CEO DailyCFO DailyBroadsheetData SheetTerm Sheet

Big Tech’s fight against Congress hinges on these two politicians

May 20, 2022, 5:31 PM UTC

Believe it or not, Republicans and Democrats in Congress have spent the past year doing the dirty work on tech legislation, cobbling together detailed proposals and building rare bipartisan coalitions.

The big remaining question: Will congressional leadership get any legislation over the finish line?

In an era of deep partisan division on Capitol Hill, few topics seem to unite the GOP and Democrats right now quite as much as Big Tech. To wit, members of Congress have put forward three pieces of meaningful legislation with strong support on both sides of the aisle.

Yet key players on tech regulation remain nervous about the prospects of any legislation getting a hearing in the full House and Senate before the August recess, at which point any reform is likely to die. The post-recess months are expected to get eaten up by midterm elections, and Republican congressional leadership isn’t expected to prioritize the bills if it moves into the majority next year.

While Senate Majority Leader Chuck Schumer, D-N.Y., and House Majority Leader Nancy Pelosi, D-Calif., have professed support for more tech regulation, neither has moved with much urgency to push bills onto President Joe Biden’s desk.

Over the past several months, Congress’ rank-and-file have set aside partisan differences to advance tech reform.

The Senate Judiciary Committee voted 16-6 in January to advance a bill, known as the American Innovation and Choice Online Act, that stops large tech companies from pushing their own products ahead of third-party competitors on their platforms. (An example: Amazon listing its private label brand higher on its search ranking.)

The same committee voted 20-2 in February to move the Open App Markets Act, which would force Apple and Google to allow third-party payment processors to operate within their respective app stores and give users the option to download third-party apps onto the two companies’ operating systems.

The latest example of unexpected bipartisanship came Thursday, when some strange congressional bedfellows introduced companion bills that would take a sledgehammer to Google’s digital ad business. The group included Sen. Mike Lee, R-Utah; Sen. Ted Cruz, R-Texas; Rep. Matt Gaetz, R-Fla.; Sen. Amy Klobuchar, D-Minn.; Sen. Richard Blumenthal, D-Conn.; and Rep. Pramila Jayapal, D-Wash.

As The Wall Street Journal reported, the proposal would ban companies with more than $20 billion in annual online ad sales from taking part in more than one side of the digital ad ecosystem—essentially forcing Google to break up and sell parts of its $147 billion ad business.

All three pieces of legislation aim to reduce the enormous power of Apple, Amazon, Alphabet, and Meta—all of which are lobbying hard against the bills. Tech giants argue the various pieces of legislation will harm consumer privacy, make digital products less secure, hurt small businesses, and damage the online experience.

Despite the committee-level success, the self-preferencing and app bills haven’t been put on either chambers’ legislative calendar. The Google bill likely will have to wait until after the recess, owing to its late introduction.

In an encouraging sign for tech reformers, Axios reported Thursday that Schumer intends to put the American Innovation and Choice Online Act up for a vote “by early summer.” Schumer also has signaled support for the Open Markets App Act.

But as TIME reported last month, some elected officials and congressional aides question Schumer’s stomach for ticking off Silicon Valley. They also noted that bigger hurdles await in the House, where geography might play a major factor.

“One obstacle standing in the way is opposition from the California delegation, much of which represents Silicon Valley,” Time’s Eric Cortellessa reported. “Both House leaders, Speaker Nancy Pelosi and Minority Leader Kevin McCarthy, are also from the state, which boasts the world’s fifth largest economy, driven largely by the tech sector.”

Congress’ leading tech opponents continue to put a positive spin on their legislative prospects. Rep. Ken Buck, R-Colo., told Axios earlier this month that he’s “confident we’ll get something done before the summer recess.” Blumenthal said Congress still has a “real opportunity to pass several strong, smart antitrust bills before the end of the year,” per a Washington Post report in late April.

If the bills are going to become law, the ball’s now in the leadership’s court.

Want to send thoughts or suggestions for Data Sheet? Drop me a line here.

