USICA enters the wilderness

Where to even begin with the United States Innovation and Competition Act? I’ve had to regroup several times while writing this newsletter due to breaking news updates that seem to upend the entire political calculus of the bill — and, by extension, the Democrats’ broader tech regulation agenda.

Here’s where things stood going into this wild week on Capitol Hill:

• Democratic leadership wanted to push for a reconciled version between the House and the Senate, steering it as close as possible to the House version of the bill, which garnered a single Republican backer.
• Republican leadership was open to passing a bipartisan USICA bill, but only if Democrats gave up on other top legislative priorities, such as the reformed Build Back Better bill, which includes tax hikes. Senate Minority Leader Mitch McConnell said as much in a tweet at the end of June.

Things really started ramping up on Wednesday. In the morning, reports arrived that House Speaker Nancy Pelosi and House Majority Leader Steny Hoyer were not open to passing a Senate version of the bill. It was an attempt at forcing Republicans to negotiate on reconciliation rather than give them an “easy out.”

• Later that day, Commerce Secretary Gina Raimondo said she favored a version that stripped out the subsidies. Raimondo observed Congress seemed to be “coalescing around the path of chips, or maybe chips plus a thing or two, and getting it done this month.”
• Then on Thursday, Senate Majority Leader Chuck Schumer indicated he wanted a stripped-down version of the bill that would center on the subsidies. Schumer reportedly told Senators to plan for a vote as soon as Tuesday. That plan would mean giving up on the broader version of USICA, which Democrats at one point hoped would include key legislative goals including immigration reform and trade adjustment assistance programs.

Now Republicans are playing hardball on the skinny bill because it’s not skinny enough. Some Senate Republicans want the bill to be solely focused on the subsidies, rather than Schumer’s “CHIPS-plus” option, a Republican aide told Axios.

• Republican Sen. John Cornyn said he and other senators aren’t on board with Schumer’s plan. Cornyn reportedly wants to delay the vote until later in August.
• “Now we’re at a point where I don’t think anybody really knows what the final bill might look like, or kind of where the votes are,” Senate Minority Whip John Thune told POLITICO.

In a bid to get something, Democrats could wind up with almost nothing. Leadership for both parties wants the $52 billion in subsidies, so that makes it a key point of leverage for Democrats to pass their wider tech agenda.

• As a reminder, that agenda is still supposed to include key tech items including (in no particular order): a broader USICA bill, a privacy bill, Sen. Amy Klobuchar’s antitrust bill, the State Antitrust Enforcement Venue Act, the appointment of an FCC commissioner and an App Store bill.
• Some of those bills have bipartisan support. But if chip subsidies are out of the picture, Republicans have time on their side: Why negotiate when you can just wait until midterms, which will probably swing both the House and Senate to the right?

To see this political reality in action, look no further than the shrinking Build Back Better 2.0 bill. Last night, Sen. Joe Manchin said he wouldn’t support a version of the bill that included spending on climate change or corporate tax hikes. That adds to the growing list of legislative priorities that have been cast aside in the name of getting something — anything — done. The fallen priorities now include universal preschool, public housing, free community college, paid family leave, dental and vision care for the elderly and a child tax credit.

In Washington

The Justice Department is poised to launch another antitrust suit against Google, this one focused on ad tech, according to Bloomberg. DOJ is ready to rebuff Google’s reported offer to rearrange its ad tech operations, but not to sell them outright, to address competition concerns. The long-awaited lawsuit would join an ongoing U.S. complaint about Google’s tactics to spread its search engine.

U.S. intelligence agencies have concerns about the Senate antitrust bill, according to CyberScoop. The worries seem to focus on whether the measure will get in the way of Big Tech’s ability to protect cybersecurity, especially against China. Several former national security officials have been critical of the bill, though many of those complaining have tech ties, and the bill’s main sponsors say they’ve addressed privacy and security concerns through amendments.

After Elon Musk tweeted in May about changing his plans to buy Twitter, the SEC seems to have asked his lawyers if he had anything he needed to disclose about changing his plans to buy Twitter. His team responded at the time that the tweet did not reflect “material change to Mr. Musk’s plans.” Musk has, of course, since changed those plans quite definitively.

