organisational data breach, ones which impact international relations.

Back in 2021, the US accused China of a global cyberespionage campaign and responded with a broad coalition that included Britain, the EU and even NATO. Beijing rejected the attempted initiative and called it irresponsible. Overall, it was a highly tense situation involving two super nations, and ultimately, a conflict which emphasised a growing problem for government offices. The UKs Gloucester City Council has been hit twice by attackers in the last decade, Belgiums defence ministry and Canadas foreign ministry have been targeted by hackers, and perhaps the most serious of all; Ukraines massive cyber attack that shut down numerous government websites. The fallout of Ukraines cyber attack highlights the catastrophic effects of cyberwarfare at a national level. It should be a wake-up call for countries to strengthen their own cyber security posture.

While most countries like the UK and Belgium are increasing investment in cybersecurity, the US is turning to Big Tech for help with cyber defence. After sending out a letter back in December, the White House met executives from the top tech firms including Google, Apple, IBM and Amazon to discuss how to bolster software security in the wake of the attack on Log4j, the open-source software. A bold move, one that indicates the private sector could be the answer to securing critical infrastructure and systems.

Perhaps a rather obvious and inevitable challenge for governments is that countries will undeniably engage in cyber-espionage. In a data-driven and digital-first world, the easiest form of information gathering is to target systems and data. Some of the targets of the SolarWinds/Nobelium attack of 2020 included the Department of Homeland Security (DHS), the Cybersecurity and Infrastructure Agency (CISA), and the US Treasury.

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The role of Big Tech in cyber defence - IDG Connect

The Bureau of Investigative Journalism is looking for a talented journalist to join our team reporting on big tech.

The Bureau has been investigating the effects of big tech for several years, breaking stories on everything from algorithmic decision-making to Facebooks lobbying, from global misinformation, to mobile phone surveillance. We want to tell this story from a truly international perspective, tracking big techs influence across the world.

We want an enthusiastic journalist with at least two years experience to join this small team and help us hold big tech to account.

The Bureau is the UKs largest independent investigative journalism organisation. It exists to inform the public about the realities of power in todays world. Our investigations seek to expose systemic wrongs, challenge misinformation and spark change. With no corporate or political agenda we bring to light serious issues affecting individuals and communities in the UK and around the world.

We work collaboratively to maximise the impact of our fact-based reporting and share our findings openly with local, national and international media outlets to reach as many people as possible.

In the last few years, The Bureau has been at the cutting edge of reporting on the business model underlying the new digital era. Weve uncovered the world of Twitterbots for hire and their role in a political scandal in South Africa and explored how social media promotes quack Covid cures in India.

Weve spot-lit how European agencies tried to exploit new technologies to predict refugee arrivals and exposed behind-the-scenes lobbying for NHS data as well as the struggles behind Britains contact tracing app. Weve revealed how top-tier global commercial surveillance companies have been enabled by a hidden trade in mobile network access points.

Our renewed project aims to take this work up a level. We dont intend to replicate the reporting done by national newspapers and magazines reporting on Big Tech. Were looking instead to meet the urgent need for deeper reporting on the hidden, systemic issues, within the UK and internationally.

It is an exciting time to join our innovative, mission-driven journalism outfit and be part of an ambitious project to produce cross-border investigations on technology and its effects.

The big tech reporter will work as part of our investigative team. The ideal candidate will have some experience in tech reporting or else be able to show a strong interest in the area and will be able to demonstrate some experience of investigative or off-diary journalism.

It is envisaged that this is a full-time role, primarily based in our London office where we use a hybrid working approach but as The Bureau is committed to supporting people who require a more flexible approach to working this is open to discussion.

The Bureau is committed to being an inclusive and diverse employer providing opportunities for all, where people can come to do their best work. We encourage individuals from BAME communities, those with disabilities, or disadvantaged backgrounds as these groups are currently underrepresented in the media industry, which is something we are committed to changing.

Salary: 32-36,000, dependent on experience.Duration: An initial 18 month fixed-term contract.

Send a CV and covering letter to [emailprotected] by 4 March 2022.

Please also fill out our Equality Monitoring Form here, which is anonymous, so we can better track who we are reaching.

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We're hiring! Apply to be our big tech reporter - The Bureau of Investigative Journalism

Facebook parent Meta (FB) took a huge earnings hit last week in part because of privacy changes Apple (AAPL) made to its iOS platform, but lawmakers may be poised to force Big Tech to take additional steps to protect users' privacy.

In a new interview with Yahoo Finance Live, Congressman Ro Khanna (D-Calif), whose district is in the heart of Silicon Valley, outlined three areas that lawmakers should focus on when it comes to tech regulation: privacy, antitrust regulation, and free speech.

On the regulation front, he points to instances where private companies have done more than the United States Congress. But, he added, "We have to go further."

On the issue of privacy, Khanna says a federal law is needed to enshrine the right of users to only opt in before a company may use and profit from their personal information. Khannas home state of California enacted privacy bills in 2018 and 2020 that advocates hope will set the stage for nationwide legislation in the years ahead.

Apples new privacy policy requiring iPhone owners to opt in before apps can track their activity across the web makes the company a leader when it comes to privacy, acknowledged Khanna, who has a new book out called Dignity in a Digital Age: Making Tech Work for All of Us. But he says he wants to ensure that Congress passes what Apple has started to do.

