Published on Nov 07, 2023
Senate subcommittee hearing from Facebook whistleblower on social media and the teen mental health crisis. Former Facebook engineering director and Instagram consultant Arturo Béjar testified in front of a Senate Judiciary subcommittee on Tuesday, presenting internal documents stating that parent company Meta (META) was aware that teens were experiencing or seeing discrimination, bullying or threats on its platform, as well as receiving sexual advances.
“It is unacceptable that a 13-year-old girl gets propositioned on social media,” Béjar said during the hearing. “Unfortunately, it happens all too frequently today.”
Béjar described working at Facebook starting in 2009. He met regularly with senior executives, including Mark Zuckerberg, and worked on ways to make the platform safer for young users. When he left in 2015, he felt that the company was going to continue improving the site for those users.
However, when his young daughter received unwanted sexual advances on Instagram, he found that the company was not making an effort to stop these incidents, even after she reported them.
Béjar rejoined Instagram in 2019 as a consultant for the company’s well-being team, and after researching the platform’s effect on its young users, presented his findings to senior leadership, but his findings went unresolved.
He found that 11% of young users of Instagram felt disrespected, excluded, insulted or left out on the platform in a single week and that 1 in 8 users received unwanted sexual advances over that same time frame.
Since Béjar left Meta in 2021, he has made three conclusions.
“One, Meta knows the harm that kids experience on their platform,” Béjar said. “And executives know that their measures fail to address it. Two, there are actionable steps that Meta can take to address the problem. And three, they are deciding time and time again, to not tackle these issues.”
Senators throughout the hearing questioned Big Tech’s influence on Congress, calling for their fellow lawmakers to take action against the companies, including by passing the Kids Online Safety Act, which would require social media platforms to do more to protect minors on their apps, as well as give children and parents more tools to protect their personal information and report issues.
One senator, Republican Lindsey Graham, vowed during the hearing to not take any more lobbying money from Big Tech, and to return all the money he’s taken from Big Tech back to those companies.
“I’m calling on every member of Congress today,” Graham, who is from South Carolina, said. “Don’t take their money until they change.”
Meta did not respond to questions about the company’s lobbying influence on Congress or Senator Graham’s declaration that he will stop taking money from Big Tech, but made a statement to The Capitol Forum about the hearing and the company’s efforts to keep young users of its social media platforms safe.
“Every day countless people inside and outside of Meta are working on how to help keep young people safe online,” a Meta spokesperson told The Capitol Forum in an email. “The issues raised here regarding user perception surveys highlight one part of this effort, and surveys like these have led us to create features like anonymous notifications of potentially hurtful content and comment warnings. Working with parents and experts, we have also introduced over 30 tools to support teens and their families in having safe, positive experiences online. All of this work continues.”
The hearing comes just weeks after 33 states sued Meta for its exploitation of young users and an additional nine attorneys general sued the company at the state level for the same reason.
Real Estate Tech Litigation
Real estate tech companies in crosshairs of lawsuits pushing to break-up commissions. Hours after a federal jury found that the National Association of Realtors and several large brokerages conspired to inflate commission prices for homebuyers, the lawyers for the plaintiffs filed another lawsuit alleging the same actions by companies like Redfin and Compass.
While it is difficult to know how the jury decision of this case will impact the real estate industry at large, especially given how new suits may pop up in the interim, The Capitol Forum recently reported that the entire nature of commissions could shift, turning to a flat rate or hourly model. Ultimately, however, it should result in greater competition.
This newest lawsuit is notable for its inclusion of Redfin, which has often been outspoken about its consumer advocacy.
However, Wendy Gilch, founder and CEO of Sellinglater.com, a site that allows home sellers to tell buyers in advance that they’re getting ready to sell, remembers a time she was helping someone find a real estate agent and contacted Redfin to see what the best commission price possible could be for that person.
She got in touch with an employee and that employee told her, “I’m an employee. I don’t set the commission, the company does,” Gilch recalled.
“Redfin is usually more on the side of the consumer when it comes to their advocacy work, so I’m hoping that that agent was just misinformed, I gotta hope,” Gilch told The Capitol Forum. “But you never know.”
