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Regulation January 26, 2023

US Government Wants Google Split Up Over Ad Monopoly Accusations



US Government Wants Google Split Up Over Ad Monopoly Accusations

The U.S. Department of Justice (DOJ) and eight states have filed charges against Google, accusing the company of exerting monopoly power over the buying and selling of online advertisements (ads).

U.S. Attorney General Merrick Garland filed the 155-page complaint in a Virginia federal court on Jan. 24. He alleged that Google “used anticompetitive, exclusionary and unlawful conduct to eliminate or severely diminish any threat to its dominance over digital ads technologies.”

Also read: How Google Is Joining the Text-to-Image AI Race

The lawsuit wants the court to press Google to break up part of its advertising business. Website publishers in the U.S. sell over $5 trillion digital display advertisements on the open web each year, or about $13 billion ads per day.

Google gets much of its revenue from online ads. The tech behemoth dominates the search and digital ad business. According to market research firm Insider Intelligence, Google’s share of total online advertising income in the U.S. fell from 37% in 2016 to 29% in 2022.

Breaking up Google

The complaint focuses on the way Google controls the tech for online ads that get placed on websites via its auction process. It accuses the firm of forcing publishers and advertisers to use its tools, corrupting legitimate competition, and manipulating auction outcomes.

“We alleged that Google’s anti-competitive conduct extends to three significant elements of the digital ad buying process,” said Garland.

“First, Google controls that technology used by nearly every major website publisher to offer advertising space for sale. Second, Google controls the leading tool used by advertisers to buy that advertising space. And third, Google controls the largest ad exchange that matches publishers and advertisers together each time that ad space is sold.”

Due to Google’s conduct, said Garland, “website creators earn less and advertisers pay more.” The U.S. goverment alleges that, on average, Google kept at least $0.30 – and sometimes far more – of each dollar flowing from advertisers to website publishers via its ad tech tools.

He cited Google’s own internal documents in which the company “conceded that [it] would earn far less in a competitive market.” Garland intends to “halt Google’s anti-competitive scheme and unwind [its] monopolistic grip on the market.”

To restore competition, the Justice Department wants at the minimum the court to compel Google to dispose of its Ad Manager suite, including both Google’s publisher ad server called DoubleClick for Publishers, or DFP, and its advertising exchange AdX.

Garland revealed that the U.S. government, as an advertiser, has been affected by Google’s behavior. “Monopolies threaten the free and fair markets upon which our economy is based,” he said, adding:

“They stifle innovation. They hurt producers and workers, and they increase costs for consumers. Today’s complaint is only the latest example of the department’s work to challenge antitrust violations that undermine competition and harm the American people.”

Google denies wrongdoing

Google denied any wrongdoing, and instead accused the Department of Justice of “doubling down on a flawed argument”. In a blog post Dan Taylor, vice president of global ads said the complaint would “reverse years of innovation, harming the broader advertising sector”.

“Today’s lawsuit from the DOJ attempts to pick winners and losers…” a Google spokesperson further told the BBC. “It largely duplicates an unfounded lawsuit by the Texas Attorney General, much of which was recently dismissed by a federal court.”

“DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow,” added the person.

The latest lawsuit builds on a 2020 Trump-era action launched by the Justice Department and 11 states against Google over its dominance in search ad business. The case is slated for trial in September 2023, but the DOJ maintains it is separate from the new complaint.

US broke up monopolies in the past

The U.S government successfully challenged the AT&T telecom monopoly in 1974, winning the case eight years later in 1982, according to reports. However, there are also examples of lawsuits seeking the same kind of remedy which have also failed.

While the Biden administration committed to enforcing antitrust laws in a 2021 Executive Order, it failed to prevent the acquisition of Imperial Sugar by competitor U.S. Sugar. It also could not stop the UnitedHealth Group merger with Change HealthCare.

As MetaNews previously reported, gamers are trying to to prevent Microsoft’s takeover of Activision Blizzard. And so is the United States’ Federal Trade Commission. The regulator is also attempting to stop Meta, formerly Facebook, from buying virtual reality (VR) company Within Unlimited.

Veteran tech writer and analyst Jessica E. Lessin believes the latest lawsuit against Google “will take years and years to sort out,” as is usually with all cases involving tech regulation.

