Mammoths

'Patentability and de-extinct animals in Europe: the patented woolly mammoth?' by Aisling McMahon and David M Doyle in (2020) Journal of Law and the Biosciences comments 

De-extinction is a hot topic within conservation science but the potential patentability of de-extinct animals in Europe has hitherto been unexplored. This article addresses this lacuna, examining the legal, commercial, and ethical implications of patenting de-extinct animals under European patent law. The article is organized into four parts. Part I explores the reasons why patents are relevant and may be applied for in this context. Part II provides an overview of the scientific techniques currently being used in de-extinction projects, setting the foundation for the analysis of patentability which follows. Part III then critically assesses whether recreated animals would qualify as patent eligible subject matter under European patent law. It also investigates the extent to which European patent exclusions such as those on animal varieties, essentially biological processes, and the morality provisions might apply and whether recreated animals would meet the novelty requirement for patentability. Part IV concludes by highlighting the possible ramifications of patenting such animals, elucidating the chasm between the cultural and symbolic significance held by such animals, and their lack of differential treatment in the patent law sphere. It argues that de-extinction reignites questions around the scope of patents, and the role of ethical considerations within patent decision-making which warrant urgent reconsideration. 

 The authors argue 

 Ever since the 1993 blockbuster film ‘Jurassic Park,’ the notion of bringing vanished species back to life has hovered on the boundaries of reality and science fiction, but scientists are now reputedly on the brink of de-extinction. While conservationists argue that this risks persuading lay people that extinction is reversible, technological advances in synthetic biology and genetics have made the revival of extinct species a real scientific possibility, with much of the recent literature in this area shifting from whether we can resurrect extinct species to whether we should. In May 2016, for instance, the International Union for the Conservation of Nature Species Survival Commission released ‘Guiding Principles for Creating Proxies of Extinct Species for Conservation Benefit’ (2016), while scientists, conservationists and bioethicists, inter alia, have begun to consider the ethics of reviving extinct species, the optimal candidate species for de-extinction, as well as attempting to conduct cost-benefit analyses of both resurrection and reintroduction. The ‘nascent discipline’ of de-extinction has been the topic of animated debates within the scientific community,5 but at least one point of consensus has emerged: we are now on the brink of de-extinction. As Donlan puts it, ‘[t] here are many unknowns surrounding de-extinction. Whether it will happen or not, however, is likely not to be one of them.’ 

Much of the academic literature to date has understandably focused on the science of bringing back extinct species, but ‘de-extinction presents us with myriad ethical, legal and regulatory questions.’ These include a range of questions around the legal status of de-extinct animals, including potential legal obligations to protect them, and the resulting environmental issues which may arise. Moreover, an important but underexplored question is the extent to which such animals, if successfully recreated, could be commercialized. Watching certain resurrected species, especially ‘cool’ and ‘charismatic megafauna,’ is expected to be an exciting diversion for many (indeed, it is often considered, albeit anecdotally, to be a central motivation for de-extinction), but little academic work has focused on the ‘non-ecological “instrumental values” that de-extinct species would be likely to have for human beings, most notably, their commercial value.’ One avenue to obtain such value from de-extinct animals is via the patent system, and specifically applying for a patent on the revived animal, yet it remains an open question whether such animals would be patentable in the European context, if ongoing de-extinction attempts are successful. In taking this focus, the article explores the legal, commercial, and ethical implications of ‘patenting’ de-extinct animal species. 

This article breaks new ground by exploring the potential European patent law implications of de-extinction in relation to animal life. In doing so, this paper focuses on animal life, as opposed to plant or other organisms, which could also be recreated via de-extinction. The rationale underlying this approach is rooted in the fact that it is these projects (e.g. particularly the Woolly Mammoth project) that have captured the public imagination and provoked the most scholarly concern to date. For this reason, we wish to explore how applications for patents on such animals in Europe may play out if such megafauna are successfully recreated. 

In examining this issue, the article focuses on the European patent law context for two main reasons: first, to date, academic inquiries of the legal implications of de-extinction have focused almost exclusively on domestic law in the USA. This is not to suggest that these studies are less valuable for adopting such an approach—the USA, after all, is one of the traditional centers of conservation power and where key de-extinction projects are ongoing but many of the species that are considered viable candidates for some form of de-extinction are not species whose habitats or migration routes are exclusive to, or even include, the USA. The applicable laws outside the US context are in vital need of investigation if we are to preemptively address the legal issues that could conceivably arise should de-extinction become feasible in the next few years. To date, these aspects of species recreation and particularly the patent implications in Europe have remained unexplored. This article aims to address this lacuna by furnishing a detailed analysis of de-extinction under European patent law. 

Secondly, the focus on European patent law was taken because Europe is one of the few patent jurisdictions with express moral exclusions from patentability. Therefore, examining the European context provides a useful site to examine the ethical ramifications of granting patents in the de-extinction context and the extent to which such ethical issues are likely to be considered within patent law. It explores how the current exclusions under European law—which have proved so controversial in the past for transgenic animals—could potentially be interpreted in the de-extinction context. Given that European patent law has express moral exclusions from patentability, concerns posed by patents on de-extinct animals could theoretically (at least on paper) have a greater chance of consideration within the European context. However, the article will argue that given past interpretative practices surrounding such provisions in Europe, without institutional change within patent law, such ethical considerations are unlikely to be significant hurdles to patenting such technology in Europe (contingent, of course, on how the science develops). 

This analysis has important practical and theoretical significance. From a practical perspective, the article highlights the main patentability questions within European law that will arise in light of de-extinction projects, aiming to provide an important reference point within the de-extinction debate. At a theoretical level, it identifies aspects of European biotechnological patent law that will require further clarification should de-extinction come to fruition, such as definitional questions surrounding the patentability of cloned animals and transgenic animals not created for medical research purposes. As will be demonstrated, these issues also have broader significance for advanced biotechnologies more generally. 

In conducting this analysis, the article is structured as follows: Part I demonstrates why patents are relevant and could be applied for in the context of de-extinction projects; Part II then briefly maps the scientific avenues that are being used in de-extinction projects setting the foundation for the legal analysis which follows; Part III provides a detailed assessment of the potential patentability of de-extinct animals, examining questions of patent eligible subject matter; the potential applications of the exclusions from patentability under Art 53 EPC to animals created in the de-extinction context; and whether such animals would meet the patent novelty requirement. Part IV concludes by highlighting the possible effects, and positive/negative ramifications, of patenting such animals and elucidates the chasm between the cultural and symbolic significance held by such animals, and their lack of differential treatment in the patent law sphere.

Audit

The Australian National Audit Office has an inconvenient habit, consistent with its statutory charter, of politely questtioning Government ineptitude or downright disregard of law. That's resulted in the funding restrictions that are evident in other agencies: if you can't abolish it, just make sure it's kept on short rations. 

The Parliamentary Joint Committee of Public Accounts and Audit is now conducting an Inquiry into the Auditor-General Act 1997 (Cth), reflecting ss 8(g) and 8(h) of the Public Accounts and Audit Act 1951 (Cth). 

