Congress has failed to pass Big Tech legislation in 4 years leading up to the next election

Key Points
  • Since the U.S. government uncovered attempts by foreign actors to sow disinformation ahead of the 2016 presidential election, Congress has failed to add safeguards to prevent a repeat.
  • In that vacuum, tech companies have been pressured to make reforms on their own, which many say don't go far enough.
  • It's a similar story with digital privacy legislation, which lawmakers broadly agree is sorely needed but has been repeatedly delayed as states and other countries install their own laws.
Facebook Chairman and CEO Mark Zuckerberg testifies at a House Financial Services Committee hearing in Washington, October 23, 2019.
Erin Scott | Reuters

Four years ago, Facebook CEO Mark Zuckerberg called it "a pretty crazy idea" that fake news on Facebook could have influenced the election that handed Donald Trump the presidency. 

Today, the idea that social media can influence political events is far less debatable. In the years since 2016, independent researchers and a bipartisan Senate committee have found that Russian actors purposefully spread disinformation on social media to meddle in U.S. elections.

Zuckerberg himself said in 2017 he regretted being dismissive of the suggestion that Facebook could be used for such purposes.

Since 2016, lawmakers have only grown more skeptical of the tech platforms. That scrutiny was exacerbated by the revelation that a political analytics firm called Cambridge Analytica had gained access to information about Facebook users without their consent and used that data to target them with information about the election.

This election cycle, Facebook, Google and Twitter have all stepped up their policies to crack down on foreign influence and disinformation on their platforms. Those changes came as lawmakers dragged their CEOs and other top executives to Washington multiple times to criticize them for not going far enough. But those same lawmakers also failed to pass many key bills that would formalize regulations that exist for other industries to promote transparency.

One of the most promising bills, the Honest Ads Act, which was introduced in 2017, had bipartisan support and made a minor tweak to campaign finance law so that it would apply to digital advertising.

"Unfortunately, somehow this issue — maybe because [Senate Majority] Leader [Mitch] McConnell, [R-Ky.], has generally been against anything that touches election reform or maybe because the Trump people were sensitive about anything with foreign influence — but something that seemed like it should have gotten 85 votes, even in a [divided] Senate or maybe even passed by [unanimous consent], suddenly got bottled up," Sen. Mark Warner, D-Va., a co-sponsor of the bill, said in a September interview with CNBC.

As a result, Americans are heading into an election where tech platforms have been made to police themselves — this time in even more unusual circumstances than the last. With a record number of voters expected to cast their ballots by mail due to the coronavirus pandemic, the platforms have had to come up with ways to stem disinformation not only before the election, but after.

CNBC took a look at how Congress has gone four years without significant reforms around digital advertising and privacy and what that will mean for this year's race.

Extending political ad laws to social media

When the Honest Ads Act was first introduced, Warner said he thought it represented the lowest common denominator lawmakers could agree to pass.

“The Honest Ads Act was like what we thought would be the lowest hanging fruit, the biggest no-brainer just to kind of put points on the board,” he told CNBC.

Warner introduced the bill with Sen. Amy Klobuchar, D-Minn., and the late Sen. John McCain, R-Ariz. The two Democrats reintroduced the bill in 2019 with Sen. Lindsey Graham, R-S.C., as their Republican co-sponsor.

The bill would make a minor but consequential update to existing political advertising laws that currently apply to TV, print and radio. Those are the types of statutes that require politicians to say "I approve this message" at the end of campaign ads, or for political action committees (PACs) to disclose the messages they pay for on TV, radio or in print outlets.

The Honest Ads Act would extend similar regulations to digital ads, making it so that platforms with at least 50 million monthly visitors must maintain a public file of election-related messages purchased by anyone spending more than $500 total on the platform. Platforms would be required by law to maintain a record of whom the ads targeted, how many people they reached, who paid for them and for how much. It would also legally require them to take steps to ensure foreign actors did not purchase ads on their platforms to influence American voters.

But Warner soon learned that even this tweak would not make it far in the Republican-controlled Senate. He blamed McConnell and the Trump administration for being wary of election interference policy.

A Trump administration official said in a statement that the U.S. "will not tolerate foreign interference in our electoral processes and will respond to malicious foreign threats that target our democratic institutions." The official added that the state, local and private sector partners have coordinated to make this year's election safe and secure.

McConnell’s office did not provide a statement but pointed to a speech he made on the Senate floor last year on a bill including the Honest Ads Act, H.R. 1.

“So not only does H.R. 1 deploy stricter regulations on political speech — it also ramps up requirements when private citizens engage in it,” McConnell said, according to his written remarks. “Even small expressions of First Amendment rights could require extensive documentation.”

