tv Hearing on Tech Companies Market Concentration Data Collection CSPAN January 27, 2022 5:57am-8:01am EST
[inaudible conversations] [inaudible conversations] >> this ring will come to order. good morning and welcome to the subcommittee on responsibility and economic growth. i'm pleased to be working with ranking member kassidy on this healing promoted competition, growth and privacy protection in the technology sector.
senator cassidy will join us remotely, we're going to do a mixed hearing with some in person and some remote. under president biden's leadership, the american economy is rebounding. unemployment rate has dropped, remained pandemic height of 14.8% april 2020 to 4.6% today. 5.6 million jobs have been added since president biden's inauguration, more than were added in the first ten months of any administration since we been keeping records. child poverty is projected to plummet by more than 40% thanks to the american rescue plan. all of this has occurred despite an ongoing pandemic has plagued us now for nearly two years. families tried to adapt most echoed throughout our economy. demand shifted as people consumed fewer services while
buying more durable goods like exercise equipment and home appliances. if the economy recovered more quickly than many businesses projected all of this contributes to unexpected bottlenecks in our supply chain sporadic shortages at warehouses. these factors contribute to the price increases for many consumer goods but they are not the only reason prices have gone up. giant companies will raise prices when they have to but they will also raise prices when they can get away with it. how do we know this? when companies are simply passing along their increases in cost and profit margins stay the same but when companies see a chance to gouge customers particularly while everyone is talking about inflation, than
those companies raise prices beyond what's needed to cover their increased costs. right now prices are up at the supermarket and online. at the same time, energy companies, grocery companies and online retailers are reporting record profit. that's not simply a pandemic issue, it's not simply thing inevitably economic course force of nature, it is greed. in some cases, it is flatly illegal. one reason for the price gouging is fewer and fewer markets in america are truly competitive. when several businesses compete for customers, companies can't use a pandemic or supply chain tank to pad their own profits. in a competitive market, the margin above cost stays steady even in troubled times but in a market dominated by one or two giants, price gouging is much
easier. for generations, policymakers and regulators under both democrats and republicans promoted the market competition by starting in the 1970s, our government changed course. for decades now, regulators and courts looks the other way even as one sector after another has become dominated by one or two giants. the merger after merger without regard to the consequences and when small businesses were wiped out startups or smothered or bought out, they just didn't care. today as a result of increasing consolidation across industries, bigger and bigger corporations have more power to charge their customers any price they want. they also wield more and more power to underinvest in things like supply chain resiliency and more and more power to hold down
wages and benefits for workers and it's getting worse. earlier this month, federal trade commission chair noted by september this year, our trust agencies already received more merger filings than any other year in the previous decade. they are on track in 2021 to receive 70% increase, above average filings in recent years. giant corporations are taking advantage of this global crisis gobble up struggling small businesses and to increase their power predatory mergers. i introduced my pandemic monopoly act last year to slow it down and protect workers and small businesses and families from being squeezed even more by
harmful mergers during this crisis. i will reintroduce it this year because they need is where. the effects of limited competition in our technology sector are particularly severe and that is why i'm interested in exploring today's hearing. there are spillover effects across our entire economy. anticompetitive practices in the semiconductor industry exacerbated supply chain issues. big tech used their dominant to inflate prices throughout the online retail market and subject their workers to inhumane conditions during the pandemic. as ranking member kassidy rightly highlighted in his own work, tech firms collect and exploit sensitive personal information, often threatening national security, harming emotional health and discriminating against vulnerable groups. it doesn't have to be like this.
there are stronger antitrust laws and robust enforcement, we can ensure our economy works for american families, not just the wealthiest corporations. congress could provide better tools to the ftc and department of justice to investigate anticompetitive mergers and break up the companies that have had our economy down. we can also make it easier for agencies to reject such mergers in the first place. by promoting comparative market consumers and workers, we can foster a stronger american economy and stronger american democracy so i look forward to discussing these issues today and appreciate all of our witnesses joining us and look forward to hearing about your insights and experiences. next, ranking member kennedy -- kassidy, sorry for your opening remarks. senator cassidy.
>> senator warren, good morning. thank you all for being here today and thank you for our witnesses for taking the time to testify. we agreed the bipartisan competition growth and privacy protection the technology sector, i will focus my time on the privacy act the broker industry. it's relatively unknown to most americans, best practices and techniques into our lives. certain attributes and the information sold to those who may see fit or wish to purchase. a big fan of football, we've exd
something similar on the internet. a couple of times a year, the victim of a hack thousands if not millions of customers. they minimize those incursions, remove an entire industry that has more detail and subset of personal information. there is very little information brokers cannot sell they are not willing to sell. in this room, a good idea to sell profiles of american service members and that is what is happening. should have a conversation about what america data we think is okay bought and served without the knowledge of americans, what
six doctoral to be bought and sold. a list of personnel to be sold to foreign adversaries, should we allow risk of domestic abuse survivors to be sold to domestic abusers? we should have a conversation about what data is appropriate to collect and collect the data and have a dinner is sold or transferred to others. a conversation about all the things adversaries can do. experts to talk about the experts in front not. looking forward to discussing the issue. >> got a great set of witnesses here to share views on promoting competition growth privacy
protections, american technology sector and appreciate everyone being with us today. first, joining us virtually we have courtney brown, and amazon fresh worker at the companies fulfillment center and a leader with united forward respect. also a veteran of united states navy. also joining us remotely, we have the honorable call received from district of columbia's first elected attorney general, president of national association of attorneys general and chair narrative of the democratic attorneys general association's executive committee. previously, a managing partner, white house counsel for president clinton and staff attorney for the public defender
service of the district of columbia. third, we have barry lynn, executive director of the open market institute, his research focuses on threats of the 21st century monopolies to our democracy individual liberty, security and prosperity. next, justin sherman, cofounder and senior fellow at ethical tech, and initiative at duke university focus on research at the interaction of technology and ethics. mr. sherman status studies the sensitive data they hold on u.s. individuals. following mr. sherman, we have yell law schools china center and cyber policy fellow at the think tank new america. an expert on cross-border dataflow studies have a chinese government, how they collect and use data.
