Daily Digest 5/25/2018 (Happy GDPR Day)

The notices are flooding people’s inboxes en masse, from large technology companies, including Facebook and Uber, and even from parent teacher associations, children’s soccer clubs and yoga instructors. “Here is an update to our privacy policy,” they say. All are acting because the European Union enacts the world’s toughest rules to protect people’s online data. And with the internet’s borderless nature, the regulations are set to have an outsize impact far beyond Europe. In Silicon Valley, Google, Facebook and other tech companies have been working for months to comply with the new rules, known as the General Data Protection Regulation. The law, which lets people request their online data and restricts how businesses obtain and handle the information, has set off a panic among small businesses and local organizations that have an internet presence. Brazil, Japan and South Korea are set to follow Europe’s lead, with some having already passed similar data protection laws. European officials are encouraging copycats by tying data protection to some trade deals and arguing that a unified global approach is the only way to crimp Silicon Valley’s power.

The European Union’s General Data Protection Regulations (GDPR) go into effect May 25, and privacy groups are pushing companies to commit to the same standard for their US operations. More than two dozen privacy groups sent letters to "edge providers" Amazon, Facebook and Google, and ad giants Walmart, Nestle and others asking them to use the EU regime as a baseline for their own US data protection policies. “Since you will be providing these protections for hundreds of millions of people in Europe, there is no question that you are capable of applying the same protections worldwide,” the letter said. “We insist that you do." Letters were sent by Center for Digital Democracy, the Consumer Federation of America, Consumer Watchdog, the Electronic Privacy Information Center (EPIC), and other groups.

More and more, rural hospitals and clinics rely on high-speed internet access to bridge the urban-rural gap and provide their patients with services that are often found only in much larger cities. But a federal program to help subsidize the cost of broadband for rural health care facilities has hit its funding cap, which may jeopardize the push to connect more rural health facilities. OCHIN operates a consortia of rural safety net clinics and hospitals, drawing down federal broadband subsidies through the Federal Communications Commission’s Rural Health Program. The program was created in 1997 and helps rural facilities pay for high-speed connectivity. Administered by the Universal Service Administrative Company, the program provides 65 percent funding for broadband costs, up to an annual cap of $400 million. Spending over the first 12 years never reached that amount combined. But the cap did not grow with inflation, and the growing importance of connectivity has greatly increased demand. As a result, requests for subsidies hit the cap for the first time in fiscal year 2016. That prompted the administrator to reduce subsidies in fiscal year 2017 by 15 percent for individual participants and by 25 percent for consortia members. The American Hospital Association has urged the FCC to increase funding to fully meet demands. The FCC has proposed increasing the cap to account for inflation over the 20 years of the program. That would bring the cap to about $571 million, enough to cover all of the $521 million in subsidy requests received in fiscal 2017. But the FCC has not finalized that change and so the subsidies are still being cut.

Some observers note a decline in competition in American industry; fewer new firms are entering the market, and markets are becoming more concentrated. Federal and state agencies can devise regulations to catalyze competition. Federal and state agencies can use different types of rules to spur competition, including deregulation, which removes rules that discourage new firms, or switching price rules, which makes it easier for consumers to try a new service provider (such as the rule that phone customers can keep their phone number when changing service providers). For most of the twentieth century, competition was regulated either by antitrust law, or by public utility regulation. Economist Fred Khan observed that some regulation, such as regulation of airlines and trucking, actually prevents competition. The Federal Communications Commission (FCC) and other agencies began to design rules to promote competition in communications markets. The FCC’s Carterphone rules encouraged competition, allowing customers to connect telephones made by the phone company’s competitors, fax machines, answering machines, and modems to the phone network. The best pro-competitive rules make it easier for new firms to enter the market, and to allow the creation of entirely new industries; in designing new rules, policymakers should recognize that dominant firms will make efforts to defeat the rules. Some “separation” rules promote competition by preventing firms from selling goods in a bundle; these rules work best when there is a “clean cut” between two services, such as the rule that eye exams must be offered separately from contact lenses. Deregulation does not work if only part of the market is deregulated; for example, California energy markets were partly deregulated, resulting in price manipulation and shortages. Common carrier rules foster competition by levelling the playing field between different competitors; one oil company cannot get an edge on competitors by cutting a special deal with transportation firms; net neutrality rules are similar.

[Tim Wu]

The Federal Communication Commission wants more than $200 to release e-mails related to Chairman Ajit Pai’s novelty, oversized coffee mug under the Freedom of Information Act.  The mug gained mild notoriety after Chairman Pai was photographed with the drinking vessel. But when Taylor Amarel, a frequent FOIA-filer who secured the release of Chairman Pai’s calendar earlier in 2018, requested all of Chairman Pai’s executive assistant’s e-mails that included terms such as "reeses", "mug", or "Reese's,” the FCC pushed back. First, correspondence posted to public records platform MuckRock shows FCC attorney advisor Ryan Yates questioned whether Amarel was using a pseudonym and demanded his name, personal mailing address, and phone number, which is not required under FOIA law. Still, Amarel complied only to have the FCC respond again, this time asserting that digging up these e-mails would take more than four hours of work and cost an estimated $232.89. “This is the first time I’ve seen anything remotely close to this kind of cost when requesting emails from the FCC,” said JPat Brown, executive editor of MuckRock.