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Silicon Valley is bracing for a fresh battle with Washington after reports federal regulators may be ramping up antitrust scrutiny of the tech industry.
Prominent tech investors are urging caution as the industry's worries go beyond just tough political rhetoric: My colleague Tony Romm reported this weekend that the Justice Department took early steps toward opening a federal antitrust investigation into Google -- and that Amazon could face increased antitrust scrutiny after regulators reached an agreement putting the company under closer watch of the Federal Trade Commission.
Matt Murphy, a partner at the venture capital firm Menlo Ventures, warned regulators against “heavy-handed” action that could result in breaking up the companies.
“Many of the issues need a chisel instead of a sledgehammer and at times it feels like D.C. wants to start with a sledgehammer when it comes to tech companies,” Murphy told me in an email on Sunday.
While Murphy said it may be worth exploring if the companies have engaged in anticompetitive behavior, he is wary of any moves that could be politically motivated. “The key is not to stoke fear or get caught up in the narrative that great, successful and profitable is evil or unfair, but instead to understand at a very granular level what, if anything, is unfair and address that specific issue (with a chisel!)," he wrote.
The regulators' moves mark the beginning of a new chapter of uncertainty for Silicon Valley. The tech industry has been very effective at evading heavy-handed regulation in the U.S. to date, but that era could be coming to an end as the companies find themselves with few friends in Washington.
The criticism has come from both sides of the political spectrum: President Trump, who frequently accuses tech companies of bias against conservatives, has signaled that he wants to step up antitrust oversight of Google and other tech giants. And Democrats are in on the action: Sen. Elizabeth Warren, a presidential candidate who has made breaking up Big Tech a central part of her campaign pitch.
Republicans and Democrats alike on Capitol Hill say the regulators’ latest moves are overdue.
Sen. Josh Hawley (R-Mo.), one of the Republican party's top tech critics, said:
Warren (D-Mass.) said:
Google has too much power, and they're using that power to hurt small businesses, stifle innovation, and tilt the playing field against everyone else. It's time to fight back. That's why I have a plan to break up Google and the other big tech companies. https://t.co/0az1wjQIyt— Elizabeth Warren (@ewarren) June 3, 2019
The White House did not respond to requests for comment from the New York Times about the regulators' plans. But two people familiar with President Trump's thinking told the Times he would welcome action against Google.
Potential antitrust scrutiny should worry Google — and the broader tech industry, writes Bloomberg's Shira Ovide in a column this weekend. Google previously tangled with regulators at the FTC, but the agency ultimately decided in 2013 not to force Google to alter broad aspects of its business or to break up the company.
But Google is in a dramatically different position in Washington in 2019. The company is under fire for a laundry list of concerns, including data privacy practices, allegations of anti-conservative bias and concerns about its ambitions in China.
Ovide writes if an investigation moves forward, it “will no doubt be broad, lengthy, messy, and impossible for Google and its investors to predict.”
“That should terrify Google and every other big technology company — because there’s no guarantee that the antitrust Klieg light will turn on one company alone,” she wrote.
To be sure, the regulators' moves are in very early stages. Tony noted in his stories that the FTC's course of action for Amazon and the Justice Department's interest in Google are not immediately clear. But the arrangement the agencies negotiated to allow this level of scrutiny typically foreshadows greater antitrust action. (Google declined to comment and Amazon didn't immediately respond to a request for comment over the weekend.)
which is that agencies don't do clearance for the hell of it -- it means something -- but that something isn't necessarily a full-fledged antitrust investigation or an enforcement. we're just at the beginning of the story here. https://t.co/4L1MTgzh0c— Tony Romm (@TonyRomm) June 2, 2019
BITS: The Trump administration is requiring almost all U.S. visa applicants to submit their social media accounts, previous email accounts and phone numbers, the Associated Press reports. The move marks a broad expansion of the administration's screening of potential immigrants and visitors.
The move -- which was first proposed in March 2018 -- just took effect as the State Department says it has updated its immigrant and nonimmigrant visa forms to request the information, including “social media identifiers,” from almost all U.S. applicants. The change will impact about 15 million foreigners per year.
“National security is our top priority when adjudicating visa applications, and every prospective traveler and immigrant to the United States undergoes extensive security screening,” the department told the AP. “We are constantly working to find mechanisms to improve our screening processes to protect U.S. citizens, while supporting legitimate travel to the United States.”