The terms of reference are 

 To inquire into and report on the adequacy of general provisions contained in the Auditor-General Act 1997 (the Act), with particular reference to:

• the governance framework as it relates to the Auditor-General and the Australian National Audit Office (ANAO), including the independence of the Auditor-General as an Officer of the Parliament and the audit independence of the ANAO, and resourcing arrangements; 

• the Auditor-General’s information gathering powers and confidentiality of information, including with reference to parliamentary privilege and the interaction between the Freedom of Information Act 1982 and the Act; 

• the interaction of the Act and other relevant legislation including the Public Governance, Performance and Accountability Act 2013, the Public Accounts and Audit Committee Act 1951, Freedom of Information Act 1982, and the Parliamentary Privileges Act 1987; 

• the Auditor-General’s capacity to initiate audits into, and examine the performance of all entities in the Australian Government sector; accessibility and transparency of reports and audit conclusions, including the operation of section 37 of the Act; 

• the Audit Priorities of the Parliament; 

• the role and appointment of the Independent Auditor; and any related matters. 

Deaths

Having made a somewhat acerbic submission to the Senate Foreign Affairs, Defence and Trade Committee regarding the two National Commissioner for Defence & Veteran Suicide Prevention Bills I was interested to see today's release by the Australian Institute of Health and Welfare (AIHW) of its third annual update of information around suicide among serving, reserve and contemporary ex-serving Australian Defence Force (ADF) personnel. 

The report is stated as serving to 'inform improvements in suicide prevention and other services for serving and ex-serving ADF personnel and their families', reflecting ongoing failure at the Department of Veterans' Affairs noted by the Productivity Commission last year and a succession of parliamentary committees. 

It indicates that men who were currently serving full-time or in the reserve were considerably less likely to die by suicide than Australian men generally. That was not the case for ex-serving men, who were 21% more likely to die by suicide than their counterparts in the general community after adjusting for age. Although e the rate of suicide for ex-serving women is lower than that for ex-serving men, ex-serving women were more than twice as likely to die by suicide than other Australian women after adjusting for age. Men who were discharged from the ADF for medical reasons were more likely to die by suicide than those discharged for voluntary reasons. For ex-serving men, the rate of suicide was 28 per 100,000, which was higher than the rates for serving (11 per 100,000) and reserve men (12 per 100,000), with 465 suicide deaths among serving, reserve and contemporary) ex-serving ADF personnel between 2001 and 2018.

Recusal

In Andrew Learmont v SAS Trustee Corporation [2020] NSWDC 595 Neilson DCJ states 

This is an application that I "recuse" myself. The use of such terminology is deplorable. The Latin root is the verb, recuso, recusare, recusavi, recusatum. That is a technical term in Roman law. It is used by certain jurists meaning, to make an objection or to demur. It is so used by Cicero, Celsus, Quintilian and Julian. It gives a noun form, recusatio, recusationis, which means either a counter plea or a demurrer. However, the verb could also be used generally, meaning to make an objection or to protest. It is so used by Cicero, by Ovid, by Seneca, by Livy and by Caesar. It can also mean, not to accept or consent, or to decline, to reject, or to oppose. It is not used reflexively and is not used in Latin to mean to disqualify oneself. 

According to the second edition of the Oxford English Dictionary published in 1989, the word, recuse, is rare and means, to refuse or to make an objection. There is a form of the word, recusal, but that means an objection to a judge as being prejudiced, but not the action of the judge in disqualifying himself. However, the primary meaning assigned to one form of the word, recuse, was that of being a “recusant” and the associated status of recusancy. A recusant was a person who refused to attend the services of the Church of England as established by Parliament. It applied to all who refused to attend the services of the Church of England but, in particular, members of the Catholic faith. The second edition of the Oxford English Dictionary does not admit the use of the verb "recuse" to mean, the action of a judge in disqualifying himself. 

The 5th ed of the Shorter Oxford English Dictionary published in 2002, does give the verb, recuse, a fourth meaning, when used reflexively, of a judge withdrawing from a hearing of a case because of a possible conflict of interest or lack of impartiality. However, it is clear, from the other entries in the Shorter Oxford English Dictionary that that use is United States usage. It does not admit to the usage being either British, Australian, Canadian, New Zealander or South African. 

However, the verb, recuse, in English has the same meanings as it does in Latin, to refuse a thing offered, to reject or renounce a person or his authority or to object or to refuse to do something. The use of the word "recuse" being a request of a judge to disqualify himself from the hearing of a case is not consistent with its Latin etymology, is inconsistent with English usage and, although it may be used in the United States of America, it is not part of the Queen's English and its use is to be eschewed.

I take the application to be one that I disqualify myself. I accede to that application.

Vaping

The Senate has established a Select Committee on Tobacco Harm Reduction, the latest in a series of parliamentary and other inquiries.  

The Select Committee will inquire (quickly) into tobacco reduction strategies, with particular reference to:

• the treatment of nicotine vaping products (electronic cigarettes and smokeless tobacco) in developed countries similar to Australia (such as the United Kingdom, New Zealand, the European Union and United States), including but not limited to legislative and regulatory frameworks; 
• the impact nicotine vaping products have had on smoking rates in these countries, and the aggregate population health impacts of these changes in nicotine consumption;
• the established evidence on the effectiveness of e-cigarettes as a smoking cessation treatment; 
• the established evidence on the uptake of e-cigarettes amongst non- smokers and the potential gateway effect onto traditional tobacco products; 
• evidence of the impact of legalising nicotine vaping products on youth smoking and vaping rates and measures that Australia could adopt to minimise youth smoking and vaping; 
• access to e-cigarette products under Australia’s current regulatory frameworks; 
• tobacco industry involvement in the selling and marketing of e-cigarettes; and 
• any other related matter.

The 2018 House of Representatives Standing Committee on Health, Aged Care and Sport report on Use and Marketing of Electronic Cigarettes and Personal Vaporisers in Australia responded to terms of reference requiring it to 

inquire into and report on the use and marketing of electronic cigarettes (E-cigarettes) and personal vaporisers in Australia, in particular: 

 

1. The use and marketing of E-cigarettes and personal vaporisers to assist people to quit smoking; 

 

2. The health impacts of the use of E-cigarettes and personal vaporisers; 

 

3. International approaches to legislating and regulating the use of E-cigarettes and personal vaporisers; 

 

4. The appropriate regulatory framework for E-cigarettes and personal vaporisers in Australia; and 

 

5. Any other related matter. 

It followed the 2017 report by the Senate Community Affairs Legislation Committee regarding the Vaporised Nicotine Products Bill 2017.

The 2018 House of Reps report - where members were in strong disagreement - offered the following recommendations - 

1   that the National Health and Medical Research Council fund an independent and comprehensive review of the evidence relating to the health impacts of electronic cigarettes (E-cigarettes). This review should be updated every two years to take into account the findings of new research into E-cigarettes. Topics covered by the review should include:

• The effectiveness of E-cigarettes as an aid to help people quit smoking tobacco cigarettes; 

• The health effects of ingredients commonly used in E-cigarette liquids. Following the review, any ingredients found to have significant negative impacts on human health should be prohibited from use in E-cigarette liquids; 

• The likelihood that E-cigarettes will increase the number of young people using nicotine and the number of young people smoking; 

• The health impacts of long term E-cigarette use; 

• The relative health impacts of E-cigarettes as compared to tobacco products.

2   that the Department of Health convenes an international meeting of health experts from similar economic jurisdictions to discuss different policy and legislative approaches to electronic cigarettes.  

