The Morning Dispatch: Big Tech in the Crosshairs

Happy Wednesday! Not to toot our own horn here, but The Dispatch’s softball team won its season opener last night. Contributions from your Morning Dispatchers up and down the lineup.

Quick Hits: Today’s Top Stories

• Israel Defense Forces (IDF) launched a series of airstrikes targeting Hamas sites in Gaza early this morning in response to dozens of incendiary balloons landing in southern Israel and starting fires. “The Hamas terror organization is responsible for all events transpiring in the Gaza Strip, and will bear the consequences for its actions,” the IDF said. Authorities on both sides of the conflict have thus far reported no casualties following the renewed fighting.

• The Senate voted 69-28 on Tuesday to confirm law professor Lina Khan to the Federal Trade Commission (FTC). The Biden administration subsequently named the 32-year-old Khan—an outspoken critic of Big Tech—as chair of the five-person FTC.

• The Senate on Tuesday unanimously approved legislation championed by Democratic Sen. Ed Markey and Republican Sen. John Cornyn that would make Juneteenth—the date the last U.S. slaves learned of their freedom—a national holiday. The measure now goes to the House, where it is expected to pass.

• Alabama pastor Ed Litton was elected president of the Southern Baptist Convention (SBC) last night, beating out Mike Stone and Albert Mohler for a two-year term leading the United States’ largest Protestant denomination. Outgoing president J.D. Greear declared the vote a “defining moment” that would help determine whether the SBC is “primarily a cultural and political affinity group” or whether its “primary calling [is] being a gospel witness.” The election of Litton—a relative moderate who has mostly avoided the culture war—seems to point toward the latter.

• A new antibody testing study published yesterday by the National Institutes of Health (NIH) found evidence that the coronavirus may have been present in the United States earlier than previously thought. Of 24,000 blood samples collected by researchers in early 2020, nine were found to have antibodies against COVID-19. “The positive samples came as early as Jan. 7 from participants in Illinois, Massachusetts, Mississippi, Pennsylvania and Wisconsin,” the NIH found.

• The United States confirmed 11,888 new cases of COVID-19 yesterday per the Johns Hopkins University COVID-19 Dashboard, with 1.5 percent of the 771,242 tests reported coming back positive. An additional 344 deaths were attributed to the virus on Tuesday, bringing the pandemic’s American death toll to 600,272. According to the Centers for Disease Control, 14,232 Americans are currently hospitalized with COVID-19. Meanwhile, 1,240,847 COVID-19 vaccine doses were administered yesterday, with 143,574,144 Americans having now received at least one dose.

Big Tech in the Crosshairs for Antitrust Legislation

There are fewer and fewer areas of bipartisan agreement in Washington these days, but—as we’ve covered before—distrust of Big Tech companies is one of them. From a March TMD: 

Big Tech—the term of art for describing platforms such as Google, Facebook, Apple, Amazon, and Twitter—is increasingly under fire from both the right and the left, albeit for entirely different reasons. To simplify, Republican critiques of the platforms tend to focus on their content moderation efforts, while Democrats are more concerned about the sheer size and economic power the companies hold.

After months of hearings and investigations, that shared enmity is inching closer and closer to becoming federal policy. Lawmakers’ efforts took a huge step toward that goal on Friday, when the House Antitrust Subcommittee introduced a series of five bills—each with support from both Democrats and Republicans—aimed at, in their words, “holding unregulated Big Tech monopolies accountable for anti-competitive conduct.”

“Right now, unregulated tech monopolies have too much power over our economy,” said Democratic Rep. David Cicilline, who chairs the subcommittee. “They are in a unique position to pick winners and losers, destroy small businesses, raise prices on consumers, and put folks out of work. Our agenda will level the playing field and ensure the wealthiest, most powerful tech monopolies play by the same rules as the rest of us.”

Rep. Ken Buck, Cicilline’s Republican counterpart on the subcommittee, also threw his weight behind the bills. “Big Tech has abused its dominance in the marketplace to crush competitors, censor speech, and control how we see and understand the world,” he argued. “Apple, Amazon, Facebook, and Google have prioritized power over innovation and harmed American businesses and consumers in the process. These companies have maintained monopoly power in the online marketplace by using a variety of anticompetitive behaviors to stifle competition. This legislation breaks up Big Tech’s monopoly power to control what Americans see and say online, and fosters an online market that encourages innovation and provides American small businesses with a fair playing field. Doing nothing is not an option.”

