Hillicon Valley: Democratic state AGs sue to block T-Mobile-Sprint merger | House kicks off tech antitrust probe | Maine law shakes up privacy debate | Senators ask McConnell to bring net neutrality to a vote

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Welcome! Follow the cyber team, Olivia Beavers (@olivia_beavers) and Maggie Miller (@magmill95), and the tech team, Harper Neidig (@hneidig) and Emily Birnbaum (@birnbaum_e).

 

STATE AGS SUE TO BLOCK T-MOBILE-SPRINT DEAL: Ten Democratic attorneys general from nine states and Washington, D.C., on Tuesday filed a lawsuit to block the $26 billion T-Mobile-Sprint merger, arguing that combining two of the country’s four largest mobile carriers could harm competition and drastically raise prices for consumers.

The attorneys general, led by New York’s Letitia James and Xavier Becerra of California, filed the federal lawsuit in the Southern District of New York on Tuesday. Colorado, Connecticut, the District of Columbia, Maryland, Michigan, Mississippi, Virginia and Wisconsin have also joined the effort.{mosads}

“When it comes to corporate power, bigger isn’t always better,” James said in a statement. “The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country.”

Where federal regulators stand: The states are moving to block the merger shortly after the Federal Communications Commission (FCC) last month said it will green light the lucrative deal. The merger still needs approval from the Department of Justice (DOJ), which has not yet made its decision.

Both James and Becerra during press briefings on Tuesday denied that they are taking action now in order to increase pressure on the DOJ to reject the merger.

“We’ve concluded our investigation and we have our own responsibility to consumers,” James said during a press conference in New York City. “Based upon our review, this is bad for consumers, bad for innovation, bad for lowering prices and bad for competition.”

The state investigation: Before filing the lawsuit, the states engaged in a year-long investigation into the merger to gauge how it could potentially affect consumers in the country. They now say they have determined that the merger as proposed violates the country’s antitrust laws.

James’s office said in a statement that states determined the promises of “lightning-fast speeds and increased capacity” from T-Mobile and Sprint were “unverifiable and could only be delivered years into the future, if ever.”

The attorneys general in the lawsuit are arguing that the deal could raise prices for consumers by at least $4.5 billion a year.

Becerra in a statement said they could not find evidence to substantiate claims that the merger could create “faster, better and cheaper service.”

T-Mobile and Sprint in filings have promised to build out a next-generation wireless network, also known as 5G, that would cover almost all Americans within six years.   

They have also pledged to pay “voluntary contributions” to the Treasury Department instead of regulatory fines if the FCC determines that the new company has not followed through on any of the conditions of the merger. The FCC approved the deal on the basis that the mobile carriers will provide widespread 5G coverage to rural areas and create a new in-home broadband service.

But Becerra said the states made the decision to file a lawsuit based on “facts” rather than “promises” from the companies.

Read more on the lawsuit here.

 

MORE ANTITRUST NEWS: Congress on Tuesday opened an investigation into tech companies and antitrust issues, with a hearing on how the industry has upended the business model of the news media and other publishers.

At the first hearing in the House Judiciary Committee’s bipartisan investigation into Silicon Valley’s market power, the panel’s subcommittee on antitrust heard from media advocates who accused internet giants such as Facebook and Google of having a stranglehold on digital advertising, and who urged lawmakers to level the playing field for publishers.

“Unfortunately in the news business, free riding by dominant online platforms, which aggregate and then reserve our content, has led to the lion’s share of online advertising dollars generated off the back of news going to the platforms,” said David Pitofsky, the general counsel for News Corp., which owns The Wall Street Journal.

“We’re not losing business to an innovator who has found a better or more efficient way to report and investigate the news,” Pitofsky added. “We’re losing business because the dominant platforms deploy our news content to target our audiences to then turn around and sell that audience to the same advertisers we’re trying to serve.”

The hearing came amid an unprecedented level of scrutiny in Washington over tech giants’ market power and impact on competitors and consumers. But lawmakers have generally given little attention to what many see as the threat the tech industry poses to the news industry and the damage done to local news outlets.

The bipartisan leaders of the Judiciary Committee are pushing a short-term solution backed by the newspaper industry that would grant an antitrust exemption to media outlets allowing them to collectively negotiate with companies like Facebook and Google for a larger slice of the digital advertising pie.

“It is incumbent on Congress to understand the sources of this problem and address it urgently,” said Rep. Jerrold Nadler (D-N.Y.), the chairman of the House Judiciary Committee. “Congress also has a constitutional duty to ensure markets are structured in a way that is compatible with our democratic values.”

Read more here. 

 

HEY, MITCH: A group of Democratic senators are calling on Senate Majority Leader Mitch McConnell (R-Ky.) to bring legislation that would reinstate net neutrality rules to a vote in the upper chamber.