 

3   a national approach be taken to the regulation of non-nicotine electronic cigarettes. 

 

4   that the Therapeutic Goods Administration continues to oversee the classification of nicotine and relevant exemptions, and the assessment of any electronic cigarette product as a therapeutic good. 

 

5   that the Australian Government establish a regulatory process for assessing and, if necessary, restricting colourings and flavourings used in electronic cigarettes.

Last month's ANU 'Summary report on use of e-cigarettes and relation to tobacco smoking uptake and cessation, relevant to the Australian context' by Emily Banks, Katie Beckwith and Grace Joshy (National Centre for Epidemiology and Population Health) for the Australian Department of Health) draws on the following reports: 

1. Review of smoking prevalence and trends in Australia 2. Review of smoking prevalence and trends in the Aboriginal and Torres Strait Islander population 3. Review of evidence regarding changes in smoking behaviour with decreasing smoking prevalence, including that relating to the “hardening hypothesis” 4. Review of the patterns of e-cigarettes use 5. Systematic review of evidence regarding combustible smoking uptake in relation to e-cigarette use; and 6. Systematic review of evidence regarding the efficacy of e-cigarettes for combustible tobacco or nicotine cessation. 

 The authors state 

 Despite world-leading tobacco control, smoking remains Australia’s leading cause of preventable disease and death, including for Aboriginal and Torres Strait Islander peoples. In many countries, e-cigarettes are explicitly or implicitly marketed as aids to smoking cessation and, among e-cigarette users, smoking cessation is a commonly reported reason for use. However, the substantial majority of smokers who quit successfully do so unaided and no e-cigarette products have been approved by the Australian Therapeutic Goods Administration as smoking cessation aids; the situation is similar in many other countries. In the context of the exceptional harms of combustible tobacco use and the current promotion of e-cigarettes it is important to review the current relevant evidence on e-cigarettes and smoking behaviour, to support informed decision-making.

The key findings are - 

 Smoking prevalence and trends in Australia 

• From the 2019 National Drug Strategy Household Survey, 11.0% of people aged 14 and over in Australia were current daily smokers (equivalent to 2.3M people): a statistically significant drop from 12.2% in 2016, and following sustained reductions in smoking prevalence over recent decades. These falls were largely driven by younger people not taking up smoking. 

• The proportion of never smokers has increased over time, in adults and particularly among youth in Australia. 96.6% of youth aged 14-17 in 2019 had never smoked, with youth never-smoking prevalence increasing five-fold between 2001 and 2016. 

• The majority of Aboriginal and Torres Strait Islander people do not smoke. The prevalence of current daily smoking was 40.2% in 2018/19 in Aboriginal and Torres Strait Islander adults, following substantial and significant reductions over the past decade, particularly in major cities and regional areas and among younger adults and among youth. 

“Softening” of the Australian smoking population over time 

• Based on published reviews and large-scale repeat cross-sectional studies from Australia and similar high-income countries, declining smoking prevalence has generally been accompanied by increasing motivation to quit, reduced dependency and greater quit rates among smokers. 

• In 2010, an estimated 2.0% of the general population of Australia aged 18 and over were smokers who were unmotivated to quit and had difficulty quitting. 

• Based on the weight of the available evidence from Australian and similar high-income countries, the “hardening hypothesis” – proposing increasing difficulty quitting among the population of smokers as smoking prevalence declines – can be rejected. This concept should be replaced by the evidence- based conclusion that declining smoking prevalence is accompanied by “softening” of the smoking population, whereby smokers are, on average, more readily able to quit. 

Patterns of use of e-cigarettes 

• The prevalence of e-cigarette use varies widely between countries and has increased substantially in many countries over the past decade, particularly among young people. In countries where e- cigarettes are available as consumer goods, such as the United States, use is becoming common, particularly among youth, with recent data indicating 10-20% of US high school children report recent use of e-cigarettes. 

• Among people in Australia aged 14 years and over in 2019, 11% had ever used e-cigarettes, most of whom (60%) reported using e-cigarettes once or twice only; 2.0% (equivalent to 412,000 people) reported current use (daily, weekly or monthly) and 1.1% (equivalent to 227,000 people) reported daily use, according to the 2019 National Drug Strategy Household Survey. Use has increased significantly over the last six years. 

• Among people in Australia aged 14 years and over in 2016, 0.5% were estimated to be dual current users of e-cigarettes and combustible cigarettes, and 0.2% dual daily users; current e-cigarette use was reported by 4.4% of current combustible cigarette smokers, 1.5% using e-cigarettes daily. 

• Population patterns consistent with short-term use of e-cigarettes for smoking cessation would predominantly include past use of e-cigarettes in ex-smokers, little ongoing use in current smokers and virtually no use in never-smokers. 

• However, among current daily e-cigarettes users in 2016, 32% were also daily smokers, 11% were non-daily smokers, 38% were ex-smokers and 18% were never-smokers. Hence, an estimated 43% of daily e-cigarette users in Australia in 2016 were dual e-cigarette users and combustible tobacco smokers. In 2019, 1.9% of ex-smokers reported past use of e-cigarettes and 5.2% of never-smokers reported ever using e-cigarettes. 

E-cigarette use in never- and former-smokers, and combustible tobacco smoking uptake 

• Observational evidence from three systematic reviews and 25 primary research studies was included. 

• A meta-analysis of data from these studies showed that never smokers who have used e-cigarettes were, on average, around three times as likely as those who have not used e-cigarettes to try smoking conventional cigarettes and transition to regular tobacco smoking. All studies found evidence of an increased risk, with wide variation in the magnitude of this risk. 

• Where evidence on nicotine content was available, it indicated that a substantial majority of e- cigarettes in these studies delivered nicotine. 

• The studies reviewed were observational in nature as it is not ethical or appropriate to randomise non-smokers to e-cigarette exposure. The quality of the evidence from the reviews and primary research studies was rated moderate overall. 

• The limited available evidence indicates that former smokers who had used e-cigarettes were around twice as likely to relapse and resume current smoking as those who had not used e-cigarettes. 

The efficacy of nicotine-delivering e-cigarettes as an aid to smoking or nicotine cessation 

• Reliable evidence on the efficacy of use of e-cigarettes for smoking cessation requires large-scale, independent randomised controlled trial (RCT) evidence from multiple studies. 

• The randomised controlled trials identified found no significant difference in quit rates between smokers randomised to nicotine-delivering e-cigarettes versus no intervention or non-nicotine e- cigarettes, although point estimates of risk ratios were all above 1.00. 

• Of the four trials of nicotine-delivering e-cigarettes versus other nicotine-replacement therapy identified, three found no statistically significant difference in smoking cessation between the groups and one found significantly greater cessation with nicotine-containing e-cigarettes than with other nicotine-replacement therapy. 

• Data derived from three RCTs suggest that smokers randomised to nicotine-containing e-cigarettes versus other types of nicotine-replacement therapy were substantially more likely to be using any form of nicotine (i.e. e-cigarettes or nicotine-replacement therapy) at follow up. One study found that around 80% of successful quitters randomised to e-cigarettes continued to use them at one- year follow up while 9.0% of those randomised to other nicotine-replacement continued to use it. 

