The FTC will protect your razor, but not your privacy
With the recent FTC suit to block the Edgewell Personal Care Co acquisition of upstart Harry's, the Agency shows it can still protect trivial consumer staples
It’s good to know you can still count on regulators for some things. Safe-to-eat food, drugs that are well understood and safe if used correctly, and protecting the free market where it counts: cheap, easily gentrified razors.
According to Brent Kendall and Sharon Terlep of the Wall Street Journal (WSJ), the Federal Trade Commission (FTC) has filed suit to block the acquisition of upstart razor manufacturer Harry’s by Edgewell Personal Care Co. One of two companies in a market oligopoly along with mainstay competitor Procter & Gamble. The acquisition comes at a time where a growing popularity of online shaving clubs has eaten away at the market of Edgewell, with Proctor and Gamble competing online with its own Gillette Shave Club.
Prosecutors, three Republicans and two Democrats, unanimously voted to go ahead with the suit in what W.S.J. writes as, “the latest signal that antitrust enforcers across the ideological spectrum remain willing to challenge deals that they believe could lead to higher prices for consumer staples.”
What W.S.J. writes only works without weighing the changing definition of what can be considered a consumer staple, especially when regarding the complicated nature of digital tools and services.
The FTC has proven time and again in the Trump administration, and prior, that although the agency is one of definite character, it lacks in the execution of its objectives.
The FTC v. Facebook settlement in 2019 was a big deal. The agency had just levied its largest penalty, one of the largest ever by the United States Government, and it staff was excited.
Lesley Fair, a writer at the FTC’s news-event blog, opened an article about the civil suit with, “If you’ve ever wondered what a paradigm shift looks like, you’re witnessing one today.”
This was a massive precedent in privacy rights, consumer rights, and well deserved blow against one of the most contentious companies in modern America. But, taking a step back and putting the even in perspective clarifies how little impact the FTC’s decision had on Facebook and on the American consumer.
$5 billion is not a lot for Facebook. The company made $55.84 billion in revenue in 2018—a slap on the wrist comparatively.
Still worse, is the settlement really did nothing to restructure Facebook and its predatory advertising practices, the core concept of its business model.
As FTC Commissioner Rohit Chopra wrote in his dissenting statement, the company benefited more from this suit than it got punished. Facebook made more from exposure than the suit sought, it did little to meaningfully change the management of the company or its internal practices, and it didn’t punish those responsible for breaking the original 2012 regulation that got the company sued in the first place.
The only party that didn’t directly benefit from the $5 billion fine is the American consumer. The fact that target advertising networks know your precise location, personal information, taste, relationship status, contact information, health, and at times private conversations was hardly even impacted by this suit. If anything, this suit encourages multi-billion dollar companies to continue their controversial practices. If you could park anywhere you wanted and the worst penalty you’d face was a $5 fine that you’d earn back with interest, why wouldn’t you?
The FTC even has a precedent for claiming unjust gains from tech companies suits. In 2012, according to Commissioner Chopra, “the FTC obtained a penalty of more than five times [Google’s] unjust gains.”
The FTC has a responsibly to the American consumer to follow said precedents, especially on an issue so contentious and important as digital privacy and the impact of social media platforms post the 2016 election. Especially as the 2020 election begin on February 3, 2020 at the Iowa Caucus, there should be little doubt state, local, or bad actors will try to attempt another election hack. Is it possible that this election will go differently? Sure, but I wouldn’t count on a clean fair game.
Regulation
Because of decisions like this, the free market has been left to determine the extent of self-regulation needed to protection the integrity of American elections and the viability of its business. Facebook and Twitter have chosen two very different routes, both untested, that may prove fruitful at protecting the entire tech industry from the threat of Federal regulation come the next administration.
To be blunt, Twitter doesn’t matter. Though it may seem a hotbed of contentious progressive though, the platform of 330 million is primarily international, with only 20% of the platform being U.S. based. Consider, according to a Pew Research study, that 80% of tweets are sent by 10% of total users and anyone can see the platform with smaller metrics than Snapchat isn’t a large factor in this up-and-coming election.
Still, the company has eliminated political advertising from its platform. According to the New York Times, in part, this strategy exists as a challenge to Facebook Founder Marc Zukerberg’s hands-off stance—much like a five-year-old attempting to bully an adult for candy.
Jack’s impact on the world is overblown by the journalists and media aficionados who utilize his platform. Facebook’s 1.5 billion daily active users are most influential social media category and with the company continuing to allowing political ads in 2020, this group will inevitably be a target for future election hacking and decide the future of our country.
That’s not to say Facebook is taking the challenge of preserving international and American elections lying down. Facebook’s election integrity division has worked to increase accountability, page transparency, and remove election interference networks on its platforms.
We’ll discuss more about the impact of social media and digital advertising on democracies around the world and in North America in a future letter. It’s a very fascinating topic that’s very detailed and it deserves its own in-depth series.
For now, looking at the state of American regulation in its limited scope to California and through lame precedents, its impossible to understate the importance of action soon by the Federal government or the industry to protect the rights of consumers of this generic good and reduce the price we pay—not monetarily, but with our data and personal freedom.
Addendum
Thank you for reading the first installment of The Scratchpad. We won’t cover the topic of regulation, tech, or privacy every week, but as this issue is lacking in media coverage—especially as the 2020 election approaches—I figured it would be a good jumping point for this series and a primer for the type of topics this newsletter will cover.
Best,
Tristan Isham
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