On this special episode of
Recode Decode, hosted by Kara Swisher, Kara is joined by political strategist and CNN analyst Hilary Rosen, who will be co-hosting several episodes in November about the intersection of Washington and tech.
The guests on this episode — former prosecutor Beth Wilkinson and Yelp VP of Public Policy Luther Lowe — talk about the hearings in D.C. that put representatives from Facebook, Google and Twitter in front of Senate and Congressional lawmakers.
You can read some of the highlights here, or listen to the entire interview in the audio player below. We’ve also provided a lightly edited complete transcript of their conversation.
If you like this, be sure to subscribe to
Kara Swisher: Recode Radio presents Recode Decode, coming to you from the Vox Media podcast network. Hi, I’m Kara Swisher, executive editor of Recode, and you’re listening to Recode Decode, a podcast about tech and media’s key players, big ideas and how they’re changing the world we live in. You can find more episodes of Recode Decode on Apple Podcast, Spotify, Google Play Music, or wherever you listen to your podcasts, or just visit >Recode.net/podcasts
Today I’m in Washington, D.C., with my friend Hilary Rosen. She’s a political strategist for SKDKnickerbocker. Hey, Hilary. You’re also a CNN analyst.
Hilary Rosen: Hey, Kara, happy to be here.
KS: Glad to do it.
KS: I’m going to explain Hilary’s presence; she doesn’t just follow me around. This month we’re trying to do something a ...
HR: I do follow you around.
KS: Yes, you do. We’re going to do something a little different here on Recode Decode. Every Wednesday for the next four weeks, Hilary and I will be tag-teaming an interview with a really interesting person in the political world. Could be media, could be anything, but related to politics, as Hilary is a longtime political pro here in Washington. Every month we’re going to have a different ... for our extra Recode Decodes we’re going to have a different co-host with me on different topics, which brings us to today. So welcome, Hilary.
HR: Thanks, Kara.
KS: Do you have anything to say to the listeners?
HR: Washington is a very exciting place right now.
KS: It is.
HR: Scary and swampy.
KS: Swampy, it’s super swampy.
HR: Very super swampy.
KS: 100 percent more swampy, and obviously a lot of the stuff in the news that has to do with the tech world is its involvement in Washington, which I’d hoped never would happen, now it’s full scale tech this week.
HR: I think we’ve never seen this kind of scrutiny on the tech industry, certainly, but probably not since post-2008, the scrutiny on the banking industry, have we seen this kind of anxiety around the impact of a particular industry.
KS: Go through it for listeners who maybe aren’t paying that much ... What’s the stuff that tech is really focused on right now? There’s been a bill, so go through the couple of things that have been going on.
HR: There are multiple areas, and we’ve got great guests here today to talk about them, but if you go down the list of what people are looking at, it’s the role that the social media companies played in the election both on the paid advertising side as well as the social media content side, the so-called fake news. But not just fake news, but also trading information and using false identities for content. Then there is the ...
KS: That’s the Russian problem.
HR: The Russian problem. Then there is the actual investigation of the Trump administration officials and what role they may have played in colluding with Russia or anyone else ...
KS: Using the internets.
HR: ... using the internets.
HR: The world wide webs.
KS: Invented here and used against us.
HR: In this election. Then there’s the antitrust issues and consumer problems that people are talking about; whether some of these companies have gotten too big to regulate. The so-called is Amazon created jobs or killing jobs question, and Luther is going to help us on some of those questions.
Then there is the can you regulate tech at all or is it too big to regulate?
KS: Right, and should you, because of innovation.
HR: And should you regulate. For years the tech industry has said, “If you regulate us, you’re going to kill innovation. We’re too complicated, we’re based on algorithms, we’re based on engineering, this is not an area where Washington has traditionally had any expertise,” and that line has worked for a long time, and people are wondering whether or not that will still work.
KS: And the bill?
HR: The most recent legislation for a lot of play. Just this week introduced by Senator Warner and Senator Klobuchar, which would essentially create transparency in advertising the way that they have in broadcast television. You have to disclose who is it you are advertising for when you involve yourself in a political campaign. That’s never happened online.
KS: And this is going to air last thing on November 1st, so what ...
KS: And there’s going to be a hearing where?
HR: There are a series of hearings that are probably going to take place. The first one is November 1st in the Intelligence Committee where Facebook, Google and Twitter are being called to testify on this social media component, both the paid and content side of it that we discussed. I think you’re going to start to see some hearings on some of the antitrust issues raised by Amazon and others in terms of size and impact on consumers. I expect that over the course of the next two years we’re going to see a lot more hearings and a lot more investigations.
KS: I think that depends on who’s in office. We’re going to talk all about that and more. We have great people to talk about it. Hilary, thank you for that primer. It’s trouble for tech right now.
HR: A little bit of trouble for tech.
KS: Trouble for tech. They feel so badly. They’re like delicate flowers, so we’ll see what happens to them.
All right, today in the red chair we have two great guests to talk about this. First up is Luther Lowe, the vice president of public policy at Yelp, and you have been very active, and for years now, and we’ll talk about your background, and like ... He’s been at Yelp since 2008, so a long time Yelper.
Also joining us in the studio is Beth Wilkinson, the co-founder of apparently the hottest Washington, D.C., boutique law firm in the country, it actually is, Wilkinson Walsh Eskovitz. Beth recently worked for Facebook on the Oculus case and a whole bunch of others. She’s a prosecutor.
Beth Wilkinson: Was a prosecutor.
KS: Was a prosecutor, so knows a lot about this. We’re going to talk about all of these things. Luther and Beth, welcome to Recode Decode.
BW: Thanks, Kara.
Luther Lowe: Hey, Kara.
KS: All right, so I’m going to go with your backgrounds first, and then we’ll get into ... and Hilary will have a whole bunch of questions on where we’re going, because there’s so many topics here to go into. I want to focus mostly on that, but I want listeners to get a sense of who you are. Beth, why don’t you start. Give us a brief sort of bio, and especially around the prosecutorial stuff, but people you deal with now on all kinds of cases.
BW: Sure. Like most women, I started my career as an Army lawyer. I was in ROTC in college and worked here at the Pentagon on national security and special operations law, which one would think really has no applicability in the real world, but turned out to be very useful. I prosecuted cases up in New York, Eastern District of New York, and probably the biggest case was the Oklahoma City bombing case involving Timothy McVeigh and Terry Nichols.
Now I’ve been in private practice for almost 20 years, tried all kinds of cases for all kinds of clients, but the company cases, and white-collar investigations, and I would say the topics we’re going to talk about today, cover all of those.
KS: So you’re getting a lot of attention in that area, and you represented Facebook publicly in the Oculus trial around, kind of ... You do all kinds of different litigation.
BW: Yes, anything that goes to trial, we will take.
KS: Anything goes to trial, okay. Luther?
LL: Thanks for having me on, Kara. I’ve been at Yelp ... I’m a dinosaur at Yelp, I’ve been there for nine years, but prior to that I worked in Democratic politics, and I guess most notably with General Wesley Clark helping him with a memoir. Really had a lot of friends in the Democratic political scene, and so as Yelp was growing and as we became more active in Washington, they sort of looked around and said, “Hey, you’re the political guy at the office. Why don’t you sort of take some of this on?”
