Privacy and crypto will likely lead tech policy under split Congress



After what started as a hopeful year for tech policy, the 117th Congress is about to close out its term with many key efforts tabled.

Despite bipartisan support for antitrust reform targeting digital tech giants, a digital privacy framework and new guardrails for kids on the internet, lawmakers headed home without passing the hallmark bills of those issues. And the Senate has yet to vote to confirm the final nominee to fill out the Federal Communications Commission, leaving that agency incomplete for the entirety of the Biden administration so far.

Congress did pass the CHIPS and Science Act, which incentivizes domestic semiconductor manufacturing after shortages highlighted the risks of overseas production. It also included in the year-end spending package a bill that will raise funds for the antitrust agencies by raising merger filing fees on large deals, as well as a measure banning TikTok on government devices in light of national security concerns due to its ownership by a Chinese company.

And even when it comes to many of the bills that remain in limbo, progress this year shows significant headway. That’s the case with privacy legislation, where a bill proposed this year gained bipartisan support, passing out of a House committee with a near-unanimous vote. Still, it lacks the backing of the Senate Commerce Committee’s Democratic chair, Maria Cantwell of Washington, which is seen as critical to passing the legislation.

“Any privacy legislation has to be bipartisan,” said Craig Albright, vice president of U.S. government relations for enterprise software industry group BSA. “Senator Cantwell has to be part of the process. There’s no going around her, she will be one of the key leaders. But I think if the House can demonstrate continued progress, I think that that will create more of an environment for the Senate to be able to act.”

Albright added that the House committee leaders who championed the bill, Energy and Commerce Chair Frank Pallone, D-N.J., and Ranking Member Cathy McMorris Rodgers, R-Wash., expected to become chair next year under Republican House control, proved with the panel vote “that substantively, you can come up with a bill that has broad bipartisan support.”

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

Lawmakers face a tougher landscape next year if they hope to pick up where they left off on tech reform. With Democratic control of the Senate and Republican control of the House in 2023, policy watchers stress that bipartisanship will be essential to make bills into law.

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

Still, lawmakers who led aggressive antitrust proposals and other tech reforms have signaled they’ll continue to fight for those measures next year.

“This is clearly the beginning of this fight and not the end,” Sen. Amy Klobuchar, D-Minn., whose bill barring online platforms from favoring their own services on their marketplaces failed to make it into year-end must-pass bills, said in a statement following the release of the spending package text. “I will continue to work across the aisle to protect consumers and strengthen competition.”

Sens. Richard Blumenthal, D-Conn., and Marsha Blackburn, R-Tenn., said in a statement that while their Kids Online Safety Act, setting new guardrails for sites likely to be accessed by kids, and Open App Markets Act, imposing new regulations on app stores run by Apple and Google, did not make it into the spending bill, they are “resolved to reintroduce and pass this legislation in the next Congress.” The pair blamed the bills’ failure to advance on intense lobbying efforts by the tech industry against them.

A survey of congressional staffers by Punchbowl News found that while a majority of Capitol Hill respondents expect a less productive session in terms of passing meaningful legislation, the tech agenda is high up on the expected list of priorities. Punchbowl said that 56% of respondents anticipated action on bills targeting Big Tech, a percentage that was second only to those who expect to see action targeting inflation.

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

And while it’s unlikely to result in new laws, House Republicans have signaled they’ll use their majority to focus on tech issues that have taken a backseat while Democrats held the gavels in both chambers. Rep. Jim Jordan, R-Ohio, who’s expected to lead the House Judiciary Committee, signaled he’ll likely use that power to focus on tech companies’ relationships with Democratic politicians and allegations of bias and censorship by social media platforms.

Earlier this month he wrote to the CEOs of Apple, Amazon, Google, Meta and Microsoft, demanding information about 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 spend more time looking at crypto regulation, after the downfall of exchange FTX alleged fraud of its founder Sam Bankman-Fried thrust the industry into the limelight before Congress. Legislators have already considered some legislation targeting the industry, and incoming House Financial Services Chair Patrick McHenry, R-N.C., has indicated that making a clearer regulatory framework for crypto is a priority.

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

Just like in 2022, next year’s tech policy agenda will be subject to the whims of Congress, and could be especially susceptible if the country sees some level of economic downturn as many experts expect.

“Everybody has their desire to regulate tech. But I can’t help but wonder what that desire looks like, depending on the economic outlook of the United States in Q1 of 2023,” said James Czerniawski, senior policy analyst for technology and innovation at the Koch-backed advocacy group Americans for Prosperity, pointing to high interest rates and job cuts in the tech sector. “If we were to go and enter into a recession at some point in early next year, which isn’t out of the realm of possibility, that might go and rejigger priorities from Congress to more immediate things.”

Czerniawski said the push for regulation in tech seems to be based on an “assumption that tech is this thing that’s just immovable and going to be around for the test of time with these companies’ names attached to it. And, if anything, I think that the past year and change has shown that that’s not necessarily true.”

“I think that it’s pretty easy to beat up on Big Tech when they’re so successful and they’re pulling in record profits,” said Tom Romanoff, director of the technology project at the Bipartisan Policy Center think tank, which has received funding Amazon and Meta, according to recent donor disclosures. “It becomes a different equation when constituents and districts are upset because they got laid off in one of these very high paying jobs. And so I think if there is an economic downturn, the focus will shift to the economy.”

Romanoff added that certain global dynamics could also shift the focus away from increased tech regulation, such as if tensions escalate between China and Taiwan, where a large portion of semiconductors are currently produced. He said an event like that could cause a shift from an “internal focus of what these large companies mean for U.S. democracy, to kind of a national defense strategy — what does it mean in wartime to regulate an industry that is very much critical to any wartime industry.”

Still, Albright of BSA sees focus on the tech sector in Congress remaining high as concerns that have existed in the past are not going away.

“I think the economy will go up and down,” he said. “But the importance of tech policy issues will still be strong.”

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