National

Senate Majority Leader Chuck Schumer (D-N.Y.) intends to put bipartisan tech antitrust legislation up for a vote by early summer, a Democratic source familiar with the situation tells Axios.

Why it matters: Schumer is in charge of the Senate's agenda, and if the bill doesn't pass soon, its prospects in the next Congress look shaky.

The legislation would then have to pass the House, where there is a companion bill.

Driving the news: Per a source familiar with the meeting, Schumer met with  Sens. Amy Klobuchar (D-Minn.) and Richard Durbin (D-Ill.) Wednesday to discuss next steps for Klobuchar's bipartisan bill, the American Innovation and Choice Online Act, which passed out of the Senate Judiciary committee earlier this year.

The bill would ban Big Tech companies like Google, Apple, Amazon and Meta from favoring their own services in an anticompetitive way, similar to a House bill approved by the House Judiciary Committee as part of a marathon markup last summer.

Schumer urged Klobuchar to release an edited version of her bill with input from bipartisan members of the Judiciary Committee soon, so members have time to review it before it's put up for a floor vote, per the source.

Schumer told Durbin and Klobuchar he fully supports the antitrust bill, and committed to putting a revised bill on the Senate floor, according to the source. 

Flashback: Though the bill passed out of committee, a number of members said it needed changes before they'd commit to voting for it in the full Senate.

Democratic leadership is working on ensuring 60 votes. Klobuchar recently presented to the Democratic caucus seeking support for her antitrust proposals.

The other side: Opponents of the bill say it would undermine national security, embolden China, break encryption services and endanger tech services consumers enjoy.

Scoop: Schumer seeks tech antitrust bill vote by early summer

The window for legislation to limit monopolistic practices by Big Tech is closing.

Illustration of a gavel in the shape of a cursor

Big Tech

Senate Majority Leader Chuck Schumer (D-N.Y.) intends to put bipartisan tech antitrust legislation up for a vote by early summer, a Democratic source familiar with the situation tells Axios.Why it matters: Schumer is in charge of the Senate&#x27;s agenda, and <a class="gtmContentClick" data-vars-link-text="if the bill doesn&#x27;t pass soon, its prospects in the next Congress look shaky" data-vars-click-url="https://www.axios.com/2022/05/05/tech-antitrust-clock-ticking-senate-congress" data-vars-content-id="2fe5e18e-1adf-4217-82f9-cd8112d653c0" data-vars-headline="Scoop: Schumer seeks tech antitrust bill vote by early summer" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/05/05/tech-antitrust-clock-ticking-senate-congress" target="_self">if the bill doesn&#x27;t pass soon, its prospects in the next Congress look shaky</a>.<ul><li>The legislation would then have to pass the House, where there is a companion bill.</li></ul>

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

Regulators around the world are exploring forcing Big Tech companies to pay more for the internet service they rely on to make their billions.

Why it matters: A growing number of governments think tech giants should up their contributions to the basic internet service that makes their success possible. That money could prop up local economies or help close the digital divide.

Driving the news: The Senate Commerce Committee on Wednesday will vote on bipartisan legislation that would order the FCC to study the feasibility of collecting fees from companies like Google and Netflix to shore up the agency's broadband deployment subsidy fund, the Universal Service Fund.

Meanwhile, in Europe, antitrust chief and European Commission executive Vice President Margrethe Vestager said at a press conference earlier this month that "the issue of fair contribution to telecommunication networks" is something lawmakers should consider "with a lot of focus."

"We see that there are players who generate a lot of traffic that then enable their business, but they have not been contributing actually to enable that traffic, they have not been contributing to enable the investments in the rollout of connectivity," she said.

Flashback: The idea to tax Big Tech to underwrite the FCC's broadband fund, which supports internet service in rural areas, schools, libraries and hospitals, picked up steam among Republicans last year. 

Currently, a fee on phone bills pays for the Universal Service Fund, but that revenue base has been decreasing.