I think now as the zeitgeist around big tech and antitrust have gotten a lot bigger, work’s gotten a lot busier.
KS: Yeah, and you are very known for your very pushing the, not the agenda of Yelp so much, but sort of attacks ... I don’t want to say attack, because it’s not fair. You were really well known for not giving up on this issue around Google, especially, and other companies that have gotten too big.
LL: Well, I hope that that’s the case. We try to really advocate on behalf of the consumer. We really try to reframe the argument not around sort of company A vs company B, but really articulate this in the terms of how are consumers being harmed.
KS: All right, so let’s get started on some of the issues. There’s so much here happening. Beth, give us a little background, because tech has not been really attacked in a long time, like I think Microsoft, I think people are using that term, so if you could just give a little background. Everyone knows the Microsoft monopoly trial, but why don’t you talk about it and then sort of give us the scene, and then Luther, I’d love to hear your thoughts on that too.
BW: Sure. I think it goes back to what Hilary is saying. When a computer or an industry gets so big and so powerful, it’s just a knee-jerk reaction of the government to start investigating in any way they can, and sometimes their competitors come in to help, which is often true in the antitrust context. But the Department of Justice can come in the criminal area, U.S. attorneys around the country, it can ... interacts these days with tech all the time, and requesting information, which I think is a huge issue for tech, and a problem. We’ve seen that controversy with Apple, and the government, and many other players in tech.
I think there’s a focus in the government on, sadly, what’s on the front page when they use their investigative resources, and that’s the same for the FBI, and there can be that perfect storm, and I think that’s where tech is right now. I mean, they are in the crosshairs of the government. You have Congress adding to that, and you have testimony which is being requested, as we just heard from Hilary, and that puts kind of these companies in a very difficult place where they want to cooperate publicly and they’re being investigated privately.
KS: Why now? What has happened? Is it just the power or tech, or is it the mood, because most Democratic and Republican sides have been pro-tech, very pro-tech, and this has been the biggest area of innovation in the country I think we can pretty much say.
BW: Well, I think it’s both. I think people are scared of the companies being so big, and I think ... We saw this with the Google investigation by the FTC — which I will disclose I was brought in by the government to work on that — and there was a lot of animosity even in tech’s own community about the power of some of the companies. I think that’s just grown over time, and with the new administration I think there’s a new focus. There was a sense that the Democrats, President Obama and his team, were very sophisticated in tech and had a relationship with some of the companies.
KS: Friendly, I would say.
BW: Friendly might be a way to describe it.
KS: I’ll say.
BW: Somebody might call it cozy, I don’t know. I don’t think they have that same relationship with our current administration, so I think it’s all those factors coming together.
KS: All right, Luther, your thoughts on how we got here, because you’ve been banging away at this drum for a long time.
LL: Sure. I agree with Beth as well. I think that what I would add is maybe just the levels of concentration, particularly by Google and Facebook, have increased. Last year, 99 cents of every new dollar in online advertising went to Google or Facebook. The year before that it was 85 cents, and so we just see ... Going back to the last sort of attempt at an investigation five years ago with the FTC, all of these sort of assumptions that went into both opening and closing that investigation have not really aged well.
If you’re an antitrust enforcer and you’re deciding whether or not to shut something down, you shut it down after you’ve been adequately convinced, hey, the market’s competitive, and things are going to be okay, there’s going to be new ... Two guys in a garage starting some disruptor and everything’s going to, the market’s going to take care of itself. But that’s clearly not the case. Things are getting more concentrated and that’s very interconnected with these issues around Russia. I think that is emerging as a major issue about just concentration generally. Then you had this issue with the New America Foundation.
KS: Explain that for people.
LL: There was a team of folks that worked on antitrust and concentration issues at the sort of left-leaning New America Foundation, which happened to receive over $20 million from Google, Eric Schmidt and his family.
KS: Who is the chairman of Google.
LL: What we learned is that after they put out a 150-word statement praising the European Commission’s enforcement action against Google, there was a phone call apparently made between Eric Schmidt and Anne-Marie Slaughter, the head of the foundation, and then subsequently the 10-person team was spun off; they were effectively fired. A lot of gray area around was this sort of a ... Did Schmidt call in this hit of this team? I don’t know.
KS: Yeah. Did he get what he paid for, essentially?
LL: Exactly, and so that, I think, raised a lot of awareness on the left where Google at least has traditionally had a lot of fans. Then like within three weeks of that you had this James Damore anti-diversity memo come out of Google. I think that’s kind of erupted the Bannonite crew where you have folks who are just saying, “Oh, all these Silicon Valley tech firms want to shut down right-wing views.” It’s sort of this perfect storm, this convergence around, on both poles.
KS: Which comes to ... Hilary?
HR: Yeah, let’s go there, this perfect storm around tech, because I’m wondering whether either of you think that if Hillary Clinton had won the election, whether we would still be in this situation. In other words, is this organic due to size and dominance and consumer impact, or is this really an outgrowth of people’s frustration at the outcome of the election?
BW: I think it’s the former. I think it could have easily happened if Hillary Clinton were the president. I think the sexual ...
KS: She was not as friendly to tech.
BW: She wasn’t, but ...
KS: She got money from them, but didn’t get a lot, and it wasn’t the same kind of love affair.
HR: A lot of people on her team, though, were former employees.
BW: What I think the problem is, Luther alluded to this, is the Democrats were friendly with tech and they thought they were politically aligned in terms of gender issues. Kara, you’ve always talked about tech and how they can seem to solve every problem except for gender parity, and so I think stripping away and showing all the true gender problems they have from just pay equity to sexual harassment, it’s disarmed the Democrats and they can’t really come to the defense of tech anymore.
I do think that is a perfect storm, along with the concentration issues, and I don’t think it really does matter. People want to blame this current administration. I think they are always looking for high-profile cases, but prosecutors don’t really care about the politics. They care about the high-profile nature of the case and whether it’s interesting, so I think it would have happened either way.
LL: It’s a great question. I think about this a lot. I was very personally involved in the Clinton campaign raising a lot of money and trying to internally make sure that they were strong on antitrust. I think there were some folks that were trying to ride from the Obama administration into a future Clinton administration and have that chummy relationship with Silicon Valley that I think would have resisted calls for at least antitrust enforcement.
I do think there were signals from her campaign that showed that she would have taken it seriously. I know there are folks like Senator Warren that were kind of holding the campaign’s feet to the fire and saying these issues are important. I mean, it’s really hard to say, but you can’t help but think that the Trump election has really poured gasoline on everything and created this.
KS: That’s a really good way of putting it. Yeah, I mean there wouldn’t have been a Russian investigation, right, because she would have won, but it wouldn’t have been ...
HR: Unlikely, although somebody might have discovered it at some point and it would have ...
HR: It would have raised just as many issues. Maybe the Republicans would have raised it.
BW: Well, it was out there. I mean, the Obama administration knew it, they just didn’t talk about it, so I think it would have been discovered and Clinton would have had to discuss it if she became president. I mean, it’s a fundamental violation of our electoral process, and I don’t think it’s that he got elected, it’s that there was interferences, period, in the election.
