What it really means when Congress talks about regulating Big Tech

There’s steady chatter in Washington about placing some regulatory guardrails around Big Tech companies, which many lawmakers (and their constituents) believe have become too big, too powerful, and too often unwilling or unable to self-regulate. There’s lots of discussion about new data privacy legislation, antitrust actions to break up big tech companies, and the removal of special legal protections for tech.

But it’s all very likely to add up to a big zero in this Congressional session, based on my conversations with Democratic and Republican insiders.

Privacy

The passage in 2018 of California’s aggressive privacy bill, which goes into effect January 1, 2020, started a time clock for the passage of a federal privacy bill. If the California law goes into effect, companies holding customers’ personal data would have to comply with two different regulatory regimes, California’s and the rest of the country’s. Other states may pass their own privacy bills, making things even more complicated. And many U.S. companies are already working to comply with Europe’s General Data Protection Regulation, or GDPR.

A number of privacy bills have been introduced during the current session (there’s a neat rundown here), a number of others have been circulated, while others are in the works. But none has even reached the committee markup stage in either the House or the Senate. Many Democratic lawmakers agree on the need for a federal law, but right now it’s almost impossible to write one that’s politically palatable for all stakeholders, one Congressional staffer told me.

Democratic bill authors want the support of privacy rights groups like the ACLU and the EFF, but those groups will support only bills that provide a “private right of action” (the right of an individual to directly sue companies for mishandling or misusing their personal data), and that do not preempt state privacy bills. Meanwhile, many Republicans (who are pro-business and prefer “light touch” regulation) refuse to get behind a bill that includes a private right of action and does not preempt state privacy laws.

While Republicans talk about the need for a federal privacy law, there are signs that it’s not high on Republicans’ agenda in the House. One Republican source pointed me to a recent New York Times op-ed by House Minority Leader Kevin McCarthy called “Don’t Count on the Government to Protect Your Privacy.” In it, McCarthy argued that consumers should look to “blockchain and other innovations” to ensure their own privacy. In other words, let the market provide the answer. At any rate, McCarthy’s take suggests that Republicans aren’t ready to work with Democrats on legislation. The source added that it may take another major privacy breach –another Cambridge Analytica–to get Congress moving on a privacy law.

Of course, distractions abound, and the August break is just around the corner.

Antitrust

The second prong of the policy discussion around tech is antitrust–the idea that in order to put a check on Big Tech’s power they must be broken into smaller pieces. The desire to break up Big Tech is a politically expedient thing to say for both Democrats and Republicans, and for most it plays well with the folks back home.

But it may make for a better political sound bite than the beginning of a serious policy discussion. While some high-profile people like Senators Elizabeth Warren and Bernie Sanders have spoken out in favor of breaking up tech companies, many lawmakers on both sides of the aisle are suspicious of such proposals, my Congressional staffer told me. Many Republican members, per my source, have ties to the Chamber of Commerce, and might risk straining that relationship by supporting efforts to break up big U.S. corporations.

The Republican lobbyist told me antitrust sentiment is far away from becoming actual legislation. He said the most likely legislative path is to take away Section 230 protections for Big Tech, which shield companies from lawsuits related to harmful content posted by users at their platforms. But even there, he says, many lawmakers on both sides of the aisle are “skeptical” of removing that protection.

Right now the main actions on antitrust include an active investigation of tech antitrust by the House Judiciary Committee, an antitrust investigation of Google and Apple at the FTC, and another antitrust investigation focused on Facebook and Amazon at the Justice Department.

My Republican source says the main effect of the antitrust discussion in Congress may be to focus pressure on FTC and DOJ to apply closer scrutiny to future tech mergers, and more aggressively investigate allegations of anti-competitive conduct.

The antitrust discussion was pushed into the open in March when Warren began talking about a plan to break up Big Tech during her stump speeches. Her plan would prohibit large tech companies (like Amazon and Apple) from operating large marketplaces and from selling products in those marketplaces. Amazon’s own products, for example, could not compete with those of third-party sellers on Amazon. Apple’s own apps could not sell side-by-side with third-party apps in the App Store. The rule would apply only to tech companies with $25 billion or more in revenue.

People have grown mistrustful of big, rich tech companies. Imposing new regulations on them is something that people in both parties can get behind without much political risk. Some in Congress may use the “let’s regulate tech” talking points to project a consumer champion image. Others may use the issue as a means of rallying the political base against big, rich, coastal elites who work at tech companies.

We won’t see any real policy action until and unless this posturing stage passes. That may take a long time, and it might take a regime change.