WEBVTT - The Biggest Tech-Regulation Questions 0:00:10.360 --> 0:00:14.160 Hello, and welcome to the Votes and Verdicts podcast hosted 0:00:14.200 --> 0:00:20.000 by Bloomberg Intelligence, Bloomberg LP's investment research platform. In this 0:00:20.120 --> 0:00:24.160 podcast series, we talk about the intersection of business policy 0:00:24.320 --> 0:00:24.840 and law. 0:00:25.720 --> 0:00:27.320 My name is Matt Schuttenhelm. 0:00:27.480 --> 0:00:31.680 I'm an analyst with Bloomberg Intelligence covering US litigation and 0:00:31.760 --> 0:00:36.519 policy in the TMT space. I'm joined today by my 0:00:36.680 --> 0:00:40.840 Bloomberg Intelligence colleague in London, Tamlin Basin, who covers tech 0:00:40.920 --> 0:00:45.800 litigation and policy in Europe. Today we're going to walk 0:00:45.840 --> 0:00:49.320 through some of the biggest issues around US and EU 0:00:49.479 --> 0:00:52.479 tech regulation with the goal of getting you up to 0:00:52.560 --> 0:00:55.600 speed on our latest thinking on the current state of 0:00:55.640 --> 0:00:59.240 play on all things tech. With one exception, we won't 0:00:59.320 --> 0:01:03.560 be discussing antitrust in the tech space today. For that, 0:01:03.680 --> 0:01:07.680 look for a future podcast from our Bloomberg Intelligence colleague, 0:01:07.840 --> 0:01:08.800 Jennifer Reed. 0:01:10.640 --> 0:01:14.240 Hi, Matt, I'm happy to be joining you today. It 0:01:14.319 --> 0:01:17.160 seems like the tech industry has been caught in the 0:01:17.200 --> 0:01:21.479 regulatory crosshairs of European regulators for a few years now, 0:01:22.520 --> 0:01:25.160 and in Europe at least, the tough rhetoric has been 0:01:25.240 --> 0:01:28.839 backed up by some fairly onerous regulations and it's starting 0:01:28.840 --> 0:01:31.479 to feel like the US may be starting to catch up, 0:01:31.880 --> 0:01:35.080 certainly catching up on the rhetoric side, at least. I 0:01:35.160 --> 0:01:37.200 look forward to our discussion. I think we're going to 0:01:37.280 --> 0:01:40.399 have any to talk about, even without waiting into those 0:01:40.520 --> 0:01:44.000 competition issues that Jim will handle, right. 0:01:44.080 --> 0:01:46.480 Yeah, So today, on the US side, we will walk 0:01:46.520 --> 0:01:51.920 through questions on data privacy regulation, section two thirty of 0:01:51.960 --> 0:01:58.559 the Communications Decency Act, a potential TikTok ban, and broadband regulation. 0:01:59.040 --> 0:02:01.640 And then on the E side, we will talk about 0:02:01.840 --> 0:02:08.520 GDPR enforcement, some new content moderation regulations, Europe's own response 0:02:08.600 --> 0:02:14.040 to TikTok, and the fair shared debate. So with that, 0:02:14.160 --> 0:02:17.480 let's let's dive right into the questions, and I'll start 0:02:17.480 --> 0:02:20.840 with one for you, Tamlin. Years ago, we heard a 0:02:20.880 --> 0:02:26.079 lot about how GDPR was going to massively change how 0:02:26.160 --> 0:02:31.200 companies operated in Europe. Yet, at least from my perspective 0:02:31.200 --> 0:02:34.240 here in the US, it seems like it hasn't had 0:02:34.280 --> 0:02:36.000 that dramatic impact. 0:02:36.040 --> 0:02:38.440 Can you talk us through what's what's going on there 0:02:38.480 --> 0:02:40.840 with GDPR? Yeah, sure, Matt. 0:02:41.200 --> 0:02:45.519 And we're actually nearing the five year anniversary of GDPR 0:02:45.639 --> 0:02:49.200 first taking effect. That was in May eighteen when it 0:02:49.280 --> 0:02:52.880 first really began to take effect, and it's true that 0:02:52.919 --> 0:02:56.920 there hasn't been a sea change and how large platforms 0:02:56.960 --> 0:03:00.560 have operated in Europe during that time, I would say 0:03:00.560 --> 0:03:03.560 that there are some signs that its beginning to have 0:03:03.600 --> 0:03:06.640 an impact now. The threat of GDPR, which stands for 0:03:06.720 --> 0:03:12.160 the General Data Protection Regulation, was always basically twofold. One 0:03:12.360 --> 0:03:15.880 was the direct financial liabilities and this is because GDPR 0:03:16.080 --> 0:03:19.960 allows refines up to four percent of a company's