“Divestiture is always a bright idea for merging parties, and it’s not always a very good idea for consumers.,” he added.
Albertsons shares fell on Friday, a sign that investors are skeptical that the deal will get past regulators. By late morning, the stock was trading below $27 a share, more than 21 percent below Kroger’s $34.10 a share offer price.
In announcing the deal, Kroger also sought to ease concerns about the impact on consumers by saying that it expects to save about $500 million in costs, which it plans to use to “reduce prices for customers.” Whether it follows through with those plans will likely be a key focus for regulators.
Though cost savings in acquisitions often come from layoffs, the grocers may also point to fact that their workforces are unionized as part of their discussions with regulators. The Biden administration has been a significant proponent of unions. Neither Walmart nor Amazon are unionized on a large scale.
Consumer protection groups raised concerns about the deal following reports of a possible merger on Thursday. The American Economic Liberties Project, a nonprofit that promotes antitrust legislation, criticized it as a “bad deal for consumers, workers and communities.”
“There is no reason to allow two of the biggest supermarket chains in the country to merge — especially with food prices already soaring,” Sarah Miller, the group’s executive, said in a statement on Thursday.
As part of their pitch to regulators, Kroger and Albertsons will likely try to convince them that their scale is needed to compete against big box stores like Aldi, Lidl — two European chains that have been expanding quickly in the United States — and Costco, as well as Amazon.
The agency, though, has not always allowed retailers to use Amazon as a boogeyman to help clear their deals. In 2015, the F.T.C. successfully sued to block a merger between the retailers Office Depot and Staples, even after they had positioned the deal as an effort to take on Amazon and lower prices.
Former Twitter security chief Peiter Zatko alleges that the social media platform ignored engineers and led them to “prioritize profit over security.”
A former security chief at Twitter told Congress that the social media platform is plagued by weak cyber defenses, privacy threats and the inability to control millions of fake accounts. Peiter “Mudge” Zatko, a respected cybersecurity expert, appeared before the Senate Judiciary Committee to lay out his allegations Tuesday.
“Twitter’s misleading the public, lawmakers” and regulators, Zatko said as he began his sworn testimony.
“They don’t know what data they have, where it lives and where it came from and so, unsurprisingly, they can’t protect it,” Zatko said. “It doesn’t matter who has keys if there are no locks.”
Zatko said “Twitter leadership ignored its engineers,” in part because “their executive incentives led them to prioritize profit over security.”
His message echoed one brought to Congress against another social media giant last year, but unlike that Facebook whistleblower, Frances Haugen, Zatko hasn’t brought troves of internal documents to back up his claims.
Related StoryFormer Twitter Security Chief Files Whistleblower Complaints
Zatko was the head of security for the influential platform until he was fired early this year. He filed a whistleblower complaint in July with Congress, the Justice Department, the Federal Trade Commission and the Securities and Exchange Commission. Among his most serious accusations is that Twitter violated the terms of a 2011 FTC settlement by falsely claiming that it had put stronger measures in place to protect the security and privacy of its users.
Sen. Dick Durbin, an Illinois Democrat who heads the Judiciary Committee, said Zatko has detailed flaws “that may pose a direct threat to Twitter’s hundreds of millions of users as well as to American democracy.”
“Twitter is an immensely powerful platform and can’t afford gaping vulnerabilities,” he said.
Unknown to Twitter users, there’s far more personal information disclosed than they — or sometimes even Twitter itself — realize, Zatko testified. He said “basic systemic failures” that were brought forward by company engineers were not addressed.
The FTC has been “a little over its head,” and far behind European counterparts, in policing the sort of privacy violations that have occurred at Twitter, Zatko said.
Related StoryMusk Subpoenas Twitter Whistleblower In Bid To Rescind Acquisition
Zatko’s claims could also affect Tesla billionaire Elon Musk’s attempt to back out of his $44 billion deal to acquire the social platform. Musk claims that Twitter has long underreported spam bots on its platform and cites that as a reason to nix the deal he struck in April.
Many of Zatko’s claims are uncorroborated and appear to have little documentary support. Twitter has called Zatko’s description of events “a false narrative … riddled with inconsistencies and inaccuracies” and lacking important context.
Among the assertions from Zatko that drew attention from lawmakers Tuesday was that Twitter knowingly allowed the government of India to place its agents on the company payroll, where they had access to highly sensitive data on users. Twitter’s lack of ability to log how employees accessed user accounts made it hard for the company to detect when employees were abusing their access, Zatko said.
Zatko also accuses the company of deception in its handling of automated “spam bots,” or fake accounts. That allegation is at the core of billionaire tycoon Elon Musk’s attempt to back out of his $44 billion deal to buy Twitter. Musk and Twitter are locked in a bitter legal battle, with Twitter having sued Musk to force him to complete the deal. The Delaware judge overseeing the case ruled last week that Musk can include new evidence related to Zatko’s allegations in the high-stakes trial, which is set to start Oct. 17.
