Daily Digest 5/2/2018 (Privacy; Ownership; Big USF News)

Almost everybody who uses an online service or app that handles their data has been getting a flood of emails advising of privacy-policy changes. And it’s not the US behind the tech industry’s recent flurry of updates. Instead, the European Union has been driving these changes with a sweeping set of privacy rules that will go into effect May 25 — and which are also yielding benefits on this side of the Atlantic. The EU’s General Data Protection Regulation will require companies that handle the data of EU residents to provide them with far more control over that data. Among the key provisions of this roughly 54,000-word document:

• Companies have to obtain users’ permission in much more detail before using their information for marketing or advertising.
• They have to let users inspect the data they’ve collected and correct it on request — then delete it when it’s no longer needed.
• They must allow users to download their data in a format they can then take to a competing service — what’s called data portability.
• People can challenge algorithmic decisions that affect them significantly and ask that humans make them instead.

The GDPR says nothing about how companies treat customers in other countries. But many US firms that have had to rewrite privacy policies for Europe to avoid fines that could cost them billions of dollars are carrying over these changes to the States for the sake of simplicity. That has American privacy advocates pleasantly surprised.

Less than a month before tough new European privacy rules take effect, there are growing concerns from regulators, publishers, and privacy watchdogs about the ways that two internet giants—Google and Facebook—plan to implement the regulations. The critics say the companies are squelching the promise of the new rules, and will leave European internet users no better off. In a blog, a top EU regulator warned of “attempts to game the system,” which could lead to a “travesty of at least the spirit of the new regulation, which aims to restore a sense of trust and control over what happens to our online lives.” Giovanni Buttarelli, who as supervisor of the European data protection authority is the continent’s top data-protection watchdog, said companies’ “take-it-or-leave it” propositions, which come with “a hint of menace” violate “at least the spirit of the new regulation.” He says European data-protection authorities have formed a new social-media group that will meet for the first time in mid-May.

A sizeable portion of the nearly 100 million users who have come online through Internet.org live in Myanmar, where Facebook partnered with local telecommunication company Myanma Posts and Telecommunications for the program in mid-2016. Facebook went on to serve as an accelerant to violence and ethnic cleansing-related hate speech. Cost-free access to Facebook’s services has seen Facebook’s own user base in the country skyrocket from two million in 2014 to 30 million in 2017. By August, Facebook's Free Basics program, which is part of the Internet.org initiative, abruptly ended in the nation, users say; using Facebook was no longer free of cost on a data plan. “It all just stopped working one day,” May, a Yangon-based college professor told The Outline. Facebook’s free internet service, she said, was immensely popular in her city. The most concerning issue with Internet.org has been its unpreparedness to serve and protect the people it is helping come online for the first time. Nikhil Pahwa, a New Delhi-based activist who revolted against the Free Basics program in India, says part of the problem with Internet.org is that it is increasingly becoming a substitute for internet for people in countries such as Myanmar. “Effectively, Facebook’s Free Basics is shaping the internet experience of users — i.e., the services they can access, the services they cannot access,” Pahwa said, adding that this creates a filter bubble for users that influences their worldview. “You can see problems crop up in nations where Free Basics is operational and Facebook is dominant.”

Here’s what three government agencies will weigh as they consider the T-Mobile/Sprint merger.

1. The Committee on Foreign Investment in the United States (Cfius), an intra-agency panel run from the Treasury Department that reviews mergers and can block them on national security grounds, will ask if the deal is in the national interest of the US.
2. The Federal Communications Commission will examine if the deal is in the public interest. In 2014, the FCC and the Department of Justice concluded that effectively reducing the wireless market to three major carriers from four would not be good for consumers. Sprint and T-Mobile are now betting that current FCC Chairman Ajit Pai feels differently.
3. The Justice Department's Antitrust Division will also review the deal. T-Mobile and Sprint’s deal would unite two direct competitors, a type of deal that regulators have traditionally been harder on.

[Commentary] The merits of some mergers make for a close case, but the proposed merger between the mobile carriers Sprint and T-Mobile, which would create a new telecommunications behemoth, is not one of them. Basic economics strongly suggests the proposed combination should be dead on arrival, at least if the nation’s antitrust law still stands for competition and lower prices for consumers. In addition, the recent history of telecommunications and similar industries indicates that allowing consolidation to just three “majors” — Verizon, AT&T and the new T-Mobile (merged with Sprint) — is a terrible idea. The problem for Sprint and T-Mobile is that they themselves have done such a good job of proving the merits of the four-way competition they now seek to eliminate. In short, competition has actually worked the way economists say it is supposed to, forcing firms to improve quality or face elimination. But it takes competitors to compete, which is where blocking mergers comes in. 

[Wu is a Columbia law professor who specializes in antitrust and telecommunications]

Commerce Secretary Wilbur Ross said that building a 5G mobile broadband network is a chief concern for the Trump administration. “I think the pitch that Sprint and T-Mobile are making is an interesting one, that their merger would propel Verizon and AT&T into more active pursuit of 5G,” Sec Ross said. “Whoever pursues it, whoever does it, we’re very much in support of 5G. We need it. We need it for defense purposes, we need it for commercial purposes,” he continued.

Effective immediately, as of May 2018, the Universal Service Administrative Company (USAC) will accept payments to and distribute funds from the US Treasury. This is not a change to USAC’s administration of the Universal Service Fund (USF).

[Press release] The prior Administration’s budget control mechanism has created constant uncertainty for small, rural carriers, endangering their ability to make long-term investment decisions to bring high-speed broadband to the millions of Americans who still lack it. That’s why earlier this year we allocated $180 million to such carriers as a stop-gap measure to avert budget cuts for the current funding year. But now small carriers are facing even more severe cuts in the coming year, which will only exacerbate the digital divide in rural America. That highlights the importance of the Notice of Proposed Rulemaking we advanced earlier this year. In the Notice we take a hard look at the budget control mechanism and potential reforms to our rules to give small carriers greater investment certainty and to create incentives for more efficient operations. We’re still accepting public input on the Notice, but once that period has ended, I hope my colleagues will support my efforts to take action in the coming months.

Mark Zuckerberg kicked off his keynote by explaining Facebook’s plans to protect the integrity of elections in the United States and abroad. He also recapped moves the company has made to boost transparency in election ads–things like requiring anyone buying a political ad produce government identification to prove they are who they are, and requiring that political ads on Facebook have a higher degree of transparency than print, radio, or TV ads. That, of course, is meant to get in front of Congress’s proposed Honest Ads Act. Zuckerberg also touted the oft-mentioned stat that Facebook plans on having 20,000 people working on security content review by the end of 2018–though the company has yet to explain how many of those people will be employees and how many will be contractors.

The US Office of Special Counsel (OSC) has wrapped up its investigation of Federal Communications Commissioner Michael O'Rielly's statements at the Conservative Political Action Conference (CPAC) on Feb. 23, 2018, and concluded he violated the Hatch Act prohibition on certain political activities by federal branch employees. He was issued a warning letter that a repeat of such statements could incur more than a warning. “I appreciate that OSC recognized that the statement in question was part of an off-the-cuff, unrehearsed response to an impromptu question, and that they found this resolution to be the appropriate consequence," said Commissioner O'Rielly of the warning. "While I am disappointed and disagree that my offhand remark was determined to be a violation, I take their warning letter seriously.” After he made the comments, the watchdog group American Oversight filed a letter with the Office of Special Counsel, which handles Hatch Act complaints. In response to the group’s letter, the Office of Special Counsel said that Comissioner O’Rielly did, in fact, violate the Hatch Act.