Tech regulators have plans. SCOTUS doesn’t seem to care.

Steer clear

You may be getting the feeling that 2022 will go down as another close-but-no-cigar year in tech policy because Congress has so much catch-up to do in the period before lawmakers check out for fall campaigning. But it’s worth remembering just how much regulators want to at least try to accomplish, whether or not lawmakers continue to bicker. Then again, the Supreme Court doesn’t seem too keen on making rulemaking efforts easy either.

Amid all of the seismic rulings from the court this term, the conservative justices also struck down an EPA proposal on greenhouse gas emissions, finding that agencies can only regulate on matters of great “economic and political significance” when they have “clear congressional authorization.”

• This newly formalized “major questions doctrine,” though, isn’t just a blow to the Biden climate agenda. It’s also a warning for would-be tech regulators, especially because the decision by Chief Justice John Roberts left the standard vague enough to use in lots of cases later.
• Experts told me they could see the court going after the FTC if the agency tries to regulate non-compete clauses through its already much-debated power to issue rules governing “unfair methods of competition.”
• The FTC’s coming rulemaking on privacy is likely based in separate authority, but it too has faced accusations of being too big, and potentially invoking too hazy of a statute. Then there’s the possibility of the FCC bringing back net neutrality, which Roberts even alluded to obliquely.

There are tech regulatory efforts underway at the SEC too, on issues such as climate risk disclosure and trading systems that could pull in decentralized platforms, and even at the CFPB.

• Perianne Boring, head of the Chamber of Digital Commerce, a blockchain trade association, hailed the ruling as a challenge to “the regulation by enforcement approach that the digital asset industry has been forced to navigate.”
• Enforcement being separate from regulation, that’s a “maybe” on whether Boring is right, but her comment still highlights why tech and ideological skeptics of regulation were excited by the court’s decision.

Of course, this all comes at a fraught time for executive agencies and the administrative state.

• Federal courts, especially those led by conservative judges who have long fought bureaucrats issuing rules to govern businesses, are increasingly taking aim at agencies’ structures and powers.
• Some agencies, meanwhile, are trying to reinvigorate their authority — or in some cases explicitly test the boundaries of the law.
• Over in Congress, Democratic lawmakers are basically happy to let the experts lead things. On privacy, both Democrats and Republicans are proposing to expand the scope and subjects of agency tech regulation.

Most people agree, at least in theory, that Congress gets to make the laws but elected representatives aren’t really meant to be brilliant on technical topics.

• In that world, there’s plenty of room for those lawmakers to empower expert agencies that operate according to high-level principles in industries that move fast, and this decision just nudges Congress to be a little clearer when doing that.
• Here in the real world, where regulations are as political as the court, Roberts didn’t even define what constitutes a major question or weigh in on whether Congress has to specify particular actions it wants agencies to take — or if it would be sufficient for lawmakers to just spell out their desire for the administrative state to take over once a law exists.
• Even libertarian lawyers at TechFreedom, who would theoretically be pleased with this sort of chastening of ambitious agencies in favor of the power of Congress, admitted in their Twitter Spaces event they had, umm, “major questions” about the ruling.
• In fact, anticipating this ruling, Congress’ own (excellent) law and policy researchers pointed out earlier this year, with a touch of both understatement and irony, that being more clear “may be difficult at times, given the lack of clear guidance from the Court.”

What that will leave is what one law professor described to me as a “we know it when we see it” approach when the justices — and federal judges who follow them — are considering striking down regulations. Add that on top of the threats to the agencies’ very structures, and maybe it makes sense to be skeptical that Democrats in Washington can ever — or will ever be allowed — to do anything about tech.

— Ben Brody (email | twitter)

A version of this story first appeared on Protocol.com. Read it here.

In Washington

The leadership of the Senate Intelligence Committee wants the FTC to probe TikTok over Chinese officials’ access to user data and the company’s claims that such access didn’t exist. Democratic Sen. Mark Warner, the panel’s chairman, and Republican Sen. Marco Rubio, the vice chair, wrote to Lina Khan that she should also “coordinate this work with any national security or counter-intelligence investigation that may be initiated by the U.S. Department of Justice.”

