fbpx

Tech Regulation

Forcing TikTok’s divestiture from the CCP is both reasonable and necessary

Washington, D.C. – Yesterday, a bipartisan group of US House legislators introduced a bill that would force ByteDance Ltd. to sell its US version of TikTok or face massive fines and federal investigations. This would have big ramifications for the video-sharing app, which is estimated to have over 150 million users in the US.

In practice, HR7521 designates the popular social media application TikTok as a “foreign adversary controlled application,” invoking the government’s ability to force the firm into new ownership by any private, legal entity in the United States —  a full forced divestiture.

Yaël Ossowski, deputy director of the consumer advocacy group, Consumer Choice Center, responded:

“In recent years, the default mode for the federal government has been to wage a regulatory war against American tech companies, all the while leaving the Chinese Communist Party-linked app TikTok to grow uninhibited,” said Ossowski. “While consumers generally do not want wholesale bans on popular tech, considering the unique privacy and security concerns implicit in TikTok’s ownership structure as well as its accountability and relationship to the CCP, the solution of a forced divestiture is both appropriate and necessary.”

Reports have already revealed that European TikTok users can, and have, had their data accessed by company officials in Beijing. The same goes for US users. Given the ownership structure of TikTok, there isn’t anything that can be done about this to shield American consumers from privacy violations. A forced divestiture would bring TikTok under the legal authority of the US and thus alleviate many of the concerns that consumers have about their security on the app. 

We praise Reps. Gallagher and Krishnamoorthi for spearheading this effort in a constitutionally nuanced and legal way that does not risk furthering the anti-tech attitudes of so many in Washington,” concluded Ossowski. “Upholding consumer choice is among our core principles, as is ensuring that the ethos of liberal democracies continues to guide the arc of technological progress.

READ: The best answer to TikTok is a forced divestiture 

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Washington, D.C., Ottawa, Brussels, Geneva, and other hotspots of regulation and inform and activate consumers to fight for  Consumer Choice. Learn more at consumerchoicecenter.org

The best smartphones for teens to stay connected and protected

When Republicans and Democrats come together on something in Washington, D.C., rest assured that it’s an expansion of their power at the expense of yours. The Kids Online Safety Act, sponsored by Senator Richard Blumenthal (D-Conn.) and Marsha Blackburn (R-Tenn.), now boasts 62 Senate cosponsors, making it very likely to pass in the coming weeks.

KOSA and similar age-verification laws sweeping the nation require platforms to collect personal information such as a driver’s license, Social Security number, or birth certificate to verify the user’s age. In the case of minors, parental consent involves sharing sensitive information for safekeeping by Big Tech companies.

Read the full text here

Kids Online Safety Act May be a Threat to Privacy

The Kids Online Safety Act, recently reintroduced by a group of bipartisan US Senators, is being criticized as a potential gateway to digital censorship rather than genuine protection for minors online.

Yaël Ossowski, deputy director of the Consumer Choice Center, a Washington, D.C. based consumer advocacy group, argues that the bill poses constitutional concerns and could grant excessive powers to regulate digital platforms. Ossowski suggests that rather than enhancing online safety, such legislation might compromise user experiences and jeopardize personal data security.

The Consumer Choice Center contends that enacting this bill would signify a shift towards government control over children’s internet access, diminishing parental authority. Ossowski emphasizes that safeguarding children online should start at home, with parental guidance, rather than relying on government intervention to dictate their online activities.

Read the full text here

‘Green bubble’ texts are not the FCC’s problem to solve  

When iPhone users see a green bubble pop up in their text messages, it has a way of dulling the experience. Emoji reactions, Facetime video calls, or even high-quality images over WiFi are immediately broken once a green-bubbled Android user slides into a group thread. 

This is the reality of Apple’s iMessage protocol, the default messaging app for its users. These consumers enjoy end-to-end encryption, high-quality image sharing, and a full range of emoji and message reactions all in tidy blue chat bubbles. Android users texting iPhones, though, have their messages carried over the limited SMS protocol with none of those features, yielding the green bubbles you may see in your chats. 