HR: Right. Let’s go to some of the impact of that Russia investigation. I think that antitrust issues you raised, Luther, are really, really important, and I do think that there’s a huge amount of consumer pressure on that, so I definitely want to get to that.
When you think about an investigation, this isn’t just one investigation, this is multiple investigations, and Beth, if you are in these companies and you’re trying to be transparent, because that’s sort of the buzzword of the day, we ought to be, we saw Sheryl Sandberg in town last week, and we’ve seen Jack Dorsey out there ...
KS: Facebook and Twitter, yeah.
HR: Facebook and Twitter. We’ve seen Sundar talk about we have to do better on transparency.
KS: Pichai from Google. We have to tell our readers.
HR: Everybody is talking about these companies needing to be more transparent, which means the public and the press want to see the ads, they want to know about the fake identities, they want to know where the money transfers are, they want to know who’s buying and circulating among all of these networks.
But if you’re inside these companies and you’ve got Bub Mueller, the special investigator, looking at this, you have Congress looking at this, what do you do? How do you balance the public’s desire to know everything versus what they’re really worried about, which is the bottom line and protecting themselves legally?
BW: Well, first I think we should be careful not to always call it Silicon Valley or tech, because some of these companies handle it quite differently and have different issues.
KS: And also they’re not involved.
KS: I mean, I was just talking to people at both Apple and Microsoft, and they’re like, “We don’t got nothing to do with this, but we’re getting,” they call it the viral contagion, like just over all of tech. Apple might have a problem later if there’s an encryption issue, but ...
BW: Right, and even the ones that are involved have different ways of handling it. The other thing I’d like to say, this isn’t new. This is a tech problem, and I’ll go back to putting them all in the same category. This happens to industries all the time where there’s multiple investigations. This is what we do, and other lawyers, where the government’s investigating you, there’s private plaintiffs who want to sue you, there’s different government investigators, and Congress. Think back to the financial crisis. The banks were all dragged down here, put in front of Congress, they were investigated by prosecutors, so tech thinks when it’s happening to them it’s the biggest outrage, oh my gosh.
KS: Of course.
BW: But they’re just too young to know that it’s ... I’m old, so I know that it’s happened to all these industries.
KS: Really good point.
BW: There are people out there that know how to counsel people, like Hilary and others that know that what you need to do is ... First of all, you need to figure out what’s really going on in your own company. I think people sometimes talk too quickly and then they are correcting themselves, and that’s a huge problem in front of the public. It’s a huge problem in front of prosecutors, who look for consistency.
You need to figure out what’s really going on in your company, come up with what ... I don’t even want to call it a message, because it has to be what’s really happening, and then you do have to be transparent because you’re a public company, the public will not tolerate it. So you have to testify in front of Congress, and I think the companies that are involved are smart; they have their general counsels who are some extraordinary people.
Then you have to go into the government and cooperate. But how you do that? You need good advice from seasoned professionals, because you don’t just go in and start talking, because often you will go in and say things that are wrong because you haven’t done your homework, you haven’t been tested, you haven’t gone through a murder board.
KS: We saw that with Twitter just recently. In the short beginning part it looked like they hadn’t done their homework in any way whatsoever.
BW: And so people start to think that you’re not being truthful when you haven’t been careful and thorough, and you shoot first and aim later, as they say, and I think that’s a huge mistakes for companies who haven’t interacted in D.C. with the political arm and with prosecutors.
KS: But, Luther, they’ve been raising a lot of lobbying money for ... The numbers have been going up rather precipitously for all these companies.
LL: Certainly, and I think I would even go back to the ... 2010 was when the FEC was originally looking at a lot of these questions around how, as in how should a platform like Facebook or Google disclose political advertising, disclose who the purchaser of that political ad is along the lines of what we see in sort of a television ad?
The written submissions of these companies was kind of laughable; it was saying, “Well, we should be treated like the buttons and the pencils because the ads are so small that we can’t put a disclosure there,” but of course these are technologists that could easily create sort of mouseovers or interstitials or ways to get that information there.
I think that you have to go back seven years to those discussions with the FEC to see where this problem began, and then ...
HR: That’s the Federal Election Commission, which is pretty toothless.
LL: Thank you, sorry.
KS: For all you watching people.
LL: It is pretty toothless, you’re right, that’s also part of the problem. Then you couple that with the amount of concentration you got, it’s ... There’s a reason this type of problem didn’t happen in 2012, 2008. There’s just been so much more concentration within these industries, and we are, as a society, two fish kind of sitting in these two information barrels and it just makes the target a lot easier.
KS: All right, when we get back, we’ll talk more about that, the growth of power, and also how little Washington really does know about what’s happening in tech. In the last part I do want to talk about what’s coming — AI and self-driving and stuff like that — because that hits ... I mean, Steve Case wrote a book on this, talking about that soon there’s going to be some real problems, and now there are.
We’re here with my special co-host, Hilary Rosen, who’s going to be here for four weeks in the month of November. November is an election month, so it’s also a political month, and Hilary is an expert on politics and she’s going to be co-hosting a whole series of shows we’re doing.
Our guests today are Luther Lowe from Yelp, he runs their public policy arm. Yelp has been a very active and vocal, one of the few companies that has been vocal talking about the growing power of companies like Google and Facebook. And Beth Wilkinson, who is a hotshot lawyer who’s represented some of these companies, but also prosecuted and has been involved in various things on both sides of this.
We’re talking about the problems that tech is facing. I think it’s been in the news a lot lately. Can we talk ... We talked a little bit, Hilary, yesterday about the Clinton administration. Can you just talk about what the ... Who in the Trump administration is leading this? Now, I know Donald Trump made a lot of anti-tech remarks on the campaign trail. I don’t think he knows almost anything about tech, or science, or things like that, but I think he has a lizard brain for understanding trouble. I think he is identifying that something that people feel about tech, or it’s a good target.
Can you each talk about that, sort of this administration and their thoughts about this, and is there any organization to going against big tech?
BW: Well, I think you’re right. The president realizes the same way he touched on his base, that there are people out there that are afraid of tech, whether they’re taking the jobs or they don’t know how to use tech. There’s a huge divide between Silicon Valley and D.C. and how people understand it.
Start with the Justice Department. Jeff Sessions, who I think the attorney general wants to do what the president wants him to do because they’ve been in this odd fight over other issues. Rod Rosenstein, who’s the deputy attorney general, is a career prosecutor with a lot of respect in the community. So there’s a whole group of people out there who will take their cues from more the media, I would say, than even the president in terms of investigating these issues.
Then there are the antitrust division which looks at the issues, and the FTC, they just announced my former partner, Joe Simons from Paul Weiss is going to be the head of the FTC. I think you’re going to get a very different set of concerns or investigations there, though, because you have a Republican Libertarian view towards mergers and acquisitions. I think it will come down more to the criminal prosecutors who will be investigating this.
And of course you have Mueller who is an extraordinary lifetime prosecutor and he’s hired kind of the dream team of people who will do everything they can to make sure that they’ve investigated their charge thoroughly.
KS: So it won’t be the White House? Do they have any points of view? Because he attacked almost every tech company at some point.
