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Posts Tagged ‘technological shift’

Internal divides cloud tech industry's antitrust defense

Tuesday, August 13th, 2019

Steven OverlyIn July, the head of a leading tech lobbying group published a warning against overly broad antitrust investigations that “could jeopardize American companies’ leadership” — a message that came amid rising regulatory heat on the group’s members Apple, Amazon, Google and Facebook.

But it soon became clear that some in the Information Technology Industry Council didn’t want to risk being seen as defending the four embattled tech giants.

During a conference call days later, members of ITI’s executive committee reminded CEO Jason Oxman that the group’s members don’t all share the same views on the brewing antitrust battle in Washington, two people familiar with the conversation said. They urged the association’s leadership not to go beyond the talking points of Oxman’s blog post.

The brushback highlights a byproduct of the tech backlash in Washington: Even as some of the industry’s biggest names confront mounting questions about their size and power, they can’t always rely on backup from the trade groups they’ve showered with money over the years.

The result has been only a muted response from ITI, whose executive committee includes companies like IBM, Oracle and Salesforce that aren’t facing antitrust scrutiny — and, in some cases, have had major beefs against their bigger rivals.

ITI’s leaders are “responding to what I’m sure is enormous pressure from four companies in particular” to defend them, one of the people who described the call said,while balancing a “desire of the other companies to not get in the middle of someone else’s antitrust debate.”

The Internet Association, the industry’s most prominent trade group in Washington, has stayed even quieter on the antitrust issue in the face of discord among its members, which include Google and its antagonists Yelp and TripAdvisor, as well as Amazon and rival eBay. Yelp has lodged complaints with competition regulators in the U.S. and Europe for years arguing that Google prioritizes its own products in search results.

“IA operates on consensus, which enables us to speak in a unified voice on a wide range of policies that are critical to the future of the internet,” including online liability and privacy issues, said the group’s spokesperson Noah Theran. “Because of this, IA does not engage on competition policy.”

But another industry official said tech could use some solidarity. The growing antitrust talk in Washington has “taken on an anti-tech tone in general” that affects the entire industry, the person said, and large trade groups are justified in “raising those questions” about whether the antitrust reviews are going too far.

The issue is playing out as the tech giants rack up a growing list of investigations by Congress, the Trump administration and the states. The House antitrust panel, the Justice Department, the Federal Trade Commission and a number of state attorneys general are looking into whether the companies are using their size to unfairly compete in their respective markets. The issue has also loomed large on the Democratic campaign trail, as Sens. Elizabeth Warren and Bernie Sanders pledge antitrust enforcers in their prospective administrations would break up the nation’s tech behemoths into smaller companies.

ITI has waded gingerly into the antitrust debate, trying to avoid picking sides in a fight that some members view as a threat to the entire tech sector and others see as aimed at four specific companies. In public statements and in private meetings with lawmakers, the group has stuck to arguing that antitrust reviews should be narrowly focused rather than demonizing big companies simply for their size or attacking the tech industry as a whole.

“Because antitrust law is such an important body of law, particularly for large companies who we happen to represent, it’s important to us to play that education role without getting involved in any disputes that our member companies may have,” Oxman said in an interview.

Such disputes have multiplied in recent years.

Oracle has fought high-profile battles against both Google, which it sued over alleged patent violations in the search giant’s Android operating system, and Amazon, which it accused of benefiting from a tainted bidding process for a $10 billion Pentagon cloud computing contract. All three companies are members of ITI.

And top executives don’t always hide the tensions. In a recent Recode interview, Reddit CEO Steve Huffman gleefully welcomed government scrutiny of his fellow IA members and competitors Google and Facebook.

Sheila Krumholz, executive director of the Center for Responsive Politics, said the tech sector’s divisions are not uncommon among industries with a growing presence in Washington, as lobbying on a wider range of policy matters reveals issues where companies’ desires are not identical.

