How Silicon Valley might be affected by a Republican-controlled House


Washington
CNN business

With Republicans expected to take control of the House following the midterm elections, tech giants like Amazon, Google and Meta, which have been in Democrat crosshairs in recent years, will soon face a very different situation, but no less hostile — political climate in Washington.

Under the current Democrat-led Congress, top tech executives have been dragged before lawmakers to testify about everything from their companies’ dominance of the market to the impact of social media on teen mental health. Democrats have hammered at online platforms’ handling of hate speech and white nationalism, while pushing legislation that could dramatically affect the business models of big tech companies.

In the lame session, Democratic lawmakers could renew their attempts to pass technology-focused antitrust legislation against which the industry’s biggest players have spent millions lobbying.

Republicans are unlikely to ease the pressure, political analysts say. But a change of power in the House would likely mean a renewed focus on some policy priorities — mainly allegations of anti-conservative bias on social media — and perhaps even a greater emphasis on China and its related national security risks.

Here’s what the midterm election results could mean for Big Tech and the drive to regulate it.

In general, tech companies may face more political noise with a Republican house but potentially less political risk.

“Republican earnings would be good for tech megacaps like Google and Apple,” said Paul Gallant, industry analyst at Cowen Inc. “Republicans will hold hearings on content distortion, but they are unlikely to pass antitrust legislation, which is the biggest threat companies have faced in years.

Expect more of the uncomfortable grilling rituals that have made tech CEOs and their lieutenants a frequent sight in Washington, said an industry official who requested anonymity to speak more freely.

“I think the content moderation debate will not only look at how companies make decisions on their platforms, but also how they have interacted with the Biden administration,” the official predicted. “The goal will be, ‘Are you too comfortable with, and is your content moderation policy driven by the feedback you get from the Biden administration?'”

One company that could see a reprieve is Twitter, whose new owner, Elon Musk, has won plaudits from conservatives for suggesting he could reinstate the banned Twitter account of former President Donald Trump, among others, and has used the his account to support the vote for Republicans in the 2022 midterm elections.

The hearings could culminate in more sweeping proposals to strike down Section 230 of the Communications Decency Act, the federal law that gives tech platforms broad latitude to moderate online content as they see fit.

In the past, Democrats have called for Section 230 to be tightened, thus exposing tech platforms to more lawsuits, for not removing hate speech and extremist content more aggressively. Republicans have called for expanding the platform’s accountability over allegations that social media companies unfairly remove conservative speech.

Previous legislative proposals to roll back Section 230 tended to run into constitutionality issues or failed to attract bipartisan support, and those hurdles remain. But some digital rights advocates who have defended Section 230 are taking nothing for granted, saying that if they squint, they can still see a legislative path that could limit the law.

“The thing that worries me the most in the next Congress is a nasty Section 230 bill framed as being about the ‘protection of children’ or ‘stopping opioid sales’ or something that seems uncontroversial, but could have effects far-reaching negatives” This could unintentionally result in the removal of more conservative discourse, not less, said Evan Greer, deputy director of Fight for the Future, a digital privacy group.

Given President Joe Biden’s criticisms of Section 230 — a stance reiterated by the White House in September — he might as well be willing to sign such a hypothetical bill into law. But that scenario is too premature to consider right now, according to other analysts who point to the Supreme Court, not Congress, as Section 230’s center of gravity.

There are two high-profile cases pending before the Court which could greatly affect the scope of the law. The cases concern whether tech platforms can be sued in connection with federal counterterrorism laws; if the Court finds they can, it would effectively mean a significant narrowing of Section 230’s protections. And it could create openings for others to continue to undermine the law.

“Republicans in Congress certainly have their views on content moderation, but the important thing to look for is what the Supreme Court does,” said Andy Halataei, executive vice president of government affairs for the Information Technology Industry Council, a group of defense supported by technology . “That will determine whether or not Congress can move forward.”

Both parties have been aggressive towards China but expect Republicans to make it a mainstay of their agenda. Within the first few days, Republicans may be looking to set up a new select committee dedicated to China and its impact on US supply chains, according to the industry official.

The new committee will likely look at the economic leverage China may have over the United States and the national security risks it could pose, ranging from Chinese dominance in the rare earth minerals market to agricultural products, the official said.

And while Republicans would likely bring even more scrutiny to companies with ties to China, including TikTok, they would also have a substantial impact on the semiconductor industry by exploring more ways to limit Chinese access to U.S. technology.

“Republican gains wouldn’t be big for chip and tool companies because Chinese hawks will gain power,” Gallant said.

In a subsequent research note to investors, Gallant added, “For some Chinese hawks — including likely House Foreign Affairs Chairman Mike McCaul — Biden can’t go far enough,” suggesting Republicans could try to introduce even more restrictions on Chinese exports through legislation.

Several congressional observers told CNN that support for federal privacy legislation is still bipartisan and the area remains one of the few where lawmakers could make headway in the next Congress.

A proposal, known as the American Data Privacy and Protection Act, would enshrine the nation’s first consumer data privacy law in US law. It has been approved by a key House committee this year, and political analysts say it could see more opportunity to move forward next year.

The privacy issue is becoming more important to consumers by the day, Greer said, as the Supreme Court’s decision to overturn Roe v. Wade has made the security of location data, search histories, and other personal information a critical security issue.

“Fights over hot button tech policies like data privacy, antitrust and content moderation have huge implications for core issues like abortion access, voting rights, racial justice and LGBTQ+ protections “Greer said.

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