finally, we have ms. stacy gray. senior counsel at the future of privacy from, a data broker expert in her research centers on the intersection of emerging technologies and federal regulation and enforcement. increasing consolidation throughout the american economy undoubtably interprets to the higher prices worsening working conditions and privacy concerns. the pandemic has not only exacerbated these issues but has also exposed them more plainly. we can fix this together and we can make our economy work for all americans. i want you today, looking forward to hearing your testimony. ms. brown, we are going to start with you, you are recognized for five minutes. tell us what you want to know. >> okay.
good morning, everyone. thank you for inviting me to share my experience with you today. currently working at the fulfillment center and have been for four and a half yesterday looking at the service member in the united states navy and i took her commitment i made to the country then seriously as well as the commitment i take seriously now as a member here. i'm here today about amazon's business model, it is a threat to our economy. one out of every 150 american workers is an employee. multibillion-dollar corporation were on the backs of its workers by explaining that. i'm looking to you to stand up to corporations to protect us. the job i do, especially since
the covid pandemic began, come to new york city and new jersey. constantly stepping in and temperatures of negative 10 degrees and little to no rust. it's supposed to be 30% of people that we operate with 25 people or less every day. because our work load has increased, we are all hands on deck, not less so we can take turns getting breaks and much needed rest. amazon can barely retain workers. amazon's multibillion-dollar is made possible by altering same-day delivery to two day delivery the corporation has achieved this in scale through
brutality and associates like me and my coworkers for not working fast enough associates take time off to adequately recover and prevent burnout. from the moment we pulled in the parking lot, every step of the facility we take and if we fall behind in any way, we must be disciplined. we are punished to the place where we can't even take regular bathroom breaks. we have to often run to and from the bathroom and under two minutes so we don't get in trouble. on top of that, bathrooms are usually pretty gross. constant pressure and surveillance is why amazon has injury compared to other similar jobs. research has shown injuries are
higher with robotic movements. when i was a trainer, i found out firsthand how only 5-foot make it to the one or two month mark in due to injuries or over exhaustion. we are living in a country where machines are getting better treatment than people. between maintenance checks, they make sure they don't burn out. by the time i need to take off to recover from my mother passing, i had two days to plan a funeral and process my mother's death so i ended up taking a month off of unpaid time which was all i had at the time and it's only because of the amount of work we had. my sister is lucky because she
also works with me as well mushy had to literally work the day off her death as well as the day after, come to her funeral and return to work. two days later. imagine the billions of dollars last year and that's what shop has given me tendinitis, debilitating pain in my heel and ankle. having to stand for long period of time with no rust. this month where it was so severe, i ended up in the emergency room and i was home with have the time and didn't have enough time to take off, i had to beg doctors and nurses as quick as possible.
the expectation, people emerging through the pandemic nonstop, amazon would let us take time off. we are so exhausted we break down and cry often a coworker of mine had to stop breast-feeding her child early due to not receiving support when she had to come back to work. this is the type of environment amazon is perpetuating across the country. amazon associates have been fighting back against dangerous conditions for years so instead of fixing the problem, amazon government down on this model. jeff bezos himself recently told shareholders he is using more automated controls in the warehouse. the worst part amazon is setting up this type of sweatshop and blackburn recent desperate for work. they know there are people who
have limited choices and no we can't afford to complain or refuse the conditions. amazon takes advantage of the separations pandemic put a lot of illnesses in my area so even someone like me, there are no jobs or available or the pay isn't enough to pay rent or make food on the table. economic growth where incorporations and rules to maximize profit but ensure all means necessary including exploiting workers and small businesses. i'm looking to you to stop corporations like amazon to ruin our economy and dictate hundreds of millions of workers. i am asking to help me put an end to inhumane practices we american workers getting injured
from and are exhausted each day. our country needs elected officials to side with essential workers. >> thank you very much. i appreciate you coming in and testifying now we go to our eternal generally attorney general, you are recognized for five minutes. >> distinguished members of the subcommittee, thank you so much for the opportunity to testify before you today. as the first independent director attorney general district of columbia and also outgoing today, bipartisan national association of attorneys general, my most important responsibility is to protect d.c. consumers and corporate long wrongdoing. including investigating and where appropriate, five eight suit against defendants who
illegally exercise power, violate privacy laws. we've used our power and authority to sue amazon and local d.c. court from using its overwhelming market power. fifty -- 70% of all online sales occur on amazon's platform to control prices through restrictive agreements with third party sellers who sell on amazon's marketplace and wholesalers that feed amazon's retail business. amazon claims everything it does in business is all about the consumer. well, our investigation reveals otherwise. amazon indeed is focused in the evidence is compelling, on one thing. it bottom line.
even at the expense of consumers the ones it claims to care so much about. in fact, amazon is costing all of us more money by controlling prices across the entire electronic mail. like you, senator warren, i, too am a capitalist. people should get paid for their hard work, creativity and entrepreneurship. people should certainly watch profits increase as businesses increase. companies like amazon are unfairly and unlawfully increasing prices on all of us, stifling competition and taking advantage of consumers. the law must step in say enough is enough. in 2019, amazon was facing pressure from regulators over
anticompetitive behavior. we know the concerns on amazon and other big tech bipartisan as it gets. to put regulators at ease, amazon claimed it removed a particular clause in its agreement with third party sellers that prohibited third party sellers from offering lower prices or on better terms, competing online marketplaces including third party sellers own websites. amazon claimed it removed that particular cause. here is the spoiler alert. amazon deceived consumers with its bait and switch of replacing the initial terms of the agreement with different titles and different words that have the same illegal impact. i'll give an example of how this works. if i am a third party seller
selling for example -- i list my product on amazon because it reaches so many people. remember 50 to 70% of the entire electronic mall, in order to do so, so headphones at a price on the amazon marketplace that allows reasonable profit. after incorporating amazon's high fees and permissions. then i am barred from selling my headphones on any other platform other than my own website at a lower price even though i could earn a fair profit by doing so. i have two building high amazon fees and high amazon commissions into every price of the headphones i sell. why? because amazon forced me to
agree to that term in order to access its electronic mall. if they find out i sell my headphones even on my own website for a lower price, lower than built in fees and commissions, amazon requires you to be kicked off the amazon marketplace sanctions, financial sanctions imposed on me. third party sellers have two choices. they can sell their product on amazon under extremely restrictive terms and guarantee a profit to amazon and put third-party sellers at risk for only offer their product on other market basis. amazon controls so much of the marketplace, sellers have little choice. this imposes artificially high price as i've explained, all across the online retail space.