Rather than use similarly encrypted messaging apps like WhatsApp, Signal or Telegram, which remain more popular overseas, over 125 million Americans are plugged into the iPhone ecosystem. It’s no wonder, then, that social pressure exists for non-Apple users, particularly teens, who prefer iMessage over its competitors. 

To solve this, innovative developers have created Android apps to route around Apple’s strict “walled garden.” Some apps offer third-party relay servers running on Mac computers, allowing Android users to communicate on iMessage while breaking Apple’s proprietary encryption. 

The company Beeper found a way to reverse-engineer iMessage’s protocol without relays, giving Android users a direct connection with Apple’s servers and all iPhones. The app quickly became popular on Android devices — but Apple soon took notice. 

In December, Beeper announced it would abandon its service after Apple made protocol changes that blocked the app’s workaround. It’s a typical cycle for an innovative startup looking to disrupt an industry. 

But then came the politicians.  

That same week, a bipartisan group of senators and congressmen, including Big Tech foes Sens. Mike Lee of Utah and Amy Klobuchar of Minnesota, sent a letter to the Department of Justice demanding an antitrust investigation against Apple. Their letter claimed Apple’s de facto block on Beeper’s workaround “harms competition” and “eliminates choices for consumers.”  

On Monday, FCC Chair Brendan Carr called on his agency to investigate Apple’s iMessage based on Part 14 of the commission’s rules regarding accessibility, usability and compatibility. Carr claims the iMessage experience harms consumers with disabilities who may not be able to read the “low contrast” green bubbles coming from Android users. 

Add that to the growing list of grievances being brought against American tech firms by Washington. 

Is this truly a situation that warrants intervention by the nation’s telecom regulator and antitrust hawks in Congress?  

There are meaningful market solutions available to consumers. While Apple defends its iMessage protocol, the company has also pledged to upgrade how its tech interacts with non-Apple devices. 

This month, Apple announced it will soon upgrade its SMS and MMS messaging to what’s known as the RCS protocol (Rich Communications Services), allowing more multimedia features and functionality with other devices that would closely match the iMessage experience. 

This is unlikely to silence Apple’s critics, however, because this is about far more than blue and green chat bubbles. 

growing number of public and law enforcement officials are advocating for outlawing messaging encryption altogether, which iMessage uses by default. The FBI has already battled Apple numerous times over its encryption protocol and routinely attempts to crack it. 

The same goes for rival companies that rely on Apple’s App Store to deliver their products to Apple users. 

In 2020, video game maker Epic Games sued Apple and won a partial victory, classifying Apple’s management of its App Store as “anti-competitive.” In 2023, Damus, an iPhone app for the decentralized messaging protocol known as Nostr, revealed Apple was threatening to delist their app if it allowed users to make Bitcoin payments for content instead of Apple Pay. 

At the same time, the Justice Department is likely to issue a sweeping antitrust lawsuit against the company, with the aim of breaking apart the hardware and software integrations that Apple has made so central to its product ecosystem. Apple is fighting a war on multiple fronts, and not every new conflict opened in good faith. 

Apple’s competitors and the federal government seem to be in lockstep on breaking the entire Apple user experience.  

Apple claims its “walled garden” approach exists to add simplicity and security for its users, and I gather most consumers with iPhones would agree. Apple created this garden, and consumers flock to it because they find value in it. It stands to reason that for outside developers and Apple’s competitors, the walled garden is a thorn in their side. 

These are real issues that impact consumers, and they deserve to be addressed. However, we must make distinctions between problems that are merely conflicts between rival companies competing for consumers, and those that require government intervention on consumers’ behalf.  

The switching costs and trade-offs for American iPhone users aren’t worth it to most. And that’s nothing will be or should be remedied by agency decree or legislation. The FCC would just be manifesting a solution in search of a problem when it comes to chat bubbles. 

If the U.S. wants to remain competitive on a global scale, we need our regulatory agencies to focus on calling balls and strikes to ensure fairness and competitiveness, not dictating the chat protocol between Android and Apple users. 

Opening up Pandora’s box of government meddling into a niche technology, whether that’s on your newsfeed or chat app, would be a step too far. It would be much more trouble than it’s worth. 

