Big Tech Governance

Introduction to Our Policy Proposal for Regulating Large Technology Companies and Social Media Platforms

The advent of the internet and the subsequent rise of the digital economy has created enormous social and economic value. American technology companies have led the way and now represent 12% of total U.S. GNP, and since 2016, these companies have grown America’s economy by 22%.1 Yet as we now enter more fully into the “digital age,” the laissez-faire regulatory environment that helped give birth to America’s tech industry must be superseded by laws that exert greater democratic control over this industry, which has become dominated by enormous, quasi-monopolistic digital platforms. The United States, in concert with the world’s other liberal democracies, should accordingly work to ensure that these powerful international corporations are constrained by the rule of law and governed in accordance with the public interest.

Prominent tech investor and bestselling author Roger McNamee has well-articulated the urgent need for more effective regulation of “Big Tech.” Decrying the harm brought about by the growing power of platforms such as Facebook, Google, Apple, Amazon, Twitter, YouTube, Instagram, and TikTok, McNamee writes: “They are very much in the business of manipulating attention in order to get you to spend more time on [their services]. And that is a very dangerous business model for society. It’s bad for the mental health of the people who use it. It’s terrible for democracy. It’s completely destroyed any sense of privacy, and it’s undermined entrepreneurship in the United States, because these companies essentially pick off one industry at a time and disrupt it in a way that destroys the old without replacing it with something of equal value.”2

In response to the growing realization of the harms that Big Tech is inflicting on our democracy and culture, over the past twelve months eleven new bills have been proposed in Congress, with each bill designed to address a different aspect of Big Tech’s “dangerous business model.”3 Most of these bills, however, have little chance of becoming law. And among these bills, even the one with the most bipartisan support — The American Innovation and Choice Online Act — is currently hampered by significant opposition from business interests.4

Meanwhile, the European Union has moved forward with its own tech regulations with the landmark passage of the Digital Services Act and the Digital Markets Act.5 While these new E.U. laws may reduce some of the antisocial impacts of Big Tech platforms on European populations, these laws may also reduce the value that Europeans currently derive from using these technologies. Even though the digital technology industry is highly profitable, this industry is nevertheless constrained by intense financial performance pressure. Leading companies within this industry have risen to prominence within a fragile ecology of markets, which can be easily disrupted, resulting in harm not only to these companies’ bottom lines, but also to all stakeholders in the digital economy. These digital stakeholders include users, customers, employees, contractors, entrepreneurs, investors, local communities, and crucially, America’s economy and democracy as a whole.6 And because all of the platforms listed above are American companies (with the exception of Tik Tok), most of the negative impact that these European laws will have on Big Tech’s stakeholders will be borne by Americans rather than Europeans. In their transatlantic competition with the United States, E.U. regulators accordingly see the harm these laws will inflict on U.S. companies and their stakeholders as “a feature not a bug.” In short, while technology users in the U.S. certainly need better protections, they have a greater collective interest in protecting the fortunes of America’s tech industry than their European counterparts.

Underscoring the harm to American companies that the European Digital Services Act and the Digital Markets Act are expected to create, U.S. Commerce Secretary Gina Raimondo recently wrote: “The Acts aim to bolster competition and enforce content moderation in the EU. But we have serious concerns that these proposals will disproportionately impact U.S.-based tech firms and their ability to adequately serve EU customers and uphold security and privacy.”7

Yet while these new E.U. laws may not be ideal for digital stakeholders in the U.S., neither is America’s current laissez-faire regulatory environment. Now that the negative impacts of Big Tech have become apparent, the leaders of America’s technology industry have an opportunity to demonstrate good corporate citizenship by working with U.S. lawmakers to craft meaningful regulations that will effectively ameliorate the antisocial impact of their platforms, not only for the sake of American democracy, but also for the long term vitality of their own industry.

However, in order to craft these needed regulations with a deft hand — to strike the kind of delicate balance required to integrate the interests of all digital stakeholders — the tech industry needs partners in Congress who are digitally literate and who understand the fragile ecology of markets in which this industry operates. Notwithstanding the growing bipartisan determination to rein in Big Tech, U.S. lawmakers do not yet have the technological expertise required to regulate this industry without hobbling it and harming its stakeholders. Increasing the “digital intelligence” of congressional regulators is therefore crucial for the creation of the public-private cooperation necessary to transition from our current laissez-faire regulatory environment to a system of tech governance that will preserve this “crown jewel” of America’s economy.

