The decade DC turned on Big Tech

Facebook CEO Mark Zuckerberg had made it about an hour into his two-day marathon testimony in front of Congress before the M-word came up.

Sen. Lindsey Graham, R-S.C., was the first to float the term as lawmakers began their grilling at the April 2018 hearing. The senators wanted to know how the data from 87 million Facebook profiles was able to be harvested and sold to a political consulting firm, Cambridge Analytica, without users’ consent.

“You don’t think you have a monopoly?” Graham asked Zuckerberg.

Pausing and tripping slightly over his response, Zuckerberg said, “Doesn’t feel like that to me,” to a chorus of stilted laughter.

A year and a half later, Graham’s suggestion is no longer being laughed off. Facebook now faces antitrust investigations by the Federal Trade Commission, the House Judiciary Committee and a coalition of attorneys general from 47 states and U.S. territories. The Department of Justice has said it’s conducting a broad review of the tech industry. And lawmakers are regularly introducing legislation aimed at tamping down tech companies’ wide-reaching power and influence.

As the 2010s draw to a close, the relationship between Washington and Silicon Valley appears fraught. It’s a far cry from the relatively cozy alliance they fostered at the beginning of the decade, when the aftershock of the antitrust case against Microsoft had mostly waned and lawmakers and the public alike still seemed in awe of tech’s promise of advancement.

The 2010s could have been the decade that Washington embraced the tech industry. But a series of scandals has frayed the trust tech executives built up with lawmakers and regulators early on. This is the story of how the 2010s became the decade D.C. turned on Big Tech.

Barack Obama threw his trust into technology in 2008, and it helped deliver him the presidency.

The young senator’s campaign seemed novel at the time for its savvy use of social media to build a following. Once in office, Obama made good on his promise to appoint the first chief technology officer to the White House to leverage industry advancements and modernize U.S. infrastructure and services.

Over at the FTC, agency leaders decided it was time to bring on an expert who could advise on issues intersecting technology and policy, and they hired their first chief technologist in 2010.

While there was some skepticism by government regulators over the tech industry, they still mostly let companies like Facebook and Google run their course. In 2011, the FTC settled charges that Google used deceptive practices and violated privacy promises in launching its social network, Google Buzz, forcing it to submit to regular audits for 20 years.

About a year later, the FTC also settled with Facebook for allegedly misleading users about how their data would be shared publicly and with third parties. The company agreed to new stipulations, and the same month, the FTC cleared Facebook’s $1 billion acquisition of Instagram, a money-losing company with just 13 full-time employees. As of last year, Instagram was worth an estimated $100 billion-plus, according to data compiled by Bloomberg Intelligence.

By all accounts, Obama’s reelection campaign in 2012 was even more digital than his first. The staff built on the previous successes, scaling up the campaign’s analytics team and hiring former tech employees to work on technical aspects of the campaign. The team relied heavily on Amazon Web Services to build a variety of tools, Ars Technica reported shortly after the election.

The Obama administration continued to hire tech alums in the White House. A 2016 report from The Intercept revealed 55 cases where Google employees moved into jobs in the federal government under Obama. The report also found that Google and its affiliates had at least 427 White House meetings during Obama’s presidency, based on data from The Intercept and the Campaign for Accountability.

By the middle of the decade, some latent concerns about the tech industry were starting to bubble up. The White House was beginning to take steps to promote competition across the economy, and the administration’s Council of Economic Advisers wrote that workers and consumers would stand to gain from such a push.

In April 2016, Obama issued an executive order calling on federal agencies and departments to assess and suggest specific actions to reinvigorate competition across all sectors. Alongside the order, the CEA released an issue brief suggesting, “Regulators may want to consider whether this ‘big data’ is a critical resource, without which new entrants might have a difficult time marketing to or otherwise attracting customers.”

The report signaled concerns about competition in tech markets but stopped short of a full-throttled endorsement of antitrust action. The CEA wrote that “more work is needed to understand how policies that promote competition should be applied in the digital economy and other technologically dynamic sectors.”

Within some government agencies, however, doubts about the tech industry had already started to creep in.

The DOJ, for example, sued to block a proposed $39 billion merger between AT&T and T-Mobile, claiming the combination would be harmful to consumers and unnecessary to build out AT&T’s wireless network. The companies ultimately gave up the plan in September 2011, putting AT&T on the hook for $4 billion in cash and spectrum rights due to T-Mobile parent company Deutsche Telekom.

“AT&T trying to buy T-Mobile was an effort to say, ‘Wait a minute, have we reached the limit of acquisitions within wireless?'” said a former senior antitrust official, who asked not to be named to protect the official’s current employer. The deal would have combined the second and fourth-largest telecommunication carriers in the U.S.

