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Once a darling, Big Tech is now a target

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Jose Luis Magana/AP
Facebook chief operating officer Sheryl Sandberg (l.) accompanied by Twitter CEO Jack Dorsey are sworn in before the Senate Intelligence Committee hearing on 鈥楩oreign Influence Operations and Their Use of Social Media Platforms鈥 on Capitol Hill, Wednesday, Sept. 5, 2018, in Washington.

When Facebook announced on March 6 a , much of the public reaction was along the lines of 鈥渨e鈥檒l believe it when we see it.鈥 And two days later, when Democratic presidential candidate Elizabeth Warren pledged that her priorities would include breaking up giant tech companies like Google and Facebook, responses were similarly skeptical.

The grains of salt are warranted. Facebook founder Mark Zuckerberg has pledged to respond to public concerns about privacy before. Major antitrust actions to bust apart giant companies are rare.

Yet those recent announcements also symbolize a change that has occurred over the past year or so. Public concerns about online privacy are on the rise. Prominent researchers are wondering aloud if the rise of 鈥淏ig Tech鈥 is bad for both the economy and society. Politicians of both parties are increasingly talking about the need for a national law to provide data-commerce rules of the road 鈥 and the industry itself increasingly agrees.

Why We Wrote This

The push for regulating America鈥檚 largest tech firms is about more than Facebook. It鈥檚 about a world coming to terms with how information shapes people鈥檚 lives.

鈥淭here has been an enormous shift,鈥 says Andrea Limbago, chief social scientist at Virtru, a technology firm focused on data protection. And it鈥檚 needed, she argues. 鈥淚n the United States, we really need to have a counterweight to that movement that鈥檚 going on [globally toward] digital authoritarianism.鈥

Although the shift , it doesn鈥檛 mean the pendulum is swinging completely toward an embrace of strict internet regulation and a 鈥渄elete Facebook鈥 rejection of Silicon Valley鈥檚 giants.

Legions of consumers are still hooked on Google searches, buying things on Amazon, and checking social media daily or hourly. (When Facebook and its sibling services Instagram and WhatsApp ran into simultaneous derailments Wednesday, users vented and adapted in the only way they knew how 鈥 by posting on Twitter.)

Beware the states?

In fact, the momentum for a federal data-privacy law is partly rooted in the technology industry鈥檚 desire to hold regulatory impulses in check, rather than await the prospect of disparate and sometimes stringent state-level legislation.

Perhaps the central question surrounding proposed federal legislation is whether it will block states from enacting their own laws (as the industry and many innovation advocates urge).

Many Democrats in Congress are wary of preempting state laws unless they feel assured a new federal law will have sufficiently broad protections and enforcement for consumers.

Their desire for a strong law is bolstered by a range of indicators and incidents:聽

  • A succession of high-profile data breaches have hit the news, including that affected as many as 30 million of its users. 聽
  • On Wednesday, The New York Times reported that federal prosecutors had into Facebook鈥檚 deals to share user data with other firms. Separately, the Times has reported on mobile-app companies that track users鈥 locations without informing them that the data could be used in targeting ads.
  • Polls over the past year have found a majority of Americans concerned about data privacy and want government to act (with two-thirds saying that in .
  • Official government reports have amplified concerns about efforts by Russia-based groups , including the 2016 presidential race.

Last August, Director of National Intelligence Dan Coats described the latter trend as part of a 鈥減ervasive messaging campaign by Russia to try to weaken and divide the United States.鈥

To Ms. Limbago, it鈥檚 part of a global battle over how information will shape people鈥檚 lives. The Russian efforts, she says, are just one example of how, if unchecked, authoritarian practices can ripple from one nation to another. Conversely, she adds, steps to strengthen online data protection in the U.S. could help promote greater data integrity worldwide.

Others agree.

鈥淚t鈥檚 not just about protected privacy and competition. It鈥檚 really about what is the nature of our liberty in the 21st century both in America and around the world and other democratic societies,鈥 says Jeff Chester, who heads the Center for Digital Democracy, a consumer advocacy group in Washington. 鈥淭hat鈥檚 really what鈥檚 being decided.鈥

Backlash started in 2018

Although the public backlash started earlier, the changed atmosphere in U.S. policymaking circles began emerging last year as executives including Mr. Zuckerberg were called before Congress to testify and as Republicans joined Democrats in the grilling.

Although the fate of bills is far from certain, on a range of tech-industry issues are underway in both the Democrat-controlled House and the Republican-controlled Senate.

This week, it was Sens. Ed Markey, D-Mass., and Josh Hawley, R-Mo., who took a turn, rolling out a proposed . Then lawmakers questioned tech executives about location tracking and other data-collection practices. And Sen. Ted Cruz, R-Texas, tweeted his support of Massachusetts Senator Warren, after reports that Facebook briefly took down some of her ads calling for the company鈥檚 breakup.

鈥淪he鈥檚 right,鈥 . 鈥淏ig Tech has way too much power to silence Free Speech鈥. A serious threat to our democracy.鈥

Although President Donald Trump has also criticized Big Tech giants like Amazon, the pendulum hasn鈥檛 swung all the way to Europe鈥檚 ambitious new protections of privacy.

A key question is how to balance privacy protections with continued U.S. leadership in new data-based products and services.

鈥淲e definitely want a federal privacy law that is uniformly and strongly enforced,鈥 including a role for state attorneys general and a better-funded Federal Trade Commission, says Linda Moore, CEO of TechNet, a trade group for the industry. But 鈥渨e don鈥檛 want it to have a chilling effect on innovation.鈥

Lessons from Europe

She and others note the European Union鈥檚 new General Data Protection Regulation (GDPR) that went into effect last year has created new compliance costs that are harder to bear for small companies than large ones. The result is that, in effect, Big Tech has been getting bigger as a share of Europe鈥檚 information services market.

Ms. Moore says the U.S. has a chance to learn from Europe鈥檚 experience in creating legislation that guards against too-high compliance burdens while also helping consumers have transparency and control over how their data is used.

The question of whether a few firms have grown too powerful is another piece of the puzzle.

for possibly breaking off portions of Google, Amazon, and Facebook, based partly on the idea that a single company shouldn鈥檛 be both a key platform for online commerce and a provider of services on that platform.

Her proposal may be a long shot, but it has won some fans. And even defenders of existing antitrust law say it may need to be applied with more rigor toward those tech giants.

At the same time, others point to the penchant of younger Americans to shy away from Facebook 鈥 and of some longtime users to abandon the platform 鈥 as signs that the industry isn鈥檛 as monopoly-prone as critics say. Conservative analyst James Pethokoukis of the American Enterprise Institute Senator Warren鈥檚 proposal from 1998 that has proved less than prescient in hindsight: 鈥淗ow Yahoo! won the search wars.鈥

Focus on the big or the small?

Economists, meanwhile have been debating whether the rise of powerhouses like Amazon and Facebook have .

However that debate over antitrust concerns shakes out, some say it鈥檚 important not to focus regulatory attention mostly on the highest-profile firms.

鈥淭he bigger driver of violating that privacy are these hidden data aggregators and data brokers that gather up information,鈥 companies that consumers have no conscious relationship with, says Kirsten Martin, a technology expert at George Washington University. 鈥淭hey have an even more nuanced view of us than Facebook, because they鈥檙e buying all the little bits of data from all over, [from offline shopping to] our browsing history.鈥

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