consumers lose in this as a result of amazon's agreements. often the agreements, third-party sellers can offer their products for lower prices. that is one of the bases for the lawsuit. just doing this with third party sellers, they are also doing it with wholesalers as well. recently adding to the lawsuit first party sellers for amazon to resell and retail to consumers. amazon lowers retail prices to match or beat lower prices on competing online marketplace, wholesalers are forced to pay amazon the difference between the agreed upon profit and where amazon has the lord retail price. this leaves sailors costing millions of dollars. wholesalers have increased the
crisis prices of the goods and competing in an online marketplace. they've agreed to do what amazon wants. that is to charge consumers more for products they ordinarily would have to pay. amazon's illegal agreements. all of these agreement reduce an online marketplace ability to compete with amazon's marketplace on price and results in consumers getting artificially high prices. even outside of this litigation, small businesses have complained and complained amazon has strong business ideas and got them off amazon's own. >> attorney general, i will have to stop you here in a minute, we've got about five minutes for each of our witnesses but we will be able to ask you some questions because i definitely want to hear this. is that okay?
>> absolutely, i am happy to stop right here. >> great, okay, thank you so much. appreciate it. mr. flynn, you are recognized for five minutes you need to hit your button. >> chairman warren, ranking member cassidy, members of the subcommittee, thank you for inviting me to speak with you today on this fundamentally important topic. i direct the open markets answer to ed it's good to see you today. economics of the governing of how people compete with an exercise power over one another. essential truth of human society is competition among people is inevitable. what people can control as corporations and markets are structured to promote liberty and well-being of the individual machiavelli of citizens to make wise decisions and the security and prosperity of individuals and of the nation. for two centuries americans were masters of engineering
competition policy to achieve these. american citizens use antimonopoly laws to make themselves the most equal free people in the world and the most prosperous innovative powerful. beginning your tickets out americans from both parties radically altered how we think about and enforce competition policy rather than aimed liberty, democracy, community, prosperity policymakers sufficiency only. result of that today americans face the bravest set of domestic threats to liberty and democracy since the civil war. today in america as courtney made clear, monopolies drive down the people's driving up the prices people must pay. monopolists threaten freedom of the press and of expression. monopolists find citizens and use people's arm secrets to misinform insight and enrage the same citizens for profit.
monopolists extort and steal other people's businesses. monopolists destroy better technologies and ideas. monopolists destroy vital industrial capacities. last year was office with facemask, this year with semi conductors. monopolists create dangerous dependencies powerful foreign states. monopolists strip america's communities of wealth, opportunity, independence, security and hope. none of this is new. i first want of how the platform monopolists threaten freedom of expression and democracy more than 11 years ago. myself, i first want of the painters of the supply chain concentration 19 years ago. there is good news, americans are swiftly awakened to interlocking set of crises motivate the great majority of americans from across the political spectrum want to see monopolists stripped of their powers and better yet, enforcers
and legislatures are on the move. justice department and ftc brought lawsuit against google and facebook in the most democratic antimonopoly action in u.s. history, attorneys general from 49 states, puerto rico, washington d.c. and investigations of google and facebook involving three additional lawsuits. there is a smart and urgent effort to strengthen antitrust laws here in the senate as with senator warren's proposal in the house and europe and around the world. perhaps president biden has personally condemned the promenade of the chicago school consumer welfare for richard poster. restored our nation's traditional focus protecting the american people and the nation itself from all dangerous concentrations of power and control. president biden appointed law enforcement smart enough and strong enough to get the job done.
today's hearing marks an especially important work forward in the struggle highlighting the need to learn competition policy is much more than antitrust law. competition policy is a combination of antitrust with trade policy, corporate governance, wall street governance and industrial strategy. nowhere is this more obvious than america's twin supply chain crises. that's why my written testimony focus on what lessons we can learn from role monopolists played concentrating so much risk and power in our production and transportation systems such as with semi conductors. i detail how we can rebuild industrial systems in ways that make us truly safe while also breaking inflation and boosting wages. our opportunity today is not really to rebuild what the monopolists have broken these last four years, it is to
relearn how to use antimonopoly laws to imagine and make in america far more democratic, forward-looking that any of us have dared to imagine in a generation. >> thank you very much, i appreciate it. mr. sherman, you are recognized for five minutes. >> distinguished members of the subcommittee, thank you for the opportunity to testify today about privacy issues raising american citizens. i'm a fellow at duke university stanford school of public policy i lead an ecosystem. virtually unregulated industry u.s. companies aggregating, buying and selling, america's intimate personal data on the market data brokers profit off vulnerability and insecurity for u.s. and its citizens. comprehensive consumer privacy
law vital, congress need not wait to resolve this debate to regulate brokerage. i will make three points today. congress strictly controlled the sale of data to foreign companies, citizens and governments. strictly control the sale of data insensitive categories like genetic health information and the patient data. stop companies from circumventing those controls by inferring data. all research at duke university found by the advertising data hundreds of families of americans. sensitive demographic information, political preferences and beliefs and whereabouts and real-time locations as well as data on first responders, students, government employees and current and former members of the u.s. military. data brokers contract and sell race, religion, gender, sexual orientation, income level, how
you vote, what you buy, you search online and what your kids and grandkids go to school. this harms every american particularly the most vulnerable and i'll focus on three examples. data brokers advertising data on millions of current and former u.s. military personnel. criminals brought this data to scan veterans and their families because of the military benefits they get from the federal government. foreign states could acquire this data to profound military personnel, track them and their families and undermine national security. chinese governments 2015 hack of the office of personal management is one of the worst breaches of federal government suffered. in the future there is no need for the chinese government or many other foreign intelligence agencies to hack the databases when the data can be bought legally from the open market on the u.s. companies. people search websites, advocate millions of americans public records and make them available for search and sale online.