The big picture: Companies that connect people to the internet and those that provide what people access on the internet, like videos, TV shows and music, are battling over who should foot the bill as streaming's costs and popularity grow.

European telecommunications companies argued earlier this month that the European Commission should require Big Tech to pay telecom companies for broadband infrastructure projects.

The European telecoms say social media and tech companies — including Meta, Netflix and Amazon — account for 55% of traffic on mobile and broadband networks, costing them between 15 billion and 28 billion euro per year, per the Financial Times. 

The intrigue: Netflix is already engaged in this fight in South Korea. 

Proposed legislation there would make global content providers pay local network fees, and the streaming giant is in court fighting a local ISP's efforts to collect money, per Reuters.

The law being debated in the Korean National Assembly would incur a "huge additional cost" for YouTube and could have a "direct impact on the domestic YouTube business," making it difficult for YouTube to invest in South Korea's creator ecosystem, wrote Gautam Anand, executive vice president for Asia Pacific at YouTube, in a company blog post in Korean last month (English version courtesy Google Translate).

Internet service providers in the U.S. have argued Big Tech should pay into the increasing cost of broadband.

The Senate proposal is "critical to the future of the Universal Service Fund," USTelecom CEO Jonathan Spalter said in a statement to Axios. "USF has long benefitted a wide universe of companies — streaming, videoconferencing, e-commerce, cloud computing and more — that largely do not contribute to the FCC’s critical universal service programs. It’s time they step up."

The other side: "Consumers currently pay internet access fees and companies that use extra bandwidth for everything from search to video streaming already pay extra fees to internet access providers," said Matt Schruers, president of the Computer and Communications Industry Association, which represents Big Tech companies. "These digital services help create the demand for the services internet access providers are selling."

“American families are struggling with high gas prices and skyrocketing grocery bills, and the last thing they need is a new tax on online services that bring them competition, choice and savings," said Angie Kronenberg, chief advocate and general counsel for INCOMPAS, a trade association representing both smaller broadband companies and large tech platforms like Google and Amazon.

In the Senate, The FAIR Contributions Act was introduced by committee ranking member Roger Wicker (R-Miss.) but now counts communications subcommittee chairman Ben Ray Luján (D-N.M.) as a sponsor. 

“The FAIR Contributions Act would be an important step to help ensure that Americans in unserved and underserved areas are not left behind as we work to close the digital divide,“ Wicker said in a statement to Axios.

"The same companies that benefit from public funding for broadband connectivity should be willing to support this proposal," Luján told Axios. 

What they're saying: FCC Commissioner Brendan Carr told Axios it's time for a "fundamental rethink" on who pays into the agency's broadband funds.

"It's sort of a universal idea that people are realizing that these are the companies that are benefiting from these expenditures and so why don't we look at them to pay in as well," Carr told Axios.

New push to make Big Tech pay more for bandwidth

The Senate is taking up a bill that would tax companies like Google and Amazon to support low-income Internet access.

Illustration of a loading screen with a dollar on it

Senate confirms Bedoya for FTC seat, giving Democrats majority

His arrival at the commission will give chair Lina Khan a chance to enact tougher policies.

Photo Illustration: Pavlo Gonchar/SOPA Images/LightRocket via Getty Images

Federal Trade Commission (FTC)

The Senate has voted to confirm Alvaro Bedoya to the Federal Trade Commission, giving Democratic chair Lina Khan a majority at the agency after a long wait. Why it matters: Khan can now move forward with the aggressive pro-competition agenda she&#x27;s planned, with three Democratic members sitting on the five-member commission.

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

Federal Trade Commission chair Lina Khan has a chance to work her way down her Big Tech to-do list, nearly a year into her tenure, now that she has a Democratic majority in hand.

Driving the news: The Senate voted 51-50 Wednesday afternoon — with Vice President Kamala Harris breaking a tie — to confirm privacy expert Alvaro Bedoya to the FTC.

