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Sen. Elizabeth Warren and Facebook co-founder Chris Hughes have been dominating the antitrust debate in Silicon Valley with their proposals to break up Big Tech. But Supreme Court Justice Brett Kavanaugh’s surprise decision to rule against Apple yesterday could open the floodgates for new antitrust action against Silicon Valley giants.
Kavanaugh sided with the liberal justices and wrote the majority opinion in a 5-to-4 decision allowing consumers to press forward with a lawsuit alleging Apple acted as a monopoly. Though the ruling focused on one lawsuit against Apple, it could make it possible for consumers to bring similar actions against other technology marketplaces such as Amazon, Google and Microsoft, my colleagues Tony Romm and Reed Albergotti report.
Kim-Mai Cutler, a partner at Initialized Capital, noted Kavanaugh’s decision came as the industry was still reeling from the calls to break up Facebook:
Maybe Joel Kaplan’s move to defend his friend won’t be so great for Facebook after all…. https://t.co/qH5lehOY5B
— Kim-Mai Cutler (@kimmaicutler) May 13, 2019
Tough antitrust enforcement is traditionally associated with liberals, and progressive Democrats have largely dominated the discussion about whether greater antitrust action is needed to limit the power of tech companies. But Kavanaugh’s vote shows the current Supreme Court may not treat antitrust issues along traditional political lines.
Noah Feldman, a professor of law at Harvard University and former clerk to U.S. Supreme Court Justice David Souter, wrote that the tech industry should take note of Kavanaugh’s shot at Apple because it shows the Supreme Court is more open to antitrust litigation.
Feldman writes in a Bloomberg News op-ed, “if you are trying to calculate the overall risk of major successful antitrust suits against big tech companies, Kavanaugh’s vote should change your priors. It’s new information of potential value.”
Kavanaugh’s decision underscores that the growing scrutiny of the tech industry’s power and influence isn’t limited to one side of the political spectrum. Last year, President Trump said his administration was “looking at” Amazon, Facebook and Google for antitrust violations. At a recent hearing, Sen. Ted Cruz (R-Texas) proposed antitrust action as a way conservatives could remedy alleged anti-conservative bias at the technology companies.
In a divided Washington, cracking down on the tech industry is emerging as a rare area of consensus. Democrats signaled their support for yesterday’s ruling.
“The broader feeling in Washington is that tech has to be held accountable,” Rep. Ro Khanna, a Democrat whose district includes a slice of Silicon Valley, told my colleagues Tony and Reed. He said the court reached the right conclusion in ruling against Apple.
Kavanaugh has a history of rulings that indicated his position on the bench would be problematic for Silicon Valley.
In May 2017, Kavanaugh argued that Obama-era net neutrality rules — which many Silicon Valley tech companies supported — violate internet service providers’ First Amendment rights. He also defended the National Security Agency’s bulk collection of phone records in an opinion following former government contractor Edward Snowden’s revelations of government surveillance, which set off an icy period with Siilicon Valley. He wrote that “the Government’s metadata collection program is entirely consistent with the Fourth Amendment.”
Kavanaugh’s seat on the Supreme Court has been a source of contention in Silicon Valley since his confirmation hearings.
Facebook employees expressed outrage that Joel Kaplan, Facebook’s head of global policy and a longtime friend of Kavanaugh’s, supported him and appeared at his hearing. The employees viewed the appearance as a signal of how the top executives were handling the #MeToo movement and Trump-era politics. Kaplan later apologized for his appearance, saying it was a mistake for him to attend the hearing without consulting other Facebook executives.
BITS, NIBBLES AND BYTES
BITS: Facebook says it will raise wages for contractors, including content moderators who have been increasingly organizing to protest their low pay and other poor working conditions, Bloomberg’s Kurt Wagner reports.
The company said the current minimum wage it requires — $15 per hour — is no longer sufficient in places like the San Francisco Bay Area, where the company’s headquarters are located. The minimum wage for contract workers will be $20 per hour in the Bay Area, New York and Washington, and $18 per hour in Seattle. Content moderators will make more than other contractors, with their minimum pay rising to $22 an hour in San Francisco, New York and Washington, and $20 per hour in Seattle. In other metro areas, like Phoenix, they’ll make $18 per hour.
The company has been under intense pressure to improve conditions for content moderators, who are tasked with watching graphic and violent videos on its service all day. My colleague Elizabeth Dwoskin reported last week that these workers are using Facebook’s internal communications system, Facebook Workplace, to raise awareness throughout the company of their low wages and lack of sufficient mental health resources. Earlier this year, The Verge’s Casey Newton reported on the intense emotional toll content moderation takes on workers at a contracting firm called Cognizant.
