Lawmakers are racing to pass tech antitrust reforms before midterms

A major piece of legislation that could reshape the tech industry is just a few steps away from becoming federal law. But advocates fear that if congressional leadership doesn't usher it through before the midterms, or at least the end of the year, it could die.

The American Innovation and Choice Online Act, a Senate bill that closely resembles an earlier House version, advanced out of the Judiciary Committee earlier this year by a wide margin.

Known among staff and lawmakers as the self-preferencing or anti-discrimination bill, the legislation would prohibit dominant tech platforms like Amazon, Apple and Google from giving preferential treatment to their own services in marketplaces they operate. If passed, it could prevent Google from having its own travel recommendations at the top of search results, for example. Or Amazon might have to ensure its own products are ranked by the same criteria as competitors' products.

The bill has overcome intense lobbying from the tech industry, and there are increasingly signs it will move forward before the August recess.

Advocates feel there's little time to spare. They cite the probability that with Republican control of the House following the November vote, the party would follow current caucus leaders who have signaled that antitrust reform would be a lower priority. In the digital space, Republican House leaders have been focused more on content moderation and privacy issues.

Given that backdrop, onlookers are wondering: What will it take for Senate Majority Leader Chuck Schumer, D-N.Y., or House Speaker Nancy Pelosi, D-Calif., to give the bills time on the floor for a vote?

They're getting closer, sources tell CNBC. Schumer met about the status of antitrust legislation on May 18 with Sens. Dick Durbin, D-Ill., and Amy Klobuchar, D-Minn., chairs of the Judiciary Committee and subcommittee on antitrust, respectively, according to a Democratic source familiar with the conversation. (The source, like others who are not named in this article, spoke on the condition of anonymity to discuss behind-the-scenes conversations in Congress.)

Schumer asked Klobuchar, the bill's lead sponsor alongside Sen. Chuck Grassley, R-Iowa, to release the latest version of the text that has input from members on both sides over the next couple of weeks, and Klobuchar released the latest language last Wednesday. Schumer told the pair he fully supports the bill and is committed to putting it on the floor for a vote by early summer, according to the source.

It's unclear if the bill has the 60 votes needed to pass the Senate. Some reports have suggested Democratic leaders are waiting to have enough votes to pass the bills before bringing them to the floor. But some advocates say it would be best to put lawmakers' feet to the fire by making them go on the record with their votes, gambling that many won't want to be seen as weak on Big Tech.

CNBC spoke with lawmakers, advocates and opponents of the legislation and congressional staffers involved in discussions around the bills to learn what it might take to move forward as Congress races against the clock to pass tech antitrust reform.

The window to pass significant antitrust reform is rapidly closing, but sponsors and advocates are still hopeful.

Jesse Lehrich, co-founder of Accountable Tech, expressed "cautious optimism" that this Congress would pass both the self-preferencing bill and a separate bill that is more specifically targeted at how companies display apps in mobile app stores.

Lehrich said he's even "bordering on confident" that the self-preferencing bill will be signed into law by August. "I do think that this is kind of like a make-or-break time where stuff's either going to start to move forward in this next upcoming month or two or the window is going to close quicker than people think," he said.

While it may feel like Democratic leadership is dragging its feet, Charlotte Slaiman, competition policy director at Public Knowledge, a nonprofit funded both by Big Tech firms like Google and their opponents like DuckDuckGo, said the timing has been "normal" given other high-priority measures and the need to get members up to speed on complicated tech issues.

"Some of those early hearings about the biggest platforms, people clearly didn't have a strong understanding," Slaiman said. "But if you compare that to the most recent hearings, the level of detail, and these senators really get it now, which is amazing. But it takes some time to bring the rest of Congress along to understand why it's so important to make these changes."

Rep. Ken Buck of Colorado, the top Republican on the House Judiciary subcommittee on antitrust and one of the chief champions for the bills, predicted in a CNBC interview in April the self-preferencing bill will "have the votes in both chambers to move forward," adding he believed it would pass before the August recess.

Buck attributed his confidence to the fine-tuning of language in the markups and emphasized that such changes were not a result of pressure from the industry, but instead have been "member driven."

