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September 13 2019

Should government regulate Google?

featuring Beverly Hallberg

On this episode of “She Thinks,” we talk big tech and privacy. With a bipartisan group of Attorneys General across the nation announcing an antitrust investigation into Google, we consider what it means for companies like Facebook and Amazon to bear federal regulations. Will it stifle competition? Or are these companies so large that they’ve already pushed out competitors? It’s a complex issue, but fortunately we have Roslyn Layton to break it down for us.

Roslyn Layton is a visiting scholar at the American Enterprise Institute, where she focuses on evidence-based policy for information, communications, and digital technology industries. Using empirical methods, she assesses regulations and policies for digitally connected domains such as mobile wireless, telecom, cable, internet, among others. Dr. Layton is also a visiting researcher at Aalborg University in Copenhagen Denmark and a vice president at Strand Consult.

Beverly H.:
And welcome to She Thinks, a podcast where you're allowed to think for yourself. I'm your host, Beverly Hallberg, and on today's episode we delve into the issue of big tech and privacy. With a bipartisan group of attorneys general across the nation announcing an antitrust investigation against Google, what does this mean for companies like Facebook, Amazon, and others if the federal government steps in to regulate? Will that stifle competition or are these companies so large that they've already pushed out competitors? It's complex, but fortunately we have Roslyn Layton to break it down for us today.

Beverly H.:
Roslyn Layton is a visiting scholar at the American Enterprise Institute where she focuses on evidence based policy for information, communications, and digital technology industries. Using empirical methods she assesses regulations and policies for digitally connected domains such as mobile wireless, telecom, cable, internet among others. Dr. Layton is also a visiting researcher at Aalborg University in Copenhagen, Denmark and is a vice president at Strand Consult. Roslyn, thanks so much for joining us today.

Roslyn Layton:
I'm thrilled to join you, Beverly. Thank you so much.

Beverly H.:
And I think technology is a wonderful thing. You are a tech guru. You are actually joining us today from Copenhagen. I know it's later there, so thank you so much for joining us on this episode. But isn't technology wonderful where we can even have this conversation while we're in different countries?

Roslyn Layton:
It's true. It is. I mean I've been able to work all over the world and work with people because broadband is so excellent and it's getting better all the time. It's really a wonderful success story, and you don't know how great you have it until you go abroad actually. But any case, you and I today, we're using our mobile technologies probably, and I listened to your podcast when I'm on the go, so I love it.

Beverly H.:
And I didn't tell you, I was going to ask you this question, but something that I was reading, your introduction I thought of is that while you and I have worked together in the past and you're a friend of mine, I have to admit that even though I've worked with people in the tech industry focusing on researching the policies of big tech, I don't meet many women in this industry. So you're one of the few women that I know that works in this industry. How did that come about? Why was this an interest for you and what is it been like being a woman working in this field?

Roslyn Layton:
It's such a great question, and I would just say to those listener women who want to get into tech, go for it. Because you know what? Honestly, being a woman is an advantage. And the other part is who uses technology is women. But in my personal story, I have reinvented myself many times. I've had a long career doing different things, but I knew that at maybe in my thirties I got an MBA. I knew I had to change careers. I had worked with nonprofit organizations and I worked in the financial industry and I got an MBA. I worked for Titan India. I went back to California. I actually was working in Silicon Valley, so I had a great experience. And then I was recruited to Denmark to bring my Silicon Valley skills to a new place.

Roslyn Layton:
But as I went along, I was very much involved in kind of startup culture, and what I realized what was missing was the thinking is so much like make it happen. Things had to be very fast. And I thought, gee, if you could step back and think of strategy for a moment. So in Denmark there's a wonderful thing called the Industrial PhD Program, and that I went to a study business economics. I studied a very controversial issue called net neutrality. I looked at 50 countries around the world and what happened with their internet regulation before and after. And that was really ... opened my mind and my world to the policy area, and it's made me love the American constitution because I've learned so much about the US because I've lived abroad. But what I can boil all of that down for you is that regulation tends to reward the largest companies because they are generally asking for regulation and they can protect their market position.