The big picture: Progressives last year cheered President Biden's appointment of Khan, a prominent critic of Amazon's market power, to lead the agency — but her ability to enact sweeping changes or enforcement actions has been limited so far.

The Democrats' majority at the five-person agency now opens the door for Khan's agenda, expected to include:

1. New privacy and competition rules. Biden called on the FTC to craft rules on data and surveillance, as well as rules barring unfair methods of competition on internet marketplaces, as part of a wide-ranging executive order on competition last summer.

Khan will now have the votes to propose new rules around unfair competition practices, children's privacy, consumer privacy, and the use of non-compete contracts, along with the use of data and surveillance.

2. Aggressive enforcement on deals. The same executive order said the FTC has the power to to challenge prior mergers, something the FTC itself highlighted when Amazon closed its deal with MGM after running out the clock on the agency's review.

Agency watchers tell Axios Khan may wait to file a larger case against Amazon that goes beyond its MGM purchase.

"[Khan] was put in charge of the agency with a strong bipartisan majority to address the market power problems deriving from Big Tech. Core to those problems are their ability to leverage their power into markets through acquisitions," Sarah Miller, executive director of the American Economic Liberties Project, told Axios. 

3. More stringent guidelines on mergers. The administration called on the FTC to scrutinize mergers and acquisitions by dominant internet platforms, especially when buying smaller rivals, and Khan will be able to scrutinize and challenge mergers more successfully with Bedoya's vote.

Separately, the FTC and DOJ are also in the process of drawing up new merger guidelines, which could change the way businesses approach acquisitions.

"On the antitrust side, item number one is probably the revision of the merger guidelines, together with DOJ," Daniel Francis, the former deputy head of the FTC's Bureau of Competition, told Axios. "In practice, that's the most important document for merger control and review in the country, and everyone is waiting to see what the agencies will change. The new third vote will make all the difference."

What they're saying: Bedoya's arrival means "the urgent work of reining in the unchecked power of increasingly concentrated industries can finally move forward at the FTC," Alex Harman, ​director of government affairs for competition policy at the Economic Security Project, the anti-monopoly nonprofit founded by former Meta co-founder Chris Hughes, told Axios.

The other side: Critics of Khan's FTC, including the U.S. Chamber of Commerce, said her new Democratic majority marks the end of bipartisanship at the agency. 

"As soon as she has a third vote I expect an unprecedented flood of aggressive, partisan actions that continue to erode the commission's long history of bipartisanship," said Neil Chilson, a senior research fellow for Tech and Innovation at Stand Together and a former FTC adviser.

Between the lines: Democratic commissioner Rebecca Kelly Slaughter, the former acting chairwoman, and Bedoya will have considerable leverage over the agency's work as Khan will need their support to push through her agenda in the face of Republican opposition.

Yes, but: Khan will also need the support of FTC staff, who carry out the work of writing rules and guidelines. A recent survey showed low trust in senior leaders among FTC employees, and Politico reported tensions between FTC leadership and longtime staffers.

"The FTC has been a gem of an agency, a community of professionals dedicated to protecting consumer," Republican FTC commissioner Christine Wilson tweeted about the survey. "New leadership has marginalized and disrespected staff, resulting in a brain drain that will take a generation to fix."

Lina Khan's to-do list on Big Tech

With a key spot on the FTC now filled, the commissioner has a chance to pursue a bigger agenda.

Photo illustration of Lina Khan with the Capitol Building, a gavel, and binary code

Photo illustration: Sarah Grillo/Axios. Photo: An Rong Xu/Washington Post via Getty Images

Federal Trade Commission chair Lina Khan has a chance to work her way down her Big Tech to-do list, nearly a year into her tenure, now that she has a Democratic majority in hand.Driving the news: The Senate voted 51-50 Wednesday afternoon — with Vice President Kamala Harris breaking a tie — to confirm privacy expert Alvaro Bedoya to the FTC.