“In those instances, the industry association may have to choose between taking sides — and risk creating rifts within their membership — or sitting on the sidelines of an intra-industry debate,” she said. “It’s bound to frustrate companies that pay money to an entity to represent their interests when that entity can’t or won’t go to bat for them.”

Tech companies have shelled out big money to myriad trade associations in Washington, D.C., that frequently serve as their first defenders when lawmakers and regulators come hollering. The groups are deeply engaged in fending off or shaping potential regulation, including data privacy legislation and proposals to amend the critical law that shields websites from liability over user-generated content. They’ve also, at times, backed lawsuits on issues like net neutrality where their members are more aligned.

“The associations are useful on issues where the industry is more united,” said Lee Drutman, a senior fellow at New America and author of “The Business of America is Lobbying.” “There’s a strategic value in maintaining a broad association because lawmakers generally are more likely to respond when the industry is united than when it is divided.”

But the groups’ silence on antitrust is all the more striking given the recent pileup of investigations and lawmaker complaints. The DOJ said last month its antitrust review is focusing on dominant companies in online search, social media and e-commerce — a not-so-veiled reference to Google, Facebook and Amazon, respectively.

The FTC is also conducting an antitrust probe into “social networking or social media services, digital advertising, and/or mobile or online applications” at Facebook, the social media behemoth disclosed in a recent regulatory filing. The agency has also subpoenaed sales data from third parties who sell goods on Amazon as part of a potential probe of the e-commerce juggernaut, trade publication MLex reported last month.

Amazon, Apple, Facebook and Google are not without resources, even as some of their associations keep a low profile. The four firms shelled out $25 million in the first six months of the year on nearly 300 in-house and outside lobbyists to shape policy on Capitol Hill and within regulatory agencies, according to the Center for Responsive Politics. They also spread money around Washington think tanks and advocacy groups that often amplify their policy positions. Some of those organizations, such as the Competitive Enterprise Institute and the Information Technology and Innovation Foundation, are coming to the companies’ defense.

As the antitrust heat rises, the small, right-leaning trade association NetChoice, which counts Facebook and Google as members, has emerged as one of the tech industry’s most vocal defenders. Carl Szabo, the vice president and general counsel of the three-person operation, said antitrust falls well within the group’s mission to “keep the internet open for free expression and free enterprise.”

After the DOJ announced its review, NetChoice called on the department to “resist the siren song of populism and only investigate actual evidence of consumer harm.” It also slammed House Democrats as “hypocritical” for complaining about the power of tech companies while seeking an antitrust exemption for big news publishers to negotiate collectively with Google and Facebook over ad sales.

Industry trade groups shouldn’t shy away from the fight, Szabo said.

“I would hope that all associations and all business would oppose a movement away from objective, data-based analysis of antitrust and all associations and businesses would oppose the weaponization of antitrust,” Szabo said. “While such actions may help them today, it can definitely be used against them tomorrow.”

The head of the Consumer Technology Association, Gary Shapiro, has also defended the big tech companies, as has the Computer and Communications Industry Association. Both groups represent Facebook, Google and Amazon, among others. A CCIA representative testified at a House hearing that any antitrust review should consider the industry’s benefits to consumers and the economy.

CCIA President Ed Black said his group has made competition issues a focus for 47 years and at times lost members that disagreed with its stances on pending mergers or antitrust lawsuits.

“It’s one of the reasons most trade associations have not gone into antitrust issues,” Black said. “We’ve had somewhat of the field to ourselves because we’re willing to take the risk to defend innovation.”

This article was originally published at Politico on August 13, 2019. Reprinted with permission.

About the Author: Steven Overly covers technology policy and politics for POLITICO with a special focus on the industry’s effort to influence decisions in Washington. He previously spent seven years as a reporter and editor at The Washington Post. Steven holds a degree in journalism from the University of Maryland, College Park, and a master’s degree from Columbia University, where he studied as a Knight-Bagehot Fellow in Economics and Business Journalism. A native of the Washington metro region, Steven currently resides in the District.

