tv Hearing on Tech Companies Market Concentration Data Collection CSPAN January 24, 2022 12:03pm-2:07pm EST
the hearing will come to order. good morning. today's hearing of the subcommittee on fiscal responsibility and economic growth. i'm pleased to be working with ranking member cassidy on this hearing of promoting competition, growth and privacy protection in technology sector. senator cassidy will be joining us remotely. we're going to do a mixed hearing with some people in person and some people remote. under president biden's leadership, the american economy is rebounding. the unemployment rate has dropped from pandemic height of 14.8% in april 2020 to 4.6% today. 5.6 million jobs a even added since president biden's
inauguration. more than added in the first ten months of any administration since we have been keeping records. child poverty will plummet by 40%. families have tried to adapt and the changes have echoed throughout our economy. demand as shifted as people have consumed fewer services while buying more durable goods like exercise equipment and home appliances. the economy has recovered more quickly than many businesses projects and all of this is contributing to unexpected bottlenecks in our supply chain and spread shortages at warehouses. these factors contribute to the
price increases for many consumer goods. they're not the only reason that prices have gone up. giant companies will raise prices when they have to. they will also raise prices when they can get away with it. how do we know this? because when companies are passing along their increases in costs, then profit margins should stay the same. when companies see a chance to gouge others, then those companies raise their prices beyond what is needed to cover their increase cost. right now prices are up at the pump, at the super market and online. at the same time, energy companies, grocery companies and online retailers are reporting record profits. that's not simply a pandemic issue. it's not simply some inevitable economic force of nature, it's
greed and in some cases it's flatly illegal. one reason is fewer and fewer markets in america are truly competitive. when several businesses are competing for customers, companies can't use a pandemic or supply chain kink to pad their own profits. in a competitive market, the market stays above. policy makers and regulators under democrats and republicans promoted free market competition but starting in the 1970s, our government changed course. they rubber stamp mer general after merger and when small businesses got wiped out and
start ups were smothered or bought out, they just didn't care. today as a result of increase in consolidation across industries, bigger and bigger corporations have more and more power to charge their customers any price they want. more and more power to hold down wages and benefits for workers. it's getting worse. they are on track to receive a 70% increase above average filings in recent years. i introduced my pandemic antimonopoloy act to slow down this trend and to protect
work, tech firms collect and exploit sensitive personal information often threatening national security, harming our emotional health and discriminating against vulnerable groups. it doesn't have to be like this. we can also make it easier for the agencies to reject such mergers in the first place. by promoting competitive markets we can foster a stronger
american economy and a stronger american democracy. i look forward to discussing these issues today. i appreciate all of our witnesses who are joining us. i look forward to hearing about your insights and your experiences. next, i'm going to turn to ranking member cassidy for your opening remarks. senator cassidy. >> good morning. thank you for being here. thank you to our witnesses for taking time to testify. senator warren and i have agreed to a bipartisan hearing on promoting competition, growth and privacy protection in the technology sector. i will focus my time on the
privacy aspect of this and on the data broker industry. the data broker industry relatively unknown to most americans but its practices and techniques are interwoven into our lives. data brokers build profiles on certain individuals and sell that information to those who may see fit or whom they who wishes to purchase. that search data is collected. a profile is made i'm a big fan of lsu football. i receive ads about buying lsu football ticket, merchandising. we all experience something similar on the internet. a company will be a victim of a hack that exposes data to thousands, if not millions of customers. i believe few will think it's good idea to sell the profiles
collected and restrictions on how it's sold or transferred to others. thanks to our witnesses and i'm looking forward to discussing the issue. >> thank you very much. we got a great set of witnesses to share their views on promoting competition growth and privacy protections to the technology sector. i appreciate every one being with us today. joining us virtually, we have courtenay brown in new jersey and a leader with united for respect.
she's also a veteran of the united states navy. the first elected attorney general. he's the president of the national association of attorneys general and the chair ameritus of the democratic attorney generals executive association committee. he was a managing partner at vennable associate white house council for president clinton and a staff attorney for the public defender service of the district of columbia. his research focuses on threat offense the 21st century monopolies. next, we have justin sherman, the co-founder and senior ceo
and initiative at duke university focused on interaction of technology and ethics. finally, we have miss stacy gray. miss gray is senior council at the future of privacy forum. she's a data broker expert. increasing consolidation throughout the american economy undoubtedly contributes to the higher price, worsening working conditions and privacy concerns. it's also exposed them more
plainly. we can fix this together. we can make our economy work for all americans. i want to thank you all for being with us today. i'm looking forward to hearing your testimony. we're going to start with you. you are recognized for five minutes. tell us what you want us to know. >> good morning, every one. thank you for inviting me to share my experience with you today. my name is courtenay brown. i live in newark, new jersey. i'm working at an amazon facility center and have been for four and a half years.
i served my country as a service member in the united states navy. i took the commitment that i made to my country then seriously as well as the commitment i take seriously now as a member for united for respect. i'm here today to raise the alarm about amazon's business model because it's a threat to to working people and it's a threat to our economy. one out of every 150 american workers is an amazon employee as well as in that group there's some former employees. this multi-billion dollar corporation grew on the back of its workers by exploiting them. i'm looking far do you stand up to amazon and protect us. the job is a much needed service especially since the covid-19 pandemic began. as a process guide i'm in charge of sorting 35,000 to 50,000 groceries daily for delivery to homes in new york city and new jersey. i'm in and out of our cooler constantly, stepping in and out of temperatures as low as negative 10 degrees and setting packages down with little to no
rest. the work that i do is supposed to be done with 30 to 40 people but we operate with 25 people or less every day. because our work is essential and our workload has increased, we need more hands on deck, not less so we can take turns getting breaks and getting the much needed rest. amazon can barely retain its workers. amazon's multi-billion dollar wealth is made possible by offering same day delivery anywhere from same day delivery to two-day delivery and the corporation has achieved this speed and scale through their
sheer brutality watching timing and punishing associates like me and my co-workers for not working fast enough and allowing associates to take time off to adequately rest and recover and to prevent burn out. in the moment we pull into parking lot, we're monitored. that's through every step of the facility we take. if we fall behind in my way during our 11-hour shift we risk being disciplined or losing our jobs. we're pushed to our limit to the point where we can't even take regular bathroom breaks. we have to run to and from the bathroom in under two minutes so we don't get in trouble. on top of that, the bathrooms are pretty gross and usually broken too. the constant pressure and surveillance why amazon has twice the level of injuries and turn over compared to similar
jobs. workplace injury rates are higher at amazon facilities with more robotic technology. i used to be a trainer, only five would basic it to the one or two month mark. many quit soon after due to injuries or over exhaustion. we're living in a country where machines are getting better treatment than people. the machines under go routine maintenance checks to ensure they don't burn out. one time i needed to recover from my mother's passing back in september, i was only given two days. two days to plan a funeral and process my mother's death. i ended up taking a month off of unpaid time which was the only option i had at the time. it was only because there was a reduction in the amount of work we had. my sister wasn't as lucky. she had to literally work the day of her death as well as the day after. come to her funeral and return to work, two days later. her entire funeral was literally
scheduled around me and my sister's work schedule. imagine what we went through while jeff bezos made $75 billion last year thanks to me and my co-workers. amazon's high-tech sweat shop caused me to develop plantar facisitis, pain in my heels and ankles because i'm having to stand for long periods of time at work with no rest. there was once the pain was so severe i ended up in the emergency room. i was homeless at the time and didn't have enough time to take off, i had to beg doctors and nurses to see me as quick as possible because i couldn't afford to lose my job and the opportunity i had becoming leadership. this kind of exploitation isn't just happening to me. people have been working through the pandemic non-stop because amazon won't let us take time off. we are so exhausted we break down and cry. a worker of mine had to stop breast-feeding her child early due to not receiving the support when she had to pump at work.