The market pressures that exacerbate Big Tech’s negative externalities, such as its “race to the bottom” for user engagement, can be reduced through smart “rules of the road” designed to relieve these competitive pressures and create a level playing field for all industry participants. And we believe that most tech executives will welcome such “win-win-win” regulations if they are carefully crafted to balance the needs of all industry stakeholders, including America’s democracy. As McNamee writes: “The future of our democracy, public health, privacy, and competition in our economy depend on thoughtful and comprehensive regulatory intervention.”8 But in order to be “thoughtful and comprehensive,” the new U.S. regulatory regime we need must be designed by digitally fluent lawmakers acting in concert with responsible tech executives.

Problems to Be Solved

1. Harmful business practices polarize our society and threaten our democracy

The business models of most large tech companies are based on advertising revenue, which has created an “attention economy” that incentivizes these companies to increase user engagement through disinformation and extremist content. In a report for the Brookings Institution, Clara Hendrickson and William A. Galston write: “the structural design of the attention economy has given rise to disinformation and its rapid spread online. Today’s powerful technologies … have coarsened public discourse by satiating the appetite for political tribalism, serving up information — true or false — that accords with each users’ ideological preference. … Unlike political advertisements broadcast on television or radio which are subject to strenuous disclosure requirements, online political advertisements face few constraints. This omission has allowed bad actors to leverage the power of online platforms to individually curate to each voters’ ideological preferences and biases.”9

2. Lack of privacy and control of our personal data results in manipulation and abuse

Roger McNamee frames this privacy problem well: “Privacy has been on the radar of policy makers since the Cambridge Analytica scandal. The data economy evolved over decades, and government largely took a hands off approach. Corporations asserted ownership to any data they touched, as well as the right to use or transfer it without restriction. Smartphones and the internet enabled the tracking of every human activity, making it possible to capture a complete digital representation — what the activist Tristan Harris calls a ‘data voodoo doll’ — of every consumer. Credit card purchases, financial records, employment history, cell phone location, medical tests and prescriptions, browsing history, social media activity all create data that is deeply personal and available in a data marketplace. Marketers and internet platforms use this data to understand, predict, and manipulate our behavior. This is not just about advertising. Marketers and platforms also limit the choices available to us, without us even being aware. Worse yet, data about other people can be used to manipulate and exploit our vulnerabilities.”10

3. Secret algorithms and lack of platform transparency prevent political and economic oversight

As described by the Brennan Center for Justice: “Social media compan­ies often shield them­selves from scru­tiny of the harm they cause by refus­ing to disclose inform­ation. … Face­book has clamped down on research­ers attempt­ing to study polit­ical ads on the plat­form. Plat­forms’ terms of service commonly forbid research­ers from using essen­tial invest­ig­at­ive tools … Exist­ing plat­form-provided tools … offer tightly circum­scribed and spotty inform­a­tion to the public and to research­ers. Algorithm-driven personal­iz­a­tion of social media feeds also means that indi­vidu­als are exposed to differ­ent kinds of inform­a­tion and have little basis to compare their online exper­i­ences. As a result, the public and policy debate about social media plat­forms’ impact remains woefully under­in­formed.”11 As Ashkan Soltani, former chief technologist at the Federal Trade Commission, observes: “Sadly, because this ecosystem is primarily hidden from view and not transparent, consumers aren’t able to see and understand the flow of information.”12 This lack of transparency also facilitates politically motivated censorship, which has motivated many Republicans to attempt to breakup Big Tech’s concentrated corporate power.

4. Data monopoly gatekeepers undermine autonomy and stifle competition

Platforms such as Google, Facebook, Apple and Amazon have used their enormous scale and network effects to stifle competition and undermine the autonomy of users, suppliers, and communities. Unless new regulations are passed that update antitrust and common-carrier laws to respond to the unique features of the digital economy, these platforms will have no incentives to improve their practices, and users will be left with no alternatives.

