The agreement on the Digital Markets Act (DMA) released on March 24, 2022 has clearly been a source of inspiration for S.2992,”The American Innovation and Choice Online Act,” now pending before the Senate, and its companion bill, H.R.3816, in the House.  Finding the right balance between the many and varied interests that these bills seek to address requires difficult tradeoffs that need to be considered carefully and not on a rushed timetable. Given what’s at stake, we cannot afford to get this wrong.

SIIA is concerned that these legislative proposals will –

• Weaken national security.  Large U.S. tech companies are critical to important R&D in emerging technologies like AI and quantum computing and provide a significant portion of the backbone for the global internet. Hobbling them will have profound effects on U.S. national security. First, it will create a vacuum that will be filled in the short term by massive non-U.S. companies that do not subscribe to the democratic values that the U.S. believes are essential for the future of tech and our geopolitical order. This will strengthen certain companies tied to authoritarian regimes as there are no large platforms in other democratic nations – including Europe – primed to provide the services and access that these U.S. companies do. This puts the U.S. government at a disadvantage for national security and law enforcement needs while bolstering China’s bid to overtake the United States in economic power and technological innovation.
• Weaken cybersecurity. At a time when we are more vulnerable to cyberattacks, ransomware, and privacy intrusions by malicious state and non-state actors, these bills will hinder the ability of large platforms to maintain a safe and trustworthy internet ecosystem. By restricting these companies in their ability to protect consumers’ personal information, the bills, if enacted, will make the enforcement of strong cybersecurity policies more difficult and put at risk the security of the U.S. and its allies and partners.
• Weaken privacy protections. The bills will also undermine consumer privacy. Tech platforms often compete by offering better privacy protections than their competitors. But such company-specific privacy policies could easily run afoul of the bills’ duty not to discriminate. In addition, the proposals require large U.S. tech companies to turn over user data to any company that requests it, irrespective or where it is located. Under the domestic laws of China and Russia, for example, the government can compel the disclosure of information, which would pose a threat to U.S. persons.
• Diminish consumer welfare. For decades, U.S. antitrust law has been guided by the consumer welfare standard with the focus of competition policy being on protecting the interests of consumers. Under this standard, the conduct of individual companies is only relevant if it is anti-competitive. Competition law normally applies to all businesses, not just a small group of large companies. These proposals break with those principles and are likely to result in consumers having to pay more for products and services that also might become harder and less convenient to access.
• Create unintended but serious spillover effects. Based on trends in another country that has adopted similar-type rules, there is concern that while the bills only directly apply to a small group of companies, it will come to be seen as the rulebook on good business behavior and therefore expand its reach to a much larger group of companies and the broader economy.

The blunt force of antitrust will not address perceived concerns around “big tech” in the United States. Those revolve largely around how companies collect, store, and use personal data. While the DMA may serve the EU’s interest in fostering European tech champions, that concern does not justify the significant consequences that the U.S. legislation is likely to have on U.S. consumers, small- and medium-sized businesses, and national security.

We think these bills are fatally flawed and cannot support final passage.

The highly anticipated SXSW Conference returned to Austin last week after a two year hiatus. SIIA was there to listen to and meet with policy makers and thought leaders at the cutting edge of tech policy and innovation. We were blown away by the conversations, ideas and community that emerged. While there was no shortage of talk about Web3 – the world of crypto, NFTs, DeFi and blockchain – that was just the tip of the iceberg. 

We wanted to share some of the compelling themes that emerged from SXSW and that we brought back to Washington DC.

• Disinformation and manipulation of the internet by authoritarian regimes present existential threats to the internet and human freedom. The sessions included a focus on the lack of trust in online information sources, which is challenging for users globally, and could represent an “existential threat.” 

Speakers discussed:

• Importance of revitalizing civic life so that communities can engage in new ways; 
• How technology can be designed as a solution to combat the disinformation and misinformation campaigns; 
• Need for broader access to platform data to gain a better understanding of how disinformation spreads and how social networks develop and provide recommendations to strengthen the democratic underpinnings of the internet
• How authoritarian regimes are using highly sophisticated means to censor the internet and further social control
• How the manipulation of the global online environment by state actors has expanded exponentially in recent years.

• Increasing representation of women in technology (development, product design, policymaking and related efforts) is essential. This year’s headliners included women leaders from a variety of backgrounds: for example, founders of healthcare unicorn companies shared how they got started and an all-women panel of intelligence experts “the Sisterhood of Spies” – discussed disinformation. Ashanti, a Grammy award-winning artist shared her journey from music to tech, breaking barriers and learning to be a trailblazer through a new partnership in the block chain industry.

• We can build a new “creative economy” through the metaverse. Damon John (of Shark Tank and FUBU fame) and Mark Zuckerberg (Meta) discussed the nexus of their work as entrepreneurs and shared recommendations on how to follow their path as it can take many failed plans, projects and investments to achieve success.  Zuckerberg discussed the opportunities, challenges and likely timeline for the metaverse – including AR, VR, holograms and other experiences which will help unite individuals regardless of geography and how the new creative economy will create jobs in the metaverse. He stated interoperability is key to the metaverse because people shouldn’t be limited by data that cannot be stored or transferred across other platforms and apps.

“The defining characteristic of the metaverse is that you feel like you’re there and present with people- it is magical. It’s the holy grail of social experiences. The tech is finally getting there. It’ll create a massive economy for creative work!” 

– Mark Zuckerberg

• The US and EU are largely aligned on interests in democracy-affirming technology and innovation. Multiple events focused on the EU’s plans to advance digital innovation through a series of ambitious regulations. Though concerns were raised about the impact of EU regulations on US firms and the ability for the US and EU to move ahead in a coordinated way to address mounting geopolitical risks, prominent officials from both the US and EU stressed alignment on foundational, pro-democratic principles. Notably, discussions also touched upon the potential economic impacts of major events like Preakness Stakes Betting, illustrating the broad scope of digital and financial interests at play. These included EU EVP Margrethe Vestager and US Deputy Assistant Secretary of State Molly Montgomery. Speakers heralded the ongoing Trade & Technology Council as a vehicle for further collaboration and efforts to develop a unified perspective and direction on trade, digital innovation, and economic growth.

• The future of AI will rise and fall with its ability to incorporate diversity, inclusion, and access into design and use. Several speakers noted it is essential to build these practices into the early stages of AI design, rather than allowing them to be an afterthought. Among the most notable was National Science Foundation Director Sethuraman Panchanathan who said: “Privacy, security, bias, ethics, and diversity – of all kinds – cannot be an afterthought; it must be part of the design of AI.” 

• Standards are an often ignored but essential feature of innovation. Representatives from Public Knowledge, Google, and the App Association spoke to the importance of countering abusive behavior by owners of “standards essential patents” to foster ongoing innovation in hardware and software. Though often overlooked, standards provide the framework to ensure that devices and applications are interoperable – that they can work with and speak with one another. Sessions on AI and the future of personalized solutions, including personalized robotics and IoT solutions that require individualized biometric data, echoed this theme on the need for common data standards and interoperability. 

Interesting point raised during the session: A few years ago, they asked: “Is your AI solution here to replace Drake? But today, the industry knows that human input and AI together are integral to collaboration for more impactful solutions.”