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The Technology 202

A newsletter briefing on the intersection of technology and politics.

Government has key role in tech investing, Google board member says

The Technology 202

A newsletter briefing on the intersection of technology and politics.

Good morning! I'm Gerrit De Vynck, filling in for your regular host Cristiano Lima this morning. You can reach me at gerrit.devynck@washpost.com

Below: GOP critics of Big Tech are pushing for an ally at the FTC, and TikTok fires back at an official’s warning not install the app. First:

Government has key role in tech investing, Google board member says

Roger Ferguson is no stranger to the overlap between government and the private sector. As Fed vice chair from 1999 to 2006, he led the central bank’s response in the hours and days after the 9/11 attacks, helping banks access emergency cash at a time when the stock market was in chaos and much of Wall Street’s communications infrastructure had been destroyed. 

Now, after years of leading TIAA, a major retirement fund company, and serving on the boards of companies including Alphabet and General Mills, Ferguson is getting into venture capital investing, hoping to use his expertise to help smaller companies navigate government contracts, geopolitics and a shaky economic environment. 

He’s joining Red Cell, a venture firm co-founded by Grant Verstandig, a Washington-based entrepreneur whose parents both worked in presidential administrations. It already counts former defense secretary Mark T. Esper, former Aetna CEO Jack Rowe and Yahoo co-founder Jerry Yang among its directors and advisers. 

Red Cell focuses on health care and defense, both industries that Silicon Valley has tended to avoid because of strict regulations and their proximity to government, which is often seen as slow-moving and lacking in tech savvy by start-up investors looking for companies with the potential to grow quickly. 

“Yes the government can be bureaucratic, yes the government puts in regulations, it does many things that may seem to be inconsistent with the Silicon Valley move-fast, break-things culture,” Ferguson said. “The flip side is we have periodically seen a major role for the U.S. government in terms of supporting basic research or through tax policies and subsidies supporting the private sector in its investments. And it’s paid off.”

Ferguson points to the story of Moderna, which was small compared with pharma giants like Pfizer before the pandemic but shot to prominence when its mRNA technology was key for coronavirus vaccines. 

Many of the biggest technology companies were born out of government programs. 

The original research by Larry Page and Sergey Brin which led to their founding of Google was funded by grants from the NSA, CIA, the Pentagon’s DARPA program and the National Science Foundation. The internet itself famously grew out of a decades-long government program. And some of the first tech companies to grow in what would become Silicon Valley started there to take advantage of Navy projects before and during World War II.

Ferguson said tech start-ups should take advantage of the funding the government has set aside specifically for smaller companies through programs like the Small Business Research Innovation fund. 

“Those are basically billion-dollar efforts by the government to actually attract and support small companies in the defense space,” he said. 

Ferguson has been privy to the inner-workings of Big Tech. He’s been a board member of Google parent Alphabet since 2016, and in 2021 he joined the board of Corning, the high-tech glass manufacturer which makes smartphone screens and fiber-optic cables. 

Some venture capital leaders and antitrust experts have argued the biggest tech companies have grown too dominant and are making it more difficult for start-ups to compete and grow.

Those who do come up with innovative products are quickly scooped-up by the giants. Ferguson disagrees, and says the U.S.’s economic history shows big companies constantly have to be on their toes to stay ahead of small competitors. 

“The really big companies are going to have to continue to validate their leadership role by innovating,” he said.

Defense and health care may also be industries that are more resistant to the damage caused by an economic downturn, which many economists are predicting is on the way as Ferguson’s old employer, the Fed, fights inflation by raising interest rates and slowing down the economy. Venture capital funding has slowed down significantly this year, and dozens of start-ups have fired workers. 

“I don't think this is the time to stop investing,” Ferguson said. “One of the things that I've learned from watching the economy for many decades is that even in downturns there are good opportunities.”

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GOP tech critics lobby for an ally at the FTC

Populist conservatives are calling on Senate Republicans to advocate for a Federal Trade Commission nominee with a track record of taking on the tech giants, your regular host Cristiano Lima reports. 

