THE REGULATOR
SENATOR MARK WARNER, A FORMER TELECOM INVESTOR AND ENTREPRENEUR, IS SOUNDING THE ALARM ON HOW CHINESE ADVANCEMENT AND BIG TECH’S MISCONDUCT ARE ALTERING AMERICA’S GEOPOLITICAL STATUS. NOW HE’S TRYING TO GET BOTH CONGRESS AND SILICON VALLEY TO DO SOMETHING
A dozen venture capital investors in dark suits enter
the U.S. Capitol Visitor Center on an overcast November afternoon, pass through security, and make their way to the basement, where a police officer guards the entrance to the Senate’s Sensitive Compartmented Information Facility. Through the double doors, the VCS place their phones and Apple Watches in wooden cubbies; their host for the afternoon, Senator Mark Warner, has a clearly labeled cubby of his own, as do all 99 of his Senate colleagues.
Warner, a Virginia Democrat who serves as vice chairman of the Select Committee on Intelligence, has invited the group to Capitol Hill for a classified briefing on China. They follow National Venture Capital Association president and CEO Bobby Franklin into the SCIF’S soundproof, spyproof underground auditorium and take their seats at a large round table alongside top officials from the FBI, the Department of Homeland Security, and the National Counterintelligence and Security Center, as well as Florida Senator Marco Rubio, a Republican member of the Select Committee. The VCS sign nondisclosure agreements and are “read in” on the rules governing the sensitive information they are about to receive before Warner and Rubio spend half an hour framing the conversation that will follow.
Warner will go on to organize 10 more briefings like this for civilian leaders in business and academia over the next seven months. The former entrepreneur and tech investor feels compelled to “sound the alarm” about China, he’ll tell me when we meet in his double-height corner office near the Capitol a few months later, an American flag shivering in the breeze outside the window. He is also trying to make up for lost time. “We were late,” he says, referring to 5G in particular—a technological shift involving faster wireless speeds that he likens to the leap from radio to television. China invested nearly $300 billion last year in research and development on technology like 5G, while supporting the rise of homegrown startups such as Huawei, a telecom giant that boasts more 5G patents than any other company in the world and 2018 revenues of $100 billion, making it roughly the same size as Microsoft. Warner believes that China is positioning itself, through companies like Huawei that operate internationally (Huawei does business in 170 countries), to export a model of internet governance that runs counter to U.S. priorities, not to mention existing U.s.-defined norms. At the most basic level, Huawei’s 5G hardware could serve as a back door for Chinese spies looking to listen in on foreign networks. In a more expansive way, China could use Huawei and its peers to export a tool kit for internet-enabled state surveillance. (A Huawei spokesperson dismissed such claims, describing the company as a “vendor” deeply integrated into complex global supply chains.)
“For all our flaws, don’t call our [democratic] system equivalent to what the Chinese are practicing,” Warner says.
Meanwhile, America remains stuck on the question of how to regulate 4G-era players such as Facebook and Google, which may soon face their comeuppance (in court, and perhaps in Congress) for anticompetitive and deceptive business practices that have prioritized profit over user privacy and had a corrosive effect on civic discourse and democratic elections worldwide.
All of this is on Warner’s mind in the subterranean SCIF (pronounced skiff) as he introduces the classified information that the assembled VCS are about to hear. The investors have gathered today out of a sense of duty, and perhaps some curiosity. They may also be feeling the sting from China’s plunging direct investment in the U.S., down from $46 billion in 2016 to $5 billion last year.
But they’re also here because of Warner himself. Given his background, the 64-year-old senator has a unique ability to connect Silicon Valley and Washington. He believes the time has come to rein in Big Tech by tackling how platforms make money, which should tell you something about just how bad it’s gotten for American consumers. And he is going out of his way to educate tech leaders on foreign policy issues like China, which should tell you just how woefully unprepared Silicon Valley is to manage its own influence over national security and world events. On China, Warner has become convinced that, with an assist from stolen intellectual property, President Xi Jinping and his Communist Party are laying the groundwork to control the next era of the internet. The VCS, in other words, are playing a more complicated global game than they may realize.
