Jamie Susskind  

Everybody Good afternoon Welcome to CS day 15 Okay, thank you all for joining us to talk about should big tech be broken up. We have a great panel here today. I'm Jamie Susskind. And I'm the Vice President of policy and regulatory affairs at CTA. So let me quickly introduce our panelists and then we'll get going. So seated to my left is Robert Atkinson. He's the founder and president of the Information Technology and Innovation Foundation, or ITF, which is recognized as the world's top think tank for Science and Technology Policy. There he leads a team of policy analysts and fellows, that shaping the debate and the agenda and a host of critical issues at the intersection of tech innovation and public policy. And he has a very long and distinguished bio, so I'm going to try to shorten it. Previously, he was vice president of the progressive Policy Institute and prior to that he was the first executive director of the Rhode Island Economic Policy Council, a public private partnership, whose members included the state's governor, legislator. Leaders in both corporate and labor leaders prior to his time in right Rhode Island. He was a project director at the congressional office of technology assessment which is a hot topic in the news these days. And he has a PhD in City and Regional Planning from the University of North Carolina Chapel Hill. He has a master's degree in Urban and Regional Planning from the University of Oregon, which named him a distinguished alumnus in 2014. Charlotte is seated to his left Charlotte slam and is Senior Policy counsel for competition policy at public knowledge. Prior to joining public knowledge, she worked in the anti competitive practices division of the Federal Trade Commission, where she investigated and litigated antitrust conduct violations, including the 2017 case against one 800 contacts for manipulating Google Search ad auctions. She also worked as a legislative aide to Senator Al Franken where she focused on judiciary committee issues including competition media and consumer privacy. We're also joined by Zach graves. So Zach is the head of policy at the Lincoln network, a nonprofit that helps bridge the gap between Silicon Valley and DC. He was previously the Technology Policy Program Director at the R street Institute where he remains an Associate Fellow. Prior to our street, Zach worked at the Cato Institute and the America's future foundation. He's also a fellow at the Internet Law and Policy foundry. He has a master's degree from the California Institute of the Arts in a bachelor's degree from the University of California at Davis. And the last but not least, we have Jennifer Huddleston from mercatus. She's a research fellow there. So Her research focuses on the intersection of emergent technology and law with a particular interest in the interactions between technology and the administrative state. Her work covers topics including judicial deference, liability protection for internet platforms, autonomous vehicles and other disruptive transportation technologies, regulation of data privacy and the benefits of tech Technology and Innovation. So she has a JD from the University of Alabama School of Law and a BA in political science at Wellesley College. She's also an alumna of the makeda centers. And I always say this wrong, Frederick best yet fellowship in the Charles Koch Institute's Koch Associate Program. And prior to law school, Jennifer was a Teach for America core member in the Mississippi Delta and she worked for the Charles Koch foundation. So join me in welcoming our our panelists today. So I'll kick it off by maybe making this like a congressional hearing. So let's go down the line and just answer the question should big tech companies be broken up? If you want to start?
 

Robert Atkinson  

So if it's a real congressional hearing, you're only allowed to get a yes or no answer. I'll let you elaborate. So the answer is no. And I think the way to think about that is you have to understand what any trust doctor historically is focused on this really focused on two things. One is conduct in the others structure. And we should be focusing on conduct we should FTC, DOJ, other authorities should be looking very religiously at the behavior and the conduct of big technology companies to make sure they don't use their market power in ways that are anti competitive. But the simple fact that big technology companies are big is not a problem in and of itself. In fact, it's a benefit. For example, if you look at the top 15 companies now in the world in terms of spending on research and development, number one, and number two, our alphabet and Amazon, I think it's five and six are apple and Apple and Microsoft, and I think 13 is Facebook. So the size that these companies have enabled them to make big investments in the future big investments in r&d, and if we try to break that up, we're gonna we're gonna lose that. Last point to make is that there's a lot of good evidence that The economy the the industries that these it that these firms are in, essentially are lend themselves to bigness. they lend themselves even, maybe even to monopoly. There's a great quote by the Council of Economic Advisors in the Obama administration, which says, quote, some newer technology markets are characterized by network effects with large positive spillovers from having many consumers use the same product. markets in which network effects are important such as social media may become dominated by one firm in English, that means a network effect, meaning when you're using something and somebody else is using something, the benefit is bigger than just the two of you. So why a lot of these firms that's why we have Facebook and not five of these things, and nobody wants to post multiple times to one thing. And then the second point, I think, is that there's a lot of good evidence that these these markets are that there are economies of scale in terms of being able to do innovation. So very good book that just came amount if you haven't read it, I encourage you to look at it's called the title prediction machines, the simple economics of AI, and it's by three academics who look at the economics of AI. And one of the things they pointed they say, quote, If AI has scale advantages, reducing the negative effects of Monopoly has trade offs. Breaking up monopolies reduces scale, but scale makes AI better. And I think that's we can't sort of just pretend somehow that just magically waving the breakup one which we can talk about later, which I don't think is possible anyway. And given the courts system, even if we can do that, we have to recognize they're going to be trade offs, and there will be harmed innovation that occur from that. And the last part is to say, historically, in the US, at least anti trust laws been folk has been principally focused around what's called the consumer welfare standard, that something a company is doing is it helping or hurting consumers? And I think the evidence for big technology companies and helping consumers is overwhelmingly large most of these industries was the products are Free. They're constantly innovating. They're constantly giving consumers what they want. So I think on that standard, the consumer welfare standard, it's an unalloyed good, we should say, and therefore, I think the case for breakup is pretty limited or zero. Right?
 

Jaime Susskind  

Charlotte, your thoughts? Great.
 