Originally published here

‘Kids Online Safety Act’ is a Trojan Horse For Digital Censorship

Washington, D.C. – This week, a bipartisan cohort of US Senators unveiled a new version of the Kids Online Safety Act, a bill that aims to impose various restrictions and requirements on technology platforms used by both adults and minors.

Yaël Ossowski, deputy director of the Consumer Choice Center, a consumer advocacy group based in Washington, D.C. responded: 

“This bill is constitutionally dubious and would create new powers that should frighten not only every parent but also every user of digital platforms such as social media. In writing new federal rules to “protect” kids online, the real effect will be to significantly degrade the experience for all users while putting their sensitive personal information at risk.”

The Consumer Choice Center believes strongly that if Congress were to pass such a bill, lawmakers would be aligning with the idea that the government should have the final say over young people’s access to the Internet, thus diminishing the role of parents in their kids’ lives. 

“There are ways to protect kids online, but that begins at home with parental authority and supervision. It’s a false choice to accept the gatekeeping of an entire generation from technology that has become so integral to daily life and contributes to their development as responsible citizens,” added Ossowski. 

Privacy and consumer advocates are sounding the alarm about what this law would mean in practice. Rules emanating from Washington granting “duty of care” to government officials will erode parental authority and consumer choice online. The bill seeks to control “design features” and limit developers’ inclusion of personalized recommendation systems, notifications, appearance-altering filters, and in-game purchases for apps used by minors. It’s a crackdown not just on features that work functionally for certain apps, but also on features that make them fun for users.

“KOSA is fundamentally wrong,” concluded Ossowski. “We as a society should trust that parents have the ultimate right to decide whether or not their children access certain websites or services, not indifferent government officials sitting in Washington. No one knows what is in the best interests of their child more than parents.”  

Media inquiries and interview requests can be sent to Media Director Stephen Kent: Stephen@consumerchoicecenter.org

***

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Washington, D.C., Ottawa, Brussels, Geneva, and other hotspots of regulation and inform and activate consumers to fight for  Consumer Choice. Learn more at consumerchoicecenter.org.

Virginia youth social media law would cause online chaos and diminish parental authority

Richmond, VA – In the name of “safety” and the “best interests” of children, the Virginia Senate this week passed a draconian age-verification bill for online platforms which would require youth who want to use social media to provide exhaustive proof of their age and to seek parental consent. This legislation is not as common-sense as its backers would have voters believe. 

SB 359 outlines the restrictions on so-called “addictive feeds” that offer content to users, but lays out significant exemptions that could be used by platforms like YouTube, TikTok, and Snapchat to evade regulation impacting their competitors.

Yaël Ossowski, deputy director of the Consumer Choice Center, a consumer advocacy group based in Washington, D.C. responds to the VA Senate’s passage: 

“The legislation, with its focus on “addictive feeds” that “connect users,” means a number of services would arguably be exempted, including YouTube, TikTok, and Snapchat. This demonstrates that instead of trying to “protect kids” writ large, this is nothing more than legislative retribution against select social media companies, and has more to do with politics than positive discussion on online safety.”

This bill follows in the steps of last year’s adoption of SB1515, which holds websites of “harmful content” liable in civil courts if they allow minors access, similar to the so-called “porn ban” first passed last year in Utah. If the bill is passed by the House of Delegates, it would create a labyrinth of weaponized policies that prevent teens from engaging with friends and family online, would burden future social media upstarts, and create privacy risks. 

Yaël Ossowski added, “By requiring social media websites to collect sensitive photos, IDs, and documentation of Virginia minors, they are mandating enormous privacy risks that will be a cyberhacker’s dream. Not only does this bill make it more difficult for young people to begin to use the Internet and all the benefits it provides, but it enshrines into law the idea that governments should pick which social media networks young people can or cannot use rather than parents. This is gatekeeping a generation of people from the Internet.”

The Consumer Choice Center believes strongly that if Virginia were to pass such a bill, the state would be aligning with the idea that the government should have the final say over young people’s access to the Internet, diminishing the role of parents in their kids’ digital lives. 

“That is fundamentally wrong,” concluded Ossowski. “We as a society should trust that parents have the ultimate right to decide whether or not their children access certain websites or services, not government officials sitting in Richmond. No one knows what is in the best interests of their child than parents.” 

