The U.S. Government Is Finally Scrambling to Regulate Facebook

Congress is moving to appoint privacy regulators and members are readying legislation that targets the social network.

WASHINGTON, DC - APRIL 07:  Senate Minority Leader Chuck Schumer (D-NY) boards an elevator before Judge Neil Gorsuch was confirmed as the next member of the U.S. Supreme Court April 7, 2017 in Washington, DC. The full Senate confirmed Gorsuch by a vote of 54-45. (Photo by Eric Thayer/Getty Images)
Senate Minority Leader Chuck Schumer (D-NY) boards an elevator before Judge Neil Gorsuch was confirmed as the next member of the U.S. Supreme Court April 7, 2017 in Washington, DC. Photo: Eric Thayer/Getty Images

Washington and Big Tech are scrambling to keep up after revelations that the voter profiling firm Cambridge Analytica harvested data from 50 million Facebook users. The scandal has accelerated regulatory and oversight efforts and left top Democrats reconsidering the party’s traditional closeness to Silicon Valley.

Perhaps the biggest change in Washington has been to the Senate timeline for confirming members of the Federal Trade Commission, the agency with jurisdiction over data privacy and the tech industry. The FTC has been essentially adrift, operating with only two out of five commissioners. Last week, it appeared that four nominees for the commission were stuck in limbo, awaiting a slow-moving process to vet and nominate the fifth. But on Monday night the Trump administration nominated Becca Kelly Slaughter, chief counsel to Senate Minority Leader Chuck Schumer, D-N.Y.

Schumer, whose daughter works as a product marketing manager at Facebook, recommended Slaughter in late January, and the nomination was reportedly held up over background checks. That changed rapidly after the Facebook scandal renewed attention on the FTC. “Rebecca Kelly Slaughter will make an excellent FTC commissioner and I’m proud to have recommended her to the White House,” Schumer said in a statement.

Instead of a confirmation hearing occurring weeks or months after the nomination, as is often the case, Slaughter’s may take place as soon as April 11, in the week the Senate returns from its Easter recess, according to two sources close to the process. The Senate Commerce Committee would not confirm the hearing date in response to a request from The Intercept. But the rumored speed around Slaughter’s nomination reflects a commitment to new leadership at the FTC, which currently has two lame-duck members on its five-member panel.

The FTC could impose sanctions on tech platforms like Facebook, enforce data privacy controls, challenge acquisition deals, and even break up companies if it finds anti-competitive conduct. A reinvigorated agency, in sum, represents a legitimate threat to Big Tech. And congressional attention to the issue creates new pressure on the FTC to act.

After criticism of its relatively passive oversight of the tech sector, the FTC on Monday confirmed an “open non-public investigation” into Facebook’s privacy practices. “Companies who have settled previous FTC actions must also comply with FTC order provisions imposing privacy and data security requirements,” wrote Tom Pahl, acting director of the Federal Trade Commission’s Bureau of Consumer Protection. He was referring to a 2011 FTC consent decree with Facebook where the company promised to prohibit third-party apps from scraping personal user data. The FTC traditionally doesn’t comment on nonpublic investigations, suggesting that it felt the need to restore its credibility on the subject.

In addition to at least eight user lawsuits, 37 state attorneys general from both parties also demanded answers about Facebook’s policies on user privacy, in a letter to the company on Tuesday.

Elsewhere, three separate congressional committees have requested that Facebook CEO Mark Zuckerberg testify on data privacy, and Zuckerberg has reportedly agreed to go before Congress in some capacity, though Facebook has made no announcement yet. So far, the company has only given private briefings to Congress through mid-level staff on the Cambridge Analytica matter.  Earlier this week, Zuckerberg stiffed a UK parliamentary committee seeking his testimony on the  situation.

Beyond hearings, Sen. Mark Warner, D-Va., himself a former tech executive, told NBC News that Congress should re-examine current law around tech platforms. “I think we have to re-look at the fact that if you move from one company to another maybe you should be able to move all your data,” Warner said, referencing the concept of interoperability, which proponents say would restore competition in social media by eliminating the network effects that encourage people to stay on Facebook because everyone else is on Facebook.

Rep. David Cicilline, D-R.I., a co-chair of the Congressional Antitrust Caucus, said that Facebook is facing an “existential crisis” after years of broken promises about what they do with user data. From the Republican side, Sen. John Kennedy, R-La., told CNN that while “I don’t want to regulate Facebook to death,” some of the company’s practices are “creepy.”

Democrats have long-standing and numerous ties to the tech community. Former President Barack Obama was famously close to Google, with hundreds of staffers moving back and forth between executive branch jobs and the search engine giant. Last year, former Obama counselor Valerie Jarrett joined the board of Lyft, and just this week former national security adviser Susan Rice joined the board of Netflix.

House Minority Leader Nancy Pelosi’s husband Paul holds $1.5 million in stock in Apple and at least half a million dollars in Facebook. Alison Schumer, Chuck Schumer’s daughter, works at Facebook as a “Privacy and Politics Product Marketing” manager, promoting projects related to getting people to vote and contact elected officials. Democrats receive the lion’s share of campaign contributions from Silicon Valley.

Asked if social media platforms should be regulated more tightly, a senior Democrat staffer said, “I think Mark [Zuckerberg] said as much.”