this is type of environment amazon is perpetuating across the country. amazon associates have been fighting back against these dangerous conditions for years. instead of fixing the problem, amazon is only doubling down on exploitative model, jeff bezos says he plans to use more automated control for workers in the warehouse. the worst part is amazon is setting up high-tech sweat shops in black and brown communities where people need work. they know there's people look like me that have limited choices and they know we can't afford to complain or refuse bad conditions. amazon takes advantage of this desperation. the pandemic has closed a lot of businesses in my area. even someone like me who has
been looking for jobs, the pay isn't enough to make rent or put food on the table. dict indicating the workplace second-degrees for hundreds of millions of workers like me. i'm asking you to put an end to inhumane, exploitive practices that america's workers batter each day. our country needs elected officials to side with working people, to side with essential workers, not pay corporations. >> thank you very much. i appreciate your coming in and testifying. now we go to attorney general racine.
you're recognized for five minutes. >> thank you so much for the opportunity to testify today. as the first independent elected attorney general of the district of columbia and out going president of the bipartisan national association of attorneys general, one of my most important responsibilities is to protect d.c. consumers from corporate wrong doing, including investigating and file and suit against defendants that illegally exercise monopoly power, violate privacy laws and hurt workers.
that is 50 to 70% of all online sales occur on amazon's platform to control prices through restrictive agreements with third party sellers that sell on amazon's marketplace and wholesalers that feed amazon's retail business. in its defense, amazon claims that everything it does in business is all about the consumer. well, our investigation reveals otherwise. amazon, indeed, is focused and the evidence is compelling on one thing. its bottom line. even at the expense of consumers like the ones it claims to care so much about. in fact, amazon is costing all of us more money by controlling prices across the entire electronic mall. like you, senator warren, i,
too, am a capitalist. people should get paid for their hard work, creativity and entrepreneurship. people should certainly watch their profits increase as their businesses increase. when companies like amazon unfairly increase the prices on all of us, stifle competition and take advantage of consumers, the law must step in and say enough is enough. back in 2019, amazon was facing pressure from congress and regulators over anti-competitive behavior and we know the concerns around amazon and other big tech is as bipartisan as it gets. to put regulators at ease, amazon claimed it removed a particular cause in its agreement with third party sellers that prohibited these third party sellers from offering their goods for lower prices or on better terms in
competing online marketplaces, including their own websites. there's the policier alarm. amazon deceived congress and consumers with its bait and switch of replacing the initial terms of the agreement with different titles and different words that had the same illegal impact. if i'm a third party seller selling, for example, headphones, i do want to list my product on amazon. why? because it reaches so many people. remember, 50 to 70% of the entire electronic mall. in order to to do so, i got to do the following, sell the headphones on a price on the amazon market place that allows
me to earn a profit after the high fees and commissions. then i'm barred from selling my headphones on any other platform including my own website at a lower price even though i could earn a fair profit by doing so. another way i've got to build in those high amazon fees and high amazon commissions. why? because amazon forced me to agree to have that term in order to access its electronic mall. and if they find out that i sell my headphones, even on my own website for a lower price, lower than the built in fees and commissions that amazon requires, guess what? you get kicked off of the amazon marketplace and have sanctions, financial sanctions imposed on me.
this leaves third party sellers with two choices. they could sell their product on amazon under these extremely restrictive terms that guarantee a profit to amazon and puts third party sellers at risk or only offer the product on other market places. but because amazon controls so much of the market place, third party sellers have little choice. these agreements impose a high price as i've explained all across the online retail space and consumers lose in this scheme as a result of amazon's agreements. but absent these agreements, third-party sellers could offer their products for lower prices. that is one of the basis for our lawsuits.
and amazon isn't just doing this with third-party sellers. they're doing it with wholesalers as well. so we recently added that count to our lawsuit. they sell products for amazon to resell at retail to consumers. if amazon lowers the retail prices to match or beat a lower price on a competing online market place, the wholesalers, listen to this, are forced to pay amazon the difference between the agreed upon profit and what amazon realizes with the lower retail price. this can lead to wholesalers owing amazon millions of dollars. to avoid triggering this agreement, wholesalers have increased the prices on their goods and in other words they've agreed to do what amazon wants. that is to charge consumers more for products that they ordinarily would have to pay but for amazon's illegal agreements. all of these agreements reduce an online market place's ability to compete with amazon's marketplace on price and result
in consumers paying artificially high prices and even outside of this litigation, small businesses of course have complained and complained that amazon has stolen their business ideas and passed them off as amazon's own. let me give you one brief example. >> attorney general, i'm going to have to stop you here in just a minute. we have five minutes for each of our witnesses but we're going to be able to ask you some questions because i definitely want to hear this. is that okay? >> absolutely. senator, i'm happy to stop right here. >> great. okay. thank you so much. i appreciate it and now mr. lynn, you're recognized for five minutes. >> chairman -- >> you need to hit your button. >> chairman warren, ranking member cassidy, members of subcommittee, thanks for inviting me to speak to you today on this important topic.
i'm barry lynn and i direct the open markets institute and it is good to see you today. political economics is the art of governing how people compete with and exercise power over one another. and an essential truth of human society is that competition among people in inevitable. what people can control is whether corporations and markets are structured to promote the liberty and well being of the individual, the ability of citis to make wise decisions and the security and prosperity of individuals and of the nation. for two centuries americans were mastered of engineering competition policy to achieve these ends. america citizens use anti-monopoly laws to make themselves the most equal and free people in the world and the most prosperous innovative and powerful. but americans from both parties radically altered how we think about and enforce competition policy.
democracy, community, prosperity and policymakers embraced a philosophy that said we should aim to promote efficiency only. the result is that today american's face the gravest threat of liberty to democracy since the civil war. today in america, as courtenay made clear, monopoly' drive down the people's wages and driving up the people must pay. they threaten freedom of the press and expression. they spy on citizens and use the people's own information to enrage their citizens for profit. monopolist extort other people's businesses. they destroy better technologies and ideas. monopolist destroyed vital industrial capacity. last year we saw that with face masks and this year with semiconductors. they create dangerous dependency on powerful foreign states, they strip america's community of wealth, opportunity, independence and secure and
hope. none of this is new. i, myself, first warned of how the platform monopoly threatened democracy more than 11 years ago. i first warned of the dangers of the supply chain 19 years ago. there is good news. americans are swiftly awakening to this interlocking set of crises, today the great majority of americans from across the political spectrum want to see monopoly's striped of their powers and they are on the move. the justice department and ftc have brought lawsuits against google and facebook and in the most democratic action, attorneys general from 49 states, puerto rico, washington, d.c. and guam launched investigations of google and facebook and filed three additional lawsuits. then there are the smart and
urgent efforts to strengthen anti-trust laws here in the senate as with senator warren's proposal, in the house and in europe around the world. perhaps most important president biden has personally condemned the pro-monopoly chicago school consumer welfare philosophy of robert bork and richard posener and restored our focus on protecting the american people and the nation itself from all dangerous concentrations of power and control. and in lena khan and jonathan canter president biden has appointed law enforcement strong enough to get the job done. today's hearing marks an especially important step forward in this great struggle. it highlights the pressing need to relearn that competition policies is much more than mere anti-trust law. rather, competition policies is the combination of anti-trust with trade policy, corporate governance, wall street governance and industrial strategy. nowhere is this more obvious than addressing america's twin supply chain crisis.
this is why in my written testimony i focus on what lessons we could learn and concentrating so much risk and power our production and transportation systems. such as with semiconductors. and i detail how we could rebuild our industrial system in ways that make us truly safe while also breaking inflation and boosting wages. our opportunity today is not merely to rebuild what the monopolists have broken these last 40 years, it is to relearn how to use anti-monopoly laws to imagine and make america far more democratic and just and forward-looking than any of us have dared to imagine in a generation. >> thank you very much, mr. lynn. i appreciate it. mr. sherman. you're recognized for five minutes. >> chair warren, ranking member cassidy and distinguished members of the subcommittee.
thank you for the opportunity to testify today about privacy issues facing american citizens. i am a fellow at duke enough sanford school of public policy where i lead a research project focused on the the daya proek raj eco-system. the unregulated industry of u.s. companies aggregated, buying and selling americans' personal data on the open market. data brokers are profiting off the vulnerability and insecurity of the u.s. and its citis while a comprehensive privacy law is vital, congress need not wait to resolve this debate to regulate data brokerage. today i'll make three points. congress should control the sale of data to foreign countries and control the sale of data for certain categories and stop companies from circumventing those controls by inferring data. our research at duke university
has found data brokers widely advertising data on hundreds of millions of americans. they're sensitive demographic information and political preferences and beliefs and whereabouts in realtime locations as well as data on first responders and students and government employees and current and former members of the u.s. military. data broker can track your race, religion, gender, sexual orientation, income level, how you vote, what you buy, what you search online, and where your kids and grandkids go to school. this harms every american, particularly the most vulnerable and i'll focus on three examples.
