Emerging Technologies Washington Update

August 22, 2019

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This Week: USTR holds hearing on French digital services tax; EU to consider new regulation governing online platforms; Sanders, Warren take on facial recognition technology in new criminal justice reform proposals.

Week in Review

While Congress remains in recess, Rep. Ed Case (D-HI) sent a letter to colleagues this week seeking support for draft legislation aimed at reforming Section 230 of the Communications Decency Act so that short-term rental marketplaces can be held liable for listings in jurisdictions that have banned such rental properties. Case asked the House Energy and Commerce Committee last month to review the matter, arguing that Section 230 shields platforms from penalties for knowingly listing properties they know to be illegal. He intends to introduce the Protecting Local Authority and Neighborhoods (PLAN) Act when Congress returns to Washington in September.

Today, Senators Ed Markey (D-MA) and Richard Blumenthal (D-CT) wrote to National Highway Traffic Safety Administration (NHTSA) Acting Administrator Heidi King expressing concerns about the cybersecurity of internet-connected cars and asking for information on any steps NHTSA has taken to address such vulnerabilities. Markey and Blumenthal reintroduced legislation last month that would direct NHTSA and the Federal Trade Commission (FTC) to establish federal standards for security and privacy in “increasingly computerized vehicles.” King is leaving the agency at the end of the month; Department of Transportation Deputy General Counsel James Owens will take the helm after her departure.

FTC Commissioner Noah Phillips and Assistant Attorney General for Antitrust Makan Delrahim were among those who spoke this week in Aspen at the Technology Policy Institute’s annual forum. During his panel, Delrahim said that while Section 230 has “nothing to do with antitrust,” it would be appropriate to review it in the context of today’s internet. He also said that the Department of Justice (DOJ) has contacted companies subject to its recently announced investigation into the practices of market-leading online platforms and suggested the Department might soon “be issuing compulsory process on some third parties” as part of its inquiry.

Meanwhile, former House Energy and Commerce Committee Chief Counsel Robin Colwell joined the White House this week as a special adviser to the President on technology, telecommunications, and cybersecurity issues. She also replaces Gail Slater on the National Economic Council.

On Tuesday, President Trump hosted Romanian President Klaus Iohannis at the White House for a bilateral meeting while Vice President Pence spoke at a National Space Council meeting, where he announced that the new United States Space Command will formally launch next week under the leadership of Four-star Air Force General John Raymond.

Former Colorado Governor John Hickenlooper announced today that he will seek the Democratic nomination to challenge Senator Cory Gardner (R-CO) in 2020. Gardner sits on the Senate Commerce, Science, and Transportation Committee and chairs the Senate Foreign Relations Subcommittee on East Asia, the Pacific, and International Cybersecurity Policy, among other assignments. Hickenlooper recently dropped out of the Democratic presidential primary field. Washington Governor Jay Inslee also dropped out of the presidential race this week and will instead run for reelection.

Looking Ahead

Congress remains in recess through the second week of September, but the House Judiciary Committee will return to Washington on September 4 to markup several bills aimed at reducing gun violence. The Committee will also hold a hearing September 25 on military-style assault weapons. According to the House Homeland Security Committee, 8chan owner Jim Watkins has also agreed to appear at a September 5 deposition to discuss whether the site has made any efforts to stop the spread of racist and violent content.

President Trump will join other G7 leaders this weekend in Biarritz, France. He also announced on Tuesday evening that he will not travel to Denmark early next month for bilateral meetings with senior political and business leaders as planned after Prime Minister Mette Frederiksen said that she would not be interested in discussing the potential sale of Greenland to the United States. The President and First Lady had also been scheduled to visit Queen Margrethe II during their time in Copenhagen. The trip was to coincide with a visit to Warsaw on September 1 to mark the 80th anniversary of the beginning of World War II. Elsewhere, Vice President Pence is scheduled to travel to Iceland, the United Kingdom, and Ireland next week.

USTR Holds Hearing on French Digital Services Tax

The Office of the US Trade Representative (USTR) held a hearing on Monday as part of its Section 301 investigation into the French digital services tax (DST). The Office of the USTR announced last month that it would investigate whether or not the tax unfairly targets US-based companies shortly before French President Emmanuel Macron signed the new law into effect on July 25, initiating a 3% tax on revenue collected in France by technology firms with more than €750 million in global revenue and €25 million in revenue in France.

On Monday, representatives from large US-based technology companies told the Office of the USTR that the French DST will encourage other countries to take similar measures, citing efforts underway in Spain to implement a DST mirroring the new French law. Industry said these efforts conflict with negotiations underway at the Organization for Economic Cooperation and Development (OECD), which aim to reach international consensus on DSTs by the end of 2020.

While no companies suggested on Monday that the United States should pursue retaliatory tariffs in response to DSTs, President Trump has previously suggested that the United States will take “substantial reciprocal action” against France if its DST disproportionately impacts US-based companies.

EU to Consider New Regulation Governing Online Platforms

Documents leaked this week reveal the European Commission’s plans to consider comprehensive legislation in 2020 that would update and revise the existing EU e-Commerce Directive. The regulation would establish a new EU-wide framework to hold online platforms responsible for specific services related to content moderation and online political advertising, among other provisions. In documents obtained by POLITICO, EU officials raise concerns with outdated policies under the 2000 Directive, as well as a lack of legal clarity for industry stakeholders under a growing patchwork of national rules.

“Such a fragmented market is difficult to contest for newcomers and reinforces the dominance of the mega-platforms who can put dedicated teams in each country,” the document reads. The EU regulators go on to explain that this new regulatory structure would “ensure oversight, enforcement, and cooperation in areas such as illegal or harmful content, including protection of minors.” 

The effort to update EU-wide regulations comes after Germany and France adopted online hate speech laws establishing differing reporting and removal requirements for online platforms. The EU regulators clarified that both countries would welcome the adoption of an EU-wide framework.

Sanders, Warren Take On Facial Recognition Technology in New Criminal Justice Reform Proposals

2020 Democratic presidential candidate Senator Bernie Sanders (I-VT) unveiled Sunday a sweeping criminal justice reform package proposing “deep and structural investments to rebuild the communities that mass incarceration continues to decimate.” Among a number of measures, Sanders proposes a universal ban on the use of facial recognition software by law enforcement officials, marking the first such proposal from a 2020 presidential candidate. “We must ensure these tools do not have any implicit biases that lead to unjust or excessive sentences,” the proposal reads.

The next day, fellow presidential candidate Senator Elizabeth Warren (D-MA) released her own comprehensive criminal justice reform proposal outlining “bold, structural changes at all levels of government” designed to address a range of topics, including public safety, criminalization, enforcement, incarceration, and reentry. While raising concerns with algorithms used in facial recognition technology thought to “exacerbate bias,” Warren stops short of a universal ban on the technology. Instead, Warren proposes establishing a new task force on digital privacy in public safety. The task force would be responsible for “establish[ing] guardrails and appropriate privacy protections” for surveillance technology used by law enforcement officials, including facial recognition technology.

Facial recognition technology remains a hot button issue both on the campaign trail and in Congress, with the House Oversight and Government Reform Committee holding a two-part hearing series on the technology in May and June. The Committee is also expected to consider related legislation that could move forward as soon as this fall.