I learned it by watching you, Merrick!The Chamber of Progress scolded the DOJ for its treatment of data. The Democratic-allied group that counts big tech companies as corporate partners said the DOJ’s approach to seeking emails or using cell sites to locate people could serve as a template for state authorities investigating and prosecuting those seeking abortions. DOJ recently set up a task force to try to protect abortion rights in the post-Roe world.

The U.S. Chamber of Commerce is suing the FTC for failing to produce records under the Freedom of Information Act about voting procedures and other issues. While the suit might seem small, it’s something of a shot across the bow by a group that has threatened to challenge Chair Lina Khan’s aggressive and tech-skeptical agenda wherever it can, including in court.

The top Republicans on two House committees want TikTok to hand over information about potential access by Chinese nationals at ByteDance to U.S. user data. Reps. James Comer and Cathy McMorris Rodgers don’t have any Democratic signers on their letter, and thus would have trouble getting a vote to issue a formal subpoena in the near term. The two, though, will likely end up as panel chairs if the GOP regains control of the House next year as expected.

Rep. Anna Eshoo and Sen. Ron Wyden want the FTC to crack downon deceptive claims by VPN providers.

In the states

The California Public Utilities Commission is looking into claims that cars from GM’s Cruise stalled frequently when state regulators issued the company a permit to ferry passengers for driverless rides, according to an anonymous letter cited in a Wall Street Journal report. The letter purports to be from a longtime Cruise employee.

When Chuck Schumer popped over to Bellevue, Washington, during the recess, he did in fact meet with Microsoft’s Brad Smith, FedScoop reports. The two even talked about the antitrust bill. As supporters of that measure get increasingly frantic for the Senate majority leader to schedule the vote he says he supports, they’re targeting him in increasingly personal terms for his tech ties. Some had suggested the trip was for fundraising from Microsoft and Amazon.

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In the courts

Mark your calendars: The Delaware Court of Chancery will discuss the possibility for a September trial in Twitter’s lawsuit against Elon Musk at a hearing Tuesday.

A lawsuit will proceed against Omegle, suggesting once again that plaintiffs who focus on platforms’ alleged design deficits may have the best shot of circumventing Section 230 defenses.

On Protocol

State abortion policies pushed to consolidate its data onto Google Cloud. As states are already diverging widely in the first weeks of the post-Roe world, and the threats to the data of those who seek abortions become more apparent, the question of which data centers physically hold consumers’ information becomes rather important.

Rolling out the electronic health records system from Oracle-owned Cerner at VA hospitals proved bumpy, according to a government watchdog report focusing on a Spokane, Washington, facility. The main problem was a glitch that caused the loss of many follow-up orders, likely resulting in hospitalizations of patients who should have gotten additional care earlier on.

Around the world

The European Commission confirmed Amazon has offered to stop using third-party sellers’ data to compete against them and potentially open up a second Buy Box in a bid to head off the bloc’s antitrust scrutiny. Now the EU enforcers want to know if the public thinks that’ll really assuage concerns.

The U.K.’s Online Safety Bill is on hold amid the search for the country’s next prime minister. The measure, which was poised for a vote in the House of Commons, is designed to force swifter and more reliable removal of illegal and harmful content, but critics worried the definition of the latter was overbroad. Theoretically, the next PM could get the bill moving again as it’s currently written, but the change in leadership could mean lawmakers try to narrow it.

In data

$1.2 billion: That was the size of the hole in the balance sheet of ill-fated crypto project Celsius Network, according to a filing in the U.S. Bankruptcy Court of the Southern District of New York. Policymakers will be watching the bankruptcy proceeding closely, as crypto lacks established rules around customer frauds if a deal-broker or bank goes under.

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Google Play scans more than 125 billion apps each day, helping our users live safe and secure digital lives. By identifying and removing insecure and malicious apps, Google Play helps more than 2.5 billion people worldwide safely discover apps and games they love.

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Swim to work

Saudi Arabia is attempting to build a futuristic — and some say dystopian — $500 billion city in the desert. Bloomberg published a great story on the project earlier this week. One of the stranger elements of the city plans? Canals for commuting so residents can swim to work. The head of planning for Neom’s sports sector said residents of the city can expect an additional 10 years of healthy life expectancy if everything goes according to plan.