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The Technology 202

A newsletter briefing on the intersection of technology and politics.

Senate’s tech antitrust push notches a win, but major hurdles loom

The Technology 202

A newsletter briefing on the intersection of technology and politics.

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Below: European lawmakers give initial approval to sweeping legislation targeting the tech industry, and a report by the Federal Reserve hints at the central bank′s thoughts on a digital dollar.

Senate’s tech antitrust push notches a win, but major hurdles loom

A high-profile markup of a bill to rein in alleged anti-competitive abuses by the tech giants on Thursday showed that, just like in the House, Senate lawmakers face a narrow margin to get their legislation passed and will need to overcome significant bipartisan objections.

After nearly three hours of debate, the Senate Judiciary Committee advanced to the floor legislation that would ban dominant digital platforms from favoring their products over that of their competitors, a critical piece of lawmakers’ broader antitrust agenda. The push overcame a lobbying blitz by the tech giants that attacked the vote as “rushed” and ill-conceived.

While the proposal moved out of committee by a vote of 16 to 6, earning the backing of all 11 of the panel’s Democrats plus five Republicans, the tally belied the extent to which lawmakers on both sides of the aisle have significant reservations about the bill. 

How effectively the lawmakers leading the push address those concerns will ultimately determine the fate of the legislation, which if enacted would usher in the most significant restrictions that Congress has ever placed on the tech giants’ practices. 

Here are our top takeaways from the highly anticipated session: 

Democratic objections will be a big obstacle, and not just out of California

Just like during the marathon markup of the bill’s House counterpart in June, California Democrats expressed some of the strongest skepticism, including that the legislation was too narrowly focused on several major tech companies, primarily based in their home state. 

“If the conduct this bill seeks to prevent is unfair and improper, I believe that conduct should be prevented from anyone who engages in it, not only a small handful of companies,” said Sen. Dianne Feinstein (D-Calif.), who initially said she planned to vote against the measure but did not.

Differences over that issue in particular will be hard to overcome, since the targeted nature of the proposal is a big reason its proponents are pushing for it. 

Freshman Sen. Alex Padilla (Calif.) was one of several Democrats and Republicans to suggest the bill could harm consumers’ privacy and cybersecurity, a point groups representing the tech giants have been emphasizing both publicly and to lawmakers in recent weeks. 

But it wasn’t just the Democrats from California who expressed concerns. 

While all Democrats ended up voting to advance the proposal out of committee, several stressed that they needed to see changes made to support it on the floor, including to address privacy and security issues. That included Sens. Patrick Leahy (D-Vt.) and Chris Coons (D-Del.), a close ally of President Biden.

Expect significant wheeling and dealing ahead

A slew of Democrats and Republicans criticized what they called a rushed process to mark up the legislation, echoing concerns voiced by trade groups funded by the tech giants. Senators also proposed dozens of amendments, signaling a strong desire to see the bill tweaked.

Sen. Mike Lee (Utah), the top Republican on the Senate’s antitrust panel, took umbrage with the fact that the panel moved to a full markup without first holding a dedicated legislative hearing where experts could be brought in to critique and offer feedback on the bill. 

Senate Judiciary Chairman Dick Durbin (D-Ill.) rejected the argument. “It is not uncommon for bills to move from subcommittee to full committee markup. It's happened many times,” he said.

Sen. Amy Klobuchar (D-Minn.), the lead sponsor, pointed to the fact that the bill was the result of an extensive 16-month investigation in the House, which included a legislative hearing. 

The remarks and objections also suggest that significant negotiation on the legislation will now likely take place behind closed doors before, and if, it ever hits the Senate floor. 

Sen. John Neely Kennedy (La.), one of the bill’s GOP co-sponsors, warned that those negotiations better not exclude members like him. 

“I expect to be in that room when these changes are made, otherwise I'll be off this bill faster than you can say ‘Big Tech,’ ” Kennedy quipped. 

After the markup, Klobuchar told my colleague Cat Zakrzewski that part of the battle will be informing colleagues about some of the changes they have already implemented. “There’s a lot of misinformation going out there,” she said.

If the bill ever becomes law, it will be because of an unlikely coalition

Unlike most other topics in this Congress, the markup showed just how much the debate over competition and how to rein in the tech giants doesn’t fall neatly along partisan lines.

After Democrats including Feinstein and Padilla criticized the legislation for focusing too much on just a few American tech companies, it was Republican Sens. Ted Cruz (Tex.) and Josh Hawley (Mo.) who offered some of the strongest rebukes of that rationale. 

“Several members of this committee have said, ‘Well, gosh, why is it focused on the giant companies?’ Well, because they're the monopolists,” Cruz said. “We're not really concerned about the mom-and-pop store, even if they engage in bad conduct.”