One investor will later describe the confidential material about China’s zero-sum ambitions and the country’s success in exploiting American vulnerabilities as “eye-opening.” Another, echoing comments that Warner has heard from allies overseas, wonders what exactly the U.S. government plans to do about the situation.
Two and a half hours later, the attendees emerge to fading daylight. They have been forewarned.
With a net worth of more than $230 million, the
Indiana-born Warner is one of the wealthiest members of Congress. His fortune stems from a bet he made in the mid-1980s that wireless technology would be the future of telecommunications. After graduating from Harvard Law School, working for Democratic organizations, and experimenting with entrepreneurship, Warner noticed a change in how the FCC awarded wireless spectrum licenses and became a broker of sorts, connecting parties looking to buy and sell the rights. The first years were lean: Warner sometimes slept in his car rather than pay for a hotel while on the road. He kept at it, building a reputation as an honest and relentless deal maker, even though some viewed his practices as a brazen cash grab. “He had an almost pushy way about him that could force people to a conclusion,” says venture investor James Murray, one of Warner’s business partners at the time. Later, with Murray and three others, Warner began putting his own money into deals, eventually forming what would become the venture firm Columbia Capital.
But Warner remained attracted to politics, which had first drawn him to Washington as an undergraduate at George Washington University. He applied his dealmaking skills to fundraising in the late ’80s, taking a leave of absence from Columbia Capital to secure checks and run the campaign of Douglas Wilder, who became Virginia’s first African American governor. Years later, in his own successful 2001 campaign for Virginia governor, Warner out-raised his opponent 2 to 1—and served a single term with approval ratings consistently topping 70%. When Warner arrived in the U.S. Senate in 2009, he was viewed as a rising star within the Democratic Party; he delivered the keynote address at the 2008 Democratic National Convention, and his name was floated as a presidential or vice presidential nominee.
This was also an era in which Silicon Valley was esteemed in Washington. Tech leaders were being hailed as American innovators, and the White House, under President Barack Obama, made a habit of welcoming their input (a 2015 Wall Street Journal investigation found that Google employees had been meeting with senior White House officials pretty much once a week for six years). Warner made regular visits to the Bay Area for fundraising, collecting checks from the likes of Sheryl Sandberg and John Doerr. He also stayed current on tech innovation through the network he had built during his time at Columbia Capital. AOL founder Steve Case and former Federal Communications Commission chairman Tom Wheeler both separately recall dining out with Warner and discussing the gig economy, long before Uber became a household name. (Warner later proposed a bill that would give gig economy workers access to portable benefits, one of the few proposals involving this new mode of labor at the federal level.)
“I believe he’s pro-business, pro-tech, pro-innovation,” says Case. “But he also recognized that as the internet becomes part of everyday life, policy does become more important. It makes sense to take a fresh look at what the policies are with a Facebook that has 2 billion users and is more powerful than any media company.”
Like most of his elected peers, Warner didn’t initially see a need to rein in Big Tech, let alone consider how the Chinese government might wield technology as an empire-building tool. “We were kind of nibbling around the edges,” he says. Several years ago, his office raised questions, for example, about fraud in online advertising markets and connected devices capable of spying on children. The turning point for Warner was Russia’s interference, via social media, in the 2016 presidential election, which the Select Committee on Intelligence has been investigating since 2017. “I still remember the totally arrogant and over-the-top reaction from [CEO Mark] Zuckerberg and the Facebook folks—well, that must be ‘crazy,’ ” he says, paraphrasing remarks that Zuckerberg made in 2016 regarding fake news on Facebook and its influence on the presidential election. The committee has yet to complete its investigation, but Special Counsel Robert Mueller indicted 13 Russians and 3 Russian organizations in February 2018, noting that Russia’s Internet Research
Agency “had a strategic goal to sow discord in the U.S. political system.” In Facebook, Instagram, and Twitter, the Russian IRA found the perfect weapons to do so.
It wasn’t until the spring of 2018 that Silicon Valley was officially brought before Capitol Hill, with
Zuckerberg testifying for a combined 10 hours before Senate and
House committees in April about privacy, political polarization, and the mechanics of how Facebook makes money. Facebook COO Sandberg and Twitter CEO Jack Dorsey got their moment under the lights in September, appearing before Warner and the Select Committee. Alphabet CEO Larry Page, invited by Select Committee chairman Senator Richard Burr, was a no-show. “I am deeply disappointed that [Alphabet-owned] Google, one of the most influential digital platforms in the world, chose not to send its own top corporate leadership to engage this committee,” Warner said at the time. (Google has privately admitted to lawmakers that the decision not to come was a mistake.)