• The overall quality of the evidence was rated as low and uncertain: the few RCTs conducted were generally small, employed a wide range of study designs across diverse settings and the majority had methodological issues indicating a high risk of bias. 

• Overall, there is insufficient evidence that nicotine-delivering e-cigarettes are efficacious for smoking cessation, compared to no intervention, placebo existing nicotine-replacement therapy or other best-practice interventions. However, preliminary evidence highlights the potential for nicotine-delivering e-cigarettes to support cessation, and more reliable, large-scale evidence is needed. 

Reasonableness

'The Reasonableness Machine' by Brian Sheppard in (2020) Boston College Law Review comments 

Automation might someday allow for the inexpensive creation of highly contextualized and effective laws. If that ever comes to pass, however, it will not be on a blank slate. Proponents will face the question of how to computerize bedrock aspects of our existing law, some of which are legal standards—norms that use evaluative, even moral, criteria. Conventional wisdom says that standards are difficult to translate into computer code because they do not present clear operational mechanisms to follow. If that wisdom holds, one could reasonably doubt that legal automation will ever get off the ground. 

 

Conventional wisdom, however, fails to account for the plasticity of law. The murkiness of standards makes them a fertile ground for the growth of competing interpretations of their legal meaning. Some of those interpretations might be more rule-like than others and, therefore, easier to automate. Proponents of automation will likely be drawn to those rule-like interpretations, so long as they are compatible enough with existing law. 

 

This complex dynamic between computer-friendliness and the changing content of law makes it troublesome for legislators to identify the variable and fixed costs of automation. This Article aims to shed light on this relationship by focusing our attention on a quintessential legal standard at the center of our legal system—the “reasonably prudent person test.” 

 

Here, I explain how automation proponents might be tempted by fringe, formulaic interpretations of the test, such as Averageness, because they bring comparatively low innovation costs. With time, however, technological advancement will likely drive down innovation costs, and mainstream interpretations, like Conventionalism, could find favor again. Regardless of the interpretation that proponents favor, though, an unavoidable cost looms: by replacing the jurors who apply the test with a machine, they will eliminate a long-valued avenue for participatory and deliberative democracy.

Tracking

'Vulnerability in a tracked society: Combining tracking and survey data to understand who gets targeted with what content' by Nadine Bol, Joanna Strycharz, Natali Helberger, Bob van de Velde and Claes H de Vreese in (2020) New Media and Society comments

While data-driven personalization strategies are permeating all areas of online communication, the impact for individuals and society as a whole is still not fully understood. Drawing on Facebook as a case study, we combine online tracking and self-reported survey data to assess who gets targeted with what content. We tested relationships between user characteristics (i.e. socio-demographic and individual perceptions) and exposure to branded content on Facebook. Findings suggest that social media use sophisticated algorithms to target specific groups of users, especially in the context of gender-stereotyping and health. Health-related content was predominantly targeted at older users, females, and at those with higher levels of trust in online companies, as well as those in poorer health conditions. This study provides a first indication of unfair targeting that reinforces stereotypes and creates inequalities, and suggests rethinking the impact of algorithmic targeting in creating new forms of individual and societal vulnerabilities.

The authors argue 

The continuous and ubiquitous tracking of our online activities has initiated public and scholarly debates about big data, privacy, and fairness. The opportunities of leveraging the large amounts of personal data we produce online are tremendous, for example, when large-scale, detailed, and highly integrated patient data are combined in electronic health records to deliver personalized care to patients (Dzau and Ginsburg, 2016). Or when personalization algorithms are used to help users to handle the abundance of information online and find the content that matters to them (Thurman et al., 2018). Users, while concerned about their privacy, also appreciate the advantages of more personally relevant advertising and branded content (Aguirre et al., 2016; Strycharz et al., 2018). Data analytics and personalization strategies, however, do not only decide who receives what kind of care, or gets to see particular selections of content, but also who is included in treatment, news, advertisements, and special deals, and who gets excluded from them. In doing so, tracking and targeting users cannot only create new opportunities but potentially also new disparities and vulnerabilities in society, and in users (Bol, Helberger, et al., 2018). To better identify the opportunities and also risks of targeting, for individuals and society, there is a need for critical research to better understand who gets targeted with what content. 

Ongoing debates about online targeting are often emotion-driven and based on assumptions and moral panic of what happens inside the “black box,” and what algorithms might and could do in terms of targeting ill-informed, vulnerable users (Bodo et al., 2017). At the same time, research on the implications of algorithmic targeting is challenging, as the exact nature of such algorithms is more often than not hidden from public oversight (Bucher, 2012), and also requires new research methods to bring into the light. As a result, empirical research substantiating various assumptions is scarce, but is direly needed to assess to what extent targeting occurs and to what kind of users. Scholars have pointed out repeatedly and urgently the need for new research designs to study the black box (Moore, 2016; Pasquale, 2015; Resnick et al., 2015). Put sharply, we need to think outside the box to look inside the box. In doing so, our article contributes to previous research in two distinct ways. 

First, this study uses a unique design by combining tracking and survey data to assess who gets targeted with what content on online platforms. Although there is already research focusing on the sender side (i.e. the type of content on online platforms such as social media) or on the receiver side of targeted messages (i.e. the impact of type of content on user attitudes and self-reported behavior), research that has examined both sides simultaneously is scarce. Studies so far that have investigated online targeting typically rely on users’ online behavioral data such as website visits, search activity, advertising exposure, and online purchases (e.g. Lipsman et al., 2012), or conducted (automated) content analyses of social media content created by brands (e.g. Shen and Bissell, 2013). Drawing on Facebook as a case study, the current study moves a step further by integrating insights from both sender and receiver sides, which offers a more profound understanding of the workings of algorithms used for targeting and the implications thereof for user vulnerability online. 

Second, we provide a theoretical framework that informs our understanding of the individual and societal impact of online targeting on vulnerabilities. So far, the ways in which algorithmic architectures are being used to target specific audiences remain unclear, and theoretical underpinnings explaining the potential opportunities and risks for users as well as for the society have only begun to emerge. As a result, there is little understanding of why users are exposed to certain content online, and also why it matters, and how to evaluate the status of the tracked society from a normative point of view. The question arises if groups, who are typically said to be more vulnerable to persuasive attempts such as less knowledgeable or older users (Duivenvoorde, 2013), are also the groups that are particularly vulnerable to targeting strategies, either because of greater perceptiveness or concentrations of targeting activities on particular consumers. The current study indeed shows that vulnerability factors, such as age and health condition are related to, for example, being targeted with health-related content. Informing consumers with a health condition about potentially helpful practices can be a useful thing to do. The point that we make in this article is that such a practice can amount to a (societal) problem if vulnerabilities, as result of a health condition, are identified and (ab)used trough data-driven advertising practices. 

Next to implications for individual users, another urgent question is the one about the societal implications of targeting certain, and including, but also excluding other categories of users, and whether this can result in new forms of (digital) inequality. The question if we accept the situation in which different market segments are treated differently is not only of academic relevance, but also of societal relevance. In fact, research into the tracked society and its individual and societal implications offers critical input for ongoing policy debates, as the question of data-driven targeting strategies triggers the need for new policy measures to protect consumers’ autonomous decision-making. These are vital questions particularly in light of the pending review of the Unfair Commercial Practice Directive, and overhaul of the current consumer law acquis in Europe. Therefore, the current exploratory study aims to identify factors associated with targeting to assess whether vulnerable groups are exposed to certain content more avidly, which would result in both individual and societal consequences.