This dynamic is under stress as the realization of the darker side of Big Tech’s power dawns on the political class. The Democrats’ Better Deal campaign platform, released in 2017 and shaped in no small part by Schumer aide and FTC nominee Becca Kelly Slaughter, includes several planks on fighting corporate monopolies. But while it names several industries, it carefully leaves out tech companies. That kind of omission probably couldn’t happen today, just a year later.

Some Democratic leaders continue to struggle with where to draw the line. In an interview with Recode just two weeks ago, Schumer said that tech companies were working to police themselves, that Facebook was a “a very positive force,” and that he was “sympathetic” to the company’s situation. The Cambridge Analytica scandal dropped a week later.

It was reminiscent of a 2011 Senate hearing with then-Google executive chairman Eric Schmidt, where Schumer went on and on about New York’s tech sector and how Google “has been a very important part of that equation.” He added that small tech startups in New York told him that “Google is a positive force, much more positive than most of the other large companies they deal with.” The hearing concerned an investigation into Google favoring its own products over competitors in search and on its Android phones.

Schumer hasn’t made a public statement on the Facebook scandal, though that hasn’t prevented other members of the Democratic caucus from speaking out.

Pelosi, whose district is home to several tech firms, said at a CNN town hall in October, “We are blessed with the advances in technology” from Silicon Valley, but “it has its dangers. And we’re learning more about what they are.”

A senior Democratic staffer told The Intercept that Pelosi’s office has been coordinating with ranking members to push forward on investigating Russian election meddling on a number of fronts, including by looking at Facebook’s role. The effort includes letters, press conferences, meetings with Facebook leaders including chief operating officer Sheryl Sandberg, bill introductions, and calling for investigations in the Energy and Commerce Committee, which Republicans have only now agreed to.

The staffer made clear that the Minority Leader saw the Facebook revelations as a national security issue, as opposed to the economic security issues in the Better Deal agenda. Asked if social media platforms should be regulated more tightly, the staffer said, “I think Mark [Zuckerberg] said as much,” apparently referring to the CEO’s widely-repeated statement to CNN that “I actually am not sure we shouldn’t be regulated. … The question is more what is the right regulation.”

SAN JOSE, CA - APRIL 18:  Facebook CEO Mark Zuckerberg delivers the keynote address at Facebook's F8 Developer Conference on April 18, 2017 at McEnery Convention Center in San Jose, California. The conference will explore Facebook's new technology initiatives and products. (Photo by Justin Sullivan/Getty Images)

Facebook CEO Mark Zuckerberg delivers the keynote address at Facebook’s F8 Developer Conference on April 18, 2017, in San Jose, Calif.

Photo: Justin Sullivan/Getty Images

The Cambridge Analytica scandal isn’t the only startling behavior Facebook is being made to answer for. U.S. users of the platform who obtained the personal data Facebook collected on them were startled to find phone numbers and text messages pulled from their Android phones; a spokesperson told Ars Technica this information was used to rank contacts in Facebook Messenger. Fair housing groups have sued Facebook for continuing to allow advertisers to discriminate based on race, gender, disability and other criteria in housing ads. The company has been aware of that problem for over a year and has yet to remedy it.

Seeing the Democrats’ new guard take on Facebook reflects a new willingness to confront power in unpredictable ways.

Facebook Inc.’s stock price keeps falling, and polling indicates that its net favorability rating among the general public has fallen 28 points since October. Fellow tech giants like Apple CEO Tim Cook have echoed called for privacy regulation, amid recognition that there’s something unsettling about the sheer amount of data handed over to social media companies every minute of every day. On Wednesday, Playboy signaled its dissatisfaction by deleting its Facebook accounts; ironically, though, Playboy made the announcement on Instagram, which is owned by Facebook.

Facebook has attempted to stop the bleeding. On Monday, Zuckerberg issued another round of apologies, this time in newspaper ads. The company announced on Wednesday it would make it easier for users to review and even delete information previously posted or shared on the site, while promising more privacy initiatives in the future. It also shut down a tool called “Partner Categories,” which allowed marketers to use aggregated data from outside Facebook to target users. It delayed the announcement of a home speaker product on the grounds that a company struggling to explain privacy abuse should probably not be selling audio surveillance devices. And it trotted out a series of defenders in the media, including former Washington Post chair and Facebook board member Don Graham, to warn of the dangers of regulating the platform.

But away from the public relations messaging, Facebook’s real response to the spiraling scandals and lack of trust could be seen in its web postings seeking to hire 11 Washington lobbyists to manage its image on Capitol Hill. Facebook is already third in overall lobbying expenditures among tech companies, behind Google and Amazon with $11.5 million in spending in 2017.

Facebook hired three lobbyists last year in response to the use of its platform for Russian disinformation capaigns, all with ties to prominent Democrats: former John Kerry aide David Wade, former Joe Biden legislative affairs director Sudafi Henry, and former Mark Warner chief of staff Luke Albee. Facebook’s use of Democratic staffers for its lobbying talent pool speaks to the conundrum Democrats face on Big Tech.

As Facebook ramps up its PR campaign, it’s doubtful that there will be immediate consequences for the company outside of a grilling in hearings; it’s likely to take time for anything close to a wholesale restructuring of the social media sector. But seeing the Democrats’ new guard take on a company that has been fairly solicitous of it reflects a new willingness to confront power in unpredictable ways. The leadership may be hanging back, but it’ll be difficult for them to avoid joining the clash.

Top photo: Senate Minority Leader Chuck Schumer, D-N.Y., boards an elevator before Judge Neil Gorsuch was confirmed as the next member of the U.S. Supreme Court on April 7, 2017 in Washington, D.C.

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