abuse of individuals used the data including highly sensitive information on individuals and actresses, whereabouts and family members to hunt down and stop, harass, intimidate and murder other people. predominately women and members of the lgbtq community. there's little in u.s. law stopping data brokers from collecting, publishing and selling data on victims and survivors. data brokers advertising data on millions of americans mental health conditions. companies can legally purchase this data from other firms and music to exploit consumers. criminals already scan cedars citizens using rubber data and similarly could buy data on seniors with alzheimer's and dementia to steal away their life savings. foreign governments could acquire this data for intelligence purposes. our research found companies selling the data on hundreds of
millions of americans conduct relatively little know your customer due diligence and it's unclear how strong it is and practice. brokers may make customers fine non- disclosure agreement stopping them from saying where they obtained u.s. citizen information. part of talking about data threats to american civil rights, u.s. national security and democracy we must focus on this entire data broke which equaled system. three steps congress can take now. first, starkly control sale of data broker data, foreign companies, citizens and government which currently can entirely legally by millions directly or through front companies. second, strictly control even consider outright bans on the sale of data insensitive categories like genetic health information and location data used now to follow, stop and harm individuals. third, stop companies from
circumventing controls consumers, civil rights and national security. thank you. >> members of the subcommittee, it is an honor to testify today. i am a senior fellow at yale law school's center and security policy. last decade is an analyst of technology and data policies and national security community. i advise corporations on these policies. i will focus my testimony on china and data flows while my expertise focuses on china, i
will speak specifically about the chinese government's efforts to acquire data. my few the most effective solutions required united states put forward a more comprehensive data governance vision which stronger productions for security and privacy for all companies. some of these are specific to china but so much is much bigger. lawmakers have the opportunity to address transnational security threats but while also advancing a more secure ethical democratic internet and its own right. chinese government embarked on an ambitious data strategy, the goal of acquiring, controlling and unlocking value of data. my written testimony submitted for the record have more detail with recent plans and directors. chinese state information flows and beyond china's borders.
strategic and economic asset. concerning national security risks and it presumes sensitive national security information and personal records of roughly 20 million individuals from u.s. office of personnel management. if that location has social media data acquired on the open data market combined with what beijing already has, china for target individuals and sensitive government national security positions in the military. manipulation, coercion and blackmail. this particular concerning counterintelligence perspective. chinese online services network infrastructure grows in predominance around the world, it is possible the chinese government could use this position to monitor data processes are brought just as the united states had done as shown utilizing data
transmissions across u.s. intelligence networks. we simply do not know what value and harm data created now to hold in the future. we must grapple with the implications of the ccp gaining control of information flows beyond china's close economic system. i have the following recommendations. first, the analogy of data is false and leads to bad policy. it assumes data is a finite state resource and efforts by both beijing and washington to board data from each other would only lessen national power, not increase it. instead, congress should mandate stronger cybersecurity protections and basic standards for what data can be collected and retained in a comprehensive federal privacy law to protect american data not just from
sophisticated state hackers but also unrelated industry of data brokers around the world, trading and consumer data without transparency or control while comprehensive federal policy law moves slowly amid much debate, having baseline rules for the data broker district would close off prime target for exploitation now. currently, there is nothing in our regulatory structure that would prevent the chinese government from buying american citizens data. bans on chinese software applications will make us more secure or safe. tik tok for example, were an american owned applicable you could still legally by the data on the open market. american data is shockingly ex post and will remain that way as long as restrictions on data flows are only focus on specific companies deemed adversaries. u.s. should work with
like-minded government to develop a common set of standards and safeguards, perhaps building off initiative put forward by the chinese -- upper chinese, japanese government known as data free throws with trust. specific recommendations in my written testimony but in conclusion, action by the united states offering an affirmative compelling vision of u.s. data government, its own right will only make the united states less secure, less prosperous, less powerful and allow space for chinese companies controlled by the ccp to flourish. thank you. >> thank you very much. >> thank you members of the committee for the opportunity to testify today. i work future privacy form in u.s. law and emergency consumer privacy regulation.
i've been asked to speak to the topic of data brokers. privacy advocates federal trade commission and members of this and other senate committees have long called for greater transparency and accountability in the data broker industry regulations long overdue. many of the most influential reports published on a decade ago have influenced debate and then, much has changed. significant examples machine learning and artificial intelligence, adoption of consumer technology has become universal with 97 u.s. adult firms and additional devices. legislative landscape evolved more slowly and largely not kept up. since 2018, california and two other states have consumer privacy laws, three states established limited data broker specific regulations and many are focused on transparency with data broker registries while others such as california privacy rights act with broader
consumers to opt out of sharing of data. much more work remains to be done. like to make two points regarding data brokers and then get recommendations. first, a term data broker has been in an ongoing challenge because it's a broad spectrum of diverging companies. leading definition includes businesses to collect personal information of a consumer, which the business does not have a direct relationship. many hundreds of businesses while under this definition and use data for a wide range of businesses that include what fishermen pointed out including marketing advertising, databases, identity theft, some of these activities directly benefit consumers such as hughes updated to protect bank accounts against fraud activity but others primarily benefit purchases or users of data such as advertisers with fewer or
little benefits are in society. second, lack of direct relationship with consumers, characteristic of the broker industry is at the heart of concerns on privacy, fairness and accountability also present one of the greatest challenges, procrastinating data regulation. director of consumer relationship such as restaurant, hotel, retailer, social media network can collect large amounts of personal information about u.s. consumers today directly or purchasing it and in some cases, it exercises enormous market power as we have heard. there is still some degree of accountability to users aware the countries exist and can delete accounts or raise alarms. a direct relationship with consumers typically does not have the same interest,
incentives and in some cases legal requirements to limit data and protected against misuse. lack of consumer relationship also means businesses engage in legitimate data practicing and cannot rely on traditional historical privacy mechanisms. meaningful from consent, where opting in may be impractical or impossible to obtain in these cases. while opting out after the fact tends to be most safeguard and impractical for most consumers to navigate, we know consumers can be overwhelmed with choices and knowledge to assess future risks, complex technology or future potential secondary use. what does it mean? congress should pass states on regulation that establishes rules for both data brokers and first product companies. address gaps in current u.s.