The FTC later opened an investigation into Google to understand if it used anticompetitive practices to fuel its search engine. It closed the case in a unanimous vote in 2013 with minor concessions from Google, but an inadvertently released copy of staff’s recommendations to the commissioners revealed underlying concerns.

The FTC staff had recommended pursuing a case against Google, The Wall Street Journal reported after the recommendation was accidentally disclosed in an open records request from the outlet. While it’s not uncommon for commissioners to vote against staff recommendations, the report fueled Google’s critics, who still point to it as a sign they are onto something.

In 2016, law enforcement started to realize tech companies wouldn’t always help their cause. Apple refused to assist the FBI in unlocking the iPhone of a mass shooter in the San Bernardino, California,  attack that left 14 people dead. Apple CEO Tim Cook called a court order requesting Apple’s help “chilling” and warned of putting the security of all iPhone users in danger if the company wrote a “master key” to break the encryption. The FBI was ultimately able to crack into the iPhone without Apple’s help.

Eventually, two major flashpoints seemed to convince lawmakers and regulators that they could — and in some cases, should — do something about Big Tech.

The first mainly rippled through circles of academics and antitrust professionals. Lina Khan, then a law student at Yale, published an article in the Yale Law Review called “Amazon’s Antitrust Paradox” in January 2017. The article called into question traditional interpretations of antitrust law that often measure the so-called consumer welfare standard based on price. That standard is not adequate to measure harm by a tech company like Amazon, Khan argued, since the firm’s structure has allowed it to keep prices low while circumventing antitrust enforcement.

The article didn’t spark immediate consensus, but it did light up conversation.

“It was a good piece at the right time,” said Harry First, a law professor at New York University. “You walk around you see you’re in a nice middle class neighborhood and the stores are all going out of business and you know that you’re using Amazon a lot. … These are very visibly big companies, it is not like an oil company or a steel company that you don’t see it. These are consumer-facing businesses that are part of your everyday life.”

The second flashpoint went far beyond academic circles. In March 2018, The Guardian and The New York Times broke the story of how Cambridge Analytica obtained Facebook data without users’ consent and used it to aid Donald Trump’s presidential election campaign in 2016.

The story prompted outrage at a time when Americans were particularly divided in the wake of Trump’s election and concerned about Russian interference through social media platforms. The most important response, according to Jen King, director of consumer privacy at Stanford Law School’s Center for Internet and Society, came from lawmakers.

“I think Cambridge Analytica was pivotal a little bit less because of the public impact and a little bit more because of the effect on Congress,” King said. “Cambridge Analytica, because of its potential effect on the election, I think, is what motivated a lot of congressional actors to go, ‘Oh crap, this is a serious issue.'”

If the 2010s were the Wild West for tech, the 2020s are likely to be the decade of rules.

While it’s still unknown how any of the various investigations into Big Tech will end, Congress and state lawmakers across the country are keen on reining in the industry’s power.

“I think to some degree it’s going to depend on whether something comes out of these investigations,” First said of how the next decade will shake out. “It may be that some of the attention will move seriously to Congress to make changes in antitrust laws. Some disillusionment could be in store if either cases are not brought or they’re brought and lost [in court].”

Lawmakers are already beginning to question how various laws, and the lack thereof, have allowed tech companies to grow so rapidly and dodge legal obstacles. Congress and federal regulators are asking how data can amass power at a tech company. They’re asking how much that data is worth, who owns that value and what it should take for a user to pick up and move their data elsewhere.

Lawmakers are starting to seem sympathetic to the FTC’s pleas for more funding and enforcement powers. Two new Senate proposals for a federal privacy law would grant the FTC resources and authority to enforce that law.

Congressional leaders are also rethinking a law that has long-protected tech platforms from liability for their users’ content. One has suggested tying the legal shield to audits that evaluate if their processes are “politically neutral.”

Even if no enforcement actions are taken against the Big Tech firms this time, that could fuel lawmakers to take up proposals to amend the antitrust laws themselves. Given the bipartisan concern over the tech industry, it’s not difficult to imagine that laws governing mergers could be reined in, the former senior antitrust official said.

“That’s the area where I think there is the greatest prospect for there to be any sort of change,” the official said.

Already, there are some proposals on the table. Sen. Amy Klobuchar, D-Minn., ranking member of the Senate Antitrust Subcommittee and presidential contender, introduced the Merger Enforcement Improvement Act in 2017 to give federal regulators more tools and resources to enforce merger laws.

Sen. Elizabeth Warren, D-Mass., who is also seeking the presidency, is drafting a broad bill co-authored by House Antitrust Subcommittee Chairman David Cicilline, D-R.I. According to a draft viewed by CNBC, the bill would apply sweeping guidelines to a range of large companies over how they price their products and treat competitors.

There’s still one major unknown that could sway the course of the next decade.

“The elephant in the room,” said Stanford Law professor Doug Melamed, “is the 2020 election.”

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