TikTok app on a phone
Photo: Andrew Harrer/Bloomberg via Getty Images

The social media design wars are heating up in the US

Protocol Policy

Hello, and welcome to Protocol Policy! Today I’m thinking about the regulatory questions that might stick with us even when power inevitably changes hands in Washington. Plus, the Inflation Reduction Act has passed, and China’s getting ever more vision into algorithms.

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For years, regulatory pressure on social media in the U.S. focused on content. That focus most notably resulted in the SESTA-FOSTA bills to rein in online sex trafficking — adopted back in 2018, when Facebook felt secure atop the heap. Now we’re moving on from the content debate and finding ourselves in the midst of the privacy debate. But with TikTok ascendent, you can see the next frontier approaching, too: regulation of the very design elements that make these services what they are.

As usual, this debate started across the Atlantic, after the U.K. put in place its Age Appropriate Design Code a year ago.

  • The FTC put some pressure on companies to bring some of those new protections back to the U.S.
  • In the past year, major services have been announcing features meant to protect younger users, especially teens.
  • Those include TikTok’s plan to limit direct messaging for users under 16 and Snap’s recently unveiled Family Center, along with changes to private-by-default settings, curbs on endless scrolling, alerts on usage time, and other features.

But the possibility of a real U.S. showdown — one that comes with actual laws or lawsuits — seems to have grown significantly just in recent weeks.

  • In July, for instance, a Senate panel advanced a measure that’s supposed to protect the data of users under age 17, limit autoplay and prompt companies to take “reasonable measures” in design to rein in bullying and mental health fallout.
  • That bipartisan bill comes from Sens. Richard Blumenthal and Marsha Blackburn.

In addition, late last week, a proposed age-appropriate design code for California got its latest thumbs-up in committee.

  • The Golden State proposal, as of the most recent changes, would require platforms “likely to be accessed by children” to come up with plans to mitigate “risk of material detriment” to those young users arising from design, or else face fines.
  • Prior iterations of the bill prompted warnings from industry and allies that it’ll require almost every website to put up age gates.
  • Both the California proposal and the federal measures arise from concerns, highlighted by Frances Haugen’s 2021 congressional testimony, about (sometimes vague) notions of harm to kids and teens or addiction to social media services.

It’s all well and good for TikTok or Instagram to bring over bits of their U.K. changes to appease parents and head off future regulation, but it probably won’t be enough.

  • As we saw when California’s CCPA kicked off the whole privacy debate in a way that’s still roiling other states and Congress, managing an evolving U.S. regulatory landscape is a whole other ballgame.
  • The state is so huge that if California passes its new design code, the rules would almost certainly become a de facto standard for the rest of the U.S. for a time.
  • But while apps dealt with potential California rules, they’d also probably follow the model from privacy — i.e., lobbying other states for less onerous rules and then using the confusion to seek a national standard that’s easier for them to manage.

The movement on Blumenthal and Blackburn’s bill might complicate this picture.

  • Federal lawmakers, though, have so many top tech policy priorities — not only privacy but also antitrust — that it’s not clear if the proposal is actually poised to continue moving in the precious few days left for legislation before the next Congress.

On the other hand, the bipartisan nature of the congressional bill is a reminder that regulation of design, especially as it relates to kids, may have staying power because Democrats and Republicans both want to advance it. That’s the kind of issue that tech companies have to watch over their shoulder for … They just may not yet know exactly where they should be looking.

— Ben Brody (email | twitter)

In Washington

As expected, the House passed the Inflation Reduction Act on Friday, with a vote of 220 to 207. Once it’s signed by President Biden, the bill will allocate over $370 billion for key Democratic priorities, including clean energy initiatives and electric vehicle subsidies.

Take a breather: Congress is on a break. That means midterm campaigning is ramping up, and Democrats now finally have some legislative wins to point to as they look to fend off a big swing to the right. Notably absent from the list of legislative accomplishments is antitrust — but Sen. Amy Klobuchar told POLITICO earlier this month that Sen. Chuck Schumer is “committed to a vote in the fall.”

Apple and Meta discussed a potential deal for ad tracking before the ongoing feud began. Before Apple launched its opt-out iPhone setting for mobile ads, it offered Meta a way out: an ad-free, subscription-based version of Facebook that would allow Apple to still get its cut in app store fees, according to a Wall Street Journal report.

Now Apple wants to more than double its own ad revenue. Executives within Apple’s ad group have discussed getting annual revenue into the double-digit billions, up from the current amount of around $4 billion, according to Bloomberg.

A message from CCIA

New research sponsored by the CCIA Research Center reveals strong price competition between offline & online sales channels, with offline and online prices matching at least 95% of the time. Online prices respond quickly to changes in brick-and-mortar prices, and vice versa, resulting in lower prices for consumers.

Learn more

On Protocol

Call of Duty faces an identity crisis, even as Microsoft and Sony battle over its future ownership. The game franchise — which would fall under Microsoft ownership if the Activision Blizzard acquisition goes through — has an older business model relative to the dominant free-to-play, cross-platform model of newer blockbuster series such as Fortnite and Roblox.

We were promised a four-day workweek — do governments need to make it happen? This piece from Protocol’s Brian Kahn explores the merits of a four-day workweek, as well as the legislative efforts to make it happen from the top down.

Around the world

Chinese regulators scrutinized the algorithms of the nation’s largest tech companies. Late last week, the Cyberspace Administration of China published a list of 30 compliant companies, including Alibaba and Tencent. The demand came as part of a government effort to monitor potential violations of user data.

Microsoft revealed previously protected Xbox sales figures amid a Brazilian court battle. Brazil’s competition authority has been scrutinizing the attempted acquisition of Activision Blizzard, and in doing so released court documents showing Microsoft sold around 58.5 million units of the Xbox One console — fewer than half the sales of PS4 units. Microsoft previously declined to disclose that figure to investors, claiming it wasn’t a key success metric.

In data

$350 million: That’s how much Andreessen Horowitz is investing in WeWork founder Adam Neumann’s latest venture. The company, Flow, says it aims to take WeWork’s community-building approach into the residential real estate market. The a16z investment is a serious stamp of approval — and an unexpected one for many observers, given WeWork’s infamous pre-IPO implosion.

About that “green transition” …

There’s been a lot of talk about how the ongoing energy supply crunch can accelerate the transition to renewable energy. Maybe that’s still true, but for now, the oil business is booming: After reporting $48.4 billion in net income for Q2 2022, Saudi Aramco just set a new record for highest corporate profit ever recorded. Apple previously set the record last year with $34.6 billion in net income.

A message from CCIA

New research sponsored by the CCIA Research Center reveals strong price competition between offline & online sales channels, with offline and online prices matching at least 95% of the time. Online prices respond quickly to changes in brick-and-mortar prices, and vice versa, resulting in lower prices for consumers.

Learn more

Have a good day — see you Wednesday!

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