So what would the suite of bills actually do?

• The “American Innovation and Choice Online Act” seeks to limit large companies’ ability to use their dominant market share to keep rivals at bay, specifically targeting platforms like Amazon, Apple’s App Store, and the Google Play Store that restrict third-party sellers’ ability to set their own policies and prices. Think back to the dustup between Apple and Epic Games we covered a few weeks ago, in which Apple suspended Fortnite from its App Store when Epic Games tried to implement its own, non-Apple payment system for in-app purchases.

• The “Platform Competition and Opportunity Act” would make it illegal for Big Tech companies to acquire smaller companies that could be seen as direct competitors, putting the onus on the large platforms to prove a given deal would not reduce competition. If this law had been on the books a decade ago, Facebook would likely have been prevented from acquiring Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014.

• The “Ending Platform Monopolies Act” aims to eliminate “the conflicts of interest that arise from dominant online platforms’ concurrent ownership or control of an online platform and certain other businesses.” This would, for example, make it illegal for Amazon to both operate its online store with third-party sellers and include its own “Amazon Essentials”-branded items in that online store.

• The “Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act” seeks to combat network effects that some argue lead to “natural monopolies” in the tech world by improving data portability and reducing the cost of switching between platforms.

• The “Merger Filing Fee Modernization Act,” aptly named, updates the merger filing fee rate for the first time in decades, which lawmakers argue will “ensure that Department of Justice and Federal Trade Commission have the resources they need to aggressively enforce the antitrust laws.”

In pushing back against the proposed legislation—which would, in many ways, completely upend how some of the country’s most successful companies are allowed to operate—representatives of the tech sector argued that lawmakers are essentially working backward to craft highly specific laws targeting companies they don’t like.

“Rather than offer broad antitrust reform applicable across the U.S. economy, these proposed regulations focus upon a few companies whose competing products and services are very popular with consumers,” said Matt Schruers, president of the Computer and Communications Industry Association that represents Facebook, Google, and Amazon in Washington. “The House bills … disregard the principles that have governed the U.S. market economy and would stop successful tech companies from providing consumers with the products and services that improve their lives.”

Mark Jamison, an antitrust scholar at the American Enterprise Institute, argued that lawmakers should show a little humility before trying to reshape a major sector of the economy. “We’ve failed at this before,” he told The Dispatch yesterday. “We failed at this in breaking up AT&T. We failed at this in how we tried to restructure the telecommunication industry back in 1996. Every time we try to use politics to change an industry, we do it badly.”

Perhaps anticipating this criticism, Republican Sens. Mike Lee and Chuck Grassley introduced on Monday the Tougher Enforcement Against Monopolies (TEAM) Act, which aims to reform American antitrust laws in a more sector-agnostic way than the House laws would. “America is facing a panoply of competition concerns not just in Big Tech, but across our entire economy,” said Lee, who leads the Senate Antitrust Subcommittee alongside Democratic Sen. Amy Klobuchar (who also has her own antitrust reform bill). “We need a holistic approach that deals with all of these concerns, and that benefits all consumers, in every industry—without massively increasing regulation and imposing a command-and-control grip over the economy.”

Among other things, the TEAM Act would approximately double the amount of money appropriated to federal antitrust enforcement—allowing agencies to better enforce existing antitrust law—and consolidate enforcement at the Department of Justice.

It’s far from clear that either the House or the Senate bills will make it through Congress as is, but it’s becoming increasingly apparent that there’s too much momentum behind reforms to the way Big Tech operates to believe that lawmakers will do nothing. 

And at least on this issue, traditional partisan differences are breaking down: The Senate voted yesterday to confirm Lina Khan, an uber-progressive Big Tech critic, as a Federal Trade Commissioner. Twenty-one Republicans—including Sens. Josh Hawley, Ron Johnson, and Chuck Grassley—voted in Khan’s favor. 

Monday’s NATO Summit

As President Biden continues his foreign trip to meet with various leaders this week, a consistent theme is emerging: The administration is leaning on U.S. allies across Europe to get more serious about the threat posed by China. The weekend G7 summit, which we wrote about yesterday, resulted in condemnations of China’s human-rights abuses and unfair trade practices. And a subsequent North Atlantic Treaty Organization meeting on Monday produced another round of call-outs against China’s increasingly pushy stance toward international institutions. 