data brokers advertise data on millions of military personnel. criminals have bought this data to scam veterans and families because of the military benefits they get from the federal government. foreign states could acquire this data to profile military personnel, track them and their families, and undermine national security. the chinese government's 2015 hack of the office of personnel management was one of the worst breaches the federal government has suffered. if in the future there is no need for the chinese government or many other foreign intelligence agencies to hack the data bases when the data could be bought legally on the open market from u.s. companies. data brokers known as people search websites aggregate millions of americans' public records and make them available for search and sale online. abusive individuals have used this data including highly sensitive information on individual's addresses and whereabouts and family members to hunt down and stock and harass and even murder other people. freedom innocently women. date aur brokers advertise data on millions of american's health conditions. companies could legally purchase data from other firms and use it
to exploit consumers. criminals already scam senior citizens using data broker data. they could similarly buy data on seniors with alzheimer's and dementia to steal away their life's savings. foreign governments could acquire this for intelligence purposes. our research has found that companies selling this data on hundreds of millions of americans conduct relatively little know your customer due diligence and for those that do, it is unclear how strong it is in practice. brokers may also make their customers sign nondisclosure agreements, stopping them from saying where they obtained u.s. citizens' information. as part of talking about data threats to americans civil rights, u.s. national security and democracy, we must focus on this entire data brokerage eco-system.
there are three steps congress could take now. first, strictly control the sale of data broker data to foreign companies, citizens, and governments. which currently could entirely legal by by millions of u.s. citizen's data directly or through front companies. second, strictly control and even consider outright bans on the sale of data and sensitive categories like genetic and health information and location data which is used now to follow, stalk and harm individuals. third, stop companies from circumventing controls by inferring data using allergies and other techniques to predict things they have not technically collected. congress should act now to regulate the eco-system and the threats to consumers, civil rights and national security. thank you. >> thank you, mr. sherman. and now miss sacks, your recognized for five minutes. >> chair warren, ranking member
cassidy and members of the subcommittee, it is an honor to testify today. i'm a senior fellow at yale law school's china center and a cybersecurity policy fellow at new america. i've spent the last decade as an analyst of chinese technology and data policies both in the national security and with the private sector. i also advise corporations on chinese tech policies. today. i will focus my testimony on china and border data flows. while my expertise focuses on china and i will speak about the chinese government's efforts to acquire data, my view is that the most effective solutions require that the united states put forward a more comprehensive data governance vision, with
stronger protections for security and privacy for all companies. some of these risks are specifically to china but so much of this is much bigger. u.s. lawmakers have an opportunity to address transnational security threats but while also advancing a more secure ethical and democratic internet in its own right. the chinese government has embarked on a ambitious national daya strategy to unlock the value of data. my written testimony submitted for the record has more details on some of the recent plans and directives that signal the centralization of chinese state power of information flows within and beyond china's borders, the chinese leadership seeks to control data as both a strategic and an economic asset. there are concerning national security risks. beijing is already presumed to have sensitive national security information from the theft of personal records of roughly 20 million individuals from the u.s. office of personnel management as my colleague
justin sherman has testified. if that location health and social media data were to be acquired on the open data market, and combined with what beijing already has, china could target individuals in sensitive government national security positions and the military for manipulation and coercion and blackmail. as chinese online services and network infrastructure grow in freedom nance around the world, it is possible that the chinese government could use this position abroad just as the united states had done like with snowden to utilize intelligence networks. we don't know what value and harm data created now will hold in the future. but we must grapple with the
implications of the ccp gaining control of information flows beyond china's closed internet eco-system. i have the following recommendations. first, the analogy of data as the new oil is false and leads to bad policy. it assumes that data is a finite state resource and as such efforts by both beijing and washington to hoard and wall off data from each other will only lessen national power, not increase it. instead, congress should mandate its stronger cybersecurity protections and basic standards for what data could be collected and retained in a comprehensive federal privacy law to protect sensitive american data not just from sophisticated state hackers, but also from the unregulated industry of data brokers around the world trading in consumer data without transparency or controls. while comprehensive federal
privacy law moves slowly amid much debate, having baseline rules for the data broker industry would close off a prime target for exploitation now. currently there is nothing in our regulatory structure that would prevent the chinese government from buying american citizens' data and that is why bans on chinese software won't make us more secure or safe. even if tiktok were an american owned company, it could still legally buy that data on the open market. given that, american data is shockingly exposed and will remain that way as long as restrictions on data flows only focus on specific companies deemed adversaries. the united states should work with like-minded governments to develop a common set of standards and safeguards, perhaps building off of the initiative put forward by the chinese -- not the chinese, the japanese government known as data flows with trust. and i have some more recommendations in my written testimony. but in conclusion, in offering an affirmative compelling vision of u.s. data governance in its
own right will only make the united states less secure, less prosperous, less powerful, and allow space for chinese companies controlled by the ccp to flourish. thank you. >> thank you, very much, miss sacks. and now miss gray, you're recognized for five minutes. >> thank you, chair warren, ranking member cassidy and members of the committee for the opportunity to today testify. my work at the future of privacy forum is in u.s. law and public policy related to emerging technology and consumer privacy regulation. and specifically i've been asked to speak to the topic of data brokers. the federal trait commission and other senate committees have long called for greater transparency and accountable in the data broker industry and regulation is long overdue. many of the most influential reports published almost a decade ago have influenced the debate and since then much have changed. there have been significant advances in much learning and
artificial intelligence, adoption of consumer technology has become universal with 97% of u.s. adults owning a smartphone and most families owning many additional devices. the legislative landscape has evolved more slowly and it largely not kept up. since 2018 california and two other states have passed consumer privacy laws, three states have established limited data broker regulations and they have focused on transparency through the establishment of data broker registries, while others such as the california privacy rights act codify them to opt out of the sale and sharing of data. much more work remains to be done. i would like to make two points regarding data brokers and give recommendations. the first point is that defining the very term data broker has been an ongoing challenge because it encompasses a very broad spectrum of divergent business activities. the leading definition is any business that collects and sells consumer information with whom the business does not have a direct relationship.
