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Congress, Far From ‘a Series of Tubes,’ Is Still Nowhere Near Reining In Tech – The New York Times

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Holding a hearing that humbles the most powerful business executives in the world is much easier than legislating.
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WASHINGTON — It’s now a rite of passage. Executives of the hottest technology companies fly, or more recently Zoom, from Silicon Valley to Washington, usually swapping their tech-casual for something more buttoned-up. They take oaths, explain their mission to better the world, and defend their businesses under the glare of TV cameras.
Wednesday was a double feature. In the morning, six crypto executives testified before a House committee. In the afternoon, Adam Mosseri, the head of Instagram, faced a Senate subcommittee.
The ritual itself was familiar, but it represented a mammoth leap forward: No one went viral after.
That’s because the hearings didn’t devolve into theater, as past hearings with tech C.E.O.s have tended to. There were no embarrassing gaffes comparable to one senator’s description in 2006 of the internet as a “series of tubes.”
Lawmakers on the House Financial Services Committee focused on whether the fast-changing markets for digital currencies deserved more government oversight, asking questions about the security, stability and safety of the technologies and admitting their shortfalls in knowledge.
“I ask my friends on the Hill, do you know enough about this?” asked Representative Patrick McHenry of North Carolina, the top Republican of the committee.
The lack of regulation of technology companies is not because elected officials don’t understand the internet. That used to be the case, and it helps explain why they have been so slow with oversight measures. Now, though, new questions about technology get mapped onto increasingly intractable political divides.
Without the distractions of bizarre questions, what’s left is the naked reality that the parties are deeply at odds over how to protect consumers and encourage businesses. Dozens of bills to strengthen privacy, encourage competition and quell misinformation have stalled because of a basic disagreement over the hand of government on businesses.
“Congress has again shown it’s all bark and no bite when it comes to regulating Big Tech,” said Jeffrey Chester, the executive director of the Center for Digital Democracy, a nonprofit consumer advocacy group, adding: “We’ve made no progress for decades.”
The cost of the government’s long education on tech is that regulation is increasingly out of reach. In April 2018, 14 years after founding thefacebook.com and more than five years after Facebook surpassed 1 billion users, Mark Zuckerberg appeared for the first time before Congress. Nervous Facebook lobbyists asked Congressional aides to jack up the air conditioning to save Mr. Zuckerberg, known for sweating easily, from a public meltdown.
At the hearing, lawmakers angrily promised to rein in Facebook’s business model, which voraciously consumed and shared user data with third parties — data that eventually got into the hands of Cambridge Analytica, a political consulting firm that wanted to use it to sway votes. Despite the anger at his company, Mr. Zuckerberg was effectively saved from the hot seat as the public’s attention turned to the lawmakers peppering him with bad tech questions.
Senator Brian Schatz, Democrat of Hawaii, seemed not to know how messaging works, asking “If I’m emailing within WhatsApp, does that ever inform your advertisers?”
Others seemed confused about Facebook’s ad business.
“How do you sustain a business model in which users don’t pay for your service?” Senator Orrin Hatch, Republican of Utah and then 85 years old, asked Mr. Zuckerberg in the same hearing.
Months after the Facebook leader had submitted to questioning, Google’s C.E.O., Sundar Pichai, also agreed to testify for the first time. His staff had fought against the hearing for months to protect their chief from public scrutiny. But in front of the House Judiciary Committee, those fears were allayed by more awkward tech questions.
Representative Steve King, a Republican of Iowa, asked why his granddaughter was served photos of him with disparaging language while playing a game on her Apple iPhone.
“Congressman, the iPhone is made by a different company,” Mr. Pichai responded politely.
Representative Ted Poe, a Republican of Texas, dramatically held up his own iPhone and asked if Google would be able to track his movements if he were to walk across the hearing room. Mr. Pichai hesitated at first. The answer was complicated. He finally said that Google’s services don’t track location by default.
“It’s not a trick question,” Mr. Poe blustered. “You know, you make $100 million a year, you ought to be able to answer that question.”
It wasn’t entirely a confused question: Google maps and other services are available on iPhones, and location tracking by Google services is a serious concern for privacy advocates. But on social media and in some media reports, Mr. Poe was ridiculed for his apparent confusion over Apple and Google technologies.
The fumbles were bipartisan, with Representative Steve Cohen, Democrat of Tennessee, describing Google as an “apparatus” and suggesting Mr. Pichai create an online school for users to understand the search engine where they can be assigned a Google representative. But not like the phone customer service at Comcast, he added, where you get put on hold for 30 minutes and “find somebody who you can’t understand.”
Another example of boomer Luddite lawmakers stumbling their way around technology, viewers quipped.
The belly flops from the hearing room dais helped take the spotlight off the company’s market dominance and data collection. Since then, criticisms toward tech giants have only intensified. But despite bipartisan agreement that tech companies have run roughshod and deserve more oversight, none of the bills discussed in those hearings four years ago have been passed.