**

The CCC represents consumers in over 100 countries across the globe who want smart public policies that are fit for growth, elevate tech innovation, and protect lifestyle freedom. We closely monitor regulatory trends in Washington, D.C., Ottawa, Brussels, Geneva, and other hotspots of regulation and inform and activate consumers to fight for  Consumer Choice. Learn more at consumerchoicecenter.org..

The FTC’s cheering of a failed merger shows its disdain for consumers

Since when do government agencies applaud business deals that fall apart, resulting in hundreds of layoffs and loss opportunities for consumers who depend on those products?

That’s what happened earlier this month, when the Federal Trade Commission issued a press release applauding the failed $1.7 billion acquisition of the technology firm iRobot by the ecommerce giant Amazon.

The FTC, as well as Democratic Senators and competition regulators in the European Union, were hostile to the deal as they claimed it would “harm” competition for robot vacuum cleaners, one of the main consumer products made by iRobot, including its signature Roomba, one of the first products of its type. UK regulators disagreed and green-lit the deal back in June 2023.

Once the termination of the deal was announced, iRobot said it would be forced to lay off 31% of its employees – over 350 of them – and likely pause new projects. Their CEO also stepped down amid a falling stock price.

In response to the news, the FTC gloated that the transaction fell apart:

“We are pleased that Amazon and iRobot have abandoned their proposed transaction. The Commission’s probe focused on Amazon’s ability and incentive to favor its own products and disfavor rivals’, and associated effects on innovation, entry barriers, and consumer privacy. The Commission’s investigation revealed significant concerns about the transaction’s potential competitive effects. The FTC will not hesitate to take action in enforcing the antitrust laws to ensure that competition remains robust.”

Federal Trade Commission Associate Director for Merger Analysis Nathan Soderstrom

The failure of business mergers and acquisitions aren’t uncommon. Whether it be because of stockholder pressure, regulatory concerns, or mismatch of company cultures, deals like this fall apart all the time as often as they succeed. This cycle, caused by market forces, is healthy for innovation, better allocation of capital, and more options available for consumers in the market.

However, if the failure of a business deal and then a company comes at the hands of a regulator, that’s an entirely different matter. One that should leave us asking hard questions of the officials at these agencies, and whether they’re really looking out for consumers’ best interest.

The impact of such failures on consumers should not be lost.

With the failure of this acquisition, and without new innovative products or injections of capital, the maker of one of the first robotic vacuums purchased by millions of Americans and global consumers will likely end up a shadow of its former self. One more product will disappear from physical and online retail shelves, giving consumers less choice than they had previously.

There will still be plenty of options for consumers who want a robotic vacuum in their home, but the significant blow to iRobot means fewer consumers will be able to benefit from the new products and services that could have spawned as a result of this merger.

Armed with Amazon’s vast inventory, its capital, and its supply chain, as well as the current demand for artificial intelligence products consumers can use in their homes, we can only imagine what this partnership could have produced.

This leaves us asking an important question: had Amazon been allowed to purchase iRobot, would it have put other companies at a disadvantage? Would it have squelched competition in robotic vacuum cleaners? Would it have reduced choice and options for consumers? Or would it have led to significantly more innovations and products that we could have benefited from?

Put simply, we just don’t know. But neither does the FTC nor the EU regulators who also shot this deal down. Rather than increasing competition or denying an advantage, the FTC has managed to kill off the opportunities for an American company to grow and succeed, as well as the consumers who benefit from these products.

This has been a key mantra of the FTC during this administration, seeking to put halts on mergers and acquisitions for grocery stores, technology companies, and even healthcare firms, as my colleague Kimberlee Josephson eloquently puts here. These are robust and competitive sectors that are continuing to deliver innovation to consumers, and would benefit from having more not fewer companies.

Instead of a win for consumers as the FTC claims, all we have now is a failed business deal, a company in shambles, and an uncertain path for the open market of robotic vacuums. All in the name of “protecting the consumer”.

Since when should our regulatory agencies, which act in our name, cheer and applaud when deals like this lead to layoffs, declining revenues, and fewer options for consumers? That seems like not only poor in taste, but harmful to our own economic prospects and choices as customers.

If consumers aren’t scratching their heads yet, they definitely should be.

The EU’s AI ACT will stifle innovation and won’t become a global standard

February 5, 2024 – On February 2, the European Union’s ambassadors green lit the Artificial Intelligence Act (AI Act). Next week, the Internal Market and Civil Liberties committees will decide its fate, while the European Parliament is expected to cast their vote in plenary session either in March or April. 

The European Commission addressed a plethora of criticism on the AI Act’s potential to stifle innovation in the EU by presenting an AI Innovation package for startups and SMEs. It includes EU’s investment in supercomputers, statements on Horizon Europe and Digital Europe programs investing up to €4 billion until 2027, establishment of a new coordination body – AI Office – within the European Commission.

Egle Markeviciute, Head of Digital and Innovation Policies at the Consumer Choice Center, responds:

“Innovation requires not only good science, business and science cooperation, talent, regulatory predictability, access to finance, but one of the most motivating and special elements – room and tolerance for experimentation and risk. The AI Act is likely to stifle the private sector’s ability to innovate by moving their focus to extensive compliance lists and allowing only ‘controlled innovation’ via regulatory sandboxes which allow experimentation in a vacuum for up to 6 months,” said Markeviciute. 

“Controlled innovation produces controlled results – or lack thereof. It seems that instead of leaving regulatory space for innovation, the EU once again focuses on compensating this loss in monetary form. There will never be enough money to compensate for freedom to act and freedom to innovate,” she added.

“The European Union’s AI Act will be considered a success only if it becomes a global standard. So far, it does not seem the world is planning on following in the EU’s footsteps.”

Yaël Ossowski, deputy director of the Consumer Choice Center, adds additional context:

“Despite optimistic belief in the ‘Brussels effect’, the AI Act has not yet resonated with the world. South Korea will focus on the G7 Hiroshima process instead of the AI Act. Singapore, the Philippines, and the United Kingdom have openly expressed concern that imperative AI regulations at this stage can stifle innovation. US President Biden issued an AI Executive Order on the use of AI back in October of 2023, yet the US approach seems to be less restrictive and relies upon federal agency rules,” said Ossowski.

“Even China – a champion of state involvement in both individual and business practices is yet to finalize its AI Law in 2024 and is unlikely to be strict with AI companies compliance due to their ambition in terms of global AI race. In this context, we have to acknowledge that the EU has to adhere to already existing frameworks for AI regulation, not the other way around,” concluded Ossowski.

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva, Lima, Brasilia, and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org.

Let Apple be Apple — consumers don’t need DOJ intervention 

Apple is a lifestyle brand. The $2.8 trillion company, founded by Ronald Wayne, Steve Wozniak and Steve Jobs, is known to the world as an innovator in consumer technology, but using Apple products is widely seen as a lifestyle choice embraced by consumers. 

I’m an Apple guy. My devices are all synced, from the iPhone to the Macbook Pro, the Apple Watch and the HomePod mini. No one coerced me into this way of living, but that hasn’t stopped the U.S. Department of Justice (DOJ) from investigating Apple and concocting yet another vast antitrust case against an American company.  

As of today, President Biden’s Federal Trade Commission (FTC) has taken Amazon and Meta to court over alleged anti-competitive practices, and the DOJ has hit Google with two antitrust suits targeting Google Search and their ad services. According to The New York Times, the DOJ is still calculating whether or not to bring its multipronged antitrust complaint against Apple.  

What stands out in the Times’s report on the investigation is that it reads like Apple’s competitors are behind the steering wheel of their very own government agency. David McCabe and Tripp Mickle write, “Rivals have said that they have been denied access to key Apple features, like the Siri virtual assistant, prompting them to argue the practices are anticompetitive.”  

Imagine the classroom slacker making the case to the teacher that the straight-A student in the front of the class is being anti-competitive by not sharing their lecture notes with them.  

It’s one thing to maliciously penalize or seek to inconvenience consumers for having a mixed assortment of technology from Apple, LG, Samsung, Nokia and Google. It’s another thing entirely for the government to say that Apple has to design its products for Samsung to piggyback on and then offer to their loyal customers as a perk of not doing business with Apple. Investigators are spending taxpayer dollars to find out why the Apple Watch works more smoothly with the iPhone than with rival brands.  