many hundreds of businesses fall under this definition and use data for a wide range of purposes that include many of these, as my fellow witness, mr. sherman, pointed out, including marketing and advertising and people search data bases, fraud identification and risk scoring. some of these activities directly benefit consumers such as the did at that that protect a bank account against fraudulent activity but some benefits from advertisers with fewer or little or no accompanying benefits to individuals or society. second, the lack of a direct relationship with consumers characteristic of the data broker industry is at the heart of concerns around privacy, fairness and accountability, but it also presents one of the greatest challenges for crafting effective data privacy regulation, and i'll briefly explain why. any business with a direct to consumer relationship such as a restaurant, a hotel, a retailer, even a social media network could collect large amounts of
personal information about u.s. consumers today directly or by purchasing it and in some cases the first party companies could exercise enormous influence on market power as we've heard. however, there is still some degree of accountability to users who are aware that the companies exist and can delete accounts or raise alarms. in contrast, a business lacking a direct relationship with consumers typically does not have the same reputational interests, incentives, and in some cases limits protection of data and protected against misuse. however, a lack of consumer relationship also means that businesses engaged even in legitimate data processing or socially beneficial data processing cannot rely on traditional historical privacy mechanisms of notice and choice. meaningful affirmative consent or opting in might be impractical or impossible for a business to obtain for some use cases while opting out after the fact tends to be both an
inadequate safeguard and impractical for most consumers to navigate. we know that consumers could become overwhelmed with choices and lack the knowledge to assess few door future risks or future potential secondary uses. so what does it all mean? first and foremost, congress should pass privacy regulation that establishes clear rules for both data brokers and first party companies that process personal information from u.s. consumers. it should addressed gaps in the current u.s. second sectoral address to privacy and not rely solely on consumer choice chls. a privacy law should codify clear limb its on the collection of data and apply accountability measures such as transparency, risk assessment, auditing, limitations on the use of sensitive data and retention. in the absence of comprehensive legislation, there are a number of steps that you could take including empowering the federal
trade commission through funding, staff, the establishment of a privacy bureau, limiting the ability of law enforcement agencies to purchase information from data brokers, and enacting sectoral legislation for biometrics and facial recognition. or updating existing federal laws such as the fair credit reporting act to more effectively cover emerging uses of data. thank you and i look forward to your questions. >> thank you very much, mrs. gray. appreciate all of your testimony here. and now i recognize senator whitehouse for five minutes of questions. >> thank you very much, chairman warren, i appreciate it. this is a fascinating and important hearing and i'm delighted to have these terrific witnesses here. facebook and google have been profiting off some of the worst propagators, i guess you would call it, of climate denial. the center for countering
digital hate finds ten fringe sites that fuel 69% on facebook, so with a little bit of focus, they could address this problem if it's only ten major propagators. google itself makes millions from google ads that it runs alongside climate denial content as if it were legitimate. mr. lynn, can you talk about how our information eco-system suffers when a handful of companies control what people see and how they perceive reality, what a communications monopoly means in a world in which there is so much deliberate climate denial propagated by industry. >> thank you, senator. thank you, senator. no, yes, this is a fundamentally important issue. what we see today, one way to answer the question is to understand that google and
facebook today are our -- these are the communications corporations of the 21st century. these are the at&ts and the western unions of the 21st century. at&t and western union, they did not, they were prohibited by law from manipulating how people spoke to one another. google and facebook, their business model is based on manipulation, the reason they take the data is in order to manipulate you. they're massive manipulation machines. they make their money by renting out the manipulation machines and they call it advertising. so what we have is in the midst of our society, rather than sort of networks that connect people and empower people to speak with one another, and interact with one another, we have machines that are designed to set people into conflict with one another, to feed them false information,
to -- to determine how people vote and so what we have -- >> so they're ready, willing and able tools for false information propagators? >> when they were established, i think the idea was that these systems would be used by proctor and gamble to sell soap and tide. what they now do is they rent themselves out to vladimir putin, to climate deniers, to the chinese communist party, whoever comes along. >> let me switch to the data that you're talking about that they have gathered and ask the witnesses who spoke about data privacy and data brokers, what does somebody listen to this hearing need to know about what companies know about them, what data brokers could extract from what
companies know about them to sell and to what extent that information could be individualized back to them potentially by foreign bad actors, foreign governments. mr. sherman is going for his microphone. go ahead. >> data brokers know everything about pretty much every american. where you work, where your kids go to school, how much money you make, your race, your religion, your sexual orientation, and their entire business model is they can target this to individuals. they sell this data, they offer advertising like mr. lynn mentioned for the purposes of targeting specific individuals and so the profiles are out there on the open market for sale. >> and if you are running a psychological warfare operation involving american public officials or american ceos or various kinds of decision makers
in american society, how valuable of a tool would that be if you were a foreign government to be able to look into people's lives and understand not only what you directly know but what conclusions you could draw about what their shopping habits are and so forth? >> incredibly value for that threat actor. you could buy data bases right now of what people search online, how they vote, what they think, and so it is all out there on the open market. >> my time is up. thank you, chair warren. if i could, i would just add one question for the record, so as not to take up too much time. but one of the things that we hear in the finance committee a lot, our chairman has joined us, chairman wyden, and he's active on the subject, is that if we make big american companies pay a fair share in taxes, that will make them anti-uncompetitive
against foreign big companies and that is the argument our republican friends always make. what they ignore is that when big american companies don't pay a fair tax burden, that gives them competitive advantage over smaller american companies. and obviously that plays out in this tech world because you have apple and google, who have come up with, what do they call them, the double irish and the dutch sandwich and peculiar tax tricks that they use to avoid paying their fair share and i'm interested in your views no writing and not now because my time has expired and how that created competitive disadvantage with potential contenders against them for competitive advantage in the u.s. and to what extent it locks in financially some of their monopolistic power because, frankly, they put themselves into a place where they don't
have to pay taxes but all their smaller competitors have to. thank you very much. appreciate the attention to that question in writing. >> thank you, senator whitehouse, a very thoughtful question. and now senator cassidy, i think you're up. >> thank you, madam chair. thank you all for testifying. mr. sherman, i can't help but note we're on pearl harbor day and our country has come to venerate this day but also to honor the service men and women and others in the clandestine services and we rival, make tremendous investment in the v.a. hospital and other services to include a suite of benefits to help these folks who have offered so much. but i'm struck when you speak about how a data broker can sell personal information on a -- active military personnel, i
presume a veteran as well to allow a company to basically rip them off these benefits that they would ordinarily receive. how and where, how does someone get such information, what is the price of one military profile, and is it safe to say that companies are getting rich off of using this data to trick our service folks into giving their benefits over to the company, marginal benefit for the service person or the veteran but great benefits for the company and the taxpayer gets ripped off. i have at least three questions in there. >> data brokers are profiting off the vulnerability and the insecurity of the u.s. and its citizens including veterans,
that includes members of the military. i don't have a figure in front of me for the cost of one of those profiles though i could follow up on that. but i'll just say it is very easy to find this information online and to purchase it. our research has shown that many of these companies offering this data, whether it is military personnel, you know, low-income individuals, whatever it is, do not do much customer vetting. they are willing to sell to most entities with a paycheck and an email address. with a check and email address. so at the end of the day, it is all too easy for people to use this as they have to scam veterans and to create risks to national security. >> how do they get this information? how do they know that someone is active military, et cetera? >> because the collection and buying and selling of this information is so unregulated. it is very easy for these companies to put pieces of information together to figure out how you are. much like they might track where you go during the day and what you spend to figure out how much
money you and your household make, they might look at where you travel to figure out if you're in the military. >> now would the data broker themselves have location data that would obviously indicate that i was spending my night on base every night except for an occasional deployment in someplace which seems to be a military zone or are they buying this location data from others? >> likely both. many companies collect this data directly from people's phones, whether you're working on the hill or in the military or even at an intelligence agency, and they also buy this data from other companies. >> and now i'm a physician so let me toss this out and if one of the other witnesses on data brokers wishes to address, please do. the thought has occurred that we have hipaa penalties if i as a physician would reveal that
someone was hiv positive or had a mental illness. but what you specify that the mental health is well-known, makes total sense, if you have location data that shows that somebody goes to work every day at a place which is known to be a mental health clinic or hiv treatment clinic, that the person is probably employed there. but if they go every two weeks or every month and go to a pharmacy afterwards, they could infer the patient has hiv or mental health but those are often stand-alone clinics so they could infer this. is this a correct kind of guess at how this is done, and doesn't this kind of violation the certainly the spirit and it seems actually almost the letter of the hipaa regulations? mr. sherman please start and i'll ask the others to -- miss sacks and miss gray to comment. >> that is exactly the problem.
that is exactly the problem with data brokers, senator. they could dance around the very few limited privacy laws that we do have by proxy data to get that information any way. >> so this is what you were speaking of, they could infer even if they don't directly collect. >> that is correct. >> and they sell that data to those that might be interested in marketing to someone who has mental health or hiv or something such as that. >> yes, they do that. >> mrs. gray or miss sacks do you have any further comments because as a physician that greatly offends me. because the idea that we could infer that which is otherwise restricted is, again, it just violated that which i always kind of had in my dna as a physician in terms of protecting patient privacy. >> i characterize that the same way, senator, and, in fact, this is one of the major problems that needs to be addressed
through nonsectoral comprehensive privacy information and data collected through apps and wearable and fitness devices and devices like bicycles and electric vehicles, could all lead to the types of information sharing that you're describing. some of it when it is directed -- directly collected from consumers and some of it would be inferred through large data sets. >> your answer implied that my car, which is connected to the internet, theoretically could have an app that could theoretically, the data broker could purchase the information related to my location data from a car which is, quote, unquote, a smart car, although i don't know why you would have to if you could do it from an app on somebody's cell phone, but is it all true. >> all of that is true. much of the commercial location data that is out in the industry, some from mobile apps and some from cars is tied to device i.d.s for example.
some of it is from apps when it claims to measure things like driving behavior and all of that information is very valuable for a number of purposes. some of it benign, like transportation analytics and urban planning and some of it more harmful. >> i'll have a second round but yield back, madam chair. >> thank you very much, senator cassidy. senator widen. >> thank you, i want to thank you for getting into these issues. senator cassidy just mentioned the modern car. this is a computer on wheels and i have been investigating now for years as chairman of this xhep the sleazy, unregulated world these data brokers and in several instances we blew the whistle on government agencies that were too eager to consumers for this information and we pushed apple and google to finally get some of the
sleaziest data brokers out of their stores and out of their businesses and i'm glad we're making progress but we've got a lot more to do. and i want to start with you, mr. sherman. you made an important point with respect to how foreign governments can acquire americans' data to run disinformation campaigns, identify undercover government personnel, blackmail government employees, and i have been working on legislation for some time now to deal with this threat, the bill will be introduced shortly. my first question to you, mr. sherman, is do you agree that congress should enact legislation to strictly limit the exports of americans' personal data to high risk foreign nations and companies to address what is in my view a demonstrable national security threat?