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Tech platforms are facing a new reality: Unless the U.S. Supreme Court intervenes, Texans could immediately start suing giants like Meta and YouTube over content moderation decisions they don't agree with.

Driving the news: The United States Court of Appeals for the Fifth Circuit reversed an earlier ruling that had stopped Texas from enforcing its social media law, HB 20, last week. Industry groups asked the Supreme Court Friday for an emergency stay.

The law's supporters see it as a way to get Facebook, YouTube, Twitter and other social media companies to stop what many on the right have long viewed as "censorship" of conservative viewpoints.

Opponents point out that the law is likely to let virtually anyone challenge any content-related decision by the platforms, even though most content moderation involves blocking spam and porn and barring harassment and bullying.

Details: HB 20, which applies to platforms with 50 million or more U.S. monthly users, bars "censorship" based on "viewpoint." 

It defines "censorship" as acts that "block, ban, remove, deplatform, demonetize, de-boost, restrict, deny equal access or visibility to, or otherwise discriminate against expression."

It empowers individuals to bring legal action against companies that violate the law.

How we got here: Texas passed HB 20 last September, but a federal district court judge blocked it from going into effect in December. 

Last week's appeals court ruling reversed the lower court and will allow the law to take effect unless the Supreme Court steps in.

What they're saying: "HB 20 strips private online businesses of their speech rights, forbids them from making constitutionally protected editorial decisions, and forces them to publish and promote objectionable content,” Chris Marchese, counsel for NetChoice, one of the groups appealing the ruling, said in a statement. 

“The First Amendment prohibits Texas from forcing online platforms to host and promote foreign propaganda, pornography, pro-Nazi speech, and spam.”

The law's opponents also see it as violating Section 230 of the Communications Decency Act, which protects online platforms from liability for moderating user-contributed content.

Between the lines: In theory, a social media platform could just stop taking posts from Texans as it hopes for HB 20 to lose in court.

But the law defines removing content based on "a user's geographic location in this state or any part of this state" as censorship, too, so such a move wouldn't end the flood of lawsuits.

The big picture: A number of state legislatures have attempted to pass laws that prevent social media platforms from taking down posts they find objectionable, in an attempt to fight alleged bias against conservatives. 

Members of Congress have introduced similar bills.

In Florida, a similar law passed last May was almost immediately put on hold by a federal judge. The state's appeal of that decision is awaiting a ruling from the Eleventh Circuit.

The bottom line: The Fifth Circuit decision shows that these "anti-censorship" laws can find at least some judges who won't reject them out of hand. 

Content moderation experts tell Axios this will give other states an incentive to see if they can find other sympathetic judges.

Dallas

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Court opens way for flood of Texas "censorship" lawsuits

Texans are expected to start suing giants like Meta and YouTube over content moderation decisions they don't agree with.

Illustration of a row of gavels, with all but one of them transparent.

Texas

Tech platforms are facing a new reality: Unless the U.S. Supreme Court intervenes, Texans could immediately start suing giants like Meta and YouTube over content moderation decisions they don&#x27;t agree with.Driving the news: The United States Court of Appeals for the Fifth Circuit reversed an earlier ruling that had stopped Texas from enforcing its social media law, HB 20, last week. <a class="gtmContentClick" data-vars-link-text="Industry groups asked the Supreme Court" data-vars-click-url="https://www.axios.com/2022/05/14/supreme-court-texas-social-media-law" data-vars-content-id="def4ab3b-d2bd-4fc2-805d-e50f3581704e" data-vars-headline="Court opens way for flood of Texas &quot;censorship&quot; lawsuits" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/05/14/supreme-court-texas-social-media-law" target="_self">Industry groups asked the Supreme Court</a> Friday for an emergency stay.

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Stories

Scoop: Schumer seeks tech antitrust bill vote by early summer

Court opens way for flood of Texas "censorship" lawsuits

Lina Khan's to-do list on Big Tech

Senate confirms Bedoya for FTC seat, giving Democrats majority

New push to make Big Tech pay more for bandwidth