Analysis | The Technology 202: Washington lawmakers tell tech executives trust has 'run out' - The Washington Post

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Sen. Sherrod Brown, D-Ohio, speaks during a Senate Finance Committee hearing with pharmacy benefit managers on Capitol Hill in Washington, Tuesday, April 9, 2019, exploring the high cost of prescription drugs. (AP Photo/Susan Walsh)

Lawmakers from both parties had a clear message to Silicon Valley at a trio of Capitol Hill hearings on Tuesday: We don’t trust you. 

The gauntlet of grillings kicked off with Sen. Sherrod Brown (D-Ohio) ripping into Facebook at a hearing about the company’s plans to launch a cryptocurrency — calling Facebook “dangerous” at a Senate Financial Services Committee hearing.  

“Now, Facebook may not intend to be dangerous, but surely they don’t respect the power of the technologies they’re playing with,” Brown said. “Like a toddler who has gotten his hands on a book of matches, Facebook has burned down the house over and over and called every arson a learning experience.”

Hours later at a Senate Judiciary Committee hearing, Sen. Josh Hawley (R-Mo.) dug into Karan Bhatia, a chief Google lobbyist. He interrogated Bhatia on a host of issues confronting the platform — from its business plans in China to the steps the company has taken to protect children from pedophiles on YouTube. 

“Clearly trust and patience in your company and the behavior of your monopoly has run out,” Hawley said. “It has certainly run out with me, and I think it’s time for some accountability.”

Tuesday was a bruising day to be a technology company in Washington, as Silicon Valley executives found they had few allies on either side of the aisle as they were grilled on a host of issues. Republicans such as Hawley sounded the alarm about Google’s business interests in China, and Sen. Ted Cruz (R-Tex.) blasted the search giant for allegedly censoring conservative voices online. Democrats slammed the companies’ potential monopoly power and YouTube’s failure to remove violent content from its platform. Meanwhile. lawmakers from both parties expressed skepticism about Facebook’s cryptocurrency plans. 

For all the hand-wringing about greater regulation, there appears to be no consensus among lawmakers about a legislative remedy. Yet the increased public scrutiny is impacting the tech companies' business decisions. Just look at how Facebook is approaching cryptocurrency and Google is shaping its strategy in China. 

For years, Silicon Valley companies have taken an “ask for forgiveness, not permission” approach when it comes to Washington regulators — keeping them at arms-length as they develop new products. But the brouhaha over Facebook's plans to launch a digital currency underscores that's no longer possible in an era when Congress is much more closely scrutinizing the tech companies' products. In the case of Project Libra, the scrutiny is mounting months before the project even launches. 

Underscoring that shift, Facebook executive David Marcus repeatedly promised lawmakers yesterday the company would not move forward with plans to launch its Project Libra cryptocurrency until it had complete buy-in from Washington. 

“Trust has been a very important of the journey for us in the last few years,” Marcus said in an interview with my colleagues Elizabeth Dwoskin and Damian Paletta. “We also understand that such a network cannot be controlled by one company and of course not Facebook now.” He told my colleagues that Facebook would not launch the currency until regulator concerns were addressed — no matter how long that takes.

Some lawmakers aren't satisfied with those promises and want to ensure guardrails are in place to ensure Facebook doesn't move ahead with Project Libra, my colleague Tony Romm reports. The Washington Post obtained a draft bill being circulated by Sen. Brian Schatz (D-Hawaii) to tweak financial regulations in such a way that it would effectively outlaw Project Libra. 

Meanwhile, Facebook isn't the only company that appears to be changing its strategy under intense political pressure. Sen. Mark R. Warner (D-Va.) told Bloomberg Television in an interview yesterday that Google chief executive Sundar Pichai tells him the company has ended some of its partnerships in China. 

“I do think there’s some explaining that Google needs to make,” Warner said in an interview with Emily Chang on “Bloomberg Technology.” “I’ve met with the Google CEO. He said they are backing out of some of those partnerships, and they’re willing to work with the U.S. government.”

Warner didn't specify which projects. A spokeswoman for Warner told Bloomberg the senator and Pichai spoke about a “range of partnerships.” 

Google's relationship with China has been in the political spotlight for the past year. The company has received broad criticism for reportedly working on a censored version of its search engine, known as Project Dragonfly. Bhatia told senators on the Hill yesterday the company had “terminated” the controversial project, but he didn't rule out working on tools in China in the future. 

The company's work in China faced renewed scrutiny this week after Trump threatened to “take a look” at Google for its China ties. The president's tweet followed Peter Thiel's accusations that Google may have committed treason while conducting operations in China, and that it's time for the CIA and FBI to investigate. Thiel offered no specific evidence for these accusations. 

“As we have said before, we do not work with the Chinese military,” Riva Sciuto, a Google spokeswoman, said in a statement.

You are reading The Technology 202, our guide to the intersection of technology and politics.

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BITS, NIBBLES AND BYTES

The Amazon logo. (Pascal Rossignol/Reuters)

BITS: The European Union competition commission could open a formal investigation into Amazon’s business practices as early as this week, according to Aoife White at Bloomberg News. European regulators would use the probe to dig into claims that “Amazon may be unfairly using sales data to undercut smaller shops on its Marketplace platform,” Aoife reports.

Representatives from Amazon and other big tech companies on Tuesday went in front of U.S. lawmakers to answer questions about the competitive nature of their businesses. But E.U. regulators have spent years cracking down on the companies. Apple, Facebook, and Google all face ongoing investigations in the E.U.; the E.U. hit Google with a record $5 billion antitrust fine last summer.

If a case against Amazon moves forward, it could face similar financial penalties or be ordered to change the way it does business in Europe. The E.U. previously fined Amazon about $300 million dollars for “unfair tax advantages” and pressured the company into changing its e-book contracts with publishes as a result of two former probes.

Amazon founder and CEO Jeff Bezos also owns The Washington Post.

Packages move along a conveyor at the Amazon fulfillment center in Robbinsville, N.J., in June 2018. (Bess Adler/Bloomberg News)

NIBBLES: A dozen Democratic lawmakers sent a letter asking the Occupational and Safety Health Administration to launch an investigation into the working conditions at Amazon's warehouses. The request came a day after Amazon workers in Minnesota went on strike to protest unfair and unsafe labor practices by the company.

Amazon's work environment “creates a high risk of physical injuries, a risk increased by Amazon's intentional disregard for the health and safety of their employees,” lawmakers alleged, citing both OSHA data and numerous media reports. In the past five years OSHA has found “instances of egregious injuries, including fractures and amputations,” the lawmakers write.

Rep. Ilhan Omar (D-Minn.) and Senator Bernie Sanders (I-Vt.), a vocal critic of the company’s labor practices, spearheaded the letter. Amazon has repeatedly denied media reports that it has a safety problem at its warehouses.

“The allegations outlined in this letter are not an accurate portrayal of activities in our buildings,” an Amazon representative wrote in a blog post responding to the letter. “If Rep. Omar and Sen. Sanders really want to help the American worker, they should focus on passing legislation that raises the federal minimum wage — $7.25 is too low.” Amazon raised its minimum wage last year to $15 an hour after political pressure. 

Sanders fired back on Twitter against criticism from Amazon that he has yet to visit a warehouse in person.

I am not interested in a photo op at an Amazon warehouse. I am calling for Labor Department inspectors to come in, unannounced, and do thorough investigations of the facilities where hundreds of workers have told me about horrendous conditions and abuse. https://t.co/OE76mJcjjs

— Bernie Sanders (@SenSanders) July 16, 2019

OSHA did not respond to a request for comment. 

BYTES: Apple plans to invest in exclusive, original podcasts -- escalating its competition with rivals like Spotify and Stitcher, Bloomberg's Lucas Shaw and Mark Gurman report. 

Apple executives have apporached media companies and their executives to discuss exclusive rights to podcasts, according to Bloomberg. Apple's strategy isn't clearly defined yet, but the company plans to seek out deals it didn't make before. 

The Apple Podcast app makes up 50 percent to 70 percent of listening for most podcasts, according to industry executives. Apple "all but invented" podcasting through a network that collects thousands of podcasts from around the web. 

The move pits Apple more directly in competition with Spotify. The music-streaming company has emerged as the second top podcast listening destination after investing in some of its own original content. Spotify recently filed an antitrust complaint against Apple in the European Union. 

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