“And while I tend to think Google is likely to negotiate some concessions to avoid splitting off the business, I find this one tough to read and I think many outcomes are possible. When it comes to this area of display advertising, there are very few other games in town,” she said.

Shares of Alphabet Inc., the parent company of Google, fell more than 3% to $96.10 as of writing. Over the past 52 weeks, the stock touched a high of $152.10 and a low of $83.45, according to Yahoo Finance.

Image credits: Shutterstock, CC images, Midjourney.


Elon Musk Takes His Transparency Wars to ‘Unwanted’ WEF World Government



Elon Musk Takes His Transparency Wars to ‘Unwanted’ WEF World Government
Elon Musk and Klaus Schwab.

Twitter CEO Elon Musk may have turned down a Davos invite, per his contested claim, but he did not necessarily sit out the proceedings. The chief twit has been chatty about this year’s edition of the World Economic Forum (WEF), questioning its legitimacy as the talking shop for solutions to global problems.

“WEF is increasingly becoming an unelected world government that the people never asked for and don’t want,” Musk tweeted. He was responding to a video of World Economic Forum founder Klaus Schwab and other high ranking officials discussing the organization’s new “Global Collaboration Village.”

On day one of the event, Musk sarcastically responded to a buzzword, “‘Master the Future’ doesn’t sound ominous at all,” and added, “How is WEF/Davos even a thing? Are they trying to be the boss of Earth!?” This year’s meetings ran from Jan. 16 – 20.

Musk criticizes WEF global agenda

Musk’s criticism of the Davos is an extension of his criticism of institutional opacity. The Twitter Files, a retrospective look into the tech behemoth before Musk’s takeover, includes revelations that the company ranked right-leaning tweets lower without making this information available to users.

Musk, a self-styled “free-speech absolutist”, has posed as the broom of the system since he started his hostile bid for Twitter. He demanded transparency from the company not just for his own due diligence but for Twitter users. The billionaire has also accommodated dissenters on Twitter in symbolic correction of mute-happy Meta platforms and others.

Also read: Twitter Q4 Revenue Tumbles 35% as 500 Advertisers Suspend Spending

Making good on his transparency crusade from the helm of his new acquistion, he recently announced, “Twitter will publish tweet recommendation code and make account or tweet status visible no later than next month. Transparency builds trust.”

WEF, known by its Davos synecdoche, is a gathering of global who’s who, meeting annually to discuss solutions to world problems, including the ecological crisis and the social aspects of new technology. While it is made up of unelected leaders, as Musk points out, the guest list is remarkable for its star power, including heads of state and tech magnates.

Davos’ emphasis on global cooperation, everyone speaking like they are walking on egg shells, may also account for the mercurial billionaire’s dismissiveness. Musk is known for speaking his mind, however unpalatable. Like many businesspeople at home with the bare-knuckle language of competition rather than diplomacy.

In the heat of corporate rivalry, Musk has savaged Davos’ upcoming “Global Collaboration Village” in the metaverse powered by Meta. WEF founder Schwab’s announcement of Interpol’s contribution to the security side of the Global Collaboration Village does not help.

That’s given the so-called tech-intelligence complex whereby major technology companies are accused of back-channeling user data to security agencies, particularly in the U.S and China (The Permanent Record, Edward Snowden, 2019).

Parallels between Big Tech monopoly and WEF

As he angled towards his Twitter takeover, Musk said he wanted to push the company towards free expression and questioned permanent bans and content restrictions.

To hear Musk tell it, in having content “mysteriously promoted or demoted with no insight into what’s going on”, Twitter was failing the transparency test. It includes the erstwhile secrecy around the identities of the makers of such decisions.

This goes for the other tech companies whose drive to moderate content also unilaterally and unaccountably amplified their power over speech. Davos may well spell a parallel, a talking shop of the powerful deciding the direction the world should take without consulting or representing the people they speak for.

“Having a black box algorithm promote some things and not other things, I think this can be quite dangerous,” Musk said of Twitter, an analogy which may well hold against mega-rich and mega-powerful clubs calling the shots.