The calls from Democrats in the Senate coincide with the one-year anniversary of the Federal Communications Commissions (FCC)’s party-line decision to repeal the Obama-era net neutrality rules.

Sen. Ed Markey (D-Mass.) in a speech on the Senate floor said he is calling for an “immediate” vote on the Save the Internet Act, which passed the House overwhelmingly earlier this year. The bill passed in a 232-190 vote, with just one Republican — Rep. Bill Posey (Fla.) — siding with Democrats in favor of the legislation.

“Under Senator McConnell’s leadership, the Republicans are trying to bury this bill in a legislative graveyard,” Markey said.

McConnell previously described the Save the Internet Act as “dead on arrival” on the Senate.

The Democrats, including Markey, Sen. Ron Wyden (D-Ore.) and Sen. Maria Cantwell (D-Wash.) — the ranking member of the Senate Commerce Committee — took to the Senate floor to voice their support for a Senate vote on the bill.

“Net neutrality may still be a term that some people aren’t familiar with but what it’s all about is a free and open Internet,” Wyden said. “After you pay your internet access fee, you get to go where you want, when you want and how you want. That is what net neutrality is all about.”

Sen. Roger Wicker (R-Miss.), the chairman of the Senate Commerce Committee, on the floor rejected Democrats’ arguments, calling them hyperbolic.

“I’ve been amazed over the last year and a half, and even longer, at the intense overblown rhetoric about this issue of net neutrality and about the hyperbole that we heard on the floor of the Senate and elsewhere,” Wicker said. “[Internet service providers] are delivering on consumers’ expectations.”

Read more here.

 

MAINE SHAKES UP PRIVACY DEBATE: Maine is shaking up the national privacy debate with a new law, one that advocates say puts in place some of the toughest measures on internet service providers (ISPs) in the country.

The law, which bars those companies from using, selling or distributing customer data without consent, was signed by Maine Gov. Janet Mills (D) last week and goes into effect on July 1, 2020.

Industry pushback: Industry groups have already voiced their opposition to the Maine law and its tougher standard, fearing not only a patchwork of privacy laws that vary by state, but also that states are competing with each other to pass increasingly more stringent standards.

USTelecom, a coalition of broadband providers including Verizon and AT&T, opposed the Maine law as it went through state legislative committees, sending a letter in April detailing their concerns.

“Consumers expect consistent privacy protections online, regardless of where they are located or what services they use,” USTelecom wrote. “Data does not recognize state borders, and a fragmented, state-by-state approach sets uneven and inconsistent protections for consumers that are difficult, and sometimes impossible to implement.”

USTelecom also argued that the new law could violate ISPs’ First Amendment rights “relative to online actors that use and disclose the same information.”

The law could also face questions from federal regulators.

What this means for Capitol Hill: The law’s effects are likely to have implications far beyond Maine’s borders. The law could provide a template for other states looking to draft data privacy rules and in Washington, D.C., where Congress is grappling with its own efforts to draft the first federal privacy law.

Lawmakers in Washington, though, have struggled to get traction on a federal law.

The House Energy and Commerce Committee has been among the panels on Capitol Hill working on the issue of data privacy in recent months, holding two major hearings on the issue including one with all five commissioners from the Federal Trade Commission.

While a spokesperson for committee Chairman Frank Pallone Jr. (D-N.J.) declined to comment on the new law, a spokesperson for ranking member Greg Walden (R-Ore.) told The Hill that the legislation could lead to a “confusing” situation around privacy.

“A patchwork of state laws is confusing – Congress needs to pass a federal privacy law that sets one national standard,” the spokesperson for Walden said.

Fallout for ISPs in Maine: The law will likely mean sweeping changes to how major internet service providers implement their data policies in Maine.

Currently, AT&T, Comcast and Verizon have privacy policies that allow for the use of customer data for purposes including delivering customized advertising, for billing services and for monitoring for illegal activity on accounts.

A spokesperson for Comcast told The Hill the company was not commenting on the new bill due to its “limited” presence in Maine.

But some ISPs in the state have already begun to implement policies that are more protective of customers’ privacy rights.

GWI pledged to customers in a recent blog post that “under no circumstances will we EVER sell your information.” Another company, Viasat, told The Hill that “it does not presently sell customer data, and has no plans to sell customer data in Maine or any other state.”

And one of the nation’s largest ISPs criticized the Maine law for not targeting other companies that also handle consumer data.

A spokesperson for Charter Communications, which provides internet services to 41 states, including Maine, under the Spectrum brand, told The Hill that “the legislation doesn’t go far enough to protect our customers in Maine because it exempts search engines, social media apps, websites and data brokers from having to protect the privacy of consumers’ online information.”

Read more on the Maine shakeup here.

 

RECUSE YOURSELF: Sen. Elizabeth Warren (D-Mass.) on Tuesday called on the Department of Justice’s (DOJ) top antitrust official to recuse himself from any probes into Google or Apple because of his previous lobbying for the two tech giants.

