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House turnover to GOP would change focus of US Big Tech regulation


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House turnover to GOP would change focus of US Big Tech regulation

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With midterm elections approaching, time is running out to move forward pending tech regulation bills before a new Congress sets new priorities.
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U.S. legislators are running out of time to pass several pending bills related to reining in the power of Big Tech before the focus shifts to campaigning in this year's midterm elections.

Seats in both chambers of Congress are up for grabs, and policy analysts say Republicans have a strong chance of taking control of the U.S. House of Representatives during the midterm elections on Nov. 8. If that occurs, the new House leadership is expected to set a different tone on tech regulation, with Republicans likely to resurface concerns about platform censorship over antitrust regulations, policy experts said.

Historically, the party in charge of the White House loses congressional seats in the midterms.

"It's not as though Republicans are going to say 'Big Tech is our friend," said Rodell Mollineau, co-founder and partner at Rokk Solutions, a bipartisan public affairs and strategic communications firm based in Washington, D.C. "They will be coming at it from 'These big companies are squashing the voices of half of the American population due to their ... woke stances.'"

Legislation in limbo

Two antitrust bills face an uphill climb if they do not pass during this Congressional session and the GOP takes control of the House.

The American Innovation and Choice Online Act, introduced last year by Sens. Amy Klobuchar, D-Minn., and Chuck Grassley, R-Iowa, seeks to prohibit Big Tech firms from promoting their own private-label products and services over those of competitors, a practice known as self-preferencing. For example, the bill would bar Inc. from promoting its Amazon Basics products over similar goods from third-party sellers.

Supporters of the bill say it would boost competition; opponents believe it would hurt consumer choice. The bill has yet to advance to a Senate floor vote, and members of Congress are increasingly focused on issues such as inflation and abortion.

Klobuchar, who is leading the charge on the bill, did not return S&P Global Market Intelligence's inquiries about the timing of a potential vote for the bill.

"If this does not get over the hurdle this year, I find it hard to believe that the next Congress is going to make it any easier with Republicans in charge of the House," Mollineau said. "Divided government tends to favor status quo."

Some Democrats have voiced reservations about the wording of the bill. Sens. Tammy Baldwin, D-Wis.; Ben Ray Luján, D-N.M.; Brian Schatz, D-Hawaii; and Ron Wyden, D-Ore., wrote a letter to Klobuchar in June raising concerns about the impact the bill could have on content moderation policies. The Democratic senators suggested they would support the bill if it included a section clarifying that the legislation would not inhibit a platform from moderating content such as hate speech.

The Open App Markets Act, whose co-sponsors include Klobuchar and Marsha Blackburn, R-Tenn., could likewise be in jeopardy if it does not pass soon. Drafted in tandem with the American Innovation and Choice Online Act, the bill would prevent companies such as Apple Inc. and Alphabet Inc.'s Google LLC from requiring developers to use their app payment systems.

Epic Games Inc. sued Apple and Google in 2020 for allegedly abusing their market power after the tech companies removed Epic's Fortnite game from their app stores when the developer implemented its own in-app payment system.

Although Apple partially won the lawsuit brought against it, the court sided with Epic in forcing Apple to allow developers to offer other payment methods besides Apple's own system.

The failure of any tech-related antitrust bill would mean that companies can focus on growth and enjoy "one less immediate threat from Congress," said Carl Szabo, vice president and general counsel of NetChoice, a trade association whose members include Amazon and Meta Platforms Inc.

Amazon, Meta, Apple and Google did not respond to requests for comment on the U.S. regulatory outlook.

READ MORE about the impact of the U.S. midterms on our sectors in this Issue in Focus.

Shifting focus

It is possible the pending tech bills would move forward as one package voted on by the end of the year, said Alex Petros, policy counsel for Public Knowledge, a nonprofit public interest group in Washington, D.C.

But the proposals could face pushback from Republicans such as Rep. Jim Jordan, R-Ohio, who is up for reelection this year, and House Minority Leader Kevin McCarthy, R-Calif., who is running to become speaker of the House if Republicans retake control of that chamber's majority. Representatives from the offices of Jordan and McCarthy did not return inquiries from S&P Global Market Intelligence regarding the legislators' tech regulation priorities.

Both lawmakers are "not fans of these bills," Petros said. "There's a sense that if Republicans take over the House, it's going to be quite a hurdle to get these bills on the House floor."

Jordan has repeatedly expressed concern about Big Tech platforms' treatment of conservative views in content moderation. The legislator sponsored a bill called the "Protect Speech Act" that would amend the liability protections provided to online platforms regarding content moderation. The bill has not progressed since its introduction in June of last year.

More recently, Jordan, along with Rep. Cathy McMorris Rodgers, R-Wash., and Rep. James Comer, R-Ky, in August introduced the "Protecting Speech from Government Interference Act," which would prohibit President Joe Biden's administration from promoting censorship of speech or pressuring social media companies to censor speech.

If the House majority flips in the midterm elections, Jordan is potentially in line to take over as chair of the House Judiciary Committee from Rep. Jerrold Nadler, D-N.Y., which would increase Jordan's ability to advance or stall bills.

Voter sentiment

Heading into the midterm elections, U.S. voters are concerned about bread-and-butter issues such as inflation and the economy.

According to 451 Research's "Voice of the Customer: Macroeconomic Outlook, Consumer Spending (Population Representative), Cost of Living 2022" survey fielded in July showed that 59.2% of survey respondents said inflation in the U.S. was the greatest threat to their personal finances, while 34.7% cited energy prices and 17.8% pointed to rising interest rates. Just 3.6% of respondents said financial regulations were a threat.

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Republican candidates up for election are focused on public dissatisfaction with these types of issues, while Democrats are attempting to seize on the public backlash to the Supreme Court's recent decision to overturn the precedent-setting Roe v. Wade case that created a federal right to abortion.

As the focus shifts to other priorities, that gives tech companies cover "as these more political and partisan fights are playing out," Mollineau said.

451 Research is part of S&P Global Market Intelligence.