Roslyn Layton:
And when it comes to the internet, we have seen a lot of success with what's called multi-stakeholder or bottom up kind of solutions where you have different stakeholders working together. And I learned that in my research where I saw that the countries that had the most heavy handed regulation, you saw very little startup activity, very little disruptors. And of course where we've seen the entrenchment of the large companies were where ... sorry, the opposite. So where you had a multi-stakeholder model, you had a lot of local innovations. So for example, here in Denmark they manage the net neutrality issue through self-regulation. In most of the Nordic countries, they've been very innovative, making local innovation.

Roslyn Layton:
But in the cases where they had a heavy handed approach, you don't find ... what's interesting is we were told we need to regulate the internet, but no one else has been able to come up with the other Google or something on Facebook, except in China where there are no rules at all for net neutrality. So in any case, my PhD was really ... it pushed back against a lot of conventional wisdom and so I take that approach very much because we have everyone in Washington, they all want to regulate their competitors. And when the largest companies come in and say, "Oh please regulate us," then you really have to have some concerns.

Beverly H.:
Well obviously because they have a vested interest in that. And I do want to get into that more, but I want to take a step back. I think often this world of big tech can ... it's a lot to sift through if you don't deal with it day in and day out. We know that there is something significant going on because 50 state attorney's general are making an investigation into Google across this issue, the issue of privacy, but can you take us a step back and say when it comes to privacy, what is it that people are referring to? What are the concerns?

Roslyn Layton:
Well, that's a great question, Beverly. I'm really glad you asked that because if you listen to the debates or what you read on the news, they are jumbling a lot of terms together. They'll say data privacy, data protection, data security, every single one of those terms has a very different meaning and extremely different legal implications and they all get thrown around and they're not the same thing. And so just to put this in perspective, in Europe, this giant new regulation called the General Data Protection Regulation, the word privacy is not in that text. With all the words in it, there's nothing about privacy. It is about regulating the conduct of business. It's about regulating information. It has nothing to do with privacy. Now, privacy in the United States actually has a very long history over 200 years going back to before the founding and the first laws that were adopted in the United States had to do with protecting people from the government.

Roslyn Layton:
So how the census was conducted, protecting the posts, making sure that your mail wasn't read, laws about people eavesdropping on you. So actually the privacy tradition in the United States is very strong largely about the administrative state. In our laws in the US we have over two dozen laws regulating privacy with regard to business, different industries. That goes back to the '70s, and where people had a lot of financial information, we have a lot of active ... people had credit, the early days of credit. And when it was time to move that away from punch cards and so on onto computers, it was necessary to make a kind of framework. So the interesting thing is in terms about the protection of data and how it's treated, the United States has a long tradition of doing that. But what we did was evolve what you would call a trust based or risk based approach, where we didn't do what the Europeans do, which says every single thing needs to be regulated by the state.

Roslyn Layton:
We said, "Let's evolve this based upon where the need is necessary. Financial information, health information, children and information." So that's been important for the permission less innovation we have in our country because we didn't assume that just because you collect personal information that it's a problematic. So we have allowed firms to emerge, that's been vital for the internet. And so now we're at a point, in fact, we've been there for 20 years, it's just Congress keeps ... it becomes difficult to make the deal or what have you, but we know that now we have to do something about the digital space and that's where- [crosstalk 00:09:19]

Beverly H.:
And can I jump in here in a question on that? So when we want to think about privacy, should we say, "Okay, privacy first of all is about people and how people are treated in relation to the companies that they opt in to use." So let's use Facebook. That's an easy example. And Facebook should adhere to their policies on how people's data is being used. That's when they get into trouble is when they sell it to a third party without your consent, therefore breaking the privacy policy that they have with you. So that is very separate than what's going on with the competition and the regulation. Correct?

