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How Silicon Valley could be impacted by a Republican-controlled House



Washington
CNN Business
 — 

With Republicans projected to take control of the House as a result of the midterm elections, tech giants such as Amazon, Google and Meta, who’ve been in the crosshairs of Democrats in recent years, are soon set to face a very different — but no less hostile — political climate in Washington.

Under the current Democratic-led Congress, top tech executives have been hauled before lawmakers to testify on everything from their companies’ market dominance to social media’s impact on teen mental health. Democrats have hammered away at online platforms’ handling of hate speech and white nationalism, while promoting legislation that could drastically affect the business models of big tech companies.

In the lame duck session, Democratic lawmakers could renew their attempts at passing tech-focused antitrust legislation that the industry’s biggest players have spent millions lobbying against.

Republicans aren’t likely to let up the pressure, policy analysts say. But a change in power in the House would likely mean renewed focus on some political priorities — primarily allegations of anti-conservative social media bias — and perhaps an increased emphasis on China and related national security risks, too.

Here’s what the results of the midterm elections could mean for Big Tech and the push to regulate it.

In general, tech companies may face more political noise with a Republican House but potentially less policy risk.

“Republican gains would be good for megacap tech like Google and Apple,” said Paul Gallant, an industry analyst at Cowen Inc. “Republicans will hold hearings about content bias, but they’re not likely to pass antitrust legislation, which is the biggest threat the companies have faced in years.”

Expect more of the uncomfortable ritual grillings that have made tech CEOs and their lieutenants a frequent sight in Washington, said one industry official who requested anonymity in order to speak more freely.

With Republicans likely to take control of the House, tech companies could face more hearings, but not necessarily more legislation.

“I think the content moderation debate will not just look at how companies make decisions on their platforms, but also how they’ve interacted with the Biden administration,” the official predicted. “The focus will be, ‘Are you too cozy with, and is your content moderation policy led by, feedback you get from the Biden administration?’”

One company that may see a reprieve is Twitter, whose new owner, Elon Musk, has won plaudits from conservatives for suggesting he could restore former President Donald Trump’s banned Twitter account, among others, and has used his account to endorse voting for Republicans in the 2022 midterm elections.

The hearings could culminate in more sweeping proposals to roll back Section 230 of the Communications Decency Act, the federal law that grants tech platforms broad latitude to moderate online content as they see fit.

In the past, Democrats have called for narrowing Section 230, thus exposing tech platforms to more lawsuits, for not removing hate speech and extremist content more aggressively. Republicans have called for expanding platform liability over allegations that social media companies unfairly remove conservative speech.

Previous legislative proposals to scale back Section 230 have tended to run into constitutionality questions or failed to attract bipartisan support, and those hurdles still remain. But some digital rights advocates who have defended Section 230 aren’t taking anything for granted, saying that if they squint, they can still see a path forward for legislation that might curtail the law.

“The thing I’m most worried about in the next Congress is a bad Section 230 bill that’s framed as being about ‘protecting kids’ or ‘stopping opioid sales’ or something that sounds non-controversial, but could have far-reaching negative effects” that may unintentionally result in more conservative speech being removed, not less, said Evan Greer, deputy director of Fight for the Future, a digital privacy group.

Given President Joe Biden’s criticism of Section 230 — a position the White House reiterated as recently as September — he might even be willing to sign such a hypothetical bill. But that scenario is far too premature to consider right now, according to other analysts who point to the Supreme Court, not Congress, as the center of gravity on Section 230.

There are two high-profile cases pending before the Court that could powerfully affect the law’s scope. The cases have to do with whether tech platforms can be sued in connection with federal anti-terrorism laws; if the Court finds that they can, it would effectively mean a significant narrowing of Section 230’s protections. And it could create openings for others to continue chipping away at the law.

“Republicans in Congress certainly have their views on content moderation, but the big thing to look for is what the Supreme Court does,” said Andy Halataei, executive vice president of government affairs for the Information Technology Industry Council, a tech-backed advocacy group. “That will drive either the opportunity or the consensus for Congress to move forward.”

Both parties have been hawkish on China, but expect Republicans to make it a pillar of their agenda. Within the first few days, Republicans could seek to establish a new select committee devoted to China and its impact on US supply chains, according to the industry official.

The new committee would likely look at the economic leverage China may have over the United States and the national security risks that could pose, ranging from China’s dominance in the rare earth minerals market to agricultural products, the official said.

And while Republicans would likely bring even greater scrutiny to businesses with links to China, including TikTok, they also would have a substantial impact on the semiconductor industry by exploring further ways to restrict Chinese access to US technology.

“Republican gains wouldn’t be great for the chips and tools companies because the China hawks will gain power,” said Gallant.

In a subsequent research note for investors, Gallant added: “For some China hawks — including likely House Foreign Affairs Chair Mike McCaul — Biden can’t go far enough,” suggesting Republicans could try to introduce even more restrictions on China exports through legislation.

Multiple Congress-watchers told CNN that support for federal privacy legislation is still bipartisan and the area remains one of a handful where lawmakers could make progress in the next Congress.

One proposal, known as the American Data Privacy and Protection Act, would enshrine the nation’s first-ever consumer data privacy right into US law. It was approved by a key House committee this year and policy analysts say it could see more opportunities to advance next year.

The privacy issue is becoming more salient to consumers by the day, said Greer, as the Supreme Court’s decision to overturn Roe v. Wade has made the security of location data, search histories and other personal information a critical safety matter.

“Hot button tech policy fights like data privacy, antitrust, and content moderation have massive implications for core issues like abortion access, voting rights, racial justice, and LGBTQ+ protections,” Greer said.

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