FTC Report Calls Out Manufacturers on Their Anti-Competitive Repair Policies

Illustration for article titled FTC Report Calls Out Manufacturers on Their Anti-Repair Bullshit

Photo: Alex Cranz/Gizmodo

After nearly two long years of waiting, the Federal Trade Commission released its “Nixing the Fix” report on restrictions employed by manufacturers on product repairs. Folks, it does not mince words, saying there is “scant evidence” justifying the obstacles companies put in place to limit consumers’ options when it comes to repairs.

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The lengthy report initially spawned out of a 2019 FTC workshop, which then prompted Congress to call on the agency to continue its investigation into the issue. While right-to-repair advocates have been banging the drum that manufacturers have unfairly rigged the game against independent repair shops and consumers, manufacturers have retorted that the market works fine as is. The bipartisan FTC report categorically disagrees. “Although manufacturers have offered numerous explanations for their repair restrictions,” the report concludes, “the majority are not supported by the record.”

The list of major issues highlighted by the FTC warranties is extensive. It includes:

  • Warranties being routinely voided in violation of the Magnuson Moss Warranty Act
  • Product designs that either complicate or prevent repairs
  • Parts and repair information being made unavailable
  • Designs intended to make an independent repair “less safe”
  • Policies designed to herd consumers toward manufacturer repair networks
  • Disparaging third-party repair parts
  • Software locks and firmware updates
  • End-user license agreements
  • Companies enforcing patent rights and trademarks as a means of shutting down independent repair

The report also notes that repair restrictions placed heavier burdens on lower-income communities and communities of color. “Many Black-owned small businesses are in the repair and maintenance industries, and difficulties facing small businesses can disproportionately affect small businesses owned by people of color,” the report reads. On top of harming small business owners in underserved communities, the FTC report says repair restrictions can also result in greater financial burdens for lower-income families, as they may lack broadband internet at home and therefore rely heavily on smartphones.

The FTC also highlighted that the pandemic only exacerbated these problems, as repair restrictions made it much harder for consumers to get their products fixed while working from home. Supply chain shortages mean that parts can be hard to come by, leaving customers to sometimes wait months for appliance repairs. Likewise, requiring customers to go through authorized repair facilities means that many have had to wait weeks for broken computers or other work-related gadgets—a situation that’s untenable during the work-from-home and remote learning era.

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As far as tech companies go, Apple had the dubious honor of being held up as a specific example of a company guilty of restrictive repair policies. If you’ve been following the news, this won’t come as a shock. Apple has historically been hostile to independent repair shops and prefers its customers go to a pre-approved list of authorized repair vendors. The Cupertino giant is also guilty of restricting access to repair manuals and famously had that debacle with iPhone throttling in a bid to preserve battery life.

As for what to do about the current situation, the report concludes with several suggestions ranging from new legislation, strengthening the Magnuson Moss Warranty Act, self-regulation like the auto industry, transparent repairability scores for products, and taking some cues from the European Union, which last year decreed that manufacturers would have to make household appliances both longer-lasting and easier to repair. The FTC also urged consumers to report manufacturers who void warranties because of independent repairs in a release and on its Twitter.

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“This is a great step in the right direction,” iFixit CEO Kyle Wiens said in a statement. “The bipartisan report shows that [the] FTC knows that the market has not regulated itself, and is committing to real action.”

FTC Says Racist Algorithms Could Get You In a Lot of Trouble

Illustration for article titled FTC Says Racist Algorithms Could Get You In a Lot of Trouble

Photo: Bridget Bennett (Getty Images)

Tentatively excellent news! The FTC has declared that it is serious about racist algorithms, and it will hold businesses legally accountable for using them. In a friendly-reminder type announcement today, it said that businesses selling and/or using racist algorithms could feel the full force of their legal might.

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“Fortunately, while the sophisticated technology may be new, the FTC’s attention to automated decision making is not,” FTC staff attorney Elisa Jillson wrote in a statement on Tuesday, adding that the agency “has decades of experience” enforcing laws that racist algorithms violate. They write that selling and/or using racially biased algorithms could qualify as unfair or deceptive practices under the FTC Act. They also remind businesses that racial discrimination (by algorithm or human) could violate the Fair Credit Reporting Act and the Equal Credit Opportunity Act.