sectoral privacy and should incorporate but not rely solely on consumer choice. privacy law should codify clear limits on collection of data and apply accountability measures such as transparency, risk assessment, auditing from limitations on sensitive data and retention. in the absence of comprehensive legislation, there are a number of other steps to take over privacy data brokers including (trait permission to continue deceptive trade practices through funding, staff, establishment of privacy bureau limiting ability agencies to purchase information data progress and legislation for uniquely high-risk technology biometric and facial recognition or updating existing federal law such as reporting act to more effectively cover effective uses of data. >> thank you very much.
appreciate all of your testimony here. now i recognize senator whitehouse for five minutes of questions. >> thanks very much. this is a fascinating and important hearing and i am delighted to have witnesses here. facebook and google have been profiting off some of the worst problem peters, climate denial, digital eight, ten fringe sites that fuel 69% of climate this information on facebook so a little bit of focus, address this problem if it's only ten major propagator's. they make millions from google ads and runs alongside limit denial content. can you talk about how our
information ecosystem suffers when a handful of companies control what people see and how they perceive reality, a communications monopoly means in a world in which there is so much deliberate denial propagated by industry. >> thank you, senator. it's a fundamental important issue. what we see today, understand google and facebook today are communications corporations of the 21st century. these are the at&t's and western union's of the 21st century. at&t and western union, they were prohibited by law from many belated house spoke to one another. google and facebook business model is based on past manipulation. the reason they take in data is
to manipulate you. massive manipulation machines. the way they make their money by renting out manipulation machines and calling it the money they receive, they call it advertising. what we have in the midst of our society rather than networks that connect people and empower people to speak with one another and interact with one another, we have machines designed to set people into conflict with one another, feed them false information, to determine how people vote so they are ready, willing and able tools for false information propagator's. >> when they were established, i think the idea was the systems would be used by procter & gamble to sell soap and tired. what they now do is rent themselves out to vladimir putin, climate deniers, the
chinese communist party, whoever comes along. >> let's switch to the data you're talking about that they have gathered and asked the witnesses who spoke about data privacy and brokers, what does somebody listening to the hearing need to know about what companies know about them, what data brokers can extract from companies know about them so and to what extent that information can be individualized back to them potentially by foreign bad actors, foreign governments. >> data brokers know everything about pretty much everything every american. where you work, where you kids go to school, how much you make,
here's race, religion, sexual orientation and your entire business model to target this to individuals. the purposes of targeting specific individuals so the profiles are out there on the open market for sale. >> if you are running psychological warfare operation involving american public officials or american ceos or various decision-makers in american society, how valuable o'toole would it be if you were a foreign government to look into people's eyes and understand you can realistically draw about their shopping habits and so forth. >> incredibly valuable for that, you can buy databases right now where people search online, what they felt and how they think so is all out there on the open market. >> my time is up, thank you chair warren.
if i could, i'd add one question for the record so as not to take up too much time but one of the things we hear in finance committee a lot, our chairman has joined us, he is very active on this subject, if we make big american companies pay a fair share in taxes, that will make them anti- uncompetitive against foreign big companies and that is the argument republican friends always make. they ignore when big american companies don't pay a fair tax burden, gives them competitive advantage over small american companies. you have apple and google who have come up with double irish and dutch sandwich and all of
these text tricks they used to avoid paying their fair share and i would be interested in your views again but not now because my time has expired, and how that current rates competitive disadvantage with potential against them for competitive advantage in the u.s. to what extent oxen financially similar monopolistic power because they put themselves into a place where they don't have to pay taxes but all the competitors have to cross our competitors have to. >> thank you very much from a appreciate that question in writing. >> thank you. senator cassidy, you are up. >> thank you all for testifying. our country --
[inaudible] we make a tremendous investment in the va hospital and other services to include benefits to help these folks who have offered so much. when you speak about how a data broker can sell personal information for active military personnel, i presume a veteran, failed to allow a company to basically rip them off of these benefits they receive. how and where, how does someone get such information, where is the price of the profile and is it safe to say companies are getting rich off of using this data to trick our service books
>> how do they know somebody from the military? >> because the election and buying and selling of this information is so unregulated it's very easy for these companies to put pieces of information together to figure out how you are. much like they may track where you go during the day and spend how much you and your household make they may figure out if you are in the military. >> with that location data except an occasional all deployment in the military and with that through others. >> likely both.
>> because with the idea that which is otherwise restricted just violates that with the dna position in terms of privacy. >> and this is one of the major problems that needs to be addressed in regulation because increasingly through apps and it can all lead to the types of information sharing which you are describing and that is directly collected from consumers through those data sets. >> and that which is connected
to the internet to have an app that could theoretically to approach the information from that which is a smart car so is that true? >> much of that commercial location data. and that is tied to device id. and when it measures like behavior and all of that information. >> thank you very much senator cassidy. >> senator wyden. >> thank you. thank you for getting into these issues.
senator cassidy just mentioned the modern car is a computer on wheels. and the sleazy unregulated world of the data brokers with the government agencies that were to eager consumers for this information we pushed apple and google to finally get the sleaziest data brokers out of their stores and businesses. and i'm glad we are making progress but we have a lot more to do and i want to start with you. and then important point with how foreign governments to run disinformation campaigns and
identify undercover government personnel, and government employees. and i have been working on legislation for some time now to deal with the bill to be introduced shortly. you agree congress should enact legislation to strictly limit the exports of america's personal data to high risk for nations and companies to address which is a demonstrable national security threat? >> there is a huge national security threat and congress needs to control the sale of data for those as you reference it is all too easy to get that on the open market. >> we have also been looking at the whole issue of how the us government agencies bypass the courts by buying america's data through data brokers.