Charlotte Slaiman  

So I am very concerned about the power of big tech, which I define as dominant digital platforms. I agree with what a lot of what Rob has said. But I think these are real problems. network effects very well may be a big part of the reason that these companies are so powerful. And I agree that antitrust is not well suited to handle the problem. But that is a problem that we need to solve. These companies are too powerful and we need other solutions. So what I'm focused on is coming up with some ideas for new laws and rules that can address this problem. Experts in the US and in the UK, and In the EU and in Australia and more and more companies, more and more countries are saying that today's dominant digital platforms occupy sort of unique position in the marketplace. Part of this is because of network effects. Part of this is because of the incredible value of data, the incredible increases in the value of data as it is aggregated. So when a platform has a bundle of services and can aggregate the data from those bundle of services, there are incredible economies of scope to that. And then the third sort of characteristic that makes them unique are behavioral tix of users, the power of defaults, we are not always searching around for the best product, we tend to stick with what we know that creates another incumbency advantage. So because of these three characteristics, dominant digital platforms are very difficult to compete against. Some of you in this room may have experienced this. What economists say as the way that you can try to compete in an industry dominated by a digital platform is start in one vertical. Maybe you're interested in search, you're not going to start out with general search trying to compete against Google, you might start with local search, like Yelp did. It's a very financially smart move to start in a profitable area like local search, but you're facing that bundle of services. If you want to switch from local search to getting directions to the place that you've searched, it's a lot harder for someone who only has one product to offer that service. So that's one of the difficulties that folks encounter. The other competitive strategy that economists recommend for competing in these digital platform markets, is disintermediation. You should try to come up with a way to build a relationship with your customers. directly, instead of having to go through the platform every time, this can be really difficult to because the platform controls the terms and conditions under which you are interacting with your customers. It decides whether you get the data about your customer transaction or whether the platform gets that data. Maybe you both get that data. It decides who is at the top of the recommendation algorithm. So there are a lot of levers whereby they can control how companies use the platform and whether companies can really successfully thrive when they are relying on these platforms. So these are some of the concerns that we have and why I think even if antitrust violations may not have occurred, we really need to act we really need to fix this market and come up with some new laws and rules that can promote competition here.
 

Zach Graves  

So I mean, I think it's been you know, become very trendy to hate on some of the big tech companies, right? This is not Just a matter of four Democrats or Republicans, both Tucker Carlson and Elizabeth Warren have called for breaking up big tech. And this is, you know, trendy and news stories and and congressional hearings. It's been sort of a hot topic. What seems to be absent from that conversation, though, I think is any agreement on what the underlying grievances are with big tech, as Rob said they provide provide tremendous value to consumers that consumers are generally I think, very happy with, there may be a few scandals, Cambridge Analytica number of unforced errors, particularly in the privacy arena that companies have gotten into but by and large, I think people are still you know, very pleased with the sort of quality of services and innovation that they're getting out of that. the conservative side I think it's a little bit different. You have up we can talk about this later, but if people worried about, you know, getting more marginalized and pushed out of the public square. And so there's really a lot of concern about speech related issues more than concentration of power issues. But again, even assuming those grievances are real rather than imagined, I think that's a bit of an F in many instances. I don't really see how this idea that this remedy of breaking up big tech addresses that. And it's also a very difficult policy lever to enact I mean, the Microsoft fight over antitrust took, you know, decades a decade of litigation, right. So I'm also no on breaking up big tech. I don't really see it as you know, addressing fundamental problems. I don't see it as thoughtful policy. I see it more as something punitive, something that people want to punish the tech industry for a different video different sets of perceived wrongs, rather than something that will, you know, optimize our kind of innovation policy ecosystem in the right direction. That being said, I think we shouldn't be too dismissive over concerns of sort of concentrated power and the rise of walled gardens and the internet that's become a lot more tightly controlled by a few dominant platforms. But I really think that's not a thoughtful solution to it.
 

Jennifer Huddleston  

And kind of to echo a lot of what has already been said, I, you know, I'm trained as a lawyer, I can't say yes or no to. Probably not based off of at least what we know, as the general public of there's always possibility. Anti trust is really designed as a tool for a specific kind of behavior we're looking at is their anti competitive behavior. What is the role in the market not for all these other policy program problems, especially as it's traditionally been used in the US? I think it's also important to note Not only is that said do these issues take significant amount of time But also that oftentimes innovation has in and of itself in our best competition policy in America. A decade ago when we were talking, if we were talking about should big tech be broken up, we would be talking about the MySpace natural monopoly or how y'all who won the search words, when you look back at the browser wars, it's things like the rise of mobile that really came into play. And so yes, there is this kind of question of is it easier to stick with the incumbents, but we've seen time and time again, that things that look like untolerable giant, something new and innovative that we never could have imagined, comes about and completely revolutionizes the industry, and that the market may not have been what we thought it was to
 

Jamie Susskind  

begin with. The only one old enough for Friendster. Friendster before MySpace. So obviously, breaking up big tech companies. We hear all about it in the news these days. Right. The presidential contenders are talking all about it. We've seen state agencies Now many of them are starting to look at Facebook and starting to look at Google to see if their behaviors anti competitive. Zach, why do you think? Why now? Right? Why this tech lash now?
 

Zach Graves  

Yeah, I mean, there's you know, like I said there's been a few scandals and in Cambridge Analytica was big in instrumental Lee kind of turning people I think, you know, there is this idea that the you know, I mean, coming from a center right perspective, I think there was some view that tech companies were complicit and getting Donald Trump elected in 2016. And people are upset about it. Right. But, you know, more broadly, you know, I think there is a schism between the kind of pundit class who goes on TV and complains about big tech or Elizabeth Warren or policymakers and where you know, your kind of average person as I think your average person is a lot less worried about this issue on the sort of hierarchy of all of the thing your jobs you know, the how's the economy doing foreign policy like this. is pretty low on the list, I think. And so it's interesting to see how popular that is just as a matter of sort of where the policy conversation is, but I don't I see it as a lot more noise than actual substance. I don't necessarily see it really going anywhere in the near term. And if any of you have thoughts, please do chime in.
 

