So that was a week… Here we go:

For years, Silicon Valley and Big Tech have bemoaned regulators’ and lawmakers’ ignorance of their core business practices. At times, they openly argued that regulators needed to be “disrupted” for the 21st century.

Today, those efforts appear to be backfiring (details below). As those regulators and lawmakers have gained missing knowledge, Silicon Valley behemoths have been fined billions by European regulators, and the companies have scrambled to prevent similar outcomes in the U.S.

They’re not succeeding. U.S. regulators and lawmakers this week began calling loudly for the explicit protection of personal consumer data — the “oil” on which Silicon Valley and Big Tech businesses now run — and the punishment of companies that steal or even fail to protect that data. More cofounders and industry organizations are coming forward with accusations of hidden agendas and their own regrets over what these companies have become. And in an unprecedented display of unity, top antitrust decision makers at the U.S. Department of Justice, the Federal Trade Commission, and throughout Congress are all now saying they view the Silicon Valley / Big Tech business practice of extremely early-stage acquisitions — the “acqui-hiring” and “catch and kill” of potential competitors who could threaten their data collection before the companies reached FTC-review thresholds — as an illegal manipulation of markets… and grounds to specifically break up the companies.

Central to this shift is a change in what constitutes consumer harm. In the 20th century, consumer harm centered on price. If prices went up, consumers were harmed; if they went down, no changes were necessary. But in the 21st century, that interpretation is proving inept since the “freemium” business model popularized by Silicon Valley startups — and galvanized by Big Tech behemoths — means “costs” to consumers are much broader.

Consumers today also pay for goods and services with myriad information on their preferences, behaviors, health status and concerns, second-by-second physical location, vital signs, and uncountable other bits about themselves and their proclivities. And once the companies collecting this data move to broker or sell it without explicit consent — which happens incessantly — consumers also pay with their privacy.

In the past 10 days, actions from regulators and others suggest this free-wheeling theft could finally come to a screeching halt…

REGULATORS & LAWMAKERS

In a joint statement, two members of the U.S. Federal Trade Commission said they want the FTC to specifically review the practice of monetizing of consumer data
U.S. Senator, and former Presidential candidate, Kristen Gillibrand introduced a bill to create a dedicated Data Protection Agency
New Jersey lawmakers moved to strictly protect the privacy of genetic data. As written, the legislation would make the garden state the 25th to require informed consent; the 6th to define genetic information as personal property; and only the second — after Alaska — to assign personal property rights to DNA samples.
“Laws requiring fair and responsible industry behavior are how we keep genetic data in the right hands - the individual to whom it belongs,” said the lawmakers.
The U.S. Department of Health and Human Services’ Office of the Inspector General issued a scathing indictment of misuse of Medicare patient data by pharmacies and service providers. The report — “The Majority of Providers Reviewed Used Medicare Part D Eligibility Verification Transactions for Potential Inappropriate Purposes” — documented patient data being sold to marketers and other infractions

Lawmakers are questioning U.S. Veterans Administration officials about the privacy provisions of an app the agency intends to use to manage patient data … See also: The National Institute for Standards & Technology (NIST) in January laid out its enterprise risk-management guidance, which included provisions on protecting sensitive data and clarifying privacy
The UK released its white paper defining the Commonwealth’s view of Online Harms and named a regulator to oversee technology platforms … See also: The EU’s GDPR drafters were prescient about consumer data abuse: “Art 5.1b: Personal data shall be collected for specified, explicit and legitimate purposes and not further processed in a manner that is incompatible with those purposes."

CO-FOUNDERS, INDUSTRY GROUPS & ENTIRE BUSINESS SECTORS

In an unprecedented move, more than 35 companies from across the globe raised urgent concerns about regulators favoring Google with regard to vacation rental bookings:
“We see strong indications of a competitive strategy for Google to reduce us and our industry to mere content providers for the 'one-stop-shop' of Google’s new product...”
Amazon cofounder Shel Kaphan calls the company a “huge and unstoppable force” and says “Amazon scares me” in blistering PBS documentary … This follows Facebook co-founder Chris Hughes’ now infamous call to break up that “powerful monopoly”

A leading healthcare data watchdog reiterated its blunt warning to a government agency responsible for protecting patient data that the tech sector’s core business models of “API-driven ecosystems pose privacy and security concerns”
“When this future is viewed alongside the current reality of scant consumer protections outside the HIPAA-regulated environment, the near-term goal espoused by the ‘without special effort’ clause in Cures [Act] has the real and significant potential to create privacy risks and opportunities for fraud.”

