Graham, Warren Nearing Deal on Senate Bill for New Tech Regulator

Sens. Lindsey Graham, R-S.C., and Elizabeth Warren, D-Mass., are nearing agreement on legislation that would create a new consumer protection agency to regulate the tech industry, they confirmed with us.

Graham called it a “more comprehensive view” on social media regulation. “We’re having very fruitful discussions,” he said in an interview. “It’s been fun to work on it. There’s a lot of bipartisan support for this issue.” Asked whether this new agency would handle antitrust and privacy issues the FTC currently oversees, Warren told us: “We’ll have a rollout of it very soon.” Graham and Warren have often clashed over differing political views. Warren originally proposed the Consumer Financial Protection Bureau, an agency that has drawn heavy criticism from Graham and Republicans. “We’re trying to create a digital consumer protection agency to deal with all these issues,” Graham said of the latest proposal.

Former Republican officials and agency advisers on Monday criticized the FTC's latest attempts to regulate the tech industry. FTC Chair Lina Khan and Democrats, in their current exploration of a privacy rulemaking, are intent on restructuring the entire internet economy, said George Washington University professor Howard Beales, a former FTC Consumer Protection Bureau director, during a George Mason University Mercatus Center livestreamed event. It’s difficult to know what legal theories Democrats would use to declare certain tech industry data collection practices as unfair or deceptive because they haven’t stated those theories clearly, said Beales: But it seems they want to ban certain uses of information that are vital for targeted advertising and in turn vital for content delivery.

There’s concern a rulemaking would create “one-size-fits-all” standards, said former FTC General Counsel Alden Abbott, now a researcher at Mercatus: If you set fixed, “prescriptive” standards, you slow down innovation because companies can’t respond to a shifting marketplace. Less data collection leads to less information about customers and potentially worse products and services for those customers, said University of Florida professor Mark Jamison, who served on former President Donald Trump’s FCC transition team.

Increasing regulation has led to this trend of larger companies in the U.S. because regulation serves the “most powerful” companies and makes it difficult for smaller companies to compete, said Jamison. Companies will often advocate for regulations that benefit their self-interests and harm their competitors, said Beales: Apple, for example, in the current privacy debate is promoting its fee-based business model over data-based ad models for social media companies “in the name of privacy.”

When the FTC announced its initial solicitation for public comment on a potential privacy rulemaking, the commission majority stressed that it would defer to Congress if lawmakers pass a federal privacy law. House Speaker Nancy Pelosi, D-Calif., recently said the House Commerce Committee’s bipartisan, bicameral privacy bill isn’t strong enough to replace strong laws like those in California (see 2209020059). Asked about her comments, Senate Commerce Committee ranking member Roger Wicker, R-Miss., told reporters last week: “She certainly schedules things on the floor, and she’s capable of blowing up the whole deal, if she chooses to.” Sen. Jerry Moran, R-Kan., told us he’s not convinced the bill Wicker negotiated with House Commerce Committee Chairman Frank Pallone, D-N.J., and ranking member Cathy McMorris Rodgers, R-Wash., is the best option: “It doesn’t make a lot of sense to me, and I can’t imagine it’s the path forward.” Asked about Pelosi’s comments, Moran pointed to “lots of problems in the House” and lack of support from Senate Commerce Committee Chair Maria Cantwell, R-Wash.

Asked about opinions that this is the closest Congress has come to passing a bipartisan privacy bill, Sen. John Cornyn, R-Texas, told us: “I’ll believe it when I see it. Obviously, that’s always very hard, to coalesce and build some consensus on issues like that.”