Jamie Susskind  

So, obviously, there are issues and some of them have been talked about here real legitimate issues. You know, you mentioned Cambridge Analytica, so there's privacy competition is a big issue that's being talked about. But is breaking up the company is necessarily the way to go. And I'd be interested in hearing from you, Robin, you, Charlotte to hear, you know, are there other ways we can be approaching this problem? Are there other solutions we should be pursuing before we kind of go to you know, the big Burnet down solution? Yeah.
 

Robert Atkinson  

Both Zach and Charlotte array some issues that people are Talk about in terms of the breakup, Charlotte talks a little bit more about competitiveness, competitive issues, competition issues. And those are legitimate issues to have as part of this discussion, although I don't think breakup is the way to deal with I think, focus and I appreciate the point you make. I think they're important points. Were anti trust authorities have to have oversight around conduct. Zach brought up a number of points that really have almost nothing to do with competition policy. Things like political speech, political, power and money in Washington, privacy, cyber security, whole set of other issues. There's really nothing that any trust in any trust solution in many of those cases would actually be worse rather than better. Big companies, wrote a book last year for MIT Press with my colleague Mike Lind called biggest beautiful, debunking the myth. The small business big companies have better cybersecurity than small companies and better privacy policies, a whole set of things. You want to see what the most powerful one of the most powerful lobbies in Washington just go down in New Jersey Avenue Look at the National Association of Realtors building and you have your own building and it's two blocks from Washington, you have a lot of power. There's made up of a lot of small businesses. So if we think there's a problem with too much power of tech companies and campaign finance reform is the answer. If we think there's a problem with privacy, then a national privacy bill is the answer, which is, by the way, something we've long endorsed. If we think there's a problem with speech, then oversight of that, but again, those aren't competition policy issues and putting them into the competition policy boxes, some elected officials have argued for really muddy the water. Well, what are you supposed to prioritize if you're an anti trust official is that you supposed to prioritize certain types of conduct, you're supposed to prioritize privacy, I think, just would really mess up competition policy. So I think the more important question though, is really about what are are there things that these companies are doing in terms of actual behavior, actual conduct that are is problematic and hurting competition and I think that's true. Really what the focus should be on.
 

Charlotte Slaiman  

So the types of new laws and rules that we're thinking about at public knowledge are actually focused on competition policy but broader than antitrust. There are plenty of industries in the US where we have competition policy that is not antitrust focused on a particular  industry, because that industry is especially important. antitrust applies across the economy. And like Rob said, it is focused on particular conduct violations. But I believe that dominant digital platforms today occupy this unique space and require their own competition laws for them. So our proposal is that there needs to be a regulator that is focused on dominant digital platforms, the ones that occupy this sort of bottleneck gatekeeper position, and you might experience this again, at CES, I'm thinking we probably have a lot of folks working at businesses that work with these platforms, the platforms have the audience that you're looking for. And that is a bottleneck, you have to go through them to reach that audience. So that's the type of situation we're looking at when we think about who should be regulated by this new idea, the digital platform authority. So some of the tools that I think are really important for that authority are interoperability obligations, the platforms should have an obligation to be interoperable with services that want to be a part of it. I think it's important to have terms and conditions so that privacy can be protected. It doesn't have to be that bad actors have an interoperability right. But anyone who complies with the sort of basics can be a part of the platform can interoperate with the platform. I think that would provide a really important right. for small businesses to be able to use these platforms and community have their users come Indicate across the platform. The second tool is non discrimination. When these platforms are making their recommendation algorithm decisions, we want to make sure that they are not discriminating in a form that causes competitive problems. Or they preferencing their own products, putting their own services at the top of the page, or are they using a neutral criteria? Or are they promoting folks who are have a special financial relationship with them? Or are they demoting companies that they believe pose a competitive threat? Those are the types of concerns we think about with the non discrimination standard. The last is I think that when one of these dominant digital platforms wants to have a merger, there should be a sector specific merger review for that merger. In addition to antitrust. This is sort of how things work today with the Federal Communications Commission. They will review mergers and The industries that they focus on, at the same time that the Department of Justice or the Federal Trade Commission is analyzing that merger. So I think that's also necessary here because of some of the limitations of antitrust that Rob has described. For example, I think in digital platforms, a tiny company can have a huge impact. And so if Facebook is buying Instagram when it only had 15 employees or something like that, the regular antitrust laws may not recognize how important that is. So we need sector specific merger review by experts in this industry.
 

Robert Atkinson  

I just quickly I don't I agree with some of your concerns, but I don't I we fundamentally believe that the current system of DOJ FTC, joint oversight is more than adequate. All of those concerns that you raised are all things that undercurrent anti trust law, and doctrine and precedent I think all could be easily handled. I don't think we need a separate regulator. I guess that would be the main difference. I would have
 

Jamie Susskind  

Yeah, I'd like to get the views of the rest of the panel on that also. And I wondered, in part, maybe you can explain some more your concerns, you know, is it is it a resources issue? Is it an expertise issue? Is it like a captured agency concern?
 

