Privacy and crypto likely to drive tech policy under divided Congress

After what began as a hopeful year for technology policy, the 117th Congress is about to end its term with many key efforts.

Despite bipartisan support for antitrust reform aimed at digital tech giants, a digital privacy framework and new safeguards for children online, lawmakers headed home without passing major bills on the issues. And the Senate has yet to vote to confirm the final nominee to fill the Federal Communications Commission, leaving the agency unfinished for the entire Biden administration so far.

Congress passed the CHIPS and Science Act, which encourages domestic semiconductor production after shortages highlighted the risks of foreign production. He also included in the year-end spending package a bill that would raise funds for antitrust agencies by increasing filing fees for large mergers, as well as a measure to ban TikTok from government devices in light of national security concerns over its ownership of a Chinese company.

Even with many bills still in limbo, progress this year shows significant progress. That’s the case with privacy legislation, where a bill proposed this year received bipartisan support, passing a House committee with a near-unanimous vote. However, he does not have the support of the Democratic chairwoman of the Senate Commerce Committee, Maria Cantwell of Washington, who is seen as critical to the passage of the legislation.

“Any privacy law has to be bipartisan,” said Craig Albright, vice president of U.S. government relations for business software industry group BSA. “Senator Cantwell has to be part of the process. There’s no getting around her, she’s going to be one of the key leaders. But I think if the House can show continued progress, I think that’s going to create a better environment for the Senate to be able to operate.”

Albright added that the House committee leaders who championed the bill, Energy and Commerce Chairman Frank Pallone, D-N.J., and Rep. Cathy McMorris Rodgers, R-Wash., who are expected next year become presidents under control of the House of Representatives Republicans, proved a panel vote “that essentially, you can come out with a bill that has broad bipartisan support.”

“I think it puts this next Congress in a stronger starting position than we’ve had before,” Albright said.

Lawmakers face a more difficult situation next year if they hope to pick up where they left off on technology reform. With Democratic control of the Senate and Republican control of the House in 2023, political observers stress that bipartisanship will be key to turning legislation into law.

While that could dash hopes for most antitrust reforms, which while bipartisan are generally not supported by Republicans expected to lead the House and key committees, it could mean there’s still a chance for a digital privacy bill where both parties stressed the urgency despite years of failing to reach compromise in areas of disagreement.

Still, lawmakers who have spearheaded aggressive antitrust proposals and other tech reforms have signaled they will continue to fight for the measures next year.

“This is clearly the beginning of this fight, not the end,” said Sen. Amy Klobuchar, D-Minn., whose bill to ban online platforms from prioritizing their services in their markets failed to make it into year-end must-pass legislation. in the press release after the publication of the text of the spending package. “I will continue to work on the other side to protect consumers and strengthen competition.”

Sens. Rep. Richard Blumenthal, D-Conn., and Rep. Marsha Blackburn, R-Tenn., said in a statement that while their Child Online Safety Act, which sets new safeguards for sites children are likely to access, and the Open Markets Act app, imposes new regulations on the app stores it manages Apple and Google, did not make it into the spending bill, they are “determined to reintroduce and pass this bill in the next Congress.” The pair blamed the notes’ failure to thrive on the tech industry’s intense lobbying against them.

A survey of congressional staff conducted by Punchbowl News found that while most Capitol Hill respondents expect a less productive session in terms of passing meaningful legislation, the technology agenda is high on the list of expected priorities. Punchbowl said 56% of respondents expected action on legislation targeting Big Tech, second only to those expecting action on inflation.

Technology regulation is a top priority for Democrats, according to Punchbowl, with 59% of respondents choosing it as one of their top issues. Among lobbyists and business executives surveyed by Punchbowl, 55% predicted lawmakers could crack down on a major tech company, with TikTok the most likely target, followed by Facebook parent Meta.

And while it’s unlikely to result in new legislation, House Republicans have made it clear they will use their majority to focus on technology issues that have fallen on the backburner as Democrats hold the gavel in both chambers. Rep. Jim Jordan, R-Ohio, who is expected to lead the House Judiciary Committee, has signaled he is likely to use that power to focus on tech companies’ relationships with Democratic politicians and allegations of bias and censorship by social media platforms .

He wrote to CEOs earlier this month Apple, Amazon, Google, Target and Microsoft, seeking information on what he called “the nature and extent of your companies’ collusion with the Biden administration.” He said the letters should serve as a formal request to preserve records related to the request.

Lawmakers are also likely to devote more time to considering crypto regulation, after the FTX exchange’s alleged fraud by its founder Sam Bankman-Fried thrust the industry into the spotlight before Congress. Lawmakers have already considered some legislation targeting the industry, and incoming House Financial Services Speaker Patrick McHenry, RN.C., has indicated that creating a clearer regulatory framework for cryptocurrencies is a priority.

One of the key issues lawmakers have wrestled with is who should be the agency charged with overseeing the industry. That question has so far remained unanswered, with many industry players favoring the Commodity Futures Trading Commission, while some consumer advocates prefer the larger and better-resourced Securities and Exchange Commission. One prominent bipartisan bill in the Senate would put the CFTC in charge.

Like 2022, next year’s technology policy agenda will be subject to the whims of Congress, and could be especially sensitive if the country experiences some level of economic decline as many experts expect.

“Everyone has their own desire to regulate technology. But I can’t help but wonder what that desire looks like, depending on the economic outlook for the United States in the first quarter of 2023,” said James Czerniawski, senior policy analyst for technology and innovation at the advocacy group Americans for Prosperity supported by Koch, pointing to high interest rates and job cuts in the technology sector. “If we were to go and go into recession at some point early next year, which is not out of the realm of possibility, that could go and shift the priorities of Congress to more pressing matters.”

Czerniawski said that the push for regulation in technology seems to be based on “the assumption that technology is something that’s just static and that it’s going to be around as long as the test of time with these company names attached to it. And, if anything, I think the past year and changes have shown that this is not necessarily true.”

“I think it’s pretty easy to beat Big Tech when they’re so successful and making record profits,” said Tom Romanoff, director of the technology project at the Bipartisan Policy Center think tank, which has received funding from Amazon and Meta, according to recent donor statements. “It becomes a different equation when voters and districts are upset because they got fired from one of these very well-paying jobs. So I think if there’s an economic downturn, the focus will shift to the economy.”

Romanoff added that certain global dynamics could also shift the focus away from increased technology regulation, such as if tensions escalate between China and Taiwan, where much of the semiconductors are currently manufactured. He said such an event could cause a shift from “an internal focus on what these big companies mean to American democracy, to a sort of national defense strategy — which means in wartime regulating an industry that is very critical to any war industry.”

Still, the BSA’s Albright believes the focus on the tech sector in Congress remains high because concerns that existed in the past are not going away.

“I think the economy will go up and down,” he said. “But the importance of technology policy issues will continue to be high.”

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