“I think that that’s a virtue, not a vice,” Hawley said of the “targeted nature” of the bill. 

Both Cruz and Hawley — who just a year ago Democrats like Coons were calling on to resign after the Jan. 6 attack on the Capitol — voted to advance the bill. They were joined by GOP Sens. Chuck Grassley (Iowa), the panel’s ranking member; Lindsey Graham (S.C.), a top ally of former president Donald Trump; and Kennedy. 

After the markup, Klobuchar said she knew going in that she had to “make this a bipartisan bill” and touted that they have drawn “significant support from heavyweights.”

For lawmakers to cobble together enough support to get the bill passed, they will need to thread the needle and resolve enough of Republicans’ and Democrats’ myriad and at-times conflicting grievances to get to 60 votes. And as Durbin noted, time is not necessarily on their side

“We have limited opportunities to consider important legislation and a lot to do,” he said.

Our top tabs

The European Parliament approved sweeping legislation that could transform the way tech companies operate

The version of the Digital Services Act that the 27-nation bloc’s legislative arm approved could be debated for months by the European Parliament and Council of the European Union before a final vote, Perry Stein, Quentin Ariès and Cat Zakrzewski report

“The version approved Thursday would force companies to remove content that is considered illegal in the country where it is viewed, which could be Holocaust denials in Germany or racist postings in France,” they write. “And it would significantly shape how companies interact with users, allowing Europeans to opt out of targeted advertising more easily and prohibiting companies from targeting advertisements at children.” The legislation also bans companies from deceptive designs known as dark patterns. It would also let users ask companies what information they used to target them with ads.

The legislation could serve as a model for lawmakers in the United States who say they also want to rein in tech giants.

Epic asked an appeals court to rule that Apple’s App Store violates antitrust laws

Apps function “under a dark cloud: contractual and technological restrictions that Apple imposes to maintain its monopoly position and restrain competition,” Epic told the 9th Circuit Court of Appeals. The company’s court filing escalates Fortnite maker Epic’s battle with Apple over its App Store and the 30 percent fee it charges for in-app purchases, Bloomberg News’s Malathi Nayak reports.

“​​Apple faces a number of antitrust lawsuits in and outside the U.S. seeking to open up the App Store to competition,” Nayak writes. “Apple is also contending with monopolization enforcement investigations brought by federal and state agencies, and legislative bids to restrict its business practices.” Apple told Bloomberg News that it’s confident the appeals court will rule in its favor.

The Federal Reserve issued a long-awaited report on launching a digital dollar

The central bank wants the public to provide feedback on the issue over the next four months, but it says that it will only try to make a digital currency with “clear support” from both the executive branch and Congress, Tory Newmyer reports

“The specter that a government-issued digital dollar would open the door to the Fed offering banking services to consumers has drawn objections from the banking industry,” Tory writes. “Commercial banks have raised alarms that the move could drain their deposits and destabilize financial markets.” The Fed suggested in its paper that it doesn’t want to give accounts to consumers. Rather, it indicated that it would be in favor of letting companies offer digital wallets to let consumers hold and use the currency.

Rant and rave

Twitter launched a premium feature that allows its users to show off their non-fungible tokens (NFTs) as hexagonal profile photos. ABC News's Meg Cunningham:

PlaceIQ's Drew Breunig:

The Verge's Richard Lawler:

The feature also had some problems on its first day. Blogger and researcher Jane Manchun Wong:

Inside the industry

Google launches fresh appeal to overturn $2.8 bln fine at top EU court (Reuters)

Tesla driver faces felony charges in fatal crash involving Autopilot (Faiz Siddiqui)

Workforce report

Google team that keeps services online rocked by mental health crisis (Bloomberg)

Apple has swapped in a company veteran as its new head of PR (BuzzFeed News)

Hill happenings

Google U.S. lobbying jumps 27 percent as lawmakers aim to rein in Big Tech (Reuters)

Trending

Was the viral Metaverse rave fun? An investigation (Motherboard)

Daybook

  • Intel chief executive Pat Gelsinger discusses the company’s manufacturing plans today at 2:30 p.m.
  • Microsoft holds a conference call on its earnings on Tuesday at 5:30 p.m.
  • FTC Commissioner Noah Phillips discusses data privacy at an event hosted by the National Cybersecurity Alliance and LinkedIn on Wednesday.
  • Sens. Ron Wyden (D-Ore.) and Marsha Blackburn (R-Tenn.) speak at an R Street Institute event about a future federal privacy law on Thursday at 2:30 p.m.
  • Apple holds a conference call to discuss its earnings on Thursday at 5 p.m.

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