Sen. Charles Grassley, the committee’s ranking Republican, said Tuesday that Twitter CEO Parag Agrawal declined to testify at the hearing, citing the ongoing legal proceedings with Musk. But the hearing is “more important than Twitter’s civil litigation in Delaware,” Grassley said. Twitter declined to comment on Grassley’s remarks.
In his complaint, Zatko accused Agrawal as well as other senior executives and board members of numerous violations, including making “false and misleading statements to users and the FTC about the Twitter platform’s security, privacy and integrity.”
Zatko, 51, first gained prominence in the 1990s as a pioneer in the ethical hacking movement and later worked in senior positions at an elite Defense Department research unit and at Google. He joined Twitter in late 2020 at the urging of then-CEO Jack Dorsey.
One of the allegations is also at the core of the attempted withdrawal of a $44 billion takeover bid for Twitter by billionaire Elon Musk.
A former head of security at Twitter has filed whistleblower complaints with U.S. officials, alleging that the company misled regulators about its cybersecurity defenses and its problems with fake accounts, according to reports by The Washington Post and CNN.
Peiter Zatko, Twitter’s security chief until he was fired early this year, filed the complaints last month with the U.S. Securities and Exchange Commission, the Federal Trade Commission and the Department of Justice.
The Post, which obtained the complaint, reported that among the most serious accusations is that Twitter violated the terms of an FTC settlement by falsely claiming that it had a strong security plan.
Zatko also accuses the company of deceptions involving its handling of “spam” or fake accounts, an allegation that is at the core of the attempted withdrawal of a $44 billion takeover bid for Twitter by billionaire Elon Musk.
Shares of Twitter Inc. slid 4% Tuesday.
Zatko didn’t immediately respond to a request for comment Tuesday but told the Post he “felt ethically bound” to come forward.
Zatko, better known as Mudge, is a highly respected cybersecurity expert who first gained prominence in the 1990s and later worked in senior positions at the Pentagon’s Defense Advanced Research Agency and Google. He joined Twitter at the urging of then-CEO Jack Dorsey in late 2020, the same year the company suffered an embarrassing security breach involving hackers who broke into the Twitter accounts of world leaders, celebrities and tech moguls, including Musk, in an attempt to scam their followers out of Bitcoin.
Twitter said in a prepared statement Tuesday that Zatko was fired for “ineffective leadership and poor performance” and that the “allegations and opportunistic timing appear designed to capture attention and inflict harm on Twitter, its customers and its shareholders.”
“What we’ve seen so far is a false narrative about Twitter and our privacy and data security practices that is riddled with inconsistencies and inaccuracies and lacks important context,” the company said.
The legal nonprofit Whistleblower Aid, which is representing Zatko, confirmed the authenticity of the document Tuesday, but said it is legally precluded from sharing it. The same group worked with former Facebook employee Frances Haugen, who testified to Congress last year after leaking internal documents and accusing the social media giant of choosing profit over safety.
A spokesperson for the U.S. Senate’s intelligence committee, Rachel Cohen, said the committee has received Zatko’s complaint and “is in the process of setting up a meeting to discuss the allegations in further detail. We take this matter seriously.”
Sen. Dick Durbin, an Illinois Democrat, said in a prepared statement that if the claims are accurate, “they may show dangerous data privacy and security risks for Twitter users around the world.”
Among the most alarming complaints is Zatko’s allegation that Twitter knowingly allowed the Indian government to place its agents on the company payroll where they had “direct unsupervised access to the company’s systems and user data.”
A 2011 FTC complaint noted that Twitter’s systems were full of highly sensitive data that could allow a hostile government to find precise geo-location data for a specific user or group and target them for violence or arrest. Earlier this month, a former Twitter employee was found guilty after a trial in California of passing along sensitive Twitter user data to royal family members in Saudi Arabia in exchange for bribes.
The complaint said Twitter was also heavily reliant on funding by Chinese entities and that there were concerns within Twitter that the company was providing information to those entities that would enable them to learn the identify and sensitive information of Chinese users who secretly use Twitter, which is officially banned in China.
Zatko also describes “deliberate ignorance” by Twitter executives on counting the millions of accounts that are automated “spam bots” or otherwise have no value to advertisers because there is no person behind them.
Alex Spiro, an attorney representing Musk in his effort to back out of the deal to buy Twitter, said lawyers have issued a subpoena for Zatko. “We found his exit and that of other key employees curious in light of what we have been finding,” Spiro wrote in an email Tuesday.
Antitrust experts worry that the deal is less about selling Roombas and more about finding ways to surveil the most intimate spaces of our lives.