Roslyn Layton:
Right. So yes, I appreciate that you highlight that because that's already covered. So we have the Federal Trade Commission, which just fined Facebook $5 billion, a huge fine, but that was for what's called a violation ... we have rules about unfair and deceptive practices. So take privacy off the table. If you make a contract with a person or a terms of agreement and you do not represent what you're going to do or you do the opposite or you don't disclose, that is an unfair or deceptive practice. So you don't have to make new laws to address that. And so that has been there.

Roslyn Layton:
Now there were other issues with Facebook because they had a previous consent decree with the Federal Trade Commission, so the question was did they violate it? And that of course enables the FTC to make the kinds of investigation and fines that they did. So that is one issue, unfair and deceptive practices. We have a hundred year tradition on that. It's very important in American law and jurisprudence and so forth. But the other issue is now, can you say the second part? I'm sorry, what's [crosstalk 00:11:00]

Beverly H.:
Well, just let's now get into what ... yeah, what are we now getting into when it comes to regulate the companies any further? Like you were saying earlier, a lot of these terms get used in different ways and they have very specific meanings and people I think are careless in how they use it. What's being talked about right now when it comes to the attorneys general is not about the privacy of people, it's how do we regulate these companies. Correct?

Roslyn Layton:
Right. So I'll be honest with you, when I have ... I'm still trying to get a copy of the materials, but I've watched the 50 attorney general stood on the steps of the Supreme Court and each one of them had kind of different reasons. So there's not a specific reason and they're not even describing it. But what is significant is not since really the tobacco kind of litigation have we had attorneys general on both sides and 50 of them, all but California and Alabama, so also Washington D.C. and Puerto Rico's AG have joined, but they all kind of have a different beef against Google. Now I would say this. On their own, a lot of attorney general have tried to go after Google for things like Affirm was on the Google search engine and then they fell to page three and all their business dried up.

Roslyn Layton:
So that again could be a deceptive practice with Google not disclosing how their algorithm works. So the challenge here is that you have a lot of antitrust action. You've got the Department of Justice, they have launched an investigation, you have Congress looking into it. So I would guess I would say there's a laundry list of people upset with Google. And to be honest with you, I mean a lot of us in the policy community have been trying to highlight these issues for years and no one would really listen. And so now it's a bit after the fact and everyone ... there's a lot of things we're concerned about, what's going on in China and so forth. But the world has changed even in the last decade. So for example, do you really want to break up Google and Facebook and Amazon and then just give a gift to the large Chinese companies?

Roslyn Layton:
So maybe we are not happy about some of these American companies, but who do we want people in Thailand? Do we want them to use American companies or Chinese companies when they go online? So I think the issue is now there's even more at stake. It's very complex. There's also challenges because for example Apple is putting cloud data in China where the Chinese government and military can look at it. So that's a concern, that Google has worked with ... has done some projects with the Chinese government. That's a concern. So it's a very difficult, extremely difficult question. And in many respects, sometimes it doesn't line up to traditional antitrust analysis. So for example, consumers don't necessarily pay more out of their pocket. Right? You don't pay to use a search engine. But we are considering now, well, do we give too much of our information?

Roslyn Layton:
We don't know how it works. It's very opaque. The other issue is the companies are extremely innovative. So in a anti-competitive situation, innovation would be reduced, but that's not the situation now. We have a lot of innovation today. So I'll just wrap up on this one point just to show you how complex it is, because I used to be ... I was working in the field where we worked in digital advertising and analytics. A lot of the attorney generals think that because your advertisement appears high, did you pay more for the advertisement? That's not necessarily the case. Some of the best advertisers, they pay very little for their keywords because they have made a quality advertisement. It's very relevant for the user's query.

Roslyn Layton:
So in fact the bad advertisements get penalized by paying a higher price. So it actually rewards advertisers who make quality advertising that users click through, that they resolve, that they get what they're looking for. So the other part of this is that users get a lot of utility out of Google. Now there's definitely concerns with the operating system, there's concerns about business practices with vertical integration and so on. But it doesn't always match up to what the traditional antitrust analysis would look for.