Big Tech and US Competition Policy

In the US the House Judiciary Committee’s Antitrust Subcommittee has released its 400 plus page Investigation of Competition in the Digital Marketplace: Majority Staff Report and Recommendations regarding competition in the digital economy, particularly challenges presented by the dominance of Apple, Amazon, Google, and Facebook and their business practices. 

The Subcommittee notes that the report draws on seven congressional hearings, the production of nearly 1.3 million internal documents and communications, submissions from 38 antitrust experts, and interviews with more than 240 market participants, former employees of the investigated platforms, and other individuals. 

 The report offers possible remedies to (1) restore competition in the digital economy, (2) strengthen the antitrust laws, and (3) reinvigorate antitrust enforcement.

Recommendations include: 

•  Structural separations to prohibit platforms from operating in lines of business that depend on or interoperate with the platform; 
• Prohibiting platforms from engaging in self-preferencing; 
• Requiring platforms to make its services compatible with competing networks to allow for interoperability and data portability; 
• Mandating that platforms provide due process before taking action against market participants; 
• Establishing a standard to proscribe strategic acquisitions that reduce competition; 
• Improvements to the Clayton Act, the Sherman Act, and the Federal Trade Commission Act, to bring these laws into line with the challenges of the digital economy; 
• Eliminating anticompetitive forced arbitration clauses; 
• Strengthening the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice; and 
• Promoting greater transparency and democratization of the antitrust agencies.

The report comments 

A year after initiating the investigation, we received testimony from the Chief Executive Officers of [Amazon, Apple, Facebook, and Google]: Jeff Bezos, Tim Cook, Mark Zuckerberg, and Sundar Pichai. For nearly six hours, we pressed for answers about their business practices, including about evidence concerning the extent to which they have exploited, entrenched, and expanded their power over digital markets in anticompetitive and abusive ways. Their answers were often evasive and non-responsive, raising fresh questions about whether they believe they are beyond the reach of democratic oversight. 

 

Although these four corporations differ in important ways, studying their business practices has revealed common problems. First, each platform now serves as a gatekeeper over a key channel of distribution. By controlling access to markets, these giants can pick winners and losers throughout our economy. They not only wield tremendous power, but they also abuse it by charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them. Second, each platform uses its gatekeeper position to maintain its market power. By controlling the infrastructure of the digital age, they have surveilled other businesses to identify potential rivals, and have ultimately bought out, copied, or cut off their competitive threats. And, finally, these firms have abused their role as intermediaries to further entrench and expand their dominance. Whether through self-preferencing, predatory pricing, or exclusionary conduct, the dominant platforms have exploited their power in order to become even more dominant. 

 

To put it simply, companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons. Although these firms have delivered clear benefits to society, the dominance of Amazon, Apple, Facebook, and Google has come at a price. These firms typically run the marketplace while also competing in it—a position that enables them to write one set of rules for others, while they play by another, or to engage in a form of their own private quasi regulation that is unaccountable to anyone but themselves. 

 

The effects of this significant and durable market power are costly. The Subcommittee’s series of hearings produced significant evidence that these firms wield their dominance in ways that erode entrepreneurship, degrade Americans’ privacy online, and undermine the vibrancy of the free and diverse press. The result is less innovation, fewer choices for consumers, and a weakened democracy. 

 

Nearly a century ago, Supreme Court Justice Louis Brandeis wrote: “We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both.” Those words speak to us with great urgency today. 

 

Although we do not expect that all of our Members will agree on every finding and recommendation identified in this Report, we firmly believe that the totality of the evidence produced during this investigation demonstrates the pressing need for legislative action and reform. These firms have too much power, and that power must be reined in and subject to appropriate oversight and enforcement. Our economy and democracy are at stake. 

 

As a charter of economic liberty, the antitrust laws are the backbone of open and fair markets. When confronted by powerful monopolies over the past century—be it the railroad tycoons and oil barons or Ma Bell and Microsoft—Congress has acted to ensure that no dominant firm captures and holds undue control over our economy or our democracy. We face similar challenges today. Congress—not the courts, agencies, or private companies—enacted the antitrust laws, and Congress must lead the path forward to modernize them for the economy of today, as well as tomorrow. Our laws must be updated to ensure that our economy remains vibrant and open in the digital age. 

 

Congress must also ensure that the antitrust agencies aggressively and fairly enforce the law. Over the course of the investigation, the Subcommittee uncovered evidence that the antitrust agencies failed, at key occasions, to stop monopolists from rolling up their competitors and failed to protect the American people from abuses of monopoly power. Forceful agency action is critical. 

 

Lastly, Congress must revive its tradition of robust oversight over the antitrust laws and increased market concentration in our economy. In prior Congresses, the Subcommittee routinely examined these concerns in accordance with its constitutional mandate to conduct oversight and perform its legislative duties. As a 1950 report from the then-named Subcommittee on the Study of Monopoly Power described its mandate: “It is the province of this subcommittee to investigate factors which tend to eliminate competition, strengthen monopolies, injure small business, or promote undue concentration of economic power; to ascertain the facts, and to make recommendations based on those findings.” 

 

Similarly, the Subcommittee has followed the facts before it to produce this Report, which is the product of a considerable evidentiary and oversight record. This record includes: 1,287,997 documents and communications; testimony from 38 witnesses; a hearing record that spans more than 1,800 pages; 38 submissions from 60 antitrust experts from across the political spectrum; and interviews with more than 240 market participants, former employees of the investigated platforms, and other individuals totaling thousands of hours. The Subcommittee has also held hearings and roundtables with industry and government witnesses, consultations with subject-matter experts, and a careful—and at times painstaking—review of large volumes of evidence provided by industry participants and regulators. ... 

 

Finally, as an institutional matter, we close by noting that the Committee’s requests for information from agencies and any non-public briefings were solely for the purpose of carrying out our constitutionally based legislative and oversight functions. In particular, the information requested was vital to informing our assessment of whether existing antitrust laws are adequate for tackling current competition problems, as well as in uncovering potential reasons for under-enforcement. The Report by Subcommittee staff is based on the documents and information collected during its investigation, and the Committee fully respects the separate and independent decisional processes employed by enforcement authorities with respect to such matters. 

 

Although the companies provided substantial information and numerous documents to the Subcommittee, they declined to produce certain critical information and crucial documents we requested. The material withheld was identified by the Committee as relevant to the investigation and included, primarily, two categories of information: (1) documents the companies’ claimed were protected by common law privileges; and (2) documents that were produced to antitrust authorities in ongoing investigations, or that related to the subject matter of these ongoing investigations. 

 

Institutionally, we reject any argument that the mere existence of ongoing litigation prevents or prohibits Congress from obtaining information relevant to its legislative and oversight prerogatives. We strongly disagree with the assertion that any requests for such materials and any compliance with those requests interfere with the decisional processes in ongoing investigations. Furthermore, while Congress is fully subject to constitutional protections, we cannot agree that we are bound by common law privileges as asserted by the companies. While we determined that insufficient time exists to pursue these additional materials during this Congress, the Committee expressly reserves the right to invoke other available options, including compulsory process, to obtain the requested information in the future. ..