5. Most U.S. lawmakers are technologically illiterate and lack a purposeful digital strategy for the healthy growth of America’s tech industry

A paper by the pro-market think tank R-Street Institute frames the problem well: “Technological complexity has grown fantastically over the past two decades and there is no reason to believe the pace of innovation will slow. But as technology advances, it also creates challenges for our elected officials to comprehend its impacts and to enact sensible policies around it, which includes updating and clearing out old laws and regulations.”13

Wins Sought for Each Major Worldview

As outlined in our recommendation below, by: 1) convening an annual congressional regulation summit tasked with crafting regulations that integrate the interests all digital economy stakeholders, 2) increasing the technological literacy of lawmakers, and 3) building on the recent first round of regulatory bills, we hope to provide “wins” for each of America’s major cultural worldviews, as follows:

Progressivism’s Wins

Effective regulation will provide wins for progressives by checking the unfettered power of corporations and big business, and by restoring public interest oversight to the digital economy.

Modernity’s Wins

Bipartisan regulation that deftly integrates all tech industry stakeholders will provide wins for modernists by preserving the economic environment necessary for ongoing technological innovation, and by reducing monopolies and crony capitalism through increased competition.

Traditionalism’s Wins

Effective regulation of Big Tech will similarly provide wins for conservatives and traditionalists by providing a check against the evident progressive bias of many of tech platforms, and by providing greater transparency and accountability.

Everyone’s Wins

Finally, all Americans will win by disempowering hate and extremism, and by increasing personal privacy.

Overview of Currently Proposed Regulations

This final section provides a summary of the pending tech regulation bills currently circulating in the House and Senate. Our summaries of these bills are organized around the five “problems to be solved” first identified above. These five problem areas can be simply stated as: anti-social algorithms, user privacy, operational transparency, platform monopoly, and technological literacy.

1. Anti-social algorithms

By working to maximize engagement by appealing to users’ “lizard brain,” Big Tech platforms are causing both individual psychological harm and collective social harm. Individual harm is inflicted when vulnerable people become radicalized through constant exposure to algorithmically-curated extremist content. Social harm is inflicted on America’s electorate through hyperpolarizing content which is similarly algorithmically-curated to satiate peoples’ appetite for political tribalism. Both of these harms can be ameliorated by reducing liability protections under section 230, which currently provides blanket legal immunity for platforms that publish third-party content.

An example of a pending bill which would reduce the harm caused by anti-social algorithms is: The Protecting Americans from Dangerous Algorithms Act (H.R. 2154). This bill removes section 230 immunity from social media companies with more than 10 million monthly users if they utilize an algorithm to amplify or recommend content that interferes with a user’s civil rights, or promotes acts of international terrorism. (Introduced in March, 2021 by congressman Tom Malinowski, D-NJ). A similar bills is: The Justice Against Malicious Algorithms Act (H.R. 5596). This bill similarly limits the liability protection provided by section 230 from social media companies with more than 5 million monthly users if they “recklessly recommend” material which contributes to a physical or severe emotional injury to any person. (Introduced in October, 2021 by congressman Frank Pallone, D-NJ)

Also, the European Union’s Digital Services Act (which is expected to come into force as early as 2024) will require Big Tech giants to police illegal content on their platforms more aggressively, or else risk potential multibillion-dollar fines. “The Digital Services Act also stipulates that the end user must be offered at least one recommender algorithm option that is ‘not based on profiling,’ or any of the sort of information usually collected for targeted advertising.”17

2. User privacy

As Big Tech assembles comprehensive profile data on every user, the pernicious effects of these “data voodoo dolls” are becoming increasingly evident. Examples of legislation designed to protect privacy include this pending House bill: The Augmenting Compatibility and Competition by Enabling Service Switching Act “ACCESS” (H.R. 3849). Under the ACCESS Act, large online platforms are required to maintain their interfaces in a manner that is interoperable with competing businesses and that enables user data to be portable. (Introduced in June, 2021 by congresswoman Mary Gay Scanlon, D-PA)

States unwilling to wait for national legislation have recently begun enacting their own privacy laws, led by: California’s Privacy Rights Act (CPRA), which was passed in the November 2020 ballot by 56% of California voters. The CPRA imposes stringent privacy protection obligations on organizations and greatly increases the rights of consumers. The law applies to businesses and entities located in California or anywhere serving products or services to a California resident. The CPRA will take effect on January 1, 2023. Virginia, Colorado, Minnesota, Connecticut, Washington and Utah have recently enacted similar laws.

