The Coming Tech Reckoning
Here is one of the worst kept secrets in Washington: lawmakers on Capitol Hill aren’t in love with technology companies. As Congressman Fred Upton (R-Mich.) said at a recent hearing with major social media and tech companies, “It sounds like everybody on both sides of the aisle is not happy.” That’s putting it mildly.
The collective anger means tech and social media companies face several legislative threats right now. And that’s not all. The states are at it too.
Let’s take a look.
Breaking Up Big Tech
Back in January, Politico reported the new, Democratic-led Congress had four major tech policy priorities for the next two years: update federal antitrust statutes, reform Section 230/online content liability standards, expand broadband, and enact data privacy legislation. (With significant investment due to made in broadband deployment in the coming infrastructure package, we won’t spend much time on this priority.)
When Democrats took back the Senate that same month, Protocol, a tech news outlet owned by Politico, said, “An antitrust crackdown and other regulation becomes more likely.”
Indeed, antitrust took up most of the air in the first quarter of 2021.
The Wall Street Journal has summarized what lawmakers want. (The goals also are outlined, at great length, in the 449-page report issued by the House Judiciary Committee in October 2020.) Specifically, Republican and Democratic lawmakers are looking to:
Set a higher bar for acquisitions by companies that already dominate their markets;
Make it easier for the government to challenge anti-competitive conduct in the technology marketplace; and
Force some large firms to separate their various lines of businesses.
On Monday, Sen. Josh Hawley (R-Mo.) introduced what is so far the toughest tech antitrust legislation of the current session. As Politico explained, the bill would ban mergers and acquisitions by companies with a market capitalization of more than $100 billion. It also would empower the Federal Trade Commission to designate “dominant digital firms” in specific internet markets and then keep those firms from buying potential competitors.
As Politico also reported, Sen. Hawley’s bill is similar to legislation offered by Sen. Amy Klobuchar (D-Minn.), who is leading on this issue for Democrats in the Senate. Adding momentum to the bipartisan effort is the fact that President Biden clearly is on board. During the 2020 election he argued tech companies have “not only abused their power, but misled the American people, damaged our democracy and evaded any form of responsibility."
Though Congress will be distracted by the debate on infrastructure legislation for at least the next few months, antitrust legislation still could move quickly. The House started debate this week and is expected to clear a bill soon.
Protecting Consumer and Democracy
After the January 6 attacks on the U.S. Capitol, the White House and most lawmakers in Congress also are eager to do something about the regulation of social media content.
The “Protecting Americans from Dangerous Algorithms Act,” which is sponsored by Rep. Anna Eshoo (D-Calif.) and Rep. Tom Malinowski (D-N.J.) would hold large social media platforms liable “if their algorithms amplify misinformation that leads to offline violence.” The “Online Consumer Protection Act,” which Rep. Jan Schakowsky (D-Ill.) is expected to introduce soon, also would weaken social media companies’ liability shield.
Regarding Section 230, which provides legal protections for online platforms regarding content that appears on their sites, Jonathan Peters, a professor of media law at the University of Georgia and expert in the regulation of technology companies, told The New York Times that Democrats do not have the votes “to go through with a full revocation of Section 230, although an amendment might be possible.”
While Republicans would not support full Section 230 repeal, it is worth noting that, on the Senate floor this past Monday, Sen. Chuck Grassley (R-Iowa), ranking member of the Senate Judiciary Committee, said, “It’s time that we examine the need for Section 230 immunity and to what extent these tech companies are abusing their monopoly power.”
Congress’ third tech-related priority is data privacy legislation. In general, lawmakers are likely to consider provisions that would:
Limit platforms’ ability to use consumer data, including how long they may use it;
Require that consumers have the opportunity to opt-in or out of the use of certain data;
Put in place new rules that force platforms to be transparent about how they use data; and
Require the Federal Communications Commission to create a system that would allow consumers to opt-out of tracking and that would punish companies that disregard consumers’ preferences.
As Protocol reported, lawmakers are likely to start with legislation that was introduced in past sessions of Congress. The main questions before lawmakers are whether a bill should preempt state laws and allow individuals to sue companies over privacy violations. Together, these are the two issues that have prevented a federal data privacy bill from becoming law for the last several years. Democrats — at least at this point — would prefer to keep state laws supreme since some, like California’s, are likely to include more robust consumer protections than any bill Congress will be willing to accept.
Senate Commerce Committee Chair Maria Cantwell (D-Wash.) has made it clear she prefers a tough approach. She warned GOP lawmakers would “allow companies to maintain the status quo, burying important disclosure information in long contracts, hiding where consumer data is sold, and changing the use of consumer data without their consent.”
Tech Companies Face Threats Outside Congress
Consumer and privacy advocates also have tech companies in their crosshairs, including on the matter of how new technology might be used. This week, for example, more than 20 organizations asked local, state and federal lawmakers to ban the use of facial recognition surveillance by private and government entities. Protocol has noted Democrats, in particular, are worried about bias in artificial intelligence.
Tech companies have their hands full outside of Washington as well. As The Wall Street Journal said in March, “Tech companies are turning their attention to statehouses across the country as a wave of local bills opens a new frontier in the push to limit Silicon Valley’s power.”
With good reason. Like they do in Washington, “State policy proposals have bipartisan support from lawmakers who want to temper companies’ influence and financial clout, which have grown during the pandemic.” Among the legislation, litigation, and regulations being considered or approved in the states are:
New York legislation that would make it easier to establish antitrust cases;
A bill in Arizona that would limit the fees Apple and Google ask software developers to pay;
A Maryland law imposing taxes on digital ads;
Online privacy legislation in Washington state and Virginia similar to California’s expansive data privacy framework;
A bill in Florida that would limit social media content moderation; and
A Colorado-led lawsuit that alleges Google has a monopoly over online searches.
American Voters Support Efforts to Rein in Tech
While Americans have relied on technology to get them through the COVID-19 pandemic, they largely support government efforts to curb technology companies’ power.
According to a 2020 Consumer Reports survey, nearly 75 percent of voters are worried about the amount of power these firms have amassed. Eight in 10 said tech company mergers and acquisitions unfairly undermine competition and consumer choice and 30 percent want to break up platforms into smaller platforms. Additionally, three-quarters of Americans said they believe social media companies should “be required to take more responsibility” for evaluating the veracity of the information that is shared on their sites.
With numbers like those, it is clear lawmakers have the backing of voters in both parties to move forward with their robust plans to rein in the tech sector.
In the same hearing where Congressman Upton spoke, Rep. Frank Pallone, the chair of the House Energy and Commerce Committee, said, “ The time for self-regulation is over … It is time we legislate to hold [tech companies] accountable.”
The need for heightened tech regulation and apple pie: perhaps the only two things that both parties can agree on.