TOP ANTI-TRUST DECISION MAKERS

Ten days ago, the FTC’s new director of its Bureau of Competition as well as an EU official each offered specifics of how a breakup of Facebook would happen. Though strongly worded and offering unprecedented specifics, the comments now pale compared to what was revealed in the past week:

And in a stunning mid-week move, the FTC ordered Alphabet (Google), Amazon, Apple, Facebook and Microsoft to reveal details of every acquisition the companies have made in the past 10 years (Facebook’s largest deals were already under investigation). The primary focus of this sweeping scrutiny is deals that were too small to trigger automatic regulatory review. And the commission confirmed it could take retroactive action if it deemed smaller, previously reported acquisitions resulted in antitrust violations … Also here, in what appears to be a break from an earlier agreement to have the Justice Department and FTC divvy up Big Tech investigations, FTC commissioner Rohit Chopra launched a broadside against the entire group as the new investigation was announced:
Rohit Chopra @chopraftc
Many giant companies are convinced that their dominance is due to their genius and innovation. But the truth is that so many can get big by swallowing up or shutting down potential threats. They don't need to invent killer apps if they can stay on top through killer acquisitions.
February 11th 2020
166 Retweets439 Likes

Once again, the lesson for Silicon Valley and Big Tech is to be careful what you wish for. Washington DC finally understands tech. And if these companies are smart — which is not clear at this point — they’ll orchestrate their own breakups to keep maximum control over what’s looking increasingly inevitable.

TODAY IN…

DEEP TECH:

A Federal judge issued a temporary restraining order against Microsoft, preventing it from working on the Pentagon's JEDI project. Technology watchers, however, see Microsoft as the rightful winner of the multi-billion-dollar award … See also: Longtime Beltway tech watcher wants “too tainted” JEDI procurement scrapped altogether
The U.S. Justice Department indicted Huawei on charges of racketeering and conspiring to steal trade secrets from six companies. The move follows controversial comments from the U.S. Attorney General suggesting NATO take control of Huawei rivals, and strong reaction from Cisco’s CEO

MEDIA & TELECOM:

Nielsen’s Total Audience Report is out. The only thing the average American does more than stare at their phones (3 hours, 58 minutes a day) is watch traditional TV (3.5 hours). The numbers also reinforce why viewing any market as an either/or proposition is foolish: 91% said they subscribe to at least one streaming service yet only 38 minutes of daily phone use is spent streaming video
Fears about the coronavirus outbreak forced the cancellation of the mobile telecom industry’s largest annual gathering. The decision follows an exodus of top-tier exhibiting companies and attendees

HEALTHCARE TECH:

A Q&A with the FDA’s Amy Abernethy reveals how the agency is grappling with digital health regulation
Wearables are toys, not medical devices: In a major study, wearable heart rate monitor accuracy errors spiked 30% during activity

FINANCE:

Crisis averted, then? Fed to beat a faster retreat from repo market
Piketty is right: As share prices soar, inequality in owning listed companies will worsen … See also: The OECD lists owners of the world’s listed companies
This trend was underway anyway; pandemic fears are throwing gasoline on the flame: Fixed-income fund flows rise as investors fear coronavirus impact … See also: World Health Organization epidemiologist warns the novel coronavirus could infect two-thirds of the world population

PUBLIC POLICY:

The EU is reconsidering its facial-recognition ban in public spaces, instead leaning toward letting individual countries decide
The American Heart Association and American Stroke Association issued an urgent call to action around rural health … See also: Rural health disparities linked to socioeconomic status, limited access to care, lack of health insurance … And:Healthcare deserts are real
Uber failed to block California’s “gig economy” law that granted workers more rights

And finally…

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