With help from Leah Nylen
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— Silicon Valley wallets unscathed: Washington may be going after big tech companies more than ever before, but you wouldn’t know it from their third quarter earnings.
— Google heat: Today is the first hearing in the Justice Department’s antitrust suit against Google, and CEO Sundar Pichai had to answer to investors’ worries about the company’s regulatory troubles on Thursday.
— Attn. Wisconsin, Pennsylvania, Ohio: More than half of social media users in these key battleground states have reported seeing ads questioning the validity of the November election, a new survey shows, illustrating how those states could be more vulnerable to misinformation.
4 DAYS TO GO (OMG). IT’S FRIDAY; WELCOME TO MORNING TECH. I’m your host, Alexandra Levine.
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THE SKINNY ON SILICON VALLEY’S THIRD QUARTER EARNINGS — Apparently neither a pandemic nor a major congressional investigation can shake the success of the tech giants. Amazon, Apple, Facebook and Google reported earnings Thursday, and they all did swimmingly. The quarter kicked off in July with the four CEOs testifying together (for the first time ever) at an historic House Judiciary antitrust hearing on the companies’ market power. The executives were put through the wringer, but their businesses came out the other end worth even more — driving home that no matter how much Washington goes after big tech, the firms are (at least so far) seemingly immune to government intervention.
— Facebook flies: Facebook saw higher revenue thanks to strong digital-ad spending, per WSJ — and that’s after one month of advertisers boycotting the platform (the so-called Stop Hate for Profit campaign) and another month of whiplash over the social network’s political ads policies.
PLUS: GOOGLE TO ‘ENGAGE CONSTRUCTIVELY’ WITH REGULATORS — A week after the Justice Department sued Google for antitrust violations, CEO Sundar Pichai said the company will “engage constructively” with regulators. “Scrutiny is not new for us and in some ways it is now sector-wide,” Pichai said in response to a question during the investor earnings call Thursday. “We will engage constructively where possible, as we’ve shown through some of the past cases.” The first hearing in the U.S. antitrust suit is set for today.
— DOJ suit: Investors typically avoid questions about Google’s regulatory troubles, but three analysts quizzed Pichai Thursday on how the Justice Department’s lawsuit or other regulations might affect the search giant’s business. “People choose Google search not because they have to but because it’s helpful,” Pichai said. “We believe that our products are creating significant consumer benefits, and we’ll confidently make our case.”
— Digital Services Act: The comments come a day after the Financial Times published an internal document by Google outlining plans to lobby the European Commission as it finalizes legislation, known as the Digital Services Act, expected to be introduced in December. The EU’s executive body is considering a list of do’s and don’ts for gatekeepers like Google, which could include bans on platforms using a rival’s commercial data to compete with them and “self-preferencing” — where a platform favors its own products over those of competitors. Google allegedly preferences its own services like YouTube and Google Maps in its search results; Google doesn’t deny that it prefers its own products, maintaining that they help consumers find things they are looking for.
SEE YOU IN 2021: EPIC GAMES, GOOGLE CASE HEADED FOR TRIAL — The judge overseeing Fortnite-creator Epic Games’ antitrust case against Google said Thursday that he wants to schedule a trial in the suit for next year. That would be a blow to Google, who said it needed until October 2022 to put together its defense, while Epic had suggested February 2022. U.S. District Judge James Donato said he intends to “move briskly” in the case. “We do not need to drag this thing out,” he said. Google’s lawyer Brian Rocca, however, said Epic’s case against the search giant is complicated and may involve documents and testimony from companies in Asia and Europe, which would take time. The judge did not set a trial date but said they would discuss it at the next case hearing in December.
A NEW FTC APPROACH: HIT THEM IN THE WALLET — FTC Commissioner Rohit Chopra and an advisor are pushing for the agency to unleash one of its under-utilized tools to make companies behave: fining them. In an article published Thursday, Chopra and Samuel A.A. Levine argue that the FTC needs to use its “penalty offense authority.” The power granted to the FTC in 1975 allows the agency to fine companies if they knowingly engage in behavior the FTC has deemed “unfair or deceptive” in a previous case. Fines can reach more than $43,000 per violation per day. The FTC has rarely used its authority, except in a 2013 case where it penalized Amazon, Macy’s, K-Mart and others for labeling products as environmentally-friendly bamboo when they were, in fact, made from rayon.
— For decades, the FTC has eschewed civil penalties when businesses mislead consumers, instead entering into settlements where the company pledges to end its bad behavior. Cases in point: a 2011 order with Google for misleading users over privacy practices related to the short-lived Google Buzz and a 2012 order with Facebook after it made public information it told users would stay private. The tech firms paid nothing in either case. When it does go to court, the FTC is limited to asking for the amount directly lost by victims or earned by wrongdoers — and that power is currently under attack in two cases the Supreme Court will hear next year.