introducing bipartisan legislation the fourth amendment is not for sale. do you agree the government exploitation loopholes is a serious problem? do you agree that congress ought to close the polls by passing legislation quick. >> absolutely. the fourth amendment is not for sale. >> tell us how this connects with privacy issues. i have also introduced another piece of legislation. the mind your own business act. and that becomes law and mr. zuckerberg would have already faced major sanctions for behavior connected to privacy violations. how does the whole area connect with privacy because on the finance committee we are increasingly looking at
privacy issues. for example, we feel very strongly that wealthy tax cheats right now are as likely to be audited by the government to be hit by a meteor. we have to do more to root out corruption. but we can do in a way that is consistent with protecting people's privacy. i am a privacy hawk i will put credentials up against anybody in the united states senate. tell us how this connects with the broader expanse to protect people's privacy. >> one is the sheer scale and volume that is becoming increasingly untenable of the law enforcement and national security and commercial
collection and use of data that originates for a particular purpose and with that being used for secondary purposes by a government agency. >> and that privacy is a massive economic and national security issue. >> and with those economics and national security and privacy are directly linked. thank you to all of you for your good work senator warren has been a long time leader is making sure that we hold these major economic forces in our country and holding them accountable. by the way i was just in oregon and people are asking me about these issues. being successful and ensuring
there is accountability are not mutually exclusive. we can do both. of course we want our businesses to do well. of course we want them to be profitable. but they can also be accountable of key american values of protecting people's privacy. we want everybody to know we are so please senator warren is giving us this chance this unregulated data brokers to put them on notice today and tell there are serious consumer protections with those other measures to be accountability. thank you. >> thank you to senator wyden and for your long time leadership in this area. this is how we will make change. thank you. thank you for all you have done. talking about another aspect from the issues we have raised today when congress passed the first 80 trust laws to protect local businesses and to
protect democracy from powerful corporations to undermine competition and crush workers and gouge consumers. starting in the seventies the government reversed course. corporate ceos and lobbyists push the idea that corporate behemoth is good. congress uses complicated models to say if we just let big corporations get even bigger, they would be more efficient, lower prices and they would compete better on the world stage. unfortunately too often that is not what happens. take the semi conductor industry for example. hedge fund managers took over the biggest chip manufacturer intel. it grew its market size to the dominant position through anti- competitive and predatory practices. and then with the competition
and then to weaken the fundamentals with impunity. and from 2001 through 2010 instead of spending more money on innovation, remember we are talking about the semi conductor industry come and spend the on —- instead of spending more information on ideas or more efficient manufacturing here in the united states, manager spent $48 billion on stock buyback while they have hollowed out a once great company. so you know a lot about the semi conductor industry. did consolidation, particularly the growth with intel lead to greater efficiency? >> no senator. the opposite. >> did it at least make intel
a stronger competitor on the world stage? >> the opposite. >> so in your assessment, what exactly did happen as a result of intel's growing dominance in its field? >> first, you measure $48 billion paid out between 2001 and 2010. that allow them to pay out much more between 2010 and 2020. actually $130 billion over the last ten years. so this corporation grew much faster but this results in higher prices it results in more power over workers and not just those on the assembly line but also the engineers.
these are the people that we count on to develop a better future and we have concentrated power. we see less innovation and with this extreme concentration of capacity we are seeing and with all that eggs in one basket and then to dismiss as fragile and catastrophic failure. you have a system that has other powerful countries like china, power over the people that depend on capacity by threatening to disrupt shipments in taiwan. leads to massive shortages the structural shortages that we see leading to the shutdown of assembly lines. all around the world. not just america but 50 percent decline of production of cars.
we see toyota 40 percent decline of production in q3. this equals vastly higher prices for newer cars vastly higher for used cars vastly higher for rental cars because we cannot replace them with newer or cleaner cars. >> consolidation clearly does not strengthen the semi conductor industry but consolidation or lack of competitors in this field. so to create the supply chain crisis. and now as you rightly point out with the semi conductor chips other manufacturers like auto companies cannot meet demand at the same time the orders are stacking up because they cannot get the chips.
and what has been managed from the same executives that exacerbated the crisis by failing properly to invest in their operations and infrastructure asking congress to bail them out to make the investments they should've been making years ago. excessive concentration is a real problem. is also a problem with the domestic logistics and supply chain operations and it applies obviously to date tech firms. but amazon has grown bigger and bigger and profit to skyrocket. have the logistical operations improved?
and especially with the covid crisis? can you speak to that? >> but it's all about pushing out and it used to be about the quality of giving the customers. they don't care how the workers are trained but is just about quantity. and then sending out a lot of food and everything. it's really frustrating because we are at our limits so they preach the customer
obsession but for the hardest working people and workers cannot do their jobs well because that is the bottom line. and if you attempt to try and that customer obsession than they're actually terminated. >> . >> amazons profit had exploded during the pandemic even though the deliveries have been significantly delayed and services in a competitive marketplace amazons rivals could compete on these factors providing a reliable service but there is no competition
consumers get higher prices and worse services while amazon gets even richer. markets can produce lower prices markets can produce more robust supply chains but only if there is competition when giants are allowed to dominate an industry everyone else is. >> i have a series of questions. so then the military personnel that is the data is that information that should be regulated.