Amazon recently struck a $1.7 billion deal to acquire iRobot — the company behind Roomba — and it’s creating worries about data protection. Amazon told Newsy that protecting customer data is “incredibly important” to the company, but privacy advocates say a recent deal to acquire iRobot would give Amazon a huge source of potentially invasive personal data.
“When people buy a Roomba, they want something that’s going to clean their floors. They don’t want a little roving robot with a front-facing camera, able to map their entire home and everything in it and deliver that information back to the world’s greatest retail monopolist. This is not what the product is intended to do. And when people buy Roomba, this is not what they expect it to do,” said Ron Knox, a senior researcher at the Institute for Local Self-Reliance.
The newest Roombas are outfitted with operating systems and cameras that make the robots a very efficient tool to create maps of owners’ homes.
Knox noted that Roomba could record the inside of your house in real time.
“Amazon can use that data to do a couple of different things,” he continued. “One, it can try to sell its captured Prime member customers more things that it thinks they want to buy. If it thinks you have a pet, you know, more dog toys, dog food. If you have a kid in your house, it can understand this using the Roomba data.”
Antitrust experts also worry that the deal is less about selling Roombas and more about finding ways to surveil the most intimate spaces of our lives for a marketing advantage. Amazon already controls about 56% of the eCommerce market, and this deal could further that reach.
“To have this kind of physical data, which is an element that they don’t currently have … you could really see a future where Alexa is pushing a new couch that fits perfectly in the dimensions of your living room,” said Krista Brown, a senior policy analyst at the American Economic Liberties Project. “Then, they also provide a doctor when they see you getting an air purifier. It just has so many elements that can be kind of abused and help them further entrench their dominance.”
The deal isn’t set in stone quite yet, as it could face scrutiny from the Federal Trade Commission. Chair Lina Khan rose to notability after publishing a Yale Law Journal article on changing antitrust law, with Amazon as the centerpiece of the piece.
Influencers make money online in various ways, but different platforms have different payout methods, some more “fair” than others.
There are a ton of influencers on social media, and the influencer community has grown a lot in recent years.
Data from Influencer Marketing Hub found that the industry is set to grow to approximately $16.4 billion in 2022, and last year, the global number of influencer marketing-related services — or companies who help creators grow their brand — grew by 26%.
There are a lot of major players here, including social platforms, advertisers, influencers and agencies that manage content creators. As the industry is growing in value, different platforms are working in different ways to compensate influencers fairly for their content.
Influencer agencies say micro-influencers — someone that has between 10,000 and 50,000 followers — can make anywhere from $40,000 to $100,000 a year. Big time celebrity influencers like Charlie D’Amelio, Addison Rae and Bretman Rock make way more.
One way they make money is through brand deals. On platforms like Instagram, a picture of an influencer holding or wearing a product and endorsing it can bring in a decent amount of cash. Someone with 1 million followers may charge brands up to $10,000 per post, according to influencer agency Viral Nation.
Within the last two years, Instagram rolled out new monetization features where creators could make money directly through the app instead of just from brand partnerships. They introduced their affiliate program where creators can share products with their followers and earn a commission from purchases, and they made it easier for creators to sell their own merchandise.
Influencers can also earn money from IGTV ads, but Instagram acknowledges more can be done. By the end of 2022, they plan to invest over $1 billion in programs that give creators new ways to earn money.
The sponsored content and ad revenue is something YouTube does, too. Creators can have sponsored content within their videos: Usually they take a few seconds to explain why they love a product, and according to the Federal Trade Commission, they must explicitly say it’s sponsored content.
They also receive money from the ads that run on their videos. This is because of the YouTube Partner Program. A YouTuber must have 1,000 subscribers and 4,000 public watch hours a year to partake.
Longtime Youtuber Hank Green has several YouTube channels, like Vlog Brothers, Crash Course and Hanks Channel just to name a few. Across all channels, he has over 25 million subscribers. In a recent video, Green gave a little background on why this program was started.
He explained that in 2007, when potential YouTube competitors started popping up and trying to get creators to move to their platforms, YouTube created the partner program where about half of ad revenue goes to YouTube and the other half goes to the creator.
Last year, YouTube made over $28 billion in ad revenue, and half of that went to creators. Green says about a third of a YouTuber’s revenue comes from these ads alone.
TikTok also has a pay structure for creators called the Creator Fund, which YouTubers have called out as being unfair. It’s a pool of money that’s distributed based on a creator’s share of the platform’s overall views. TikTok says “creators will need at least 100,000 authentic video views in the last 30 days to be eligible to join the Creator Fund.”
While ads on YouTube run on videos, ads on TikTok run between them, so no one creator can claim an ad was seen because of their content. This is why they have to share the money.
TikTok’s U.S. Creator Fund was started in 2020 with $200 million, and they say it’ll grow to over $1 billion in the next three years. But, that’s a static amount of money that doesn’t change if TikTok makes more or less money. As TikTok grows and becomes more successful, the Creator Fund does not. The app’s parent company grew 70% in 2021.
