Welcome to The Corner. In this issue, we take a closer look at Google’s “Privacy Sandbox” proposal to replace “cookies,” how antitrust reforms can increase the power of workers, and Rohit Chopra’s confirmation as CFPB director.

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U.K. Publishers Target Google Plan to Further Concentrate Control Over Advertising

Karina Montoya

A U.K. coalition of leading digital businesses filed a complaint last week to the EU Commission against Google’s “Privacy Sandbox,” an effort by the corporation to develop new technologies for its Chrome browser to replace third-party tracking code. Such “cookies,” as they are generally known, are still widely used by most of Google’s competitors to manage and target advertising to their readers.

The complaint sheds light on a battle over the future of digital advertising, which has intensified since Google announced plans to eliminate third-party cookies, beginning in 2023. Although advertisers and publishers have yet to agree on an alternative technology to cookie-based advertising, there is growing consensus that allowing Google to single-handedly impose a new system will only continue to increase the corporation’s monopoly power over advertising and make it that much harder for publishers to regain a foothold in the market.

Cookies are small code files originally designed in the early 1990s to help websites “remember” unique browsers and their interactions, such as their logins or shopping carts. Privacy advocates, however, have long criticized cookies for enabling tech giants like Google and Facebook to spy on users by collecting data on how they interact with online sites, even across applications and devices.

Under Google’s Privacy Sandbox system, the corporation is portraying the changes to its browser as a move toward a “more private web”. One of the proposed changes, for example, is a new technology by Google called Federated Learning of Cohorts, or FLoC. The new system would allow advertisers to target users that share similar traits without individually identifying them. Yet, it would also not restrict Google’s ability to collect its users’ behavioral data through the corporation’s many web services — such as search or maps.

The new U.K. coalition, known as Movement for an Open Web, is asking the EU Commission to deem the Privacy Sandbox to be anti-competitive and to increase oversight over any future changes to Chrome. “We want [the Commission] to stop Google from making changes to its browser until new legislation comes in. Google should not be the one defining privacy,” Tim Cowen, legal adviser to MOW and chair of the antitrust practice at Preiskel & Co., told Open Markets.

A recent report by the U .K . Competition and Markets Authority found that because of Google’s dominant position in the search and digital ads markets, blocking third-party cookies on Chrome could reduce publishers’ revenues by more than 70% in the short term. Although other browsers already offer the option to block cookies — notably Firefox and Safari — the regulator also warned that it is unclear what the long-term, marketwide effects would be of wiping out this technology entirely from the web ecosystem.

The change is of particular importance to online publishers and advertisers, especially small- and midsized outlets. In the U.S. and Canada, six of 10 digital-native local outlets rely heavily on one source of revenue, usually local advertising supported by cookies, according to a 2021 report by Project Oasis, which surveyed members of LION Publishers.

MOW first took its concerns to the U.K. CMA in November 2020, leading the regulator to open an investigation in January 2021. As a result, the CMA and Google struck a dealrequiring the corporation to make further “commitments”before making any changes to Chrome. The new complaint, based on the CMA investigation, provides additional evidence to bolster the Commission’s current wide-ranging investigation into Google’s advertising business. According to a Reuters reportlast week, the tech giant is attempting to settle.

**Callaci Testifies Before House, Details How Antitrust’s Absence Has Harmed Workers**

Open Markets’ Chief Economist Brian Callaci (above) testified at a Sept. 28 hearing on “21st Century Antitrust Reforms and the American Worker” before the House Antitrust Subcommittee. Callaci emphasized that antitrust has largely missed the boat as large corporations have suppressed wages by consolidating power over both local labor markets and entire supply chains. He also pointed out that antitrust has been absent as employers have supercharged their power over workers through restrictive employment contracts like noncompete clauses, mandatory arbitration, and no-poaching agreements that further suppress wages. Finally, Callaci argued that courts have facilitated large corporations’ use of restrictive contracts to dominate and control non-employee independent contractors and small businesses, such as fast food franchisees, and Amazon’s local delivery contractors.