Charlotte Slaiman  

So I worked at the Federal Trade Commission as an antitrust attorney. I think the it, it's a little bit from all of those columns. Okay. But the biggest problem really is that antitrust has a particular purpose. antitrust is looking for conduct violations. And you have to, you know, show that the company has a monopoly position in a particular market. There's a variety of ways in which this particular industry is difficult to fit antitrust on to the power of these platforms is not just in one market. It's about the scope of their vertical integration. They are so powerful because they are in so many different industries. That's something that antitrust doesn't do a great job of dealing with antitrust requires that you litigate a case that takes a long time. In these fast moving industries, you need your results quickly. So I think having these rules in place would have a preventative effect. rather than waiting for an antitrust to deal with the problem. It takes a lot longer to bring an antitrust case. So there's a variety of reasons I think antitrust is not working. And we can see that today and in the results that we're seeing.
 

Jamie Susskind  

Jennifer, I feel like you might agree with some of the the reasoning and maybe not the ultimate sort of place we end up is that
 

Jennifer Huddleston  

well, I was really interested in what Rob was saying earlier, because I certainly agree that one of the interesting things is that we keep hearing that breaking up big tech would solve all these other problems when it could actually make them worse. When we're talking about privacy when we're talking about content moderation. Having a lot of small players could actually at times make it harder for those smaller Our players to engage in content moderation at scale or where right now a company may not engage in certain data practices, because it's able to rely on other parts of the company, and may have to change that as well. When it comes to the consumer welfare standard, I think it does still work. And I actually would be a little concerned about an industry specific review, in part because this is such a dynamic industry, that being able to truly predict even which of those 15 people companies are aren't going to be the one to explode. I think that there there are a lot of you know, bets we could make that would prove ourselves to be wrong and a lot that we might not have made that could prove ourselves to be right. So I think that you never know where that next great idea is going to come from, and that maintaining that dynamic market where you can have innovators, provide new products and services to consumers is what's really important and so really kind of continuing the consumer welfare standard.
 

Zach Graves  

I just want to touch on something you mentioned, talking about interoperability, which I think is a really interesting avenue to try and address some of the sort of underlying concerns people have about platforms. I think there's, you know, a lot of different ways to try and get at that goal. I totally agree with the sort of, you know, the aspiration of what that's trying to do. Mike Masnick, who's the editor of tector had a recent paper with the night first amendment center arguing we shouldn't, you know, policy should, you know, encourage return to protocols over platforms and how the web is architected. And instead of these, you know, proprietary, you know, platforms, we have a little bit more of open protocols and people can, you know, tackle different preferences, you know, for each of their own settings. I think that's a good goal. Of course, this can, you know, the heavy handed version of promoting this can go very wrong, right. The idea that the government is dictating API design on a technical level is something I'd be very nervous about in the You know, dynamic ecosystem that was talking about that we've all been talking about. But, you know, I think there's also a sign for, you know, really, you know, encouraging signs that some of the platforms may be voluntarily trying to pursue some of this. And some related goals like Google has for a long, long time and very good about data portability, that I know there's a an effort to organize some of the big platforms together to, you know, build upon that. Twitter recently talked about trying to build a sort of decentralized version of its platform, which looks potentially really interesting, even though we don't have a ton of details about that guide. And there's also another approach, which I think is really interesting that Cory Doctorow has been talking about a lot called adversarial interoperability. And the policy approaches to sort of get at that, I think are a lot easier. He's talking about for instance, there's a, an anti circumvention provision in the Digital Millennium Copyright Call section 1201. There's a as elements of the the CFA, there's some of these things is how software patents are applied are things that you just make it easier to go in and scrape data from Facebook, even if they don't want you in their Twitter, notably, you know, closed off, their API used to be a lot more open. So making it easier for kind of competition to come and force their way and i think is a really promising approach.
 

Jamie Susskind  

So Jennifer mentioned the consumer welfare standard, maybe we can talk about that a little bit. I'm curious to get views from the panel, you know, what consumer harms are we actually seeing in our consumers, choices being impacted? What are they actually kind of feeling from the fact that the company there's a big right, so to me, it's, you know, I'm a user of Facebook. And so if my password gets taken, I can understand right, if my credit card information gets taken, I can understand that there's some down the line harm from that. But, you know, I guess solely by the fact that these companies are large, and there's not sort of a discreet, you know, privacy violation. What are we seeing?
 

Jennifer Huddleston  

Well, I think that gets back to the original purpose of what should anti trust actually be used for. And it should be used as a tool when there is a anti competitive behavior that harms consumers and the fact that we have such a hard time pinpointing our consumers being harmed really raises that question of is anti trust the appropriate tool here. Again, because you have several choices, including the choice of not engaging in social media at all, or using a different service or doing things the analog way in some cases of of their, you know, this is a constantly changing market into say that there's only one choice. It's rarely the case when you actually take a step back and think about it. Sometimes there is definitely a dominant player. Sometimes there definitely is a kind of default choice that we've made. But if you look at I think we all at least anecdotally, know someone who probably makes a different choice than us when it comes to these big tech platforms?
 