>> certainly. it is not necessarily name and contact information. will be the device id related to a mobile phone. that it is not personally identified to a certain extent and while it has been lessons the fact remains that persistence and precise location information over time it is very straightforward to go back to an individual person because those limits are unique over time. so that is one of the unique challenges specific to the
industry. >> some i.e. keep peers about to die you get a tour of my kitchen. [laughter] but what is the difference between the data and how do i asked them in suppression. >> sure. so suppression is an industry term that is frequently used for the purposes of describing when a company has a list of individuals of consumers or
individuals or devices for the purpose of excluding devices from products and services but not necessarily deleting the underlying data. there can be a range of reasons to do that. one of those for example is to have the art about request that are required with the emerging privacy laws. for example to automatically collect large amounts of information from public records and then to request data from individuals and release that data and then continue to delete in the future unless they retain limited suppression. >> and in using the suppression to mark this. so that data is suppressed and eliminated. >> it just depends on the use
case with marketing and advertising. and those to exclude certain segments from those advertisements with the loss of the child. or the loss of pregnancy what they used to exclude those households from that marketing for baby products. so it depends on the use and there is risk associated with those more sensitive categories just by the maintenance of the suppression. >> frankly with that legislation and in that no wants so it actually sounds like as you suggest to be
negative as well so this is another new ones and in the written testimony with the fact that this can be helpful so if you wish to look at an example using location data to establish at a conference in which covid was known to have affected people and therefore you can't do that so give you this location data were everybody would go back to and that where people have come from from the northwest and the northeast and then clearly with that data in another
sense and the using the data appropriately and then i should take this route or another? that is being used nefariously. >> you are right to point out. and there is large commercial data sets and with members of the industry to provide to help assist public health efforts so one of the nuances here is that when we talked about information practices and privacy there are
increasing concerns around the fact the data is collected in the first place whether for good or beneficial purposes that most should not be on but then for a particular service and then not to be reused for a secondary or incompatible purpose and what commercial research is technically incompatible because that is not the reason the data was provided so with those nuanced exemptions that sensitivity data to groups and society are all part of regulation. >> and that cannot be disputed it with that period
legislation to take information from those who are stakeholders and academics to analyze to try to get that down. >> thank you senator cassidy. so as the attorney general pointed out amazon controls between 50 and 70 percent of the 430 billion-dollar market online for consumer goods. prices for everything from mattresses to motor oil are going up and why is that happening? and huge part of that market dominance to squeeze more dollars and the third-party sellers so one of the
witnesses file the lawsuit for this very reason and a particular focus is the impact that amazon calls fair pricing policy and then to follow up on the example on this policy so if i make earphones and sell them on the website i just want to make sure we are clear if i want to sell them on amazon to access a huge marketplace online and extend the reach come i have to pay amazon fees and agreed to their terms. my understanding is so thanks to these fees i have to increase my prices to ensure i can still turn a profit.
so now i have to charge $130. but the worst part is and i have to have be charged on my own website and every other platform where i am trying to sell my headphones. these inflated prices for american consumers. so attorney general, to go back over the example that you talked about you also mentioned how amazon forces wholesalers to pay more as well. so where do they say that with wholesalers as well? >> you are exactly right. that is no surprise to me. with respect amazon forces to
reach an agreement in regards to what the price will be. here is the deal. if amazon lowers the retail prices then the wholesaler is the difference upon the agreed-upon profit that they made and the money that amazon realizes after it lowers the retail price. it has profit protection so also to mention look at the
they agreed to charge higher prices? and when they get caught they can go to jail under federal law. that accomplishes everything. and the higher fees are inflating prices on its own platform as well as in stores and other websites through the anti- competitive contract positions with third-party sellers and then the prices go up for millions of americans and they can't see it because nobody does price comparison to see what is happening. that is the same with a everywhere they go in it shows up as inflation. >> but this will make your point. so between 2014 and 2020 amazon.
and amazon is estimated $121 billion in fees and they are doing this to be extremely profitable. they don't care that consumers are paying far too much for goods but this is focusing 100 percent on consumers. and then to utilize the market power to extract every bit of profit that they can. >> so the question is obviously how do we get away with this ask we would like you to focus on how amazon's
dominant market position contributes to this power felt throughout the economy? >> i think the example that i gave and that you accentuated frankly and made better is the best example and that is what amazon does it artificially built as commissions. but no one not even you or me can sell for cheaper that we
were forced to agree to sell that. if we don't engage in that agreement it's up to 70 percent of the marketplace it only leads to the tollbooth the tollbooth keeper can raise the prices and us the driver has no choice but to pay whatever they are asking if you're trying to go down that road. we appreciate the work that we look forward to helping with that legislation. >> i very much appreciate that because i appreciate your point between 50 and 70 percent of those that they already own but yet he keeps growing been not just by sales because they keep continuing to acquire. back in may and propose the
acquisition of mgm studios to be eight.$45 billion deal. i will letter to the ftc commissioner asking them to review the deal and to evaluate with workers and prices in other markets in the amazon ecosystem if they wanted to oppose the huge merger it would be a challenge to successfully block at. everything we've heard from the attorney general so can you say why that is? >> yes. thank you senator. first it will be very expensive in time for our limited staff to go up against the richest corporation in the
world. wrench after wrench after ranch it is also very expensive in terms of the expertise they have to pay for economic expertise and put millions and millions of dollars often into the kitty and even with president biden's renunciation of the consumer welfare philosophy the consumer welfare philosophy to focus on efficiency continues to shape how the judiciary will look at this issue and they have to be ready with this expertise the third reason it is very difficult to communicate with judges in a stylized language of consumer welfare and efficiency this is the issue of power and democracy and human liberty and we have to
talked about this in terms of efficiency so judges are trained to use common sense to enforce the law and when you use consumer welfare framing you are speaking and nonsense. >> president biden has experts to lead the antitrust efforts at the ftc and tmj. we believe and competition and all have strong cases that congress needs to do its part to make sure they have the resources and that they have the tools to wage these battles. otherwise we will see companies like amazon with all the crisis of the day we are dealing with. it's important we step up on our side to. back to you.