Going beyond these U.S. state laws, the European Union’s Digital Services Act bans targeted advertising to minors, as well as targeted advertising based on sensitive personal information, including sexual orientation, religion, and ethnicity.

3. Operational transparency

Big Tech platforms have been described as “black boxes,” which shield scru­tiny of the harm they cause. So in addition to their attempts to stop algorithmic radicalization and hyperpolarization, and abuses of personal privacy, lawmakers are also attempting to enact regulations that mandate greater transparency. In the U.S., the main example is the pending Senate bill: The Platform Accountability and Transparency Act (“PACT” Act, S. 797). This bill would permit the Federal Trade Commis­sion to require disclos­ure of certain plat­form data directly to the public or to research­ers. It would also compel disclosure of: 1) advert­ising content, targeting criteria, and asso­ci­ated inform­a­tion, 2) inform­a­tion on plat­forms’ use of algorithms, and 3) inform­a­tion on plat­forms’ content moder­a­tion policies and decisions. (Introduced in March, 2021 by senator Brian Schatz, D-HI)

Similarly, the E.U.’s Digital Services Act includes measures compelling tech giants to be more transparent about the algorithms they use to recommend content to users.

4. Platform monopoly

In June 2021, the House Committee on the Judiciary advanced a series of antitrust bills directed at Big Tech.15 This legislative package represents the most comprehensive federal effort to date to tackle competition issues in the digital economy. And, as cited above, one of these bills has now been taken up by the Senate: The American Innovation and Choice Online Act (S. 2992). This Senate bill “is the latest bipartisan effort targeting big tech companies for potential antitrust and consumer choice violations.” The legislation is sponsored by Senate Judiciary Committee Antitrust Subcommittee Chair Senator Amy Klobuchar (D-MN) and full committee Ranking Member Senator Chuck Grassley (R-IA), and it is co-sponsored by five Democratic Senators and five Republican Senators (including Josh Hawley (R-MO) and Lindsey Graham (R-SC)). “This ideologically diverse group of Senate co-sponsors indicates the continuing growing momentum on Capitol Hill for this issue, but has yet to see legislation enacted into law.”18 But as noted, the passage of this bill remains uncertain.

 A similar bills is: The Open App Markets Act (S. 2710). This Senate bill, sponsored by Senator Richard Blumenthal (D-CT),  prohibits “app stores” with more than 50 million U.S. users from: 1) requiring developers to use an in-app payment system owned or controlled by the company as a condition of distribution or accessibility, 2) requiring that pricing or conditions of sale be equal to or more favorable on its app store than another app store, or 3) taking punitive action against a developer for using or offering different pricing terms or conditions of sale through another in-app payment system or on another app store.

Similar to the aims of these proposed U.S. laws, the E.U.’s Digital Markets Act prohibits tech giants from giving preference to their own services over others. “The law aims to prevent [platforms] from abusing their market position to harm smaller rivals. So-called ‘gatekeepers’ that violate the Digital Markets Act face potential fines of up to 10% of their global revenues.”19

5. Technological literacy

Finally, the most recent example of a comprehensive attempt to regulate Big Tech is: The Digital Platform Commission Act of 2022 (S. 4201), which was introduced by Senator Michael Bennet (D-CO) on May 21, 2022. This bill proposes the creation of a new Executive Branch agency, similar to the FCC or the FTC, that would “set reasonable rules of the road and technical standards for emerging technologies.” This proposal for a new federal agency is a predictable and conventional response to the current lack of congressional technological expertise. As the bill explicitly states: “The unique power and complexity of several digital platforms, combined with the absence of modern federal regulations, reinforces the need for a new federal body equipped with the authorities, tools, and expertise to regulate digital platforms to ensure their operations remain consistent, where appropriate, with the public interest.”20

We, however, oppose this attempt to create yet another rule-making bureaucracy within the administrative state. The delegation of legislative branch functions to executive branch agencies has been an ongoing trend over the last fifty years. But we believe this is the wrong approach for the governance of the fast moving tech industry. Despite their ability to specialize in specific areas of the economy, executive branch federal agencies all too often become unresponsive and sclerotic, or worse, they become “captured” by the industry they are charged with regulating.