Because that fund is distributed evenly in the community, as more creators join the fund, creators make less money per view. One British tech TikToker, Safwan AhmedMia, said he made just over $150 for 25 million views.
The software that many school districts use to track students’ progress can record extremely confidential information on children: “Intellectual disability.” “Emotional Disturbance.” “Homeless.” “Disruptive.” “Defiance.” “Perpetrator.” “Excessive Talking.” “Should attend tutoring.”
Now these systems are coming under heightened scrutiny after a recent cyberattack on Illuminate Education, a leading provider of student-tracking software, which affected the personal information of more than a million current and former students across dozens of districts — including in New York City and Los Angeles, the nation’s largest public school systems.
Officials said in some districts the data included the names, dates of birth, races or ethnicities and test scores of students. At least one district said the data included more intimate information like student tardiness rates, migrant status, behavior incidents and descriptions of disabilities.
Chicago Public Schools, the nation’s third-largest district.
Now some cybersecurity and privacy experts say that the cyberattack on Illuminate Education amounts to a warning for industry and government regulators. Although it was not the largest hack on an ed tech company, these experts say they are troubled by the nature and scope of the data breach — which, in some cases, involved delicate personal details about students or student data dating back more than a decade. At a moment when some education technology companies have amassed sensitive information on millions of school children, they say, safeguards for student data seem wholly inadequate.
“There has really been an epic failure,” said Hector Balderas, the attorney general of New Mexico, whose office has sued tech companies for violating the privacy of children and students.
In a recent interview, Mr. Balderas said that Congress had failed to enact modern, meaningful data protections for students while regulators had failed to hold ed tech firms accountable for flouting student data privacy and security.
outpacing protections for students’ personal information. Lawmakers rushed to respond.
Since 2014, California, Colorado and dozens of other states have passed student data privacy and security laws. In 2014, dozens of K-12 ed tech providers signed on to a national Student Privacy Pledge, promising to maintain a “comprehensive security program.”
Supporters of the pledge said the Federal Trade Commission, which polices deceptive privacy practices, would be able to hold companies to their commitments. President Obama endorsed the pledge, praising participating companies in a major privacy speech at the F.T.C. in 2015.
The F.T.C. has a long history of fining companies for violating children’s privacy on consumer services like YouTube and TikTok. Despite numerous reports of ed tech companies with problematic privacy and security practices, however, the agency has yet to enforce the industry’s student privacy pledge.
In May, the F.T.C. announced that regulators intended to crack down on ed tech companies that violate a federal law — the Children’s Online Privacy Protection Act — which requires online services aimed at children under 13 to safeguard their personal data. The agency is pursuing a number of nonpublic investigations into ed tech companies, said Juliana Gruenwald Henderson, an F.T.C. spokeswoman.
company’s site says its services reach more than 17 million students in 5,200 school districts. Popular products include an attendance-taking system and an online grade book as well as a school platform, called eduCLIMBER, that enables educators to record students’ “social-emotional behavior” and color-code children as green (“on track”) or red (“not on track”).
Illuminate has promoted its cybersecurity. In 2016, the company announced that it had signed on to the industry pledge to show its “support for safeguarding” student data.
Concerns about a cyberattack emerged in January after some teachers in New York City schools discovered that their online attendance and grade book systems had stopped working. Illuminate said it temporarily took those systems offline after it became aware of “suspicious activity” on part of its network.
On March 25, Illuminate notified the district that certain company databases had been subject to unauthorized access, said Nathaniel Styer, the press secretary for New York City Public Schools. The incident, he said, affected about 800,000 current and former students across roughly 700 local schools.
For the affected New York City students, data included first and last names, school name and student ID number as well as at least two of the following: birth date, gender, race or ethnicity, home language and class information like teacher name. In some cases, students’ disability status — that is, whether or not they received special education services — was also affected.
said they were outraged. In 2020, Illuminate signed a strict data agreement with the district requiring the company to safeguard student data and promptly notify district officials in the event of a data breach.
kept student data on the Amazon Web Services online storage system. Cybersecurity experts said many companies had inadvertently made their A.W.S. storage buckets easy for hackers to find — by naming databases after company platforms or products.
a spate of cyberattacks on both ed tech companies and public schools, education officials said it was time for Washington to intervene to protect students.
“Changes at the federal level are overdue and could have an immediate and nationwide impact,” said Mr. Styer, the New York City schools spokesman. Congress, for instance, could amend federal education privacy rules to impose data security requirements on school vendors, he said. That would enable federal agencies to levy fines on companies that failed to comply.
One agency has already cracked down — but not on behalf of students.
Last year, the Securities and Exchange Commission charged Pearson, a major provider of assessment software for schools, with misleading investors about a cyberattack in which the birth dates and email addresses of millions of students were stolen. Pearson agreed to pay $1 million to settle the charges.
