Legislation

Biden pushes Congress on privacy in SOTU

With help from Rebecca Kern, Mark Scott and Joseph Gedeon

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— C’mon, man! President Joe Biden used his State of the Union bully pulpit to press lawmakers to get moving on data privacy legislation.

— FABulous: Senate Finance Chair Ron Wyden is working to shoehorn billions in tax credits for chipmakers into an upcoming conference on competitiveness legislation — but his push could kick off a conflict between House and Senate leadership.  

— Tech on a tightrope: Executives at Meta and across the tech industry are struggling to balance demands from both sides of the war in Ukraine.

IT’S WEDNESDAY, MARCH 2. Welcome to Morning Tech! Apparently there is now another name for the big competitiveness package wending its way through Capitol Hill, this one courtesy of the president himself. Endless Frontier, USICA, America COMPETES, Make it in America (what even happened to that?) and now, Biden’s new name: the Bipartisan Innovation Act. This is a bill of many faces, folks. Very mysterious.

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BIDEN PUSHES CONGRESS ON DATA PRIVACY: The president had a message last night for lawmakers who’ve struggled for years to pass significant data privacy reforms, especially to protect children: What are you waiting for?

“We must hold social media companies accountable for the national experiment they’re conducting on our children for profit,” Biden told Congress in his first State of the Union address. The speech featured an appearance by Meta whistleblower Frances Haugen, and the president thanked her for the “courage” she showed in leaking reams of company documents, including some suggesting that content on Facebook and Instagram can harm young users’ mental health.

Biden called on Congress to “strengthen privacy protections, ban targeted advertising to children [and] demand tech companies stop collecting personal data on our children.”

Needed boost? Lawmakers in both parties have long sought to pass comprehensive privacy legislation, and have made some limited progress in the past few months on bills to specifically protect children’s privacy online. But it’s been tough to find consensus — and some Democrats hope Biden’s nudge can boost prospects for real progress.

Sen. Ed Markey (D-Mass.) — who introduced a bipartisan bill, S. 1628, with Sen. Bill Cassidy (R-La.) to update the 1998 Children’s Online Privacy Protection Act — said he was pleased to see Biden “identify specific steps forward to protect the privacy of children and teens in this country.”

“Congress should recognize the urgency of this moment,” Markey said.

— R&D, China and chips: As expected, Biden also called on Congress to send to his desk the competitiveness package being negotiated between the House and Senate. “Let’s not wait any longer,” he told lawmakers.

“We used to invest 2 percent of our GDP in research and development. We don’t now. China is,” Biden said, addressing the long-term decline in federal R&D spending in a departure from his prepared remarks. Though details have yet to be worked out in conference, the competitiveness package is expected to retool America’s federal R&D apparatus to focus more on applied technologies in a bid to match China’s rapid technological progress.

Also as expected, Biden also gave an extended shout-out to Intel for its plans to invest $20 billion in an Ohio chip manufacturing plant. The president said Pat Gelsinger, Intel’s CEO, has also pledged to boost that investment to $100 billion — as long as Congress first passes the competitiveness package, which includes $52 billion in subsidies for chipmakers like Intel.

“That would be the biggest investment in manufacturing in American history — and all they’re waiting for is for you to pass this bill,” Biden said.

— No love for tech antitrust: While Biden spoke at length about competition in other parts of the economy, he had nothing to say about the bipartisan effort in Congress to rein in the market power of some of the largest tech companies. It’s an issue the president has struggled to address, as his administration seeks to tamp down aggressive antitrust legislation targeting Silicon Valley companies in Europe while members of his own party pursue similar bills here at home.

FIGHT BREWING OVER CHIP TAX CREDITS IN USICA: As Biden zeroes in on domestic microchip manufacturing, Senate Finance Committee Chair Ron Wyden (D-Ore.) is working to shoehorn another gift to the chip industry — billions of dollars in tax credits for chip manufacturers — into the competitiveness legislation as part of an impending conference on rival House and Senate bills.

It’s an effort that’s piqued the interest of Senate leadership. But it’s so far unsupported by top House Democrats, who are wary of adding tax provisions to what’s already shaping up to be a “brutal” conference.

— Finding a ride for the FABS Act: Chipmakers are already poised to receive $52 billion in research and manufacturing subsidies from Congress, as long as lawmakers can reconcile other provisions between the Senate’s U.S. Innovation and Competition Act (S. 1260) and the House’s America COMPETES Act (H.R. 4521).

But Wyden’s bipartisan FABS Act (S. 2107) would provide additional — and sustained — support for chipmakers who build chip manufacturing plants (often known as “fabs”) in the U.S., granting them a 25 percent tax credit for most of their manufacturing activities and expenses. A November report from the Joint Committee on Taxation estimates the legislation would cost the U.S. Treasury a little more than $10 billion over 10 years.

