China Competition Bill Seen Undercutting Big Tech Regulation (1)

A top House Democrat and advocacy groups are sounding the alarm over a trade provision in legislation to bolster US competitiveness they say would obstruct regulation of large technology companies.

The Senate-passed United States Innovation and Competition Act (S. 1260) includes a requirement for the Office of the US Trade Representative to impose penalties on countries that refuse to get rid of digital governance policies deemed illegal trade barriers.

Because the language is so broad, digital governance policies under scrutiny could include anti-monopoly regulations, privacy regimes, and content moderation requirements around the world, advocates warn. USTR’s expanded authority to penalize trading partners for such efforts would come just as the US Congress is weighing a suite of proposals to rein in big tech, including by changing antitrust laws, improving consumer privacy, and overhauling Section 230, a law that shields platforms from liability for what their users post.

Photographer: Kirill Kidruavtsev/AFP via Getty Images

Photo taken in 2021 in Moscow shows the US online social media and social networking service Facebook’s logo on a tablet screen.

The trade title in USICA was led by Senate Finance Committee Chair Ron Wyden (D-Ore.) and ranking member Mike Crapo (R-Idaho). In a statement to Bloomberg Government, Jan Schakowsky (D-Ill.), chair of the House Energy and Commerce Committee’s consumer protection panel, denounced the provision.

“The Senate Finance approach to tech policy in USICA and in general — enshrining our failed laws in trade policy — would further entrench business models that have spread extremism, vaccine disinformation, and dangerous conspiracy theories that inspire right wing terrorism,” Schakowsky said. “This is exactly the wrong approach.”

Read more: BGOV OnPoint: China Competition Bill Heads to Conference

Lawmakers are working to reconcile USICA with the House-passed America COMPETES Act (H.R. 4521) to pass a sweeping China competition package by the end of the summer. House Majority Leader Steny Hoyer (D-Md.) said lawmakers aim to resolve the differences between the bills later this month.

Schakowsky, a conferee, said she “will fight to make sure this bad approach stays out.”

But Wyden said the language in the measure is an effort to fight a “tide of digital censorship” from authoritarian forces in China, Russia, and other countries.

“My amendment with Senator Crapo begins the process of fighting back, by calling on USTR to identify nations that engage in coercive digital censorship,” Wyden said in an email. “I plan to continue working to craft targeted and effective tools for fighting back against online censorship, the control and misuse of data, and other digital rights abuses in China and other nations that seek to control online speech.”

Read More: Bipartisan Draft Bill Would Fortify Children’s Data Privacy

Right to ‘Reasonably’ Regulate

Lori Wallach, director of the American Economic Liberties Project’s ReThink Trade Program, said the language likely would hit EU policies, such as the Digital Markets Act to boost tech competition and the Digital Services Act to counter illegal content, deceptive advertising, and online disinformation.

Similar efforts are underway in the US. Schakowsky, for one, has introduced the Online Consumer Protection Act (H.R. 3067) to overhaul Section 230 and thwart the spread of harmful content. And bipartisan antitrust legislation is expected to come to a Senate vote later this month.

In a May 16 letter to senators, AFL-CIO government affairs director William Samuel called for scrapping the language, contending it would “overwhelmingly benefit” big tech companies such as Alphabet Inc.’s Google and Meta Platform Inc.’s Facebook “at the expense of countries’ right to reasonably regulate global digital platforms.”

“This provision is overly broad and would have global ramifications, as it is not drafted to be specific to China,” Samuel wrote.

Google and Facebook didn’t immediately respond to a request for comment.

The Coalition for App Fairness, whose members include Spotify Technology SA and Epic Games Inc., also have expressed concern the language would undermine efforts to promote fairness and competition in the digital app economy.

Congress should refrain from expanding USTR’s authority “in any way that could strengthen the hand of Big Tech in their efforts to block competition-enhancing laws at home and abroad,” Rick Van Meter, the coalition’s executive director, wrote last month to House and Senate leaders.

With assistance from Mia McCarthy

To contact the reporter on this story: Maria Curi in Washington at mcuri@bloombergindustry.com

To contact the editors responsible for this story: Sarah Babbage at sbabbage@bgov.com; Anna Yukhananov at ayukhananov@bloombergindustry.com