On December 1, the House Energy and Commerce Committee held a hearing, titled, “Holding Big Tech Accountable: Targeted Reforms to Tech’s Legal Immunity.” This week, four hearings are scheduled to take place focused on the technology sector, including a Senate Commerce hearing also titled “Holding Big Tech Accountable.” The push for increased “accountability” of large technology companies has been a recurring theme on Capitol Hill. However, the proposals to “hold Big Tech accountable” often focus on shifting the accountability away from consumers and to elected officials and political appointees.
The appeal of calling for accountability is fairly ubiquitous since “accountability” can mean practically anything. For example, when running for president, Senator Elizabeth Warren (D-MA) proposed bringing “accountability” to large corporations by granting the federal government wide discretion to determine how a company is structured and allowing for a company’s charter to be revoked on arbitrary grounds. Unfortunately, many of the proposals aimed at increasing the accountability of large technology companies are similarly heavy-handed.
In our free market system, consumers largely hold companies accountable. Companies that fail to meet consumer demand, or are usurped by a superior business, see consumers leave and a decline in business. Unfortunately, the debate in Congress has generally focused on how to expand the government's role, shifting accountability away from the consumer. Politicians and political appointees are attempting to put themselves in the driver’s seat with both aggressive antitrust overhaul proposals and reforms to Section 230, the liability protections for online intermediaries.
Legislation, like the Augmenting Compatibility and Competition by Enabling Service Switching Act of 2021 (ACCESS ACT), would mandate that large online platforms make their data portable and interoperable, and failure to do so would be a violation of antitrust law. This legislation would grant the Federal Trade Commission (FTC) enormous power to dictate innovation and growth in a vibrant sector of the economy. Mandating portability and interoperability requirements risks homogenizing diverse businesses that serve different consumer needs. Similarly, putting the FTC in a role to approve or disapprove innovation risks cutting consumers off both from services they enjoy today, but also services that are not yet available.
The House and Senate versions of the ban on self-preferencing for large online platforms similarly attempt to undermine consumers’ role in deciding which products and services they want. “Self-preferencing” is generally a pro-consumer business practice that is employed by a wide variety of industries, including retail and video streaming services. However, this bill narrowly targets a few large online platforms and would prevent the promotion of their services or sale of their products alongside rivals’. Despite consumers’ demand for these generic products, evident by the universality of this business practice, some lawmakers are attempting to limit consumer choice as a roundabout way to punish “Big Tech.” Instead of promoting competition or protecting consumers, this proposal is simply a government-knows-best proposal absent from consumer demand.
The Section 230 debate has been similarly divorced from the realities of consumers and instead is used by some lawmakers to attempt to dictate the content moderation policies of private companies. Proposals to open online intermediaries to legal liability for the use of personalized algorithms, for example, tread on the First Amendment rights of these companies. Lawmakers are proposing a personalized algorithm carveout to Section 230 to protect consumers from a feature that they want. Personalized algorithms show users content that they are more likely to engage with or want to see. They are tools that help prevent the spread of content consumers don’t want to see or harmful content. The decisions companies make to moderate content are protected by the First Amendment and they are held accountable by consumers who decide whether to use their services.
Some lawmakers who have been critical of content moderation practices of some platforms have proposed common carrier regulations for social media. Proponents claim that a lack of competition in the technology sector forces consumers to use these products and services, and therefore, social media needs utility-style regulations. However, a more plausible explanation is simply that consumers sometimes disagree with certain decisions these companies make, but these disagreements do not outweigh the benefits these services provide. There is ample competition in this growing sector of the economy, and a rush from Congress to impose a heavy-handed standard on social media companies won’t make consumer technology better, and it could create monopolies in the technology industry where none currently exist.
While the proposals surfacing generally don’t serve consumers’ interest, lawmakers and regulators still have a role to play in improving the technology sector. However, Congress has largely been consumed with antagonistic, rather than constructive, ways to address the technology sector. As states have passed their own data privacy legislation, there is a rising risk that a patchwork of data privacy standards will make it more difficult for small businesses to navigate varying laws. Congress could, and should, focus their attention on protecting consumer data privacy and simplifying the regulatory puzzle that is emerging.
While Congress should take the lead in data privacy, the FTC similarly has a constructive role in promoting U.S. global leadership in technology and advancing consumer-focused policies. At the most basic level, the FTC could do this by creating clear and transparent guidelines. Unfortunately, “zombie votes,” last-minute open meetings without engaging with public input, and overall aggressive posturing from the agency has been the norm at the FTC under Lina Khan. The FTC’s 2022 draft summary mission statement eliminated, “without unduly burdening legitimate business activity” and replaced “consumers” with “the public.” These changes mark a shift in attempting to make businesses more accountable to the government than to consumers.
The FTC’s lack of transparency and willingness to rollback bipartisan positions creates uncertainty for business, leading to harmful consequences for consumers. Rescinding guidelines for mergers and acquisitions (M&As) and sending threatening letters to companies, for example, expands the government’s role to dictating the growth and size of businesses. Again, this is a role traditionally left to consumers whose activities dictate the growth and size of businesses. Consumers voting with their wallets is a more effective way to regulate the growth of businesses than unelected antitrust enforcers putting their thumb on the scale.
Proposals to boost accountability rhetorically seem like a light-touch approach, but many of these “accountability” arguments attempt to put the federal government in a position to dictate growth and consumer needs. While Congress and regulatory agencies have an important role in creating and enforcing standards, many of the attempts to boost accountability from a select group of technology companies are aimed at making these companies less accountable to consumers. The urge to regulate a nascent sector with knee-jerk policies threatens to raise unnecessary barriers to entry for competitors and limit the services offered to consumers.