Emerging Technologies Washington Update

July 31, 2020

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This week: A tech-focused week in review, big tech testifies at House Antitrust hearing, Senate Commerce holds a hearing on the PACT Act as calls for Section 230 reform grow.

A Technology-Focused Week in Review

Amidst frenzied efforts to enact a COVID-19 relief bill to extend unemployment benefits during global pandemic and address issues such as state and local funding needs, PPE and testing needs nationwide and liability protections for employers, Congress briefly turned its attention to the technology sector.  In two hearings in particular, Congress set its sights on scrutinizing whether this critical sector of our economy has sufficient competition or is dominated by a few key companies and whether statutory protections that have allowed the sector to offer consumers a diverse array of content should remain intact or if they are in need of updating. 

The Antitrust Subcommittee of the House Judiciary Committee held its sixth hearing in its series “Online Platforms and Market Power,” but it was the first time it heard directly from the CEOs of the four largest technology companies: Apple, Google, Amazon and Facebook. For more than five hours, the Antitrust Subcommittee members probed questions on the role of these companies in today’s economy and whether they have used their position in the market to further extend their market power. The areas of concern range from online search and advertising, app store policies for developers, and e-commerce. Content moderation focused on political speech and alleged bias against conservative voices was also an issue of debate at the hearing.  The law under which these and other online companies moderate their content, Section 230, was the subject of a Senate Commerce subcommittee hearing earlier in the week, in which Chairman Thune (R-SD) and Ranking Member Schatz (D-HI) heard from expert witnesses on whether Section 230 should be updated to reflect current market conditions. 

Meanwhile, the Department of Commerce’s National Telecommunications and Information Administration (NTIA) sent a petition for rulemaking to the Federal Communications Commission (FCC) asking the FCC to seek public comment on rules to constrain the applicability of Section 230. The NTIA petition was prepared pursuant to President Trump’s Executive Order issued on May 28, 2020 and seeks the adoption of regulations by the FCC to define certain statutory terms and clarify what practices are outside the scope of Section 230’s liability protections.

Technology CEOs Testify at House Antitrust Hearing

The House Judiciary Antitrust Subcommittee hearing on July 29 represented the culmination of a more than year-long investigation into certain business practices of online platforms to determine whether they have exercised their market power in a way that is anticompetitive. For the sixth in its series of hearings, the Subcommittee called on the CEOs of Apple, Amazon, Facebook, and Google.  As in the previous hearings, Wednesday’s panel touched on the exercise of market power and the effects it may have on competition, innovation, data privacy, small and independent business development, and journalism online. 

At the core of the hearing was whether Google, Facebook, Amazon and Apple are using their status in the market to harm competition in ways that violate antitrust law.  In his opening statement, Subcommittee Chairman David Cicilline (D-RI) called the companies “critical arteries” of commerce and communications, but also characterized them as “emperors of the online economy,” whose business practices have an excessive impact on economic growth and democracy. Ranking Member Sensenbrenner (R-WI) stated in his opening remarks that while “being big is not inherently bad” he “share[s] the concern that market dominance in the digital space is ripe for abuse.” 

Lawmakers provided context for their allegations of market abuse gleaned from their investigation, citing emails and other internal communications obtained as part of its investigation as well as reports from businesses that had provided additional information on their experiences in working with the platforms. Members, such as Rep. Pramila Jayapal (D-WA), pressed a number of the companies on whether they used the data collected from competitors that use their platforms to develop competing products. Rep. Neguse (D-CO) followed up on this point asking Apple and Google, in particular, if they would commit to updating their app developer policies to make clear they will not take such steps. 

In questions regarding market share in online advertising, Rep. Kelly Armstrong (R-ND) and Jayapal pressed Google in particular on its role on all sides of the advertisement exchange market, noting that the company had between 50-60 percent of the market. 

A handful of lawmakers also concentrated their attention on the potential gatekeeper and toll-taking action of mobile device app stores. Rep. Hank Johnson (D-GA) highlighted concerns the Committee had heard related to search manipulation, prioritization, demonetization, and delisting. Chairman Nadler (D-NJ) and Reps. Val Demings (D-FL) and Joe Neguse (D-CO) questioned whether suspension and removal policies were being used as tools to advantage the app store-owned apps over independent apps. Lawmakers also probed the issue of commissions charged by app stores. 

A number of Republican members raised concerns about the content moderation practices of the companies and whether there is bias against conservative speech online.  Rep. Gaetz (R-FL) and Steube (R-FL) raised the issue with the companies and alleged there was ongoing bias against conservative viewpoints.  Rep. Raskin (D-MD) responded to the assertions noting that if these companies were censoring conservative speech “they were doing a lousy job of it.” 

Senate Commerce Committee holds a Hearing on the PACT Act as calls for Section 230 Reform Grow

On July 28, the Senate Commerce Committee Subcommittee on Communications, Technology, and Innovation held a hearing examining the PACT Act, a bill to reform Section 230 of the Communications Decency Act introduced by Subcommittee Chairman John Thune (R-SD) and Ranking Member Brian Schatz (D-HI). In his opening statement, Chairman Thune said that the PACT Act would enable greater transparency and accountability online without destroying the entrepreneurial benefits of Section 230. Ranking Member Schatz expressed similar sentiments. In addition to discussing the bill and reforms to Section 230, Senators also raised issues relating to election interference, government censorship, and the EARN IT Act, among other topics.

The hearing comes as debates over Section 230 rage throughout Washington. Earlier this month, the Senate Judiciary Committee unanimously passed the EARN IT Act, to limit platforms’ Section 230 immunity in relation to child sexual abuse material. In addition, this week Sen. Josh Hawley (R-MO) introduced the Behavioral Advertising Decisions Are Downgrading Services (BAD ADS) Act to revoke Section 230 immunity for platforms that display advertisements based on “personal traits of the user.” Additionally, this week, the Department of Commerce filed a petition with the Federal Communications Commission asking it to propose rules to narrow the scope of Section 230. The move follows an executive order signed by President Trump that takes aim at social media platforms, which he and other Republicans allege are biased against conservative voices. Yesterday, Rep. Gosar (R-AZ) and a number of other House Republicans introduced the Stop the Censorship Act, to address this perceived bias by revoking Section 230 immunity for the removal of lawful speech. The bill is unlikely to receive a vote in the House.