Callaci’s testimony was mentioned in Politico. Read his full testimony here, or watch the hearing here.

Last week, the Senate confirmed Rohit Chopra to lead the Consumer Financial Protection Bureau in a 50-48 vote. Chopra has served on the Federal Trade Commission since 2018. In a statement, Open Markets applauded Chopra’s confirmation and saluted his work on behalf of consumers.

🔊 ANTI-MONOPOLY RISING:

Frances Haugen, a former data scientist at Facebook for two years, testified Tuesday before the Senate Subcommittee on Consumer Protection, Product Safety, and Data Security. Haugen included new revelations on how Facebook algorithms fueled misinformation and how the company prioritized profits over implementing safeguards for users. Haugen’s testimony highlighted how “a structure of incentivization” at the corporation encouraged to ignore the negative effects of the platform, such as mental health harms, political divisions, and violence. (The Washington Post)
On Sept. 23, nine former chiefs of the Department of Justice’s Antitrust Division wrote a letter to the Senate and its Judiciary Committee urging the confirmation of Jonathan Kanter as the division’s chief. The letter was signed by a bipartisan group, which affirmed Kanter’s competence, leadership, and experience to head the division. (CNBC)
Last Wednesday, the National Association of 7-Eleven Franchisees and the Franchisee Advocacy Consulting Group urged the FTC to investigate 7-Eleven, Subway, UPS, IHG Hotels and Resorts, and other companies for withholding information pertaining to the legal and financial interests of franchisees. This information includes advertising funds, financial performance representation data, and supply chain information. (The Hill)
Last week, three generic drugmakers — Sandoz, Taro Pharmaceuticals, and Apotex — agreed to pay $450 million to the Department of Justice to resolve allegations of price fixing under the False Claims Act. Between 2013 and 2015, the companies are alleged by the government to have coordinated with other drug manufacturers' arrangements on price, supply, and customer allocation for numerous different drugs. The schemes resulted in increased drug prices for federal health care programs, such as Medicare and Medicaid. (DOJ)

📝 WHAT WE'VE BEEN UP TO:

Open Markets released a statement urging theOpen Markets convened 73 public interest, environmental, and racial justice organizations such as Sierra Club, Food & Water Watch, ACRE, Public Citizen, and Spirit of the Sun to send a joint letter to congressional leadership detailing how crypto mining is exacerbating the climate crisis and urging Congress to act. The letter was mentioned in The New York Times’ DealBook newsletter. “Activist groups target crypto’s environmental impact. Today, more than 70 nonprofit groups, including the Sierra Club, the Open Markets Institute and the Action Center on Race and the Economy, urged Congress to consider crypto’s energy use when writing new rules for the sector.”
Brian Callaci wrote an article in The American Prospect about Amazon’s insidious franchising model. “Workers need expanded ’joint employer’ rules against lead firms in fissured workplaces, which would make lead firms jointly responsible, along with their contractors and franchisees, for the wages and working conditions of workers. And large corporations must be forced to choose: do you want control with responsibility to workers, or are you willing to relinquish control to truly independent entrepreneurs?”
Sandeep Vaheesan published a white paper in the William & Mary Law Review about the morality of monopolization law. “A close read of the case law reveals an implicit morality in which businesses cannot use their dominance, superior access to finance, or generally prohibited practices to acquire or maintain a monopoly.”
Claire Kelloway was featured in a Vox video about corporate consolidation of the meatpacking industry. “Oer the past 40 years, the meatpacking sector — made up of the companies that buy and slaughter cattle for consumption — has undergone a dramatic degree of corporate consolidation.
Sandeep Vaheesan was quoted in The New York Times presenting the importance of a federal ban on noncompete agreements. If employers want to keep employees from going to rivals, the best way to do that, “is to treat workers well, offer regular promotions and raises, instead of locking them down through these one-sided contracts,” Vaheesan said.
Daniel Hanley was cited in Mother Jones pushing back against the recent Facebook whistleblower’s solutions for neutralizing the corporation during her Senate testimony Tuesday. Hanley criticized Frances Haugen’s dismissal of structural solutions to dealing with the corporation.
Alexis Goldstein was quoted in The New York Times’ DealBooknewsletter commenting on how recent developments prove cryptocurrency platforms can be held accountable to report tax data. “’This episode shows that the current lack of tax reporting by major cryptocurrency platforms aren’t technological limitations,’ Alexis Goldstein of the nonprofit Open Markets Institute told DealBook. ’They’re design decisions.’”
Nikki Usher received more coverage on her latest book, News for the Rich, White, and Blue, including a feature in an Open Democracy live discussion, an opinion piece in Journal of Oak Park and River Forest, and an interview in Smile Politely. “’Some places simply get more compassionate, consistent, humanizing coverage, while others, home to people of color, remain “unknowns,” places of statistics rather than of lives that matter,’ Usher writes.”
Claire Kelloway’s Food & Power report about how private carbon pay programs are funneling farm data to Big Ag ran in The Washington Monthly and Newsbreak. “Farm data consolidation among the largest firms creates competitive barriers, especially in the market for digital agriculture software.”
Phillip Longman was cited in The Wall Street Journal for his work at The Washington Monthly analyzing railroad monopolies. “Their ancient fights were recently reprised at length in the Washington Monthly by think tanker Phillip Longman, who portrays today’s freight railroads as abusive monopolists. These companies, he says, are operated by modern-day “robber barons” who perversely want to shrink the industry “to the point of non-viability” for “short-term economic gain” (this will be news to one of those robber barons, Warren Buffett, who praises his Burlington Northern Santa Fe as a source of long-term profits).”
Open Markets’ FTC petitions for competition rulemaking were mentioned in an IP Watchdog piece about the FTC’s push for more repair restrictions. “Nevertheless, the FTC under Chair Khan seems poised to try competition rulemaking… Last month, Chair Khan signaled that she may be moving forward with the plan: the FTC requested public comment (through the official channel of notice-and-comment rulemaking, Regulations.gov) on two petitions for competition rulemaking drafted and submitted by Khan’s former employer, the Open Markets Institute.”
Alexis Goldstein’s article in Bloomberg about crypto industry tax cheating was cited in an American Progress report on the SEC’s regulatory role in digital asset markets. “Although some digital asset brokers and exchanges state that they “don’t have access to the information required for information reporting,” platforms can be designed so that they do.”
Barry Lynn was quoted in Insider Advantage Georgia asserting that Big Tech’s acquisition flurry was predictable and is harmful. “This transaction is bad because it strengthens these companies. It gives their employees, capital markets, and investors more clout while preventing competition that could lead to innovation.”
Barry Lynn spoke at the conference “Global Effects of a Nuclear Weapons Exchange on Critical Infrastructure, Trade, and Sustainable Development.” The conference was hosted by the Nuclear Threat Initiative and was led by former Sen. Sam Nunn and former Energy Secretary Ernest Moniz.
Open Markets released a research paper updating a previous report on Amazon’s worker surveillance. The paper was mentioned in Mashable: “A recent report from the anti-trust advocacy group Open Markets Institute details how Amazon surveils its workers.”
Open Markets’ report on agricultural consolidation was cited in Progressive.org in a piece about improving American food systems. The Norman Transcript and Bedford Gazette also ran the piece. “It’s this system, as documented in a report from the Open Markets Institute, that allowed the four largest poultry processing firms to go from controlling 35% of the market in 1986 to 51% in 2015.”

📈 VITAL STAT: $8.5 billion

Apple’s operating profits from games in fiscal year 2019 — more than Microsoft, Nintendo, Activision Blizzard, and Sony combined.

📚 WHAT WE'RE READING:

“How Federal Copyright Law Supports Those Advocating for the Right to Repair” (Kaitlyn Dudding, Drake Journal of Agricultural Law): The author describes how current copyright law provides a viable avenue for consumers and independent repair shops to legally circumvent copyright protections provided by the Digital Millennium Copyright Act.

Open Markets Employment Opportunities

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The Corner Newsletter: October 8, 2021