In defense of the WEF, while it can be characterized as a high-powered exclusive club, it is also the place where the “big boys” get to interface with activists and lobbyists supposedly from the grassroots and alternative campaigns.

Populist posturing

Elon Musk’s call for Twitter to publish its code on Github was classic Tesla. In 2006, he published “The Secret Master Plan of Tesla” detailing his strategy to make affordable self-driving cars a reality. In 2014, he also published Tesla patents.

However, his critics cite his prolific use of non-disclosure arrangements and punishing of vehicle safety whistleblowers like former employee Cristina Balan as a proof of double standards.

His handling of Twitter Files has also been criticized as populist posturing against the former leaders which may well be a decoy away from his own opaque and individualized decision-making.

Klaus Schwab founded the World Economic Forum in 1971. Elon Musk ran a poll on Twitter asking users whether the WEF should control the world. Over 2.42 million people voted and an overwhelming majority of 86% voted “No”.

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China Snaps Up Golden Shares In Tencent And Alibaba



China Snaps Up Golden Shares In Tencent And Alibaba
Shenzen Bay Startup Plaza, where Alibaba and Tencent have offices.

China has reportedly acquired minority stakes in the country’s big tech firms Tencent Holdings and Alibaba Group as it plans to tighten its oversight on online content.

This comes after the government previously snapped up shares from TikTok’s owner ByteDance.

A report by Financial Times citing sources close to the transactions, reveals Chinese government is buying a small equity stake called ‘golden shares’ in the big tech firms. According to the report, this translates to 1% stake in each of the tech companies’ key subsidiaries.

Also read: Metaverse Tokens See Price Spike with MANA Soaring More than 100%

The report says an investment fund connected to China’s regulator took a stake in one of Alibaba’s subsidiaries, Guangzhou Lujiao Information Technology, in a deal finalized on January 4.

A similar deal is currently in the works at Tencent, which is the parent company for WeChat – China’s biggest social media platform.

Golden shares tactic

FASTCOMPANY says the deals are a sign that Xi might soon relax the iron crackdown that has constrained China’s private companies over the past few years, in an effort to resuscitate a stifled economy.

The ‘golden shares’ tactic would allow state to stay close to the levers of power within these companies as their businesses roar back to life.

According to FASTCOMPANY, the term ‘golden share’ was devised to describe the practice of state investment funds taking up small but powerful stakes in private internet companies like ByteDance and Weibo.

This will allow Chinese Communist Party (CCP) to appoint board directors and exert influence over business decisions.

In April 2021, when state groups took a golden share in ByteDance, they won the right to nominate one of the company’s three board directors. The position was taken by Wu Shugang, a hawkish CCP official.

Within the board, Shugang holds unilateral control over content that goes out of ByteDance’s two major platforms – Douyin, TikTok’s sister app and Jinni Toutiao, a news app. He is sometimes referred to as ByteDance’s “editor-in-chief.”

China resolute to have hand in techs cookie jar

Financial Times also says the move allows the government to remain involved in the businesses.

They cite people close to the matter who said the government could buy shareholding in one of Tencent Holdings’ main operating subsidiary in that country, that is Tencent Music Entertainment (TME).

TME operates a number of streaming services including QQ Music, Kugou Music and Kuwo Music.

Another source close to Tencent also told Financial Times that the company was pushing for a government entity from Shenzhen to buy the shares as opposed to having a Beijing based state investment fund as an investor. That investor supposedly bought shares in Alibaba and Bytedance as well as China’s version of Twitter – Weibo.

According to Statista, TME was the dominant player in China’s music streaming space in 2021, topping the country’s Mobile’s Migu, NetEase Cloud Music and Xiaomi’s MIUI Music. The company had 85.3 million paying music users during the third quarter of 2022, representing a 19.8% growth year on year.

It achieved a $3.43 billion revenue for the three months to September 30, 2022 on solid music subscriptions.

Bilibili, a video sharing platform often referred to as China’s version of Netflix is also pushing for a government entity in Shanghai to acquire shares in one of its subsidiaries, according to two sources that spoke to Financial Times.

This follows Beijing’s move to take a slice of ByteDance, according to reports in 2021 and 2022.

