Pressure grows on Facebook over data scandal
The number of calls for investigations into Trump-linked Cambridge Analytica's illicit gathering of Facebook data grew on Sunday.
What they're saying: There are concerns over Cambridge Analytica, which did work for the Trump campaign, gathering the data on millions of Facebook users. And there are also worries that the social platform didn't handle the incident properly, prompting lawmakers to raise their voices over the past few days on both sides of the pond.
Here at home:
- A growing group of Congressional Democrats want an investigation. Sen. Ed Markey said that the firms should "be made to testify before the Senate Commerce Committee so that we can get to the bottom of these disturbing reports" and Sen. Amy Klobuchar said that "Mark Zuckerberg needs to testify before Senate Judiciary."
- Congress' Republican majority has been quieter. But a spokesperson for the House Energy and Commerce Committee said that the panel is "is examining this incident closely." A spokesperson for the Senate Commerce Committee declined to comment on the matter.
- The Washington Post talked to former Federal Trade Commission officials who said Facebook's actions may have violated an agreement the company had with the agency to make certain privacy guarantees to users. Such a violation could trigger a fine. Facebook told the paper it hadn't violated the agreement.
- At the state level, Massachusetts Attorney General Maura Healey announced an investigation into the data gathering.
Across the Atlantic:
- British MP Damian Collins, who chairs the U.K. Parliament's Digital, Culture, Media and Sport Committee, said that it seemed Cambridge Analytica chief executive Alexander Nix "has deliberately mislead the Committee and Parliament by giving false statements." He also said Zuckerberg or another Facebook executive should testify before the committee about the issue.
- The British Information Commissioner, Elizabeth Denham, said that her office was "investigating the circumstances in which Facebook data may have been illegally acquired and used."
- European Commissioner Věra Jourová, whose portfolio includes data protection issues, welcomed the British probe. "Horrifying, if confirmed," she tweeted. "Personal data of 50 mln #Facebook users could be so easily mishandled & used for political purpose. We don't want this in the EU." She promised to seek more information from the social giant during a trip to the United States this week.
The other side: “We are in the process of conducting a comprehensive internal and external review as we work to determine the accuracy of the claims that the Facebook data in question still exists," said Facebook Deputy General Counsel Paul Grewal in a Sunday statement. "That is where our focus lies as we remain committed to vigorously enforcing our policies to protect people’s information."
What's next: On Monday, Britain's Channel 4 is planning to air footage obtained when its reporters went undercover to speak with Cambridge Analytica's Nix and others at the company. The Financial Times reported the data company was trying to stop the broadcast.
The high stakes for AT&T's courtroom showdown
AT&T’s $85 billion attempt to buy Time Warner and its way into the content business goes to trial on Monday, kicking off a courtroom battle with the Justice Department that could stretch on for two months.
Why it matters: When the deal was announced nearly 18 months ago, it was viewed as a fairly sure thing. But its prospects gradually dimmed as President Trump criticized it from the campaign trail and DoJ moved to block it. The outcome of the case will not only determine AT&T's future, but also the future of tech, media and telecom deals in general.
The battle lines: AT&T says the deal will allow it to compete with powerful media platforms like Google and Facebook. The Justice Department says AT&T will use Time Warner’s content as a cudgel against its competitors in the traditional video space.
Here are the stakes:
For the Justice Department: A win for the government lawyers rewards them for bucking years of precedent that has given the green-light to many vertical mergers. A loss would keep the legal status quo, while likely raising more questions about whether it pursued a weak case because Trump hates CNN.
For AT&T: This could help AT&T compete with the likes of Amazon and Netflix by winning original content like Game of Thrones and Westworld from HBO to juice its DirecTV offerings. It also gives the combined company a path to compete with Facebook and Google in the digital advertising market.
For Trump: AT&T won’t argue at trial that the DoJ is suing to block the deal for political reasons — but the question will still loom.
For the media business: An AT&T victory would mean media companies would have a much better shot of consolidating, both vertically and horizontally.
- It would clear the path for media companies hoping to be acquired by telecoms, a la Comcast-NBCUniversal and Verizon's acquisition of Aol and Yahoo.
- Fox is currently weighing merger bids from Comcast and Disney. If the the AT&T deal moves ahead, Fox could have an incentive to take Comcast’s more expensive bid because it'd be less likely to be challenged. It if doesn’t, it would likely stick with Disney as a merger partner.
For the advertising business: The merger will give the combined company AT&T’s robust consumer data set and Time Warner’s digital advertising infrastructure to create a data-driven advertising business that will try to compete with the likes of Google and Facebook, which collectively take over 60% of digital ad dollars in the U.S.
- Other telecom/content mergers are hoping to do the same thing. Verizon built out Oath in 2017 to expand its data-driven advertising business.
For the entertainment business: Approval could set a precedent for how telecom companies can leverage content they own for their streaming services.
- It could trigger more consolidation among studios, like the Time Warner-owned Warner Brothers. For example, if Disney and Fox merge, their combined studios would create a mega-entertainment brand to compete with studios that have telecom distribution platforms built in.
For Silicon Valley: Judge Richard J. Leon will decide whether he buys AT&T's argument that competitors need to be able to scale to take on Google and Facebook. And the trial is also a test of vertical mergers, a favorite acquisition strategy of big tech companies.
What's next: Opening arguments are scheduled to start Wednesday.