Joe Biden wants Congress to pass federal data privacy legislation. He’s better off looking elsewhere

Biden reached across the newspaper aisle Wednesday, authoring an op-ed in the conservative Wall Street Journal opinion pages that calls on Democrats and Republicans to “pass strong bipartisan legislation to hold Big Tech accountable.” His pitch centers on a few hot-button issues that gained some traction last year but didn’t result in bills reaching the Resolute desk: data privacy, child safety, algorithm regulation, antitrust law, and liability for hosting certain kinds of harmful content.

The piece is a classic Beltway tone-setter, aimed at capitalizing on the brief era of good feeling that dawns on Washington every two years in January. In reality, though, most of Biden’s legislative tech agenda is most likely DOA. 

Antitrust bills aren’t expected to gain traction after a hearty bipartisan push last year. Proposals for reforming Section 230, the law generally protecting online platforms from liability for content posted on their sites, aren’t anywhere close to becoming law. Members of Congress barely understand how algorithms work, let alone how to regulate them. Plus, Republicans appear more focused on flogging Big Tech companies for their content moderation decisions and communications with the White House.

Still, the coming year is shaping up to be a pivotal one in the U.S. for one of Biden’s pet projects: data privacy.

While there’s minimal momentum for legislation setting national data privacy standards—a bipartisan bill introduced in Congress last year petered out pretty quickly—federal regulators and a handful of states are poised to take up the mantle in 2023.

In Washington, the newly emboldened, Democrat-led Federal Trade Commission is expected later this year to propose new rules aimed at limiting data mining and curbing corporate profiteering off of users’ personal information. The FTC took a first step toward issuing regulations in August 2022, soliciting feedback from the public about “whether new rules are needed to protect people’s privacy and information in the commercial surveillance economy.”

Any such proposals would inevitably draw complaints from Republicans about Biden’s bureaucracy circumventing Congress’s policymaking role. Legal challenges likely would follow, too, particularly in light of the conservative U.S. Supreme Court’s ruling last summer on federal agencies exceeding their authority via regulatory rulemaking. 

But should the FTC act, it would mark a major federal response to a pressing issue for most Americans. Multiple national polls have found a solid majority of respondents are concerned about data privacy and favor more federal intervention to protect them. (The surveys generally don’t ask respondents about specific policies, the biggest sticking point between Democrats and Republicans on Capitol Hill.)

While the FTC ponders its next steps, several states are already ahead of the curve.

California’s landmark Privacy Rights Act, passed via a statewide referendum, went into effect at the beginning of January, ushering in the nation’s broadest policy on digital user data. The law limits what kind of information some businesses can collect; sets new notification requirements for companies mining digital data; and gives users additional rights related to their personal online information. (The law doesn’t become enforceable until July.)

A similar law took effect this month in Virginia, where the Democrat-led state government pushed through a similar but less sweeping bill in 2021. The law also forces businesses mining large amounts of user information to notify users of their collection practices and give consumers the opportunity to delete or correct personal data, among other provisions. (Questions remain about the Republican-led executive branch’s commitment to enforcing the law.)

Colorado and Connecticut are set to implement their own data privacy laws this summer, while Utah’s new statutes take effect at the end of the year.

In his op-ed, Biden said the U.S. needs “clear limits on how companies can collect, use, and share highly personal data—your internet history, your personal communications, your location, and your health, genetic, and biometric data.” Congress almost certainly won’t deliver on his appeal this year, but 2023 still could go down as a milestone year for online privacy.

Before getting to the rest of today’s Data Sheet, a correction on yesterday’s edition is in order. Owing to a mistake on my part, I wrote that Disney’s operating losses tied to ESPN+ were $1.6 billion in fiscal 2022. In fact, that figure represented Disney’s ESPN+ expenses, not its losses. Disney’s annual financial report shows it did lose money on ESPN+ last fiscal year, though the company doesn’t detail profits and losses for each of its streaming platforms. My apologies for the error.

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Jacob Carpenter

NEWSWORTHY

All good times must end. Taiwan Semiconductor Manufacturing Co. posted record fourth-quarter profits and topped revenue expectations, though the world’s largest chip manufacturer warned that it won’t be immune to a broader industry downturn this year, Barron’s reported Thursday. TSMC saw profits reach $9.72 billion for the quarter, up 78% year over year, as the company weathered weakening chip demand better than its semiconductor rivals. However, company officials said they expect revenues to slide in the first quarter of 2023 before bouncing back in the second half of the year.

