Discussion: (4 comments)
Comments are closed.
A public policy blog from AEI
The new Ajit Pai–led Federal Communications Commission (FCC) took some 50 pro-consumer and pro-competitive actions in its first 100 days, but these were not reported in most of the media. In the next 100 days, the media trend continued with little coverage of the efforts the FCC made to close the digital divide, which has been Pai’s key objective. For example, The Washington Post has published three times as many stories on net neutrality as it has on any FCC action and about two times as many on online privacy. Understandably, these are hot-button issues, but a review of the stories exposes bias and misinformation.
Consider the following news headlines on privacy from The Washington Post’s website earlier this year:
Some of the telltale signs of bias are loaded, emotional headlines with purr and snarl words; a sensational story with little to no evidence; and covering just one perspective of the issue, or an endorsement, tacit, or otherwise, of a political ideology. Typical tech policy stories suffer bias by omission in which important topics or perspectives are not covered at all, or inconvenient facts are omitted. Another typical bias is the label, such as “conservative scholar,” “progressive think tank,” or even positive labels such as “consumer group.” Confirmation bias — the tendency to search for, interpret, favor, and recall information in a way that confirms one’s beliefs or hypotheses (while giving disproportionately less consideration to alternative possibilities) — is also typical.
The headlines of these stories read more like editorials than news. Throughout the coverage, consumer and privacy groups are painted as if they are united on the issue (e.g., “Consumer and privacy groups condemned the resolution,” declared The Washington Post), when this is clearly not the case. Even Democratic Federal Trade Commission (FTC) Chairman Edith Ramirez, the nation’s top consumer watchdog at the time the rules were made, was against them, particularly because having two sets of online privacy rules creates a harmful asymmetry for consumers.
The key misstatements from The Washington Post are that internet service providers (ISPs) can see the information (e.g., websites) that subscribers visit and monetize that information. For one, ISPs have only limited insights into what consumers visit, and even that information has little value in itself. Further, The Washington Post’s story claiming that ISPs are selling browser histories cannot cite real examples of the practice occurring, and the experts they interviewed didn’t state the practice is a problem. In fact, raw browsing history is of little to no use for advertisers. It is predictive analytics, the ability to extrapolate future buying patterns, that matters. Andreas Ramos, author of more than a dozen books on digital marketing explains, “No company cares that Joe Sixpack looked at Playboy two weeks ago. His wife may care, but nobody else, because you can’t make marketing decisions on something that already happened. But. . . if we can predict what Joe do in six months, we can get the right message in front of him.”
It is interesting that ISPs would be so maligned when predictive analysis is not their wheelhouse, whereas leading companies in the space, such as Amazon, Google, and Microsoft, get limited scrutiny in the coverage. Ramos continues, “More than two-thirds of US households are Amazon Prime members. Half of Prime members no longer use Google for product search. They go straight to Amazon, search, read a few reviews, and buy. People search for information on Google and buy stuff at Amazon. Google earns zero when people search for info on eclipses or the capital of Texas. You can also pay Amazon to rank your product higher. Amazon Prime products also rank higher and have the bonus of free shipping and next day delivery.” None of The Washington Post pieces disclose that Amazon founder Jeff Bezos owns the publication.
There is no doubt that Amazon, as well as Google and other tech giants, are successful companies because they deliver value to consumers. But they also have been smart to deploy policy and regulatory strategies to win advantages. Would Netflix, YouTube, and Amazon Video be the giants they are today if they didn’t have government-ensured price controls for broadband video delivery? What if regulation made advertisers pay the cost of the broadband ad traffic rather than consumers, as is the case today? The FCC’s privacy rules appear to have been designed to deter ISPs entry into the online advertising market, saving the opportunities for a few large edge providers. Simply put, net neutrality (i.e., Open Internet) policies have worked to enshrine the market share of established companies, not to create new innovation by upstarts, as has been purported.
The Washington Post never mentions that the FTC has 40 years of privacy experience, has made more than 500 enforcements, and has successfully policed broadband consumers’ privacy from 1996 to 2015. There were no claims that the FTC was not doing its job or that ISPs were systematically abusing their customers in this regard. The only reason broadband privacy became an issue was because classifying ISPs under Title II in 2015 triggered the common carrier exemption, which nullified the FTC’s ability to regulate. ISPs voluntarily maintained the FTC’s standard in the interim. Fortunately, the FCC’s misguided rules were struck down in Congress, removing an important barrier to competition in an oligopoly market. We should welcome Amazon’s entry into online advertising, just as we should with ISPs.
Comments are closed.
1789 Massachusetts Avenue, NW, Washington, DC 20036
© 2017 American Enterprise Institute