Facebook co-founder Mark Zuckerberg
Photo: Drew Angerer/Getty Images

Will DC buy Zuck’s TikTok pivot?

Protocol Policy

Hello, and welcome to Protocol Policy! Today, I’m wondering if Meta will fade from lawmakers’ minds as quickly as its apps have faded from the download charts. Plus: the chips bill is SO close, Meta wants to back away from a broad COVID-19 misinfo ban, and the continuing turf war between CFTC and SEC over crypto regulation.

Facebook fade-away?

After getting called out by Kim Kardashian, Instagram head Adam Mosseri justified the latest steps in the TikTok-ification of the app, calling the push for creator videos at the expense of friends’ posts part of “a lot of change” that’s coming up. Mosseri’s video echoed the plans Mark Zuckerberg himself announced last week for the original big blue app, which were pretty much a full reversal from his promises of a few years ago. That all has huge implications in the business and tech worlds, but it will reverberate in policy too.

Simply put: For several years, Washington has loved hating Meta.

  • It’s not that Facebook doesn’t deserve it: Zuck’s prior pivot toward friends and family, back in 2018, was partly a response to the policy world’s anger at the company for worsening the fraying of our social fabric in its quest for more ad-targeting data.
  • The Cambridge Analytica scandal genuinely highlighted the cavalier attitude of Big Tech toward our data, our notions of consent and companies’ own promises to the federal government — and that’s why it helped launch a whole policy backlash to tech that we’re still wrestling with today.
  • Let’s be honest, though, that politicians’ … shall we say, theatrical sides, have also enjoyed railing at a smug, robotic billionaire like Zuck, and at his services, which most voters understand far more instinctively than they do ad tech or algorithms.

Now, though, Meta is essentially trying to blend in with TikTok — a competitor that, not incidentally, is newer, hotter with the kids, more often downloaded and more often visited.

  • That alone — plus the 50% drop in Meta’s share price in the last 12 months, and its reported revenue troubles — may blunt criticism that Meta is an unstoppable monopoly, although playing “copy the rival” won’t stop the FTC lawsuit alleging the company used its dominance to forestall rivals as long as it could.
  • The changes won’t entirely stop Washington’s anger toward Zuckerberg’s empire, which still includes the world’s largest social networks and has sometimes had to answer first for sins that everyone across social media also commits with gusto.

But if you can get the Googles and Twitters of the world to be honest, they’ll say they got away with stuff while lawmakers focused on Facebook.

  • Meta’s new strategy also comes as Zuckerberg has empowered savvier, more charming messengers — like Mosseri and Nick Clegg, who are less fun for lawmakers to beat up on — to speak for the company.
  • And it comes as members of Congress, sometimes with a little behind-the-scenes help from Facebook, have found other potentially useful punching bags in tech, namely TikTok itself.

It’s not going to get any easier to be TikTok in D.C.

  • Republicans, who are almost guaranteed to take over at least the House next year, if not also the Senate, are eager to delve into TikTok, including reports of Chinese owners having access to U.S. user data even when they’re not supposed to.
  • As recently as Tuesday evening, GOP Sen. Marsha Blackburn explained to Fox Business what she sees as the need for kids’ privacy legislation that’s getting a bipartisan markup today, but not really by slamming Zuck-land by name.
  • Instead, she said the bills were needed because of “dangerous platforms like TikTok” that will “try to blackmail today's children when they're adults.”
  • It’s not just Republicans who want to probe TikTok, by the way — and Joe Rogan’s slamming TikTok right now too, if you were wondering where the popular narrative was going.

A Facebook fade-away could make it harder for Google, Twitter and others to hide as well.

  • Meanwhile, however, as much as Elon Musk doesn’t actually want to shell out $44 billion to save conservative voices on Twitter, the saga and lawsuit have placed the bird app in the center of what will be a very hotanti-censorshipconversation in Washington and states.
  • That’s especially true if Donald Trump’s efforts to get back into the White House also include an attempt to return to his once-preferred digital bully pulpit on Twitter. And let’s just say he’s not known to pass up a grievance.

Zuck, Meta, Instagram and even ol’ Facebook-dot-com aren’t going anywhere just yet, and lawmakers aren’t known to stop shaking their fists at companies that voters still hate just because app download numbers are jumping around. But the lesson of the techlash is that one platform’s data access policies could supercharge pushes for privacy, antitrust, Section 230 changes and more. That’s why other tech companies would be wise to double-check that, in congressional testimony, their CEOs won’t look like perfect villains.