The effects of algorithmic racial bias and automated white favoritism spill out far beyond the types of products Facebook serves us. Racist algorithms have been shown to disproportionately deny Black people recommendations for specialized healthcare programs. They have priced out higher interest rates on mortgages for Black and Latinx people than whites with the same credit scores. They have drastically exaggerated Black defendants’ risk of recidivism, which can impact sentencing and bail decisions. They have encouraged police to target locations and arrest records which perpetuate further disproportionate arrests in Black communities. The list goes on.

Government use of racist algorithms makes the “selling” part especially important. The FTC can’t try the cops, but it might be able to go after a company that misrepresented its tool as race-neutral.

Given the endless churn of stories about the racist results of facial recognition, it could seem that the FTC is equipping itself to practically annihilate the technology. In an email to Gizmodo, an FTC spokesperson said that a seller could be guilty of “deceptive” practices if it “misleads consumers (whether they are businesses or individuals) about (for example) what an algorithm can do, the data it is built from, or the results it can deliver, the FTC may challenge that as a deceptive practice.”

That’s a big deal! Most algorithms that sort through personal data do deliver discriminatory results, and companies tend not to admit it. But this is complicated by the fact that it’s often hard to prove the results because companies also tend to avoid letting us look under the hood, forcing investigative journalists and researchers to piece together clues after the damage is done. (See most of the links above.)

That caginess would likely stall an FTC complaint against an “unfair” practice. The commission would have to perform the time-consuming chore of exposing proof that the algorithm itself directly harms consumers. (In the spokesperson’s example: “compromises consumers’ ability to get credit, housing, jobs”.)

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In other words, no one knows the extent of racist algorithms’ damage, and the FTC urges businesses to hold themselves accountable or the FTC “will do it for you,” read: the FTC will come for you, even if you’re a small potatoes Honda dealership.

Businesses will still lie, they know, so the announcement also reminds us that the FTC filed a complaint against Facebook alleging, among other things, that the company knowingly deceived users about facial recognition. This resulted in a settlement of $5 billion, which the FTC had celebrated as “history-making” but Democrats complained was wildly insufficient to make Facebook feel any pain.

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On a more hopeful note, the FTC could spread some of the regulatory responsibility around. The spokesperson noted that the Consumer Financial Protection Bureau also enforces the Fair Credit Reporting Act and the Equal Credit Opportunity Act. The Department of Health and Human Services and the Department of Justice, too, could pursue discrimination cases.

Here’s hoping they follow through and drive a hard bargain. People are getting sick and locked up.

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The Guy Who Literally Coined ‘Net Neutrality’ Now Works for Biden

Illustration for article titled The Guy Who Literally Coined ‘Net Neutrality’ Now Works for Biden

Photo: Mike Groll (AP)

The reign of telecoms shills meddling in internet regulations seems to be coming to a close, at least for now. The New York Times reports that Joe Biden has chosen Tim Wu, who’s credited with defining foundational concepts like net neutrality, to serve on the National Economic Council in a new role as a special assistant for technology and competition policy. While the extent of Wu’s power in an advisory role is still somewhat undefined, it’s represents a considerable step away from the corporate favor-trading that defined the Trump era.

As Protocol has pointed out, policymakers perpetually recite Wu’s writings on antitrust and rights to equitable access. His 2003 paper believed to have coined the term “network neutrality” catalyzed extremely popular and hard-fought net neutrality rules, which prevent internet service providers from deliberately slowing speeds, disadvantaging sites and services that can’t afford to pay as much as larger ones for bandwidth. Trump’s FCC Chairman/telecoms’ government rep Ajit Pai repealed net neutrality in 2017, despite sparking what was likely the largest-ever online protest.

Here’s Wu explaining why net neutrality matters in the New Yorker, 2014:

Acting together, the Internet service providers could destroy Netflix by slowing its data to a crawl, making movies impossible to watch.

Such obvious outrages are unlikely; the firms will surely promise to behave themselves. But they might, instead, slowly begin bleeding money out of the Internet economy with quiet threats and expensive carrots, extracting fees and tolls wherever they can. “You better pay for ‘turbo’ access, Mr. Blogger, otherwise who knows how long it will take readers to reach your content.” Or, to a new video-streaming service, it might say, “We’re going to put Hulu ahead of you, unless you pay up”—meaning that its customers would have an easier time watching Hulu videos than content from the new guy. A.T. & T., Verizon, and Comcast already collect more than three hundred billion dollars in revenues every year. But, like any good corporate citizen, they’d like more.

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Wu translated words into action as a senior enforcement lawyer under New York Attorney General Eric Schneiderman in 2015, with an investigation into Verizon, Time Warner Cable, and Cablevision for allegedly making consumers pay for slower than promised speeds. It ended with a $174.2 million settlement from Charter Communications (which bought Time Warner.)

Under Obama, Wu served as an FTC advisor and, briefly, on the National Economic Council in order to help design antitrust policy. But he had some regrets. In a talk with WIRED on antitrust, he said that he didn’t go hard enough on Mark Zuckerberg:

I don’t think anyone in the Obama administration was taking money, but we had this kind of rosy view. And when Mark Zuckerberg came to the Federal Trade Commission saying, “Oh, I’m so sorry about these privacy violations, but like, I’m a young man; I didn’t know what I was doing. We’ll never do it again,” everybody believed it and dropped individual charges against him. But in fact, we were fooled.

Since then he’s seemed less receptive to excuses. Last year, he applauded the FTC and 40 states for filing an antitrust suit against Facebook, accusing the company of illegally buying out competition. Specifically, Wu said Zuckerberg has taken the strategy of kill-or-conquer “to a smirking and egregious extreme.” He made a similar case for breaking up Google, accusing it of using monopoly powers to “shamelessly” harvest its users’ personal activity.

He also recognizes that politicians involved in the bipartisan crusade to kill Section 230 (Biden included) don’t understand how Section 230 works and why killing it would likely only further harm small players. “Repealing 230 would inflict pain, through private litigation, not just on big tech, but the entire tech sector,” he wrote last year on Medium.

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Wu has also supported a TikTok ban, not as a trade war chip but as a stance for an uncensored surveillance-free internet.

And some cherry-picked fun proposals Wu has pitched over the years: Facebook paying us for our data, eliminating extraneous tasks so everyone can work less, and perhaps even a universal basic income. For a better sense of his ideas, generally, peruse some of his books, like The Curse of Bigness and The Attention Merchants (though consider buying them somewhere other than Amazon, another tech giant of which Wu has been highly critical.)

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While there’s more than enough imbalance and abuse in the tech sector alone, the Times reports that Wu’s also expected to weigh in on other industries like big pharma and agriculture.

FTC Fines Ticket Brokers $3.7 Million in Scalping Settlement

Illustration for article titled FTC Fines Ticket Brokers $3.7 Million in Scalping Settlement

Photo: Ishara S. Kodikara (Getty Images)

Federal authorities have brought their first-ever case under a 2016 anti-bot law to crack down on ticket scalpers. Three New York-based ticket brokers were ordered to pay $3.7 million in fines after allegedly making millions of dollars through bot-powered ticket reselling schemes, the Federal Trade Commission announced Friday.

The companies—Cartisim Corp., owned by Simon Ebrani; Just In Time Tickets, owned by Evan Kohanian; and Concert Specials, owned by Steven Ebrani—are accused of scooping up more than 150,000 tickets from Ticketmaster to resell at a premium. In total, the three earned a whopping $26.1 million in estimated revenue, according to the complaints. The FTC says they allegedly used automated ticket-buying software, tools to hide their IP addresses, and an army of hundreds of fake accounts and credit cards among other methods to circumvent Ticketmaster’s purchasing limits and safeguards designed to detect nonhuman visitors.

FTC regulators added that these are the agency’s first enforcement actions brought under the Better Online Ticket Sales (BOTS) Act, an anti-bot law passed in 2016 banning ticket scalpers from using automated means to purchase tickets in bulk and evade purchasing caps.

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“These ticket brokers used bots and other technical tricks to scoop up thousands of tickets to popular events as soon as they went on sale,” said the director of the FTC’s Bureau of Consumer Protection, Andrew Smith, in Friday’s announcement. “Not only does this deprive loyal fans of the chance to see their favorite performers and shows, it is against the law.”

The three ticket brokers originally faced more than $31 million in civil penalties for BOTS Act violations under a proposed settlement with the FTC. But federal regulators agreed to suspend the bulk of these fines due to the companies’ inability to pay—so long as they abide by certain terms. Moving forward, the defendants could be on the hook for the full amount if it’s found that they either violated the BOTS Act again, fudged their financial documents to qualify for the suspended settlement amount, or failed to routinely provide authorities with up-to-date records and compliance reports. Once a judge approves these news terms, Concert Specials will pay about $1.56 million, Just in Time Tickets about $1.64 million, and Cartisim Corp just under $500,000 to the U.S. Treasury.

So what events were these scalpers even going after, anyway? The FTC’s complaints don’t go into much detail except that their alleged targets included several sporting events and musical performances, including Elton John concerts. So if you got priced out of seeing the “Rocket Man” live, I guess you now know who to blame.

Facebook Could Soon Be the Latest Big Tech Company Hit With Antitrust Charges

Facebook CEO Mark Zuckerberg arrives to testify before a combined Senate Judiciary and Commerce committee hearing in the Hart Senate Office Building on Capitol Hill April 10, 2018 in Washington, DC.

Facebook CEO Mark Zuckerberg arrives to testify before a combined Senate Judiciary and Commerce committee hearing in the Hart Senate Office Building on Capitol Hill April 10, 2018 in Washington, DC.
Photo: Chip Somodevilla (Getty Images)

State and federal investigators are planning to slap Facebook with antitrust charges as soon as November, four people familiar with the matter told the Washington Post. Such a lawsuit would mark the government’s latest crackdown on the biggest names in the tech industry, including Apple, Google, and Amazon, for holding monopolies on their respective markets.

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On Thursday, the Federal Trade Commission met privately to discuss the probe, and plans to file charges within the upcoming weeks, the sources, who spoke on the condition of anonymity, told the outlet. However, they cautioned that since work is ongoing, that timeline is still be ironed out and may be subject to change. Another investigation led by New York Attorney General Letitia James that 46 other state attorneys general joined last year has also been scrutinizing Facebook on antitrust claims, particularly the company’s strategy of buying out potential competitors only to gut their businesses.

Sources said that state officials are “in the late stages of preparing their complaint” per the Post. A fifth person familiar with the matter told the outlet that investigators expect to have “an initial roster of participants” by Friday.

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Officials seem to be pulling out the big guns this month, as this lawsuit would be the second major antitrust action against Big Tech in October. On Tuesday, the Department of Justice and 11 states filed an antitrust complaint against Google, arguing that it hamstrings other search engines by including its own permanent, preloaded search app on all Android phones, among other alleged anti-competitive tactics.

Federal officials began investigating Facebook for alleged anti-competitive practices after the company settled a Federal Trade Commission probe for $5 billion over user privacy violations in the infamous Cambridge Analytica scandal. That fine, while record-breaking at the time, was fiercely denounced by critics who said it fell short of the punishment Facebook deserved for mishandling millions of users’ personal data. The FTC later launched an ongoing probe into Facebook’s purchase of its past rivals, Instagram and WhatsApp, and whether those acquisitions violated antitrust laws.

Other state and federal regulators soon followed suit. In a statement announcing the probe in October 2019, New York’s James said that state officials had grown “concerned that Facebook may have put consumer data at risk, reduced the quality of consumers’ choices, and increased the price of advertising.”

Facebook has vehemently denied these charges and pointed out that federal regulators had every chance to step in and stop the company from acquiring Instagram and WhatsApp. However, an investigation by a House Judiciary antitrust subcommittee that wrapped up earlier this month found that Facebook and several other Big Tech companies have repeatedly avoided scrutiny from the FTC. To wit, Facebook has acquired nearly 100 smaller companies over the years, only one of which, its purchase of Instagram in 2012, was closely vetted by regulators.

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Unrelated to these antitrust charges, Facebook is also facing increased government scrutiny over its moderation practices in the wake of rampant misinformation about the pandemic and the 2020 presidential election on its platform. The Senate Judiciary Committee issued subpoenas this week for Facebook CEO Mark Zuckerberg along with another social media big wig, Twitter CEO Jack Dorsey, to testify about the platforms’ moderation policies as well as their alleged anti-conservative bias and censorship.

[The Washington Post]

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