Turns out, holding a hearing that humbles the most powerful business executives in the world is much easier than legislating. Very bright lines of partisan disagreements appear when writing rules that restrict how much data can be collected by platforms, whether consumers can sue sites for defamation, and whether regulators can slow the march of dominance of Amazon, Apple, Google and Facebook.
“Hyperpartisanship is the most powerful force supporting the status quo, and the big tech platforms work hard to fan the flames,” said David Chavern, the president of the News Media Alliance, a media lobbying group that has pushed for stronger antitrust laws aimed at tech platforms.
Meta, the parent company of Instagram and Facebook, has said it supports regulations. All six cryptocurrency executives who testified recently also said they also support some government oversight of their businesses.
Right after the cryptocurrency hearing Wednesday, lawmakers grilled Instagram’s chief executive, Mr. Mosseri, demonstrating how they’ve surmounted the tech learning curve since Mr. Zuckerberg was on Capitol Hill in 2018.
Members of both parties asked him how the social media app has led to social and emotional harms of children. They asked him about how Instagram’s algorithms drive recommendations. Three lawmakers had set up experimental accounts to test Instagram’s recommendations engine and found that their fictional profiles for teenage girls were steered toward dangerous content promoting eating disorders and self-harm.
A glossary. Cryptocurrencies have gone from a curiosity to a viable investment, making them almost impossible to ignore. If you are struggling with the terminology, let us help:
Bitcoin. A Bitcoin is a digital token that can be sent electronically from one user to another, anywhere in the world. Bitcoin is also the name of the payment network on which this form of digital currency is stored and moved.
Blockchain. A blockchain is a database maintained communally, that reliably stores digital information. The original blockchain was the database on which all Bitcoin transactions were stored, but non-currency-based companies and governments are also trying to use blockchain technology to store their data.
Cryptocurrencies. Since Bitcoin was first conceived in 2008, thousands of other virtual currencies, known as cryptocurrencies, have been developed. Among them are Ether, Dogecoin and Tether.
Coinbase. The first major cryptocurrency company to list its shares on a U.S. stock exchange, Coinbase is a platform that allows people and companies to buy and sell various digital currencies, including Bitcoin, for a transaction fee.
Crypto finance. The development of cryptocurrencies spawned a parallel universe of alternative financial services, known as Decentralized Finance, or DeFi, allowing crypto businesses to move into traditional banking territory, including lending and borrowing.
NFTs. A “nonfungible token,” or NFT, is an asset verified using blockchain technology, in which a network of computers records transactions and gives buyers proof of authenticity and ownership. NFTs make digital artworks unique, and therefore sellable.
“We’ve had enough hearings,” Lina Nealon, a director at the National Center on Sexual Exploitation, a group that has criticized Instagram’s treatment of its young users, said after the hearing. “While policymakers debate details of how best to protect kids, children are being harmed, abused, exploited on platforms. The time to act is now.”
The technology industry, meanwhile, has been moving far beyond social networking, search and e-commerce. The cryptocurrencies industry is booming. Globally, the value of all outstanding cryptocurrency has jumped from $200 billion two years ago to more than $2 trillion — approximately the same as the value of United States currency in circulation. This is from an industry that was born only a dozen years ago, when the biggest cryptocurrency, Bitcoin, was introduced.
In the cryptocurrency hearing, lawmakers delved deep into these alternative markets. They pressed the chiefs of companies including Circle, Paxos and Coinbase to explain how cryptocurrencies differed from the traditional banking system. The members of the House Financial Services Committee broke down basic definitions of digital currencies, including the differences between stablecoins and fiat currencies. They talked about security to prevent fraud and hacking.
They asked witnesses to walk through the progression of technology, from AOL bulletin boards to Google search to blockchain, the system that undergirds cryptocurrencies.
But the divides on regulation broke down along party lines. Democrats warned that the fast-growing industry needed clearer oversight.
“Currently, cryptocurrency markets have no overarching or centralized regulatory framework, leaving investments in the digital assets space vulnerable to fraud, manipulation and abuse,” said Representative Maxine Waters, the Democrat of California who chairs the committee. Other Democrats expressed similar caution, including Representative Al Green of Texas, who warned that the volatility of cryptocurrencies resembled some of the problems that surfaced ahead of the global financial crisis more than a decade ago.
Last month, the Biden administration recommended that Congress pass legislation requiring that stablecoin issuers meet requirements similar to traditional banks.
But Congress’s history on technology doesn’t instill confidence in government’s ability to create smart regulations. Republicans hewed to their free-market stripes at the crypto hearing.
Representative Pete Sessions, Republican of Texas, told the crypto executives that he was in favor of their work and that regulations the industry has embraced may go too far.
Representative Ted Budd, Republican of North Carolina, worried that lawmakers could push innovation in financial technology out of the United States. He also inadvertently offered a reminder that a lack of comprehension around new technology slows oversight.
“My fear,” he said, “is that this regulatory state is going to crack down on an industry that the regulators really don’t understand yet.”



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