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The red trickle could still be bad for TikTok, Apple, and Google

Protocol Policy

Hello and welcome to Protocol Policy! Today I’m getting ready for a lot of sound and fury in Congress next year. Plus, how tech issues fared in state elections, the EU is officially taking on Microsoft’s Activision Blizzard deal, and regulators might have thoughts about Binance’s FTX rescue.

Hearings, and maybe some listening

Republicans fell short of the midterm “red wave” they hoped for, and even today many races are still too close to call. But their likely success in taking over the House means that lawmakers will be pursuing a new set of tech priorities in a divided government — and even fewer bills will become law.

Tech policy watchers from both sides of the aisle working in government, in corporate advocacy, or for consumer groups told Protocol they expect to see a renewed focus on Section 230 and allegations of anti-conservative bias by tech companies. The best possibility for action, though, comes from areas of agreement with Democrats: Lawmakers could continue to try to build on the momentum for privacy, seek to hold together the bipartisan coalition that wants competition and antitrust reform, and pursue new directions, taking aim at Apple, Google, and TikTok.

Republicans have been saying for months they want to return to their unsubstantiated claims of politically biased content moderation by social media companies and (more recently) email providers.

  • In practical terms, that could mean going after Sec. 230, likely by trying to remove legal protections for platforms when they take down constitutionally protected speech (or spam).
  • Even if such a change could pass the Senate, though, President Biden would be unlikely to sign it.
  • In the meantime, lawmakers can hold hearings, hauling in CEOs and digging into hot-button content moderation topics like COVID-19 and climate change — as well any government pressure (real or imagined) to handle such posts in a particular way.
  • A new dynamic in the focus on moderation and Sec. 230, though, is the rise of more right-wing social apps: Elon Musk’s Twitter, Ye’s Parler, and former President Trump’s Truth Social all likely love the status quo.

Would-be GOP leaders have also said, albeit more quietly, they’re interested in building on the bipartisan progress toward a comprehensive digital privacy bill.

  • Data protection, after all, is a top tech priority among voters, and the current House vehicle has gotten further than any similar measure before.
  • On the other hand, if Republicans do indeed take power in the House, they’d want to put their stamp on the bill, currently known as the American Data Privacy and Protection Act. They likely would pull back on private lawsuits and AI regulation.
  • Since key Democrats already stopped ADPPA in the Senate by withholding their support over concerns about trade-offs, though, moving toward a GOP version of the bill could make compromise even less likely.

Anti-tech Republicans who joined with Democrats to advance antitrust legislation may also try to give another shot to bills on self-preferencing and app stores.

  • Democratic leaders (and some in the rank and file) were lukewarm on the measures, though, and those splits among will likely remain, at least for a while. On the House side, there’s also far less love for the bills among top Republicans.
  • The White House has said it will push for antitrust legislation in the lame duck now that vulnerable Democrats have gotten through election season, which could theoretically mean one or both bills pass by the end of the year.
  • More realistically, though, other priorities like nominations and the debt ceiling may jump ahead of competition policy in the few remaining legislative days of 2022.

Apple and Google could still find themselves facing new or different kinds of pressures, though.

  • A bipartisan bill that would force Google out of the digital ads business never got much attention this year, but some experts thought it could become a rallying point if lawmakers are looking for new competition-adjacent issues that appeal to both parties.
  • In addition, many Republicans are furious at both Apple and Google over the companies’ moves to restrict Parler in their app stores after Jan. 6.
  • And just recently, Republican and Democratic leaders of a powerful House subcommittee pressured both Apple and Google over the presence of TikTok in their stores.

That, of course, is a good reminder that TikTok might not have a particularly happy 2023.

  • Bipartisan hawkishness on China is rising, from the White House to House Republicans, and scrutiny of how much American data can be accessed by the app’s owners in Beijing could be intense. (Ditto TikTok’s content moderation.)
  • There have already been renewed calls — albeit largely performative ones — for a ban on the app so long as it’s in Chinese hands.
  • Bipartisan bills aiming to protect the privacy and online safety of younger users have quietly advanced in the Senate this year as well. Those could return next year, a particular wallop for an app that is so successful with teens.

The future of policy is hard to predict. Perhaps the allure of hearings on political bias for Republicans in the House will take up so much time that no one can work on TikTok. Maybe the Supreme Court will change the conversation dramatically on Sec. 230. State and international policies will shape what companies want, or fear, and control of the Senate may (again!) come down to a runoff in Georgia. Tech policy may still prove, though, it’s a rare area of bipartisan discussion.