>> so the question is for you. so first the testimony speaks of the need to have a comprehensive arrangement between countries if you will if we take the eu as a block in order to have some sort of an agreement. >> and the reason i say this is i have been told that the geo data protection regulation
in the eu risk making the eu a digital colony through china it is so restrictive that the big data sets that are required to enhance research with a high are almost impossible to construct i don't know if that is true but nonetheless that is what i'm told. so there is something here. how do we allow those data sets required for ai to be constructed? and how do we have a governance that would exclude china with the espionage as a bad actor and then have the fruits of this and then you mention specifically the japanese with the trust
paradigm so i think i'm giving you the wrong direction and i will turn it back to you. >> thank you senator cassidy. a few key points is that the us security and prosperity relies on access to large international data sets. that tied with other areas, this has a new wants how do we allow global old dataflow of home and international? and a big important step here is making sure we have her own house in order first the trans-atlantic dataflow and it's important the us put forward its own vision of data privacy first. it should not be copy and paste. the topic of this hearing focused on antitrust that one
of the most important critiques of gdpr that it only ends up serving those companies that are wealthy enough to comply with a very heavy burden that comes along with it so with that concentration of power in big tech while there are still limitations on privacy protections. i think of the japanese motto to think about how can like-minded countries come together to put in place certain standards to allow data to flow with certain conditions in place? has to be a certification regime with the privacy protections already outlined so that required new ones as well with the committee to do that. >> now does that require and
international treaty? can we pass legislation in alignment with others with that collaboration? >> i think this is when i have to get back to you on the specific nuts and bolts of those tools that are in place i will follow up with you and your staff after. >> so we learned the chinese government has example could approach this as the military personnel. and then as we have other information that those with
that legal pressure on —- purchase of the security forces of china. >> the chinese government is moving rapid the ahead with that which is deemed vital to national security even in the commercial sector to put in place a data security to put forward the data classification scheme to move across sectors for what kind of sector is to national security and that has new higher obligations as well as localization requirements overthrew the data can be shared with. >> i think it was you saying it could be counterproductive and that data is essential to the economic as a whole
linking to national security so in your mind is what they are doing counterproductive? think the chinese government is shooting itself in the foot by over classifying the kind of data that is vital to national security. but theory what they are trying to do is say certain kinds of data is vital to national security and needs to be lockdown and other kinds of data should flow and circulate in the economy. know how that will happen in practice is another story but there could be something that mr. sherman president biden in the executive order and with that security risk of transactions with it should be
restricted and that executive order not all data but one thing we can do is have a more thoughtful process following that executive order around what kind of data is entitled to national security and subject to higher protections and which is less sensitive and subjected to more sharing? >> is there any sort of data? of course we say location data and use it for xyz purpose this is very important. maybe you just want to hear this for city planning et cetera so if you have another robust data set to compare that to? >> as mentioned there is a difference between data with
the social security number attached but at the end of the day you can identify as we have right testified there is so much by different companies it's so easy to identify people by name. >> so now i will sign off because they have to transition that for your testimony thank you to those witnesses who didn't ask questions but we found your testimony very interesting. >> thank you for being such a great partner on this i really appreciate it senator cassidy and i am delighted with the witnesses you have invited today to learn from them and to have many follow-up questions for the record thank you for your partnership this
is just the opening-round and we will keep going. i have him around of questions i would like to ask right now. but now i'd like to focus on market dominance and the impact on workers so too long antitrust policies have focused on prices and consumers which is important and it shows we have week enforcement of those policies and it lets them increase prices across the board also how consolidation creates other problems particularly for american workers when the's companies merge the executives like to talk about the new efficiencies. they usually mean they will lay off workers and cut wages. so if companies grow more dominant they have more and more power to cut wages with
no real consequences for themselves because they know that is industries become more consolidated workers have fewer alternatives this means those that are subjected to dehumanizing conditions they cannot just move to do with the antitrust laws when it needs to better address this you work for amazon fresh a lot of people order groceries for delivery and don't think about it but there is a process that happens behind the scenes to accomplish this feat can you explain how conditions how it has changed during the pandemic.
>> so is an issue go to the website it causes a chain reaction of people in the warehouse together it is a small team of people that you know looking at the numbers and who are impacted running around the warehouse is bigger than a football field but then an event smaller team and then to package the items out and then it goes to a smaller amount of people and then depending on where it is going on the conveyor belt and then it goes to my people and then
nonexistent on things you have to work. >> this sounds really grueling. and then to find better employment and then to grow like no other company and with the small local businesses are closing. if conditions are just bad at the amazon workhouse what other employment options do you and your coworkers has to support yourself and your families? >> a lot of my coworkers don't really have very many options
open in new jersey. so most of the jobs warehouse jobs but they don't pay enough. so then we are stuck taking advantage of any warehouse like this. so we know we have no other choice due to lack of regulation and everything to protect us. >> so you are right. it is not an accident. so in your industry but to be equipped amazon can pressure other companies to follow suit with the poor labor standards were to put them out of business. but it was announced last week that the amazon facility in alabama workers are entitled to hold the new union election. if that is successful it will
be the first union ever in the united states. but i will ask about what it is like to negotiate with amazon if you don't have a union on your side. they claim that direct connection between managers and associates and then to wristband respond to the amazon employee that can you tell us and then talk about negotiating. >> so then to find a solution
but they continue to exploit us and then to speak out those conditions so amazon especially to say you will be written up i tried to defend yourself is not an issue it will not go to well. >> i am very concerned that the workers that are most at risk during the pandemic are more likely to be women or people of color so that just varies depending on the job. so the one thing i want to ask you, so what have you observed about amazons treatment of
racial minorities and women? >> they will hire anyone and everyone. that is true. whether or not you can be promoted and what you will be doing. many are black and brown and very few of us are in the promotion process so then it looks okay but mostly they higher white managers out of school that have never worked for amazon but the majority of the workforce is black and brown so when they do promote you the pay is different from those who are hired from outside so if you are black and brown making manager with
internal promotions you get a lower wage compared to someone who's coming from outside that gets a higher wage and then it makes it even and more scarce with any type of leadership with any of that responsibility usually a white guy over someone that looks like me. >> i appreciate your testimony to talk about this. this all suggests to me that if we really tackle the dominant power issue by fighting abusive employer practices we could accomplish two important goals to strengthen the labor force and advance gender equity vigorous
competition is better for all americans who work and who purchase goods. thank you very much for your testimony i do appreciate it. i now ask for unanimous consent the statement can see for the subcommittee from the teamsters and the strategic organizing center for antitrust policy for workers including the tech sector to be entered into the record without objection. so ordered. united states is that an inflection point with income disparities is what we haven't seen in our lifetime the government lacks enforcement of antitrust the past few decades is a huge part of the
second we have to give our antitrust agencies better tools to break up the anti-competitive deals that are most harmful to our economy like facebook's acquisition of instagram and finally our competition policies must safeguard our workforce. those synergies that reduce corporate costs often can modify american workers. real people with families to support deserve to work with dignity are paid a huge cost when they reduce competition. more than 100 years ago our antitrust laws were not designed to promote efficiency or to increase all i it protects us from being at the mercy of economic -- that can exploit
customers. they were also designed to protect their democracy from the corrupt influence of giant corporations. congress needs to do its part once again to make our economy more competitive. so i want to say again thank you to all of our witnesses. i appreciate your being here today in your testimony has been very valuable and appreciate your answers. for any senators who wish to submit questions for the record pooser due one week from today tuesday december 14. our witnesses will have 45 days to respond to any questions and i want to thank you all again and with that this hearing is adjourned.