Editors’ Briefing: This Week in Political Economy (August 25–September 1)

As Trump ramps up his attacks on Google, Sen. Orrin Hatch asks the FTC to revisit its investigation of the company; as Facebook finally takes action on Myanmar, US campaign strategists reportedly gear up to flood the social network with inflammatory ads; and why are doctors and hospital groups organizing to oppose single-payer health care in California?

 

 

 

  • President Trump stepped up his attacks on big technology platforms this week, accusing Google of rigging search results against conservative news outlets (charges based on an admittedly non-scientific blog post). In an interview with Bloomberg, Trump went on to say that tech giants like Google, Facebook, and Amazon may be in a “very antitrust situation.” Trump’s top economic adviser, Larry Kudlow, said that the administration is “taking a look” at whether Google searches should be regulated by the government and how. Later this week, Trump claimed Google didn’t promote his State of the Union addresses as it did for President Obama’s—a charge that was easily refuted by Google and by multiple outlets, as were his earlier allegations. But while there is no basis for President Trump’s charges against Google, writes Farhad Manjoo in the New York Times, “Mr. Trump’s false charges crashed into a longstanding set of worries about Google, its biases and its power.” Once we get beyond Trump’s false charges, he explains, “you come upon a set of uncomfortable facts”—namely, Google’s biases against minorities and people of color. The “real conversation” we need to have about Google’s biases, he suggests, is a conversation “about one monopolistic platform controlling the information landscape.”

 

  • As President Trump continues to ramp up his attacks on Big Tech, Senator Orrin Hatch (R-Utah) asked the Federal Trade Commission to reopen its investigation into Google’s search and digital advertising practices. In a letter to the FTC, Hatch cited the 2015 Wall Street Journal report that showed the FTC’s staff recommended charges be brought against Google for anticompetitive practices before the FTC decided to close the investigation in 2013 and the recent “60 Minutes” segment on Google’s dominance in online search and search advertising, as well as unnamed reports that “Google has, on occasion, decided to remove from its platforms legal businesses that the company apparently does not agree with.” He concluded: “In light of all these changes, I respectfully request that the FTC consider the competitive effects of Google’s conduct in search and advertising.”

 

  • A secret deal between Google and MasterCard, a Bloomberg report revealed this week, granted Google access to the real-world transactions of 2 billion MasterCard holders, which in turn gave Google advertisers “a potent new tool to track whether the ads they ran online led to a sale at a physical store in the US.” Google reportedly once boasted that the new service, called Store Sales Measurement, gives the company access to about 70 percent of US credit and debit card data.

 

  • Facebook COO Sheryl Sandberg and Twitter CEO Jack Dorsey will testify before the Senate Intelligence Committee next week. Larry Page, CEO of Google’s parent company Alphabet, was also invited but has not confirmed his attendance, according to TechCrunch.

 

  • Brazil’s antitrust watchdog is debating whether to launch an official investigation into Google over alleged abuses in its cell phone operating system, reports Reuters, and Germany’s antitrust chief reportedly expects to take “first steps” in its probe against Facebook, after it found that the company abused its market dominance to collect data on Facebook users without their knowledge or consent. The president of Germany’s Federal Cartel Office, Andreas Mundt, said during a press conference in Bonn that the agency would focus on protecting competition in the digital economy through a strategy aimed “against big Internet companies.”

 

  • Weeks after passing the toughest online privacy law in the US, California also passed the country’s strongest net neutrality law. Antonio García Martínez, however, argues in Wired that California’s privacy law “won’t hurt Facebook or Google,” as some thought it would. 

 

  • Following a damning UN report that highlighted the role Facebook played in the genocide of Rohingya Muslims in Myanmar, the company removed accounts and pages associated with the country’s top military generals and organizations, including its army’s commander-in-chief. The UN report criticized Facebook’s response to reports that the social network was used as a platform for incitement and anti-Rohingya propaganda as “slow and ineffective” and noted that the “extent to which Facebook posts and messages have led to real-world discrimination and violence must be independently and thoroughly examined.”

 

  • In the US, meanwhile, “campaign strategists are gearing up to flood Facebook with inflammatory and polarizing ads heading into the midterm elections, saying its advertising platform rewards extreme messaging more than other venues,” according to the Wall Street Journal.

 

  • Last week, Senator Bernie Sanders (I-VT) attacked Amazon for paying its workers low wages while making enormous profits, calling on his supporters to sign a petition that implored Amazon CEO Jeff Bezos to “pay your workers a living wage and improve working conditions at Amazon warehouses.” This week, in a rare move, the company publicly responded to Sanders’s charges, calling them “inaccurate and misleading.” Next week, reports TechCrunch, Sanders will introduce legislation aimed at large companies he believes take advantage of “corporate welfare” by underpaying workers. Sanders’s criticism that Amazon and other companies take advantage of taxpayer-funded welfare programs to pay their workers outrageously low wages, meanwhile, has found an unexpected supporter in Tucker Carlson.

 

  • In the New York Times, Neil Irwin offers a useful breakdown of discussions during last week’s annual Federal Reserve policy symposium in Jackson Hole regarding the negative effects of market concentration. “Many of the world’s most powerful economic policymakers are now taking seriously the possibility that…the growing concentration of corporate power has confounded the efforts of central banks to keep economies healthy,” he writes.

 

  • “I believe in markets and the benefits they can produce when they work. Markets with rules can produce enormous value,” says Senator Elizabeth Warren (D-Mass.) in an interview with Franklin Foer in The Atlantic, in which she lays out her suggestions for how to fix American capitalism.

 

  • As the student debt crisis keeps getting worse, the Student Loan Ombudsman at the Consumer Financial Protection Bureau (CFPB) resigned this week, blaming the Trump administration for turning its back on student borrowers. The CFPB under the leadership of Mick Mulvaney “has turned its back on young people and their financial futures,” argued Seth Frotman, who led the CFPB’s student loan office for three years. “Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting,” Frotman wrote in a resignation letter addressed to Mulvaney. “Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”

 

  • From The Intercept: Following a FOIA request, the FTC released nearly 500 pages of material on the financial disclosures and potential conflicts of interest of Andrew Smith, the new head of the agency’s Bureau of Consumer Protection who previously worked as a lawyer representing many of the corporations he will now be supervising—“but the pages were almost entirely redacted.”

 

  • Bloomberg News reassigned a reporter who covered Wells Fargo after the bank’s CEO called the editor-inhief to complain, reports CNN.

 

  • Some of Donald Trump’s allies are pushing Makan Delrahim, head of the Department of Justice’s antitrust division, as a potential replacement for either Attorney General Jeff Sessions or White House Counsel Don McGahn, reports Bloomberg.

 

  • As New York’s attorney general race heats up, the real estate industry is doing everything it can to prevent Zephyr Teachout from winning, reports Josefa Velasquez in Sludge.

 

  • From the Sacramento Bee: Doctors and hospital groups are organizing to oppose any attempt to craft single-payer health care system in California.

 

Chatter From the Ivory Tower

 

In an extract from his much lauded new book Winners Take All, Anand Giridharadas examines “how plutocrats hijack campus idealism,” arguing that “American elites rigged the economy to deprive millions of young people of opportunity; and then they deftly co-opted the idealism of the young people who might challenge that rigging by convincing them that making change requires learning at their knee.”

 

Stigler Center Goings-On

 

As economists experience their first major #MeToo moment, Capitalisn’t hosts Kate Waldock and Luigi Zingales explore the larger implications of a recent case involving a Columbia University professor who was found liable for retaliation against a junior faculty member.

 

 

 

Disclaimer: The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Blog Policy.