In August last year, The Information also reported that the government acquired a 1% stake and took a board seat in ByteDance unit Beinjing ByteDance Technology.

The Standard reported two months ago that China-owned media firms bought stakes in TikTok’s Chinese version Douyin and its rival Kuaishou, which is backed by Tencent.

China’s internet watchdog also took 1% slice in a unit of Alibaba, Guangshou Lujiao Information Technology earlier this month. The move was meant to tighten control over the company’s streaming video unit Youku and web browser UCWeb, according to two sources close to the deal, as cited by the Financial Times.

Changes bleed the sector

The developments come as the Chinese government is wrapping up its two-year crackdown on the tech sector.

An official from China’s central bank – Guo Shuqing told Xinhua News Agency in an interview earlier this month that government has finished its campaign to rectify 14 internet platforms with “a few remaining problems being resolved promptly.”

The country’s crackdown on the sector has resulted in changes in the industry. For example, it led to Alibaba founder Jack Ma giving up control over the company’s fintech affiliate Ant Group. This also led to a record fine on Alibaba over its dominance in the tech sector while Tencent shut down its video game streaming platform – Penguin Esports.

The music industry was not spared neither. TME and rival NetEase Cloud Music gave up exclusive deals with global labels in China. Cloud Music was also forced to halt its Hong Kong Initial Public Offering (IPO) plan in 2021 due to government’s tight oversight.

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Could ChatGPT Be Used to Lobby on Behalf of Corporations?



Chatbots could lobby government

Large language models (LLM) such as ChatGPT have the potential to shake up political lobbying according to research conducted at one of the top US Universities.

An investigation by John Nay of Stanford University posits that at least part of the lobbying work from corporate interests can be automated. Nay argues that this development could be good news for politics, but also warms that there are inherent dangers. Chatbot technology could even be leveraged to undermine the integrity of political institutions and the legislative process.

Lobbying for policy change

A recent paper by John Nay of Stanford University titled Large Language Models as Corporate Lobbyists suggests that chatbots such as ChatGPT have the potential to become competent political lobbyists.

To test the theory Nay prompted ChatGPT to complete a set number of diverse tasks necessary for a functioning lobbying process.

Nay first asked the system to determine whether proposed US Congressional bills are relevant to specific companies. The chatbot was further asked to provide reasons for its assessment of the legislation and to offer confidence levels in its own analysis.

For the bills ChatGPT considered relevant, the bot was then asked to draft a lobbying letter to the bill’s sponsor and to ask for changes to the proposed legislation.

The research, which was published earlier this month, found that while ChatGPT is still some way from being able to fully replace the lobbying efforts of a human being that this situation may change in the future.

The report went on to say that “as large language models continue to exhibit improved natural language understanding capabilities, performance on corporate lobbying related tasks will continue to improve.”

According to Nay the benefits of AI as lobbyists are twofold. One is that it allows humans to spend less time on mundane tasks freeing them to focus on challenges at a higher level. The second is that it makes lobbying easier and more affordable, opening the practice to a wider number of potential players.

Could ChatGPT negotiate on your behalf?

Nay argues that ChatGPT could negotiate on behalf of the little guy and there is something fairly compelling about this pitch. 

On the other hand, ChatGPT and other chatbots could instead be leveraged by large corporations and other well-resourced players to further extend their advantage in the political sphere. 

Rather than improving our democracies, chatbots could instead flood them with a wave of increased corporate lobbying, eroding the relative power of ordinary people.

Besides lobbying directly on bills, chatbots could be further utilized to lobby individual politicians, write email campaigns, or game social media sites by spamming them with automated chatbot political campaigns.

In credit, Nay is not blind to the potential dangers of utilizing technology in this fashion.

As the research admits, “there may be a slow creep of less and less human oversight over automated assessments of policy ideas and the written communication to regulatory agencies and Congressional staffers. The core question raised is where to draw the line between human-driven and AI-driven policy influence.”

As AI chatbots continue to improve the question of where we draw the line may become fairly moot. Once artificial intelligence and human-led responses become indistinguishable, how can a line be drawn at all?

That’s a problem that currently holds no solution. When legislators don’t know what is composed by humans and what is written by AI, there is simply no practical way that humans can keep chatbots out of the political process. 

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