Having a hard year. French video game developer Ubisoft dramatically slashed its fiscal year guidance Wednesday, adding to fears about a prolonged slowdown in the gaming industry, CNBC reported. Ubisoft officials said they now expect a 10% year-over-year decline in revenue in its fiscal 2023, which ends in March, a sharp reversal from earlier forecasts of a 10% rise in sales. Ubisoft officials said the revised estimate stemmed from global economic headwinds and underwhelming results from some of its top titles.

Steve would not approve. Apple engineers are working on putting touch screens into the company’s Mac computers, a feature that the company has long resisted, Bloomberg reported Wednesday. Company officials have not finalized any plans to add touch screens and could ultimately nix the idea, sources told Bloomberg. Former Apple CEO Steve Jobs opposed outfitting laptops with touch screens during his tenure, calling the idea “ergonomically terrible,” while company executives have worried about the potential for Macs with touch screens to render iPads less attractive.

No escaping this trend. Global PC sales plunged in 2022 and are projected this year to remain well below the heights reached in the early days of the pandemic, the Wall Street Journal reported Wednesday. Preliminary data from research firm Gartner showed worldwide PC shipments fell 16% year over year in 2022, driven in part by waning demand from businesses. Gartner forecasts show a possible rebound in PC sales in 2024, when companies need to replace the large number of computers purchased in the past few years.

FOOD FOR THOUGHT

Running into the fire. In the midst of a Crypto Winter, Binance CEO Changpeng “CZ” Zhao remains one of the industry’s most confident players. The leader of the world’s largest crypto exchange said Wednesday that he expects his company will boost its headcount in 2023, bucking the broader industry trend of cutting staff and expenses, Fortune’s Will Daniel reported Wednesday. Speaking at the Crypto Finance Conference in Switzerland, Zhao forecasted Binance’s headcount could rise 15% to 30% this year amid confidence that the company is well-positioned to weather the current crypto downturn. Zhao’s comments came hours before former FTX CEO Sam Bankman-Fried accused Binance of a “targeted attack” that precipitated the rival crypto exchange’s collapse in November.

From the article:

Binance’s planned hiring spree comes as other major crypto businesses are pulling back. Coinbase, the largest U.S.-based crypto exchange, announced on Tuesday that it will lay off 25% of its workforce, with CEO Brian Armstrong saying the move was due to the prolonged bear market in the industry and a “broader economic downturn.”

Multiple cryptocurrency data firms have also claimed that, like its peers, Binance is losing assets quickly as crypto prices fall. On Wednesday, Forbes published an analysis including data from these firms that said that Binance is “bleeding assets,” losing 15% of its total since Dec. 13.

IN CASE YOU MISSED IT

There’s a brewing ‘A.I. arms race’ and Microsoft’s ChatGPT play is ‘a potential game changer,’ Wedbush’s Dan Ives says, by Will Daniel

Microsoft is giving U.S. employees unlimited paid time off, ditching its 4-weeks-a-year vacation policy, by Kylie Robison

Twitter and Salesforce layoffs offer another glimpse into the wild world of severance packages, by Amber Burton

Millennial founder who sold her fintech to JPMorgan for $175M is now being sued for allegedly inventing 4 million customers, by Christiaan Hetzner

Twitter’s Asia HQ workers emailed with 5 p.m. deadline to pack their bags and go home, by Sing Yee Ong and Bloomberg

Musk’s plea to move Tesla trial to Texas is mocked by lawyers: He has only himself to blame for his knack for attracting ‘negative’ coverage,’ by Michael Liedtke

I watched market rumors spread across the NYSE trading floor for a decade. Now they’re moving at warp speed, by Richard Torrenzano

BEFORE YOU GO

A fast break. FTX’s naming rights for the Miami Heat’s stadium went up in flames Wednesday. A federal bankruptcy judge terminated the sullied crypto exchange’s rights deal with Miami-Dade County, which owns the nearly 20,000-seat arena home to the NBA franchise, Fortune’s Marco Quiroz-Gutierrez reported. FTX made a splash in Miami in 2021 when it struck a 19-year, $135 million agreement to rename the stadium, long known as American Airlines Arena. Of course, FTX can no longer hold up its end of the bargain—the company had a $5.5 million bill due this month, according to Axios Miami—after the crypto house of cards collapsed in November. County lawyers are now seeking $22 million in early termination fees and unpaid bills, adding to FTX’s debtor woes.