Summarising the Subcommittee’s Investigation, the report states

 On June 3, 2019, the House Judiciary Committee announced a bipartisan investigation led by the Subcommittee on Antitrust, Commercial, and Administrative Law. The purpose of the investigation was to (1) document competition problems in digital markets; (2) examine whether dominant firms are engaging in anticompetitive conduct; and (3) assess whether existing antitrust laws, competition policies, and current enforcement levels are competition in digital markets. The Committee initiated the investigation in response to broad-ranging investigative reporting, and activity by policymakers and enforcers, that raised serious adequate to address these issues. concerns about the platforms’ incentives and ability to harm the competitive process.  

 

As part of the investigation, the Subcommittee held seven oversight hearings that provided Members of the Subcommittee with an opportunity to examine the state of competition in digital markets and the adequacy of existing antitrust laws. A diverse group of witnesses offered testimony on topics related to the effects of market power on the free and diverse press, on innovation, and on privacy. Other witnesses who testified included executives from businesses with concerns about the dominance of the investigated firms. The hearings also provided an opportunity for key executives from Facebook, Google, Amazon, and Apple—including the Chief Executive Officers of these firms— to address evidence that was uncovered during the investigation in a public-facing venue. After each of the hearings, Members of the Subcommittee submitted questions for the record (QFRs) to the witnesses. 

 

The Committee requested information from the dominant platforms, from market participants, from the Federal antitrust agencies, and from other relevant parties, for the purpose of obtaining information that was not otherwise publicly available but was important to assembling a comprehensive record. The Committee also sent requests for submissions to various experts in the field, including academics, representatives of public interest groups, and practicing antitrust lawyers. The responses to these requests were indispensable to staff’s ability to complete this Report and its recommendations for congressional oversight of the antitrust agencies and legislative action. 

 

This Report is intended to provide policymakers, antitrust enforcers, market participants, and the public with a comprehensive understanding of the state of competition in the online marketplace. The Report also provides recommendations for areas of legislative activity to address the rise and abuse of market power in the digital economy, as well as areas that warrant additional congressional attention.

Its finding are summarised as 

a. Overview 

The open internet has delivered significant benefits to Americans and the U.S. economy. Over the past few decades, it has created a surge of economic opportunity, capital investment, and pathways for education. The COVID-19 pandemic has underscored the importance of internet access that is affordable, competitive, and widely available for workers, families, and businesses. 

 

The online platforms investigated by the Subcommittee—Amazon, Apple, Facebook, and Google—also play an important role in our economy and society as the underlying infrastructure for the exchange of communications, information, and goods and services. As of September 2020, the combined valuation of these platforms is more than $5 trillion—more than a third of the value of the S&P 100. As we continue to shift our work, commerce, and communications online, these firms stand to become even more interwoven into the fabric of our economy and our lives. 

 

Over the past decade, the digital economy has become highly concentrated and prone to monopolization. Several markets investigated by the Subcommittee—such as social networking, general online search, and online advertising—are dominated by just one or two firms. The companies investigated by the Subcommittee—Amazon, Apple, Facebook, and Google—have captured control over key channels of distribution and have come to function as gatekeepers. Just a decade into the future, 30% of the world’s gross economic output may lie with these firms, and just a handful of others. 

 

In interviews with Subcommittee staff, numerous businesses described how dominant platforms exploit their gatekeeper power to dictate terms and extract concessions that no one would reasonably consent to in a competitive market. Market participants that spoke with Subcommittee staff indicated that their dependence on these gatekeepers to access users and markets requires concessions and demands that carry significant economic harm, but that are “the cost of doing business” given the lack of options. 

 

This significant and durable market power is due to several factors, including a high volume of acquisitions by the dominant platforms. Together, the firms investigated by the Subcommittee have acquired hundreds of companies just in the last ten years. In some cases, a dominant firm evidently acquired nascent or potential competitors to neutralize a competitive threat or to maintain and expand the firm’s dominance. In other cases, a dominant firm acquired smaller companies to shut them down or discontinue underlying products entirely—transactions aptly described as “killer acquisitions.” 

 

In the overwhelming number of cases, the antitrust agencies did not request additional information and documentary material under their pre-merger review authority in the Clayton Act, to examine whether the proposed acquisition may substantially lessen competition or tend to create a monopoly if allowed to proceed as proposed. For example, of Facebook’s nearly 100 acquisitions, the Federal Trade Commission engaged in an extensive investigation of just one acquisition: Facebook’s purchase of Instagram in 2012. 

 

During the investigation, Subcommittee staff found evidence of monopolization and monopoly power. For example, the strong network effects associated with Facebook has tipped the market toward  monopoly such that Facebook competes more vigorously among its own products—Facebook, Instagram, WhatsApp, and Messenger—than with actual competitors. 

 

As demonstrated during a series of hearings held by the Subcommittee and as detailed in this Report, the online platforms’ dominance carries significant costs. It has diminished consumer choice,  eroded innovation and entrepreneurship in the U.S. economy, weakened the vibrancy of the free and diverse press, and undermined Americans’ privacy. 

 

These concerns are shared by the majority of Americans. On September 24, 2020, Consumer Reports (CR) published a survey titled “Platform Perceptions: Consumer Attitudes on Competition and Fairness in Online Platforms.” Among its findings: 

 

• 85% of Americans are concerned—either very concerned or somewhat concerned— about the amount of data online platforms store about them, and 81% are concerned that platforms are collecting and holding this data in order to build out more comprehensive consumer profiles. 

 

• 58% are not confident that they are getting objective and unbiased search results when using an online platform to shop or search for information. 

 

• 79% say Big Tech mergers and acquisitions unfairly undermine competition and 

 

• 60% support more government regulation of online platforms, and mandating interoperability features, to make it easier for users to switch from one platform to another without losing important data or connections. 

 

b. Facebook 

 

Facebook has monopoly power in the market for social networking. Internal communications among the company’s Chief Executive Officer, Mark Zuckerberg, and other senior executives indicate that Facebook acquired its competitive threats to maintain and expand its dominance. For example, a senior executive at the company described its acquisition strategy as a “land grab” to “shore up” Facebook’s position, while Facebook’s CEO said that Facebook “can likely always just buy any competitive startups,” and agreed with one of the company’s senior engineers that Instagram was a threat to Facebook. 

 

Facebook’s monopoly power is firmly entrenched and unlikely to be eroded by competitive pressure from new entrants or existing firms. In 2012, the company described its network effects as a “flywheel” in an internal presentation prepared for Facebook at the direction of its Chief Financial Officer. This presentation also said that Facebook’s network effects get “stronger every day.” 

 

More recent documents produced during the investigation by Facebook show that it has tipped the social networking market toward a monopoly, and now considers competition within its own family of products to be more considerable than competition from any other firm. These documents include an October 2018 memorandum by Thomas Cunningham, a senior data scientist and economist at Facebook, for review by Mr. Zuckerberg and Mr. Javier Olivan, Facebook's Director of Growth. Among other things, the Cunningham Memo found that the network effects of Facebook and its family of products are “very strong,”  and that there are strong tipping points in the social networking market that create competition for the market, rather than competition within the market.   