Google is pretending to believe users want less spam filtering on political emails because congressional Republicans are pretending to believe such filtering is an urgent tech policy issue. As usual, the rest of us are caught in the middle of the bluff-calling.

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On Protocol

The Kraken CEO doesn’t seem to regret cracking down on employees he says were “get[ting] triggered by everything.” Jesse Powell sat down with Protocol to discuss the aftermath of his “jet ski” offer that gave any employees who didn’t agree with the company’s values a four-month buyout option. Fewer than 1% of employees took the offer for culture or mission differences, he estimated.

Lucas Joppa, Microsoft’s chief environmental officer, spoke to Protocol about how the company can use computational tools to achieve its lofty environmental goals.

Around the world

The EU has approved two landmark pieces of Big Tech regulation. The Digital Markets Act introduces competition rules for Big Tech platforms that could impact services such as iMessage, Amazon’s ability to self-preference on ecommerce and Google and Meta’s advertisement data gathering practices. Those competition rules will likely go into effect around 2024. The Digital Services Act focuses on content moderation enforcement and transparency, and will likely go into effect around mid-2023.

Twitter sued the Indian government over content moderation mandates. The lawsuit will escalate tensions between Twitter and the Bharatiya Janata Party, but it won’t rock the boat as much as any unilateral content moderation decisions made by Twitter. India accounted for 11% of global legal requests on Twitter per its latest report, and many of those have centered on politically charged topics such as the farmer’s protest and Sikh independence.

The U.K. government seems serious about getting even encrypted platforms to scan for CSAM — a laudable goal that’s nonetheless proven controversial in similar U.S. proposals because of numerous threats to user security.

Meanwhile, the U.K.’s competition regulator is looking into whether Amazon’s treatment of third-party sellers is anticompetitive, and also aiming its magnifying glass at Microsoft’s proposed acquisition of Activision Blizzard.

U.S. officials are attempting to cut China off from another critical chipmaking tool. They want the Dutch lithography machine manufacturer ASML to stop exporting deep ultraviolet lithography machines — an older technology than extreme ultraviolet lithography, which is already blocked — to China. U.S. Deputy Commerce Secretary Don Graves reportedly met with ASML CEO Peter Wennink on a visit to the Netherlands.

The EU Markets in Crypto-Assets bill won’t include a bitcoin ban. The EU Parliament and Council reached a provisional agreement that removed language prohibiting proof-of-work tokens. That means Bitcoin can live on in the EU — but the bill now includes requirements for companies to disclose how much energy their crypto assets consume and the related carbon impact.

In the C-suite

Brad Smith told GeekWire that Microsoft is “not trying to lobby in favor of” Sen. Amy Klobuchar’s bill tackling Big Tech self-preferencing, but added that he doesn’t “think we’re opposed to” it. Various versions of the bill have attracted criticism for (supposedly) excluding or including Microsoft, but the measure also seems designed to punish Google in particular in a way that Microsoft might not mind too much. Ultimately, Smith declared: “It would be more accurate to say we’re at peace with Sen. Klobuchar’s bill.” Whatever that means.

Hopes of loosening the dominance of Big Tech cloud providers aren’t panning out too well. Amazon, Alphabet and Microsoft accounted for 65% of total Q1 2022 cloud-service spending, up from 52% four years prior, according to a study from Synergy Research Group. The next 10 companies combined account for 21% of spend.

In data

641,000: That’s how many electric vehicles China-based BYD sold in the first six months of 2022. That was enough to make the automaker the world’s top producer of electric vehicles in terms of units sold, beating out Tesla, which sold 564,000 vehicles in the same period. Tesla deliveries were bogged down in part due to Shanghai’s COVID-19 lockdown policies, which contributed to the 18% drop in first-quarter shipments this year. BYD’s production facilities reportedly weren't as affected.

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Debate vigorously, just not about politics

The CEO of Appian told Protocol about his view that healthy arguments create a more productive work environment. “If you disagree with somebody, especially your boss, you’re doing them a favor,” said Matt Calkins. However, he cautioned against talking politics in the office: “In the company, it’s mostly demoralizing when American political debates come up, so I try to minimize them.” There’s a consistent trend of tech companies telling employees to keep politics out of the workplace, with Meta, Coinbase and Kraken adopting such policies to different extents.