BW: Well, in a normal administration the White House would have no contact whatsoever with the department over investigations, that is verboten. He seems to have tried that early on with the whole firing of Jim Comey, and I think they’ve rolled him back a bit. I can’t say that I think that that wouldn’t happen again. I’m sure the people at the Justice Department don’t want his interference, but I don’t know that that will stop him.
KS: What about public attacks? Does that create ...
BW: He can do that, I mean, and I don’t ... We don’t see it on Twitter.
KS: But he doesn’t effect Congress or any things like that?
BW: What do you think, like I think he does.
LL: Politically I think this whole issue ... The Russia stuff puts the Republicans in an interesting place because whereas their president was bashing Amazon because he doesn’t like Jeff Bezos, and the Washington Post writing some expose about his administration.
HR: Which he links together almost continually.
LL: He just sort of conflates it all. Then one interesting thing that I think was under-reported was the fact that on the day of the European Commission’s record fine against Google ... I mean, this is the guy who’s sort of gone around branding himself as Mr. Pro-America, and not afraid of finger-wagging at any other country, or foreign company, and they get asked on this record fine day ... Sarah Huckabee Sanders, “Hey, what does this America-first president think about this giant, these Eurocrats cracking down on this popular U.S. company?” And her response was, “We’re not going to get into this private company matter.” And you imagine that happening last year, the Obama administration ...
HR: He did, yeah.
LL: You interviewed him.
HR: Yeah, he did to me.
LL: He said this to you. He made the news with you, exactly.
HR: He went very America-first on that issue.
LL: They would have had John Kerry, the OSTP ... They would have had everybody lined up ready to finger-wag and call it protectionism, and here you had the White House just clearly making a conscientious effort to stay silent and let that speak volumes.
Then you’ve got this Russia stuff. There’s clearly among that kind of Bannonite crew a resentment and paranoia around Silicon Valley, its employees, the political leanings of its employees, who say, “They can’t be trusted. They need to be regulated and broken up.” You’re reading these accounts of Bannon saying this stuff.
HR: “Utilities” is the word he used.
LL: Exactly. Then you have ... In doing that and making those claims, in some ways you’re adding fodder to the Russia meme. You’re saying ... you’re implicitly admitting that Russia may have used these tools in a way to help Trump.
HR: That is the catch-22 that I think members of Congress are facing right now, Republican members of Congress, because even though it is Democrats that have been traditionally cozier with Silicon Valley, as Beth alluded to earlier, because of the perception of sort of social and progressive values being more aligned. The Republicans now are caught between if they start to attack these companies and if they start to attack social media, are they in and of itself admitting that the election is not legitimate?
There is this kind of back and forth. We’ll see if these intelligence hearings that we referenced earlier on November 1st, Chairman Burr, Richard Burr, a senator from North Carolina, who is actually the chair of the committee. We’ve seen Mark Warner be a lot more vocal about this issue, but he’s actually not the chair of the committee. We’ll see how these Republican senators deal with what is very obvious in terms of evidence of Russian interference, but they’ve all been fairly quiet about it.
KS: Go ahead, Beth. Go ahead.
BW: I just think we want to also focus on what the government can do that’s scary that has nothing to do with investigations and using tech.
BW: I mean, there are statistics out there, articles by other journalists, that the government is using its powers to request information that could seem like political intervention.
KS: Talk about that.
BW: There’s a company called DreamHost, and the government has demanded 1.3 million IP addresses of people who were involved with the protests at the inauguration, which I just find chilling. The fact that people who are exercising, again, their First Amendment right, now you’re getting a government request to this company.
They are using federal requests to find out about immigrants and data that the tech company have on immigrants. You have this whole issue of search warrants with phones. Microsoft did an extraordinary job in Second Circuit, the court that oversees the New York federal courts, saying the government shouldn’t be allowed to get a warrant to take data that was stored over in Ireland. They won that case and the warrant was not allowed to be issued or executed.
Then the Supreme Court just accepted the government’s request to have that case reheard. That’s a big issue. The Supreme Court doesn’t normally ask to hear a case if they agree with it, so I think Microsoft and the tech world is concerned about that. The number of requests to the companies, I think there’s an article that 26 of the biggest tech companies have had more than twice the requests for data in this year alone than they had the last year.
I think those requests are talked about now more by the government and I think that’s cause for concern at the ...
KS: And those are FBI requests?
BW: Right. When I say government, I mean subpoenas ... things that the government thinks they’re allowed to request.
KS: And why is that?
BW: Well, because tech is taking over. In the old days ... when I was a prosecutor, you could get phone records very easily.
KS: Right, from the AT&T ...
BW: Just like I called you the ...
BW: Right. That they don’t really need those from phone companies anymore. Now they want all your data that tech has, and tech has a lot more data about us than a phone company ever had.
KS: Is that a function of this administration or just government in general saying what a cornucopia of information we have available here?
BW: I think it’s both. I mean, I can’t imagine a Democratic administration asking for the IP addresses of protestors, but I could be wrong. That to me sounds more like an administration focus and that should cause everybody some real grave concern. In terms of requesting more data, I think that is just how the world has evolved, and that’s why I think Microsoft and other companies came in and filed a brief supporting them, fought hard on the search warrant.
How would you feel if Ireland or Russia came over and asked for our data? Would we want to give it? That’s what the government is saying, that even though you have your data stored in Ireland, we should have to cough it up here.
BW: Well, I don’t want my data given to the Russians if they come over and make a request.
HR: Can the tech companies successfully conflate those issues to get the public on their side? Whereas there may be legitimate reasons to want to be able to identify, for instance, Russian identities, and fake identities on Twitter or on Facebook.
BW: I think they could. They need to ...
HR: And secure that.
BW: They have a long way to go to explaining what they do and that is their fault. I do that as a trialer; my job is to translate complex concepts to jurors so they understand. I don’t really know how to do anything else. They need to do that.
BW: People don’t understand, and what tech says is, “Well, Washington doesn’t understand.” That’s true, but it’s your job to teach them.
BW: Microsoft had that problem many years ago and it was very costly, that idea of like, “Well, you don’t understand, so we don’t need to talk to you.”
HR: Very good point.
KS: And Luther, you had a ... About this issue?
LL: Oh, excuse me. I was just going to jump on Hilary’s point earlier about the political dynamics between the Rs and the Ds on this, that the one, the sole Republican co-sponsor at this point on the Honest Ad Act that Klobuchar and Senator Warner are advancing, is McCain, who’s not exactly beloved by the White House right now. That may also underscore the fact that this is an awkward issue for Republicans to really rally behind.
KS: Where do you go? Because what’s interesting is everyone’s everywhere on everything, like it depends on the topic. You used to sort of know where people were on topics, but you have an administration that has Peter Thiel as an influencer on the president. They tried to bring a lot of these tech people onto these commissions and they all went off of them. At the same time, we had >an interview with Cory Booker
>an interview with Cory Booker
which was quite hostile to tech, so it just depends on the issue.
How do you navigate that as a lobbyist, because you don’t know where ... You used to know, it seems like, which side was on which side.
LL: I am happy to explain and sit down with anyone who I think could help to move the chains on the issue of addressing the problems of concentration in the technology world. We have to talk to folks on both sides. Yeah, what’s weird about the job these days is that you have things that you can almost put quotes and say, “Was this Elizabeth Warren or Steve Bannon that said this?” That’s made the year a bit interesting.