 

According to a former senior employee at Instagram who was involved in the preparation of this document for Mr. Zuckerberg and Olivan, the Cunningham Memo guided  Facebook’s growth strategy, particularly with regard to Instagram. They explained: 

 

The question was how do we position Facebook and Instagram to not compete with each other. The concern was the Instagram would hit a tipping point . . . There was brutal in-fighting between Instagram and Facebook at the time. It was very tense. It was back when Kevin Systrom was still at the company. He wanted Instagram to grow naturally and as widely as possible. But Mark was clearly saying “do not compete with us.” . . . It was collusion, but within an internal monopoly. If you own two social media utilities, they should not be allowed to shore each other up. It’s unclear to me why this 

 

Facebook has also maintained its monopoly through a series of anticompetitive business practices. The company used its data advantage to create superior market intelligence to identify nascent competitive threats and then acquire, copy, or kill these firms. Once dominant, Facebook selectively enforced its platform policies based on whether it perceived other companies as competitive threats. In doing so, it advantaged its own services while weakening other firms. 

 

In the absence of competition, Facebook’s quality has deteriorated over time, resulting in worse privacy protections for its users and a dramatic rise in misinformation on its platform. 

 

c. Google 

 

Google has a monopoly in the markets for general online search and search advertising. Google’s dominance is protected by high entry barriers, including its click-and-query data and the extensive default positions that Google has obtained across most of the world’s devices and browsers. A significant number of entities—spanning major public corporations, small businesses, and entrepreneurs—depend on Google for traffic, and no alternate search engine serves as a substitute. 

 

Google maintained its monopoly over general search through a series of anticompetitive tactics. These include an aggressive campaign to undermine vertical search providers, which Google viewed as a significant threat. Documents show that Google used its search monopoly to misappropriate content from third parties and to boost Google’s own inferior vertical offerings, while imposing search penalties to demote third-party vertical providers. Since capturing a monopoly over general search, Google has steadily proliferated its search results page with ads and with Google’s own content, while also blurring the distinction between paid ads and organic results. As a result of these tactics, Google appears to be siphoning off traffic from the rest of the web, while entities seeking to reach users must pay Google steadily increasing sums for ads. Numerous market participants analogized Google to a gatekeeper that is extorting users for access to its critical distribution channel, even as its search page shows users less relevant results. 

 

A second way Google has maintained its monopoly over general search has been through a series of anticompetitive contracts. After purchasing the Android operating system in 2005, Google used contractual restrictions and exclusivity provisions to extend Google’s search monopoly from desktop to mobile. Documents show that Google required smartphone manufacturers to pre-install and give default status to Google’s own apps, impeding competitors in search as well as in other app markets. As search activity now migrates from mobile to voice, third-party interviews suggest Google is again looking for ways to maintain its monopoly over search access points through a similar set of practices. 

 

Since capturing the market for online search, Google has extended into a variety of other lines of business. Today Google is ubiquitous across the digital economy, serving as the infrastructure for core products and services online. Through Chrome, Google now owns the world’s most popular browser—a critical gateway to the internet that it has used to both protect and promote its other lines of business. Through Google Maps, Google now captures over 80% of the market for navigation mapping service—a key input over which Google consolidated control through an anticompetitive acquisition and which it now leverages to advance its position in search and advertising. And through Google Cloud, Google has another core platform in which it is now heavily investing through acquisitions, positioning itself to dominate the “Internet of Things,” the next wave of surveillance technologies. 

 

Internal communications also reveal that Google exploits information asymmetries and closely tracks real-time data across markets, which—given Google’s scale—provide it with near-perfect market intelligence. In certain instances, Google has covertly set up programs to more closely track its potential and actual competitors, including through projects like Android Lockbox. 

 

Each of its services provides Google with a trove of user data, reinforcing its dominance across markets and driving greater monetization through online ads. Through linking these services together, Google increasingly functions as an ecosystem of interlocking monopolies. 

 

d. Amazon 

 

Amazon has significant and durable market power in the U.S. online retail market. This conclusion is based on the significant record that Subcommittee staff collected and reviewed, including testimonials from third-party sellers, brand manufacturers, publishers, former employees, and other market participants, as well as Amazon’s internal documents. Although Amazon is frequently described as controlling about 40% of U.S. online retail sales, this market share is likely understated, and estimates of about 50% or higher are more credible. 

 

As the dominant marketplace in the United States for online shopping, Amazon’s market power is at its height in its dealings with third-party sellers. The platform has monopoly power over many small- and medium-sized businesses that do not have a viable alternative to Amazon for reaching online consumers. Amazon has 2.3 million active third-party sellers on its marketplace worldwide, and a recent survey estimates that about 37% of them—about 850,000 sellers—rely on Amazon as their sole source of income.   

 

Amazon achieved its current dominant position, in part, through acquiring its competitors, including Diapers.com and Zappos. It has also acquired companies that operate in adjacent markets, adding customer data to its stockpile and further shoring up its competitive moats. This strategy has entrenched and expanded Amazon’s market power in e-commerce, as well as in other markets. The company’s control over, and reach across, its many business lines enables it to self-preference and disadvantage competitors in ways that undermine free and fair competition. As a result of Amazon’s dominance, other businesses are frequently beholden to Amazon for their success. 

 

Amazon has engaged in extensive anticompetitive conduct in its treatment of third-party sellers. Publicly, Amazon describes third-party sellers as “partners.” But internal documents show that, behind closed doors, the company refers to them as “internal competitors.” Amazon’s dual role as an operator of its marketplace that hosts third-party sellers, and a seller in that same marketplace, creates an inherent conflict of interest. This conflict incentivizes Amazon to exploit its access to competing sellers’ data and information, among other anticompetitive conduct. 

 

Voice assistant ecosystems are an emerging market with a high propensity for lock-in and self- preferencing. Amazon has expanded Alexa’s ecosystem quickly through acquisitions of complementary and competing technologies, and by selling its Alexa-enabled smart speakers at deep discounts. The company’s early leadership in this market is leading to the collection of highly sensitive consumer data, which Amazon can use to promote its other business, including e-commerce and Prime Video. 

 

Finally, Amazon Web Services (AWS) provides critical infrastructure for many businesses with which Amazon competes. This creates the potential for a conflict of interest where cloud customers are forced to consider patronizing a competitor, as opposed to selecting the best technology for their business. 

 

e. Apple 

 

Apple has significant and durable market power in the mobile operating system market. Apple’s dominance in this market, where it controls the iOS mobile operating system that runs on Apple mobile devices, has enabled it to control all software distribution to iOS devices. As a result, Apple exerts monopoly power in the mobile app store market, controlling access to more than 100 million iPhones and iPads in the U.S. 

 

Apple’s mobile ecosystem has produced significant benefits to app developers and consumers. Launched in 2008, the App Store revolutionized software distribution on mobile devices, reducing barriers to entry for app developers and increasing the choices available to consumers. Despite this, Apple leverages its control of iOS and the App Store to create and enforce barriers to competition and discriminate against and exclude rivals while preferencing its own offerings. Apple also uses its power to exploit app developers through misappropriation of competitively sensitive information and to charge app developers supra-competitive prices within the App Store. Apple has maintained its dominance due to the presence of network effects, high barriers to entry, and high switching costs in the mobile operating system market. 

