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Big Trouble for Big Tech

When Republican Senator Josh Hawley of Missouri announced via Twitter on September 9, 2019 that it was going to be “a very bad day for Google,” he was not kidding. Later that sunny Monday afternoon, attorneys general from fifty states and territories convened a dramatic press conference on the steps of the U.S. Supreme Court, to let it be known they were beginning a coordinated investigation into anti-competitive practices in Google’s digital advertising operations. Of course, it was only the latest such probe into the tech behemoth, which was already facing separate investigations by the Justice Department and the House Judiciary Committee. Just four days earlier, in fact, Google had received a $170 million fine from the Federal Trade Commission for using illegally harvested personal data to target child users with ads on Google-owned YouTube.

Still, in a political moment often defined by episodes of extreme partisanship, the unified front mounted by the chief lawyers from some four dozen red and blue states was nothing short of remarkable. “I can’t remember the last time you had just about everybody get on the train,” noted one former Federal Trade Commission (FTC) chairman in the aftermath of the announcement.

It has been the best of times and the worst of times recently for Google and the other major players in the technology sector. After a brief swoon in 2018, tech stocks again buoyed the market’s record setting pace for much of 2019. Quarterly sales and earnings reports from tech firms have been consistently bullish, despite the expectations of a generalized slowdown in economic activity. But the government inquiries, record-setting fines, and simmering employee unrest have been accumulating. Public approval of tech companies fell to just 50 percent in 2019, its lowest mark of the decade. At this writing, there are four pending investigations into Google, eight more into Facebook, and another three into Amazon and Apple. The so-called “Big Four” have done more to revive antimonopoly sentiment from its long dormancy in American political life than any hedge fund or subprime lender managed to do even during the depths of the Great Recession. Calls to “break them up,” once relegated to the political margins, have become relatively common-place—and now echo from both sides of the political aisle.

The so-called “Big Four” have done more to revive antimonopoly sentiment from its long dormancy in American political life than any hedge fund or subprime lender managed to do . . .

For its part, Big Tech has responded to the mounting opposition to its more controversial business practices in a variety of ways. After more than 20,000 Google employees staged an unprecedented walk-out in November 2018 to protest the company’s handling of workplace sexual harassment (and gender inequity at the company more broadly), Google quickly abandoned its in-house policy of mandatory arbitration to resolve complaints. Then in 2019, following a series of lawsuits and Department of Justice investigations, Google announced it was no longer enforcing so-called “no-poaching” agreements—highly unpopular contract provisions which the company had used to make it harder for departing employees to make lateral moves elsewhere in the tech sector. And other industry leaders have begun making similar types of accommodations. In the aftermath of the Cambridge Analytica scandal—in which the British consulting firm with ties to the Trump campaign was given access to Facebook users’ account information, triggering an FTC investigation that culminated in a history- making $5 billion fine—Facebook agreed to create extensive new layers of internal oversight to monitor the storage and use of private data gathered by the site. Acting more preemptively amidst rising complaints that it was stacking the deck in favor of its own products on its market-dominating App Store, Apple executives announced last year that they were reworking the store’s algorithm to ensure non- Apple apps better search results—although a Justice Department probe is still pending.

Amazon . . . has begun deploying its own workers as pro-company propagandists on social media . . .

And yet for every such compromise measure, there have been just as many indications that Big Tech is prepared to dig in its heels in whatever ways it can. Google may have caved rather quickly in the face of the extraordinary public attention generated by the 2018 walk- out—but at least two of the employee activists who were instrumental in organizing the action have claimed they were retaliated against by the company in the months that followed. Then, just this past November 25th, the company fired four workers who had been active in the internal organizing campaign, claiming, implausibly, that they were let go for “clear and repeated violations of our data security policies”. Amazon, meanwhile, which has received a steady drum-beat of criticism in recent years for the deplorable working conditions at its massive fulfillment centers (FCs), has begun deploying its own workers as pro-company propagandists on social media platforms like Twitter. Amazon refers to these employees as “FC ambassadors” and pays them to counter negative online posts about the company and its warehouses. In 2018, there were fourteen such “ambassadors” on company payroll; by 2019, the number appeared to have grown to about fifty. An exemplary tweet: “I suffer from depression too, and at one point I wanted to quit Amazon. But I realized it was my fault for the problems I was dealing with, and not Amazon’s.”

. . . the clearest sign that Big Tech is gearing up for a fight can be seen in its political spending.

Company-sponsored Twitter wars aside, the clearest sign that Big Tech is gearing up for a fight can be seen in its political spending. Internet companies spent more than $76 million on lobbying expenses in 2018, an increase of nearly 30 percent from just two years earlier and more than four times as much as the industry was spending on lobbying as recently as 2010. The Big Four alone spent a combined $55 million in 2018—double the $27 million they spent in 2016. Political contributions have increased at a similar rate, from $18 million on the 2012 election cycle, to nearly $37 million in 2016, to more than $46 million during the 2018 midterms. Only midway through 2019—long before even a single primary vote had been cast—the internet industry has given more than $6 million to candidates running for federal office in 2020.

It is important to remember, all this is relatively new for Big Tech. As recently as Barack Obama’s first election in 2008, the internet industry was only the fifty-seventh largest industry in the country by political spending; as of 2018, it had shot up to twenty-fourth, and the early 2020 returns would suggest that it will continue its ascent in the current cycle. And while Big Tech has been and remains most partial to Democrats, the recent surge in spending has been marked by a more rapid uptick in the amount of total dollars going to Republicans. In each of the last three election cycles, more than half of the top twenty-five recipients of federal political action committee (PAC) contributions from internet companies have been Republicans. In other ways, too, Big Tech has been moving to curry favor with the GOP. Last summer, for example, Amazon retained one of the largest “bundlers” for Donald Trump’s reelection campaign, Jeff Miller, as a lobbyist; it paid another lobbying firm with close connections to Trump, Ballard Partners, to help establish contacts at the White House. Facebook retained a former Federal Communications Commission Chairman under George W. Bush, Kevin Martin, as a lobbyist during the second quarter of 2019, in what was the most expensive single quarter of lobbying in the company’s history. And in what surely qualifies as one of the more transparent acts of bipartisan pandering from last year, the Internet Association, a lobbying group that rep- resents all the Big Tech companies, awarded Ivanka Trump its 2019 “Internet Freedom Award”—at the same gala dinner where Democratic House Speaker Nancy Pelosi received a Lifetime Achievement Award from the trade association.

One of Big Tech’s greatest fears . . . has become the passage of potentially dozens of state-level consumer privacy laws . . .

These and other overtures toward the GOP are not only a function of which party currently occupies the White House. One of Big Tech’s greatest fears in the wake of recent data breaches and other scandals has become the passage of potentially dozens of state-level consumer privacy laws—especially if those state laws are modeled on California’s first-in- the-nation Consumer Privacy Act, which puts a particularly heavy (and costly) burden on companies to protect customers’ personal information. So, the Internet Association has spent the better part of the last year lobbying heavily within the California legislature to help Republicans and pro-business Democrats pass a raft of amendments to the law which would weaken its consumer protections considerably. And at the same time, the Internet Association has been supporting calls by Congressional Republicans for a single, federal privacy law that would override state laws—knowing, as all indications seem to suggest, that the federal law such Republicans would support would be only a pale shadow of the California model.

How successful Big Tech will be with its deep dive into the political arena remains to be seen. Tech-sector standouts like Uber, Lyft, and DoorDash were among the biggest losers when California recently passed a state law requiring gig-economy workers to be treated as employees, rather than more vulnerable and rights-less independent contractors—a bill which, like California’s robust consumer privacy law, could threaten one of the tech sectors more reliable (and exploitative) sources of profit if it is replicated by other states. In response, those three companies have pledged to spend $30 million (each!) on a 2020 state ballot initiative that would essentially exempt their drivers from coverage under the law. But in California and elsewhere, beating back the rising anticorporate sentiment focused on the tech sector and its leading firms remains an uphill battle. (For an examination of California’s political shift to the left, see Harold Meyerson’s article in this issue.)

After all, when virtually every important Democratic presidential candidate to the left of Andrew Yang is talking about major changes to the way the tech sector does business—and when the “most aggressive and assertive anti- monopolist . . . [in] the entire Senate,” according to the leading antimonopolist Matt Stoller of the Open Markets Institute, is a freshman Republican from Missouri, Senator Josh Hawley, who ran on a platform of religious liberty, cutting taxes, and fending off government overreach—well, that’s the rare kind of bipartisan consensus that could spell doom for Big Tech in the months and years ahead.

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