TECH & CYBER BRIEFING: CES Debates Breaking Up Big Tech

By Rebecca Kern and Giuseppe Macri

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Should big tech be broken up? That question was raised at CES this week following months of discussion and antitrust inquiries from lawmakers and regulators in Washington.

The subject of both a tech think tank panel and a Federal Trade Commission-focused panel at CES this week is timely given ongoing investigations by the Department of Justice and the FTC into anti-competitive behavior of companies including Facebook, Amazon, Google and Apple. The House Judiciary Committee is also conducting its own tech antitrust probe.

Robert Atkinson, president of the think tank Information Technology and Innovation Foundation, said in a panel yesterday he was against the idea of a break-up. “The simple fact that big technology companies are big, is not a problem in itself, in fact it’s a benefit,” he said. Atkinson said large tech companies, such as Alphabet and Amazon, are among the top investors in research and development in the world and without their size, they couldn’t innovate.

His remarks mirrored those of Christine Wilson, a commissioner at the Federal Trade Commission, who said in an earlier FTC session that proposals from Sen. Elizabeth Warren (D-Mass.) and others to break up large, successful companies because they are large and successful “is not an approach that I would embrace.”

FTC Commissioner Rebecca Slaughter defended the intent behind some of the break-up proposals. “What they are doing is saying that we are concerned about the effects across the market, and in the market, and on consumers, of the market power that particularly large companies have, and how they are using that market power,” Slaughter said during the FTC session. “So it may be that either more regulation or breaking up is an appropriate way to remedy those concerns.”

Charlotte Slaiman, senior policy counsel at non-profit Public Knowledge, also raised the alarms over big tech’s dominance. “I am very concerned about the power of big tech, which I define as dominant digital platforms,” she said in yesterday’s panel. She did agree that antitrust laws are not necessarily well-suited to address the network effects that have led to big tech’s growth, but said new laws are needed to remedy consumer harms that are the result from dominant tech, including a federal privacy bill.

She also contested Atkinson’s premise that tech companies’ large R&D spending is the best way to measure innovation. A small company that is trying to gain market share is going to do much more disruptive innovation, she said. “A company that is already doing well, that is very comfortable in its market position, is going to do some innovation on the margins,” she said. But if a large companies discovers a great innovation that could potentially limit their market power, they might want to sit on that versus innovate, she added.

Sen. Rosen Talks STEM Bill, Tech Innovation: Sen. Jacky Rosen (D-Nev.) wasn’t able to make it to CES in Las Vegas this week due to the Senate schedule, but in a phone interview praised the state’s tech sector and highlighted STEM and tech legislation she’s pushing in Congress.

“I’m proud that Nevada is leading the nation in innovation and software job growth,” Rosen told Bloomberg Government. “I will continue to support legislation, like my bipartisan Building Blocks of STEM that was recently signed into law, to ensure that the Silver State is educating and training the workforce of tomorrow.”

Rosen and Victoria Espinel, president and CEO of BSA The Software Alliance, co-authored an opinion article yesterday in the Las Vegas Sun noting that Nevada has the fastest growing software job sector in the country.

Rosen’s bill (S. 737), signed into law by President Donald Trump late last year, expands STEM education initiatives at the National Science Foundation for young children and creates new research grants to increase the participation of girls in computer science.

She also highlighted her bipartisan Mapping to Save Moms’ Lives Act (S. 3152), which she released this week. That measure would require the Federal Communications Commission to map remote areas with internet service gaps and high rates of poor maternal health outcomes.

“In Nevada we have real frontier land, particularly in northern Nevada,” she said. “We know about 5G, we have places with no ‘G,’ We have to get everybody connected.”

She said she is working on legislation with Girls Who Code, a nonprofit that trains girls in computer coding, to require schools that receive federal funding for computer science programs to provide information on demographics in the classroom. “So many school districts say, ‘We have computer science education.’ But are we sure that we’re making it accessible, available and open or recruiting everybody to do that or just a select group,” she said.

Rosen has experience with technology, having worked as a computer programmer and software developer for numerous companies in Nevada, including Summa Corporation, Citibank, and Southwest Gas.

Happening on the Hill

Legislation & Letters:

  • House Lawmakers Unveil Bill to Revamp Children’s Privacy Law: A bipartisan House bill announced yesterday aims to modernize children’s privacy laws by raising the age of parental consent and protecting the geolocation and biometric data of minors. The measure, introduced by Republican Rep. Tim Walberg (Mich.) and Democratic Rep. Bobby Rush (Ill.), would update the Children’s Online Privacy Protection Act of 1998, known as COPPA. The bill would raise age of parental consent protections for children from age 13 to 16, and affirm the law applies to children’s privacy on mobile apps. Sens. Josh Hawley (R-Mo.) and Ed Markey (D-Mass.) introduced a similar bill to update COPPA in the Senate last March. See the House bill text here.
  • Wyden, Others Ping FCC on Wireless Scams: Sen. Ron Wyden (D-Ore.) and five House and Senate members yesterday asked the FCC to protect consumers from scammers hijacking phone numbers to steal bank and other personal information. “As the primary regulator of the wireless industry, the FCC has the responsibility and authority to secure America’s communication networks and protect consumers who rely on those networks. To that end, we urge the FCC to initiate a rulemaking to protect consumers from SIM swaps, port outs and other similar methods of account fraud,” the members wrote.

Happening Next Week:

  • Facial Recognition: The House Oversight and Reform Committee on Wednesday holds the third installment in a series of hearings on facial recognition, focusing on “ensuring commercial transparency and accuracy.”
  • Future Industries: The Senate Commerce, Science and Transportation Committee plans a hearing Wednesday on industries of the future. Witnesses include National Institute of Standards and Technology Director Walter Copan, National Science Foundation Director France Cordova, U.S. Chief Technology Officer Michael Kratsios, and FCC Commissioners Jessica Rosenworcel and Michael O’Rielly.

Industry and Regulation

Business Group Chief Urges Congress to Step Up on Privacy, Labor: Congress should move past gridlock and take the reins on issues such as privacy, where liberal states have enacted new laws, the leader of the U.S. Chamber of Commerce plans to say in a Thursday speech. “Washington’s inability to make progress on data privacy is resulting in a patchwork of state rules and regulations that will stifle the free flow of goods and services across state borders,” chamber Chief Executive Officer Tom Donohue said in prepared remarks.

As part of his annual “State of American Business” address, Donohue expressed worry about state-by-state approaches, particularly regarding data protection and worker classification in the gig economy, according to excerpts provided by the chamber, one of the most influential and highest-spending business associations in Washington. Read more from Ben Brody.

Apple Stole Tech for Watch, Masimo Claims: Apple is accused of stealing trade secrets and improperly using Masimo inventions related to health monitoring in its Apple Watch. Masimo, which develops signal processing technology for health-care monitors, and its spinoff, Cercacor Laboratories, claim in a lawsuit that Apple got secret information under the guise of a working relationship and then hired away key employees, including Michael O’Reilly, who became vice president of Apple’s health technology efforts. The business segment that includes the Apple Watch, Apple TV and Beats headphones is the company’s fastest-growing category and generated more than $24 billion in sales in the fiscal year that ended in September. Read more from Susan Decker and Mark Gurman.

New DHS Cybersecurity Assistant Director Starts: Bryan Ware earlier this week stepped into a top cyber role at Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency that was vacated by longtime assistant director Jeanette Manfra, according to a statement yesterday. Ware steps into the position just as the U.S. faces potential Iranian cyber attacks following its assassination of a top general. Sam Kaplan will fill Ware’s former position at the department later this month, Michaela Ross reports.

More Headlines:

To contact the reporters on this story: Rebecca Kern in Washington at rkern@bgov.com; Giuseppe Macri in Washington at gmacri@bgov.com

To contact the editors responsible for this story: Zachary Sherwood at zsherwood@bgov.com; Brandon Lee at blee@bgov.com

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