No Longer Enamored, Washington Looks Critically at Silicon Valley

The era of Silicon Valley operating largely free from government regulation may be coming to an end.In 2019, lawmakers grilled tech executives at multiple hearings in Washington and federal regulators slapped record fines on tech firms. They promise action in the coming year on a host of issues: competition, online privacy, encryption and bias.U.S. tech companies such as Apple, Facebook, Google and Amazon are girding themselves for more federal scrutiny.“As the internet companies matured without a lot of regulation, some issues have emerged where attention is needed,” said Rep. Zoe Lofgren, a Democrat representing Silicon Valley since 1994 and who has introduced a national online privacy bill.“I think it’s fair enough to examine what kind of rules should be set in certain elements of the tech economy,” she said.FILE – Rep. Zoe Lofgren, D-Calif., is pictured during a committee hearing on Capitol Hill in Washington, July 24, 2019. Lofgren was the chief sponsor of a bill approved Oct. 23 to better protect the country’s elections from foreign interference.For years, Washington was enamored with the technology industry and its iconic companies that fueled economic growth. They created new tools for campaigning and reaching voters, and enjoyed an aura of cool.Online privacy and user dataNow, there are threats of fines over things such as violating users’ privacy or stifling competition.In 2019, the Federal Trade Commission issued a record $5 billion fine against Facebook for “deceiving users about their ability to control the privacy of their personal information.” It also issued a $170 million fine against Google for violating children’s privacy on YouTube, which Google owns.New laws, such as the one Lofgren proposes, could give American users more control over their online data and limit companies’ ability to collect user data. Those moves could limit companies’ ability to sell advertising, which funds the free internet.FILE – Facebook CEO Mark Zuckerberg arrives to testify before a Senate Judiciary and Commerce Committees joint hearing regarding the company’s use and protection of user data, on Capitol Hill in Washington, April 10, 2018.Antitrust and competitionBoth Democrats and Republicans criticize “Big Tech,” as it is now called. And in the coming year, the pressure will likely increase.“Whenever the word ‘Big’ is placed before your industry, it’s not a good thing,” said Carl Guardino, president and chief executive of the Silicon Valley Leadership Group, which represents many of the region’s tech firms. “It’s now ‘Big Tech,’ and you know it’s not used as a term of endearment.”Foreign users of American tech products could also see changes if Washington follows through on threats to break up large companies like Facebook. Presidential candidate Elizabeth Warren is reportedly drafting a bill to toughen the country’s rules about antitrust and competition.The Federal Trade Commission is reportedly looking into stopping Facebook’s further integration of Whatsapp and Instagram, in case it would one day see a need to break up the social network giant.Washington seems to have woken up to the dangers of technology companies that have become the gatekeepers of communications and commerce, said Sally Hubbard, the director of enforcement strategy at the Open Markets Institute, a research group that focuses on antitrust issues.“The traction has definitely really intensified over the last year,” she said. “There’s also just a growing awareness that these companies are causing a wide range of harms, whether it’s harms to our democracy, harms to innovation, harms to entrepreneurship. They are playing the game and controlling it, too.”A Huawei employee on Huawei’s campus in Shenzhen in southern China’s Guandong Province, Dec. 5, 2019. The Chinese tech giant is asking a U.S. federal court to throw out a rule that bars rural phone carriers from using government money to purchase its equipment.China and 5G infrastructureMeanwhile, there is growing concern over China’s expanding role in advanced global communications and whether the authoritarian country can be entrusted with user data. The U.S. government has warned other countries not to work with the Chinese telecommunications giant Huawei, which sells equipment that is building the new 5G networks around the world.Much is at stake. With more than a majority of the Earth’s 7 billion people online, Washington’s rules for the U.S. technology industry and its global competitors could determine the future of communication.
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