"I think we will gain support as a result of that evolution," he said.

Tech antitrust reform has gained momentum through an odd coalition of lawmakers that's put liberals like Klobuchar on the same side as conservatives like Sen. Ted Cruz, R-Texas.

But within each party, there is still some hesitancy over the approach. It's particularly notable among the Democrats, who have the power to bring the bills to a vote on the floor.

Democrats who oppose the bill fear it would diminish user privacy protections or hamper platforms' ability to remove dangerous speech or services. Some Democrats, as Politico reported last week, are also concerned about having to vote on a bill they don't see as a priority before the midterms.

The bill's sponsors have attempted to address some of the concerns through more explicit privacy defenses. But its skeptics were critical of the latest version Klobuchar's office released late last month, which added language to exempt the telecom industry (a sector that had not been the initial intended target) and did not address content-moderation worries.

"Instead of making the bill better, Senator Klobuchar added preferential carveouts for telcos and Wall Street in order to win Republican votes," Adam Kovacevich, CEO of tech-backed center-left group Chamber of Progress, said in a statement.

Rep. Suzan DelBene, D-Wash., who leads the moderate New Democrat Coalition caucus, has raised concerns about the key bills. One particular worry is that the self-preferencing bill could hinder platforms' ability to moderate harmful content for fear they might be seen as discriminating against a rival service. She pointed to the example of Parler, which Amazon Web Services and Apple and Google's app stores temporarily suspended in the wake of the Jan. 6, 2021, insurrection at the U.S. Capitol, after it became clear some users were encouraging violence on the service.

DelBene, whose husband is a former Microsoft executive, has supported some antitrust reforms, such as a bill to increase funding at the Federal Trade Commission through merger-filing fees. But she maintains that strong digital privacy legislation is the most fundamental piece to focus on.

"If we don't have consumer data privacy legislation at the most fundamental level, then how do we look at issues like facial recognition, or AI or so many other issues where I think it's important for Congress to be clear what the rules of the road should be?" DelBene said.

Staff for the bill's sponsors have been meeting with members who are more skeptical of it, but two people familiar with the matter told CNBC the skeptics are dissatisfied with the engagement.

One Democratic aide described a conversation with a bill sponsor as more "briefing style ... rather than an honest negotiation" about members' concerns.

A Democratic Senate aide said Klobuchar's team didn't share the revised text with their office until it was publicly posted. "Our team has certainly tried to engage on the changes we want to see here, but I wouldn't say it's been very effective," the Senate aide said.

Advocates for the bill believe Democrats who are on the fence could be swayed.

One Democratic aide suggested that Klobuchar's connection to the bill could help ease concerns among some of the more moderate Democrats in the House.

Another House Democratic aide said if the bill makes it through the Senate, it's likely House Democrats will get on board. Last summer, the bill was perceived as having "a California Dem problem" that would require making up the large number of votes from that state with Republicans, but that's no longer the case, the aide said.

That's because the House does not need to pass each of the six bills that passed out of the House Judiciary Committee last summer. It's about "passing the one that can get out of the Senate," the aide said.

More active support from White House could also help. The Department of Justice has endorsed the self-preferencing bill, although President Joe Biden himself has not commented directly on it.

But Buck, the Colorado congressman, said he believes DOJ's endorsement means that "the administration is on board," and may actually be more helpful than a personal endorsement from the president.

"Frankly, I think that a less overt endorsement is helpful," he said. "I think that getting a few Democrats who are on the fence on board is helpful without knocking a few Republicans who are on the fence over to the other side."

Advocates for the bills and congressional staff said tech leaders were quiet ahead of the House markup, then started lobbying more intensely once they knew what it would look like.

"For a long time before the actual markup of the bill, before it was announced, the companies had gone pretty silent," said one Democratic aide. "And then there was kind of a big drumbeat right at the time of movement when the markup was announced. And I think the strategy there was like stay really silent, don't raise a lot of attention around the bills themselves, and then throw out this idea that like, 'Wow, these bills came out of nowhere, we had no idea, they haven't been vetted, where'd these even come from,' to freak members out."

The staffer said it isn't uncommon for legislators to deal with bills they haven't been fully immersed in, given the wide range of issues Congress faces. The aide called the sudden outburst of concern about the quick markup a "fabricated crisis."

But the aide said they've heard fewer of those concerns as there's been more time for Congress to get familiar with the reforms.

Those who seek to educate congressional offices on the bills say tech's fingerprints are clear through the talking points echoed by staff.

"By the time that we were engaging with congressional offices they'd heard from like 12 people from industry," Accountable Tech's Lehrich said. "You could tell who they talked to just from the things that they're raising."

Lehrich said advocates for the bills would end up spending the "first 30 minutes debunking talking points from Facebook and Amazon and Apple and Google." But he said the way the tech lobbyists have been "out in full force ... in a weird way is almost encouraging."

"Before the House markup there was this sense that this was all like a pipe dream," Lehrich said, noting how many tech firms would mainly speak through their trade groups against the bills. Now, even Apple CEO Tim Cook has spoken against the bills.

Lehrich said Apple's lobbying has so far seemed to be the most persuasive to lawmakers with lingering concerns about the legislation, in part because it's maintained a greater sense of credibility in Washington than some of its peers.

"When Facebook or Amazon make baseless sky-is-falling attacks, there's little to say besides, 'that's just patently false,'" Lehrich said in an email. "When Apple makes esoteric arguments about serious security risks of sideloading, you need compelling substantive pushback to allay lawmakers' concerns."

A source in a GOP office said the industry is also using the tactic of directing lawmakers to focus on other issues that are more contentious, such as reforming Section 230 of the Communications Decency Act, which gives companies the right to moderate user-generated content.

"Facebook runs ads for Section 230 reform, so that should tell you everything you need to know about what they want," the source said. "And with some of these other groups, they're trying to pitch anything to harm Big Tech as a threat to national security. But I think most Republicans would agree that Big Tech is a threat to national security and small businesses."

The source said supporters of the legislation attempt to combat that message by "pointing out the misinformation and the hypocrisy and letting the offices have the facts."

Even with the extensive lobbying from the industry, advocates for the bills who engage with those same offices remain confident some reform legislation will pass.

When Alex Harman, who advocates on antimonopoly policy at Economic Security Project Action, meets with congressional offices, he said, "we don't find people who are like, 'Well, I'm really worried about this,' or 'Oh, I have grave concerns,' or 'I'm opposed.' "

"We're not building 'no's' in our outreach," he added.

Harman said he's been in communication with "certain Northern California members" or their offices, "who have not been publicly opposed. And they say, yeah we're going to vote yes. Of course, we're going to vote yes."

Many lawmakers on both sides of the aisle agree passing antitrust legislation in a Republican-controlled Senate would be more difficult. But some said it's not impossible, and that there even could be a second chance for the bills during the lame duck period at the end of the year, should Republicans gain back control in November's midterms.

Though Buck said he thinks the self-preferencing bill is "most likely to pass before the August recess based on the conversations I'm having with the Democrat sponsors of the legislation," he believes it would also have a shot in the last three months of the year if not.

"I think there will be antitrust legislation passed in the next Congress, regardless of which party is in power," Buck said. "I think that the legislation would look somewhat different if Republicans are in, but I think a majority of the Republicans in the House conference now recognize the threat of Big Tech."

Others disagree, including Mike Davis, president of the conservative Internet Accountability Project. "I don't think they're going to get done if Republicans take over the House next year," Davis said. "This has to happen in the next two months or it's not going to happen."

"The closer you get to midterms, the less likely I think Republican members of Congress are going to be to hand Joe Biden bipartisan victories, which underscores the urgency of getting this done ASAP," Accountable Tech's Lehrich said. "There is a very real but narrow window for these two bills."

"I think there's always another chance down the line," added Evan Greer, director of digital policy advocacy group Fight for the Future. "I do think everything that we've heard from Republican leadership suggests that if Republicans do take the House, they are not going to be moving forward with thoughtful, solid, meaningful legislation to rein in Big Tech companies. And so this really is a once in a lifetime shot. And if Democratic leadership fumbles it, they're going to have no one to blame but themselves."

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