Will Artificial Intelligence Mean Massive Job Loss?

Friday, September 30th, 2016

arthurmacewan_cla_fall2012_hb_bioIn the late 1970s, my early years at the University of Massachusetts Boston (UMB), the Department of Economics had two secretaries. When I retired, in 2008, the number of faculty members and students in the department had increased, but there was only one secretary. All the faculty members had their own computers, with which they did much of the work that secretaries had previously done.

I would guess that over those thirty years, the number of departmental secretaries and other secretaries in the university declined by as many as 100, replaced by information technology—what has now become the foundation of artificial intelligence. As I started writing this column, however, I looked on the university’s web site and counted about 100 people with jobs in various parts of the Information Technology Department. Neither this department nor those jobs existed in my early years at UMB. The advance in technology that eliminated so many secretaries also created as many jobs as it eliminated—perhaps more.

My little example parallels the larger and more widely cited changes on U.S. farms in the 20th century—a century when the diesel engine, artificial fertilizers, and other products of industry reduced the percentage of the labor force working on farms from 40% to 2%. No massive unemployment resulted (though a lot of horses, mules, and oxen did lose their jobs). The great expansion of urban industrial production along with the growth of the service sector created employment that balanced the displacement of workers on the farms.

Other cases are cited in debates over the impact of artificial intelligence, examples ranging from handloom weavers’ resistance to new machinery in the early stages of the Industrial Revolution to a widespread concern about “automation” in the 1960s. Generally, however, the new technologies, while displacing workers in some realms of production, also raised productivity and economic growth. There has, as a result, been increased demand for old products and demand for new products, creating more and different jobs.

Historically, it seems, each time prophecies foretold massive unemployment resulting from major technological innovations, they turned out to be wrong. Indeed, often the same forces that threatened existing jobs created new jobs. The transitions were traumatic and harmful for the people losing their jobs, but massive unemployment was not the consequence.

Is This Time Different?

Today, as we move further into the 21st century, many people are arguing that artificial intelligence—sophisticated robotics—is different from past technological shifts, will replace human labor of virtually all types, and could generate massive unemployment. Are things really different this time? Just because someone, once again, walks around with a sign saying, “The world is about end,” doesn’t mean the world really isn’t about to end!

In much of modern history, the substitution of machines for people has involved physical labor. That was the case with handloom weavers in the early 19th century and is a phenomenon we all take for granted when we observe heavy machinery, instead of hand labor, on construction sites. Even as robotics entered industry, as on automobile assembly lines, the robots were doing tasks that had previously been done with human physical labor.

“Robotics” today, however, involves much more than the operation of traditional robots, the machines that simulate human physical labor. Robots now are rapidly approaching the ability, if they do not already have it, to learn from experience, respond to changes in situations, compare, compute, read, hear, smell, and make extremely rapid adjustments (“decisions”) in their actions—which can include everything from moving boxes to parsing data. In part, these capabilities are results of the extreme progress in the speed and memory capacity of computers.

They are also the result of the emergence of “Cloud Robotics” and “Deep Learning.” In Cloud Robotics, each robot gathers information and experiences from other robots via “the cloud” and thus learns more and does so more quickly. Deep Learning involves a set of software that is designed to simulate the human neocortex, the part of the brain where thinking takes place. The software (also often cloud-based) recognizes patterns—sounds, images, and other data—and, in effect, learns.

While individual robots—like traditional machines—are often designed for special tasks, the basic robot capabilities are applicable to a broad variety of activities. Thus, as they are developed to the point of practical application, they can be brought into a wide variety of activities during the same period. Moreover, according to those who believe “this time is different,” that period of transition is close at hand and could be very short. The disruption of human labor across the economy would happen virtually all at once, so adjustments would be difficult—thus, the specter of massive unemployment.

Skepticism

People under thirty may take much of what is happening with information technology (including artificial intelligence) for granted, but those of us who are older find the changes awe-inspiring. Nonetheless, I am persuaded by historical experience and remain skeptical about the likelihood of massive unemployment. Moreover, although big changes are coming rapidly in the laboratories, their practical applications across multiple industries will take time.

