Klobuchar’s new antitrust bill may hit Big Tech where it hurts

with Aaron Schaffer

Sen. Amy Klobuchar unveiled new legislation this morning aimed at dismantling corporate consolidation — which could have stark consequences for the tech industry. 

The Minnesota Democrat is poised to become chair of the Senate Judiciary antitrust subcommittee, and her new bill could signal the way Democrats intend to use their new power in Washington to follow through on long-running promises to usher in greater competition. Washington lawmakers have increasingly used their bully pulpits to scrutinize tech companies and question executives, but to date they’ve passed very little legislation actually checking Silicon Valley’s power. 

Klobuchar says it’s time to change. 

“It’s not just sitting there and pulling constant hearings where we’re yelling at executives and throwing popcorn at them, though I’m sure some of that will go on,” Klobuchar said in an interview. “We have to pass something, and I really want to see something get done.”

© Pool/Reuters
Sen. Amy Klobuchar speaks at a hearing. Ken Cedeno/Pool via REUTERS

Klobuchar’s wide-ranging bill aims to beef up the resources and powers at the disposal of two key regulatory bodies tasked with overseeing tech giants, the Federal Trade Commission and the Justice Department’s antitrust division. It would also allow enforcers to seek civil fines for violations the first time antitrust laws are broken.

The legislation, called the Competition and Antitrust Law Enforcement Reform Act, would also create new standards for dominant companies trying to acquire nascent rivals — addressing a major concern of regulators probing the past acquisitions by Facebook and other tech giants. 

The legislation signals the dramatically different posture Democrats plan to take in regulating the tech industry in the new Congress. 

Tech giants including Facebook and Google enjoyed a fairly friendly relationship with Democrats the last time they controlled the Senate during the Obama era. But there is intense pressure within the party to take a much more aggressive stance this time around. 

Klobuchar says she believes 2021 will be a turning point in regulating the industry, due to out-of-hand privacy controversies. She also said tech companies are more willing to work with Washington as a patchwork emerges of different state laws regulating the industry.

“If we don’t do anything, shame on us,” she said.

Klobuchar said in crafting this legislation, she worked with House Democrats, who led a more than year-long investigation into large technology companies’ power and issued a report of recommendations for addressing competition. That report is expected to influence House lawmakers approach to regulating tech in the new Congress. 

In an interview yesterday, Rep. Pramila Jayapal (D-Wash.), who sits on the House Judiciary antitrust subcommittee, told me she expects legislation within the next six months based on the report’s recommendations. She intends to address concerns that emerged during the investigation about tech companies’ alleged strategy of copying, acquiring and killing their nascent rivals. She also signaled the subcommittee will have more hearings in the new year with tech executives and their smaller rivals. She said it will be particularly important for Congress to hear from the smaller companies impacted by the dominance of the bigger firms. 

“There’s a real fear among these smaller companies that if they speak out they will be targeted by these big platforms,” she told me. 

Klobuchar also said she would seek support from Republicans.

With Democrats holding only a razor-thin majority in Congress, Klobuchar is optimistic she can find common ground with conservatives increasingly raising concerns about monopoly power, especially in the tech industry. Some of that pressure is driven by baseless allegations the companies are censoring them, which Democrats have criticized. But there are growing signs at least some conservatives plan to be more active on these issues. Sen. Josh Hawley (R-Mo.) yesterday separately introduced legislation to bar large tech companies from acquiring smaller businesses.  

Klobuchar said many of the calls for antitrust action from then-President Trump were politicized. She said it may be easier to work with Republicans on antitrust issues now that he has left office. 

“I think it will help, and hopefully people will see the light that what we’re really dealing with is competition policy and not personal vendettas about content,” she said.

But any attempt to significantly change antitrust law us certain to face fierce opposition from the tech industry, which has been increasingly spending on lobbying in Washington, including roughly $65 million last year.

Here are some of the key details from the Klobuchar bill the tech industry is sure to be watching:

Klobuchar’s bill would authorize $300 million increases to both the FTC and DOJ’s budgets.

That would bring the FTC’s to $651 million, and the DOJ antitrust division’s to $484.5 million, according to her staff. That could empower the agencies to hire more people, especially with technical expertise. It would also establish a new independent division within the FTC to conduct market studies to understand where there might be competition issues in the economy. 

“You can’t take down trillion-dollar companies with duct tape and Band-Aids,” Klobuchar said in an interview. 

The legislation would also put the burden on large companies to show their acquisitions of start-ups wouldn’t risk harming competition.

Right now, the burden is on the government to show that, so such language could have a significant impact on whether tech deals get past regulators. It’s a key move as the recent Facebook case from the FTC zeroed in on the company’s acquisitions of smaller players like Instagram and WhatsApp, which were not blocked by the federal government at the time of the deal. 

Our top tabs

Internet providers in Myanmar blocked access to Facebook in the fallout of a military coup.

© Sai Aung Main/AFP/Getty Images
People light up their phones after calls to protest were posted on social media in Myanmar. Facebook has since been blocked. (Sai Aung Main/AFP/Getty Images)

Internet providers in Myanmar blocked access to Facebook in the fallout of a military coup. The country’s Ministry of Communications Information posted an online letter stating the social network would be blocked in the country until Sunday, citing a need for “stability.” The move is raising human rights concerns as nearly half of the country’s 53 million people use the service as a key communication channel, Reuters reports.