In a blog post published after the jury decision in the case against the NAR, Redfin CEO Glenn Kelman reiterated that the company was “on the right side of history.”
“Prior to this verdict, we announced our resignation from the National Association of Realtors,” Kelman wrote. “For our entire history, at Congressional hearings, in press appearances, in sensationalized debates, and in public and private industry meetings, we’ve campaigned tirelessly for lower fees, commission transparency, and broader consumer access to real estate listings.”
Redfin declined to comment beyond the statements Kelman made in his blog post.
Similarly, Compass declined to comment beyond statements its CEO, Robert Reffkin, made in the company’s third quarter earnings call.
“Looking ahead to the future, we will continue to take a disciplined approach to our operating expenses and run our business efficiently while still investing in our agents, platform, and growth,” Reffkin said. “We are confident that this approach ensures we can build upon our competitive advantage with the only proprietary end-to-end technology platform for agents in the industry. When the market improves in the future, we believe the company will be well positioned to generate substantial free cash flow over the long term.”
There’s one big real estate company that has been left out of the lawsuits so far, and that’s Zillow.
“Zillow isn’t really included because they’re just cycling data, selling your data,” said Gilch. “And then they turn around and sell your data to real estate agents for 30 or 40% of the commission those agents make.”
“If things change, it would likely hurt Zillow’s revenue,” Gilch said. “Because most of these companies bank on that 2.5, 3% buyer-agent commission to get their cut. These lawsuits will likely impact how Zillow makes money on the buy-side.”
Zillow did not respond to a request for comment.
D.C.’s OAG sues RealPage, alleging rental price-fixing. The District of Columbia’s Office of the Attorney General is accusing RealPage of being involved in a price-fixing scheme, alleging in a lawsuit filed on November 1 that the company, along with fourteen of D.C.’s residential landlords, had colluded to raise rents based on RealPage technology.
The complaint states that RealPage and the fourteen residential landlords agreed to use RealPage’s revenue management software to set rent prices, rather than competing on price. Additionally, the complaint states that the landlords agreed in writing to share “competitively sensitive data” with RealPage to feed into this software.
RealPage and the associated residential landlords were also working to add more landlords to the scheme, the complaint states.
“To recruit more landlords to their cartel, Defendants have publicly advertised that landlords who participate in the scheme, agreeing to use RealPage’s RM [Revenue Management] Software to set rents, can boost revenue (i.e., rents) by 2-7%,” the complaint states.
RealPage is also alleged within the complaint to make sure landlords participating in the scheme are compliant with using its rental prices. In one instance, a contract between RealPage and a landlord stated that RealPage would be conducting secret shopping tests to make sure a landlord was using the correct rental prices. Additionally, RealPage employed “pricing analysts” who created reports on different landlords’ compliance to the scheme.
“RealPage and the defendant landlords illegally colluded to artificially raise rents by participating in a centralized, anticompetitive scheme, causing District residents to pay millions of dollars above fair market prices,” said AG Schwalb in his office’s press release about the suit.
“Defendants’ coordinated and anticompetitive conduct amounts to a District-wide housing cartel,” AG Schwalb continued. “At a time when affordable housing in DC is increasingly scarce, our office will continue to use the law to fight for fair market conditions and ensure that District residents and law-abiding businesses are protected.”
RealPage’s first revenue management software was purchased through an acquisition of a revenue optimization company and developed by that company’s CEO Jeffrey Roper, who developed price-setting software for the airline industry that the Department of Justice investigated for facilitating anticompetitive agreements among airlines.
RealPage did not respond to a request for comment, and the D.C. OAG referred The Capitol Forum to their press release and video on the topic.
New CFPB Rule for Fintech
CFPB proposes rule to define market for digital wallets and payment apps. On Tuesday, the CFPB took another step to ensure fintech companies receive regulatory oversight, proposing a rule that would require nonbank digital consumer payment companies to adhere to the same rules as banks and credit unions.
This rule would allow the CFPB to supervise these companies under the Consumer Financial Protection Act and is the sixth in a series of rules the CFPB is enacting in order to protect consumer financial products.