— Ben Brody (email | twitter)

In Washington

Peter Thiel’s gamble on J.D. Vance paid off. With ballots still left to be counted in Arizona, Blake Masters — another Thiel acolyte — has considerable ground to make up against incumbent Sen. Mark Kelly. Both Vance and Masters benefited from their ties to the venture capital world.

The Treasury Department doubled down against Tornado Cash. The department’s Office of Foreign Assets Control tied the crypto obfuscation tool to North Korea, effectively designating it as a national security threat.

In the states

In October, Protocol wrote about some of the biggest tech issues on the ballot. Here’s how things played out yesterday:

  • California’s Proposition 30 failed. The measure would have raised funding for climate initiatives by imposing a 1.75% tax on Californians with annual income above $2 million. Lyft had been a huge backer of Prop. 30.
  • Montana’s Constitutional Amendment 48 passed by a huge margin. The amendment requires law enforcement to obtain a search warrant before accessing any private electronic data. The Montana Association of Chiefs of Police came out against the measure, but with 80% of the votes in, around 82% of voters in Montana voted for the amendment.
  • Illinois’ Amendment 1 is still too close to call. The amendment would codify employees’ right to organize to bargain for better working conditions. The Illinois Chamber of Commerce expressed concern that it would make the state less business-friendly. Boeing, Caterpillar, Tyson, and Citadel already moved their headquarters out of Illinois in the past year.
  • Washington’s Advisory 40 is also still too close to call. This was a nonbinding vote on HB 2076, which gives ride-hailing drivers benefits that include a minimum pay rate and access to sick leave. It also enshrines drivers’ status as independent contractors, which helps explain why Uber and Lyft backed the measure in the first place. Washington’s state legislature already passed the bill, and this vote is only intended to guide its decision to repeal or uphold it.
TSMC is expected to build a second chip factory in Arizona, according to The Wall Street Journal. The new fab could produce even more advanced chips than the original.

A MESSAGE FROM THE FINANCIAL TECHNOLOGY ASSOCIATION

Don’t miss out! Register today to hear some of the biggest players in fintech discuss the industry’s most pressing issues at the Financial Technology Association’s inaugural Fintech Summit: Shaping the Future of Finance. Produced in partnership with Protocol, all sessions of the event will be live-streamed on November 16th.

Learn more and reserve your spot here.

Around the world

The European Commission found that Microsoft’s attempted Activision Blizzard acquisition could “significantly reduce competition.” Microsoft can offer concessions to increase the chances of the deal going through.

The United Nations released 10 recommendations for achieving net zero emissions. Protocol’s Climate team has an overview of how those align with Big Tech’s current net zero agenda.

In the media, culture, and metaverse

Elon Musk backtracked on an additional verification badge. For a short while, Gray Checks became the new Blue Checks. Twitter gave some already-verified individuals the additional badge to combat all the confusion that ensued after the company opened up Blue Checks to anyone who paid. Then, with a tweet (of course) fewer than 24 hours after the product rollout, Musk announced that he “killed it” and proclaimed that “Blue check will be the great leveler.”

In data

13%: The percentage of Meta employees the company will lay off, a total of about 11,000 workers. Mark Zuckerberg took personal responsibility for being overly optimistic about growth. Salesforce is also reportedly preparing to cut as many as 2,500 employees.

A MESSAGE FROM THE FINANCIAL TECHNOLOGY ASSOCIATION

Don’t miss out! Register today to hear some of the biggest players in fintech discuss the industry’s most pressing issues at the Financial Technology Association’s inaugural Fintech Summit: Shaping the Future of Finance. Produced in partnership with Protocol, all sessions of the event will be live-streamed on November 16th.

Learn more and reserve your spot here.

Buying Goldman Sachs

Not so long ago, FTX founder Sam Bankman-Fried told the Financial Times that acquiring Goldman Sachs was “not out of the question at all.” Yesterday, he agreed to sell his own company to its chief rival, Binance, for pennies on the dollar. The FTX collapse was sudden and unexpected. Just a few weeks ago, it seemed to be one of the best-positioned crypto players. Crypto insiders expressed concern to Protocol over how U.S. policymakers would see this event.

Thanks for reading — see you Monday!

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