Mr. Balderas, the attorney general, said he was infuriated that financial regulators had acted to protect investors in the Pearson case — even as privacy regulators failed to step up for schoolchildren who were victims of cybercrime.
“My concern is there will be bad actors who will exploit a public school setting, especially when they think that the technology protocols are not very robust,” Mr. Balderas said. “And I don’t know why Congress isn’t terrified yet.”
WASHINGTON — The Federal Trade Commission on Wednesday filed for an injunction to block Meta, the company formerly known as Facebook, from buying a virtual reality company called Within, potentially limiting the company’s push into the so-called metaverse and signaling a shift in how the agency is approaching tech deals.
The antitrust lawsuit is the first under Lina Khan, the commission’s chair and a leading progressive critic of corporate concentration, against one of the tech giants. Ms. Khan has argued that regulators must stop competition and consumer protection violations when it comes to the bleeding edge of technology, including virtual and augmented reality, and not just in areas where the companies have already become behemoths.
The F.T.C.’s request for an injunction puts Ms. Khan on a collision course with Mark Zuckerberg, Meta’s chief executive, who is also named as a defendant in the request. He has poured billions of dollars into building products for virtual and augmented reality, betting that the immersive world of the metaverse is the next technology frontier. The lawsuit could crimp those ambitions.
in its lawsuit, which was filed in the U.S. District Court for the Northern District of California. “Instead, it chose to buy” a top company in what the government called a “vitally important” category.
attack on innovation and that the agency was “sending a chilling message to anyone who wishes to innovate in V.R.”
Meta had said it would acquire Within, which produces the highly popular fitness app called Supernatural, last year for an undisclosed sum. The company has promoted its virtual reality headsets for fitness and health purposes.
The F.T.C.’s lawsuit is highly unusual and pushes the boundaries of antitrust law. Regulators mostly focus on deals between large companies in large markets, rather than their acquisitions of small start-ups in nascent tech areas. Courts have also been skeptical applying antitrust law to block mergers based on the hypothetical that the two companies involved would later become competitors if the deal was blocked.
Instagram, the photo-sharing app that has since grown to more than one billion regular users. Instagram has helped Meta dominate the market on social photo sharing, though other start-ups have sprung up since.
lawsuit against Facebook that argued the company shut down nascent competition through acquisitions. The Justice Department has also sued Google over whether the company abused a monopoly over online search.
More cases could be coming. The F.T.C. is investigating whether Amazon has violated antitrust laws, and the Justice Department has inquiries into Google’s dominance over advertising technology and into Apple’s App Store policies.
For Mr. Zuckerberg, the F.T.C. lawsuit is a setback. He has been pushing Meta away from its roots in social networking as its apps, like Facebook and Instagram, face more competition amid stumbles in privacy and content moderation. Instead, he has bet on the metaverse.
Mr. Zuckerberg has reassigned employees and put a top lieutenant in charge of metaverse efforts. He has also authorized executives to pursue some of the most popular games in the V.R. space. In 2019, Facebook purchased Beat Games, makers of the hit title Beat Saber, one of the top V.R. games on the Oculus platform. He has also authorized the purchase of roughly half a dozen other virtual reality or gaming studios over the past three years.
The F.T.C. filed suit on Wednesday hours before Meta reported its first decline in quarterly revenue since it went public in 2012. The company has recently trimmed employee perks and reined in spending amid uncertain economic conditions. John Newman, the deputy director of the F.T.C.’s Bureau of Competition, said the agency acted on the Within deal because Meta was “trying to buy its way to the top.” The company already owned a best-selling virtual reality fitness app, he said, but then chose to acquire Within’s Supernatural app “to buy market position.” He said the deal was “an illegal acquisition, and we will pursue all appropriate relief.”
The F.T.C.’s vote to authorize the filing was split 3 to 2. Christine Wilson, a Republican commissioner at the agency, said she was one of the two votes against the lawsuit. She declined to comment onher reasoning.
The F.T.C. said in its request that asking for an injunction was sometimes a prelude to filing a complaint against a merger, which could embroil Meta and the agency in a lengthy trial and appeals process. A F.T.C. spokeswoman said the agency had not filed such a complaint and declined to comment further on the agency’s strategy.
Ms. Khan, 33, who was appointed by President Biden last year to acclaim from the left, has tried to make good on expansive promises to rein in corporate power. She became prominent after she wrote an article in law school in 2017 criticizing Amazon. As F.T.C. chair, she has called for regulators to vigorously enforce antitrust laws and has said she may craft sweeping online privacy rules that would implicate Silicon Valley companies.
The lawsuit drew praise from Ms. Khan’s allies. Sandeep Vaheesan, the legal director of the Open Markets Institute, a liberal think tank, said in a statement that the lawsuit was a “step toward making building, not buying, the norm for Facebook.”