Mainly, the CFPB rule will give consumers recourse if digital consumer payment companies use “unfair, deceptive, or abusive acts and practices” and will also protect consumers’ privacy rights.
The CFPB hopes the rule will promote competition among these companies and encourage them to focus more efforts on federal compliance.
The rule would apply specifically to digital consumer payment companies handling more than 5 million transactions per year, of which the CFPB has identified 17, which are “responsible for approximately 88 percent of known transactions in the nonbank market for general-use digital consumer payment applications,” according to the rulemaking. The CFPB did not name the 17 entities.
However, the rulemaking is considering lowering the transaction threshold, mentioning that a threshold of only 1 million transactions per year would raise the number of entities under supervision to 19 while maintaining approximately the same percentage of known transactions.
The public comment period for this rule ends on or before January 8, 2024, or 30 days after publication of the proposed rule in the Federal Register, whichever is later.
“Payment systems are critical infrastructure for our economy. These activities used to be conducted almost exclusively by supervised banks,” said CFPB Director Rohit Chopra in a press release about the rulemaking. “Today’s rule would crack down on one avenue for regulatory arbitrage by ensuring large technology firms and other nonbank payments companies are subjected to appropriate oversight.”
Ongoing Litigation
Vegas hotels price-fixing lawsuit is dismissed; attorneys say they will refile. A class action lawsuit alleging hotels on the Las Vegas strip engaged in price-fixing was dismissed by a federal judge on October 24.
The lawsuit, filed against MGM Resorts International, Caesars Entertainment Inc, Treasure Island LLC and Wynn Resorts Holdings LLC, alleged the company was in violation of the Sherman Act by artificially inflating hotel prices using pricing software all hotel operators agreed to use.
However, the suit failed to state that the hotels were indeed using the software, which is owned through a subsidiary by Florida-based hospitality software company Cendyn, “much less that these hotels accept all of the recommendations any software provides to them,” the order to dismiss states.
“Plaintiffs must therefore include factual allegations in their Complaint that could plausibly allege an agreement between Defendants, … but they have not,” the dismissal reads.
However, the dismissal is not without hope for members of the class action.
Chief Judge Miranda Du of the U.S. District Court of the District of Nevada left room for the complaint to be refiled if amended, though only gave 30 days for that to happen.
The dismissal alludes to additional facts that could be brought by the plaintiffs’ counsel, Steve Berman, managing partner at the law firm Hagens Berman Sobol Shapiro.
Berman “argued at the hearing that he has received some discovery from Defendants since filing this case and has continued his investigation pertinent to the case through public sources,” Du writes in the dismissal.
Berman did not respond to a request for comment but has told other news outlets that he plans to refile.
MGM Resorts International, Caesars Entertainment Inc, Treasure Island LLC, and Wynn Resorts Holdings LLC did not respond to a request for comment.
Coursera sued in federal class action alleging violation of Video Privacy Protection Act. A proposed class action lawsuit was filed against massive open online course provider Coursera (COUR) on November 1 alleging the company shares a copy of a consumers’ viewing history to Meta (META) without that consumer’s consent, in a “brazen disregard for its subscribers’ privacy rights,” according to the complaint.
The plaintiff is seeking a jury trial for Coursera’s alleged violation of the Video Privacy Protection Act, which was enacted in 1988 to preserve a consumers’ right to privacy for their video-viewing histories.
The complaint states that Coursera shared a consumer’s viewing history with Meta along with the consumer’s Facebook identification number using a virtual tracking tool called a “Meta Pixel” that allows a website user, in this case, Coursera, to “track visitor traffic and action on their websites by collecting visitor information.” Meta, then, can use this data to optimize advertising.
However, according to the complaint, Coursera did not disclose to their consumers that their data would be shared with Meta, and also did not acquire consent for that action at any point.
While only one plaintiff’s experiences are detailed in the complaint, “tens of thousands of consumers who hold a Facebook account have watched videos on Coursera and fall into the Class definition,” according to the complaint.
Coursera did not respond to a request for comment.