>> there is a huge national security threat here in congress and they did need to control the sale of information. it is all too easy to get that on the open market. >> very good. ms. gray, we've also been looking at this whole issue of how u.s. government agencies bypass the courts by buying americans' data from data brokers. so i've introduced bipartisan legislation, the fourth amendment is not for sale to close these loopholes. do you agree that the government's exploitation of these loopholes is a serious problem and do you agree that congress ought to close these ever-yawning loopholes by passing our legislation. >> absolutely, senator. the fourth amendment is not for sale act, it is a strong model. it is exactly what is needed right now. >> and tell us if you would how
this connects with privacy issues. because i have also introduced another piece of legislation, the mind your own business act, and had that become law, i'm of the view, mr. zuckerberg would have already faced major sanctions for behavior connected with privacy violations. but how does this whole area connect with privacy, because on the finance committee we're increasingly looking at privacy issues. for example, we feel very strongly that wealthy tax cheats who right now are about as likely to get audited by the government as getting hit by a meteor, we have to do more to root out that corruption. but we can do it in a way that is consistent with protecting people's privacy. i'm a privacy hawk. i'll put my privacy credentials up against anybody in the united states senate. but tell us how this whole field connects with the broader
expanse of making sure that we protect people's privacy. >> sure. well, one of the issues is the sheer scale and volume in the modern commercial data eco-system and it is becoming increasingly untenable to separate the related fields of law enforcement and national security uses of data and commercial collection and uses of data that originated for a particular purpose and is used for secondary purposes and being used by government agencies. >> it is striking because i'm also on the intelligence committee. and i've come to the conclusion that privacy is a massive economic and national security issue. and you can't just separate these all out into separate boxes. it is a question of economics and national security and privacy are directly linked. i want to thank all of you for
your good work. i appreciate senator cassidy's interest in this, senator warren has been a long time leader of making sure that we hold these major economic forces in our country, our largest companies accountable. and by the way, i was just in oregon and people were asking me about these issues. being successful and ensuring that there is accountability aren't mutually exclusive. we can do both. of course we want our businesses to do well. of course we want them to be profitable. but they can also be accountable on key american values like protecting people's privacy and i want everybody to know and i'm so pleased that senator warren has given us this chance. these sleazy unregulated data brokers, i want to put them on notice today, we're going to stay at it until there are serious consumer protections, whether it is the fourth
amendment it's not for sale, but there is going to be accountability in this field. thank you, senator warren. >> and thank you, senator wyden, for your longtime leadership in this area. this is how we're going to make change. so thank you. thank you for all you've done. i want to talk about another aspect of the issues that we've raised today. and that starts over 100 years ago when congress passed our first anti-trust laws to protect both local businesses and to protect our democracy from powerful dominant corporations that would undermine competition, crush workers and gouge consumers. but starting in the 1970s, our government reversed course. corporate ceos and lobbyists pushed the idea mega-mergers and corporate behemoths were good. economists used complicated models to say, gee, if we just let big corporations get even bigger, they would be more efficient, they would lower
prices for everyone, and they would compete better on the world stage. unfortunately, too often, that is not what happened. take the semiconductor industry for an example. hedge fund managers took over our biggest chip manufacturer intel. intel grew its market size, cemented its dominant position through anti-competitive and predatory practices. then, having killed the competition, the managers were free to weaken intel's fundamentals with impunity. i'll give you just one example. from 2001 to 2010, instead of spending more money on innovation, remember we're talking about the semiconductor industry, right, you have to stay up, instead of spending more money on innovation, on new ideas, on more efficient manufacturing here in the united states, intel's managers spent $48 billion on stock buybacks.
they boosted share prices and executive pay while they hollowed out a once great company. so, mr. lynn, let me start with you. you know a lot about the semiconductor industry. did consolidation particularly the growth of intel lead to greater efficiency? >> no, senator. the opposite. >> did it lead to lower prices? >> absolutely not, senator. >> then did it at least make intel a stronger competitor on the world stage? >> the opposite, senator. >> so in your assessment, what exactly did happen as a result of intel's growing dominance in its field? >> first, one of the things that you mentioned $48 million that intel paid out between 2001 and 2010. the dominance allowed them to pay out much more between 2010 and 2020.
actually $130 billion over the last ten years. so, the looting and sacking of this corporation grew much faster and more aggressive for the last ten years. but this results in higher prices for the chips. it results in more power and concentration of power over workers and it is not just people on the assembly line but it is also scientists and the engineers. this is -- these are the people that we count on to develop a better future and we have concentrated power over them. we see less innovation as another effect. the other effects include you know, this extreme concentration of capacity that we have seen in corporations like tsmc in taiwan and this extreme concentration when you have all of a certain kind of chip, all eggs in one basket, that means the system is fragile and subject to catastrophic failure. you have the system that gives
other powerful countries like china power over the people who depend on that capacity. for instance, by threatening to disrupt shipments in and out of taiwan. it leads to these massive shortages, these structural shortages that are leading to the shut down of assembly lines all around the world. not just in america, but talking about ford, 50% decline in production of cars in q2. and toyota 40% decline of cars in q3. this equals vastly higher prices for newer cars, vastly higher prices for used cars, vastly higher prices for rental cars, and a lot of dirtier cars on our streets because we can't replace them with newer, cleaner cars. >> so consolidation clearly did not strengthen our semiconductor industry. but consolidation or lack of
competitors in this field did create this supply chain crisis that the pandemic has exposed. and now, as you rightly point out, without semiconductor chips, other manufacturers like auto companies, can't meet demand. they're furloughing workers at the same time that orders are stacking up all because they can't get the chips that the u.s. manufacturers once supplied all around the globe. and what has been management's response to this? the same executives who exacerbated this crisis by failing to properly invest in their operations and infrastructure now are asking congress to bail them out. so they could make the investments that they should have been making years ago. excessive concentration is a real problem. it is also a problem in our domestic logistics and supply chain operations and it applies
to big tech firms. ms. brown, i'd like to go to you, if i can. during the four and a half years that you have worked at amazon, amazon has grown bigger and bigger, its profits have skyrocketed. so let me ask, in your personal experience, have amazon's logistical operations improved or have things just gotten worse and particularly with the covid crisis? can you speak to that? >> yeah. absolutely. it has definitely gotten worse as the years have gone on, especially with the pandemic. it is also about pushing out as much as possible for amazon. it used to be about the quality that we're giving our customers. that was the number one thing. but now amazon really doesn't care very much. they don't care about how, you know, their workers are trained, it is all about speed, and quantity.
so when it comes to my facility, with delivering food, you know, we deliver broken eggs, crushed bread, we end up sending out a lot of spoiled, you know, food and everything. so a lot of us want to do good work but it is frustrating because we're at a limit for doing such things and for amazon, this only means they're getting rich. they preach the customer obsession but it is not good for customers or hard working people at the fulfillment centers either. workers cannot do their jobs well because amazon wants to make more money and that is the bottom line for them. just about as much product as they could get out and more money. if you attempt to try and do, you know, these things like give customers good quality, actually practice customer obsession, you end up actually getting written up then eventually terminated. >> yeah. >> so the bottom line is for them is all profit. >> yeah.
