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After three years of promises, attempt to regulate tech comes down to a single bill

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By Jon Swartz

After three years of saber-rattling about passing major tech legislation for the first time since the dawn of the internet, Democrats in Congress appear likely to only have one shot at actually passing a law, and critics doubt the effort will succeed.

Senate Majority Leader Chuck Schumer, D-N.Y., is committed to a vote on a high-profile anti-monopoly bill from Sen. Amy Klobuchar, D-Minn., as early as this month, according to sources in the House and Senate. It appears to be the only bill out of several proposed that has a chance to make it to the floor before Congress breaks for a summer recess and turns its attention to campaigning for the midterm elections.

However, squeamish moderate Democrats such as Sen. Maggie Hassan, D-N.H., and Dianne Feinstein, D-Calif., could torpedo matters amid pressure from Big Tech and a slew of competing issues ranging from gun violence and Roe v. Wade to inflation and the war in Ukraine. If no legislation passes this summer, experts expect that the push to regulate tech companies could be pushed off again, potentially for years .

Three years ago this week, federal regulators launched probes into tech’s Mount Rushmore in an effort to rein in their growing power , and legislators latched on to the effort with a series of bills seeking to modernize antitrust laws and build basic regulatory structures for tech. Yet none of the proposed bills have reached the floor of the House or Senate for a full vote, leading to a sense of exasperation that permeates all sides.

Developers are resigned to inaction because tech’s biggest names wield more power than ever in the COVID era, and legislators fundamentally don’t understand complex, sophisticated digital ecosystems. Lawmakers and consumer rights advocates are flustered by political gridlock in Washington that prevents shaping substantive law. And companies dependent on the vast digital ecosystems are jittery that punitive action against the keepers of walled gardens will unwittingly damage them.

Tech regulation this year “will never happen,” said Marco Bellin, chief executive of Datacappy, a cybersecurity company that has jousted with Alphabet Inc.’s /zigman2/quotes/205453964/composite GOOG -1.38% /zigman2/quotes/202490156/lastsale GOOGL -1.45% Google for years. “There is a sense of hopelessness in curbing these companies. They have so much money and power.”

For more: The clock is running out for Congress to pass tech legislation

The last, best shot — the American Innovation and Choice Online Act led by Klobuchar — was revised last week in a last-minute push. The new draft of the bipartisan anti-monopoly bill, which prohibits tech companies from favoring their own products over those of their competitors, focuses more narrowly on Google, Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN +0.58% , and Facebook parent company Meta Platforms Inc. , though Apple Inc. /zigman2/quotes/202934861/composite AAPL -2.63% remains the primary target and the bill’s most vocal critic.

“If it does come to the Senate floor and passes, I think that puts tremendous pressure on the House to deliver, particularly given President Biden’s endorsement,” Ernesto Omar Falcon, senior legislative counsel for the Electronic Frontier Foundation, told MarketWatch.

“The American Innovation and Choice Online Act will make digital markets in the United States more competitive, more innovative and more secure. That’s why the bill is widely popular with American consumers and businesses,” Rep. David Cicilline, D-R.I., said in a press conference .

The task won’t be easy, with gun control sucking up floor time and expected votes on bills for veterans and competition with China given priority over tech regulation. A likely scenario, if a vote were to occur, would be in July if Schumer believes he has close to the 60 votes necessary to pass the bill, said one person who works closely with the Senate.

In one recent poll , 76% of voters in Arizona, Georgia, Nevada and New Hampshire said they support the American Innovation and Choice Online Act. But in a sign of these troubling times, they also consider inflation and job loss far more important — nearly seven in 10 Americans across political spectrums believe inflation is the most important issue, and only 3% consider tech regulation a top priority, according to new research from the Consumer Technology Association (CTA).

“At a time when inflation is the top concern for voters, Congress must also listen to their constituents,” TechNet CEO Linda Moore told MarketWatch. “Only 3% of voters rank tech regulation as a priority [while] 97% of voters want to see action on issues that matter to them, including passing a federal privacy law, which more than 80% of voters support.”

Michelle Finneran Dennedy, CEO of PrivacyCode Inc., has pinned her regulatory hopes on Klobuchar as the “best hope for pragmatic, comprehensive privacy legislation, but also the archenemy of the most expensive ad-driven revenue tech giants’ lobbyists and propaganda machines.”

Hence, “The bottom line answer of my best guess of getting to a full vote this summer is a no,” Dennedy told MarketWatch.

In-depth: What is a platform, and what should one do? The answer could determine the future of Apple and the rest of Big Tech

Big Tech companies maintain recent changes in the bill are minimal and do not address national security concerns. TikTok is now included in the bill, but foreign companies like Tencent Holdings /zigman2/quotes/204605823/delayed HK:700 +5.85% and Alibaba Group Holding /zigman2/quotes/201948298/composite BABA +0.50% are not, allowing them to operate without the same scrutiny as those based in the U.S.

Apple officials told MarketWatch the revised bill remains flawed because it undermines the security of consumer data by allowing developers to sideload their apps on the App Store — in essence, turning an iPhone into an Android susceptible to malware. Apple said it spent nearly $1.5 billion last year stopping fraudulent transactions on the App Store.

“We remain concerned that this legislation threatens to break this model and undermine the privacy and security protections our users depend on,” an Apple spokesperson said in a statement to MarketWatch. “Governments and international agencies worldwide have explicitly advised against sideloading requirements, which would empower bad actors who want to target users — including children — with malware and scams, and make it easier for data-hungry companies to track users without their consent.”

A source close to Klobuchar counters the bill does not say sideloading is allowed, but nor does it mention that sideloading is outlawed. The revised version, they say, bolsters security and privacy.

See also: Apple has spent decades building its walled garden. It may be starting to crack

Big Tech’s other players are less critical of the bill than Apple, but find plenty of fault in what will probably pass as a litmus test for any future tech legislation.

The bill “threatens America’s global technology leadership and national security. Privacy and cybersecurity experts, plus members of Congress, economists, and small businesses, have urged Congress to look before it leaps,” said Mark Isakowitz, vice president of government affairs and public policy at Google.

Amazon, too, took the legislation to task. “These changes fail to address the serious concerns that we and others have previously raised about how the legislation would harm customers and small businesses,” a company spokesperson told MarketWatch.

Toyin Kolawole, CEO of Iya Foods, agrees with that sentiment from Amazon. His company gleans 30% of its business through Amazon’s e-commerce platform, she told MarketWatch

“Has Congress considered the trickle-down negative effect of legislation on thousands of companies like mine that depend on Amazon’s ecosystem?” Kolawole asked. “Amazon’s platform gives me and so many others access to wide distribution, and changes to [Amazon] would hurt our businesses.”

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