Beverly H.:
And that's why I think it's good that even as we're thinking about, okay, what leads to innovation, what increases competition, we can actually look to Europe and some of the rules, you called them, I think they are known as GDPR is what they're known as there, is some of the privacy rules that they institute. And of course they deal with privacy differently outside of America, but what have you found when it comes to the small or medium sized firms that are trying to grow in comparison to these larger companies? Because like you were saying, these large companies tend to want these types of regulations because it benefits them somehow. Correct?

Roslyn Layton:
Right, exactly. Well, as I told you in my PhD when I studied this net neutrality policy, all the countries that adopted the hard rules, Google, Apple, Facebook, all the big American companies increased their traffic and revenue in those countries. And it's not surprising of course, they've always been asking for, "Well please regulate the internet in our favor." But what we've seen in Europe, and it's not just this latest policy of GDPR, it's been the history of the EU, is that they've always felt that they could manage innovation from the desk of the bureaucrat. Right? So they thought, well, we didn't like Google so the government will fund our own search engine and it will ... And France and Germany tried to create a competitor to Google, it didn't fly because there's something about ... every single day you have to have the test of the users and do they like your service or not and you have to respond to the marketplace.

Roslyn Layton:
So the European attempts to make innovation to compete with Silicon Valley have not really been successful. There's other barriers within the European Union. Americans forget that our whole nation was founded on being a single market. We have a common language and currency. We have interstate commerce and the European Union is still trying to resolve that. They have 17 currencies and 24 languages and so even with all the regulations they make to try to make it a single place, it still doesn't work. And that has a lot to do with restrictive regulations that say you have to treat every single piece of information as if it is a piece of property, that it has to be ... if you don't care whether it's sensitive or not, whether it's valuable or not.

Roslyn Layton:
So you don't get a lot of risk taking. The sad thing about the EU would be in the last ... you haven't seen small and medium sized companies grow. But the amazing thing with this GDPR is they promise that policymakers said, "Oh, we're going to go after the American companies and we'll see a level playing field and new European innovation will come." That hasn't happened. A year later, American companies, Google, Facebook, Amazon, they have more market share today than they did a year ago because the cost of the GDPR, it's several million dollars to upgrade the systems, to hire all the people to do all the reporting and so on. So small competitors, small advertising competitors have exited the market. They have closed down. They've stopped serving the EU. To put in perspective, 1000 media from the United States, they no longer serve European Union. From my desk in Copenhagen, I cannot get the Chicago Tribune.

Roslyn Layton:
They decided they're not going to make their site available in Europe because the regulations are so onerous. Now if you tried to do that in America would it violate our first amendment, free speech where the government is essentially regulating speech. So this is really what the lesson is is that you have to be careful with the regulations you adopt because you end up rewarding the largest players. So for example, Microsoft, they're around the world saying, "Oh we have to make GDPR everywhere." Well of course because they're already compliant and they don't want a new software company to challenge them on that because they have the market position.

Beverly H.:
And I want to talk a little bit just about our elected officials that have to make decisions on this. I find that whether somebody is Republican or Democrat, they're looking at big tech and trying to figure out what is the solution and what do we do about some of these issues that we're coming across. And I'm curious from you as somebody who's testified on the hill, both in the House and the Senate, what has it been like educating members of Congress on the issues of big tech? Like you were saying, it's such a complex issue, and they're being approached with different ideas on how to deal with it. Are they really taking the time to research this as much as possible? And of course they have different expertise, different members of Congress, but I just find in some ways it's kind of ironic that members of government are making these decisions when it's very much outside of most of their wheel of expertise. It's very different than traditional policies that they're used to.

Roslyn Layton:
Yeah. Well that's a great point, Beverly. Well first of all I'd say is the media will definitely like to highlight the conflicts in Congress between the parties and of course that's part of their shtick to do that. But personally I find it very gratifying to work on this issue because there's a lot of bipartisanship. And just given that privacy is something everybody cares about, they understand what's at stake. And I'm very heartened because I think honestly all of the testimony that I've prepared, the representatives and senators, they have asked extremely insightful questions and their staff people, they're very knowledgeable. They asked very good questions. And personally I'm okay that they have been deliberant about it. And in fact, I find it's the most encouraging thing of everything. And I'm much more encouraged by Congress than the AGs, for example, because they are more measured in what they look at and they know what's at stake.