Robert Atkinson  

I'm just saying a lot of this debate really comes down to this question of consumer welfare. And if you look at what the Europeans are doing your Competition Bureau is much more focused on this then then us regulators are and the reason is because in European competition law, they don't privilege the consumer welfare standard, the same way we do they have, they try to balance it with what they would what you could term a producer welfare standard. So take Amazon, for example. You know, if it's selling things and somebody else's selling on their market and they decide, I'm going to also sell batteries and brand them as Amazon batteries are great for consumers might maybe it hurts the battery company. The Europeans are much more likely to take that seriously than we are. I think that's a big mistake. I fundamentally don't think we should be focused on that. As long as a company isn't using that in an unfair way. That's what capital markets are all about some people win, some people lose. And you know, when we were writing our book as big as beautiful, we came across a great, great article by the set of what now are called Neo Brandeis. Ian's. These are people who followed in the Justice Louis Brandeis, who when when we had the first sort of industrial way back in the early 1900s, Brandeis was the big leader, he would be I don't know what the equivalent would be today, but he was the guy. And he led this national charge against industrialization against the rise of big companies. He even had a great quote where he said, the raw and the bigness is the mark of Cain. And other words, just being big meant you had somehow sin. There was no no way to get big without sinning. And that's Brandeis, Ian thinking. So this article, sort of among a bunch of Brandeis. Ian's great insight to me, he basically said, Look, there's no way we can really convince Americans that companies like Amazon are bad for Because everybody knows an Amazon is so good. And consumers love it so much. So we have to come up with different arguments to go against Amazon. I think you have to ask the question, Well, why would you want to go against Amazon? And the answer is because a lot of these people and by not you, UK from this seriously, but there are a lot of people in this debate and the argument, the debate is not about should these big companies, it's really about should the economy itself be structured with big companies. And if you read Matt stallers, book, Goliath, which encourage you to read, that's what Matt is saying, Matt is essentially saying we were better off in the 1900s, when the economy was largely small farmers and small crafts people. We should try to go back to that. The only problem is with that vision is we would all be significantly poor. small companies are nowhere near as productive. So I think that's overlying or underlying all of this debate. We have to we have to recognize that that are just a lot of people out there who just don't any big companies, and rather than go fight against General Motors or Owens glass, and nobody who cares about them, I mean, we can say that. But it's easy to it's easy to sort of make a case when you go against Google or Amazon because consumers see them every day.
 

Jennifer Huddleston  

I think that the other thing to point out there is that if the standard changes, it won't just change in the context of technology. And it won't just change for the ease one or two cases about today's tech giants. And that has to be part of this broader conversation, too. If we're really going back to that kind of philosophical underpinning of it, should it be a producer welfare model, or consumer welfare model? We have to think about that in the bigger legal landscape and in the bigger economic landscape as well and how that would potentially change the approach to antitrust law as well as to the markets in general.
 

Charlotte Slaiman  

So I think it would be helpful to take a step back and just talk a little bit about what the consumer welfare standard is. So I'm used to talking to audiences in Washington where we can Just have this conversation. Everyone knows what the consumer welfare standard is. And we could skip ahead to is this good or not? They don't know about API's. So this, you know, we all have different expertise. So the consumer welfare standard is what antitrust today in the US is based on. It is not just about consumer prices. A lot of times you might hear that the consumer welfare standard is also supposed to include changes in quality, consumer choice, innovation, and it's supposed to include impacts on suppliers impacts on workers, not just impacts on consumers and not just limited to price. So it's much broader than some people think. I think the reason that antitrust cases often come down to being about consumer price is just because that's the easiest to measure. Judges can see a nice looking chart. It's very clear, look how prices will go up. It's a lot harder to model innovation. Rob has said that bigger companies are doing more of the innovation using the metric of research and development spending. I don't think that's the best way to measure innovation. And this is a real disagreement within economists who are working hard on this is how can we measure innovation, what type of innovation matters, I think that a company that's in a very dominant position is doing a very different kind of innovation than a small company that is trying to gain market share. I think that kind of company is going to do much more disruptive innovation, a company that is already doing well and is very comfortable in its market position is going to do some innovation on the margins. But if they discover a great innovation that is going to mess up their market power, they might not want to monetize that innovation, they might want to sit on it. I think there are stories about that happening at Bell Labs, which is sort of this historical model where people say, Look, they had this great monopoly and they spent all This money on innovation. But actually, those were small innovations on how to make telephones better. And there were some innovations that they came up with that they did not want to bring to market because it would disrupt their market position. And I'm really worried about that type of innovation being lost here. It's a little hard for consumers to identify that you're trying to prove this counterfactual. You know, today, the world is good. But imagine what types of innovations we've been missing out on for the last 10 years.
 

Jamie Susskind  

Does the rest of the panel agree we're missing out on innovations?
 

Robert Atkinson  

Well, I I have a different take on Bell Labs. I think if you read john, I think it's Jonathan Gardner's book, on the sort of definitive Bell Labs. Bell Labs is responsible for some of the most disruptive innovation in the 20th century and problem for Bell Labs was actually an anti trust problem is they were under I think it was a consent decree but they were under anti trust scrutiny. So severely. It actually is an important point, it goes back to this other point about everybody while we should be aggressive and using the anti trust weapon to go after these companies, we already did that one time in the US and there was in the 50s, and 60s and people really forgotten this history is a very important history. Bell Labs had these great technologies, and one of them was the transistor. And they they were, they licensed that to everybody. They basically said, and that's Texas Instruments got it and whole bunch of companies got it. But one of the things that happened was because they were under this scrutiny of anti trust, they licensed it so cheaply. They were afraid that if they license it for, you know, a bunch of money, that they would get taken to court by DOJ. So they licensed it so cheaply, that that is what the single biggest factor that allowed the Japanese to get into the electronics market that Sony was able to license that technology for $25,000. Which, back then they had about $30,000 I think in the Bank and they had about 25 26,000 in forex capability. So there's simply no way the Japanese would have even gotten this technology. And the great case of RCA in the anti trust authorities looked at RCA as an RCA was the dominant telemar color television company. They had a big market, everybody admitted that that's where most of the innovations came from. And so, the antitrust authorities rather than break up RCA, they basically said not basically they said, We have to you have to give away all of your patent portfolio for free domestically. Because we were worried about that. Now the real thing showed and condoms show this there was a consumer harm from the RCA monopoly. It was the price increase of 1.5% on the price of color to TV TVs because of that monopoly so even teeny little bit, which was more than offset by the by the fact that RCA was such an innovator in making TVs and all the companies learned from that. So RCA was clearly good for Americans doing what happened with that they ended up like licensing their color televisions, because they had always licensed technology for money. They ended up licensing all their TV, TV patents to the Japanese, again to Sony and all the other TV companies. So again, without that, there is simply no way the Japanese would have gotten into the TV market, at least anytime in the 10 or 20 years after that. So we have to be really, really careful with anti trust. Because again, I look at the competition in the world. And it's not just competition in the US. It's competition with China. And you have got big, big players in China that have an enormous amount of scale. Their governments aren't just saying, Oh, we should worry about any friends. They're doing the opposite. They're doing forced mergers in China. They're forcing companies to come together to get global scale. So I think that's the other thing we have to be very, very cautious about if we go down this road.
 

