The American Prospect: Jon Ossoff’s Moment of Trust Before entering the Senate, Ossoff had more than half his net worth in Apple stock; it’s now in a blind trust. Today, he must vote on legislation affecting the company. BY JAROD FACUNDO FEBRUARY 3, 2022 https://prospect.org/power/jon-ossoffs-moment-of-trust/

February 06, 2024

The American Prospect: Jon Ossoff’s Moment of Trust Before entering the Senate, Ossoff had more than half his net worth in Apple stock; it’s now in a blind trust. Today, he must vote on legislation affecting the company. BY JAROD FACUNDO FEBRUARY 3, 2022 https://prospect.org/power/jon-ossoffs-moment-of-trust/

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Jon Ossoff’s Moment of Trust

Before entering the Senate, Ossoff had more than half his net worth in Apple stock; it’s now in a blind trust. Today, he must vote on legislation affecting the company.

BY JAROD FACUNDO FEBRUARY 3, 2022

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TOM WILLIAMS/CQ ROLL CALL VIA AP IMAGES

Sen. Jon Ossoff (D-GA) at a Senate Judiciary Committee markup, June 10, 2021

The election that brought Sens. Jon Ossoff (D-GA) and Rev. Raphael Warnock (D-GA) to the Senate was in many ways about elite corruption. Their opponents, former Sens. David Perdue (R-GA) and Kelly Loeffler (R-GA), were embroiled in potential pandemic-related insider-trading scandals over selling stock before the markets crashed in early 2020. Ossoff, a former investigative reporter, played that up in his race.

“Perhaps Senator Perdue would have been able to respond properly to the COVID-19 pandemic if you hadn’t been fending off multiple federal investigations for insider trading,” Ossoff said in a debate clip that went viral across social media channels. “It’s not just that you’re a crook, senator, it’s that you’re attacking the health of the people you represent.” Perdue declined to attend a subsequent debate with Ossoff.

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Following his victory, Ossoff continued burnishing his anti-corruption image. He has led the charge in the Senate on legislation that would ban members of Congress from trading stock while in office. As reported in the Prospect, Ossoff’s bill, the Ban Congressional Stock Trading Act, would force members of Congress, their spouses, and dependent children to divest or transfer their holdings into a blind trust, subject to public visibility and only accessible 180 days after leaving public office.

Ossoff is already holding himself to this standard. In March 2021, he transferred his entire stock portfolio into an independent blind trust.

But a markup being held today in the powerful Senate Judiciary Committee will offer a test of Ossoff’s system, and whether he can separate his votes from his financial holdings.

The Open App Markets Act, co-sponsored by Sens. Richard Blumenthal (D-CT), Marsha Blackburn (R-TN), and Amy Klobuchar (D-MN), would prohibit companies like Alphabet and Apple from requiring app developers to use app stores and in-app payment systems controlled by Google and Apple for access to their markets.

It’s part of a broader and bipartisan antitrust crackdown against Big Tech, designed to protect competition and free startups from dominance by the platform monopolies. The American Innovation and Choice Online Act, which passed a markup in the Judiciary Committee two weeks ago, focuses on big tech companies prioritizing their services over competitors. The Open App Markets Act homes in on competition within the app stores themselves.

Ossoff has led the charge in the Senate on legislation that would ban members of Congress from trading stock while in office.

THIS LEGISLATION WILL BE a moment of trust for Ossoff. As of March 2021, right before he moved his stocks into the blind trust, Ossoff owned as much as $5 million in Apple stock, potentially half of his net worth.

Apple, as one of the two companies that control nearly all mobile operating systems, strongly opposes the app store bill. Lobbyists for the tech giant have already stopped bills of this type at the state level, and the company has funded respected think tanks like the Brookings Institution and other outside groups to influence Congress. Plus, according to a former Hill staffer who focuses on antitrust, Ossoff has been in touch personally with Apple CEO Tim Cook about this legislation. Ossoff’s office in a statement to the Prospect confirmed this information, and that he’d met with others on all sides of the issue, just as he also did with the American Innovation and Choice Online Act, which he supported in the bill’s markup two weeks ago.

There’s no indication that Ossoff’s blind trustee is engaged in nefarious activities such as telling Ossoff what was bought or sold.

But while Ossoff might not know how much Apple stock he holds on a day-to-day basis, according to the terms of his trust, the trustee must notify him if the value of a particular asset is completely disposed of or if its value drops below $1,000. And Ossoff would be aware of any partial sale too. Because the Apple stock was such a big part of his portfolio, any sale would likely generate significant capital gains. That would become known to Ossoff when the trustee gives him the information he needs to file his taxes.

