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14 January 2021

CES 2021 tries striking political tone – should probably stick to gizmos

CES succumbed to a political headache at the famous event’s first virtual showcase, fielding representatives who wouldn’t know a legitimate technological issue if it hit them square in the nose.

Admittedly, there was an element of naivety on Faultline’s part for expecting genuine insights into the core technology issues facing the US over the next four years from a session labeled ‘A Biden Administration’s Approach to Technology and Innovation’ (apologies to last week’s podcast listeners for instilling any false hope).

The unfortunate reality was a typical political sugarcoating by Brian Deese, selected by President Elect Joe Biden as an Incoming Director at the National Economic Council, and a former advisor to Obama no less. He waxed lyrical about partnering with the private sector as a solution for almost every topic that came his way – frequently spinning current economic fragility into a weapon against everything from the digital divide to rebuilding regulation. In other words, things cannot get worse than they already are.

Of course, what else was Deese supposed to say at the world’s largest consumer electronics show? While fully aware that his participation at CES was to serve as a megaphone for Biden himself, Deese skipped around issues with finesse just as the Biden administration would have instructed him to in the days ahead of inauguration.

Unfortunately, the Biden administration’s CES appearance came way too soon. Policies around technology and communications are evidently still being drafted and discussed, with Deese revealing little to nothing on specific matters. An office administrator from the FCC would have proven a more insightful panelist.

However, the political edge that CES so craved was saved by a later panel session on whether Big Tech is really the enemy, where disagreements ensued between Rachel Bovard, a Senior Director of Policy at the Conservative Partnership Institute, and Robert Atkinson, President of the Information Technology and Innovation Foundation.

On the session’s core question “Is Big Really Bad?”, Bovard and Atkinson each emphatically answered no – but that is where the agreements ended.

With WhatsApp recently hitting headlines for all the wrong reasons due to its contentious privacy rule changes, Atkinson ruffled some feathers by questioning whether Facebook’s acquisition of the mobile messaging app was really as detrimental to consumers as the media has made out. He stressed that a) WhatsApp works better under Facebook ownership, and b) WhatsApp continues to be free under Facebook ownership.

Bovard objected. She argued that when Facebook purchased WhatsApp, the social media giant gave Google full access to consumer data without end-to-end encryption and did so without any consumer knowledge.

Atkinson bit back. “Everyone talks about privacy violations, but I don’t see how consumers are harmed by these practices,” he stressed, before admitting that the FTC and Department of Justice should have more scrutiny over some of the acquisitions made by monopolies such as Facebook and Google that stifle innovations in their respective sectors.

This triggered Bovard to bring up “kill zones” – the practice of aggressively acquiring start-ups solely to kill them off.

“We had kill zones with automotive companies in the 1930s, but I don’t think kill zones are a problem in Big Tech. Social networks and Search are such mature markets; we don’t need more of them. Look at venture capital investing – angel or first stage investments are higher than ever, so there is no evidence of kill zones,” said Atkinson, again fighting the corner for Big Tech – a phenomenon which perfectly illustrates the American dream in his view.

Bovard agreed that some smaller firms want to be bought out, but argued the case for budding entrepreneurs striving to build long-standing businesses. Start-ups with such ambitions are ultimately being throttled by the likes of Facebook, not only through direct acquisition but also in blocking VC investments with its kill zone tactics.

On the other hand, such monopolistic practices can send signals to investor communities to take their dollars elsewhere. “Don’t waste money going after Google or Facebook – kill zone acquisitions give people incentives to sell out if they do well,” added Atkinson.

So, are these so-called kill zones enough of a problem to warrant regulation changes? “I don’t think we need to update the laws. But we need to ask if enforcement is responding in the ways congress intended?” questioned Bovard.

Finally, Faultline got what we came for, mention of Section 230 of the Communications Decency Act – a long-standing law that essentially protects social media platforms from being sued due to user-generated posts.

While rare, there are certain bipartisan agreements on technology issues among Democrats and Republicans, according to Bovard, although she stressed there are definitely big differences in approaches concerning Section 230 reform.

“Democrats tend to want to use the law to ban speech they don’t agree with. Republicans tend to take the approach of the way to tackle bad speech they don’t agree with is more speech,” she said.

We should remind ourselves that outgoing FCC Chairman Ajit Pai played to Trump’s tune by agreeing to investigate Section 230 after his incessant and baseless claims that social media platforms were censoring posts to influence election results. However, Biden and Trump do at least share common ground that Section 230 should be revoked, with Biden describing tech giants as “propagating falsehoods they know to be false” in relation to Section 230 – while pointing to European data privacy regulations as setting the bar.

One of Faultline’s predictions for the Biden era is that Section 230 will be reworked, and while neither of the political CES sessions on show this week provided much clarity, we can conclude that the regulatory spotlight on Big Tech will intensify in the coming years – but at the same time is likely to take a backseat to more pressing economic matters.