China and Twitter are on the tech agenda after midterm elections
Louise is a Technology Reporter for Semafor, joining us from NBC News. Reed is Semafor’s Technology Editor, joining us from the Washington Post. Sign up for the Semafor Tech newsletter to get their scoops and coverage on the industry’s biggest stories in your inbox twice a week.
The Chinese tech sector is poised to become a bigger target in Washington if Republicans gain control of even one chamber of Congress after Tuesday’s election. Such a victory could put Senator Ted Cruz, a China hawk, at the helm of the powerful Commerce Committee that largely oversees the tech industry.
If Democrats manage to keep the Senate but lose the House, the party will want to keep up pressure on China to avoid being outdone by their political opponents.
Silicon Valley will also remain in the government’s sights, given its cultural and business dominance, especially Twitter under its new owner Elon Musk. We canvassed former government officials, think tank experts, and others on what’s in store for the industry when a new Congress takes over in January.
Supercharged China focus:
The People’s Republic is a rare, bipartisan antagonist, and Republicans will want to show they can be tougher than their Democratic counterparts. They could ramp up pressure on the country’s tech sector, including imposing further restrictions on U.S. companies’ ability to sell to and make money in China.
Despite significant steps taken by U.S. President Joe Biden’s administration to limit China’s access to cutting-edge technologies, “there’s been a lot of dissatisfaction about whether [the] Commerce [Department] is moving as aggressively as they should be and whether there’s more that could be done,” said Emily Kilcrease, senior fellow at the Center for a New American Security, while noting she found some of the criticism of Democrats unfair.
Clete Willems, a partner at the law firm Akin Gump who represents clients on China issues, said he expects Republicans to push for restrictions on outbound investments to China and work to block data collection by Chinese-owned apps, like TikTok.
Willems, who served on the National Security Council under former President Donald Trump, said he doesn’t believe TikTok will be outright banned, but it could be blocked from government devices. Republicans are “going to use their platform to push for some of the things on China policy where they have concerns about the trajectory the Biden Administration has taken,” he said.
Twitter and its Chief Twit:
The social media platform is accustomed to congressional scrutiny — former CEO and co-founder Jack Dorsey testified several times before the House and Senate. But there’s renewed focus on Twitter since Elon Musk took over.
If the Democrats manage to hold on to the Senate, they will likely try to bring in Musk for a hearing on the company’s efforts to combat misinformation and moderate toxic content. Party members — including Senator Sheldon Whitehouse, a former U.S. Attorney General — have already criticized him for promoting a conspiracy theory about the recent attack on House Speaker Nancy Pelosi’s husband, which Musk later deleted.
But Republicans, including Cruz, also want to hear from Musk. The senator said recently on his podcast that he wants Twitter’s new CEO to reveal the social network’s past practices, such as whether it censored posts from conservative politicians before elections. Cruz said that kind of transparency would put pressure on Facebook, Google and its YouTube unit, to make similar disclosures. Musk said before acquiring the company that he would make its algorithms public.
Cruz also praised Musk’s moves to lay off thousands of employees, including senior executives. “I hope it sends a real signal that Twitter is out of the business of censorship,” he said.
Possible curbs to Section 230:
Speaking of content moderation, Republicans and Democrats want to reform regulations that give broad legal protection to technology companies for content that their users create or sell. Section 230 of the 1996 Communications Decency Act has so far saved firms from a potential avalanche of private lawsuits and government enforcement.
“This is one of those issues that, in fact, both parties don’t like,” said Samir Jain, director of policy at the Center for Democracy and Technology, a Washington-based nonprofit that advocates for digital rights. “For very different reasons and with very different outcomes in mind.”
Republicans want to scrap the protections because they believe it will help address what they perceive as anti-conservative bias at companies like Facebook and Google. Democrats are concerned that social media companies aren’t currently incentivized to do an adequate job policing their platforms for things like disinformation.
Crypto rules of the road:
Lawmakers are looking at drafting rules addressing crypto and creating a legal framework for the industry. But both Republicans and Democrats are also more or less aligned on tackling related national security issues.
Congress wants to stop cryptocurrencies from being used by terrorists and authoritarian regimes, like North Korea. The problem came to a head in August, when the U.S. government sanctioned Tornado Cash, a “mixer” that anonymizes crypto transactions that it allegedly had been used by hackers from Pyongyang.
“At the end of the day, both sides of the aisle say the same thing — we don’t want North Korea to be operating at will on crypto platforms,” said Yaya Fanusie, a former analyst with the CIA who founded Cryptocurrency AML, a consultancy focused on crypto compliance.
The U.S. must also make decisions on a host of other crypto-related issues, including whether to develop its own central bank digital currency, like the one China launched, or create a regulatory framework for “stablecoins” that would enable private industry to innovate in the space.
Antitrust fork in the road:
There’s a handful of antitrust bills related to tech making their way through Congress, but it’s unclear whether a victory by one party or the other would determine their success. Within the Republican party, there are big divisions, with traditional pro-business GOP members against regulating Big Tech and a new generation of anti-tech Republicans supporting it.
By placing antitrust heavyweights like Federal Trade Commission Chair Lina Khan in power, the Biden administration has shown itself to be aggressive in enforcing antitrust laws. Senator Amy Klobuchar has also been a major supporter of strengthening competition rules, working across the aisle to make it happen.
“There's real bipartisan momentum to put forward basic rules of the road for tech,” she said at the Open Markets Institute earlier this year. But moderates in the party, along with Democrats from California, which is home to Silicon Valley, haven’t been on board.
The 2016 election first put the tech industry in the crosshairs of regulators, when Russia’s manipulation of sites like Facebook opened the public’s eyes to the dark side of an industry that had previously been glorified.
This time around, with recession fears looming and abortion rights on the ballot in many states, tech didn’t become one of the major issues driving voters to the polls. The end of the era of cheap capital has also shown that tech firms may be weaker than some regulators once thought. Facebook is losing to TikTok, Google’s revenue growth is slowing, and even Apple has lost 23% of its value this year.
And for all of its bluster, Congress hasn’t actually done much to rein in Big Tech. CEOs have been dragged to Washington to get grilled by lawmakers time and time again, but there have been no major laws passed to change the way they operate.
Sometimes a divided government, if that’s what the midterms wind up producing, gives Republicans and Democrats cover to get things done. The tech industry has become enough of a bipartisan target that both parties could be incentivized to act as they look ahead to the 2024 presidential election and the role social media will play in it.
One of the most important things Congress could do is pass a national digital privacy law, something lawmakers have been talking about for years. Jain said that while the issue has faded from the headlines to some extent, progress is still being made, and a bill could be passed soon. “I think we’re closer than we have been in the past,” he said.
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