Either way, Ossoff would be notified of significant changes to the value of his Apple stock. That potentially does not remove the pressure that comes from legislation involving companies a member of Congress is invested in. The agreement also bars Ossoff from publicly disclosing his income tax return, meaning that even if Ossoff has significant capital gains liability, the public would never know if his trustee purchased or sold his Apple holdings.

“It’s too big to be credibly blind,” the former Hill staffer focused on antitrust said to the Prospect.

APPLE HAS ALLEGED that the Open App Markets Act would leave millions of Americans open to security breaches, insisting that its control over the App Store is essential to customers’ experience. The company is particularly concerned about sideloading, which refers to transferring digital files between two devices without the use of the internet, such as copying music from a computer to a mobile device. Apple and Google claim that their customers’ experience on mobile products relies on users staying within the operating system’s ecosystem.

According to The Verge, last year Tim Cook said that sideloading “would destroy the security of the iPhone and a lot of the privacy initiatives that we’ve built into the App Store.”

In a late night Twitter thread before the Open App Markets Act markup, the Google-funded think tank TechFreedom claimed the bill would, “perversely imped[e] app store operators from adequately protecting users’ privacy, safety and security and preventing violations of law.”

Yet the privacy and security concerns TechFreedom has already happen within Apple and Google’s ecosystems. During an April 2021 antitrust hearing, Ossoff pressed Apple executives over why the company couldn’t locate grifts in its app store such as a crypto wallet app that scammed a user out of $600,000 in Bitcoin, a kids’ game with a hidden online casino, and a VPN app that stole $5 million per year from users.

Despite the tough line of questioning from Ossoff, the exchange inadvertently favors Apple’s line of argument that the company must maintain control over its app store for the security of its users. Saying that Apple must do a better job of policing amounts to a slap on the wrist for the company not protecting its users sufficiently, not an argument in favor of loftier goals of breaking monopoly power over users and developers within the app store.

Ossoff’s tendency toward favoring security over consumer protection or competition has continued, sources tell the Prospect. As the former Hill staffer said, “Everyone involved in the bill knows that [Ossoff’s] been actively concern trolling over security issues relating to sideloading apps on mobile devices, which is basically copied and pasted from Apple’s talking points.”

Keeping apps inside Apple’s walled garden allows the company to charge a toll for access to its iPhone users.

In response to previous statements from Apple over security concerns, a spokesperson for Sen. Klobuchar said, “All of Apple’s arguments about ‘sideloading’ really amount to a desperate attempt to preserve their app store monopoly, which they use to charge huge fees from businesses they are competing against.”

Keeping apps inside Apple’s walled garden allows the company to charge a toll for access to its iPhone users. In an interview on the Big Technology Podcast, Spotify’s former chief legal officer Horacio Gutierrez detailed how it was not until Spotify was on the app store that Apple imposed a 30 percent fee for all in-app revenues.

It was an effort on behalf of Apple to crush its competitors in the streaming space. In the same time period, Apple acquired Beats Music, now Apple Music, and launched a competing streaming subscription at $9.99 a month, the same price as Spotify’s premium subscription. The goal was clear: undercut the competition by charging the same rate as your competitor, and drown them in arbitrary fees.

Spotify users feel the aftermath of this battle. Rather than opting in to Apple’s 30 percent commission, Spotify chose to move its payment system outside the app, running against the gold standard of frictionless design because Apple would not budge.

The result is that every in-app purchase on the app store is subject to a 30 percent commission, only dropping to 15 percent after one year.

THE OPEN APP MARKETS ACT is supported by a consortium of groups across the political spectrum and tech coalitions like the Internet Accountability Project, Coalition for App Fairness, Lincoln Network, Electronic Frontier Foundation, American Principles Project, and the American Economic Liberties Project.

Theoretically, since Ossoff’s holdings are held in a blind trust, and because he does not accept corporate PAC money and is not lobbied by outside groups, they should not cloud his judgment when legislating on matters that impact Apple’s bottom line.

But the legislative markup is the perfect test for whether the Ossoff stock trading ban bill’s architecture accomplishes what it sets out to prove. Ossoff probably has some idea of whether he holds Apple stock, because it comprised a large percentage of his pre–blind trust portfolio. It’s clear that members of Congress cannot legislate in good faith when they are actively buying and selling stock. But if one single investment is large enough for members to be somewhat aware of its existence even after it gets transferred to a blind trust, will the same compromised dynamic apply? Will Ossoff be able to vote against Apple, even if he’s aware he could take a financial hit?

So far, Ossoff has taken a publicly strong stance against Big Tech’s anti-competitive practices. But where he lands in today’s Judiciary Committee meeting will indicate if he really puts his money where his mouth is.

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