At the same time, Warner and his staff were talking with startup founders, academics, and privacy advocates— including Tristan Harris, cofounder and executive director of the Center for Humane Technology, and Jim Steyer, founder and CEO of Common Sense Media. With their
WHEN IT COMES TO INTERACTING WITH THE BIG TECH COMPANIES, WARNER SAYS, “THERE’S A BIT OF ROPE-A-DOPE GOING ON.”
input, Warner published a white paper last summer that featured a menu of 20 policy proposals, culled from an initial 50, which has served as a starting point for discussion on tech policy regulation. Unabashedly designed for wonks, the white paper did not attract much attention on cable TV. But it got people talking on the Hill: In the months that followed, Warner was able to unveil three tech policy bills, with Republican cosponsors. More are in the works. “In my experience, time spent on Capitol Hill is almost always wasted time,” says one startup CEO who provided feedback. “With [Warner], it’s not.”
One of Warner’s white-paper proposals would require the conspicuous labeling of fake accounts on social media, since they play a central role in amplifying misinformation. Another, which his office has expanded into a bill (cosponsored by Nebraska Republican Senator Deb Fischer, see sidebar, “Illuminating ‘Dark Patterns’ ”), targets “dark patterns,” a term for intentionally deceptive interfaces commonly used by large tech companies. And yet another proposal would require platforms such as Facebook to calculate each user’s value, in advertising dollars, and make the information available on demand in order to demystify the platforms’ business models. He followed through on this idea in June, cosponsoring (with Republican Senator Josh Hawley) the Dashboard Act, which would compel big tech companies to disclose what individuals’ data—their relationship status, age, travel plans, and more—is worth. If the bill becomes law, it could shift the balance of power to consumers and antitrust enforcers.
But the momentum has stalled on broader privacy legislation, making Warner’s individual bills appear less likely to pass, too, in large part because their fate rests in the hands of the Republican leaders who control the Senate, including Senator Lindsey Graham, chairman of the Senate Judiciary Committee. One day last fall, before Google CEO Sundar Pichai was scheduled to sit down privately with lawmakers, including Graham, Warner spotted the South Carolina Republican at the Senate’s members-only gym.
Warner cornered his colleague to talk up the policy ideas in his white paper, promising to get Graham a copy. “Read it before you see Sundar,” he implored. But Graham continues to show little interest in the minutiae of tech regulation, despite the fact that his committee can claim some jurisdiction. (Why bother, some might add: Only 17% of registered voters say that tech regulation should be a top priority for Congress.) Graham has also allowed his committee to serve as an amplifier of claims that platforms such as Google are biased against conservatives.
Pichai testified at a House Judiciary Committee hearing in December, at last giving Google a public face in Washington. But this time, it was Congress that served to disappoint. One House member, for example, asked Pichai about iphone settings—seemingly oblivious to the fact that his question would be better directed at Apple. Exchanges like this make Ro Khanna, the Democratic congressman representing the district that includes Silicon Valley, understand technology executives’ reluctance to engage. “The ignorance of some of the questions—i mean, fifth graders could ask better questions,” he tells me between House votes at the Capitol. “I do think [Google] should participate. But when you have [to have] the CEO explain that Google doesn’t make the iphone—you can understand their skepticism.”
Khanna also resists the idea that tech CEOS should be held personally responsible for mistakes made on their watch, an idea that has been floated in conjunction with the Federal Trade Commission’s multi-billion-dollar settlement with Facebook over privacy violations. “I still think these individuals have done more good for the world than bad,” he says.
When pressed for an example of the good, he pauses and walks over to the large marble fireplace near our table at the Rayburn Room, where his iphone has been charging at an outlet embedded in the walnut paneling. “These platforms have allowed for the Parkland students, for #Metoo, for civil disobedience in Iran, for people to keep in touch with families across the world . . . ,” he trails off, checking his notifications. While Washington dithers on tech regulation, we continue to live in Silicon Valley’s operating system.