Jamie Susskind  

And Jennifer, do you have anything to add from
 

Jennifer Huddleston  

i do think we are still very innovative in America. I think that's safe to say but to Charlotte's point. It's often this goes back to why my Original answer had to be probably not. You can't say 100% certain that it's a yes or no, because there are things like that that sometimes as a result of an investigation come out. And so when we are looking at consumer welfare standards, we want to make sure that we are considering that in some cases, but we also want clear evidence of similar to the examples that were were given where it's happening, not just assuming that because the company is big, that they're going to have this disincentive to innovate. I think we have seen large companies continue to be innovative.  It's actually want to chime in.
 

Zach Graves  

I mean, I think it's worth just touching on something you mentioned earlier about Amazon, you know, selling its own Amazon basics products and prioritizing them. I mean, that's one of the examples that comes up a lot and people who want to break them up there's a similar similar ones where I mean, Google people complain about this incident with like Yelp or they're prioritizing Google Places ever. yelp results, people, this view of the similar kinds of things for each of the different big tech companies. But I think it's worth noting like how like trivial most of these are. And maybe there's legitimate grievances here, I think Google is probably being shitty by putting its own inferior product over the Yelp one. But is is that proportionate to trying out, like breaking up these companies? I think not at all on the trade offs, I think, particularly with respect to, you know, the American innovation ecosystem broadly or, you know, significant loss if you try to take that approach in a very heavy handed approach, and not, I think, justified at all by these instances of bad behavior that people like to cite.
 

Jamie Susskind  

So since you brought it up, I think, let's play the scenario out, right, you know, the, either it's at the state level, or it's at the the FTC, the DOJ, they say, okay, you know, we decided they're anti competitive, let's break these companies up. What does that look like in practice, and this is open to anyone on the panel.
 

Zach Graves  

I mean, there's a million permutations of how you could do that. I mean, one of the ones they talk about a lot is like, you know, Facebook, kind of having to separate From WhatsApp and Instagram, I assume they would, you know, bring break that up into all of its component companies. But imagine there's a huge
 

Jennifer Huddleston  

question of even in such a breakup, going back to kind of the telephone company example, what happens next? Yeah. So you have then decades of judicial oversight of if you break off Facebook and WhatsApp since that kind of throughout that example. is Facebook still allowed to have messenger can messenger be interoperable with WhatsApp? You get into this walled gardens versus interoperability fight, and you have, you know, decades of judicial review over every action, and then what happens to the other companies, what happens to companies that may be watching this and trying to decide what risk what innovations to pursue as well?
 

Charlotte Slaiman  

So the last big breakup that I think about is at&t, and what was really important there was having a regulatory agency, the Federal Communications Commission that was overseeing all of this because just having the judicial watchdog is is really hard judges don't like to take on that ongoing monitoring responsibility. So I think even if we got to a point where the companies were being broken up, we still need a regulatory agency to be closely monitoring doing that ongoing monitoring and making sure that consumers are really benefiting.
 

Robert Atkinson  

Well, you also have the issue of it's not clear to me that any judge would allow a breakup. It's one thing for advocates to do another thing for courts with a long litany of tradition of case law to have to go through so I don't think I would have I said one thing, one thing on WhatsApp, which always strikes me as strangers in before Facebook acquired WhatsApp, you had to pay for WhatsApp. And it wasn't all that big. Now it's free and it's huge. And so I've been really harmed by that I resent that I somehow want to go back to paying in which I think you know, I have to go back again to the consumer. Well, I don't see what's wrong with it in this in this particular case.
 

Charlotte Slaiman  

Privacy Policy changed significantly.
 

Robert Atkinson  

So absolutely, absolutely. I kind of, one undred percent, agree with that Charlotte. And then that, but that's a privacy law case. 
 

Charlotte Slaiman  

But that, so that could be considered a drop in quality, which could be a consumer harm. 
 

Jennifer Huddleston  

There are better tools to address that then at trust, they're there. This goes to anti trust. In many ways. I've said this before. It's a sledgehammer when what you if you think that there is an issue with the privacy policy, what you really need is a scalpel, you need to focus on ways of proving and solving the harm you see in that sphere, rather than using anti trust, which is a tool aimed at competitive behavior and addressing things that would have collateral effects as well beyond that particular issue.
 

Charlotte Slaiman  

So I do think the best way to solve the privacy problem is to pass a comprehensive privacy legislation at the federal level and we are working hard to make that happen. But antitrust is looking and the consumer welfare standard specifically is looking at Not just price, but also quality. And so if you were, you know, if something was sort of on the margins, you would measure that quality difference, which again, is more difficult than measuring the price difference. But if if we're comparing that price difference versus the quality difference, I would want to see really like how do consumers value the difference in the privacy policy and, and that way those two? 
 

Robert Atkinson  

I agree with that point, although I think when you look at the economic evidence of hedonic pricing, how modern consumers value when they're not paying for something, ministers, they don't value it very much at all. It's just not that big a deal to them. I mean, unless there's some egregious thing, which you can't say there's. And then lastly, I think, I think the fact that they're now doing end to end encryption suggests maybe there's maybe it's better than it was before.
 