Roslyn Layton:
I think that it's surprised a lot of people that the GDPR has not been this Nirvana that they expected and they're very concerned if they adopt regulation, it's going to hurt small business. We have literally millions of small startups in the United States. Last year, 40,000 new internet startups going and then just add that over the two decades that we've had, so they're very concerned about what they adopt. Now, that being said, and you would know this, Beverly, is there's a lot of cowboy ... I don't know what you'd call them, renegades in California who somehow they want to do their own kind of GDPR and they've passed a law, it would be coming in place in January and that is very destructive. It is. It's essentially a grab bag. It came together in a week and now we really have to do something because California being a large state and so many American companies are selling into California, that it can in many ways set the tone for the whole country.

Roslyn Layton:
So it's really important that Congress does kind of bring the country back to its senses and look at and make the proper framework for internet what you would call information privacy. Because if we don't want to go with what California is doing, it is disastrous. Already the minimum cost to comply with the whole laundry list of what the California legislature wants, it's a minimum of $100,000. And that's more than companies will spend on the entire IT budget. So many of us are very concerned about California, especially because of what we've seen in Europe and so we don't want that to happen to the rest of the internet economy. So it is a big deal.

Beverly H.:
And so when you talk about internet privacy, so this angle, is there something that we need to change legislatively to ensure that that remains or would it just be keeping status quo? So just kind of finally in wrapping up, what should we be looking towards Congress? What should they be doing or not doing as a whole?

Roslyn Layton:
Right. Well, the most important thing is Congress can preempt California. So it can create a national law, which it should because it's interstate commerce, that the California ... it will preempt what California is trying to do. And as you know, we have certain areas of our constitution where we have a federal policy that will supersede the state policy. So that's very important so that we don't destroy the internet economy for the rest of America. That is one area. But the other thing is we have an excellent organization called the National Institutes of Standards and Technology, and the actual technology of privacy is codified in certified standards.

Roslyn Layton:
There are actually standards that are written down that are ... what would you say, official or certified by different standards organizations, American Institute of Standards and so on, Global One, American One, and we can be able to say to the various companies that you can choose your standards and then we'll give you a safe harbor to transition to them and that you can disclose which standards that you use so that people will know. And then we can be able to have an internet economy that works with a set of standards that have been agreed to that are disclosed.

Roslyn Layton:
If you violate the standard, it's very clear, the standard is written. And that is a much better way for the companies to, where any organization can figure out which amount of risk that they want to take for the users to decide and that would be a great direction to go.

Beverly H.:
Well Roslyn, I always appreciate chatting with you because I personally learned so much. So thank you. I'm sure if it's helpful to all of those who are listening and for joining us when it's really late in Copenhagen. So I appreciate you taking the call. Thank you so much.

Roslyn Layton:
Anytime. Take care.

Beverly H.:
And thank you all for joining us. If you have more interest in the topic we discussed, you can of course follow Roslyn on Twitter. Her handle is RoslynLayton, and that is spelled R-O-S-L-Y-N, L-A-Y-T-E-N. And of course you can check out iwf.org for all issues related to big tech.

Beverly H.:
I also wanted to let you know about a great podcast you should subscribe to in addition to She Thinks. It's called Problematic Women, and it's hosted by Kelsey Bolar and Lauren Evans, where they both sort through the news to bring stories and interviews that are of particular interest to conservative leaning or problematic women, that is women whose views and opinions are often excluded or mocked by those on the so called feminist left. Every Thursday hear them talk about everything from pop culture to policy and politics by searching for Problematic Women where ever you get your podcasts. Last, if you enjoyed this episode of She Thinks, do leave us a rating or a review on iTunes, it does help. And we'd love it if you shared this episode so that your friends know where they can find more She Thinks episodes. From all of us here at Independent Women's Forum, thanks for listening.


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Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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