We therefore propose that the governance of America’s crucial tech industry be conducted directly by Congress, as advised by the revived Office of Technology Assessment, through an innovative regulatory process such as the annual congressional summit described in our recommendation section above. While there are no pending bills seeking to revive the OTA, this idea is being advanced by the R-Street Institute think tank, the Brookings Institution think tank, as well as by our own organization, the Institute for Cultural Evolution.

End Notes

1. https://www.iab.com/news/study-finds-internet-economy-grew-seven-times-faster/

2. https://www.theguardian.com/books/2019/feb/16/roger-mcnamee-zucked-waking-up-to-the-facebook-catastrophe-interview

3. See:

S. 797, Platform Accountability and Transparency Act (“PACT”)
S. 2710, The Open App Markets Act
S. 2992, American Innovation and Choice Online Act
S. 4201, The Digital Platform Commission Act of 2022
H.R. 2154, The Protecting Americans from Dangerous Algorithms Act
H.R. 3460, The State Antitrust Enforcement Venue Act of 2021
H.R. 3825, Ending Platform Monopolies Act
H.R. 3826, Platform Competition and Opportunity Act,
H.R. 3843, The Merger Filing Fee Modernization Act
H.R. 3849, Augmenting Compatibility and Competition by Enabling Service Switching Act (“ACCESS”)
H.R. 5596, Justice Against Malicious Algorithms Act

4. See, e.g. this recent op-ed from the Editorial Board of The Wall Street Journal: https://www.wsj.com/articles/breaking-big-tech-bad-senate-judiciary-committee-bipartisan-antitrust-bill-facebook-meta-google-twitter-11654113174

5. https://digital-strategy.ec.europa.eu/en/policies/digital-services-act-package

6. The policy of integrating industry stakeholders is a cornerstone of the “Conscious Capitalism” movement. Recently, however, the concept of “stakeholder capitalism” has become closely associated with “woke capitalism,” which is ultimately anti-capitalist. It is therefore important to affirm that in this paper our recommendation to enact regulations that integrate the interests of all stakeholders in the digital economy does not suggest that the relevant interests of all these stakeholders are equal. Healthy stakeholder integration presupposes a hierarchy of interests, with investors being most “fundamental” and users being most “significant.” For more on Conscious Capitalism, see: https://www.consciouscapitalism.org. And for more on the evaluation of growth hierarchies, see: Steve McIntosh, Evolution’s Purpose (Select Books 2012).

7. https://www.axios.com/2021/12/09/biden-raimondo-vestager-big-tech-europe

8. https://time.com/5872868/big-tech-regulated-here-is-4-ways/

9. https://www.brookings.edu/research/big-tech-threats-making-sense-of-the-backlash-against-online-platforms/

10. https://time.com/5872868/big-tech-regulated-here-is-4-ways/

11. https://www.brennancenter.org/our-work/research-reports/law-requiring-social-media-transparency-would-break-new-ground

12. https://www.nytimes.com/wirecutter/blog/state-of-privacy-laws-in-us/

13. https://2o9ub0417chl2lg6m43em6psi2i-wpengine.netdna-ssl.com/wp-content/uploads/2018/04/Final-128-1.pdf

14. https://www.npr.org/2019/06/05/730057484/are-lawmakers-tech-savvy-enough-to-conduct-their-antitrust-investigation

15. Quote from the R-Street Institute’s paper: https://2o9ub0417chl2lg6m43em6psi2i-wpengine.netdna-ssl.com/wp-content/uploads/2018/04/Final-128-1.pdf. See also a similar position from the Brookings Institution: https://www.brookings.edu/research/it-is-time-to-restore-the-us-office-of-technology-assessment/

16. https://www.fedscoop.com/gao-science-technology-congress-staa/

17. https://www.cpomagazine.com/data-protection/finalized-eu-digital-services-act-promises-transparency-in-recommender-algorithms-new-restrictions-on-targeted-advertising/

18. https://bipartisanpolicy.org/explainer/s2992/

19. https://www.cnbc.com/2022/03/25/digital-markets-act-eu-targets-big-tech-with-sweeping-new-antitrust-rules.html

20. https://www.congress.gov/bill/117th-congress/senate-bill/4201/text?r=1&s=1

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