In letters, Warren cited Assistant Attorney General Makan Delrahim’s “real or perceived conflicts of interest.”

“Your past work as a lobbyist for two of the largest and most scrutinized tech companies in the world creates the appearance of a conflict of interest,” Warren wrote in a letter to Delrahim on Tuesday. “As the head of the antitrust division at the DOJ, you should not be supervising investigations into former clients who paid you tens of thousands of dollars to lobby the federal government.”

Reports in recent weeks have indicated the DOJ and Federal Trade Commission (FTC) are divvying up oversight of the country’s largest tech giants in preparation for potential investigations into the companies’ enormous market power, with the DOJ charged with overseeing Apple and Google while the FTC takes on Facebook and Amazon.

Delrahim lobbied on Google’s behalf in 2007 when it was facing antitrust scrutiny over its acquisition of DoubleClick, a top online advertising company that has boosted its dominance in digital ads. The controversial $3.1 billion merger was approved after eight months, despite an outcry from competitors and industry-watchers who said it would give Google an unfair advantage in search advertising tools.

According to Senate lobbying numbers, Delrahim reported a $100,000 paycheck from Google that year.

Delrahim also lobbied on behalf of Apple in 2006 and 2007 on patent reform.

In a letter to Delrahim, Warren slammed his swing around the so-called revolving door, writing, “Your prior work lobbying the federal government on behalf of these and other companies in antitrust matters compromises your ability to manage or advise on this investigation without real or perceived conflicts of interest.”

Read more on Warren’s letters here.

 

ELECTION SECURITY BRIEFING COMING UP: Majority Leader Mitch McConnell (R-Ky.) on Tuesday said that the Senate will have an election security briefing in the wake of special counsel Robert Mueller’s report on Russian meddling in the 2016 election.  

“We intend to have a briefing on election security,” McConnell told reporters during a weekly press conference while not responding to questions about whether the upper chamber will take up any election security legislation.

McConnell’s comments mark the first time that he has confirmed he will hold an all-members election security briefing since Minority Leader Charles Schumer (D-N.Y.) said from the Senate floor that he had received assurances from the Senate GOP leader that there would be a closed-door briefing with administration officials.

“I have some positive news. I have spoken to the Republican leader about that request. He has assured me we will have a briefing,” Schumer said from the Senate floor last week.

The closed-door briefing comes as senators have mounted a bipartisan push in the wake of Mueller’s report to try to move election security legislation through the Senate but have run into high-profile opposition from McConnell and Blunt.

Read more on the briefing here.

 

NOT NOW, FACEBOOK: Facebook announced on Tuesday a new market research initiative designed to understand how consumers interact with apps, which will include collecting a large amount of data about participants in the study.

The new “Study from Facebook” program will involve Facebook users voluntarily downloading a separate app and allowing it to collect information on how much they use other programs. Information on what data will be collected will be available to users in advance and users will be financially compensated, Facebook said.

Information collected will include what apps are installed on the user’s phone, the amount of time they spend on these apps, what country the participant is in, and app activity names.

Facebook wrote it believes “this work is important to help us improve our products for the people who use Facebook.”

None of the data collected will be sold to third parties or used in targeted adds and it won’t include user IDs, passwords, or a user’s Facebook profile content, Facebook said. The company promised to keep all data “safe and secure.”

Only users over 18 will be allowed to participate, and the program is just being rolled out in the United States and India to begin with, although Facebook said it will be expanded to other countries “over time.”

Read more on the study here.

 

CYBER WIN: The House passed legislation by voice vote on Monday that would create “cyber incident response teams” at the Department of Homeland Security (DHS), which can be used to assist both government and private sector organizations after a data breach or other cyberattack.

The DHS Cyber Incident Response Teams Act would establish these teams within DHS’s National Cybersecurity and Communications Integration Center, with the groups charged with providing assistance and support to “asset owners and operators” following a cyber incident. Private sector cyber experts would be allowed to be members of the teams.

The bill’s primary sponsor, House Foreign Affairs Committee ranking member Michael McCaul (R-Texas), said in a statement following the bill’s passage that the legislation will help foster “collaboration between the public and private sector,” describing the cyber teams as “first responders” after an attack.

“When cyber-attacks occur, immediate expertise is needed to mitigate damage and ensure organizations are restored,” McCaul said.

Read more here.

 

AN OP-ED TO CHEW ON: The devil is in the device, not the platform.

 

A LIGHTER CLICK: Today in tech policy.

 

NOTABLE LINKS FROM AROUND THE WEB:

This deepfake of Mark Zuckerberg tests Facebook’s fake video policies. (Motherboard)

House Energy and Commerce chair hopes to introduce robocall bill draft next week. (Morning Consult)

YouTube CEO apologizes to LGBTQ community after outcry. (The Verge)

Most US mobile banking apps have security and privacy flaws, researchers say. (TechCrunch)