With help from John Hendel and Leah Nylen
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— Two strategies on antitrust: Senators are taking a less-is-more approach to antitrust legislation compared to what the House Judiciary Committee has offered.
— Happy now? Critics of the Verizon-TracFone merger have dropped their opposition after securing commitments for low-income customers from Verizon.
— Fighting back: The FTC and Congress need to implement new solutions to combat harms caused by algorithmic bias, FTC Commissioner Rebecca Kelly Slaughter argues in a white paper.
IT’S THURSDAY, AUG. 12. WELCOME TO MORNING TECH. I’m your host, Benjamin Din. I’m back from covering the Olympics, where one of my favorite moments was when Sen. Amy Klobuchar (D-Minn.) lauded Suni Lee on the Senate floor for winning gold in the gymnastics all-around competition — a truly unexpected collision of tech and sports.
SENATE SHARPENS ITS ANTITRUST FOCUS — The Senate is moving on its antitrust response, following the House Judiciary Committee’s approval of its own antitrust package. But senators are taking a more targeted approach that could make their bill easier to actually get to Biden’s desk.
Sen. Richard Blumenthal (D-Conn.) on Wednesday introduced the Open App Markets Act, as Leah reported for Pros. The new bill would target Apple and Google’s “gatekeeper power” over the smartphone market, forcing the tech giants to allow developers to use alternative app stores and to tell consumers about where they can purchase software for a cheaper price online. Sens. Marsha Blackburn (R-Tenn.) and Klobuchar, who chairs the Senate Judiciary antitrust subcommittee, are cosponsors of the legislation.
— Not quite a companion bill: The Senate bill does have some overlap with a House bill introduced by Rep. David Cicilline (D-R.I.), who chairs the House Judiciary antitrust panel. However, Cicilline’s legislation is broader, applying to everything from app stores to advertising to logistics, and would ban companies from prioritizing their own products over their competitors’.
Companion legislation from the House is currently in the works. Senators are still working on companions for the House’s proposals, but those bills aren’t expected until later in the fall.
— The reaction: Groups like the Coalition for App Fairness praised the new Senate legislation, saying it would help spark innovation. But the Chamber of Progress, a tech industry coalition that counts Google and Apple among its members, blasted the bill. “This bill is a finger in the eye of anyone who bought an iPhone or Android because the phones and their app stores are safe, reliable, and easy to use,” said the group’s CEO, Adam Kovacevich, in a statement.
AN ANTITRUST CALENDAR UPDATE — Meanwhile, another antitrust bill has been put on hold until after the Senate returns from recess. The Senate Judiciary Committee was scheduled to mark up a bill that would allow state attorneys general to keep antitrust cases in their preferred courts, but that markup has been postponed again.
VERIZON WINS OVER CRITICS OF TRACFONE MERGER — Verizon just upped the prospects for clearing its proposed acquisition of wireless reseller TracFone by allaying critics’ worries that Verizon could leave some of TracFone’s low-income customers in the lurch. Public Knowledge, Access Humboldt, the Benton Institute for Broadband and Society, the California Center for Rural Policy and the Communications Workers of America are collectively announcing today that they’ve dropped their opposition.
— How we got here: In simultaneous filings before the FCC (which is still reviewing the deal), these groups and Verizon explain they worked out six enforceable conditions that Verizon would need to abide by under approval of the nearly $7 billion merger. Senate Democrats had also pressed for such commitments from Verizon last month.
These conditions include Verizon promising to maintain TracFone’s participation in the federal Lifeline program (which subsidizes service for low-income households) for at least three years; maintain at least its same Lifeline marketing budget; and not tack on new co-pays. And within six months of the transaction closing, Verizon would be required to offer TracFone’s prepaid Lifeline customers a service plan option including 5G wireless service. The carrier would have to submit quarterly reports to the FCC for three years sharing details about its Lifeline customers and their service offerings.
“After nearly a year of advocating for TracFone’s Lifeline subscribers, we believe that Verizon’s commitments are a win for consumers and serve the public interest,” said Public Knowledge policy counsel Kathleen Burke, who lauded the FCC for not expediting the merger review — a move that would have resulted in less scrutiny from agency staff. The proposed conditions “represent the federal floor of what we believe is necessary,” she added.
Verizon has said it hopes to close the merger in the second half of this year, and sorting out these condition agreements will help pave the way to do so. Verizon spokesperson Richard Young said today’s letter reflects how the merger has always been about “providing great service to value-conscious consumers, including Lifeline customers” and that the carrier wants to discuss these pledges with the FCC “so that we can bring the benefits of the transaction to value-conscious prepaid consumers as soon as possible.”
HOW THE FTC SHOULD COMBAT ALGORITHMIC BIAS — Both the FTC and Congress need to move forward on initiatives that would combat harms caused by algorithms, Slaughter wrote in a paper published Wednesday by Yale Law School’s Information Society Project and the Yale Journal of Law and Technology.
“In recent years, algorithmic decision-making has produced biased, discriminatory, and otherwise problematic outcomes in some of the most important areas of the American economy,” Slaughter wrote. Americans’ increased use of technology during the pandemic has only exacerbated those harms, she added.
— Put in context: Debates over the ways racial, gender and ethnic biases can be hard-coded into algorithms have been particularly prevalent since Twitter introduced an algorithmic bias “bug bounty” challenge to identify instances of bias in the company’s algorithms. That challenge, which wrapped up this weekend, unearthed various examples of bias, including Twitter’s tendency to favor young, slim and light-skinned faces when it crops users’ photos.
— Algorithms and antitrust: Slaughter argued that algorithms can negatively impact competition, such as with the practice of algorithmic pricing, in which prices are dynamic and change automatically. They can also be used to engage in exclusionary practices, such as prioritizing one company’s products over another’s.
— What the FTC can do: Slaughter argued her agency should aggressively use tools that allow it to go after companies for “unfairness” and violations of a federal children’s privacy law, as well as push for a new rulemaking to combat data abuses that hinder competition and consumer privacy — issues that President Joe Biden highlighted in his executive order on competition.
— The legislative response: Slaughter also called on Congress to act, specifically name-dropping the Algorithmic Accountability Act, which stalled in the last Congress. That bill would have required companies to evaluate whether their use of algorithms protected the privacy and security of their users’ personal information. She also advocated for a federal privacy law that would “require companies to be proactive in avoiding discriminatory outcomes.”
— The industry response: Tech companies generally deny that their algorithms are anticompetitive, defending them as a way to provide users with the personalized experience they want. In recent years, some companies have also made a more concerted effort to root out instances of bias by creating dedicated teams focused on the ethics of their algorithms.
Christy Pambianchi is joining Intel as EVP and chief people officer. She was previously EVP and chief human resources officer at Verizon.
Calls for action: “How Facebook Failed to Stem Racist Abuse of England’s Soccer Players,” via NYT.
New blood: FTC Chair Lina Khan is reshaping the way the U.S. approaches antitrust, a consumer-first approach that dates back to the Reagan era, FT reports.
Broadband boom: “U.S. Government Wants a Greater Role in How Americans Access Internet,” WSJ reports.
Klarna origin story: “How Sweden became the Silicon Valley of Europe,” via Reuters.
Dash for data: DoorDash has released the results of its self-conducted national worker survey, which found that 90 percent of its workers want to be independent contractors.
EV push: Amazon-backed electric vehicle startup Rivian is in talks for a $5 billion factory near Fort Worth, Texas. Bloomberg has more.
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