Alison Pepper, EVP of government relations of the ad trade group the 4A’s, which represents advertising agencies and whose members include publicly traded ad holding companies like Interpublic Group and Omnicom Group, said Congress is gaining a more sophisticated understanding of the complexities of technology and how the ad ecosystem works. She said there's also bipartisan agreement that there should be reform of political advertising and targeting, along with federal privacy legislation, but that sticking points remain.

Facebook's former chief privacy officer on decision to halt post-election ads
Facebook's former chief privacy officer on decision to halt post-election ads

Former Republican FEC Chairman Lee Goodman wrote in an op-ed for The Hill in 2019 that the Honest Ads Act falls flat by pushing responsibility onto private platforms to monitor for foreign propaganda and said that its “harsh” penalties would push many platforms to “simply censor a large amount of political content.” 

Goodman wrote that an amendment to the Foreign Agents Registration Act would be better suited to reform political advertising. The law requires foreign agents engaging in political activities to register with the Justice Department and file reports on their work. Goodman said it could be extended to cover agents’ actions on social media. 

But such a reform would likely not deal with other aspects included the Honest Ads Act, like more general disclosure requirements to the public about how ads are targeted.

Laws touching on foreign interference have generally been blocked in the Senate since 2016. Warner investigated Russia’s attempts to spread disinformation online around the last presidential election as Vice Chair of the Senate Select Committee on Intelligence. He acknowledged tech companies have made some strides since Russian actors exploited their platforms in 2016, but said private action was not enough in this case. 

“Do we really want to rely upon the goodwill of these social media companies to make sure that we have the disclosure and no foreign interference that I know is still present?” Warner asked.

New microtargeting bills

Rep. Anna Eshoo, D-Calif., introduced even bolder legislation focused on digital ads earlier this year. Her bill, the Banning Microtargeted Political Ads Act, would prohibit tech platforms from allowing political advertisers to target users based on user characteristics like zip codes, race or information about their online behaviors. 

The bill aims to reform an aspect of digital advertising that academics have identified as uniquely harmful, as platforms allow advertisers to target ads to much more curated groups than traditional media. While that can be extremely useful for grassroots campaigns seeking to limit wasteful spending, opponents fear it can also allow false and dangerous messages to spread in obscurity.

To be sure, databases of online ads, like those created by Facebook and Google, are meant to be a way to shine a light on these messages. But they require journalists and academics to pore through thousands of ads to find them, and it’s unlikely the average user would review that information after seeing an ad. 

Eshoo said in a May interview with CNBC that she supports political advertising but said it's a problem when microtargeting obscures those messages from broader view.

“It's important to have more speech, not less,” Eshoo said. “But the microtargeting, I think in so many ways, undermines that. It creates a dark space.” 

While academics and lawmakers have been hammering the importance of microtargeting legislation, Eshoo said that the reason it’s yet to gain much ground could be that “the temperature has to rise.”

But advertising groups say that in general, proposals about microtargeting could be found unconstitutional.

"When the government says that you can only send messages to people under very restricted requirements, that is likely to violate the First Amendment,” Association of National Advertisers’ group EVP of government relations Dan Jaffe told CNBC in June. "Threats to political advertising and political speech, which always have had extremely high constitutional importance and protection, present clear and dangerous precedents for all advertising categories," he added in an essay.  

Eshoo has defended microtargeting legislation by saying it would target commercial distribution practices, rather than speech itself.

If the protections for paid speech start to chip away, that might change the way the entire industry is regulated, advertisers argue. 

Facebook rakes in political ad money — Here's what's happening
Facebook rakes in political ad money — Here's what's happening

Democratic Federal Election Commissioner Ellen Weintraub has been one of the most vocal critics of microtargeted political ads. In a June interview with CNBC, Weintraub said that the highly targeted messages "interfere with free and robust debate because they interfere with the possibility of counter-speech and counter-arguments being raised.”

Since then, Facebook has continued to allow microtargeting but has made other political ad limitations meant to safeguard the election. It will indefinitely suspend election ads after polls close on Nov. 3 and ban ads seeking to delegitimize election results. Weintraub applauded both moves in an October interview, but acknowledged advertising content is just one fraction of the overall problem she sees on the platforms.

And the new policies aren't foolproof. Facebook announced last month that it would not accept new political ads the week before the Nov. 3 election, starting Oct. 27. Advertisers were able to submit and run new ads until midnight Pacific Time on Monday of this week. But campaigns like President Trump's were able to work around those rules by pre-loading ads that implied he'd won the election, that boasted about GDP figures that hadn't been released yet and others that implored people to "vote today" with graphics reading "Election Day is Today." Facebook removed the "vote today" ads for flouting policy, but didn't remove the others. There were also glitches that kept ads from running after the deadline, even though they met all the requirements.