I’m not sure that Congress at large ... I don’t know if ... I mean, we are kind of reading about this in the New York Times every day, and we’re seeing this, it feels like tech’s really under the gun, but it’s not ... I don’t know if that’s getting down to every single member of Congress, like if you ...
We had a letter than Keith Ellison told us about after the fact being sent to the FTC asking them to open up all the Google files. I thought it was kind of surprising it was just a single Congressman on that letter that ... presumably they circulated it and couldn’t get more signatures.
I think that there’s a lot of goodwill and durability by these individual companies that they’ve built up by proving kind of white glove support. “So, here, Congressman, is how you manage your Facebook page,” or, “Here’s how you run your Google Ads for your campaign,” but ultimately I think this is sort of a ... Particularly on this upcoming hearing where they’re having to answer tough questions about the ads, it is a product of their own creation because they are the ones who in 2010 were saying, “Oh, treat our ads like buttons and pencils.”
HR: Luther just referenced something that I think listeners may not understand that is really, really important, which is that for the last 10 years or so, each of the major tech companies have had an entire, essentially ...
HR: Global assist team for politicians to help them use ...
KS: Right, you mean the embedded ones that Facebook did at the ...
HR: To help them use their systems more effectively, and oftentimes that was to help them pay for advertising more efficiently, and other times it was just how do you use our free tools better.
HR: That was tech help that campaigns didn’t have to pay for, that members of Congress didn’t have to pay for, but that they effectively used to reach their constituencies.
KS: Sort of like free cars in the auto industry, but ...
HR: It would be just like that.
HR: As if Detroit said, “You need to get from campaign stop to campaign stop, so we’re going to give you cars; we’re going to lend you cars to do it.”
KS: And show you how to drive.
HR: And show you how to drive them.
BW: But I think that’s demonizing ... I’ll defend the tech companies. People know what tech does for them.
HR: Yeah, no ...
BW: I mean it does outside of that.
HR: And I’m saying this actually without value judgment. It’s just that it is a way that they have embedded themselves into the fabric of politics.
LL: It’s an exertion of self power.
HR: That is quite important.
KS: Beth, talk about that idea, because the word embedded, when Brad Parscale from the Trump campaign talked about faith, but that word was so loaded, I mean it was wrong. It was wrong, because they do provide everybody; they provide the Democrats, the Republicans ...
HR: Yes, they do it across the board politically.
KS: But the word embedded, and it looked like they were helping the Trump administration, it was sort of, I’m assuming ...
BW: Right, they were trying to make it sound devious and ...
KS: Right. I think Brad Parscale just wants more business, that’s what I read from it, but it definitely had resonation, because I had a lot of readers write me, because that’s ridiculous. They weren’t embedded; they were there the whole time.
BW: And the point is the company’s job, it is their job to teach the people here in Washington how tech works, but I think tech has a good residue or residual of good will because we all know what tech has done for our lives. You don’t have to come in and teach me how to pay for my political ads, that’s helpful, but I read my iPad, I can go on my Facebook page and talk to my family and friends. It has transformed life even for those of us that aren’t as sophisticated as the people out in Silicon Valley.
I think Congress is treading lightly too, because these aren’t all one issue, and tech companies have different issues within their own companies, and they come out in different positions depending on what the particular issue is. Like you were saying at the beginning, Apple and Microsoft aren’t really involved with this Russia stuff and they’re like, “Why are you hammering me for this?”
BW: I think there’s a lot of, there’s just a level of sophistication that people may not have, but they realize that this isn’t just one big issue and they need to be very careful in regulating or legislating.
HR: And there’s one more point to that which I think you mentioned at the outset. Tony Romm of Recode had a good story about this this week, which is that these very same members of Congress who are essentially responsible for oversight and regulation of tech, as they are in every other business, are also now, for instance, soliciting Amazon to put their new headquarters in their state.
KS: Genius by Amazon, frankly.
HR: Virtually all of the large tech companies have made a significant effort in trying to spread out the jobs across the country, to move them away from just Silicon Valley, and so there is this kind of hope. I think of it sometimes as a faint hope, but there’s a hope that the innovation will create jobs in their districts regardless of whether that has actually come to pass, and the skewing of wealth kind of happens.
KS: Two stories we just did. Microsoft yesterday announced a fund with the Green Bay Packers to locate jobs in Wisconsin. Google, $1 billion, I’m sure you saw that, Luther, to create jobs.
BW: Kara, don’t you take credit for that for your Kentucky tour? I heard you’re down there. I know you think that ...
KS: I do.
BW: It is a great thing to be moving those jobs.
KS: I think it’s a lot of press right now, honestly. I’ll be honest with you, I don’t think they really mean it, but that’s okay. If it works, it works, but I do think it’s PR on their part, and I think Mark Zuckerberg’s livestock tour of the United States is another part of that.
BW: I beg to differ.
KS: Okay, you tell me.
BW: I saw him down in Dallas do it.
KS: All right.
BW: I think ... You see him put on his Facebook page every year what he wants to learn.
KS: I get it.
BW: He’s an incredibly curious guy, and I think it’s a bit cynical, and I know you’re good at that, and there’s a good reason for it, because a lot of times these guys tell you things that are just not true.
KS: Yeah, right.
BW: But I think he realizes that tech is in a bit of a bubble and they need to just like, we need to understand ...
KS: I get it. I think he’s very earnest. I think his essay was very ... his 9,000-word essay was very earnest about the issue about community, but it’s sort of like saying ... It’s someone who caused the problem saying we should do something about the problem. That to me is like a little ...
BW: At least he’s doing something.
KS: I get that, and I don’t think he’s ... He’s not a particularly PR-savvy person as you can see by some of his videos where he should have lighting or something like that, like he’s not ... I don’t think that’s the case with him, but I do think it is a ... To me, it’s more pandering to people, like we’ll come and visit you and look at you, like you’re ... Do you know what I mean, like nobody comes out to ...
BW: I don’t think so.
HR: I think it’s sort of less personal and more about a big public policy issue, which is where are the jobs in the next 20 years, what does grow them? When Amazon slaughters retail, are they creating more jobs by providing more distribution for small businesses or are they really just slaughtering retail? I think that these are the questions that policymakers and a more thoughtful president would really be asking and delving into. I think because they’re so loaded right now with all of these other issues and the impact on the public, they’re not getting that kind of attention.
KS: Before we finish this section ... That’s what I want to talk about in the next section; what’s coming up around AI, around automation and robotics and things like that, because that’s all going to be legally ... attract a lot of legal attention and regulatory.
BW: Yes, very complicated.
KS: But first, before, let’s each of you talk about what’s coming up this next week for tech. What are the key things that are in the hearings and what you think are going to happen there in the short term, and then in the next section we’ll talk a lot about where it’s going.
HR: And can I just amend Kara’s question, Beth, for you in particular? If these social media companies ... do they have legal liability for having sold ads and engaged with these Russian ... Now, I know you don’t want to prejudge it, but is it just a terrible thing or is it really illegal for them to have had false identities, and advertising from outside, and should people really be worried about prosecution, or is this just a good government investigation issue?
