Nancy Pelosi fears tech giants will exploit wrinkle in bill
For weeks, consumer advocates have sounded the alarm that trade language in the massive China competition bill currently under negotiation on Capitol Hill could be exploited by the tech giants to target regulations overseas, including Europe’s sweeping new digital rules.
It’s a concern that’s shared by House Speaker Nancy Pelosi, D-Calif., people familiar with the matter told The Technology 202.
At odds is a portion of the legislation that’s ostensibly aimed at “addressing censorship and barriers to digital trade” in countries like China, but that groups fear contains loopholes that could be co-opted by major corporations.
Under the Senate version of the bill, the Office of the U.S. Trade Representative (USTR) would be required to identify and report on countries “that engage in acts, policies, or practices that disrupt digital trade activities,” including censorship. It’s a process that can lead to tariffs, and that advocates say could be weaponized to exert pressure on tech regulations overseas.
On Friday, a transatlantic coalition of consumer groups wrote a letter to congressional leadership warning that the language has been crafted too broadly and could be used by tech companies to claim that rules overseas seeking to promote online safety or crack down on competitive abuses qualify as “censorship” or as “barriers to digital trade.” The groups said in the letter shared exclusively with The Technology 202 that it may “undermine the European Union’s superior regulatory framework to protect consumers online.”
The Coalition for App Fairness, a group of smaller app developers including Match Group and Basecamp that is pushing for new tech regulations, also voiced concern last month in a separate letter obtained by The Technology 202 that the language “could be interpreted to undermine critical efforts to restore fairness and competition to the digital app economy.” Another coalition of consumer and anti-monopoly groups took aim at the language last month.
The provision is a key point of contention for consumer advocates as talks enter a pivotal stretch on Capitol Hill, where the House and Senate will need to hammer out differences between their versions of the bill, aimed at boosting competitiveness with China.
The concerns are shared by key House lawmakers, including Pelosi, said the people familiar with the matter, who spoke anonymously to discuss private talks. It could emerge as a flash point in negotiations as the two chambers look to finalize the highly watched package.
During a hearing last June, Rep. Jan Schakowsky,D-Ill., urged colleagues to reject what she called the “effort to entrench Big Tech’s . . . failed [business] models” in the bill by Sens. Ron Wyden, D-Ore., and Mike Crapo, R-Idaho, who authored part of the Senate trade title.
Schakowsky confirmed the remarks were in reference to the section on censorship and barriers to digital trade, among other provisions.
“This is exactly the wrong approach, and as a conferee I will fight to make sure this bad approach stays out,” Schakowsky, who is in the group negotiating the bill, said in a statement.
Pelosi’s staff has told House members she shares the concerns, according to two people familiar with the matter. A senior congressional aide added “there’s no daylight” between Schakowsky and Pelosi. Another senior congressional aide, who was not authorized to speak on the record, said the “House position is reflected in what is and what isn’t included in the trade-related measures which were carefully crafted to have the votes to be able to pass the House.”
Henry Connelly, a spokesperson for Pelosi, said in a statement that, “The Speaker backs the carefully-crafted Housepassed trade package.”
Sen. Elizabeth Warren, D-Mass., also opposes the language. “There’s no reason Big Tech corporations should get special treatment and a potential tool that could undermine policies that address corporate concentration, combat misinformation and protect privacy,” she told The Technology 202.
Wyden pushed back on the criticisms, casting the amended trade language as a tailored approach to combat censorship by authoritarian countries like China and Russia.
“If America doesn’t step up to fight this tide of digital censorship, authoritarian forces are going to win, and free speech, political dissent and human and worker rights will suffer,” he said in a statement. He added that their amendment “begins the process of fighting back, by calling on USTR to identify nations that engage in coercive digital censorship.”
A Wyden staffer, who was not authorized to speak on the record, noted that the censorship provisions call on USTR to identify and prioritize countries engaged in the “most onerous or egregious acts, policies, or practices” and that the bill more broadly urges the agency to negotiate digital trade deals “with like-minded countries” that support consumer protections.
However, Wyden is supportive of a change proposed in a letter by human rights group PEN America to add a more detailed definition of what constitutes “coerced censorship” to the bill and to explicitly state that it “shall not be construed to include government actions related to data privacy, antitrust enforcement, or anti-harassment orders,” according to the staffer.
The remarks reflect growing concern among some lawmakers and consumer advocates that corporate interests, including in Silicon Valley, are hijacking trade policy to target sweeping regulations abroad while kneecapping policymakers domestically.
Lawmakers including Pelosi and Sen. Ted Cruz, R-Tex., have previously voiced concern about including language enshrining the tech industry’s liability protections, known as Section 230, in U.S. trade deals with foreign allies.