Listen: MediaTalk | Season 2, Ep. 30 - Policy Outlook for AI, Online Privacy, Antitrust Regulation

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Mike Reynolds: Hi, I'm Mike Reynolds, a senior reporter covering the media industry with S&P Global Market Intelligence tech, media and telecom news team. Welcome to "MediaTalk," a podcast hosted by S&P Global, where the news and research staff explore issues in the evolving media landscape. Today I'm joined by Stefan Modrich, my colleague on the TMT news team. Stefan covers tech policy. With Congress back in session this week after its summer hiatus, Stefan will weigh in on what's on the Washington, D.C., watch relative to a number of topics, including cybersecurity, AI, and M&A, as the 2024 session starts to wind down. How are you doing today, Stefan?

Stefan Modrich: Mike, I'm doing well. It's good to be back in D.C. I have to say the White Sox may need to give me a September call-up here; it’s been a pretty brutal stretch. But other than that, it’s been a good summer, and I'm looking forward to our chat today.

Reynolds: Stefan spent time back in Chicago and will regale us a bit about his four-night stay there while visiting the United Center for the Democratic National Convention. Stefan, this was your first time covering an event like this, right? What were your thoughts going in?

Modrich: Yes, it was for sure a unique experience. What stood out to me over the four days was the emphasis on tech-adjacent topics throughout the entire event, from the official primetime events that you all in the audience may have watched at home to the more low-profile behind-the-scenes events that took place during the day. This underscores many themes of our coverage here in terms of the way that artificial intelligence and enterprise tech that affects different industries is also becoming increasingly used in the political realm.

Reynolds: Was there anything or anyone that surprised you inside the United Center?

Modrich: Yes, I didn't actually get the chance to talk to him in person, but I did see Mark Hamill for about a split second. The podcast celebrity Charlamagne tha God was also there. Those were a couple of off-the-beaten-track experiences that you don't see every day on the TMT beat — on the policy beat, at least. Those were definitely highlights from my end.

Reynolds: I believe you had an interview with Zoe Lofgren, the Democratic Congresswoman from California's 18th District, which covers San Jose and part of Silicon Valley. You guys talked a lot about AI?

Modrich: Yes, that's exactly right, Mike. Lofgren is the ranking member of the House Science, Space, and Technology Committee and a member of the newly appointed House AI Task Force. She, like many lawmakers, governors and Democratic surrogates for the Harris-Walz campaign, was on media row in the atrium area where the Michael Jordan statue is housed, right outside the stadium itself. We discussed the European Union's new AI Act. My question to her was how Congress should craft legislation that would lead to regulatory frameworks for AI. Her response was that she thinks the EU is doing some things that are not necessarily smart. She believes there should be some regulation of AI, but it must be carefully crafted against specific risks and formulated in a way that supports innovation. She also told me that she met with EU regulators a couple of months ago and she's concerned about their approach, which she views as micromanagement. She thinks the guardrails for AI should be more specifically oriented toward what she calls defined risks. She was skeptical about the EU's strategy of a more permission-based development for AI utilized in Europe. There’s an interesting dynamic at play, and we'll see how that manifests. In California, I met many people discussing how many AI-related bills are being thrown on Governor Gavin Newsom's desk. That's another interesting development to watch from the opposite coast. As far as federal matters stand, it remains to be seen.

Reynolds: With the election fast approaching on November 5th, there's concern about AI's potential to influence voters. Are campaigns and election administration officials taking steps to bolster cybersecurity efforts amidst threats to global elections from, say, hostile foreign actors?

