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What Do the Midterms Mean for Big Tech?

For the big technology firms, the midterm elections were never going to change much.  Whatever the result, they were going to face more scrutiny over the next year. The only difference is in what sort of scrutiny. If anything, the split in control of the chambers presents the worst of both worlds.

In the House, the Big Tech firms can expect many more hearings and subpoenas over their handling of consumer data, their market shares, and over the supposed effect of foreign actors on voting patterns.

In the Senate, the Big Tech firms can expect much more oversight over their approach to free speech, supposed censorship of conservative voices, and allegations of general political bias.

Both chambers will presumably work on their own versions of privacy bills, purportedly aimed at giving the consumer more control over their personal data. However, it is probable that these bills will become free-for-alls incorporating anything vaguely related to data handling, including provisions aimed at punishing banks, credit unions, and payment networks for financial data breaches (which are normally the fault of merchants or even government).

Such a bill would likely impact the level of service tech firms are able to give their customers, and could even result in them starting to charge for currently free services. This would likely result in considerable consumer harm, as the evidence is that most consumers are willing to hand over their data in return for services they value, and that the economics of privacy are extremely complicated.

For example, there will likely be considerable pressure to include “opt-in” provisions for data use, allowing companies to use customers’ data only after they opt in to such use. Will Rinehart of the American Action Forum explains why this seemingly attractive option is fraught with peril here.

In addition, both chambers are likely to look at ways to regulate social media firms. One potential set of proposals has been pulled together by Sen. Mark Warner (D-VA). As Wayne Crews notes, tech firms may be tempted to play along with these proposals as they will erect entry barriers to potential competitors such as Minds, Mastodon, and MeWe (the irony being that all of those new entrants proudly purport to protect users’ data in ways they say their big competitors do not).

Big Tech firms can also expect expanded antitrust scrutiny. While not technically a legislative matter, Congress is likely to put pressure on the Federal Trade Commission to initiate action against the firms under the Sherman Act, and may decide to amend the Sherman Act to make it easier to take such action (when the opposite approach would actually increase efficiency and social welfare). Fears of political bias are likely to make the Senate, which could normally be expected to resist such action, more likely to cooperate with the House in this respect.

The sharing economy also faces some danger. The House is likely to push forward legislation on worker classification, which will threaten ridesharing platforms and others like Thumbtack, and possibly on restricting home-sharing (something favored by hotel firms and hotel worker unions alike). Data privacy legislation will also further threaten the development of new platforms.

In short, the big technology firms, and the technologies they have developed that underpin so much of today’s world, face threats from both chambers. Advocates for the benefits technology brings will have to be on top of their game to preserve a legislative climate that is as friendly to innovation as it has been over the past two decades.