Split Congress Likely to Focus on Privacy and Cryptocurrency as Antitrust Reforms Stall

Although the year started off promisingly for tech policy, many key initiatives have been left unfinished by the 117th Congress.

Despite bipartisan support for antitrust reform targeting digital tech giants, a digital privacy framework and new guardrails for kids on the internet, lawmakers headed home without passing the hallmark bills of those issues. The Senate has yet to vote to confirm the final nominee to fill out the Federal Communications Commission, leaving that agency incomplete for the entirety of the Biden administration so far.

Congress recently passed the CHIPS and Science Act, which incentivizes domestic semiconductor manufacturing after shortages highlighted the risks of overseas production. The Act also includes a measure that will raise funds for the antitrust agencies by raising merger filing fees on large deals, as well as a measure banning TikTok on government devices in light of national security concerns due to its ownership by a Chinese company.

There has been significant progress this year on many of the bills that remain in limbo. For example, a privacy bill proposed this year has gained bipartisan support and passed out of a House committee with a near-unanimous vote. However, it lacks the backing of the Senate Commerce Committee’s Democratic chair, Maria Cantwell of Washington, which is seen as critical to passing the legislation.

"Any privacy legislation needs to have support from both parties," said Craig Albright, vice president of U.S. government relations for enterprise software industry group BSA. "Senator Cantwell needs to be part of the process. There's no way to go around her, she will be one of the key leaders. But I think if the House can show that it is making progress, that will create a better environment for the Senate to take action."

Albright continued by saying that the House committee leaders who were in favor of the bill, Energy and Commerce Chair Frank Pallone, D-N.J., and Ranking Member Cathy McMorris Rodgers, R-Wash., both expected to become chair next year under Republican House control, proved with the panel vote “that substantively, you can come up with a bill that has broad bipartisan support.”

"I believe that this next Congress will be in a stronger starting position than we've had before," Albright said.

Next year, lawmakers will face a tougher landscape if they hope to continue with tech reform. With Democrats in control of the Senate and Republicans in control of the House in 2023, policy watchers stress that bipartisanship will be essential to get bills passed into law.

Although that may disappoint those hoping for antitrust reform, it could mean that there is still a chance for legislation on digital privacy. Both parties have emphasized the need for action on this issue, despite years of failing to reach agreement on areas of disagreement.

Even though the current year is coming to a close, the lawmakers who have been pushing for aggressive antitrust proposals and other tech reforms have indicated that they will continue to fight for these measures next year.

"This is just the beginning of this fight, not the end," said Sen. Amy Klobuchar, D-Minn., in a statement following the release of the spending package text. Klobuchar's bill barring online platforms from favoring their own services on their marketplaces failed to make it into year-end must-pass bills, but she vowed to continue working "across the aisle to protect consumers and strengthen competition."

Sens. Richard Blumenthal and Marsha Blackburn said in a statement that their Kids Online Safety Act and Open App Markets Act did not make it into the spending bill, but they are resolved to reintroduce and pass the legislation in the next Congress. The pair blamed the bills’ failure to advance on intense lobbying efforts by the tech industry against them.

A recent survey of congressional staffers by Punchbowl News found that a majority of respondents expect a less productive session in terms of passing meaningful legislation. However, the tech agenda is high up on the list of expected priorities, with 56% of respondents anticipating action on bills targeting Big Tech. This was second only to those who expect to see action targeting inflation.

According to a recent survey by Punchbowl, tech regulation is the top priority for Democrats, with 59% of respondents choosing it as one of their chief issues. Among lobbyists and business executives surveyed by Punchbowl, 55% predicted that lawmakers could crack down on a major tech company in the near future, with TikTok being the most likely target, followed by Facebook parent company Meta.

House Republicans have signaled that they will use their majority to focus on tech issues that have taken a backseat while Democrats held the gavels in both chambers. Rep. Jim Jordan, R-Ohio, who is expected to lead the House Judiciary Committee, has signaled that he will likely use that power to focus on tech companies' relationships with Democratic politicians and allegations of bias and censorship by social media platforms.

Earlier this month, Senator Josh Hawley wrote to the CEOs of Apple, Amazon, Google, Meta and Microsoft, demanding information about what he called “the nature and extent of your companies’ collusion with the Biden Administration.” He said the letters should serve as a formal request to preserve records related to the request.

As crypto regulation comes under increased scrutiny from lawmakers, House Financial Services Chair Patrick McHenry has indicated that developing a clearer regulatory framework for the industry is a priority. This comes after the recent allegations of fraud against FTX exchange founder Sam Bankman-Fried, which have brought the industry into the spotlight. Some legislators have already proposed legislation targeting the crypto industry, and it is likely that more attention will be paid to this issue in the coming months.

One of the key questions lawmakers have wrestled with is who should be the agency in charge of overseeing the industry. That question has so far gone unanswered, with many industry players advocating for the Commodity Futures Trading Commission while some consumer advocates preferring the Securities and Exchange Commission, which is larger and better resourced. One prominent bipartisan bill in the Senate would put the CFTC in charge.

The tech policy agenda for next year will be subject to the same whims of Congress as it was in 2022. This could be especially problematic if the country experiences an economic downturn, as many experts predict.

James Czerniawski, senior policy analyst for technology and innovation at the Koch-backed advocacy group Americans for Prosperity, said that everyone has a desire to regulate tech. However, he wonders what that desire looks like, depending on the economic outlook of the United States in Q1 of 2023. Czerniawski pointed to high interest rates and job cuts in the tech sector, and said that a recession in early next year is not out of the realm of possibility. This could change priorities for Congress from regulating tech to more immediate issues.

Czerniawski believes that the recent push for regulation in the tech industry is based on the false assumption that tech is an unchanging force that will be around forever. He argues that this assumption is inaccurate, as demonstrated by events over the past year and a half.

Tom Romanoff, director of the technology project at the Bipartisan Policy Center think tank, said that it is easy to beat up on Big Tech when they are successful and have record profits. However, he noted that when constituents and districts are upset because they lost high-paying jobs, the focus will shift to the economy. The Bipartisan Policy Center has received funding from Amazon and Meta, according to recent donor disclosures.

Romanoff stated that other global events could take away from the focus on increased regulation of tech, such as if tensions rise between China and Taiwan, where a large number of semiconductors are produced. He said that an event like that could lead to a shift from an "internal focus of what these large companies mean for U.S. democracy, to more of a national defense strategy - what does it mean in wartime to regulate an industry that is very important to any wartime industry."

Albright of BSA believes that Congress will continue to focus on the tech sector, as there are still many concerns that have not been resolved.

He said that the economy will have its ups and downs, but the importance of tech policy issues will remain strong.