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Experts: Trump's allegations of tech bias may actually reduce the odds of industry regulation

Key Points
  • "In a strange way, the president's attacks on big tech inoculate them from regulation," professor Scott Galloway says.
  • Venture capitalist Roger McNamee agrees, saying technology companies may have a lot of issues, but political bias isn't one.
  • Next week, representatives from Google, Facebook and Twitter will testify before Congress on censorship and election meddling.
Trump's attack lowers probability of successful tech regulation, says early Facebook investor

Rather than inviting heavier scrutiny, President Donald Trump's accusations that Facebook, Twitter and Alphabet's Google are biased may actually protect those companies from regulation, experts say.

"In a strange way, the president's attacks on big tech inoculate them from regulation," NYU Stern School of Business professor Scott Galloway said Wednesday on CNBC's "Squawk Alley." "His attacks lack reason, data or grammar, which weaken the argument."

Trump doubled down on threats against Facebook, Twitter and Google on Tuesday afternoon, saying the social platforms are "treading on very, very troubled territory and they have to be careful." The president's comments followed earlier accusations that Google search results prioritize negative coverage and left-leaning outlets, and a warning that the issue "will be addressed."

Galloway said these firms "don't lean left, they don't lean right, they lean down," meaning the companies algorithms are designed to extract maximum profit, not to champion a political cause.

"Whatever will get more clicks, more engagement, more growth, more earnings, more shareholder value — there is no bias there. Their bias is against labor costs and controversy," said Galloway.

Galloway wasn't alone in his thinking. Roger McNamee, managing director at Elevation Partners, said the technology companies may have a lot of issues, but political bias isn't one.

"I think there are real issues with the way Google runs its search engine, just as I think there are huge issues with Facebook and Twitter. The one the president is talking about is not one of them," McNamee, venture capitalist and investor, said in the same "Squawk Alley" interview as Galloway.

Furthermore, McNamee said he wasn't sure why conservatives would even want to defend divisive figures, like Alex Jones, the conspiracy theorist behind the Infowars media outlet.

"One of the things that I find really confusing is that folks in the Republican Party would look at something like Alex Jones as being something they need to defend — someone who is in the business of spreading conspiracy theories," McNamee said.

Infowars did not immediately respond to CNBC's request for comment.

Earlier this August, multiple tech companies, including Apple, Facebook, Google's YouTube, Pinterest, Twitter and Spotify, clamped down on content by Jones, removing podcasts, pages and other content.

The tech companies said they removed Jones' material for violating policies related to hate speech and harassment. Some right-wing commentators have criticized the moves, saying they amount to censorship.

Trump's comments "rally the left, who likely could have been partners" in regulation efforts, Galloway said. "This could have been a bipartisan effort."

McNamee said rhetoric, like Trump's, only complicates regulation, which is already a very complicated issue.

"If I were the industry, I'd feel good about being attacked this way. Because at the end of the day, the industry's situation is complicated, and by making it more complicated, they do lower the probability of successful regulation," McNamee said.

The White House did not immediately respond to CNBC's request for comment.

That's not to say the industry doesn't need regulation, according to McNamee and Galloway who both said large players in big tech have all done things that should invite closer scrutiny.

"For all intents and purposes the business plan of these companies is now fair game in Washington, D.C.— and justifiably so," McNamee said. "Google and Facebook and Twitter have all done stuff that Congress does needs to regulate, because Congress has to protect the public interest and these guys have been on the wrong side of that."

In long run, we'll need policies that discourage hugeness and promotes competition, says former CNN CEO

Walter Isaacson, former chairman of CNN and former editor of Time magazine, also said Wednesday on CNBC that he thinks the size of platforms, like Facebook and Google presents a big problem, but that the implementation of any regulation is likely far off.

"In the long run, we have to have policies that discourage hugeness and promote competition, and that will be the long-term solution to this problem. So if people don't like Google searches, they can find an alternative search engine," said Isaacson, now a professor at Tulane University.

Isaacson also said he thinks these platforms should "take responsibility for what is on their platform," and ban people who are "hateful or cause deep problems to our system of government." But as they approach another round of congressional hearings next week, he said the public ought to give these social media companies a little recognition.

"We should give them some credit, because they are going to get slammed next week. This is a difficult issue, so when they try, we should say, 'Well, at least they are trying to figure this out,'" Isaacson said in a later "Squawk Alley" interview.

Next week, representatives from Google, Facebook and Twitter will testify before Congress, discussing censorship and election meddling. The hearings mark the second time representatives from all the companies will be on Capitol Hill to address concerns about election interference.