The chip industry has clamored for FABS’ passage for months, and last fall Wyden managed to tack it on to the Build Back Better reconciliation framework — a legislative vehicle that, for now at least, seems to be going nowhere.

— Pivot to USICA: With BBB stalled, Wyden is now setting his sights on the coming conference on competitiveness legislation.

“Sen. Wyden is looking to move it in the first moving package,” said Wyden spokesperson Ashley Schapitl, adding that there is a “serious effort” to include the FABS Act as part of the USICA conference.

— Democratic leadership divided: The chambers appear to be split on the wisdom of including FABS in negotiations over the competitiveness package. One Senate Democratic aide, who requested anonymity to speak candidly, said Senate leadership expressed openness to the bill’s inclusion in discussions with staff.

But top House Democrats are opposed. A senior House Democratic aide, who also requested anonymity, said that while House leaders are supportive of the FABS Act (it passed as part of the House’s version of BBB), they’re worried inserting tax provisions into a conference where none now exist would only further complicate what promises to be a difficult process.

“We need to focus on resolving differences between the bills … before we start considering new provisions for the bill,” the House aide said.

META’S CLEGG ADMITS ‘DIFFICULT BALANCING TRICK’ ON RUSSIA: Facebook and Instagram still have millions of active users in Russia. And as the Kremlin tightens the screws on social media platforms — and the Ukrainian government and others call on major tech companies to pull out of Russia as punishment for its invasion — Nick Clegg, the head of global affairs at Facebook and Instagram parent company Meta, says his priority is to keep those services available for both its Russian and Ukrainian users.

It “is quite a difficult balancing trick for us,” Clegg told reporters — including Mark Scott, our colleague across the pond — on Tuesday. Clegg, a former U.K. deputy prime minister, said it’s been tough to navigate the competing demands of governments around the world in the wake of the invasion.

“We’re a company. We’re not a government,” said Clegg. “But we’re also aware that we’re in a completely unprecedented situation.”

— All in this together: Meta’s not the only one feeling the heat. In hastily arranged Zoom calls soon after Russian forces entered Ukraine last week, executives at Google, Facebook and Twitter debated the wisdom of banning media outlets with ties to the Russian government from their platforms, as well as removing other misinformation with potential ties to the Kremlin, according to six people who spoke on the condition of anonymity to describe internal meetings.

Some executives argued for the need to uphold free speech to allow Russians access to independently sourced information. Others called for outright bans in response to the Ukrainian invasion — citing direct appeals from Kyiv and other national capitals for these companies to act. (Read much more on the tech industry’s delicate, ongoing balancing act from Mark and Rebecca for Pros).

‘DECENTRALIZED’ ENCRYPTED MESSAGING APP TAKES OFF IN UKRAINE: As fears of possible internet shutdowns loom in Ukraine, a growing number of locals have turned to a decentralized end-to-end encrypted messaging service called Element.

Unlike other encrypted messenger platforms like WhatsApp and Signal, Element uses decentralized servers. That means that if Ukrainians lose internet access, users can still communicate with one another via those independently-run servers..

Element CEO Matthew Hodgson told POLITICO fellow Joseph Gedeon that the app is “configured to be resilient to internet shutdown,” contrasting it with other popular encrypted messaging apps, which Hodgson said are “centralized and trivial to censor and block.”

Element’s servers operate on the Matrix open-source network and are currently up and running in Kyiv, Odessa and Kharkiv in Ukraine. Hodgson said the app has seen a “massive spike” in downloads from Ukraine over the last week, estimating that around 85 percent of its total iOS installations on Feb. 24 came from that country. Although Apple’s App Store doesn’t disclose total app downloads publicly, the Android Play Store shows the messenger service has more than 500,000 downloads.

Morgan McKenney, a former Citigroup executive, joined the Provenance Blockchain Foundation as its CEO. … Juan S. Ramírez Lugo and Babak Parviz are the two newest members of the board of directors of the American Association for the Advancement of Science. … Alex Howard is now lead communications and PR manager at AT&T focusing on media relations based in D.C. … Russell Coleman is now head of commercial sales at Code Climate, a software engineering intelligence firm.

Pull the plug: Rolling Stone reports the Ukrainian government is urging the Internet Corporation for Assigned Names and Numbers to cut Russia off from the global internet — a move experts say is a very bad idea.

Apple checks out: The Washington Post reports that Apple is pausing all product sales in Russia.

Core to its business? Russia amounted to less than 1 percent of Apple’s 2020 revenues, according to an analysis from TheStreet.

Duck and cover: The war in Ukraine has caused privacy-focused search app DuckDuckGo to pause its relationship with Russian search engine Yandex, Protocol reports.

Wikipropaganda? Vice reports that the Russian government has threatened to block all of Wikipedia in Russia if it doesn’t delete information about Russian military casualties and violence against civilians.
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