— Pyramid schemes, fake reviews and privacy lapses: After laying out how the FTC could use its power, Chopra and Levine target five types of cases where they believe the agency could start imposing penalties. Among the categories: gig economy companies that mislead workers about how much money they can make (Uber gets singled out in a footnote); companies that use online influencers for posts or fake reviews without disclosing they are sponsored (something the FTC dinged skincare brand Sunday Riley for last year); and privacy breaches where a firm tells users it is collecting data for one thing and then uses it for another (Cambridge Analytica).
2020 WATCH: SOCIAL MEDIA TROUBLE FOR SWING STATE VOTERS — A little more than half of social media users in Wisconsin, Pennsylvania and Ohio — key battleground states in the November elections — say they’re seeing ads questioning the validity of the race. That’s a finding in a new survey commissioned by Global Witness, a group pushing for tighter regulations of tech companies, my colleague Steven Overly reports in a new dispatch: The findings “come after months of efforts by President Donald Trump to claim that the election might be rigged and cast doubt about the validity of mail-in voting.”
CHINA HAWK TARGETS TIKTOKS OF THE WORLD — Senate Intel acting Chair Marco Rubio (R-Fla.) introduced legislation Thursday setting standards that “high-risk” foreign apps would need to meet in order to operate in the U.S. The so-called Adversarial Platform Prevention or APP Act would create guidelines around censorship and data protection in particular, a jab at Chinese-owned platforms like TikTok and WeChat that the Trump administration has targeted over national security concerns. Under the measure, apps deemed high-risk would not be afforded Section 230 protections (a likely blow to TikTok); would be compelled to store all American user data in the U.S.; and would need to display a detailed warning label. Parent companies of those apps would also be forced to disclose certain information to the FTC and Justice Department.
— Defining ‘high risk’: Apps headquartered, operating primarily or storing user data in China, Russia, Venezuela and Cuba would fall into that category.
— Bigger picture: While prospects for a solo bill introduced so late in Congress are low, the action is a reminder that government scrutiny on apps’ owners and origins, as a matter of national security, will continue no matter who wins the presidency. Concerns about TikTok have grown increasingly bipartisan during the pandemic, and President Trump and Joe Biden argued at both presidential debates about who’s the bigger badder wolf taking on China and Russia.
Christina Martin, former executive vice president of the Corn Refiners Association, joined the Internet Association as senior vice president of communications and public affairs. … Lawrence Duncan III, a longtime Democratic government affairs strategist and former defense industry executive, will on Monday join the consulting firm Monument Advocacy as a partner. Gary Bolton, former vice president of global marketing and government affairs at ADTRAN, will on Monday become president and CEO of the Fiber Broadband Association, succeeding Lisa Youngers, who is leaving the group for another role in the industry.
CTIA, the wireless industry association, announced its 2021 officers for the board of directors. David Christopher, executive vice president and general manager of AT&T, was elected CTIA Chairman; Slayton Stewart, CEO of Carolina West Wireless, as vice Chairman; Rick Corker, executive vice president of Nokia, as secretary; and Bret Comolli, Chairman of Asurion, as Treasurer.
Ads ban blunder: Facebook’s botched rollout of its ban on new political ads is costing Biden a half-million dollars in projected donations and shaking the campaign’s ad strategy days out from the election, POLITICO reports. (“We have implemented changes to fix these issues, and most political ads are now running without any problems,” Facebook said Thursday in an update.)
Khanna have it?: In an interview with Cristiano, Silicon Valley Rep. Ro Khanna said he’d be interested in filling Kamala Harris’ Senate seat in California if she and Biden win the White House. More here for Pros.
On algorithmic bias: “Google algorithms are being blamed for producing biased excerpts from the state’s official election guide when California voters search for information on ballot measures this fall,” POLITICO’s Katy Murphy reports.
ICYMI: Lina Khan, who until recently was counsel for House Judiciary’s antitrust subcommittee after joining the panel last year to help with its probe into major tech platforms, sat down with NYT Opinion’s Kara Swisher on her new podcast. Listen here.
Another podcast OTD: The latest episode of Gigi Sohn’s “G&T: Tech on the Rocks” podcast features a conversation with Verified Voting co-director Mark Lindeman about how local officials are safeguarding the 2020 voting process and making sure every ballot counts. Listen on Apple, Google and Spotify.
In profile: Republican FCC Commissioner Brendan Carr, “the man who could lead the GOP’s war on platform moderation,” via The Verge.
Tips, comments, suggestions? Send them along via email to our team: Bob King ([email protected], @bkingdc), Heidi Vogt ([email protected], @HeidiVogt), Nancy Scola ([email protected], @nancyscola), Steven Overly ([email protected], @stevenoverly), John Hendel ([email protected], @JohnHendel), Cristiano Lima ([email protected], @viaCristiano), Alexandra S. Levine ([email protected], @Ali_Lev), and Leah Nylen ([email protected], @leah_nylen).
TTYL.
