(2024-03-15) Stoller The Tiktok Problem Is Not What You Think

Matt Stoller: The TikTok. Problem Is Not What You Think. While I support the bill, and find most of these objections lacking in credibility, there is some legitimacy to the skepticism, which I’ll get into. But what I want to offer is some basic framing, which is that this legislation has to be understood not as a substitute to a broader movement for reform of social media and privacy, but as part of it.

while it’s true that Congress hasn’t passed a ‘comprehensive Federal privacy law,’ it’s also true the Biden administration is orchestrating a remarkable revolution in privacy protections by resurrecting old legal tools

The second is those who say ‘we can’t even regulate social media and now you want to divest TikTok’s ownership!’ have it 180 degrees backwards. Being able to address Chinese ownership of one video sharing platform is part of the movement to reform all platforms.

Biden Rewrites the Rules of the Internet

Two months ago, the Network Advertising Initiative (NAI), an advertising trade association composed of data brokers and tech giants like Google and Adobe, announced it was developing new industry standards for corporations who “collect and process sensitive consumer location data.”

It turns out, people really don’t like it when corporations, or employers, abusers, etc know when they go to the doctor, church, a political rally, a gay bar, and so forth. And the industry of data brokers was listening.

Why? Well it’s because of a little noticed but pivotal legal change in enforcement by the Federal Trade Commission in a series of privacy cases.

But in August of 2022, the commission brought a different kind of case, against a data broker called Kochava, arguing that collecting and using certain kinds of data, whether that was disclosed or not, was unfair. It was a novel legal claim, and it wasn’t clear if a judge would ratify it.

The judge ruled for the FTC in the Kochava case, upholding unfairness as grounds for banning the aggregation and sale of large amounts of consumer data, regardless of whether the corporation disclosed it was doing so.

While antitrust cases are an endless slog, consumer protection ones aren’t. And the FTC consumer protection enforcers have been busy, filing a flood of data-related cases over the past few years, going after the sharing of medical data, fertility data, location data, and so forth

There are also FTC consent decrees against YouTube, Twitter, and yes, TikTok, any of which could be re-opened by this FTC should they find a violation

Then there’s another FTC consumer protection claim against Meta/Facebook, one of the biggest data hounds on the internet, in which the FTC simply banned Facebook from engaging in targeted advertising to children after the corporation violated its consent agreement with the commission

Antitrust, of course, is still a thing. The FTC has a big suit against Facebook filed in 2020, seeking to break apart Instagram and WhatsApp

But consumer protection moves much faster

The Consumer Financial Protection Bureau has taken action to address shoddy data practices of financial firms, and is investigating data brokers. It is also considering rules mandating that data brokers selling certain types of consumer data involving payment history, income, and criminal records be regulated as “consumer reporting agencies” under the Fair Credit Reporting Act, which would “trigger requirements for ensuring accuracy and handling disputes of inaccurate information, as well as prohibit misuse.”

The Health and Human Services Department (HHS) is fighting with hospitals over stopping them from sharing web browsing data with Google, and the National Security Council recently issued an executive order on data security barring data brokers from selling sensitive personal data - which includes genomic data, biometric data, personal health data, geolocation data, financial data, and certain kinds of personal identifiers - to brokers who enable "exploitation by countries of concern."

Is that enough? Of course not. As just one example, auto makers are selling driving data to insurers under false pretenses, leading to unexpected hikes in insurance prices.

So why, if there’s so much happening, do people constantly bemoan the lack of a privacy law in the United States? One reason, clearly, is that legislation would help. But the truth is, there’s a large set of academics, compliance officials, and activists who have organized themselves around the issue of ‘privacy’ and ‘data’ without defining what the actual problem is.

There is some coherence to privacy, but there’s a lot more coherence to the ‘privacy advocacy community’ than there is to the problem. And that community has little incentive to clearly define the problem they want to solve, because that would require discussing specific markets and pricing and advertising, and that’s a bit tougher than abstractions.

But when you get down to it, mass data collection is mostly driven by advertising. So the legal actions undertaken by Biden across the board are restructuring how data brokers operate and how ad markets work.

The TikTok Problem

And this discussion brings me back to what started this musing in the first place, which is the proposal to shift the ownership of TikTok. One irony of this debate is that the emergence of TikTok is a very good lesson in the risks of poor antitrust enforcement in America. Indeed, the reason TikTok exists is because we allowed Facebook to kill Vine, a remarkably similar video sharing product started years earlier by Twitter.

It’s not a coincidence that all of these actions on privacy, antitrust, and consumer protection are happening at the same time as a proposal to force the divestment of TikTok from Chinese control.

is a long anti-monopoly tradition in America, and we’re using it aggressively to address domestic dominant firms. But this tradition is not limited to antitrust. It includes public utility rules, such as the prohibition of foreign control of platforms in the United States, which we had with everything from the radio to railroads. (Ironically it was the WTO in the 1990s that started chipping away at such rules.)

If a nation-state is opaque, authoritarian, and doesn’t allow foreign journalists, they don’t get the benefit of the doubt on intentions when it comes to whether private firms are in fact private, especially when the state ideology is collectivist. There’s also pretty good evidence of problems here.

What Now? Who Buys TikTok?

I don’t think it’s likely that either Meta or Google would be allowed to buy TikTok

Putting together $100B or whatever it costs to buy TikTok is a big endeavor, and I don't know that it could be done in six months. But already, Bobby Kotick of Activision has said he’s putting together an investment group, and so has former Trump Treasury Secretary Steve Mnuchin.

the partisan nature of executive leadership simply cannot be a key factor in how we think about this problem, certainly not above concern over foreign ownership of platforms.

in terms of whether changes will hurt creators and users, well, TikTok already has changed its algorithm in ways that harm creators, abruptly and often. All the big platforms do this

The solution here is breaking up the existing holding companies like Meta and YouTube into separate corporations so there are more independent platforms, and putting forward stronger public utility rules. But one bedrock public utility rule must be that the guy who runs a big platform in America has to be subject to American law.