But tech industry allies assailed Ms. Khan’s actions. Adam Kovacevich, the chief executive of Chamber of Progress, an industry group funded partly by Meta, said that with the new lawsuit, “the agency is more focused on getting headlines than results.” He said Meta “isn’t any closer than pickleball or synchronized swimming are to locking up the fitness market.”
Meta said in a blog post that the F.T.C. would fail to prove that the Within deal would “substantially lessen competition,” which is the bar that is typically set to block a deal under federal antitrust law.
In its lawsuit, the F.T.C. said that if Meta bought Within’s Supernatural, it would no longer have an incentive to improve Beat Saber, the virtual reality fitness game it already owns. But Nikhil Shanbhag, an associate general counsel for Meta, said in the blog post that the games weren’t competitors.
“Beat Saber is a game people play to have fun and it has many competitors,” he said. “Supernatural couldn’t be more different.”
WASHINGTON — The Federal Trade Commission on Thursday sued to block Nvidia’s $40 billion acquisition of a fellow chip company, Arm, halting what would be the biggest semiconductor industry deal in history, as federal regulators push to rein in corporate consolidation.
The F.T.C. said the deal between Nvidia, which makes chips, and Arm, which licenses chip technology, would stifle competition and harm consumers. The proposed deal would give Nvidia control over computing technology and designs that rival firms rely on to develop competing chips.
“Tomorrow’s technologies depend on preserving today’s competitive, cutting-edge chip markets,” said Holly Vedova, the director of the F.T.C.’s competition bureau. “This proposed deal would distort Arm’s incentives in chip markets and allow the combined firm to unfairly undermine Nvidia’s rivals.”
Federal antitrust regulators have promised greater scrutiny of mergers and a clamp down on monopolies in a push to reinvigorate competition in the economy. The action against the deal is the first major merger decision by the Federal Trade Commission under the leadership of Lina Khan, a critic of big corporate mergers and monopolies in technology. Ms. Khan is among a slew of top antitrust officials picked by President Biden to rein in the power of Silicon Valley giants.
promised to break open gas, telecom and pharmaceutical markets to bring down consumer prices at the gas pump and for home internet and prescriptions. Last month, the Justice Department sued to stop Penguin Random House, the largest publisher in the United States, from acquiring its rival Simon & Schuster.
In a statement, Nvidia said it would contest the F.T.C. lawsuit. “We will continue to work to demonstrate that this transaction will benefit the industry and promote competition.”
The F.T.C. suit, if successful, would not have much immediate financial impact on Nvidia or Arm. Shares in Nvidia rose slightly in aftermarket trading.
But a successful suit would be a blow to Nvidia’s ambitions to play a more central role in shaping the direction of the computer industry — particularly in the field of artificial intelligence.
Arm, a British company that the Japanese conglomerate SoftBank bought in 2016, licenses designs for microprocessors and other technology that other companies use in their semiconductors. Its technology has been wildly successful, providing the calculating functions in essentially all smartphones and many other devices. Arm recently estimated its technology is used in about 25 billion chips per year.
Nvidia, based in California, is a dominant provider of chips used to render graphics in video games, technology it has adapted in recent years to also power artificial-intelligence applications used by cloud companies and self-driving cars.
Jensen Huang, the company’s chief executive, has been pushing the company to become a broader, “full-stack” provider of computing technology. In April, for example, Nvidia said it was building an Arm-based microprocessor for servers used in data centers.
In announcing the deal in September 2020 to buy Arm, Mr. Huang said the combination would create a premier company for advancing A.I. technology. He also promised to operate Arm without any change to its business model, acting independently and treating all chip customers fairly.
Mr. Huang said at the time that artificial intelligence would set off a new wave of computing and that “our combination will create a company fabulously positioned for the age of A.I.”
But the deal was controversial from the start, with some of Arm’s big customers, like Qualcomm, worried about the heightened competition from Nvidia and the possibility of a rival gaining access to their confidential information. Mr. Huang took a dig at Qualcomm’s new chief executive, Cristiano Amon, at an annual dinner hosted by the Semiconductor Industry Association last month in Silicon Valley, asking, “How is it possible that Cristiano knew every regulator on the planet?”
The deal had already attracted close scrutiny from regulators in Europe, particularly in the United Kingdom, where Arm’s headquarters in Cambridge is a major employer. Britain’s Competition and Markets Authority launched an in-depth inquiry into the transaction in November, citing both competition and national-security concerns.
The F.T.C. said the merger would give Nvidia access to sensitive information about its rivals, who license technology and designs from Arm.
“Licensees rely on Arm for support in developing, designing, testing, debugging, troubleshooting, maintaining and improving their products,” the F.T.C. said in a statement. “Arm licensees share their competitively sensitive information with Arm because Arm is a neutral partner, not a rival chip maker. The acquisition is likely to result in a critical loss of trust in Arm and its ecosystem.”