Does the DOJ work for Samsung or the American people?  

This mindset is exactly what went wrong in court for FTC chair Lina Khan when she threw the once-relevant consumer protection agency between the Microsoft and Activision-Blizzard merger, a case that District Court Judge Jacqueline Scott Corley indicated seemed to be a benefit to Sony, a Japanese firm, more than American consumers. 

None of this is to say Apple is a perfect company, or that it’s behaved like a free enterprise angel throughout every aspect of its business. It hasn’t. Its long-time reliance on manufacturing and investments in China, and how that steers its business, is a big one. But that Apple makes intentionally integrated products that foster brand loyalty and consumer satisfaction is special in the landscape of American tech. Apple is a seamless experience for consumers like myself who are not huge techies, but rather novices who place a premium on convenience and ease of use. 

The reality for Apple is that it operates in a global marketplace with different rules of the road on almost every continent. The European Union is very close to forcing open Apple’s App Store model to allow for third-party app stores on their devices, a provision of the 2022 Digital Markets Act. The EU has also directed its regulatory energies on requiring device manufacturers to have a universal charging port, further removing design distinctions between major tech brands.  

In the United States, Apple narrowly fended off the maker of Fortnite, Epic Games, in a high-profile lawsuit contending Apple held an unfair monopoly over payment processing for in-app purchases. The case failed when the courts correctly acknowledged that Apple does not hold a monopoly in the mobile games market. 

Tech firms may all be united in that they are the target of never-before-seen political scrutiny in Washington, but they are still competitors. You can see this in how they fight government regulation of their business with one hand, and request government help in slowing down their competition with the other. 

Meta reportedly “encouraged” the Justice Department to look into Apple’s new consumer privacy tool, App Tracking Transparency, which empowers iPhone owners to customize and cut off data collection by advertisers of their choosing. It is not a coincidence that Meta anticipates a $10 billion loss in revenue from this useful tool Apple designed for consumers concerned with privacy.  

None of this is new. Successful companies and established industries have always sought to use the federal government as both a cudgel and a shield to protect their interests. For those of us chiefly concerned with consumer satisfaction and welfare, there is no temptation to choose winners and losers in the market.  

Let Apple be Apple, and let consumers choose.  

Originally published here

Florida Youth Deserve Better Than Gatekeeping of Social Apps

Jan 22, 2024

Dear State Representatives and Senators,

As a consumer advocacy group engaged on a wide range of digital issues including privacy and technological innovation, representing both our members and consumers, we implore you to consider another path when it comes to protecting Florida youth online, specifically HB1.

In its current form, the law would be the most draconian age-verification process for online platforms in the nation, barring all users under the age of 16 who want to use specific social media platforms regardless of parental consent or preferences for their child’s online presence. 

This process would also require select social media companies to collect sensitive personal information that we do not believe should ever be in the possession of any private entities by government mandate. This is ripe for future abuse as well as data security threats that could carry real harm to young people beginning their lives online. It will be a pandora’s box of epic proportions.

What’s more, the law makes overly broad exceptions for apps that can demonstrate a “predominate” use case for private messaging services. There are better ways to approach this, such as specifying digital services that focus exclusively on messaging. The state of Florida would be creating an uneven playing field, choosing winners and losers in the social media space, and privileging certain apps arbitrarily based on what function consumers utilize most. 

A solution that better respects parental rights, defends American innovation, and allows online consumers and their parents to choose digital apps freely would not only be more adequate, but would also allow the best private sector solutions to emerge organically. 

Parents should not have their authority and decision-making power usurped by state law or institutions, no matter how noble the cause. Rather than gatekeeping an entire generation from enjoying social connections online, we implore you to provide another solution that works for parents, young online consumers, and the American tech innovators who provide value for each and every one of us in our daily lives.

In a free country with a vibrant competitive marketplace, we will lose our global competitive edge if an entire generation is kept from the keyboard and the online global village. The Consumer Choice Center trusts parents to make the right call for their kids under 16 when it comes to social media activity. We hope you will too. 

Sincerely yours,

Yaël Ossowski

Deputy Director, Consumer Choice Center

Scroll to top
en_USEN