total 0:03:20.040 --> 0:03:24.880 annual revenue. The second, and arguably in the grand scope 0:03:24.880 --> 0:03:27.639 of things, the larger threat, was on whether there was 0:03:27.680 --> 0:03:30.799 going to be a significant change to how these platforms 0:03:30.800 --> 0:03:35.760 collected and used personal data. Now, on the first threat 0:03:36.040 --> 0:03:39.320 and looking at sort of damages and fines, there has 0:03:39.400 --> 0:03:43.680 yet to be any one massive, multi billion dollar penalty 0:03:44.000 --> 0:03:48.200 issued against the platforms. However, in twenty two alone, Ireland's 0:03:48.280 --> 0:03:52.720 Data Protection Commissioner, which has jurisdiction over most of the 0:03:52.760 --> 0:03:57.119 big platforms, issued a total of five decisions against Meta 0:03:57.440 --> 0:04:01.920 for an aggregate of over one billion euros and financial penalties. 0:04:03.200 --> 0:04:05.280 The highest of these was a four hundred and five 0:04:05.320 --> 0:04:09.360 million euro penalty find based on how Instagram was collecting 0:04:09.400 --> 0:04:14.320 and processing data on children in January it announced a 0:04:14.400 --> 0:04:17.159 total of three hundred and ninety million euros and fines 0:04:17.520 --> 0:04:20.919 for how the platform's Facebook and Instagram were allowed to 0:04:21.000 --> 0:04:24.000 change their terms of service in order to gain a 0:04:24.080 --> 0:04:27.880 legal basis for the collection and use of personal data 0:04:28.480 --> 0:04:32.760 now here the Irish Commisioner. The Irish Commissioner ultimately said 0:04:32.800 --> 0:04:37.160 that they couldn't sort of bake the terms bank consent 0:04:37.279 --> 0:04:40.640 into their terms of service. But this is where we're 0:04:40.680 --> 0:04:43.520 sort of going to detour. The reason that GDPR is 0:04:43.560 --> 0:04:46.440 sort of slow moving is because it was designed to 0:04:46.480 --> 0:04:51.200 get consensus from all of Europe's data regulators and the 0:04:51.240 --> 0:04:54.159 way to do that is again, Ireland is sort of 0:04:54.200 --> 0:04:59.640 the regulator of primary authority. But when Ireland wants to 0:04:59.760 --> 0:05:04.040 issue you a financial penalty or say a platform does 0:05:04.160 --> 0:05:08.119 or does not violate GDPR, and when it's a large 0:05:08.120 --> 0:05:11.920 platform that sort of works across all countries in the EU, 0:05:12.480 --> 0:05:16.160 it has to publish a sort of draft opinion and 0:05:16.240 --> 0:05:22.480 get the essentially work towards towards consensus with the regulators 0:05:22.520 --> 0:05:25.599 and the other countries. So going back to this terms 0:05:25.600 --> 0:05:30.760 of service, Ireland's data regulator initially said that Facebook and 0:05:30.880 --> 0:05:33.960 Instagram could do this. However, then when it sent that 0:05:35.720 --> 0:05:39.880 draft opinion to other regulators, there was objections. Ultimately it 0:05:40.040 --> 0:05:44.160 went to the European Data Protection Board. There was designed 0:05:44.160 --> 0:05:47.880 to sort of resolve differences among regulators. Now the Data 0:05:47.880 --> 0:05:52.039 Protection Board sided with someone's other regulators and said that 0:05:52.080 --> 0:05:56.400 these terms of service could not be changed. So what 0:05:56.400 --> 0:06:00.560 that means is Iron's diary regulator then had this fine opinion, 0:06:00.640 --> 0:06:02.760 wasn't one that it initially agreed with, but one that 0:06:02.800 --> 0:06:06.320 it had to enforce on Facebook, and it said that 0:06:06.440 --> 0:06:09.520 it could not change those terms of service. That decision 0:06:09.600 --> 0:06:12.760 is ultimately going to be appealed up to Europe's top court, 0:06:13.000 --> 0:06:15.919 and that is going to take a few years. But 0:06:16.400 --> 0:06:19.360 that takes a lot of time, which is makes a 0:06:19.400 --> 0:06:22.840 lot of sense because GDPR was a massive new legislative 0:06:23.240 --> 0:06:25.320 development and it's going to take its time to work 0:06:25.360 --> 0:06:28.240 through the courts. It's still early days for GDPR, and 0:06:28.320 --> 0:06:30.200 I think it's going to take some time to develop 0:06:30.240 --> 0:06:33.600 and find out where the boundaries of those data collections are. 0:06:34.040 --> 0:06:37.799 And I think that actually brings it back to you, Matt, 0:06:37.839 --> 0:06:41.600 because because again GDPR began about eight nine years ago 0:06:41.680 --> 0:06:45.600 when discussions initially began, but it seems like data previously 0:06:45.720 --> 0:06:49.440 legislation at least in the last few congresses, has really 0:06:49.480 --> 0:06:52.360 picked up for a few years now, and it seems 0:06:52.360 --> 0:06:55.280 like there might be some momentum to actually getting something done. 0:06:55.360 --> 0:06:56.799 Can you tell us how that stands? 0:06:57.160 --> 0:07:00.359 Yeah, yeah, Camlin, it's been on the US side. I 0:07:00.360 --> 0:07:00.920 think you're right. 0:07:01.160 --> 0:07:03.880 You know, it's definitely lagging behind and trying to catch 0:07:03.960 --> 0:07:06.560 up to what Europe moved ahead with first. 0:07:06.560 --> 0:07:08.360 But you know, it's remarkable. 0:07:08.680 --> 0:07:12.160 You know, twenty years ago there was this bipartisan consensus 0:07:12.240 --> 0:07:15.080 that that the Internet works best with with with the 0:07:15.120 --> 0:07:19.760 regulators staying out of the way. Now that's that's basically 0:07:19.800 --> 0:07:24.440 completely reversed, and everyone agrees there needs to be regulation 0:07:25.360 --> 0:07:28.840 of these businesses. The problem is that no one's been 0:07:28.880 --> 0:07:32.679 able to reach a consensus on how to do it here. 0:07:32.680 --> 0:07:33.920 Here in the US. 0:07:34.880 --> 0:07:38.120 But you're right, there has been progress for the first time, 0:07:38.160 --> 0:07:40.320 and I think it's useful to step back and go 0:07:40.400 --> 0:07:42.840 to what you were talking about, how how this can 0:07:43.040 --> 0:07:48.120 impact the business model. You know, you know, Google and 0:07:48.720 --> 0:07:53.760 Facebook make hundreds of billions of dollars a year using 0:07:53.960 --> 0:07:58.040 data for advertising. And what we're talking about here is 0:07:58.040 --> 0:08:03.520 is legislation or regulation that goes directly to imposing limits 0:08:03.600 --> 0:08:06.880 on how they can use that data, and that can 0:08:06.960 --> 0:08:11.040 be really impactful for these businesses. You look at, for example, 0:08:11.080 --> 0:08:15.400 what Apple did with its change in app tracking, and 0:08:15.840 --> 0:08:20.520 Facebook alone said it's change in the ability to track 0:08:20.760 --> 0:08:26.680 data across different apps using Apple's products cost Meta ten 0:08:26.760 --> 0:08:32.240 million dollars last year. We're potentially talking about more significant 0:08:32.520 --> 0:08:36.520 changes in limits on how data is used, and so 0:08:36.600 --> 0:08:39.600 it can have a really meaningful impact on these companies 0:08:39.640 --> 0:08:44.920 depending on how this legislation takes shape. So far in Congress, 0:08:44.960 --> 0:08:48.640 nothing has really gotten close to the finish line. But 0:08:48.760 --> 0:08:51.679 we did, as we said, get closer than ever. I 0:08:51.679 --> 0:08:55.800 think last term in Congress, when the House of Representatives 0:08:55.840 --> 0:09:00.000 passed a law that made it out of the House Committee. 0:09:00.280 --> 0:09:04.880 Now it ran into trouble because some in the Senate 0:09:05.120 --> 0:09:09.680 didn't think it went far enough, it didn't regulate aggressively enough, 0:09:09.720 --> 0:09:13.200 and some in California, which has adopted its own law, 0:09:13.200 --> 0:09:17.359 we're concerned that this federal law would trump the state's 0:09:17.559 --> 0:09:21.560 ability to do more in terms of regulation and so 0:09:21.960 --> 0:09:25.239 and now we have a Congress that is more divided 0:09:25.320 --> 0:09:29.560 than it was last year, with Republicans controlling the House 0:09:29.559 --> 0:09:33.960 of Representatives and Democrats still controlling the Senate and the Presidency. 0:09:34.320 --> 0:09:37.240 I think that makes it tougher for Congress to get 0:09:37.280 --> 0:09:40.160 anything over the finish line. Given the difficulty of these 0:09:40.160 --> 0:09:44.280 issues and how they're sometimes politicized. What I think is 0:09:44.440 --> 0:09:47.840 really worth watching for investors in the near term, though, 0:09:48.280 --> 0:09:52.280 is the Federal Trade Commission is trying to move ahead 0:09:52.320 --> 0:09:55.200 with its own rules. It says, Okay, Congress, you're not 0:09:55.240 --> 0:09:57.240 going to do this. We'll move ahead. We have the 0:09:57.280 --> 0:10:01.400 power to make rules defining what is an unfair or 0:10:01.440 --> 0:10:04.959 deceptive practice, and we're going to have We're going to 0:10:05.000 --> 0:10:09.600 go ahead and tackle what what FTC chair Lena Khan 0:10:09.760 --> 0:10:14.959 has called the surveillance advertising business market and tackle it 0:10:15.000 --> 0:10:19.360 with regulations. And while I think that's going to take 0:10:19.400 --> 0:10:23.400 some time, the FTC rulemaking process is extremely slow and 0:10:23.520 --> 0:10:27.160 it's rarely been used before, and I think it's likely 0:10:27.240 --> 0:10:31.000 to run into legal problems. If they go aggressive with 0:10:31.120 --> 0:10:33.520 these new rules, as I think they will, I think 0:10:33.559 --> 0:10:35.080 it still matters. 0:10:34.840 --> 0:10:36.960 For these companies for this reason. 0:10:37.400 --> 0:10:40.600 I think even if the whole effort fails in court, 0:10:41.120 --> 0:10:44.959 I think those new rules end up shaping the debate 0:10:45.440 --> 0:10:49.960 about what it is to regulate in an aggressive or 0:10:50.000 --> 0:10:53.679 strong way, and So what now might be perceived as 0:10:53.760 --> 0:10:58.160 strong regulation could change after the FTC moves ahead with 0:10:58.200 --> 0:11:02.199 its proposals, and that could be a meaningful impact for 0:11:02.800 --> 0:11:03.480 these companies. 0:11:03.480 --> 0:11:07.760 So what I'm telling clients now is to keep an. 0:11:07.600 --> 0:11:11.080 Eye on the advance of that FTC rulemaking because it 0:11:11.080 --> 0:11:12.200 could be significant. 0:11:13.240 --> 0:11:15.559 And that's really interesting, Matt to see how that's developed 0:11:15.559 --> 0:11:20.040 over the years. Talking about how you know things potentially 0:11:20.080 --> 0:11:22.280 failing in court, I want to bring your attention to 0:11:22.360 --> 0:11:26.000 sort of the liability shield for Internet companies. This is 0:11:26.040 --> 0:11:28.920 I think Section two thirty and I believe there was 0:11:28.960 --> 0:11:31.640 a Supreme Court challenge to Section two thirty just a 0:11:31.640 --> 0:11:34.439 few weeks ago, and you actually, I believe went to 0:11:34.440 --> 0:11:36.600 the oral arguments. Can you tell tell us how those 0:11:36.679 --> 0:11:38.920 arguments shaped out and what's going on there? 0:11:39.320 --> 0:11:39.800 Yeah. Sure. 0:11:39.840 --> 0:11:42.200 So that's a big deal because we again for the 0:11:42.400 --> 0:11:45.720 you know, since since nineteen ninety six here in the US, 0:11:45.800 --> 0:11:49.760 we've had this this protection in federal law that says 0:11:49.880 --> 0:11:53.720 that anytime something bad in the real world happens that's 0:11:53.840 --> 0:11:58.520 linked to the Internet, you can't sue the platform for that. 0:11:58.640 --> 0:12:00.880 You can you can sue the. 0:12:00.280 --> 0:12:04.840 The poster of that content, but not the platform that 0:12:05.000 --> 0:12:08.679 hosts it. That's why Section two thirty is very important. Plus, 0:12:08.520 --> 0:12:12.400 it says that the platforms have the ability to restrict 0:12:12.440 --> 0:12:14.679 content if they're acting in good faith, they can go 0:12:15.120 --> 0:12:19.280 clean up their sites and remove speech without facing liability 0:12:19.280 --> 0:12:22.840 for that. And we've had again, the courts have adopted 0:12:22.840 --> 0:12:26.240 a very broad reading of that liability protection over the 0:12:26.280 --> 0:12:30.120 last twenty years, and so most cases against Internet platforms 0:12:30.160 --> 0:12:33.680 tied to content posted by others, those cases get tossed 0:12:33.720 --> 0:12:37.040 out very quickly with a motion to dismiss in court. 0:12:37.280 --> 0:12:42.520 The companies don't face costly discovery, and so that's been 0:12:42.559 --> 0:12:46.199 the status quo for a long time. But there's increasingly 0:12:46.240 --> 0:12:49.400 been a lot of noise on both sides of the 0:12:49.400 --> 0:12:53.840 political aisle suggesting maybe we need to change that liability shield, 0:12:54.400 --> 0:12:57.680 and Congress has tried to do it, not really gotten 0:12:57.800 --> 0:13:01.360 very far with serious efforts. But yes, the Supreme Court 0:13:02.480 --> 0:13:06.200 sort of out of nowhere. There was no split in 0:13:06.240 --> 0:13:08.920 the courts, which is usually why the Court steps in. 0:13:09.080 --> 0:13:16.280 It took this case about Google, and that was surprising 0:13:16.320 --> 0:13:19.440 in itself. Why would the Court take a case about 0:13:19.440 --> 0:13:22.120 a statute that the courts aren't even divided about how 0:13:22.120 --> 0:13:24.959 they read how they read it, and so that suggested 0:13:25.080 --> 0:13:28.920 real risk. And the idea here pushed by the Biden 0:13:29.000 --> 0:13:34.160 administration in the court case was that, Okay, maybe Google 0:13:34.280 --> 0:13:38.000 and Facebook and these other platforms shouldn't be responsible for 0:13:38.320 --> 0:13:42.320 content posted by third parties. That's what the liability shield does. 0:13:42.679 --> 0:13:48.959 But if they recommend that content, and then they're taking 0:13:48.960 --> 0:13:54.920 an affirmative act and they should be liable potentially at 0:13:55.000 --> 0:13:59.839 least shouldn't be shielded by Section two thirty when they 0:14:00.040 --> 0:14:03.199 take that affirmative step. And so that's what this case 0:14:03.360 --> 0:14:07.280 was about. That was argued in February, and we went 0:14:07.320 --> 0:14:10.120 into it with real concerns that the platforms could see 0:14:10.360 --> 0:14:16.360 significant disruption. But what came out of the argument was 0:14:16.400 --> 0:14:19.640 then a little bit surprising because despite the Supreme Court 0:14:19.680 --> 0:14:25.240 sort of surprisingly taking this case, the justices didn't really seem. 0:14:25.080 --> 0:14:29.080 Too anxious to make major changes in Section two thirty. 0:14:29.080 --> 0:14:34.240 There was a real concern about disrupting how the Internet 0:14:34.280 --> 0:14:39.320 operates because the meta Google, their whole system is built 0:14:39.360 --> 0:14:43.720 on using algorithms to organize content and recommend content. And 0:14:44.280 --> 0:14:48.120 the justices, I think we're worried that if the companies 0:14:48.120 --> 0:14:51.360 face liability for that one, you're going to see it 0:14:51.480 --> 0:14:55.080 just the court's flooded with lawsuits against these companies and 0:14:55.120 --> 0:14:57.280 I think it could mean hundreds of millions of dollars 0:14:57.480 --> 0:15:02.200 of new litigation expense for the companies, and the court 0:15:02.320 --> 0:15:05.040 was concerned about that. But more than that, the court 0:15:05.120 --> 0:15:07.600 was concerned that, you know, they might break the Internet, 0:15:07.840 --> 0:15:11.440 and that these are nine judges that don't know very 0:15:11.520 --> 0:15:13.640 much about how this stuff actually works. I think they're 0:15:13.680 --> 0:15:16.120 a little bit wary about what they're stepping into there. 0:15:16.160 --> 0:15:20.800 So what looked like a significant threat I think might 0:15:20.960 --> 0:15:23.200 not turn out to be. I expect we'll see a 0:15:23.240 --> 0:15:27.440 decision in the second quarter of this year on that. 0:15:28.480 --> 0:15:30.240 And with that, let me let me toss it back 0:15:30.240 --> 0:15:35.040 to you, Tamlin. So, Europe recently adopted two new sets 0:15:35.080 --> 0:15:38.600 of rules that were again aimed at the tech industry, 0:15:38.640 --> 0:15:41.280 the d m A and the DSA. Can you tell 0:15:41.360 --> 0:15:42.600 us what those are about? 0:15:43.200 --> 0:15:46.480 Yeah, absolutely, Matt. So I'm gonna focus mostly on the 0:15:46.560 --> 0:15:50.480 Digital Services Act or the DSA. And this sort of 0:15:50.480 --> 0:15:52.360 builds off what you were just talking about because we 0:15:52.360 --> 0:15:55.280 can sort of think of this as the counterpart to 0:15:55.440 --> 0:15:59.920 Section thirty two thirty, although it's a much updated counterpart 0:16:00.280 --> 0:16:04.160 as it just took effect this year, and actually, in 0:16:04.200 --> 0:16:06.480 fact companies still have a few months until they must 0:16:06.560 --> 0:16:10.400 fully comply. However, light two thirty Section two thirty there 0:16:10.520 --> 0:16:14.760 is protection for the platforms against liability for the post 0:16:14.800 --> 0:16:18.240 name of third party content, which is a huge thing because, 0:16:18.440 --> 0:16:21.600 as you said, so many people are saying roll this back, 0:16:21.680 --> 0:16:27.440 and you really risk some unintended consequences for the Internet. However, 0:16:27.480 --> 0:16:31.880 the updated law treats platforms differently based on bizarre or 0:16:32.040 --> 0:16:35.480 we'll say delightful acronym v LOOP, which stands for a 0:16:35.600 --> 0:16:40.240 very large, large online platform. Now, for these platforms, there 0:16:40.240 --> 0:16:44.560 are going to be heightened obligations relating to transparency for 0:16:44.720 --> 0:16:49.040 how content moderation policies are made and how these policies 0:16:49.040 --> 0:16:51.800 are carried out. Now, this is an update to the 0:16:51.960 --> 0:16:55.560 former law which was called the e Commerce Directive, and 0:16:56.600 --> 0:16:59.720 unlike the e Commerce Directive, under the DSA, there are 0:17:00.120 --> 0:17:06.440 significant penalties in the wings if very large, very large 0:17:06.480 --> 0:17:10.119 platforms run a fowel of these moderation rules. This is 0:17:10.160 --> 0:17:13.320 even more than GDPR because it's up to six percent 0:17:13.480 --> 0:17:17.040 of total global revenue. So there's definitely some degree of 0:17:17.080 --> 0:17:21.040 added risk here for the platforms. I think it's going 0:17:21.080 --> 0:17:24.520 to take time to find out how strict these rules 0:17:24.560 --> 0:17:30.879 are being applied. I'll just say anecdotally, so far, the 0:17:30.960 --> 0:17:33.520 one firm that is getting the most attention under the 0:17:33.600 --> 0:17:37.720 DSA is Twitter, and the reason is because regulators have 0:17:37.840 --> 0:17:40.760 been very interested in how all of the layoffs and 0:17:41.200 --> 0:17:45.280 how all of the volatility within that company is impacting 0:17:45.400 --> 0:17:49.920 its ability to monitor against illegal or harm content, which 0:17:50.040 --> 0:17:52.560 was one of the motivating factors for sort of updating 0:17:52.640 --> 0:17:56.720 the DSA. Turning over the DNA, which stands for the 0:17:56.760 --> 0:18:01.240 Digital Markets Act. Now, this primarily targets what it calls 0:18:01.400 --> 0:18:05.080 gatekeeper platforms, and it's going to harness those platforms with 0:18:05.160 --> 0:18:09.920 a wrap of obligations intended to allow new players to entermarkets. 0:18:10.680 --> 0:18:13.480 It goes into effect later this year. It's definitely something 0:18:13.480 --> 0:18:16.400 to keep an eye on. But this is is primarily 0:18:16.440 --> 0:18:19.280 a competition based law, so we're gonna leave it there 0:18:19.320 --> 0:18:24.439 for now. I do, however, Matt, want to turn it 0:18:24.520 --> 0:18:28.119 to your favorite app, TikTok, And there's a lot of 0:18:28.160 --> 0:18:31.600 noise I think on both sides of the Atlantic about 0:18:32.240 --> 0:18:37.120 potential risks that TikTok poses and whether or not TikTok 0:18:37.200 --> 0:18:39.080 should be banned. So can you tell us what's the 0:18:39.160 --> 0:18:43.240 likelihood of TikTok being removed from everybody's stone in the US. 0:18:43.760 --> 0:18:46.520 Yeah, that's a great question, Tamlin and I and this 0:18:46.600 --> 0:18:50.240 is really I think, you know, great news for companies 0:18:50.280 --> 0:18:53.400 like like Meta and Alphabet, which have faced so much 0:18:53.440 --> 0:18:57.359 scrutiny over the past couple of years here here in DC, 0:18:58.880 --> 0:19:03.840 to finally shift the focus to to someone else in itself. 0:19:04.520 --> 0:19:05.520 Is is a good thing? 0:19:06.119 --> 0:19:09.000 Is it going to be stripped off of your phone 0:19:09.200 --> 0:19:13.120 in the US? I'm I'm pretty skeptical that that's going 0:19:13.160 --> 0:19:16.560 to play out, But but you're absolutely right that this 0:19:16.680 --> 0:19:21.680 is this is a growing movement I think where and 0:19:21.800 --> 0:19:26.840 you're you're seeing bipartisan interests in in upping the pressure 0:19:27.119 --> 0:19:29.560 on on TikTok. You right now, you have the Biden 0:19:29.680 --> 0:19:34.400 administration going through what's known as it's scipious process uh 0:19:34.440 --> 0:19:39.280 TO to review TikTok for national security reasons. At the 0:19:39.359 --> 0:19:43.679 same time, you have states moving ahead with bans on 0:19:44.560 --> 0:19:47.639 use of the app for government employees. You saw the 0:19:47.640 --> 0:19:52.160 federal government do that and and ban use for federal 0:19:52.200 --> 0:19:59.439 government employees, and and you see Republican House members advancing 0:19:59.520 --> 0:20:03.280 bills last week, you saw in the Senate Mark Warner, 0:20:03.840 --> 0:20:06.879 a leading Democrat, advance a bill that would give the 0:20:06.880 --> 0:20:12.439 Biden administration new power outside of the scipious process to 0:20:12.680 --> 0:20:18.800 step in and mitigate or prohibit security threats, and TikTok 0:20:18.880 --> 0:20:22.240 could potentially be on the list of things that that 0:20:22.280 --> 0:20:26.080 the Biden administration could use for that new power. Now, 0:20:26.840 --> 0:20:31.120 there is momentum for these things that's different though than 0:20:31.400 --> 0:20:35.000 I think, suggesting that this is likely to lead to 0:20:35.440 --> 0:20:39.720 a band that makes you know, Facebook and Google see 0:20:39.720 --> 0:20:42.760 a competitor disappear here in the United States. 0:20:43.440 --> 0:20:45.080 And I said that for two reasons. 0:20:45.200 --> 0:20:51.520 One, TikTok is extremely popular here, and there is potential 0:20:51.680 --> 0:20:55.359 political risk I think for this administration if it were 0:20:55.480 --> 0:20:58.160 to move ahead and take that, you know. 0:20:58.200 --> 0:21:00.360 Most extreme step for. 0:21:00.400 --> 0:21:02.960 People, unless you know, maybe you and I are a 0:21:03.000 --> 0:21:06.440 little more engaged in this than a lot of America's 0:21:06.560 --> 0:21:10.080 younger voters, and I think there could be a concern 0:21:10.440 --> 0:21:16.200 that their reaction to this might not be a great 0:21:16.240 --> 0:21:19.679 thing for the next presidential election. I think that's a 0:21:19.760 --> 0:21:22.639 concern for the administration if it were to go to 0:21:22.680 --> 0:21:23.840 that most extreme step. 0:21:24.160 --> 0:21:26.600 Number Two, there's a First Amendment problem here. 0:21:27.520 --> 0:21:30.440 The Trump administration tried to move ahead with a TikTok 0:21:30.520 --> 0:21:34.640 band and it ran into trouble in court for two reasons. One, 0:21:34.720 --> 0:21:37.080 the statute didn't let it do what it wanted to do, 0:21:37.160 --> 0:21:40.080 but also the First Amendment. Now, Congress can fix the 0:21:40.119 --> 0:21:44.560 statute part and remove that as a legal problem, but 0:21:44.680 --> 0:21:48.560 Congress can't change the Constitution, and the First Amendment is 0:21:48.600 --> 0:21:50.760 still going to be a problem. And basically courts are 0:21:50.760 --> 0:21:54.640 going to say, Okay, maybe you have an important interest 0:21:55.240 --> 0:21:59.520 in going after TikTok here, but are you tailoring your 0:21:59.560 --> 0:22:02.520 response appropriately or are you blocking more. 0:22:02.320 --> 0:22:03.760 Speech than is necessary? 0:22:04.040 --> 0:22:08.080 And that effectively is going to make the Biden administration 0:22:08.440 --> 0:22:11.200 use a total ban as sort of a last resource. 0:22:11.560 --> 0:22:14.439 It's going to have to pursue other alternatives first, and 0:22:14.440 --> 0:22:17.399 I think that's where we're more likely to land. Is 0:22:17.480 --> 0:22:22.200 some sort of divestiture or other measures too to reduce 0:22:22.480 --> 0:22:29.160 China's potential influence over TikTok. But I think it's unlikely 0:22:29.760 --> 0:22:33.000 that that they'll go to a total band, that that 0:22:33.000 --> 0:22:36.080 that is a major gain for for the competitors, for Google, 0:22:36.160 --> 0:22:39.120 for Facebook, and just to see this this competitor fall 0:22:39.160 --> 0:22:40.960 away in the US, that seems unlikely. 0:22:41.000 --> 0:22:43.080 What about what about in Europe? What are you seeing 0:22:43.119 --> 0:22:45.359 on on on the TikTok side there. 0:22:46.080 --> 0:22:48.199 Yeah, so it's actually a bit similar to what you 0:22:48.200 --> 0:22:51.439 were describing in the US. So we have seen some 0:22:51.720 --> 0:22:55.040 moves to ban the apps from the phones for staff 0:22:55.160 --> 0:22:59.159 of the European Parliament, some moves like that. TikTok is 0:22:59.280 --> 0:23:03.000 trying to peers in Europe. It's sort of proactively taken 0:23:03.040 --> 0:23:07.600 measures to update and enhance its privacy and data security practices, 0:23:08.040 --> 0:23:09.960 trying to sort of mute a lot of the criticism 0:23:10.400 --> 0:23:14.440 criticism it's facing. So it's still early days here, but 0:23:15.080 --> 0:23:18.760 TikTok is definitely facing some headwinds. I like you, I'm 0:23:18.760 --> 0:23:21.080 a bit skeptical that there's going to be a total 0:23:21.119 --> 0:23:25.160 ban in Europe. On the popularity that you mentioned as 0:23:25.200 --> 0:23:28.520 a counterweight to a potential ban, it is one reason 0:23:28.520 --> 0:23:32.040 that's also relevant here. On the flip side, though, I'll 0:23:32.080 --> 0:23:35.040 note that there's a bit of a corollary in Europe 0:23:35.040 --> 0:23:38.199 that might not necessarily be present in the US, and 0:23:38.240 --> 0:23:41.880 that's what happened a few years ago with regards to Huawei. Now, 0:23:41.880 --> 0:23:45.680 in terms of positioning and network infrastructure, the Chinese firm 0:23:46.119 --> 0:23:48.879 didn't have all that much of a foothold in the US, 0:23:49.400 --> 0:23:54.160 but it's kit had been heavily leveraged to build four 0:23:54.200 --> 0:23:58.280 G networks in Europe. However, pressure and a lot of 0:23:58.320 --> 0:24:02.280 it that came from the US government on the inclusion 0:24:02.440 --> 0:24:05.640 of Huawei and five G network builds caused a lot 0:24:05.680 --> 0:24:08.719 of European carriers to sort of turn against it and 0:24:08.760 --> 0:24:12.720 in some place rip out the existing Huawei infrastructure and 0:24:12.760 --> 0:24:16.840 replace it. The beneficiaries of that have primarily been Nokia 0:24:16.880 --> 0:24:22.080 and ericson, So so there, you know, there things can happen, 0:24:22.560 --> 0:24:26.480 and its potential that that the push to ban TikTok 0:24:26.520 --> 0:24:30.720 could accelerate. That said, I think there are a few 0:24:30.800 --> 0:24:34.560 reasons to think that a popular customer facing app like 0:24:34.640 --> 0:24:39.000 TikTok would be treated differently than Huawei was, which, at 0:24:39.080 --> 0:24:42.359 least with respect to network build outs, Huawei was fairly 0:24:42.400 --> 0:24:46.440 far removed from the public's awareness. It's will definitely have 0:24:46.520 --> 0:24:48.280 to wait and see how it's developing, because it does 0:24:48.400 --> 0:24:50.960 definitely seems like every week there's a little bit more 0:24:50.960 --> 0:24:53.399 momentum and people are talking about a potential ban a 0:24:53.440 --> 0:24:56.480 little bit more. But right now I'm a bit dubious 0:24:56.520 --> 0:25:00.159 that it goes that way. I'm gonna I'm gonna one 0:25:00.200 --> 0:25:03.080 final question, Matt, and this this is one of your 0:25:03.080 --> 0:25:06.080 favorite topics going back quite a few years, and it's 0:25:06.119 --> 0:25:08.760 net neutrality. Seems like we've been talking about net neutrality 0:25:08.840 --> 0:25:12.680 for a decade, maybe longer, but in the last few years, 0:25:12.680 --> 0:25:14.600 I haven't seen on that much about it. Is Is 0:25:14.640 --> 0:25:18.159