thank you so much, ms. brown. you know, amazon's profits have exploded during the pandemic. even though deliveries have been significantly delayed and services have become more expensive. in a competitive market place, amazon's rivals would be able to compete on these factors. providing more reliable service or lower prices or a better work environment. but because there is no competition, consumers get higher prices and worse services while amazon gets even richer. markets can produce lower prices. markets can produce more reliable products. markets can produce robust supply chains, but only if there is competition. when giants are allowed to dominate an industry, everyone else pays. thanks very much. senator cassidy, i recognize you. >> thank you.
ms. gray, i have a series of questions for you right now. i finished up my last line of questioning speaking about how location data could establish somebody as being hiv positive or having mental illness or the military personnel, et cetera. i understand the organization with which you work considers kind of location data to be personal information that should be regulated. can you kind of comment upon that, please. >> certainly. commercial location data of the nature of the data that is frequently bought and sold in the data broker industry is often tied to not necessarily name and contact information but device identifiers such as a device i.d. related to a mobile phone. that has led many in the industry to claim at times that the data is not personally identifiable, that is anone
deidentified to a certain extent. and while the risk may have been lessened, the fact remains that persistent, precise location information over time is very straightforward to relate back to an individual person because our behaviors and our movements are unique over time. and so that is one of the unique challenges specific to the location commercial data industry. >> i'm sorry, i had to stop my video. my computer is about to die so you are getting a tour of my kitchen. i apologize to that. secondly related to that, what is the difference between suppressing data, i call my data broker, and contact them and i say i don't want my data to be marketed, et cetera. how do i ask them to get rid of
it and i'm told that often times they don't get rid of it, they suppress but suppression is different than deletion. can you elaborate on that, please? >> sure, senator. suppression is an industry term that is frequently used for the purpose of describing when a company maintains a list of individual consumers or individuals or devices for the purpose of excluding those individuals or devices from their products and services but not necessarily deleting the underlying data, and there could be a range of reasons to do that. one of them, for example, is to comply in an ongoing manner with delusion or opt out requests that are required by some of the emerging privacy laws. for example, data brokers that automatically direct from records may receive a request to delete data
but be unable to continue to delete data on that individual in the future unless they retain a limited suppression list. >> in that case, you suggest that is a positive thing in which they would be using the suppression to mark this. so is it a positive or a negative that data is merely suppressed as opposed to eliminated? >> i would say, senator, that it depends on the use case. there are other higher risk marketing and advertising use cases related to suppression lists, as we've heard, for example, some marketers and advertisers wish to exclude certain segments of the population from receiving advertisements that may be deemed offensive, for example, a list of households associated with the loss of a child or the loss of a pregnancy may be a list that a marketer uses to exclude those households from receiving marketing and
advertising related to baby products, right. that is an example. and so it depends on the use and there is some risk associated particularly with those more sensitive categories of information just by the maintenance of the suppression list. >> so there is clearly a nuance here and frankly if we're going to attempt to address that in legislation, we need someone such as you and your organization to help elaborate on that nuance because it actually sounds like it could be a positive thing, although you suggest there is a potential negative as well. so that said, let me ask you about the next thing. because i think this is another nuance. in your written testimony, i believe it was you who spoke of the fact that this big data can be very helpful. you wish to look at, just give an example, i'm not sure it came to full fruition but it has in other countries, using location
data to establish who might have been at a conference in which covid is known to have affected people and so therefore you can do that. i know after mardi gras in march of 2020, people used location data to figure out where everybody went back to from new orleans after mardi gras and where people had come from and they were able to establish that covid came to new orleans from the northwest and the northeast. so clearly people are using data in another sense. so what is the nuance between using data appropriately for public health purposes as an example or maybe to let me know how congested the highway is and should i take this route or take another as opposed to be using it somewhat nefariously, if you will? >> you're right, senator, to point out that there are essentially good uses and bad uses of this data. for example, in the early stages of the covid-19 pandemic, there were large commercial data sets held by both first parties
including google and members of the commercial location data broker industry that provided aggregate analysis of how people were moving around to help assist public health efforts. so there are both good and bad use cases. one of the nuances here is that when we talk about fair information practices and privacy and having a realm of private life, there are increasing concerns around the fact that data is collected in the first place. even when it might be later used for good or beneficial purposes. there is nonetheless as zone of private life that i think most agree should not be intruded upon. in other cases most consumers are aware that their sharing location data for example for a particular service and not aware that it may be reused for a secondary or incompatible purpose. and things like commercial research and public health purposes are technically
incompatible purposes because that is not the reason the data was provided so crafting nuances exemptions related to sources and sensitivity of data, risk related to harms to individuals and groups and society are all part of crafting effective regulation here. >> and i'll finish with this and turn it back to you, madam chair. i sincerely think observationally it can't be disputed we come up with better legislation when this hearing like this takes information from those who are stakeholders and academics and others who are analyzed and try to get those nuances down. again, i ask you to contact my staff afterwards with some idea of those nuances, and that's an open invitation to everybody on the panel. madam chairman, i turn back to you. >> thank you, senator cassidy. so as attorney general racine
points out amazon controls 50% to 70% of the $430 billion market online for consumer goods. prices for everything from light bulbs to mattresses to motor oil are going up on amazon, and the question is why is that happening? a huge part of the reason is amazon's deliberate exploitation of its market dominance to squeeze more dollars out of consumers and third party sellers alike. in other words, amazon is taking a big bite out of the middle. one of our witnesses, attorney general racine, filed a lawsuit against amazon this year for this reason. a particular focus of the lawsuit is the impact of something amazon calls its fair pricing policy. if i can, attorney general racine, i'd like to follow up on an example you gave to illustrate this policy. so let's say if i make earphones and sell them for $100 on my own website, i just want to make sure we're clear on all this.
if i want to sell them on amazon to access this huge marketplace online and extend my reach, i have to pay amazon's fees and agree to their terms. and my understanding is amazon's fees can be as high as 40% of the cost of these goods. so thanks to these fees, let's just pick that example, i have to increase my prices to ensure that i can still turn a profit. so now instead of charging $100 for these earphones i may now have to charge $140. but the worst part is i now also have to charge $140 on my own website and on every other platform where i'm trying to sell my headphones. these inflated prices crush american consumers. so attorney general racine, i want to return to your opening remarks.
i wanted to go back over the example you talked about, how you also mentioned amazon forces wholesalers to pay more as well. so i did the consumer part. can you say a little more about how they're doing this with other wholesalers as well? >> sure. and you captured it exactly right, senator, which of course is no surprise to me. with respect to wholesalers, amazon, again, forces these first party sellers -- i'll call them -- to reach an agreement with them in regards to what the price is going to be. and here's the deal. if amazon lowers its retail prices to match or beat a lower price for that initial good on the online marketplace, the wholesaler is forced to pay amazon the difference between
the agreed upon profit that they made with amazon and the money amazon realizes after it lowers the retail price. in short, amazon has profit protection at the cost of the first-party seller. i do feel compelled to also mention -- and don't take my word for it -- look at the april 3rd, 02020, ""wall street journal"" article written by dana mattiole that talks about how amazon has scooped updata from its own sellers, its first party sellers to launch competing products. so not only are they crushing these first party sellers with these unlawful agreements -- that's what we allege -- but they're also using data around the popularity and selling of these products to launch
competitive products against these first party sellers. amazon can't win enough without cheating. and that's why we're suing them. >> so this just knocks me out. in a typical collusion case like price-fixing, competitors illegally agree to charge higher prices, and when they get caught they can actually go to jail under federal law. but amazon accomplishes the same thing in-house, and its higher fees are inflating prices on its own platform as well as in stores and other websites through these anti-competitive contract provisions with third party sellers. and the result is prices go up for millions of americans and americans can't see it because
there's no place else to do the price comparison to see what's happening here. this price increase is entirely hidden from consumers. the price looks the same wherever they go. and it just shows up as inflation. and amazon -- >> senator, can i give you numbers? >> please. >> because i think it's going to make your point. so between 2014 and 2020 amazon's revenue from third party seller fees and charges grew from $11.75 billion to over $80 billion. this year amazon is estimated to reach over $121 billion in fees from third-party sellers. they're doing this because it's extremely profitable. they don't care that consumers are paying far too much for goods, and they are not doing
what they say they're doing, which is focusing 100% on consumers. they're focused 100% on utilizing their market power to extract every bit of profit that they can. >> so the question, obviously, you have to ask is how do they get away with this? and what i would like you to focus on, if you can, attorney general racine, is how amazon's dominant market position contributes to this kind of pricing power that's then felt throughout our economy. i think the example with the headphones that i gave and you accentuated, frankly, and made better is the best example. and that is what amazon does is it artificially builds its commissions and fees into a product.