BW: Well, I hope they shouldn’t have to worry about prosecution, but of course we always prepare for the worst and hope for the best. I don’t think it is illegal, and I think it would be very difficult to make out a criminal case, but unfortunately sometimes when the government isn’t motivated to do its highest and best work, people bring cases where they shouldn’t. So, I think you have to have it in the back of your mind, you have to be prepared, and again, this is why you have to do your homework before you go into those hearings. I do think ... I sound like a Facebook commercial, but Colin Stretch to general counsel is an extraordinary lawyer and person.
KS: Although people were calling that it should have been Mark or Sheryl at these hearings.
BW: Yeah. Oh, I don’t get that.
KS: I saw it yesterday, it was like, yeah.
BW: I mean, he’s the lawyer, and Mark Zuckerberg is a visionary, and Sheryl is an extraordinary person, but I think these are complicated legal questions. I certainly don’t know the answers, and I know that the Facebook folks, and I’m sure the other companies, have thought long and hard about these issues. I think most people don’t have the answers, that’s why they’re having the hearings. I think the criminal liability is not at the top of their list, but regulatory issues are, and I think that’s as scary for these companies as criminal liability.
KS: What happens in the next week?
BW: Preparing for the hearings, I think. I don’t know, probably, Luther, you’re better tied into this.
LL: Frankly, I don’t think these ... I think these hearings are inadequate reactions to sort of the symptoms of the same problem, and the problem is the failure to enforce antitrust laws and that of concentration. That there’s a reason that we didn’t have these hearings four or eight years ago is because the internet was more open, it was more pluralistic, and that’s just simply not the case today, and so I’m looking forward to them in that sense.
I don’t think ... I actually don’t know. I hope that they’re asked, Google at least is asked about not only money being paid to Google, but also sort of the two-way street where broadcasts like RT, the Russia Today, was one of their premium content providers, so they’re doing a rev share, they’re getting payouts on that, and so what ... For those sort of content creators, were they using that effectively as an ATM to help fund other operations?
The other issue is how do these ... The organic kind of content creation, that seems to be the real problem. I think there was a really good ... Mark Penn had an op-ed I think this week in the Wall Street Journal.
HR: Used to work for Microsoft.
LL: About how you can’t win an election with $100,000, and I totally agree with that. I don’t think that these amounts are really substantial. It’s this kind of astroturfing that was being done, the creation of these groups, and fake accounts, and building whole social ecosystems to nudge other real human beings into believing certain things and voting certain ways.
HR: And very smartly there was a really interesting story that got pretty overlooked yesterday in ABC News from Brian Ross who’s an investigative reporter there, where a group that was traced to Russia called Black Lives came out and essentially have been organizing across the country, they were doing this all through the election, sowing discord with the status quo, discord with President Obama, discord with Hillary Clinton, discord with so-called all the politicians, essentially depressing the vote. They were not paid advertising. It was all social media content and offline organizing based on social media organizing. It’s fascinating how disruptive things like that can actually be.
KS: What do you, each of you, very briefly, and then we’ll get to our next section, our next part, think is going to happen with these hearings? Just they’re going to what, Beth?
BW: I don’t think much.
KS: Not much?
BW: I think they’re going to have this dialogue and then I think after that Congress doesn’t really know what to do because they’re not educated enough, and I don’t blame them. I mean, I don’t understand it, but isn’t there Tor browsing and other things people can do all the time to hide their identity? So, the fact that somehow people used fake identities with Facebook or Google, I just think it’s the nature of the beast that you can hide and do things that are disruptive and ...
KS: So, nothing goes, and it’s just a lot of ...
BW: Well, there may be a way to regulate that, but I don’t think anyone knows exactly how to do that, and you really have to understand the technology, and that’s the problem.
BW: I don’t think the average Congressperson — and I’m sure Luther spent years trying to educate them — understands it. I’m pretty smart and I don’t understand it, so I think that’s probably where more firepower has to be used.
KS: Focused. And Luther, the legislation?
LL: I agree. I think it’ll be pretty anticlimactic, the hearing itself, because it’s just going to be general counsels saying, “Oh, we’re looking hard into this, and we’re going to be transparent in the future,” and, “Yes sir, no sir.” But from a legislative standpoint, this Honest Ads Act, I hope it does spur a broad bipartisan discussion, because there’s far more that these platforms can be doing beyond adhering to this button-and-pencil baseline that they’re currently held to in terms of disclosure on their political ads.
KS: Well, Luther, they’re not very powerful. That’s what they tell me every day. Sorry, Beth, but they do.
HR: Right, well, and the other issue is ...
KS: It’s really exhausting when billionaires tell you they’re not powerful.
BW: I agree.
HR: Congress may not know how to regulate them, but are they smart enough to identify enough incentives for them to self-regulate?
KS: Right, and that’s the big issue, so we’re going to talk about that going forward, because there’s a lot of stuff that’s going to need a lot of government involvement and probably a lot of problems going forward, and solutions that are needed to figure it out.
We’re here with Luther Lowe from Yelp who does their lobbying for them, and Beth Wilkinson who is a trial lawyer who’s represented companies, who’s been against companies, and who knows a lot about what’s coming down the pike for tech companies in Washington, and we’re here with my co-host Hilary Rosen and we’re going to talk about what’s coming next.
We’re here with Recode Decode. We’re talking to Luther Lowe from Yelp, and Beth Wilkinson who is a well known trial lawyer in Washington who deals with a lot of tech companies and issues around what is coming up for them going forward. One of the issues ... We’ve talked a lot about issues that are happening now around Russia, around legislature on ads, around ... You mentioned James Damore and diversity and other kinds of issues.
Let’s talk about what’s coming next, because I think what Hilary referenced a little bit was the idea around automation, around robotics, around self-driving cars, around artificial intelligence. These are all things that the government is going to have to be necessarily involved in for many things. Can you each talk about what you think the most important issues going forward are for tech to think about from a legal and regulatory point of view? Beth, why don’t you start?
BW: Well, I had one that you didn’t list. It’s not as sexy, but I think it’ll be a huge issue, which is online gambling.
KS: Ah, okay, yes, of course.
BW: There’s a sports case in front of the Supreme Court where New Jersey Governor Christie was trying to do sports gambling, and the repercussions if that is allowed will have a huge impact.
KS: Explain what they would be.
BW: It would allow people to bet online, and we know what that does because we see it overseas. I’m working on an investigation, it’s public, where I’m one of the judges for professional tennis. They are looking into corruption there, and there is online and legal betting all around the world, and so places like Russia come in and put big bets down on everything from do you win the match to do you go deuce two times, and there’s a lot of pressure on these individual players because there’s a lot of money at stake, and it’s facilitated really by the internet.
That’s not allowed here in the U.S., and if it is, I think it’ll transform all of these companies, and there’ll be a lot of interest, because there’ll be a lot of money, and you’re tying sports, the internet and money together, which is in the U.S. a huge combination.
KS: That’s fascinating. Yeah, that is a really good point.
BW: And I’m not sure ... Then you have a real profit motive that is going to make people want to hold onto this, so I think that’s going to be an issue. We saw it with FanDuel. Remember a couple of years ago the attorney general of New York investigated, it kind of petered out, they cooperated, but depending on how this case goes, I think that could be a huge issue for the companies.