Modrich: Yeah and that was definitely something that surprised me during the DNC — just how much emphasis was being placed on the cybersecurity element. I attended a panel hosted by the University of Southern California Annenberg School of Journalism, where various experts in cyber policy spoke. The analogy that one of these professors shared with me was this disinformation and misinformation is like a hurricane; while a severe hurricane can be a rare event, its spread can have a very corrosive effect and do a lot of damage. So from a social media aspect, there's a lot of concern about how agencies like the FTC could potentially regulate those social media platforms and safeguard them from cyberattacks. For instance, the Trump campaign acknowledged that Iranian hackers had breached their campaign. Threats to high-level campaigns are ever-present. From the grassroots on up, even your average volunteer now is being coached to be aware of cyber threats, whether they're using their Twitter account or whatever, as malicious actors are always looking for ways to breach campaign infrastructures.

Reynolds: Correct me if I'm wrong here, but the FCC is looking to step up enforcement against AI scammers using deepfakes for candidates. You recently wrote about disclosure requirements around the use of content generated by AI for political ads on broadcast TV and radio. However, that doesn't necessarily apply to the web and social media. The FCC voted three to two along party lines to advance a proposal for AI's use in TV and radio. Are those disclosure requirements already in play, or is the commission still trying to get this in place?

Modrich: That’s a really important question. There was a common misconception after the FCC's vote that the move to require these disclosures would affect the November election. I want to clarify that the proposed rule will likely take at least a year to finalize and therefore will have no bearing on this current election cycle. Having said that, it's still an important topic and one that we're going to continue to keep an eye on.. And yes the key point is that as you know from your coverage of the traditional radio and TV broadcast space is it's certainly important to have disclosures. The argument has been advanced that it's important to know that this is AI-generated content. The FCC Chair Jessica Rosenworcel has said that many times. The flip side of that is the potential for the really corrosive, the really potentially harmful AI-generated content that has no filter, has no mechanism to really fact check or to authenticate it — that's obviously what is spreading across social media platforms and the internet. And that's where the FCC has no power to regulate. So that's the tension that we're talking about here, where it's something that they're essentially powerless to handle right now. But there's a lot of growing concern about that. It's targeted both sides. It's targeted former presidential candidates during the primary season and it'll continue to be used. And so that's another thing that campaigns from the House and Senate on down to these local state house races — they're all trying to batten down the hatches and protect themselves from this.

Reynolds: Do you think that by the time we reach the midterms in 2026, these regulations will be in place?

Modrich: That’s a good question. Your timeline might provide enough lead time for this particular rule to come into play for that midterm cycle.

Reynolds: Let’s turn our attention to kids' privacy laws. In late July, the Senate overwhelmingly approved a pair of bills — the Kids Online Safety Act (KOSA) and the Children and Teens Online Privacy Protection Act (COPPA 2.0) — by a 91 to 3 count. These would require digital platforms to take "reasonable steps" to prevent harms to children, such as bullying, drug addiction, and sexual exploitation, and would broaden existing federal privacy protections to include kids and teens 16 years old and younger. Stefan, you’ve written about this and are following it. Hasn't this been ongoing for a while? What are advocates and critics saying about the Senate passage of KOSA and COPPA 2.0?

Modrich: Yes, the interesting aspect of this bill is that while it passed overwhelmingly 91 to 3, the three holdouts were Republican Mike Lee of Utah, Republican Rand Paul of Kentucky, and Democrat Ron Wyden of Oregon. Their criticisms centered on free speech concerns. In Wyden's case, he was particularly worried that LGBTQ+ advocacy groups and teens and minors identifying with that community could be harmed by the inability to express themselves, potentially leading to suppressed speech under these new guidelines. There's an argument that such rules might force platforms to overregulate content, even benign content that could be misinterpreted as harmful.

Reynolds: On the House side, there's a different bill that seems to have been stuck in the lower chamber for a while. Is something coming? Will there be a vote on that soon?

Modrich: Speaker of the House Mike Johnson said he was supportive of the bill, but given the stakes of this election cycle, it's possible that something even as bipartisan as it was in the Senate, with the composition of the House, it's unclear if they would manage a similar sort of bipartisan effort to pass their version of this. There are key differences in the House version, which takes a narrower approach in defining the scope of some issues covered by the Senate bill. We can delve into more specifics if you like.