 

Apple is primarily a hardware company that derives most of its revenue from sales of devices and accessories. However, as the market for products like the iPhone have matured, Apple has pivoted to rely increasingly on sales of its applications and services, as well as collecting commissions and fees in the App Store. In the absence of competition, Apple’s monopoly power over software distribution to iOS devices has resulted in harms to competitors and competition, reducing quality and innovation among app developers, and increasing prices and reducing choices for consumers. 

 

f. Effects of Market Power 

 

The Subcommittee also examined the effects of market power in digital markets on the free and diverse press, innovation, privacy and data, and other relevant matters summarized below for ease of reference. 

 

As part of this process, the Subcommittee received testimony and submissions showing that the dominance of some online platforms has contributed to the decline of trustworthy sources of news,  which is essential to our democracy. In several submissions news publishers raised concerns regarding the “significant and growing asymmetry of power” between dominant platforms and news organizations, as well as the effect of this dominance on the production and availability of trustworthy sources of news. Other publishers said that they are “increasingly beholden” to these firms, and in particular, to Google and Facebook. Google and Facebook have an outsized influence over the distribution and monetization of trustworthy sources of news online, undermining the quality and availability of high-quality sources of journalism.  This concern is underscored by the COVID-19 pandemic, which has laid bare the importance of preserving a vibrant free press in both local and national markets. 

 

The rise of market power online has also materially weakened innovation and entrepreneurship in the US economy. Some venture capitalists, for example, report that there is an innovation “kill  zone” that insulates dominant platforms from competitive pressure simply because investors do not  view new entrants as worthwhile investments. Other investors have said that they avoid funding 

entrepreneurs and other companies that compete directly or indirectly with dominant firms in the

digital economy. In an interview with Subcommittee staff, a prominent venture capital investor explained that due these factors there is a strong economic incentive for firms to avoid head-on competition with dominant firms. 

 

Additionally, in the absence of adequate privacy guardrails in the United States, the persistent collection and misuse of consumer data is an indicator of market power online. Online platforms  rarely charge consumers a monetary price—products appear to be “free” but are monetized through 

people’s attention or with their data. In the absence of genuine competitive threats dominant firms offer fewer privacy protections than they otherwise would, and the quality of these services has deteriorated over time. As a result, consumers are forced to either use a service with poor privacy safeguards or forego the service altogether.

 

Finally, the market power of the dominant platforms risks undermining both political and economic liberties. Subcommittee staff encountered a prevalence of fear among market participants that depend on the dominant platforms, many of whom expressed unease that the success of their business and their economic livelihood depend on what they viewed as the platforms’ unaccountable and arbitrary power. Additionally, courts and enforcers have found the dominant platforms to engage in recidivism, repeatedly violating laws and court orders. This pattern of behavior raises questions about whether these firms view themselves as above the law, or whether they simply treat lawbreaking as a cost of business. Lastly, the growth in the platforms’ market power has coincided with an increase in their influence over the policymaking process. Through a combination of direct lobbying and funding think tanks and academics, the dominant platforms have expanded their sphere of influence, further shaping how they are governed and regulated.

The recommendations are summarised as  

As part of the investigation of competition in digital markets, the Subcommittee conducted a thorough examination of the adequacy of current laws and enforcement levels. This included receiving submissions from experts on antitrust and competition policy who were selected on a careful, bipartisan basis to ensure the representation of a diverse range of views on these matters. The Subcommittee also received other submissions from leading experts—including Executive Vice President Margrethe Vestager of the European Commission and Chair Rod Sims of the Australian Competition and Consumer Commission—to inform this inquiry. Most recently, on October 1, 2020, the Subcommittee held an oversight hearing on “Proposals to Strengthen the Antitrust Laws and Restore Competition Online” to examine potential solutions to concerns identified during the investigation to further inform the Report’s recommendations. 

 

Based on this oversight activity, Subcommittee Chairman Cicilline requested that staff provide a menu of reforms to Members of the Subcommittee for purposes of potential legislative activity during the remainder of the 116th Congress and thereafter. As he noted in remarks to the American Antitrust Institute in June 2019: [I]t is Congress’ responsibility to conduct oversight of our antitrust laws and competition system to ensure that they are properly working and to enact changes when they are not. While I do not have any preconceived ideas about what the right answer is, as Chairman of the Antitrust Subcommittee, I intend to carry out that responsibility with the sense of urgency and serious deliberation that it demands. 

 

In response to this request, Subcommittee staff identified a broad set of reforms for further examination by the Members of the Subcommittee for purposes of crafting legislative responses to the findings of this Report. These reforms include proposals to: (1) address anticompetitive conduct in digital markets; (2) strengthen merger and monopolization enforcement; and (3) improve the sound administration of the antitrust laws through other reforms. 

 

We intend these recommendations to serve as a complement to vigorous antitrust enforcement. Consistent with the views expressed by Chairman Nadler and Subcommittee Chairman Cicilline in the Foreword to this Report, we view these recommendations as complements, and not substitutes, to forceful antitrust enforcement. For ease of reference, these recommendations for further examination are summarized below. 

 

a. Restoring Competition in the Digital Economy 

 

• Structural separations and prohibitions of certain dominant platforms from operating in adjacent lines of business; 

 

• Nondiscrimination requirements, prohibiting dominant platforms from engaging in self- preferencing, and requiring them to offer equal terms for equal products and services; 

 

• Interoperability and data portability, requiring dominant platforms to make their services compatible with various networks and to make content and information easily portable between them; 

 

• Presumptive prohibition against future mergers and acquisitions by the dominant platforms; 

 

• Safe harbor for news publishers in order to safeguard a free and diverse press; and 

 

• Prohibitions on abuses of superior bargaining power, proscribing dominant platforms from engaging in contracting practices that derive from their dominant market position, and requiring due process protections for individuals and businesses dependent on the dominant platforms. 

 

b. Strengthening the Antitrust Laws 

 

• Reasserting the anti-monopoly goals of the antitrust laws and their centrality to ensuring a healthy and vibrant democracy; 

 

• Strengthening Section 7 of the Clayton Act, including through restoring presumptions and bright-line rules, restoring the incipiency standard and protecting nascent competitors, and strengthening the law on vertical mergers; 

 

• Strengthening Section 2 of the Sherman Act, including by introducing a prohibition on abuse of dominance and clarifying prohibitions on monopoly leveraging, predatory pricing, denial of essential facilities, refusals to deal, tying, and anticompetitive self-preferencing and product design; and 

 

• Taking additional measures to strengthen overall enforcement, including through overriding problematic precedents in the case law. 

 

c. Reviving Antitrust Enforcement 

 

• Restoring robust congressional oversight of the antitrust laws and their enforcement; 

 

• Restoring the federal antitrust agencies to full strength, by triggering civil penalties and other relief for “unfair methods of competition” rules, requiring the Federal Trade Commission to engage in regular data collection on concentration, enhancing public transparency and accountability of the agencies, requiring regular merger retrospectives, codifying stricter prohibitions on the revolving door, and increasing the budgets of the FTC and the Antitrust Division; and 

 

• Strengthening private enforcement, through eliminating obstacles such as forced arbitration clauses, limits on class action formation, judicially created standards constraining what constitutes an antitrust injury, and unduly high pleading standards.