KS: And what’s against the idea of doing that here legislatively?
BW: The potential corruption. We’ve always had sports gambling in Las Vegas, so it’s a little difficult to say why do they get it and not others, but there’s more regulation there. I think people are worried about all the different states doing it, and you’re going to have this corruption; I mean with gambling comes corruption.
KS: Right, okay, and what else? That’s a really excellent point.
BW: I think cryptocurrency and bitcoin and others, where the money is, and are those securities? Those are big issues for these companies. Then I think what you’re talking about, VR, AR. Those things are ... I think we don’t understand them back here in Washington, but we at least have an idea, and I think people understand driverless cars are like cars, so we need regulation.
BW: I think it’s going to be the same challenge, though; how do we figure out how to regulate that? Tech is usually far ahead of the government, so ...
KS: Especially if it’s on a state level versus a federal, like there’s just certain laws that have to be in, say, self-driving. They’re also linked with jobs, as Hilary was pointing out.
BW: Right. You might have a regulatory scheme like you do in the FDA where you have a federal scheme, or you may go state by state, and if you have state by state like you normally do for driving, you can have some real difficulties for the companies to have to lobby 50 states.
KS: Especially because it’s more complicated.
BW: Right, come out with different rules, and how do they make the cars meet the regulations if you have 50 sets of regulations? Most companies want a federal scheme; it’s easier for them.
KS: Sure. Luther?
LL: I would go back to ... The last major disruption, I would argue, was DOJ vs Microsoft when you had effectively ... Even though people remember that as this sort of stalemate where the government came in too little too late, and, “Oh, we stopped using Microsoft anyway,” you sometimes hear. That oxygenated the market, because suddenly Microsoft’s product managers couldn’t just say, “Huh, I’m going to bulldoze into this adjacent business vertical today.”
Coincidentally, you have — six months after that case is launched — you have Google is born, 1998, and I think Microsoft could have very easily strangled Google in the crib in ’98, because it had dominance; it had over 90 percent share in Internet Explorer. Antitrust enforcement I think is desperately needed, because the dynamics today are that these firms are really sitting on massive data moats, and so if you think about the next wave for AI and form factors shifting to kind of voice-based technology, if you don’t have that ...
KS: Which they dominate. Which Google and Facebook and Amazon dominate.
LL: Exactly. If you don’t have that kind of oxygenating enforcement happening, then you could easily see these firms just get more consolidated, get more dominant, more deeply entrenched. I think that that is a major test. Microsoft, it was almost 20 years ago, before that was ...
LL: ... was IBM, and then yeah, before that was AT&T, and each ... It’s like this 20-year cycle where government action or threat of action can create this oxygenating effect, and we’re at one of these inflection points, I’d argue, and if we’re not ... If we don’t enforce the antitrust laws, then that could lead to just more deeply entrenched dominance.
I am excited about cryptocurrency and Coinbase just because it seems like if that takes off in the way that people have said it is sort of like TCP/IP was, it could create a new medium for value exchange which really could fundamentally disrupt and change how we consume content and how we are doing this. But it’s in such early stages and it’s very speculative now, so it’s hard to say where that goes.
I’m genuinely fearful that this is just going to get darker and more dystopian, and tech becomes more of ever-present if we’re not willing to use our antitrust laws.
KS: Have you seen “Blade Runner 2049”? I just >interviewed Jared Leto
>interviewed Jared Leto
HR: Well, and are we at a point where government is still capable of regulating? Regardless of their political views, there are literally hundreds of thousands of civil servants in this country who work at the Department of Justice on the civil side and the criminal side, at the Consumer Products Safety Commission, at the Securities and Exchange Commission, at the Consumer Financial Protection Board, at the Civil Rights Commission, at the Federal Trade Commission. You think about all at the ... The National Highway and Transportation Safety Board for self-driving cars.
BW: Securities and Exchange Commission.
HR: You think of 20 or more federal agencies with thousands and thousands and thousands of “regulators” looking at various businesses, all of which are being disrupted now by tech and innovation, and do they have the capacity to keep up?
BW: Well, I think they’re trying, and Luther thinks the big thoughts, I think the small thoughts. I think some of these investigations come together in the regulatory when there’s a front page issue. Opiates, right, is a huge issue, so who transports those now?
BW: Pharmacies online, and Amazon, so if you’re upset about Amazon and you don’t know how to regulate Amazon otherwise, but you’re mad about opiates, you could drag Amazon into that.
HR: Yeah. That’s a really good point.
BW: I think those investigations and those regulations are going to come in that way. The Consumer Financial Protection Bureau, Senator Warren’s favorite little bureau, has been trying to regulate online lending, and now they’re going after the Indian tribes. That’s because they want to go after online lending and that’s their way of getting at the internet.
All of these things, I don’t know that they’re going to know how to regulate the big issues, but I think they will go after them on these issues that are kind of more conventional, that they understand.
KS: And there’s plenty of those.
BW: There’s plenty of those.
KS: There’s lots of them.
BW: Now because these companies are in the middle of all our commerce, you can drag these ... just like you’re dragging in Google and Facebook on the ads. They’re not really the source of the problem, but because they are, excuse me, the conveyor, I think they are going to get dragged in. That’s how I think a lot of these issues are going to come in the future just because they are so big and they are in the middle of every issue.
HR: Super smart.
KS: Before we finish up, I want to talk about a couple more things very briefly. One is Europe. Margrethe Vestager is certainly not backing down, and she seems ...
BW: She’s not shy.
KS: She’s not shy and turns out the world is turning towards her, what she was saying. What do you imagine happens in Europe, each of you really briefly, and then I want to go through each of the companies and what you think their biggest challenge from a legislative or regulatory point of view is, and then Hilary might have a final question, but so just very briefly: Europe.
BW: I really don’t know. I don’t think I’m the one that’s qualified. I think you’re right that their regulators have been more persistent, and I think they will be compared to the U.S. because of the administration.
KS: Privacy, everything.
BW: And privacy is such a huge issue in Europe, but also our administration is ... Luther’s going to be disappointed because there’s not going to be a lot of antitrust enforcement in this administration, I don’t think.
LL: I think what Commissioner Vestager in Brussels is doing is really exciting. I think that the day before she announced her big record fine against Google, there was a slew of U.S. companies that basically sent her a love letter saying, “Gosh, thank you for doing this. We sure wish our FTC would do this, and we don’t consider this protectionism,” and every time I go to Brussels and I sit down with her team, there’s like another U.S., somebody representing a U.S. tech firm walking out of the conference room.
That’s the little secret about Brussels is it’s U.S. firms are having to go to Europe to seek relief. That this is not protectionism; this is a venue of where they enforce their antitrust laws. I would also make a distinction between enforcing antitrust and regulation. On the point earlier, antitrust is the antidote to regulation. If you enforce antitrust, you don’t have to regulate.
I think that the taxes is a separate issue, like the tax stuff, but on antitrust I think you now have a situation where European consumers are poised to enjoy better protections than U.S. consumers, and that’s going to create a political forcing mechanism for state AG’s, for ...
HR: Which you’re going to see a lot in the states.