Second, Khanna wants to make sure tech giants compete fairly with one another and with smaller companies. The Federal Trade Commission and Department of Justice have embarked on a series of efforts to rein in Big Techs overall power with lawsuits that could proceed in the years ahead. And bills on Capitol Hill like the American Innovation and Choice Online Act are moving gradually forward to limit the ability of tech companies to disadvantage their rivals in forums like the App Store.

Some of the efforts are poorly drafted by people who I think dont understand technology, Khanna says. But he says he's working with his colleagues on enforceable antitrust legislation.

Story continues

Third, he wants to ensure consumers can speak freely on platforms unless they're posting misinformation or incitement to violence. Tech companies have a moral responsibility to remove certain speech from their sites, Khanna says. Still, he's wary of efforts to fully roll back Section 230 of the Communications and Decency Act, which allows platforms to operate without being held liable for content posted on their platform by third parties.

Apples (AAPL) headquarters sit inside of Khannas district as do Intel's (INTC) and Yahoo's. The headquarters for Google (GOOG) and Meta Platforms (FB) are just a few minutes away. It's fitting that Khanna represents this district, as he counted tech companies as clients when he worked as a lawyer.

But he doesn't want Silicon Valley to have a monopoly on tech jobs. In his book, Khanna writes about decentralizing tech geographically to bring more of the high paying jobs in his district to people left out with economic opportunity in the digital economy.

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit.

Read the original post:

Silicon Valleys Congressman wants to rein in Big Tech in 3 areas - Yahoo Finance

South Koreas financial watchdog pledged Monday to announce its own monitoring measures for Big Tech firms financial services.

As part of its annual plan for this year, the Financial Supervisory Service said it would prepare Korean-type Big Tech monitoring measures to stimulate competition and innovation from Big Techs foray into the finance sector and to achieve financial stability and customer protection.

The purpose of the measures is to establish systematic monitoring to enforce adoption of healthy market rules, and actively supporting financial innovation in the era of the big blur -- a locally-used term referring to the blurring of boundaries between industries.

The FSS announcement comes as tech giants Naver and Kakaos fast-growing online and mobile financial services have become serious competitors to traditional banks. It also comes amid concerns that regulations on Big Tech companies customer protection and data use related to their financial platforms remain unclear.

To bolster transparency in online and mobile finance, the FSS seeks to check on the current state of electronic finance transaction fees and build a related data and information disclosure system. The watchdog, concerned with the lack of standards in assessing environmental, social and governance-related financial products, vowed to come up with a solid yardstick for ESG bonds. It said it would review ESG-related disclosure systems and adopt stricter assessment process for ESG-related funds.

The FSS picked customer protection as another key task for this year, saying it plans to implement stricter regulations to prevent financial institutions exaggerated marketing and selling of risky products.

To minimize financial polarization in the country, it plans to roll out plans to help the elderly and consumers suffering from the fast-declining numbers of brick-and-mortar bank branches and automatic teller machines. According to separate data compiled by the FSS, the number of offline branches operated across the country by the four major banks here - KB Kookmin, Hana, Shinhan and Woori - decreased by 203 on-year as of end-September 2021 to 3,203.

Pointing to concerns surrounding the nations household debt, the FSS said it will enforce stricter loan regulations. The watchdog will prepare an integrated screening system for both household loans and special loan programs for the self-employed. This measure is to prevent abuse of the small business loan program, which tends to have less strict requirements.

Data released by the Bank of Korea earlier this year showed that total household loans extended by banks declined 400 billion won ($333 million) on-month as of end-January, while the total extended to the self-employed added 2.1 trillion won in the same period. This has sparked concerns from onlookers that borrowers were abusing the small business loan programs for other personal uses, such as stock and real estate investments, as the government has been tightening its screening and regulations on household loans.

By Jung Min-kyung (mkjung@heraldcorp.com)

See the rest here:

Financial watchdog to step up crackdown on Big Tech - The Korea Herald

Missouri Attorney General Eric Schmitt argues people are 'tired of being pushed around' as Canadian truckers continue to protest vaccine mandates.

Missouri Attorney General Eric Schmitt joined "Varney & Co." Friday to discuss his investigation into GoFundMe after the platform restricted the Canadian Freedom Convoy donations, arguing "Big Tech giants are not above the law."

ERIC SCHMITT: This week we issued a civil investigative demand, which is the equivalent of a subpoena to GoFundMe to get to the bottom of this. And I think it's important to put this in a broader context. No. 1, these Big Tech giants are not above the law. Missouri and other states have taken Google and Facebook to court and GoFundMe should be no different. When you hold yourself out there as a company that's going to take donations and give it to a cause people are choosing. You don't get to change the rules in the middle of the game. They certainly didn't do that for the Black Lives Matter protests last summer.

CNN ANALYST BACKTRACKS AFTER CALLING FOR CANADIAN TRUCKERS TO HAVE THEIR TIRES SLASHED

Secondly, working people have had enough of this. They're tired of being told what to do is to speak to sort of the protests here, right? They're tired of being pushed around. They're tired of being told they're not smart enough to make their own decisions. And you see now what's happening in the United States here, we dodged a bullet.

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Missouri Attorney General Eric Schmitt on opening an investigation into GoFundMe after the crowdfunding site halted donations for the cause, and school mask mandates.

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Missouri AG on GoFundMe shutting down donations to Canadian truckers: Big Tech giants are not above the law - Fox Business