it ensures that that embedded profit that it has, frankly, continues throughout the electronic mini mall or major mall in such a way that no one not even you nor me, the creator of our own headphones can sell our headphones for cheaper than what amazon and we essentially were forced to agree to sell it as. and why do we engage in that agreement? because they own 50 to 70% of the marketplace. look at it as a toll booth keeper. the road only leads to the toll booth. the toll booth keeper can raise those prices. and you as the driver have no choice but to pay whatever they're asking if you're trying to get down that road.
we think that's illegal. we appreciate the work of this great committee. we're going to make law in the courts, and we look forward to helping with respect to legislation. >> and i very much appreciate that because i appreciate your point about 50 to 70% of the marketplace they already own, and yet amazon keeps growing. and they don't just grow by sales. they continue to acquire. so back in may amazon announced its proposed acquisition of mgm studios. that would be an $8.45 billion deal. now, i wrote a letter to the ftc commissioners asking them to review the deal thoroughly and to evaluate how the deal might affect workers and prices in other markets in the amazon ecosystem. mr. lynn, even if the ftc wanted to oppose this huge merger, it
would be a challenge to successfully block it notwithstanding everything we've already heard from the attorney general and others have testified about. can you explain why that is? >> yes. thank you, senator. well, first, it's going to be very expensive in terms of the time for this limited staff that the ftc has. they're going up against the richest corporation in the world, the most powerful corporation in the world, a corporation that can throw wrench after wrench after wrench into the mechanism. it's also very expensive in terms of the expertise they have to pay for, economic expertise. i mean, they have to put millions and millions of dollars into the kiddie to pay for economists. and this is even with president biden's renunciation and this focus on efficiency continues to shape how the judiciary is going
to look at this issue, and they have to be ready with this very expensive expertise. third reason, it's just very difficult to communicate with judges in the stylized language of consumer welfare, of efficiency. this is an issue of power. it's an issue of democracy. it's an issue of human liberty, and we have to talk about this in terms of efficiency. judges are trained to use common sense to enforce the law, to ensure rule of law, and when you're using consumer welfare framing you're speaking in nonsense. >> well, i really appreciate that. you know, you noted earlier that president biden has selected two outstanding experts, salina conn and jonathan canter. to lead the antitrust efforts at the ftc and at doj. these are people who believe in
competition and they're going to build strong cases, but congress needs to do its part. we need to make sure they have the resources and need to make sure they have the tools to be able to wage these battles. otherwise, we're just going to continue to see companies like amazon squeeze consumers no matter who's president or no matter whatever crisis of the day we are dealing with. so i think it's important we step up on our side, too. thank you. senator cassidy, back to you. >> thank you. it appears five minute limits are off so i may go a bit longer. >> i apologize. please go as long as you need to, senator cassidy. >> i have a series of questions for you, ms. sack. first, your testimony speaks of the need to have kind of a comprehensive arrangement
between countries or blocs, if you will, if we take the eu as a bloc, in order to have some sort of agreement. i think i'm summarizing. you may find nuance there. now, the reason i say this is that i have been told that the general data protection regulation of the eu risks making the eu a digital colony to the u.s. or china. it is so restrictive that the big data sets that are required to enhance research on ai are almost impossible to construct. i don't know if that's true. you know far more than i do, but nonetheless that's what i'm told. so there's something here.
how do we allow those sort of data sets required for ai to be constructed, big data sets if you agree that is the case? and how do we have a governance that would exclude bad actors, and i think folks see china with all their cyber espionage as being a bad actor, but, nonetheless, get the fruits of this big data. and you mentioned specifically the japanese with the data free flow with trust paradigm. i think i've given you a lot of directions to go in your answer. i'll turn it back to you. >> thank you, senator cassidy. i think you get out a key point here which is that u.s. security and prosperity relies on access to large international data sets. but as with other areas of the data broker legislation you mentioned with ms. gray, this one will have nuance to it. so how do we allow global data flows but with the right safe guards in place both at home and
internationally? and i think a big important step here is making sure we get our own house in order first. the transatlantic data flow relationship will be key, and it's important the u.s. put forward its own vision of data privacy first, but it should not be a copy and paste of gdpr, and the topic of this hearing focused on anti-trust i think gets at some of the challenges, which is that one of the most important critiques of gdpr is that it may only end up serving those companies that are wealthy enough to comply with the very heavy burden that comes along with it, so it reinforces the concentration of power in big tech while there may still be limitations on meaningful privacy protections. i think that the japanese data free flow trust model is a compelling way to think about
how can like-minded countries come together to put in place certain standards that would allow data to flow with certain conditions in place? and perhaps there can be a certification regime drawing on some of the privacy protections already outlined in the oecd guidelines. so there are a number of directions and this will require nuance as well. i look forward to helping support efforts of the committee to do that. >> now, does that require an international treaty? i'm assuming you may not be an international trade attorney, but can we basically pass legislation which is in alignment with others without a formal treaty, or do you have a sense how we go about this oced collaboration? >> this is one i'll need to get back to you on with the specific nuts and bolts. i'll follow up with you and your staff after. >> i appreciate that.
now, ms. sacks, tell me -- so we've learned the chinese government as an example could purchase information on u.s. military personnel and presumably location data as well, which would be kind of interesting to see where people are deployed, wouldn't it be, to see concentration of force, et cetera, what type of force. if you know other information as to what branch of the military they were in. but do other countries have that same sort of lax attitude regarding the legal purchase of information upon their security forces? so, for example, what about china? >> the chinese government is actually moving rapidly ahead to lock down more kinds of cut data even in the commercial security. for example, they put in place a data security law this fall which seeks to put forward a data classification scheme where they will move across sectors to define what kind of data would be vital to national security. they did this first in the auto sector, for example, and data
deemed vital to national security has new higher bar obligations as well as localization requirements around who that data can be shared with. >> now i think it was you suggesting it would be counter productive if you wall off your data and that the free flow of data, a nuance here, free flow of data is essential to ascending economic power for a nation as a whole with economic power, of course, being somewhat linked to national security. so in your mind is what they're doing counsellor productive? is it something we should also do or is it counter productive? >> the chinese government is shooting itself in the foot by i think overclassifying the kind of data it deems vital to national security. but in theory what they're trying to do is say certain kinds of data is vital to national security and needs to be locked down. and other kinds of data should
flow and circulate in the economy. now, how that's going to happen in practice is another story. but i think there could be something we could learn here in terms of defining what is the most sensitive kind of data. and mr. sherman and ms. gray have mentioned location data, for example. president biden put forward an executive order in june in which he called for creating a framework to assess what the security risks of transactions involving american sensitive data should be restricted, and in that executive order he said not all data has the same level of sensitivity. so i think one thing we can do is have a more thoughtful process following that executive order around what kind of data is vital to national security and should be subject to higher protections and what kind of data is less sensitive and should be subject to more international flow and sharing. >> let me finish with this, mr. sherman. is there any sort of data that cannot be relinked?