In a Wednesday letter shared exclusively with The Technology 202, a coalition of conservative advocacy groups urged Senate Minority Leader Mitch McConnell (R-Ky.) to push for President Biden to fill an upcoming FTC vacancy with someone that has shown “a willingness to take on the unchecked power of the most powerful Big Tech companies.”

Republican Commissioner Noah Phillips recently announced he plans to step down from the agency in the fall, creating a void that — as we reported last week — may reveal how aggressively Republicans will target tech giants like Google and Facebook going forward. The president nominates commissioners but traditionally consults with or even defers to leaders from the opposing party when filling slots on their side of the aisle.

A senior Senate aide, who spoke on the condition of anonymity to discuss private deliberations, said any recommendation to Biden on a nomination will be ultimately made by McConnell, likely in consultation with key committee leaders. 

In the letter, the groups said the FTC has “often failed” to rein in tech companies' anti-competitive conduct and privacy violations, and urged McConnell to turn the tides by making sure an aggressive enforcer is “prioritized.” The letter did not specify individual candidates the groups back.

“The bipartisan FTC cabal that has emboldened Big Tech for over a decade must be broken,” wrote the conservative advocacy groups, which included the American Principles Project, Heritage Action, the Internet Accountability Project, the Center for Renewing America and the Bull Moose Project. 

Amazon opposes FTC’s ‘unduly burdensome’ information demands

The company is seeking to quash civil investigative demands by the Federal Trade Commission, which is investigating the process for signing up and canceling Amazon Prime subscriptions, Bloomberg News’s Emily Birnbaum reports. The FTC delivered the demands for information, which are like subpoenas, to 20 current and former Amazon employees, the company said. Amazon and the employees — who include Amazon founder Jeff Bezos and chief executive Andy Jassy — are seeking to quash or limit the requests, according to a filing. (Bezos owns The Washington Post.)

Amazon said the FTC's request was “unduly burdensome” and the procedures were “unworkable and unfair,” according to the filing. 

“The FTC, which has both antitrust and consumer protection mandates, has been investigating Amazon for potential anticompetitive conduct for several years,” Emily writes. “The filing offers an unusually public glimpse into the ongoing struggle between one of the world’s biggest companies and one of its regulators.”

TikTok calls on House official to rescind security warning about app

The letter from TikTok Vice President and Head of Public Policy Michael Beckerman calls on Chief Administrative Officer of the House Catherine Szpindor to “correct factual inaccuracies” in a recent warning she issued to lawmakers about the risks of using TikTok, the Hill’s Jared Gans reports. “We do not recommend the download or use of this application due to these security and privacy concerns,” Szpindor’s office said in the warning.

Beckerman’s letter, which was first published by Politico, calls on Szpindor’s office to “rescind” the advisory and meet with TikTok representatives. 

“Szpindor’s memo came as an increasing number of lawmakers have begun using TikTok to convey messages and reach new demographics ahead of the November midterm elections,” Gans writes. “Almost every Democratic lawmaker voted for a provision in last year’s defense policy bill that prevented government employees from using TikTok on any government-issued device, but numerous caucus members have posted content on the platform.”

Rant and rave

Meta chief executive Mark Zuckerberg’s announcement that Horizon Worlds — the company’s virtual reality app — is expanding to France and Spain left some asking why the app still looks the way it does. Writer Libby Watson:

Technology columnist Kevin Roose:

Our colleague, Drew Harwell:

Workforce report

Amazon workers in Albany, N.Y., file for a union election (Caroline O'Donovan and Lauren Kaori Gurley)

Hill happenings

Lawmakers demand FBI, DHS, and others reveal purchases of private data (Gizmodo)

Inside the industry

Meta pulls out familiar playbook ahead of U.S. midterms (Bloomberg)

Oracle begins auditing TikTok's algorithms (Axios)

Alex Mashinsky took control of Celsius trading strategy months before bankruptcy (Financial Times)

Amazon is raising seller fees for the holidays to manage through surging inflation (CNBC)

Agency scanner

Idaho company sues FTC, claiming agency threatened suit over its tracking data (Wall Street Journal)

Trending

Twitter wants to see Elon Musk's text messages as it fights for $44 billion acquisition (Insider)

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