The vote to block the merger was unanimous among the F.T.C.’s commissioners. The full complaint filed by the agency is not expected to be released for a few days. An administrative trial for the lawsuit is scheduled for May 10.
John Tye, the founder of Whistleblower Aid, a legal nonprofit that represents people seeking to expose potential lawbreaking, was contacted this spring through a mutual connection by a woman who claimed to have worked at Facebook.
The woman told Mr. Tye and his team something intriguing: She had access to tens of thousands of pages of internal documents from the world’s largest social network. In a series of calls, she asked for legal protection and a path to releasing the confidential information. Mr. Tye, who said he understood the gravity of what the woman brought “within a few minutes,” agreed to represent her and call her by the alias “Sean.”
She “is a very courageous person and is taking a personal risk to hold a trillion-dollar company accountable,” he said.
On Sunday, Frances Haugen revealed herself to be “Sean,” the whistle-blower against Facebook. A product manager who worked for nearly two years on the civic misinformation team at the social network before leaving in May, Ms. Haugen has used the documents she amassed to expose how much Facebook knew about the harms that it was causing and provided the evidence to lawmakers, regulators and the news media.
knew Instagram was worsening body image issues among teenagers and that it had a two-tier justice system — have spurred criticism from lawmakers, regulators and the public.
Ms. Haugen has also filed a whistle-blower complaint with the Securities and Exchange Commission, accusing Facebook of misleading investors with public statements that did not match its internal actions. And she has talked with lawmakers such as Senator Richard Blumenthal, a Democrat of Connecticut, and Senator Marsha Blackburn, a Republican of Tennessee, and shared subsets of the documents with them.
The spotlight on Ms. Haugen is set to grow brighter. On Tuesday, she is scheduled to testify in Congress about Facebook’s impact on young users.
misinformation and hate speech.
In 2018, Christopher Wylie, a disgruntled former employee of the consulting firm Cambridge Analytica, set the stage for those leaks. Mr. Wylie spoke with The New York Times, The Observer of London and The Guardian to reveal that Cambridge Analytica had improperly harvested Facebook data to build voter profiles without users’ consent.
In the aftermath, more of Facebook’s own employees started speaking up. Later that same year, Facebook workers provided executive memos and planning documents to news outlets including The Times and BuzzFeed News. In mid-2020, employees who disagreed with Facebook’s decision to leave up a controversial post from President Donald J. Trump staged a virtual walkout and sent more internal information to news outlets.
“I think over the last year, there’ve been more leaks than I think all of us would have wanted,” Mark Zuckerberg, Facebook’s chief executive, said in a meeting with employees in June 2020.
Facebook tried to preemptively push back against Ms. Haugen. On Friday, Nick Clegg, Facebook’s vice president for policy and global affairs, sent employees a 1,500-word memo laying out what the whistle-blower was likely to say on “60 Minutes” and calling the accusations “misleading.” On Sunday, Mr. Clegg appeared on CNN to defend the company, saying the platform reflected “the good, the bad and ugly of humanity” and that it was trying to “mitigate the bad, reduce it and amplify the good.”
personal website. On the website, Ms. Haugen was described as “an advocate for public oversight of social media.”
A native of Iowa City, Iowa, Ms. Haugen studied electrical and computer engineering at Olin College and got an M.B.A. from Harvard, the website said. She then worked on algorithms at Google, Pinterest and Yelp. In June 2019, she joined Facebook. There, she handled democracy and misinformation issues, as well as working on counterespionage, according to the website.
filed an antitrust suit against Facebook. In a video posted by Whistleblower Aid on Sunday, Ms. Haugen said she did not believe breaking up Facebook would solve the problems inherent at the company.
“The path forward is about transparency and governance,” she said in the video. “It’s not about breaking up Facebook.”
Ms. Haugen has also spoken to lawmakers in France and Britain, as well as a member of European Parliament. This month, she is scheduled to appear before a British parliamentary committee. That will be followed by stops at Web Summit, a technology conference in Lisbon, and in Brussels to meet with European policymakers in November, Mr. Tye said.
On Sunday, a GoFundMe page that Whistleblower Aid created for Ms. Haugen also went live. Noting that Facebook had “limitless resources and an army of lawyers,” the group set a goal of raising $10,000. Within 30 minutes, 18 donors had given $1,195. Shortly afterward, the fund-raising goal was increased to $50,000.
WASHINGTON — When the nation’s antitrust laws were created more than a century ago, they were aimed at taking on industries such as Big Oil.
But technology giants like Amazon, Facebook, Google and Apple, which dominate e-commerce, social networks, online advertising and search, have risen in ways unforeseen by the laws. In recent decades, the courts have also interpreted the rules more narrowly.