Of the 20 proposals Warner includes in
his white paper, none calls for making any of the big tech companies smaller, even as his party moves to assert its antitrust authority. “I’m not yet joining the cries for the breakup [of companies like Facebook], because I’d like to see if there are other rules of the road first,” he says. He’s encouraged by the fact that the government’s enforcers—the Department of Justice, the Federal Trade Commission—have opened investigations that may lead to penalties.
Meanwhile, policy makers from both parties have heightened their rhetoric. Democratic senator and presidential candidate Elizabeth Warren has called for the breakup of Amazon, Apple, Facebook, and Google. Republican Senator Josh Hawley, a Missouri freshman, has gone one step further, writing in a May USA Today op-ed that social media is a “digital drug” and suggesting that “maybe we’d be better off if Facebook disappeared.” (Michael Beckerman, president of a trade association that represents Facebook and other big companies, called the op-ed “irresponsible” and “cavalier.”)
Matt Stoller, of the think tank Open Markets Institute, is another voice agitating for policy makers to address Silicon Valley’s “concentrations of capital” and perverse incentives. “Facebook and Google have giant manipulation machines,” he says. “[They say to people], ‘You have to use us, we’re a communication network, and oh, by the way, we manipulate you, third parties pay us [for your data], and that’s our business model.’ So who’s willing to pay? Well, foreign adversaries are willing to do it. [The maker of ] Snickers is willing to do it to sell more Snickers, but so is Saudi Arabia, to change [its] framing in D.C. That’s the problem here.”
Warner recognizes this. But rather than break up Silicon Valley’s giants, he would prefer to hold them to higher standards. His Honest Ads Act, for example, would curtail foreign interference in U.S. elections and improve the transparency of political ads on social media. But, in keeping with the typical pace of congressional action, the bill has yet to come up for a vote since Warner cosponsored it in 2017. In the interim, Facebook has raced to implement an election-ad database of its own design, scoring some points for its efforts but drawing criticism from researchers who say its structure makes the types of analyses they would like to conduct difficult, if not impossible. And still no one is authorized to determine whether Facebook is, as the bill would require, making a reasonable effort to prevent foreign parties from targeting American voters. In other words, by “innovating” faster than lawmakers can act, Silicon Valley has found a way to elude regulation.
“I think they have tried. But they tried the narrowest interpretation,” Warner says. (Facebook declined to comment for this article.) Calling Facebook proactive is “too generous,” in his view. “I think they’re trying to do small incremental things just to spare them from some of the most onerous of rules. But I don’t think they’re doing big stuff.”
When Warner and I meet again at his office in late May, he has just had another meeting with Facebook’s Sandberg, whose well-publicized Capitol Hill charm offensive remains unrelenting. She has also tried to use fears about China’s rise to Facebook’s advantage, telling CNBC, “While people are concerned with the size and power of tech companies, there’s also a concern in the United States with the size and power of Chinese companies, and the realization that those companies are not going to be broken up.”
Warner is used to hearing tech leaders evoke China as a bogeyman—a tactic they can hide behind. And he is losing patience with their stonewalling. “They’re always cordial, they’re always, ‘We want to work with you,’ but rarely are they [amenable to concessions on things like] valuation transparencies,” he says, referring to his push to make companies like Facebook reveal to people what their data is worth. “There’s a bit of rope-a-dope going on.”
For a deal maker like Warner, the stalemate is excruciating. California and Maine have passed privacy bills echoing Europe’s General Data Protection Regulation, which are set to go into effect on January 1. But GDPR, while encouraging in theory, has yet to restore meaningful market power to consumers. The new laws also threaten to create a tangle of regulatory arrangements that only large companies with armies of lawyers and lobbyists can navigate. “If we [in Washington] could reclaim the ability to set the rules, I think the rest of the world would follow suit,” Warner says. But so far, federal regulators have been unable to agree on how privacy should be protected. Layer on the complexities of a 5G-enabled world, from abstruse AI algorithms to “smart” and watchful cities and sensors, and a global standards-setting consensus emanating from Capitol Hill seems even more unlikely. “I have been pretty disappointed that I’ve not been able to put more points on the board,” Warner admits. “My mood, it goes up and down.”