Charlotte Slaiman  

So I think that's right. It's very difficult to have competition over privacy because consumers don't have a strong understanding of what a change in the WhatsApp privacy policy means for how their data is treated. And it's I think that's the exact reason why we need comprehensive privacy legislation instead of relying on the notice and consent framework we currently have. I think that doesn't work for consumers. 
 

Jamie Susskind  

I do think that's for those of you who have come to our programming throughout the week, I think that's a pretty common theme we're hearing. So we'll see what happens with that. So we have a few minutes, and then we're going to open it up to questions. I'm just checking my watch. So I wanted to ask folks on the panel, you know, where do we go from here? Right? I mean, hypothetically, say, you work for an online platform, what are some things that you'd be trying to keep in mind or perhaps some proactive solutions that you'd be trying to pitch to your boss to, you know, they kind of evade scrutiny, right? What are some things that you think might improve the situation?
 

Zach Graves  

So, you know, I just know that I think, you know, anti trust is, you know, one of many is interested in breaking up big tech is one of many kind of like sledgehammer style policy solutions that people have tried to get it you know, addressing this, their grievances. Is with big tech. And they aren't, as Rob said, I think they aren't always necessarily aligned with, you know, being competent competitors, competition concerns versus privacy concerns versus other kinds of, you know, things that should be addressed in different ways than through anti trust. But I think it is worth keeping in mind that a lot of the critics come at this from a broadly kind of punitive framework, that if it's not anti trust, they're going to pivot to abolishing section 230, which we heard about yesterday or, you know, one of and a number of other different kinds of ways to kind of go after the tech industry. So you know, that there's that sort of flexibility in the current, you know, tech slash policy environment, I think is important.
 

Jennifer Huddleston  

Echoing Zach, I think that this conversation around should big tech be broken up largely exists within this broader kind of concerns about tech glass. And I think it's important to also remember the benefits of innovation and to really think about how much our lives have changed. for the better, even if we do have these concerns that we can all debate about privacy policies and things like that. But yesterday, again, I was thinking about the section 230 panel as well. And thinking about, for example, all this social movements and all the conversations that are be able to are able to be had now, thanks to these technologies, the fact that many of us are able to take a rideshare here to the convention center, as opposed to just relying on the cabs, or even you know, just pull up directions on your phone and things like that. That. I mean, I'm 32 and I remember when those things were new, and so thinking about what that next thing is going to be and how much that improves the lives of everyday people, I think is really an important thing to remember that it's not just about is big tech too big, but it's also about these wonderful benefits of innovation.
 

Robert Atkinson  

I just quickly I do because I love that example bug maps because I think what it's so easy to forget here is that there are real economies of scale and scope in the industries. And if you haven't read this book never lost again by I think it's built kill the fantastic book. It's by this guy who was like the Chief Marketing Officer of this little startup, I think it's called keyhole. And they were able to, they were the company that were able to take the maps. And then as you zoom down, they go out. I mean, that was the invention or the innovation that they did. And they were competing against companies, I can remember the names of the companies that were selling subscriptions for mapping services, MapQuest, I think and others, where you buy those things for 250 or $300 a year subscription. And realtors would use them and all and they were competing against them and selling their service or something like $70 a year. And they had hoped and they would rent planes and fly over things and take pictures of streets. And their goal was to hope to map the entire US in something like 10 years. And they happened to where their offices happened to be was like literally two blocks away from Google. So they got to know the Google folks so they went in they talked to Larry Page or sergej search Bren, and why don't we merge? Why don't you buy us? So they bought them. And Sergey Brin are one of the one of the two said, Yeah, let's put in $3.3 billion to map every place in the world. And they're able to do that in two years and give it away for free. So I know that the nap company went out of business. And I don't really care. I'm sorry, they went out of business, because there was these economies of scale and scope that allowed them to do that. And I look at WhatsApp is the same thing. You know, I don't know that WhatsApp actually would have survived it at least on a free model. And so I think it's important to remember those these companies are big enough that they can throw a YouTube is another good example of that YouTube wasn't making any money off of YouTube ever made any money. So there's, there's something about platforms that I think is critical. And last point I'll make on that is, I think it's certainly possible that platforms could be to the 21st century. What big industrial Corporation Word of the 20th century. There's many industries that you could think of that could be platform ized, health, finance, a whole set of other industries. And it may not be platform eyes by the Googles and the Amazons, it may be whole new companies are just in companies. But I think if we don't get platform regulation or platform governance, right, if we if we resist it, it's possible we're really cutting off a lot of promising future for just innovation and prosperity. And I get that I think the point where Cheryl and I would agree is platforms are different there's no question that you're different. And I think anti trust authorities need to really struggle the study that and understand the difference. I don't agree we need a new agency, but they are different question and we need to think about them in a different way. But I worry that we might be end up saying well, no more platforms in any other industries. I think that'd be huge mistake.
 

Jamie Susskind  

So I don't know if Charlotte if you had anything else to add in the open up for questions.
 

Charlotte Slaiman  

Sure. So the question was, I guess what would we advise? Yeah. forms to do today. So I think self regulation is not going to be sufficient here we really are going to need government action. But in the meantime, I hope that platforms will choose to be open and deal fairly with the companies that are using the platforms. Choose to be interoperable. Choose to make those API's available, stop shutting down the adversarial interoperability attempts. don't discriminate anti competitively when you are the recommendation algorithm, all of these rules that we're thinking about, they could start following them now.
 

Jamie Susskind  

Okay, so if anyone has questions, we have a mic right there. So please.
 