While the adoption of artificial technology may not take place as rapidly and widely as the doomsday forecasters tell us, I expect that over the next few decades many, many jobs will be replaced. But as with historical experience, the expansion of productivity and the increase of average income will tend to generate rising demand, which will be met with both new products and more of the old ones; new jobs will open up and absorb the labor force. (But hang on to that phrase “average income.”)

Real Problems

Even if my skepticism is warranted, the advent of the era of artificial intelligence will create real problems, perhaps worse than in earlier eras. Most obvious, even when society in general (on average) gains, there are always losers from economic change. Workers who get replaced by robots may not be the ones who find jobs in new or expanding activity elsewhere. And, as has been the case for workers who lost their jobs in the Great Recession, those who succeed in finding new jobs often do so only with lower wages.

Beyond the wage issue, the introduction of new machinery—traditional machines or robots—often affects the nature and, importantly, the speed of work. The mechanized assembly line is the classic example, but computers—and, we can assume, robotics more generally—allow for more thorough monitoring and control of the activity of human workers. The handloom weavers who opposed the introduction of machines in the early 19th century were resisting the speed-up brought by the machines as well as the elimination of jobs. (The Luddite movement of Northwest England, while derided for incidents of smashing machines, was a reaction to real threats to their lives.)

More broadly, there is the question of how artificial intelligence will affect the distribution of income. However intelligent robots may be, they are still machines which, like slaves, have owners (whether owners of physical hardware, patents on the machines, or copyrights on the software). Will the owners be able to reap the lion’s share of the gains that come with the rising productivity of this major innovation? In the context of the extremely high degree of inequality that now exists as artificial intelligence is coming online, there is good reason for concern.

As has been the case with the information technology innovations that have already taken place—Microsoft, Apple, Google, and Facebook leap to mind—highly educated or specially skilled (or just lucky) workers are likely to share some of the gains from artificial intelligence. But with the great inequalities that exist in the U.S. educational system, the gains of a small group of elite workers would be unlikely to dampen the trend toward greater income inequality.

Income inequality in the United States has been increasing for the past 40 years, and labor’s share of total income has fallen since the middle of the last century—from 72% in 1947 to 63% in 2014. The rise of artificial intelligence, as it is now taking place, is likely to contribute to the continuation of these trends. This has broad implications for people’s well-being, but also for the continuation of economic growth. Even as average income is rising, if it is increasingly concentrated among a small group at the top, aggregate demand may be insufficient to absorb the rising output. The result would be slow growth at best and possibly severe crisis. (See “Are We Stuck in an Extended Period of Economic Stagnation?” D&S, July/August 2016.)

Over the long run, technological improvements that generate greater productivity have yielded some widely shared benefits. In the United States and other high-income countries, workers’ real incomes have risen substantially since the dawn of the Industrial Revolution. Moreover, a significant part of the gains for workers has come in the form of an increase in leisure time. Rising productivity from artificial intelligence holds out the possibility, in spite of the trends of recent decades, for a shift away from consumerism towards a resumption of the long-term trend toward more leisure—and, I would venture, more pleasant lives.

Yet, even as economic growth over the past 200 years has meant absolute gains for working people, some groups have fared much better than others. Moreover, even with absolute gains, relative gains have been limited. With some periods of exception, great inequalities have persisted, and those inequalities weigh heavily against the absolute rises in real wages and leisure. (And in some parts of the last two centuries—the last few decades in particular—gains for working people have not followed from rising productivity and economic growth.)

So even though I’m skeptical that artificial intelligence will generate massive unemployment, I fear that it may reinforce, and perhaps increase, economic inequality.

This article originally appeared at dollarsandsense.org on September 29, 2016. Reprinted with permission.

 is professor emeritus of economics at UMass-Boston and a Dollars & Sense Associate.

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