so of course you say we're going to have location data and be using it for x, y and d purpose. it will be delinked. this is very important. want to establish crowd flows within a city, for city plan, et cetera. but is there any data that cannot be relinked if you have a robust enough data set by which to compare it to? >> as miss gray mentioned there is a difference between data with someone's name or social security number attached and data that does not have that attached. but at the end of the day you can reidentify anything. as nies and others have now testified there is so much data out there on americans hoarded by different companies it is too easy to combine it to identify people by name. >> madam chair, i am going to sign off now because i have to transition to come in for votes but i thank all the witnesses for your testimony, including
senator warren's witnesses whom i did not ask questions of, but found your testimony very interesting. and madam chair, i look forward to collaborating with you on future such events. >> thank you for being such a great partner on this, i really appreciate it, senator cassidy. and like you i am delighted with the witnesses that you have invited today, to learn from them and hope we will have many follow-up questions for the record here. so thank you for your partnership. this is just the opening round. we will keep going on this. i have got one more round of questions i would like to be able to ask right now. what i would like to do now is focus a little bit about market dominance and the impact on workers. for too long our anti-trust policies have focused on prices and consumers, which is important. and the amazon example shows that we have weak enforcement of those policies, and that has let
these big companies increase prices across the word. we have also talked about how consolidation creates other problems, particularly for american workers. you know, whenever these companies merge, the corporate executives labor to talk about the new efficiencies. and what they usually mean by that is they are going layoff workers and cut wages. so, as companies grow more dominant, they have more and more power to layoff workers and to cut wagings with no real consequences for themselves because they know that as industries become more consolidated workers have fewer alternatives. this means that employees who are subject to increasingly harsh, dehumanized working conditions -- a worker can just move to a better job if there is no other available employer. this is called -- power and our anti-trust laws need to better
address this. ms. brown, if i can, i would like to ask you a couple of questions here. you work for amazon fresh. and lots of people order their appreciate reese for deliver wee within a few hours, never think anything more about it. but there is a grueling process that happens behind the scenes to accomplish this feat. can you explain how conditions at your warehouse have changed during the pandemic? >> absolutely. i am going to paint a picture for you about what the process is like. as soon as you go on the website and you click the place your order button, it causes a chain reaction of people running around the warehouse to gather everything. so it's a small team of those who, you know, they will lishlly be look -- initially be looking a of the the numbers and everything and pass it down to
another spot of people who are running around a warehouse that's bigger than a football field to then gather those items. then it goes to an even smaller team, usually a max of five people to package those items out. then it goes to even you know, a smaller amount of people where they are responsible for sorting everything depending on where it's going, you know, on a conveyor belt. and then it goes the my people, where we work on the dock. and we are responsible for sorting thousands of those orders that get to us every day for 11 hours making sure they get on the truck and making sure it gets to, you know, the customers as intact as possible. now, the human toll in all of this is basically we have very few to no breaks. we work until our bodies are basically -- they are past the emergency stop button. you know, we delay bathroom breaks. we miss lunch. you know, we can't miss work and
during the pandemic you have a lot of us that, you know, we're burnt out. so a lot of us, me included, we would literally take 30 seconds to you know just kind of cry it out for a little bit and then get right back to it. then when you go home you don't even have the energy to take care of your family if, you know, you have kids or you have family members who are dependent on you. things such as cleaning the house or cooking for yourself basically become non-existent on, you know, days that you have to work. >> this sounds really grueling. and i know that during these challenging times many people across a lot of different industries have considered quitting their jobs and finding better employment. however, amazon is continuing to grow like no other company, especially while small retailers and small local businesses are
closing. so let me ask, ms. brown, if conditions are this bad at the amazon warehouse, what other employment options do you and your coworkers have to be able to support yourselves and your families? >> well, black and brown people in my particular neighborhood, a lot of my coworkers, we don't really have very many options open to us out here in new jersey. so most other jobs out here are warehouse jobs, or retail. and those don't pay enough. amazon pays just a bit more than those. so we're stuck, you know, being taken advantage of in warehouses like this. and they -- this is what they bank on. they know we have no other choice. so they continue with the lack of regulation and everything to protect us. >> right.
you are right. it's not an accident. you know, it's the largest employer in your industry, equipped with massive power. amazon can pressure other companies to follow suit with its poor labor standards or they can just put those companies out of business. now, it was announced last week that the amazon facility in bessemer, alabama, that workers there are entitled to hold a new union election. and if that election is successful, this would be amazon's first union ever in the united states. but wi want to ask about the other side of that, what it is like to negotiate with amazon if you don't have union on your side. amazon claims -- for this one, i actually want to get amazon on it. they claim that direct connection between managers & associates is the most
effective way to respond to the wants and needs of amazon employees. now, it's certainly effective for amazon's bottom line. but, ms. brown, can you tell us how effective this direct connection that amazon talks about negotiating with amazon without a union has been for you and for your fellow workers? >> so -- okay. so my colleagues and i have been fighting for change at amazon for years. instead of listening to us and working with us to find solutions, they tend to double down and continue to exploit us. so that's why we speak out to improve working conditions and for executives to take us seriously. so, you know, going against amazon especially say when you are going to be written up or something is kind of like, you know, trying to defend yourself
in court. it's not going -- it is usually not going to go too well sfa well, i am very concerned that the workers that are most at risk during this pandemic are more likely to be women, are more likely to be people of color, and it of course it varies depending on the job. if i can, this is the last thing i want to ask you here, ms. brown, as a black woman, what have you observed about amazon's treatment of racial minorities and women? >> so, now amazon, they will hire any and anyone. that's true. depending what race you are, that's going to determine whether if you can get promoted and sometimes what you are going to be doing. most of the workers are black and brown, and very few of us hold high positions in the company. it shows in the promotion
process. they will promote only enough black and brown people so that way it looks okay. mostly they hire white managers out of school who have never worked as opposed to promoting black and brown upward when -- you know, the process. >> yeah. >> they -- they really don't. when they do promote you, the pay is definitely different from those who get hired from outside. so if you are a black and brown worker, usually when you make manager, you know, internal promotions, you get a lower wage compared to someone who is going to be coming from outside that's going to be getting a higher wage. and women -- it's even more scarce to really see us in any kind of leadership roles with any of the same responsibility and respect. they would rather promote, usually a white guy over someone that looks like me. >> okay. well, i appreciate your testimony, your coming in to
talk to us about this. you know, all this suggests to me that if we really tackled the dominant power issue by fighting abusive employer practices, by limiting mergers that would harm workers, and by empowering workers to unionize, we could accomplish two different goals at the same time. we could strengthen the american labor force and the middle class, and we could advance racial and gender equity. vigorous competition enforcement would be better for all americans who work and better for all americans who purchase goods. so thank you very much for your testimony, ms. brown, i really do appreciate it. and i now ask for unanimous consent that the statement received by the subcommittee are the international brotherhood of teamsters and the strategic organizing center on the importance of strong anti-trust policy for workers, including in
the tech sector be entered into the record without objection. so ordered. i think at this moment the united states is at an inflection point. wealth and income disparities are at levels that we have not seen in our lifetimes. the government's lax enforcement of anti-trust laws during the past few decades is a huge part of this problem. regulators and judges have allowed merger after merger, and the result is too little competition in u.s. markets. dominant firms in technology are free pretty much to do as they please, including on data collection. they raise prices. they reduce wages. they threaten our privacy. all so that they can boost their profits to their shareholders and make their ceos richer. you know, i'm encouraged that the biden administration is
committed to stronger enforcement actions across agencies and committed to promoting competition. but congress has to step up and do its part, too. it's time for congress to finally update our anti-trust laws. we should ban all mergers involving huge corporations. the biggest companies need to compete on merits of they need to offer better products, better prices, better service, not just buy up their rivals and then gouge consumers. and second, we have to give our anti-trust agencies better tools to break up the anti-competitive deals that are most harmful to our economy like facebook's acquisition of instagram. and finally, our competition policy must safeguard our work force. those deal synergies that reduce corporate costs often come out
of the hooids of american workers. they are paying a kuj cost when mergers reduce competition. more than 100 years ago, our anti-trust laws were not designed to promote efficiency or to increase consumer welfare. they are designed to protect people from being at the mercy of economic kings who could exploit workers and customers at their whims. those laws were also designed to protect our democracy from the corrupt nunes of giant corporations. congress needs the do its part once again to make your economy more competitive. so i want to say, again, thank you to all of our witnesses. i appreciate your being here today.
your testimony has been very valuable. and appreciate your answers. for any senators who wish to submit questions for the records, those are due one week from today. that's tuesday, december 14th. for our witnesses, you will have 45 days to respond to any questions. i want to thank you all again. and with that, this hearing is adjourned.
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