Speaker 1  

Yes. God, I wish that have been an opponent panel. I'm the founder and CEO of a startup out of Atlanta, Georgia called board act. And, you know, you talk about should big tech be broken out. I got two points. Nobody big tech should not be broken up. I mean, it's like back in the 60s 70s 80s. Early on, they said break up the the automobile industry, you know you innovation is what drives breaking up. You know, big business. The thing that I need help on as far as a small business is, there's two things, the regulations are crazy for small business even succeed. Nowadays, not only do you have to go up against these big guys to number one, you know some things like if you've got something that they see coming down the pipeline, like an apple when you're doing an app or anything like that, if Apple sees that within their system, they're very slow to to perform. They're very slow to act and they'll they'll block you believe it or not, they will block you. And that's the way big business is all but the way you do that is do what I did. You write a pat You go after it, you become innovative, and you make a point to be competitive. And so what I did in 2014 was actually brought a patent that just received a patent. It's a geolocation geolocation patent. That basically is engagement and measurement and retargeting and stuff like that. But we are very compliant. And the privacy issue comes up there, it's To me, it's a very simple answer. If you go into your CS app today, you go into your profile, you go into your settings, you'll see four different types of settings there that basically stops anything that you don't want. I think that a nap is the key to privacy. You don't need to go through all kinds of regulation. You can go into that out, right code, set it up, so that that does not have to come through and protect the consumer. I think it's very simple from Arsenal endpoint but most companies are compliant. So my question is, you guys have done really good, really good job with with this, and I applaud you. I really do. It's given us all some some thoughts. But you know, what we need from a small business standpoint is that patent protection from the big guys? Making them stand up and recognize, wait a minute, these guys have a patent and not taking this all the way down and spending millions of dollars to protect what is ours? So that's the thing that I would ask, what do you think about it? There's two things, patent protection for innovators. So they can break through these guys and be competitive and the app having within the CES notifications right now. It's set up so that you don't get analytics you don't send me messages you don't send notifications if they if you don't want it as a consumer?
 

Robert Atkinson  

Well, you know, I'm sure I mean one hundred percent agree on we do have patent protection. You can. There's a big debate about this a little too little too strong, a little too weak and it oscillates around that over the years. But absolutely, patent protection is central for innovation. And especially for smaller disruptive innovators, you need to be able to know that if you invent something, you own it, at least for 20 years.
 

Jennifer Huddleston  

The other thing I kind of picked up on in your question, particularly when it came to say the question of privacy is whenever there's a talk about regulating something like data or privacy or content, there's also this question of what does that do to competition so we kind of alluded to in the panel, how using anti trust, which is a competition tool could have all these other impacts that make it more difficult to do certain things and say, privacy or online content. moderation. The opposite is also true in some cases of really heavy handed regulation can make it particularly hard for smaller companies to say get additional investors or to be able to enter the market when they have these increased barriers to entry.
 

Speaker 1  

Yep, brands have apps. I mean, the, you know, a lot of apps currently, it would be very easy for them to put in to platform the ability to to, to protect a consumer from any kind of spamming type activity.
 

Jamie Susskind  

So I think we might have time for one more question if anyone has one. supplement up too
 

Speaker 2  

Hi, I had a question related to the consumer welfare standard. And oftentimes, it feels like platforms must embrace digital democracy in order to survive. I'm from a regulatory standpoint, how would you guys recommend ensuring that there's just sheer transparency and education related to big tech?
 

Charlotte Slaiman  

Can you say the beginning part of that question again?
 

Jamie Susskind  

You're kind of getting a buzzy Mike.
 

Speaker 2  

Just increasingly, it feels like big platforms have to embrace digital democracy in order to survive. So just listening to their users and their complaints. And where within a government standpoint, is just making sure people were educated enough to complain about the right things.
 

Charlotte Slaiman  

Yeah, I think consumer education is a really important goal. The FTC already engages in a lot of that. So they might be well equipped to do that in this space as well. The other thing that your point makes me think of is if consumers have complaints in a competitive market, they can switch to an alternative and I think we have a situation now with some companies where people don't feel comfortable to leave, they feel locked in. And maybe that's because of network effects. But so we see these angry complaints, but the person keeps using the service. And sometimes consumers are criticized for that. But I think that is an indication of the power that these companies have.
 

Speaker 2  

Thank you.
 

Jamie Susskind  

 Okay, last question.
 

Speaker 3  

Sure. So I guess building on where that conversation ended, would it be fair to rather than taking this approach, treat big tech like a public utility and regulated that way?
 

Robert Atkinson  

The answer is no, absolutely not. 
 

Jamie Susskind  

I'm the moderator, and I'm going to say no.
 

Charlotte Slaiman  

I agree, I don't think that is the best solution. We really want to maintain the dynamism of this market. Right. And I think we can increase that dynamism by having more competition. I really am hoping Competition can address this problem. Trying to think about how utility style regulation would work here. I mean, usually you're you're regulating the specific price of each thing. It's just it's a lot to think about how that would even work. But I think we should really try competition first. And I'm hopeful that competition can achieve it.
 

Jennifer Huddleston  

And just to add to this kind of conversation, I think it's also important to know that even sometimes when it seems like people aren't leaving, we do see people act with their preferences. And we see a wide range of preferences. We see this right now in some ways with like, Gen Z uses completely different social media than millennials. And, you know, there, there's going to be these dynamic changes time and time again, assuming that we let them and so sometimes I feel like I now feel old as a millennial, like when I start talking about back in the day when there was MySpace. There's, there's this whole kind of, we often look at this from our personal perspective, and what we use these platforms for rather than looking at what the market more generally made us a platform for or how consumers more generally may use a platform.
 

Jaime Susskind  

Well, please join me in thanking our panel for this great conversation.

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