On Monday, a pair of rulings dismissing federal and state antitrust lawsuits against Facebook renewed questions about whether the laws were suited to taking on tech power. A federal judge threw out the federal suit because, he said, the Federal Trade Commission had not supported its claims that Facebook holds a dominant market share, and he said the states had waited too long to make their case.
The decisions underlined how cautious and conservative courts could slow an increasingly aggressive push by lawmakers, regulators and the White House to restrain the tech companies, fueling calls for Congress to revamp the rules and provide regulators with more legal tools to take on the tech firms.
David Cicilline, a Democrat of Rhode Island, said the country needed a “massive overhaul of our antitrust laws and significant updates to our competition system” to police the biggest technology companies.
Moments later, Representative Ken Buck, a Colorado Republican, agreed. He called for lawmakers to adapt antitrust laws to fit the business models of Silicon Valley companies.
This week’s rulings have now put the pressure on lawmakers to push through a recently proposed package of legislation that would rewrite key aspects of monopoly laws to make some of the tech giants’ business practices illegal.
“This is going to strengthen the case for legislation,” said Herbert Hovenkamp, an antitrust expert at the University of Pennsylvania Law School. “It seems to be proof that the antitrust laws are not up to the challenge.”
introduced this month and passed the House Judiciary Committee last week. The bills would make it harder for the major tech companies to buy nascent competitors and to give preference to their own services on their platforms, and ban them from using their dominance in one business to gain the upper hand in another.
including Lina Khan, a scholar whom President Biden named this month to run the F.T.C. — have argued that a broader definition of consumer welfare, beyond prices, should be applied. Consumer harm, they have said, can also be evident in reduced product quality, like Facebook users suffering a loss of privacy when their personal data is harvested and used for targeted ads.
In one of his rulings on Monday, Judge James E. Boasberg of U.S. District Court for the District of Columbia said Facebook’s business model had made it especially difficult for the government to meet the standard for going forward with the case.
The government, Judge Boasberg said, had not presented enough evidence that Facebook held monopoly power. Among the difficulties he highlighted was that Facebook did not charge its users for access to its site, meaning its market share could not be assessed through revenue. The government had not found a good alternative measure to make its case, he said.
He also ruled against another part of the F.T.C.’s lawsuit, concerning how Facebook polices the use of data generated by its product, while citing the kind of conservative antitrust doctrine that critics say is out of step with the technology industry’s business practices.
The F.T.C., which brought the federal antitrust suit against Facebook in December, can file a new complaint that addresses the judge’s concerns within 30 days. State attorneys general can appeal Judge Boasberg’s second ruling dismissing a similar case.
fined Facebook $5 billion in 2019 for privacy violations, there were few significant changes to how the company’s products operate. And Facebook continues to grow: More than 3.45 billion people use one or more of its apps — including WhatsApp, Instagram or Messenger — every month.
The decisions were particularly deflating after actions to rein in tech power in Washington had gathered steam. Ms. Khan’s appointment to the F.T.C. this month followed that of Tim Wu, another lawyer who has been critical of the industry, to the National Economic Council. Bruce Reed, the president’s deputy chief of staff, has called for new privacy regulation.
Mr. Biden has yet to name anyone to permanently lead the Justice Department’s antitrust division, which last year filed a lawsuit arguing Google had illegally protected its monopoly over online search.
The White House is also expected to issue an executive order this week targeting corporate consolidation in tech and other areas of the economy. A spokesman for the White House did not respond to requests for comment about the executive order or Judge Boasberg’s rulings.
Activists and lawmakers said this week that Congress should not wait to give regulators more tools, money and legal red lines to use against the tech giants. Mr. Cicilline, along with Representative Jerrold Nadler of New York, the chairman of the House Judiciary Committee, said in a statement that the judge’s decisions on Facebook show “the dire need to modernize our antitrust laws to address anticompetitive mergers and abusive conduct in the digital economy.”
Senator Amy Klobuchar, a Democrat of Minnesota who chairs the Senate Judiciary Committee’s subcommittee on antitrust, echoed their call.
“After decades of binding Supreme Court decisions that have weakened our antitrust policies, we cannot rely on our courts to keep our markets competitive, open and fair,” she said in a statement. “We urgently need to rejuvenate our antitrust laws to meet the challenges of the modern digital economy.”
But the six bills to update monopoly laws have a long way to go. They still need to pass the full House, where they will likely face criticism from moderate Democrats and libertarian Republicans. In the Senate, Republican support is necessary for them to overcome the legislative filibuster.
The bills may also not go as far in altering antitrust laws as some hope. The House Judiciary Committee amended one last week to reinforce the standard around consumer welfare.
Even so, Monday’s rulings have given the proposals a boost. Bill Baer, who led the Justice Department antitrust division during the Obama administration, said it “gives tremendous impetus to those in Congress who believe that the courts are too conservative in addressing monopoly power.”
Facebook and the tech platforms might like the judge’s decisions, he said, “but they might not like what happens in the Congress.”
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