Dwoskin noted right now many content moderators are working side jobs to make ends meet:
A week after our story detailing how Facebook’s moderators of graphic content are protesting low pay and other grievances, Facebook announced it is raising their pay. Right now moderators work side jobs for Uber/grocery delivery to make ends meet. https://t.co/1z8OUYJczW
— Elizabeth Dwoskin (@lizzadwoskin) May 13, 2019
Newton wrote this would be a meaningful amount of money for the contractors he wrote about in Phoenix:
This is another $7,200 a year for all the folks I wrote about in Phoenix. That’s a meaningful amount of money.
FWIW, Facebook is positioning this as a way to ‘reflect the local cost of living,’ not to better compensate people for workplace trauma. https://t.co/quieXGjcdH
— Casey Newton (@CaseyNewton) May 13, 2019
Facebook told Wagner its decision to increase wages is not a direct response to negative press coverage. “We started this process middle of last year,” Janelle Gale, Facebook’s vice president of human resources, told Wagner. “Way before those articles came out.”
NIBBLES: Democratic presidential candidate Joe Biden said yesterday that dismantling companies like Facebook is “something we should take a really hard look at,” Hunter Woodall reports for the Associated Press. He added it would be “premature” to make a final judgement — stopping short of embracing a proposal from his rival Sen. Elizabeth Warren (D-Mass.) to break up Big Tech.
Biden’s comments underscore how antitrust action is increasingly emerging as an issue on the 2020 campaign trail, after Warren put a stake in the ground on the issue earlier this year with a plan to break up Facebook, Google and Amazon. The Democrats’ increased criticism of the tech industry stands in stark relief to the Obama administration’s relationship with Silicon Valley. Sen. Kamala Harris (D-Calif.) signaled she’s open to revamping Facebook over the weekend, saying the company is essentially a public utility. However Sen. Corey Booker (D-N.J.) says candidates shouldn’t be targeting individual companies.
Regardless of whether Facebook is broken up, Biden told the AP the Trump administration hasn’t done enough to enforce antitrust laws across industries.
BYTES: Amazon is rolling out machines that will automate boxing up customer orders, a job currently held by thousands of its warehouse workers, according to Jeffrey Dastin of Reuters.
The technology scans goods coming down a conveyor belt and packs them shortly after in boxes custom-built for each item. Amazon has mulled installing the machines at dozens more warehouses, removing at least 24 positions at each one. (Amazon head Jeff Bezos owns The Washington Post.)
“That would amount to more than 1,300 cuts across 55 U.S. fulfillment centers for standard-sized inventory. Amazon would expect to recover the costs in under two years, at $1 million per machine plus operational expenses,” Dastin reports.
Amazon is known for automating parts of its business, and this newly revealed plan underscores how the company is seeking to reduce labor and boost profits. Automation of the most common task in warehouses — picking up an item — remains out of reach. But it’s a delicate situation as the company considers automating jobs that have generated public goodwill and subsidies.
“We are piloting this new technology with the goal of increasing safety, speeding up delivery times and adding efficiency across our network,” an Amazon spokeswoman told Reuters in a statement. “We expect the efficiency savings will be re-invested in new services for customers, where new jobs will continue to be created.”
— Technology news from the private sector:
Amazon will pay its employees to quit and help them start their own local package-delivery businesses, as the e-commerce giant competes for delivery drivers in the tightest U.S. labor market in 50 years.
Wall Street Journal
— Michael Kratsios, deputy assistant to the president for tech policy, arrives in Paris today for the G7 Ministerial Meetings. He’ll lead the U.S. delegation at the meetings, where advancing artificial intelligence and promoting trust and security in emerging technologies are on the agenda.
Kratsios will also host a roundtable at the U.S. Embassy in France with American companies operating in the country about the conditions for American companies operating abroad, as well as the Trump administration’s tech priorities. Industry attendees include Facebook, Google, Microsoft, Amazon, Cisco, Salesforce, eBay, and others.
— More tech news from the public sector:
The Chinese owner of Grindr is required to sell the popular gay-dating app by June 2020 under an agreement with U.S. officials who raised national security concerns about the app’s ownership.
The Federal Communications Commission (FCC) is ramping up its battle against Chinese telecom companies as the Trump administration pursues an aggressive trade strategy against China.
— Tech news generating buzz around the Web: