On Wednesday, July 29, 2020, the CEOs of some of the biggest tech giants in the world testified (virtually) before Congress. Some characterized the bipartisan questioning as a brutal beating, but others reported that not much new was accomplished.
These hearings are the current ones in a series of actions at the federal and local governments and have involved other big tech such as Microsoft as other industry service providers
What can we learn? What were the impacts? How do these regulatory issues affect state and local governments? Most important, what can and should be done next by public and private sector leaders and their partners?
These are a few of the items I explore in this blog, with the help of long-time state government policy expert Andris Ozols – who worked for many years with me in Michigan government before his retirement a few years ago. Andris was also a significant contributor to my recent blog efforts on elections security.
Background on the Congressional Hearings
First, the media coverage of the testimony was widespread before, during and after the virtual event. Here are a few headlines and relevant excerpts:
Excerpt: “The leaders of Amazon, Apple, Facebook and Google took a brutal political lashing Wednesday as Democrats and Republicans confronted the executives for wielding their market power to crush competitors and amass data, customers and sky-high profits.
The rare interrogation played out over the course of a nearly six-hour hearing, with lawmakers on the House’s top antitrust subcommittee coming armed with millions of documents, hundreds of hours of interviews and in some cases the once-private messages of Silicon Valley’s elite chiefs. They said it showed some in the tech sector had become too big and powerful, threatening rivals, consumers and, in some cases, even democracy itself. …”
Excerpt: “Rep. David Cicilline, D-R.I., the subcommittee chairman, spent all of his first five-minute block of questions on Google — the company at most immediate risk of antitrust action. The Department of Justice is reportedly preparing to sue the company over its advertising business, and could be joined by state attorneys general who have also been investigating Google.
Cicilline pressed CEO Pichai on whether Google’s business model presents a conflict of interest, because it has an incentive to give search results that keep users on its own site rather than anywhere else on the Internet. …”
New York Times: Lawmakers, United in Their Ire, Lash Out at Big Tech’s Leaders
Excerpt: “The chief executives of Amazon, Apple, Google and Facebook, four tech giants worth nearly $5 trillion combined, faced withering questions from Republican and Democratic lawmakers alike on Wednesday for the tactics and market dominance that had made their enterprises successful.
For more than five hours, the 15 members of an antitrust panel in the House lobbed questions and repeatedly interrupted and talked over Jeff Bezos of Amazon, Tim Cook of Apple, Mark Zuckerberg of Facebook and Sundar Pichai of Google. …”
Excerpt: “Big Tech faces two main options. They can go on acting as if nothing is amiss and hope that government action will take a long time to become a reality. Or they can take proactive steps to recognize the legitimacy of the issues and regulate themselves with a commitment to reengage with ‘acting honorably’ and ‘doing no evil’. The latter course of action will be the smarter and less painful one. …”
Excerpt: “House lawmakers on Wednesday grilled the heads of some of the world’s largest tech companies – with Democrats questioning whether the companies violated U.S. antitrust laws and stole from competitors, while Republicans slammed them over alleged censorship and bias against conservatives. …”
BBC News (UK spelling) – Big Tech: What comes next for the US giants?
Excerpt: “It’s highly unlikely though that anything much will happen before the US elections in November.
As well as the presidential vote, all the seats in the House of Representatives are up for grabs, as well as about a third of the Senate.
And so we reach a fork in the road for Big Tech in America.
A Republican win would probably see the tech giants scrutinised further over how they police free speech. Section 230 – which gives social media companies immunity from prosecution for what is published on their platforms – would probably be looked at.
If the Democrats win, expect more regulation in an attempt to inject more competition into the tech industry. …”
Consequences to State and Local Governments and Potential Actions
There are both direct and indirect consequences on state and local governments, and in order for the states and locals to both maximize the benefits as well as ameliorate the effects of regulations, the state and local governments need to understand these effects and their causes and work collaboratively among themselves and with the technology partners.
Collaboration involves shared assessments, solution design, programs, education and training, advocacy and more. Selected examples include:
Understanding State and Local Direct Impacts of Regulatory Issues
Direct impact issues are issues that are part of the federal review, litigation and hearing agendas and state Attorney General related agendas. Contested IT related issues involve direct business practices, platforms, hardware, software, services at variance with state and local government public values and ethics, policies, strategies, standards and agreements including accuracy, operations, outputs or outcomes.
Emphasis is placed on: State legal requirements; state and gubernatorial priorities; action and decisions needed for this decision cycle; potential for maximum effects on outcomes; facilitating integration, collaboration among governments; options available for sustained innovation involving the greatest range of state and local government services and customers.
1 – Direct effects of federal regulatory issues. Key issues identified in federal big tech, and related hearings include: Limiting options in services, decrease in control or discretion in managing services, decreased trust in government protection of security and privacy, accuracy and truthfulness of information.
2 – State and local regulatory issues. Key issues addressed in state Attorney General initiatives also include: Limiting options in services, decrease in control or discretion in managing services, decreased trust in government protection of security and privacy, accuracy and truthfulness of information.
Collaborative state initiatives announced last week for New York and California are accelerating the process and provide new models for state and local initiatives. This article from The Guardian (UK) is entitled, “New York unveils landmark antitrust bill that makes it easier to sue tech giants.”
“New York State is introducing a bill that would make it easier to sue big tech companies for alleged abuses of their monopoly powers. New York is America’s financial center and one of its most important tech hubs. If successfully passed, the law could serve as a model for future legislation across the country. It also comes as a federal committee is conducting an anti-trust investigation into tech giants amid concerns that their unmatched market power is suppressing competition. Also, The New York Attorney General’s office will join the California Attorney General’s office and the Federal Trade Commission’s investigation into Amazon’s online marketplace.”
3 – State, local and federal regulatory roles and balance. Balance in roles and authority in regulations is a policy and legal point of contention among levels of government and also determines how the regulatory issues are prioritized. This includes topic like what stakeholders need to be involved and timing for action. One of the NGA chairs priority issues for 2020 – 2021 will be federalism issues and questions of balance of roles and authority.
4 – State and local stakeholders and collaboration. States have established public and private sector collaborative networks (cite examples), but the current issues call for reinforcing relationships and strengthening ones with NGA, fiscal officers (https://www.nasbo.org/home ), procurement National Association of State Procurement Officials – NASPO , auditors NASACT , legislators (National Conference of State Legislatures) and their associations. Also, the perspectives of federal Congressional and Executive assessment sources such as Partnership for Public Service, GAO, GSA, CBO and public policy administrators would be helpful, including ASPA. https://www.aspanet.org/ASPA/
Understanding Indirect Impacts: Information, Procurement, Smart, Digital Government and Public Sector Policy and Procedural Issues
Indirect issues are those resulting from direct IT services such as hardware, software, services, outputs serving as IT inputs that support or enable other functions, processes, programs or services. In addition to processes and services, these may also affect policies, standards, decision-making, customer values, perceptions, satisfaction and trust.
In particular, these issues and how they are resolved help define and pre-structure the options available for smart, digital communities and governments.
1 – Information Control and Management. Information and information management is a foundational issue, the wizard behind the curtain. Ownership, control, accuracy, misinformation and information management plays a central role in a number of the support platforms for smart, digital government – such as internet of things, mobile and location aware services, cloud, integrated and autonomous AI.
2 – Procurement. Procurement management is the gateway to public / private relationships, partnerships, standards, performance, accountability, policy and value alignment, etc. Includes RFIs, RFSs, RFPs and contracts. National Association of State Procurement Officials – NASPO is a crucial partner on this issue and NASCIO has a strong established relationship.
3 – Smart, Digital Government. Smart, digital government and communities and cities are vital constructs describing the connection, integration of technologies to transform how governments, citizens and businesses interact. Some of the regulatory issues can impact on smart government priorities; timing and scheduling; platforms; information ownership; privacy; security; accuracy and reliability; processes; state and local government control; public trust and others.
While many roadmaps for smart governments and communities address the role of regulations, not all of them do, and the pandemic as well as the overlap of the flu and hurricane seasons will further accentuate the risks. In general state and local assessments, policies, standards, plans and roadmaps do not consistently address the role of regulations or the consequences of not complying. However, there are sufficient examples and models such as NGA work on on Smart Transportation and Smart Energy roadmap, with sections on regulations from the Smart Community and State Initiative that can serve as models.
4 – Key State and Local Service Sectors. There are differential regulatory effects on service sectors and realignment of priorities and solutions. For example, differential effect of selected platforms on IT supported health and education services, distance learning and work, election processes, security, disaster management and recovery.
5 – Key 2020 – 2021 Events and Decision Points. The juxtaposition of the pandemic, hurricane season, pending flu season in context of elections, economic disruptions a revenue and budget short-falls are altering priorities, reducing funding allocation levels, stressing state and local service capabilities and calls for modifications in disaster and management and recovery approaches and the supporting platforms in which Big Tech is involved.
Recommendations for Collaborative Action
The public sector IT community needs to work together in both recognizing the benefits of Big Tech and integrator services as well as addressing and resolving adverse effects. This needs to involve both the public and private sector communities and build upon existing networks and public private partnership models.
The following recommendations address both the three-month cycle before the election, the three months after the election, and reference issues for potential future action.
The next five or six month period covers the front end of most state and local government assessment, design and development cycles and also includes a number of state and local association and support group working sessions and planned deliverables that could include a regulatory issue perspective. The following four groups share a collaborative history are illustrative of potential opportunities and next steps regarding non-profits supporting state and local governments:
National Governors Association (NGA) – https://www.nga.org/
Follow-up to federalism issue after the Summer 2020 virtual session can include both infrastructure and regulatory issues from an IT perspective.
National Association of State Chief Information Officers (NASCIO) – www.nascio.org
- Incorporate regulatory issues into the next brief in the “CIO as Broker” management series.
- Pose the regulatory issues as one of the priority options in the next priority assessment.
- Modify next survey design to address regulatory issues.
- Consider having a virtual collaborative forum on regulatory issues and impacts at the 2020 fall virtual conference in October.
Center for Digital Government – (CDG) https://www.govtech.com/cdg/about/
- Incorporate an assessment on regulatory issues in the 2020 DSS survey assessment within the scope of available data.
- Build upon “Navigating the Next Normal: A resource guide for state and local IT leaders during the COVID-19 recovery and beyond” to further assess role and considerations for regulatory issues.
Public Technology Institute (PTI) / CompTIA https://www.pti.org/
- Expand regulatory assessments through the local government survey series.
- Consider doing a local government regulatory assessment and recommendations jointly with CDG, NACo and NLC.
Recommended Collaborative Actions
1 – Advocacy on Federal Hearing Report. Coordinate state and local advocacy on the pending federal hearing report and recommendations as well as follow-up with the executive branch and Congress.
2 – Potential IT Related Advocacy and Potential Participation State AG Initiatives. Develop a coordinated and collaborative state and local review of AG initiatives from an IT perspective and recommendations, including the New York and California proposed actions. The federal hearings and NY initiatives are fulcrums for state and local IT related actions and may serve as models for selected state actions.
3 – Enhance Role of Regulations in State and Local IT Policies, Strategies, Operations, Roadmaps and Advocacy. Collectively develop templates for addressing regulations in state and local policy and procedural guidelines, including procurement, operational and performance management, audits and others.
4 – Conduct an Assessment and Recommendations of IT and Regulatory Effect and Support Capabilities for Pandemic Effects and Election Processes. Conduct a collaborative assessment of the capabilities and opportunities of IT support for the pandemic and election process, other pending emergencies and potential interactions with the regulatory issues. Develop recommendations for state leadership, NGA, NCSL and federal government.
5 – Develop a Forum for IT Stakeholder Collaboration on Regulatory Issues. Identify scope of potential stakeholders for supporting recommendations and further action, and develop a forum for organizing a state, local, federal and private sector collaborative. This forum can be a Web based forum, perhaps hosted as part of the NASCIO virtual fall session.
Back in 2018, Deloitte Consulting wrote this: “Regulations or absence of regulations can also alter or limit both direct government operations as well as stakeholder, customer benefits, and limit development or innovation options. As new business models and services emerge, such as ride-sharing services and initial coin offerings, government agencies are challenged with creating or modifying regulations, enforcing them, and communicating them to the public at a previously undreamed-of pace. And they must do this while working within legacy frameworks and attempting to foster innovation.”
Here is another excellent piece by Deloitte on regulation and cybersecurity: National security and technology regulation. I also think it worth reviewing these biggest takeaways from the Washington Post on the antitrust hearings.
CNBC’s expert analysts believe these companies will never be broken-up due to the U.S. desire to compete with companies from China and elsewhere. Nevertheless, they also say there is likely more regulation coming.
One thing is clear: We’ll be back to cover this topic many times in the coming years. The issues are not going away.
Time to do your homework and get ready for more in 2021 and beyond – regardless of who wins the upcoming election.
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