— Ben Brody (email | twitter)

In Washington

The Chips-Plus bill advanced through a procedural Senate vote, teeing it up for final passage through the chamber on Wednesday. It’s a promising sign for the semiconductor industry, which would receive $52 billion in direct manufacturing subsidies as part of the broader $280 billion package. The bill now heads to the House, where Speaker Nancy Pelosi has reportedly attempted to gather Republican support, perhaps in anticipation of a few holdouts from the progressive left. Sen. Bernie Sanders voted against the Senate bill, citing the hefty profits and executive pay packages within the semiconductor industry.

Senate Majority Leader Chuck Schumer told donors recently he doesn’t think that tech antitrust legislation has the 60 votes needed to pass, according to Bloomberg. Schumer has been saying publicly he’s trying to collect the necessary votes, while the measure’s sponsors insist the “ayes” are already there. The dynamic has led to supporters targeting Schumer personally for pressure, and they’re now saying he’s delaying. Meanwhile, the National Federation of Independent Business, a small business group that’s not exactly reflexively progressive, is backing the measure.

Sen. Maria Cantwell, who’s holding up privacy legislation despite consumer advocates’ increasing comfort with it, accused House colleagues of “ignorance” about what enforcement should look like. In an interview with The Spokesman-Review, she reiterated that she couldn’t support their measure, which recently made several changes to appease her. The Senate Commerce Committee, which is chaired by Cantwell, did approve a measure to extend kids’ digital privacy protections to young teens and another bill that would curb young people’s exposure to algorithms and boost research on the platforms.

The SEC is reportedly probing trading in unregistered securities on Coinbase as the company continues to expand the tokens it offers. That process has already drawn action from the SEC, which recently charged a former company employee over alleged insider trading on a token that was about to be listed by Coinbase. The case could create de facto categorization of some digital assets.

More trouble in cryptoland: The Treasury Department reportedly launched its own investigation into Kraken. The Department’s Office of Foreign Assets Control is expected to fine the crypto exchange for violating sanctions on Iran. In 2019, a former employee accused Kraken of servicing customers in sanctioned countries.

CFPB Director Rohit Chopra told the Financial Times that his agency would “have to take a very careful look” at the entry of Big Tech players into the “buy now, pay later” space.

The House bill on stablecoins isn’t likely to go to a vote until at least September, the Wall Street Journal reports. The delay is reportedly due to slow proceedings with the draft of the bill, precluding the committee vote originally scheduled for Wednesday.


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On Protocol

The New Orleans city council reversed a prior decision to ban facial recognition surveillance. Some city council members voted against the reversal, citing lack of evidence around the efficacy of facial recognition to stop crime.

CFTC Commissioner Caroline Pham criticized the SEC’s recent Coinbase insider trading charge as a “regulation by enforcement approach.” In a Q&A with Protocol, Pham, whose agency is hoping to be in charge of oversight of a good chunk of the crypto world in lieu of the SEC, said regulating the sector was a matter of “just going back to basics and having the right prudential regulation or minimum financial resource requirements and minimum standards for risk management in place.”

In the media, culture and metaverse

Hulu will now accept political ads on controversial issues like abortion. Democrats had grumbled that the previous policy was getting in the way of their midterm message, although the decision raises questions about the transparency of political ad spending on Hulu. The move also kicks the can down the road, because it almost certainly tees up anti-abortion political ads that will spur a new round-and-round about what speech platforms should host.

Meta is asking the Facebook Oversight Board if the company should still be blocking as much COVID-19 misinformation, suggesting the evolution of the pandemic has reduced the harm of false claims about the virus.


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In the C-suite

European satellite company Eutelsat is merging with U.K.-based OneWeb, largely in a bid to better take on SpaceX’s Starlink projects.

The chip shortage and continued supply chain woes contributed to a downbeat General Motors quarter. The Detroit automaker saw profits slip by 40%, but executives said they expect the chip supply crunch to ease through the rest of the year.

Yeah, science!

By the way, were you wondering what the semiconductor bill — which has had more identities than an “Americans” character and was formerly known as America Competes, USICA and Endless Frontier — will be called when it goes through the Senate? The latest iteration (which has an after-school club vibe, but in a good way?) is apparently Chips and Science.

Thanks for reading — see you Friday!

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