"One would think that one could grapple with the ads because that's the easier part," Weintraub said. "But I think the more pressing concern for democracy is how these platforms and algorithms are further dividing the nation and steering people toward more extreme content."

But if Congress can't figure out a way to promote more transparency in political advertising online, she said it is much more unlikely it will find ways to promote transparency around platforms' algorithms that amplify sometimes harmful organic content.

Weintraub also said that when consumers sign up for social media profiles, they don’t really think about the personal data that will be used to target them later on. That touches on another area that has seen even broader support than that for digital ad reform, though with equally little movement: digital privacy laws.

Sticky details hold up digital privacy protections

Listening to Republican and Democratic lawmakers talk about the need for a national digital privacy law, it’s at first hard to understand why a bill hasn’t been passed. But deeper into their arguments, there are two sticky details that have delayed privacy protections for millions of Americans.

Many Democrats believe individuals should have the right to sue companies they believe violate their digital privacy rights. They also believe a national privacy law should be a baseline for the states, rather than prevent them from adding additional protections. Republicans object to both of those arguments, saying a so-called private right of action would result in countless petty lawsuits. They also say that if states can supersede a national law, it would make compliance virtually impossible for smaller players.

Lawmakers have introduced several bills in both the House and Senate attempting to address digital privacy rights, but the gulf remains. At a hearing last month before the Senate Commerce Committee, former Federal Trade Commission Chairman Jon Leibowitz, a Democrat, said it’s worth letting at least one of these points go to move forward.

“[I]t would be a tragedy if we let a fight over private rights of action kill the far more important protections for American consumers that you can otherwise put in place,” Leibowitz said in his written testimony.

Tech industry executives are anxious for a law to be installed. At the same hearing, Julie Brill, a former Democratic FTC Commissioner and chief privacy officer at Microsoft, said the U.S. “will lose our edge in terms of competitiveness on the global stage” if it failed to pass privacy legislation.

Eshoo, who introduced a privacy bill in the House last year with Rep. Zoe Lofgren, D-Calif., is already looking past the current legislative session for her digital privacy bill.

“If the Congress doesn't take this up in 2020, I believe that this will become a template for a new administration,” she said.

How the tech industry fills the vacuum, and is it enough? 

The major platforms have taken a number of steps to, at least outwardly, show they are trying to prevent a repeat of the exploitation they saw around the previous election. 

Some platforms banned political advertising altogether: Twitter did so in October of 2019, about a week after TikTok announced the same. LinkedIn, which is owned by Microsoft, banned political advertising in 2018. Snap said last year it fact-checked any political ad it ran. 

Facebook and Google, which still accept political advertising, have made a number of changes to their political advertising policies through the years. Facebook has been particularly resistant to fact-checking or moderating political ads, but has more recently changed its tune. This month, Facebook went further than it was previously willing to go, announcing it would halt election-related ads after polls close on Nov. 3 given the uncertain timeline of election results during the pandemic. It previously said it would ban ads seeking to delegitimize the election.

But criticisms remain on the kinds of political ads that can be bought on Google and Facebook. Facebook continues to allow false claims in their political advertising, though now with certain exceptions. For instance, in late September, the platform said it would prohibit any ads that call specific methods of voting, like voting by mail, inherently fraudulent or corrupt. But when CNBC inquired about ads that link to news stories to frame the voting method as problematic, Facebook said those ads were within policy.  

For years, Facebook has called for more regulation — including around political advertising — and endorsed the Honest Ads Act in 2018,” a spokeswoman for Facebook said in an emailed statement. “Even without additional rules, we created a system of transparency that allows people to learn more information about the political content they’re seeing on Facebook and Instagram than on any other platform or medium anywhere.”

Google pointed to an August blog post about its election efforts and to its recent announcement that it will pause ads referencing election after polls close on Nov. 3, but declined to comment further on the state of regulation since the last election. 

“As we said last fall when we made the decision to ban political advertising globally, we believe that the reach of political speech should be earned, not bought,” Twitter VP of Public Policy in the Americas Jessica Herrera-Flanigan said in a statement. “And we’re implementing this philosophy across-the-board — recent examples include our decision to end political contributions and distribute remaining dollars to non-partisan voter turnout efforts in marginalized communities and our broad, cross-functional efforts to protect the integrity of the election conversation.”

Jason Kint, CEO of digital content trade organization Digital Content Next (of which CNBC is a member), said leaving the rules in the hands of tech platforms leaves the door open for the same kind of activity that occurred around the election in 2016. He referenced a recent investigative piece by British TV station Channel 4 News, which entailed reporters finding data allegedly used by Trump's campaign to use advertising to deter Black citizens from voting during the last presidential campaign.

"Nothing happened," Kint said, referring to progress on national regulation. "We're in no better place than we were four years ago, from an accountability perspective of the government, at least."

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