Jacob Carpenter

NEWSWORTHY

That makes five. The Canadian government announced plans Thursday to ban the use of equipment manufactured by Huawei and ZTE, becoming the latest nation to target the two Chinese telecommunications companies on national security grounds. Companies operating in Canada will have until June 2024 to remove Huawei and ZTE gear on 5G networks and until the end of 2027 to take products off of 4G networks. With the move, all members of the Five Eyes intelligence-sharing network—the U.S., the U.K., Australia, Canada, and New Zealand—will have effectively banned the two companies from their borders.

Elon under fire. SpaceX paid a $250,000 settlement to a flight attendant in 2018 after she accused founder Elon Musk of exposing himself and propositioning her while alone on a corporate jet, Insider reported Thursday. A friend of the flight attendant told Insider that the alleged incident took place in 2016 on a trip to London, after which the flight attendant reached a severance agreement that included a commitment not to sue SpaceX and a non-disclosure clause. Musk said the accusations are “utterly untrue” and accused the flight attendant of engaging in a political attack tied to his planned $44 billion acquisition of Twitter.

Saying ‘hi’ to some friends. President Joe Biden visited a Samsung chip plant Friday as part of his three-day swing through South Korea, a trip aimed at boosting business alliances and countering China’s economic influence, The Wall Street Journal reported. The visit followed Samsung’s announcement last November that it plans to build a $17 billion semiconductor manufacturing hub in Texas, a potential boost to domestic chip production. American political leaders have increasingly prioritized ties with Asian and European allies amid supply chain snags tied to China and a broad business pullout from Russia.

A headset on the horizon? Apple board members got a sneak peek last week at the company’s mixed-reality headset, a sign that the long-awaited device might go on sale as early as next year, Bloomberg reported. Citing sources familiar with the matter, Bloomberg reported that board members saw a demonstration of the headset, which combines virtual and augmented reality. Apple executives have targeted a debut for the device sometime later this year, with hopes of producing a commercial product in 2023.

FOOD FOR THOUGHT

You better behave. The Federal Trade Commission is threatening to put naughty education technology companies in time-out. As Protocol reported Thursday, the commission unanimously voted to approve a policy that clarifies its view of existing laws targeting the collection and sharing of data on kids younger than 13. Under the policy, companies can’t collect any more data than is reasonably necessary or use the data for advertising purposes without parental consent. The measure also includes a warning that the agency will “vigilantly enforce the law.”

From the article:

The vote, which comes after the COVID-19 pandemic accelerated the reliance on education technology, highlighted the bipartisan interest in protecting kids' privacy. 

The commissioners enunciated their worries about companies forcing parents to accept overly vast data collection so kids can do homework, firms getting sign-off only from schools for practices that go beyond students' work and the long-term retention of educational data for use in advertising or other commercial contexts.

IN CASE YOU MISSED IT

Tesla relegated to the backseat in Cathie Wood’s ARK fund as woes mount for Elon Musk, by Christiaan Hetzner

New Twitter policy aims to crack down on war misinformation, by David Klepper and The Associated Press

Ethereum co-founder Vitalik Buterin says the blockchain’s highly anticipated ‘merge’ will happen in August, by Taylor Locke

Did Tether see the cryptocrash coming? Stablecoin buys higher-quality Treasuries to defend dollar peg, by Christiaan Hetzner

The $1 trillion crypto collapse is crippling digital coin bulls. But the rest of us will hardly notice, says Goldman Sachs, by Bernhard Warner

NASA is offering $70k as a prize for the best design for a Martian metaverse to help train astronauts, by Chloe Taylor

BEFORE YOU GO

A new kind of gun tracing. The bulky metal detector has some competition—though privacy and Second Amendment advocates might not be thrilled with this development. The Washington Post reported Friday on a Boston-area company, Evolv Technology, that produces an artificial intelligence-based system said to be capable of detecting weapons without people walking through a machine. The technology involves creating images of widely trafficked areas and identifying outlines that match the shape of a weapon, at which point a security guard can search an individual. The product wouldn’t have halted the racially-motivated shooter responsible for last weekend’s act of terror in Buffalo, N.Y., but it’s already in use at sports stadiums, public arts facilities, theme parks, and schools. Technology ethicists and the American Civil Liberties Union, however, worry that such surveillance systems could soon expand beyond detecting guns.

This is the web version of Data Sheet, a daily newsletter on the business of tech. Sign up to get it delivered free to your inbox.