Reynolds: Given your insights and the slow churn of government, it doesn’t seem like there will be consensus before year-end. If there were, has President Biden indicated he would sign these into law?

Modrich: Yes, that's another one of these interesting things to observe as this election cycle plays out. With the change of the candidate now official on the Democratic side from President Joe Biden to Vice President Kamala Harris as the nominee, both Biden and Harris have publicly supported the bill. Biden has said he would sign it, and interestingly, the Senator from Ohio, J.D. Vance, the GOP's vice presidential nominee, has also expressed support. That is a kind of a rare issue in a campaign with a lot of division where you see a sweet spot in the middle of that Venn diagram there where they do overlap.

Reynolds: In a broader sense, which states have the strictest privacy laws?

Modrich: California definitely comes to mind as one of the stricter states. The broader attempts to regulate privacy at the state level have led to what experts often call a "patchwork." Different approaches across the 50-state federalist framework that our Constitution has set up have allowed states like Arkansas, California, Louisiana and Texas to implement children's privacy laws. There are many inconsistent approaches, so if you’re a business operating in these states, you might cherry-pick from those with more concrete laws regarding age verification, parental consent for signing up for platforms like Instagram, data collection limits on minors, ad restrictions, and whether parents have access to accounts. Additionally, questions arise about enforcement authority — whether it's the FTC or another agency — responsible for holding companies accountable.

Reynolds: As you said, a patchwork doesn’t easily equate to a national law. That’s not something on the horizon.

Modrich: Exactly. I would be very surprised to see a federal privacy law resurrected. There have been attempts in the last few years, but they haven’t gained much traction. Even if one were to surface during this lame-duck or election cycle, I would be very surprised to see it pass both chambers and reach President Biden's desk.

Reynolds: Understood. Stefan, as we near the end, can you summarize the recent U.S. District Court ruling against Google LLC and its implications for big tech?

Modrich: Sure. The case in question, U.S. vs. Google, centered around the product most synonymous with the company: its search platform. The DOJ and FTC argue that Google's monopoly is tied to distribution agreements it has. As any iPhone or Android user knows, Google has been the default. That Apple Inc. contract made up the largest amount of the share of contracts it had. Even with companies like AT&T Inc., Verizon Communications Inc. or T-Mobile US Inc., it comprised the vast majority of ...

Reynolds: It’s almost covering the entire world.

Modrich: Exactly. Those agreements are viewed by the DOJ as anti-competitive. Interestingly, I've observed that younger generations, particularly Gen Z and some younger Millennials, are using different apps for searches, redefining the search marketplace. Instead of simply opening a browser to Google, many are turning to platforms like TikTok Inc. or Instagram for visual searches, which has dramatically changed how some users approach traditional search. Large language models and AI chatbots are also altering this landscape.

Reynolds: AI is undoubtedly reshaping the search business as well.

Modrich: No question about it. AI has become omnipresent in the search market, changing how people use the internet daily.

Reynolds: Finally, what's the M&A outlook from a D.C. perspective? Will things remain the same with a Harris victory, or will they change if Donald Trump regains the Oval Office?

Modrich: This is a fascinating question that we will continue to explore. Interestingly, Kamala Harris and J.D. Vance have both praised the FTC chair, Lina Khan, for her more restrained approach to larger deals. This philosophy may or may not continue if Trump wins. However, I don't foresee a significant difference in approach between Harris and Biden. If Harris wins, I expect a similar stance, and if not Khan, then someone with a similar philosophy will likely chair the FTC.

Reynolds: That concludes this episode of MediaTalk. I want to thank Stefan for spending time sharing his insights on current events in D.C. Stefan, thank you very much.

Modrich: Thanks, Mike. It’s going to be a fun fall.

Reynolds: I also want to thank all of you for listening. This is Mike Reynolds. We'll catch up on the next edition of MediaTalk.