In the past, these identifiers were only requested in the past from applicants who were targeted for extra scrutiny, such as people traveled to areas controlled by terrorist organizations. About 65,000 applicants per year had been included in that category.
The State Department says gathering the information from more applicants “will strengthen our process for vetting these applicants and confirming their identity.”
NIBBLES: Trump escalated his attacks on AT&T early Monday morning, writing on Twitter that if people stopped subscribing to AT&T, it would result in changes at one of his top targets -- CNN. Last year, the telecom giant acquired Time Warner, which is CNN's parent company.
Just arrived in the United Kingdom. The only problem is that @CNN is the primary source of news available from the U.S. After watching it for a short while, I turned it off. All negative & so much Fake News, very bad for U.S. Big ratings drop. Why doesn’t owner @ATT do something?— Donald J. Trump (@realDonaldTrump) June 3, 2019
I believe that if people stoped using or subscribing to @ATT, they would be forced to make big changes at @CNN, which is dying in the ratings anyway. It is so unfair with such bad, Fake News! Why wouldn’t they act. When the World watches @CNN, it gets a false picture of USA. Sad!— Donald J. Trump (@realDonaldTrump) June 3, 2019
The tweets follow a report that Trump ordered Gary Cohn, then the director of the National Economic Council, to pressure the Justice Department to intervene in the merger of AT&T and Time Warner Inc., CNN's parent company. Cohn reportedly warned John Kelly not to intervene, and it's unclear if the president ever made direct requests to the Justice Department. A federal appeals court upheld the merger earlier this year after the Department of Justice challenged it as anti-competitive.
BYTES: A D.C. judge dealt an early defeat to Facebook on Friday, after a judge rejected the social network's request to block a case brought by the D.C. attorney general targeting the company's data privacy practices, my colleague Tony writes.
D.C. Attorney General Karl A. Racine can now start “obtaining all of the evidence proving that Facebook broke District law and did not follow its own policies to protect the privacy of more than 340,000 Facebook users who reside in the District,” he said in a statement Saturday.
Racine filed the suit against Facebook last year, primarily in response to the Cambridge Analytica scandal, when a political consultancy accessed Facebook data on 87 million users without their consent. The incident combined with other privacy blunders highlighted that that the social network had violated the District’s consumer-protection laws, the attorney general said, resulting in hundreds of thousands of local residents having their personal data misused.
Facebook has long argued against Racine’s allegations. Lawyers for the company contend that it never misled users about the privacy protections afforded to their personal data. They've also argued that as a California-based company, the District doesn't have jurisdiction against the company.
-- Tech news from the private sector:
-- Several 2020 presidential candidates were in the Bay Area in recent days, as Democrats increasingly court the region's wealthy donors, according to my colleague Michelle Ye Hee Lee.
"This weekend, several candidates were scheduled to appear at fundraisers in the San Francisco Bay area, including Pete Buttigieg, Sen. Kirsten Gillibrand (N.Y.) and Sen. Amy Klobuchar (Minn.)," Michelle wrote. "Sen. Bernie Sanders (I-Vt.), who famously built his campaign around small donations in 2016, on Saturday held his first fundraiser of the primary this weekend in San Francisco. However, he has priced the lowest-tiered ticket at $27 — the average donation to his campaign in 2016."
Elizabeth Warren also was in San Francisco over the weekend, where she posed with her billboard calling for a breakup of Big Tech. Dan Geldon, Warren's chief of staff, tweets:
-- Schools across the U.S. are increasingly investing in "a massive digital surveillance infrastructure," according to Education Week's Benjamin Herold, often with little attention to privacy or the systems' impact on civil liberties.
Companies monitor the social media posts of everyone in the areas around schools, including adults. Other companies trawl the private digital content of millions of students using district-issued technologies. In addition, the schools increasingly are adopting tip-reporting apps, facial-recognition software, and other new technology systems.
Herold notes that the technology has already had far-reaching consequences in schools across the country. Though there are only limited annectdotal reports of the companies preventing violence in schools, they have been effective in highlighting self-harm among students. But school administrators also find themselves navigating new legal and ethical quandaries.
“It’s similar to post-9/11,” Rachel Levinson-Waldman, a lawyer with the liberty and national security program at the Brennan Center for Justice at the New York University law school, told Herold. "There is an understandable instinct to do whatever you can to stop the next horrible thing from happening. But the solution doesn’t solve the problem, and it creates new issues of its own.”
-- More tech news from the public sector:
-- Tech news generating buzz online: