1 big thing: DOD report tees up spectrum action

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2. Catch me up: Copyright, AI and TikTok

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3. What we're hearing: AI and civil rights

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It's Thursday! And the government's on track to shut down Sunday at 12:01am ET. If that happens, we're not going to send you an alert, because the news will be everywhere.

But if we notice any new shutdown wrinkles for agencies you care about, or if we get good intel about what the approps solution will look like, we'll jump into your inbox.

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Tech Policy

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1 big thing: An EU lawmaker reflects on a D.C. trip

2. Hill hearing watch

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It's Tuesday, Pro readers. The House and Senate are back. The National Quantum Initiative Act expires at the end of the week. Oh yeah, and there's a shutdown looming. 

📡 Join us tomorrow at 8:15am ET for an event featuring discussions with decision-makers on broadband and how to reduce the digital divide. Guests include Sen. Ben Ray Luján, FCC chair Jessica Rosenworcel and NTIA administrator Alan Davidson. 

Register here to attend in person or virtually.

✅ Thank you for reading Axios Pro Policy, and thanks to editors Mackenzie Weinger and David Nather and copy editor Steven Patrick.

1 big thing: App store advocates keep steady push for change

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Welcome back, Pro readers. What a weekend.

⚡️ Situational awareness: The Senate on Saturday night confirmed Geoffrey Starks and Brendan Carr to new terms on the FCC.

✅ Thank you for reading Axios Pro Policy, and thanks to editor Mackenzie Weinger and copy editor Brad Bonhall.

1 big thing: High-speed internet money under scrutiny

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2. Black, Latino leaders zero in on AI

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3. Bills of the week: AI and surveillance

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4. Catch me up: FTC, DOD and the UK

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Good afternoon!  It's Thursday and we're barreling toward a shutdown.  Let us know what you're most worried about in tech policy by replying to this email.

The House and Senate aren't in session on Monday in observance of Yom Kippur, so we'll be back in your inbox next Tuesday unless there's breaking news before then.

1 big thing: What's next for net neutrality

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2. Shutdown to undermine tech goals

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3. What we're hearing: Tribal broadband grants

We hope you made it to our event this morning with Sen. Ben Ray Luján, FCC Chair Jessica Rosenworcel and NTIA administrator Alan Davidson — but we've got you covered if you didn't. Just keep scrolling!

The Federal Trade Commission is suing Amazon over alleged anticompetitive business practices in a long-awaited case against the massive online retailer and platform.

Driving the news: The FTC voted 3-0 to proceed with the Amazon suit, per an announcement Tuesday.

Rumors of a big Amazon FTC case have been flying for years, starting under the Trump administration, and the agency started working on its complaint in earnest earlier this year.

17 state attorneys general also signed onto the complaint.

Amazon "is a monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power," the FTC's Tuesday press release reads.

Why it matters: If the FTC, led by Democrat Lina Khan, is successful in this suit, it could fundamentally alter the way Amazon's business operates and notch a major win for Khan and the other commissioners.

Khan has been eyeing Amazon since she was a law student, garnering attention for a paper on how antitrust law should be applied to it.

The big picture: Under Khan, the FTC has suffered a string of losses in court attempting to bring down Big Tech companies, including a bid to block Microsoft's acquisition of Activision Blizzard and an attempt to keep Meta from buying virtual reality fitness startup Within.

What they're saying: "Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies," said Khan in a press release on Tuesday.

The suit alleges "Amazon's actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon," per the FTC release.

"While we go through a variety of tactics in the complaint, the goal is the same — to deprive rivals of the scale to compete against Amazon," Khan told reporters in a call on Tuesday.

Khan declined to say whether she seeks a breakup of Amazon, saying this suit is about finding liability for anti-competitive conduct.

The other side: "If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses—the opposite of what antitrust law is designed to do," Amazon general counsel David Zapolsky said in a statement.

"The lawsuit filed by the FTC today is wrong on the facts and the law, and we look forward to making that case in court."

Meanwhile, the FTC sued Amazon in June for allegedly tricking people into Prime memberships and making it difficult to cancel, Axios previously reported, and added names of executives to the suit last week. Amazon said the suit was wrong on "both the facts and the law."

The FTC also settled with Amazon earlier this year over privacy violations connected to its Alexa smart devices and Ring cameras.

Republican FTC nominees Melissa Holyoak and Andrew Ferguson are expected to receive votes in the Senate Commerce Committee soon after a smooth hearing last week, but the looming government shutdown could delay them joining the agency even longer.

from buying virtual reality fitness startup Within

FTC files long-awaited antitrust case against Amazon

The FTC is suing Amazon over alleged anticompetitive business practices in a long-awaited case against the massive online retailer and platform.

Illustration of a giant Amazon logo surrounded by orange cones.

Federal Trade Commission (FTC)

The Federal Trade Commission is suing Amazon over alleged anticompetitive business practices in a long-awaited case against the massive online retailer and platform.Driving the news: The FTC voted 3-0 to proceed with the Amazon suit, per an announcement Tuesday.

National

Microsoft CEO Satya Nadella testified in federal court Monday that Google has unfairly hobbled his company's effort to compete in search — and that advancements in artificial intelligence likely won't change the landscape enough for Microsoft to catch up.

What's happening: Arguments are underway in the third week of the trial of the Justice Department's lawsuit against Google for alleged monopolistic behavior in maintaining its dominance of the internet search market.

Nadella's testimony is one of a handful of high-profile appearances from technology CEOs expected during the trial, which is likely to last about ten weeks.

The DOJ, along with state attorneys general, argues that Google's deals with Apple and Android establishing its service as the default search engine on smartphones hobbles search rivals and makes real competition impossible. 

The big picture: Microsoft and Google have been bitter rivals, with occasional truces, for two decades.

Microsoft's close alliance with ChatGPT maker OpenAI and early integration of conversational AI into Bing raised Bing's profile earlier this year.

Between the lines: Microsoft has argued before that Google and Apple's default search deal slowed Bing's growth. But Nadella's statement that AI might not help Bing gain ground against Google bolsters the DOJ's case.

What they're saying: "The distribution advantage Google has today doesn't go away," Nadella said while being questioned by DOJ lawyers. "In spite of my enthusiasm that there is a new angle with AI, I worry a lot that, in fact, this vicious cycle that I'm trapped in can even become even more vicious because the defaults get reinforced."

"Yeah, I mean, look, let's call it the exuberance of someone who has like 3% share, that maybe I'll have 3.5% share," Nadella said of earlier comments he'd made about ChatGPT's potential to upend the search market.

Nadella said he's worried AI will make it "even worse of a nightmare to make progress in search because there's a new avenue to lock up essentially what's the thing that feeds the power of these [large language models], which is content."

"Everybody talks about the open web — but there is really the Google web," Nadella said. He also said he "focused every year of my tenure as CEO to see if Apple would be open" to a default agreement with Microsoft.

The other side: Google argues that its search engine is simply the best, that consumers love it and can easily switch to another if desired, and that's how it maintains its exclusivity deals.

Google's lawyers have also been arguing that when search engine defaults have been switched away from Google in the past to Bing or Yahoo, customers have chosen to switch back because they prefer Google.  

Flashback: The Justice Department and 11 state attorneys general first filed a complaint against Google in 2020, accusing the tech giant of violating Section 2 of the Sherman Antitrust Act.

Microsoft CEO decries "vicious cycle" of Google search dominance

Google has such a strong lock that even the disruption of AI is unlikely to break it, the CEO said.

Microsoft CEO Satya Nadella outside a federal courtroom in Washington DC

Satya Nadella, CEO of Microsoft, arrives at federal court in Washington, DC, US, on Monday . Photo: Nathan Howard/Bloomberg via Getty Images

Microsoft

Microsoft CEO Satya Nadella testified in federal court Monday that Google has unfairly hobbled his company&#x27;s effort to compete in search — and that advancements in artificial intelligence likely won&#x27;t change the landscape enough for Microsoft to catch up.What&#x27;s happening: Arguments are underway in the third week of the trial of the Justice Department&#x27;s <a class="gtmContentClick" data-vars-link-text="lawsuit against Google" data-vars-click-url="https://www.axios.com/2023/09/12/google-doj-search-antitrust-case-opening" data-vars-content-id="3347f6d1-cd29-40ce-877d-2137fe25c0d5" data-vars-headline="Microsoft CEO decries &quot;vicious cycle&quot; of Google search dominance" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2023/09/12/google-doj-search-antitrust-case-opening" target="_self">lawsuit against Google</a> for alleged monopolistic behavior in maintaining its dominance of the internet search market.

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

FCC Chair Jessica Rosenworcel is reviving the historically contentious net neutrality debate now that the agency has a Democratic majority. 

Why it matters: A lot has changed since net neutrality rules were last in place and later revoked. There's a greater appreciation for connectivity as an essential resource and the government has invested billions of dollars into getting all Americans online. 

What they're saying: "I think the pandemic changed us as a nation. It was more than three years ago, but remember, we were all told to go home, hunker down and live life online," Rosenworcel said during an Axios event on Wednesday.

"We decided as a nation that broadband is no longer a luxury good. It's a necessity for everyone everywhere." 

"And we committed to make sure it reaches everyone everywhere like never before. You see that in all the legislation that Congress passed, and especially in the bipartisan infrastructure law, which commits $65 billion to closing the digital divide."

"So now that we've decided that this infrastructure is so essential for modern life, I think we should decide it remains open."

Driving the news: Rosenworcel on Tuesday announced plans to restore rules aimed at ensuring internet companies treat all traffic equally.

The net neutrality rules would place providers under the same classification as phone companies, allowing the FCC to treat the internet as an essential service subject to greater regulation.

Anna Gomez's confirmation earlier this month gave Democrats the majority on the FCC they needed to move forward.

Of note: "I think we should make it a national policy to make sure it's open and not just leave this issue to the states, which is where it resides right now," said Rosenworcel.

Some states like California and Washington already have net neutrality rules, and the agency's move is an effort to replace what they call a patchwork of rules with one federal standard.

"So the truth is across the country, we are living in a world with open internet policies in place, but they're coming from state capitals. And I think in a modern digital economy, we should have a uniform national law," she said.

Whether federal regulations should preempt state ones will be a key issue to watch for in the rulemaking process.

Flashback: The Obama-era rules to reclassify broadband under what's known as Title II were fought by the telecom industry in court and eventually rolled back under former President Trump's FCC Chair Ajit Pai.

"The FCC had rules: Blocking was not allowed, paid prioritization was not allowed, throttling was not allowed. And those rules were upheld by the courts," Rosenworcel said Wednesday. 

"So I'd like to see them put back in place because we've made it a national policy to make sure broadband reaches everyone everywhere."

The intrigue: Sen. Ben Ray Luján said during the same event that he's been supportive of reclassifying broadband under Title II, but he's open to any legislation that would get more people access to high-speed broadband and could pass both chambers of Congress.

"If more people can get connected, if that's going to be the goal of what a legislative initiative would result in, it's something I'd be open to," he said. "I'm open to ideas and solutions that show me how we can get there without creating loopholes.

On the FCC's policy priorities, Luján said he hopes for a focus on efforts to fight digital discrimination.

"If we're all committed to connecting America with broadband connectivity, let's not make it harder. Let's look at these rules and find ways to ensure people that are not currently connected, or that I would say were discriminated from being connected … let's get them connected."

What's next: The commission on Oct. 19 will vote on whether to advance the draft rules.

"The whole effort right now is to make sure that we kick off a rulemaking and take in a whole lot of comments. Ask how the world has changed since these rules were last in place. Across the board, I think we need to have a fresh record on that," Rosenworcel told Axios.

What's next for net neutrality

FCC Chair Jessica Rosenworcel is reviving the historically contentious net neutrality debate now that the agency has a Democratic majority.

Rosenworcel speaks during an Axios event on Sept. 27. Photo: Eric Lee/Axios

Net neutrality

FCC Chair Jessica Rosenworcel is reviving the historically contentious net neutrality debate now that the agency has a Democratic majority. Why it matters: A lot has changed since net neutrality rules were last in place and later revoked. There&#x27;s a greater appreciation for connectivity as an essential resource and the government has invested billions of dollars into getting all Americans online.

The Supreme Court said Friday it will decide the fate of controversial Texas and Florida laws restricting social media platforms' freedom to moderate content.

Why it matters: The case is likely to shape the future of online speech — and determine whether Republican-led states' efforts to fight what they view as "censorship" by Big Tech will expand or fail.

Driving the news: The Texas and Florida laws at issue before the court aim to bar social media companies from restricting certain types of political posts and accounts.

Both states' laws create mechanisms for individual residents to sue large social media companies as well as for the states to bring actions against or penalize the companies.

Tech groups have been fighting vehemently against these laws both in court and in the media.

Most provisions of both states' laws have been stayed until the courts resolve these challenges.

What they're saying: "Online services have a well-established First Amendment right to host, curate and share content as they see fit," Chris Marchese, litigation director for NetChoice, one of the groups involved, said in a release. 

"The internet is a vital platform for free expression, and it must remain free from government censorship. We are confident the Court will agree," Marchese said.

Texas attorney general Ken Paxton and Florida attorney general Ashley Moody argue social media companies infringe on conservatives' own First Amendment rights by banning certain types of content the companies have deemed as breaking their rules.

The big picture: These cases, NetChoice & CCIA vs. Moody and Netchoice & CCIA vs. Paxton, signify a long-running complaint that social media companies discriminate against conservative speech reaching the nation's highest court.

Congress will be watching closely, as it has been trying — and so far failing — to pass its own laws about how social media companies can regulate what people say.

The Biden administration had urged the court to take up the case.

What's next: A decision following oral arguments should be handed down by the end of the Supreme Court's next term in spring 2024.

Supreme Court to rule on Texas, Florida social media laws

The laws' supporters say they stop platforms from "censoring." Opponents say they violate the First Amendment.

The Supreme Court of the United States building seen in Washington D.C. on Sept. 28, 2023. Photo: Celal Gunes/Anadolu Agency via Getty Images

Supreme Court

The Supreme Court said Friday it will decide the fate of controversial <a class="gtmContentClick" data-vars-link-text="Texas" data-vars-click-url="https://www.axios.com/2022/05/16/court-texas-censorship-lawsuits-flood" data-vars-content-id="cb2e1e98-6d0e-4d2d-9e68-ad20d8ceb0e8" data-vars-headline="Supreme Court to rule on Texas, Florida social media laws" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/05/16/court-texas-censorship-lawsuits-flood" target="_self">Texas</a> and <a class="gtmContentClick" data-vars-link-text="Florida" data-vars-click-url="https://www.axios.com/2021/05/24/florida-law-free-speech-social-media-law" data-vars-content-id="cb2e1e98-6d0e-4d2d-9e68-ad20d8ceb0e8" data-vars-headline="Supreme Court to rule on Texas, Florida social media laws" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2021/05/24/florida-law-free-speech-social-media-law" target="_self">Florida</a> laws restricting social media platforms&#x27; freedom to <a class="gtmContentClick" data-vars-link-text="moderate content" data-vars-click-url="https://www.axios.com/2022/10/17/twitter-kanye-trump-elon-musk-bans-content" data-vars-content-id="cb2e1e98-6d0e-4d2d-9e68-ad20d8ceb0e8" data-vars-headline="Supreme Court to rule on Texas, Florida social media laws" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/10/17/twitter-kanye-trump-elon-musk-bans-content" target="_self">moderate content</a>.Why it matters: The case is likely to shape the future of online speech — and determine whether Republican-led states&#x27; efforts to fight what they view as &quot;censorship&quot; by Big Tech will expand or fail.

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

In 2022, Big Tech antitrust was having a huge moment in Congress. Lawmakers were on the verge of passing bills that would change the way the biggest tech companies operate — until the effort fizzled out.

The big picture: For tech companies whose business models live and die by the whims of the Apple App Store or Google Play Store, the fight is far from over.

"It's a conversation that is really about the future of the Internet," April Boyd, vice president of global government affairs and public policy at Spotify, told Axios in an interview. 

"The world cannot afford to have one company, Apple, decide what innovation and business online look like."

Driving the news: The generative AI explosion happened late last year, just as it was becoming clear that the American Innovation and Choice Online Act and the Open App Markets Act would fail to make it to a full Senate vote.

Pro-tech groups and other insiders said the bills lacked the votes to pass the full Senate. Others, including civil society and pro-antitrust groups, blamed Senate Majority Leader Chuck Schumer, saying he refused to let them go to a vote.

Both bills had cleared the Senate Judiciary Committee, with OAMA sailing through on a 20–2 vote.

What they're saying: "We're definitely very interested in the Open App Markets Act; last year there was a lot of bipartisan momentum for it, and we continue to see bipartisan momentum," Boyd said.

Spotify is talking to lawmakers around the world about "the impact to consumers of [Apple's] practices and how we want to be able to communicate with our users directly in the app," she said. "We want to be able to bring more innovative products to market in better ways."

State of play: Boyd said Spotify has been focused on past supporters of OAMA in the Senate (it was originally introduced by Sens. Marsha Blackburn, Richard Blumenthal and Amy Klobuchar, and hasn't yet been reintroduced in 2023) along with members who may want to support it this year.

Spotify CEO Daniel Ek made the rounds in the House this year, meeting groups including the Problem Solver Caucus, Boyd said.

Blumenthal spokesperson Karolina Wasiniewska told Axios that tech and antitrust are still a priority for the senator and that work continues on the bill.

Rick VanMeter, executive director of the Coalition for App Fairness, told Axios: "The Open App Markets Act is our top priority in the U.S. We're working every day, talking with members and staff on the need for the bill so that when it's reintroduced they understand why it's needed."

By the numbers: Despite a quieter conversation than in 2022, lobbying dollars are still flowing on app store bills, with Apple's spend significantly bigger than its smaller counterparts'.

Apple has spent $5 million lobbying Congress so far in 2023, per federal disclosures, with the OAMA listed as a lobbying issue "in anticipation of [reintroduction] in the current Congress." 

Spotify has spent $600,000 so far this year, including on OAMA.

Online dating service company Match Group, which supports the bill, spent $780,000 lobbying in the first two quarters of 2023.

Epic Games, which has been embroiled in a court battle with Apple over App Store policies, spent $300,000 lobbying so far this year.

The other side: One of Spotify's major complaints about App Store rules is the inability to let customers buy audiobooks from within its app.

An Apple spokesperson said it rejected Spotify's attempt to add audiobook purchases to its app last year for "not following the guidelines regarding including explicit in-app communications to direct users outside the app to make digital purchases."

Relations with the Google Play Store haven't been as icy for Spotify: In March 2022, the two companies entered a multiyear agreement enabling customers to choose to pay within the Spotify app with its own payment system or to use Google Play's billing.

Meanwhile, those hoping to push forward the debate in the U.S. are watching Europe and the U.K. closely as they move ahead with their own app store regulations.

VanMeter said the introduction this year of the U.K.'s Digital Markets, Competition and Consumers bill, which would open up mobile app stores and allow in-app payments, was promising.

In Europe, the Digital Markets Act, which will require Google and Apple to open up their app stores, will soon go into full effect. 

VanMeter said his group is advocating for strong implementation and enforcement of the law because the two companies, designated as "gatekeepers," are likely to attempt circumvention tactics to avoid compliance.

What we're watching: The deadline for DMA compliance is in March 2024. How that goes will be telling for other app store regulatory efforts.

And app store issues may also reach the Supreme Court. Both Epic Games and Apple have asked the high court to weigh in on their battle over in-app purchasing. 

App store advocates keep steady push for change

For tech companies whose business models live and die by the whims of the Apple App Store or Google Play Store, the fight is far from over.

Antitrust law

In 2022, Big Tech antitrust was having a huge moment in Congress. Lawmakers were on the verge of passing bills that would change the way the biggest tech companies operate — until the effort fizzled out.The big picture: For tech companies whose business models live and die by the whims of the Apple App Store or Google Play Store, the fight is far from over.

Ashley Gold

Stories

Microsoft CEO decries "vicious cycle" of Google search dominance

App store advocates keep steady push for change

Supreme Court to rule on Texas, Florida social media laws

What's next for net neutrality

FTC files long-awaited antitrust case against Amazon

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