In a statement following the summit, NATO members warned about several specific threats from both Russia and China, singling out Moscow’s aggressive military actions against other states in the region and cyberattacks around the world and Beijing’s “assertive behavior” that presents “systemic challenges to the rules-based international order.” 

Harsh rhetoric toward Russia is nothing new for NATO, an organization founded in large part to act as a counterweight to and provide collective security against the Soviet Union during the Cold War. But collectively speaking out against China’s aggression and growing sphere of influence is more novel. Various NATO member states have their own reasons to want to keep things amicable: Hungary, for example, boasts particularly friendly relations with China, while other European countries fear economic retaliation from the autocratic state.

“We need to address the challenges that the rise of China poses to our security even though many allies have a lot of economic ties with China,” NATO Secretary General Jens Stoltenberg told reporters this week. 

The comments from NATO are a step in the right direction, senior director at the Foundation for Defense of Democracies Bradley Bowman told The Dispatch, but financial interests in China may be preventing even more forceful action. “I think that many European countries are a year or two behind waking up to the scale and severity of the threat from China,” he said. “And I think many European companies are putting too much priority on revenue and market access.”

The NATO summit came just days ahead of Biden’s highly anticipated meeting with Russian President Vladimir Putin, which takes place today. Critics of the meeting have argued it will legitimize Putin, but Biden has shrugged this off.

“Every world leader here, as a member of NATO, that spoke today—and most of them mentioned it—thanked me for meeting with Putin now. Every single one that spoke,” Biden said. “I’ll convey to President Putin that I’m not looking for conflict with Russia, but that we will respond if Russia continues its harmful activities and that we will not fail to defend the Transatlantic Alliance or stand up for democratic values.”

Worth Your Time

• “Twitter has created a village square that everyone in the world—at least, everyone with a Twitter account—is present in, all the time. That’s new. That has never happened before, in all the time that humans have been on this planet,” writes Noah Smith in a thought-provoking essay on Substack. Smith examines the supposed power of Twitter, and whether the microblogging platform represents  “real life.” One problem with Twitter, Smith writes, is that “the platform—and thus, our public discourse—is dominated by the people with the time, energy, and inclination to shout at and denounce each other all the time. Those are probably not the people we’d pick to dominate our discourse, if we got to pick.”

• Last year, 34-year-old musician Daniel Elder used Instagram to criticize those who set a Tennessee courthouse on fire after the death of George Floyd. Since then, local choral directors have refused to program his music, he has been dropped by his publisher, and he hasn’t even been permitted to sing in local choirs. Robby Soave profiles the last year of Elder’s life in Reason. “What happened to Elder has happened to countless others. And as with so many of those others, Elder’s story doesn’t have a happy ending,” Soave writes. “He has survived his ordeal only in the most literal sense: His career is in shambles, and recovering will be extremely difficult. Social media has a long memory.”

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Toeing the Company Line

• Remnant regular Tevi Troy joined Jonah on the podcast’s latest episode to discuss the changing of the guard in Israel. From Benjamin Netanyahu’s legacy to the benefits and drawbacks of Israel’s chaotic parliamentary system, you won’t want to miss their conversation.

• Yesterday’s Uphill broke down where things stand with Senate infrastructure negotiations before turning to the upcoming House vote on repealing the 2002 authorization for the use of military force behind the 2003 invasion of Saddam Hussein’s Iraq. “It’s still an uphill climb to final passage,” Haley writes. “But proponents of repealing the authorization have an ally in the White House, which explicitly backed the repeal bill on Monday.”

• In this week’s Sweep, Sarah takes a skeptical look at a poll result finding that nearly a third of Republican voters believe Donald Trump will be “reinstated” as president this year, and Chris Stirewalt previews the New York City mayoral race. 

Let Us Know

Depending on when you read this newsletter, President Biden is either set to kick off his bilateral meeting with Vladimir Putin any minute, or it just started. If you were a White House aide, what advice would you give him about how to handle the summit?

Reporting by Declan Garvey (@declanpgarvey), Andrew Egger (@EggerDC), Haley Byrd Wilt (@byrdinator), Charlotte Lawson (@charlotteUVA), Ryan Brown (@RyanP_Brown), Harvest Prude (@HarvestPrude), Tripp Grebe (@tripper_grebe), Emma Rogers (@emw_96), Price St. Clair (@PriceStClair1), Jonathan Chew (@JonathanChew19), and Steve Hayes (@stephenfhayes).