Individual users reported inability to access several services. NetBlocks, a network monitoring group, confirmed a state-owned telecom provider that serves 23 million people had blocked Facebook, Messenger, Instagram and WhatsApp. Facebook confirmed the actions. “We urge authorities to restore connectivity so that people in Myanmar can communicate with their families and friends and access important information,” Facebook spokesman Andy Stone told Reuters.

Facebook has previously come under fire for its response to hate speech fomenting violence in the country, and it said earlier this week it was taking emergency measures and removing content praising the coup.

American social media companies are also facing pressure from the Indian government for their handling of accounts critical of the country’s prime minister, Narenda Modi, and his government, BuzzFeed’s Pranav Dixit reports. “The Indian government has threatened to punish Twitter employees with jail time of up to seven years and fines after they restored hundreds of accounts that the government had ordered the company to block.”

Parler’s CEO says he was fired.

© Gabby Jones/Bloomberg
The future of the conservative social media site is uncertain. (Gabby Jones/Bloomberg News)

“On January 29, 2021, the Parler board controlled by Rebekah Mercer decided to immediately terminate my position as CEO of Parler,” John Matze wrote in a memo to staffers obtained by Fox Business. “I did not participate in this decision.”

The conservative-friendly social media network, which has sued Amazon Web Services for cutting off its service, is in an increasingly perilous position as it plots its relaunch. A top lawmaker has asked the FBI to investigate the app’s role in organizing the Jan. 6 Capitol siege, noting that the request is a step toward opening a formal House investigation into websites, including Parler, that may encourage violence.

Amazon’s leadership shake-up leaves Facebook’s Zuckerberg as last man standing.

© Erin Scott/Reuters
Jeff Bezos’s departure as Amazon’s CEO leaves Facebook founder and CEO Mark Zuckerberg as the only major tech company founder still in the role. (Erin Scott/Reuters)

Jeff Bezos’s decision to step aside from the CEO role at the company he founded is the most visible symbol of a profound changing of the guard in Silicon Valley, Elizabeth Dwoskin writes. Bezos, who is giving Amazon cloud computing head Andy Jassy the reins of the tech giant, leaves Mark Zuckerberg as the only major tech company founder who is still CEO. (Bezos owns The Washington Post).

The decades-long industry shift began in 2000, when Microsoft’s Bill Gates stepped down as the company’s CEO. The strategies of the founders, which turned their companies into massive businesses, have also drawn intense scrutiny from governments around the world. 

Inside the industry

Regulators are scouring pro-GameStop social media sites for signs of fraud.

© Jonathan Ernst/Reuters
Treasury Secretary Janet Yellen plans to meet with top regulators this week to discuss the ups and downs of the video game store chain. (Jonathan Ernst/Reuters)

But a fraud case will be difficult to prove because such cases require evidence of material misstatements of fact, Bloomberg News’s Benjamin Bain and Daniel Avis write. The ramped-up investigation comes as Treasury Secretary Janet Yellen plans a meeting with top financial regulators to discuss the rapidly rising and falling video game store chain’s stock.

Brad Bennett, a former enforcement head of the Financial Industry Regulatory Authority, or Finra, said that such fraud cases are not easy to prove because “it’s no crime to go on a website and say, ‘I think the stock’s going to go up.’ ” But the regulators are searching for information that potentially illegally affected the market.

Privacy monitor

Amazon plans to watch its delivery drivers.

Its new camera system is designed to increase safety but will probably be scrutinized for its privacy implications, The Information’s John Di Stefano reports. The company shared plans in a new video that notes that the onboard Netradyne technology is an industry leader in combining artificial intelligence and video technology.

Amazon has long faced scrutiny for its treatment of work. Matt Saincome, the founder of music satire site the Hard Times, had this to say about the new announcement:

Canadian officials say Clearview AI’s software is illegal.

© Chris Wattie/Reuters
Officials said the technology presents serious risks for Canadians. (Chris Wattie/Reuters)

Facial recognition start-up Clearview AI is facing the heat in Canada, where officials say that the company violated Canadian and local laws. The company has also been scrutinized in the United States, where law enforcement agencies nationwide use the secretive technology.

“Clearview AI’s technology allowed law enforcement and commercial organizations to match photographs of unknown people against the company’s databank of more than 3 billion images, including of Canadians and children, for investigation purposes,” Canadian officials said in a statement. “Commissioners found that this creates the risk of significant harm to individuals, the vast majority of whom have never been and will never be implicated in a crime.” The company said in a statement to TechCrunch it was not operating in Canada, and argued its practices were in line with legal precedent in the country. 

Mentions

Rep. Ken Buck (R-Colo.) has been named the top Republican on the House Judiciary Committee’s antitrust panel.

Daybook

• European Commission President Ursula von der Leyen speaks at the virtual Masters of Digital conference today at 11 a.m.
• John Samples, a member of Facebook’s oversight board, speaks at a virtual R Street Institute event today at 2:30 p.m. The discussion will center on the board’s upcoming decision on Donald Trump’s fate on the social media network.
• Sen. Edward J. Markey (D-Mass.) delivers a keynote address on the first day of the three-day virtual INCOMPAS communications and technology policy summit on Feb. 8 at noon.
• Acting Federal Trade Commission chair Rebecca Kelly Slaughter delivers the keynote address at the virtual Privacy Papers for Policymakers Award event on Feb. 10 at 1 p.m.

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