LL: I’m cautiously optimistic. I’m at least happy that we have a blank slate at the FTC, although you’re right, it is a kind of traditional Republican mold, so time will tell in U.S. FTC.
HR: On the regulation front, the state attorney’s general around the country have increasing resources in some of these big states, and you’re right, we haven’t talked about them as either enforcers or prosecutors yet, but they’ll be very active.
KS: Absolutely. Which one do you think?
HR: I think you look at New York and Eric Schneiderman, you look at Illinois, you look at California.
BW: They’re all in the opiod crisis if you look at that. They’re the ones bringing the cases.
HR: They’re all in opiate, but ... Pennsylvania, they have resources, they have big offices.
BW: They’re Democrats.
HR: And they’re Democrats.
KS: All right, last question, and then Hilary might have a last question. We’re going through just each of the companies, their biggest issue they face. Let’s go through them, and each of you, and either you both can answer or individually, whoever doesn’t have an answer. Apple?
BW: I think they’re in a good place.
KS: Unless there’s some encryption thing that pops up?
BW: Right, I mean that’s always going to be an issue for them and they’ve taken a principled stand. I think because they’re a hardware provider basically, and they’ve kind of stayed above the fray, they’re in a very good place. I think it’s their competitors who have gotten so big. Amazon’s biggest problem is that it’s so big and so good.
KS: All right. Microsoft?
LL: Doesn’t register. I think they’re ...
KS: That’s so funny. They used to be so evil!
LL: I mean, they’re not as ... Yeah, they’re not ...
BW: I think their stock price is doing great.
LL: I think sort of Sundar and the CEOs of Google and Microsoft buried the hatchet and so that famous beef has gone by the wayside.
KS: Oh, it’s over, yeah.
HR: You got to go back to Apple on two issues, though. One is just this issue with jobs and whether they really can sustain their overseas manufacturing relative to domestic. The other are potential antitrust issues, complaints from the other companies around their dominance on the app store and whether they can continue to keep such a tight hold on that.
KS: Yeah, although that seems rather quaint now, doesn’t it, after considering all the other issues? Google, I’m not going to give you Google, but okay, you can go ahead.
BW: I think Google are their ads. Their best revenue is going to be their biggest problem and it’s what they’re facing with Congress right now, and I don’t think that’s going to go away, either.
KS: All right. Luther, go ahead.
LL: Well, today when a mom does a search for a pediatrician in Washington, D.C., she’s seeing this sort of Google Plus box at the top, and I think that is a way where Google’s directly harming consumers, and that’s really the smoking gun that the FTC missed. I think when Vestager looked at the same set of evidence, they decided to move forward, and so that’s where I think they were potentially exposed is on these antitrust issues because you can show direct consumer harm.
KS: All right. Facebook?
BW: I think I’m too biased to say.
KS: All right, and Mark’s a nice guy, go ahead.
LL: Facebook ...
KS: He is. I agree with you on that one.
LL: I think the thing that’s a little bit concerning about Facebook to me is ... You’ve read these stories about they just acquired tbh, and they sort of cloned all of Snapchat’s features, and baked them into ...
KS: And they admitted quite publicly about doing it.
LL: Yeah, and so, again, I think that these are just ...
BW: Google copied everyone too, I mean it’s good old fashioned American competition, copy.
KS: Yeah, Microsoft, Apple.
HR: I think Facebook has a content problem.
HR: I think Facebook has a content problem that will stretch their credibility over time. Who is posting and what can we trust about what they say. And I think their risk is that it becomes so polluted, that the system becomes so polluted with content that people don’t trust or don’t know where it comes from. They seem to be focused on trying to deal with that, but I think they’re a ways from that.
BW: But don’t you think that’s because people are treating them like they’re more like a conventional media source?
HR: They are a media company.
BW: I mean, that’s how they think of it.
HR: They deny that.
BW: They are and they aren’t.
HR: They say they’re a tech company, but they are a media company.
KS: That’s right.
BW: But I don’t get to go to ABC News and put up what I think, so it isn’t the same.
KS: It’s a different kind of media company, but it’s a media company. They do try to shy, as Hilary said, they try to pretend they’re a benign platform. This is a word I use all the time.
BW: Yeah. I don’t know that they’re benign, but my point is it’s much more ...
KS: Oh, I don’t think they’re benign at all, but they, yeah.
BW: I know you don’t. You don’t think anyone’s benign, so that’s good.
KS: I think you’re not benign at all.
BW: I’m not benign at ... You are so right.
HR: But then neither are you.
KS: Yeah, that’s true, fair point.
BW: I don’t pretend to be, come on. But I think that it’s different when everyone’s putting their own content — or what they would call their own content — up, because then you get into First Amendment issues very quickly.
KS: Yeah, and it’s the implicit promise of the business.
HR: Well, and again, I think all of these issues are, is there a legal issue or is there a moral responsibility or is there a public policy issue, and the intersection of those three issues going forward, I think, are what’s going to be our most challenging.
KS: Last one for me. Twitter? We didn’t talk about them at all, but the president’s favorite ...
BW: He saved that company. Single-handedly saved Twitter.
KS: Sort of saved and killed it.
HR: Saved and ruined it.
KS: Yeah, so any issues there besides viability as a business?
BW: Right, well, I think that’s a pretty big issue. Regulatory issues are kind of a luxury if you don’t think you’re going to stay in business.
LL: I’m eager to see what their plan of self-governance, attacking these fake accounts and trolling, will be, because that’s clearly just dogged them forever. I think just ... I mean, their market cap is what, something like $30 billion? They’re like a tenth or a twentieth of the size of these companies, and not a lot of ...
KS: But they get a lot of attention because of the president.
LL: They do because all the media.
KS: Yeah, and the media, and the people ...
LL: People in the media use it and I think that’s the reason we even include them in the same breath, but really there’s just not as much data, there’s not as much influence, and so I think that gives them some inoculation from this.
HR: I think that’s probably the most important thing about Twitter and the least-used thing about Twitter is that it is essentially, of all of them, the most used by elites than any other communications mechanism. Elites don’t communicate with each other on Facebook in the same way.
KS: No, not at all. Hilary, last question and we’ll wrap it up?
HR: Well, I’m curious whether you think this is a ... In a year, is dinner table talk in Washington still going to be about the tech industry or is this going to fade?
BW: I don’t think it will fade. It may not be these same issues we’ve been talking about, but again, they’ve transformed the economy, and Washington follows the money, and they’re going to talk about the companies that are really affecting their constituents’ lives, and that’s these companies.
LL: I totally agree with that.
KS: All right. Thank you so much.
BW: I love that. Let’s end on that.
KS: Let’s on that. But there’ll be plenty of business for you both, I think, I suspect, including you, Hilary Rosen. Hilary, thank you so much for co-hosting this.
HR: Thanks for having me, Kara.
KS: We have many to go.
HR: Looking forward to it.
KS: Very exciting. You can take my job at any time. I can see that, obviously. All right, Luther and Beth, it was great also talking to you and thanks for coming on the show.
LL: Thanks Kara.
KS: We appreciate it. These are big issues. We’re going to bring you guys back ...
BW: Thanks so much.
KS: ... and we’re going to figure it out in a little bit after things ... see what happens.
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