Will Lawmakers Finally Act Against Big Tech?

Kids and whistle-blowers. This is the heart of the recent Wall Street Journal series of investigations about how Facebook runs its business. And it’s why the articles landed with such force.

Jeff Horwitz, one of the Journal reporters who penned the devastating “Facebook Files” series, and Cecilia Kang, who with fellow Times reporter Sheera Frenkel wrote the recent book “An Ugly Truth” about Facebook, joined me this week for a social audio discussion on Twitter Spaces.

We talked about The Journal’s reporting on the toxicity of Instagram on the psyche of teenage girls, supported in the stories by internal Facebook documents. Kids and whistle-blowers have now given politicians and regulators a very clear target, one that resonates with the public.

Finally, slow-moving regulators may have some much-needed fuel.

This story will continue to unfold in the coming days. Facebook will be sending its global head of safety, Antigone Davis, to Senate hearings about kids’ safety sometime next week, which should be made livelier by the revelation that a whistle-blower who gave documents to The Journal has also turned over a pile to lawmakers and will go public at some point soon, according to Senator Marsha Blackburn, a Tennessee Republican. This person is reportedly seeking federal whistle-blower protection.

I often cringe at Blackburn’s ignorant claims of anti-conservative bias at social media companies — on social media, of course — which, so far, have no basis in fact. But it appears she has now set her sites on a problem that is actually supported by evidence: the dangers for children online. She and Senator Richard Blumenthal, a Connecticut Democrat, have joined together in this endeavor, as they did this summer on proposed legislation around app stores that seeks to throttle back the power of Apple and Google.

I would not have imagined such a pair cooperating so much. And the combo of bipartisan, the-kids-are-in-danger and we-have-your-possibly-incriminating-documents-right-here must have Facebook nervous. Hopefully, the tired trope that government is incapable of legislating and regulating tech is over.

But it’s critical that the Senate committee widen its gaze — and subpoenas — to include other tech giants, like Alphabet’s YouTube, a point Facebook also makes. All of Big Tech needs to be pressed on safety by regulators or it just becomes a pile-on on Facebook. It’s easy to paint Facebook as the only villain, but that is just not fair.

And as you can see from Apple’s recent missteps around monitoring its devices for child pornography — which is about balancing privacy and the need to thwart criminals — tech companies should be attentive to lawmakers’ concerns, since they won’t slip out of scrutiny so easily this time, as they have so often in the past over different issues.

One thing is certain: Whistle-blowers will continue to play a key role in this story, especially if regulators want to get some traction. There are scads of people inside tech companies who are worried about the massive power amassed by Big Tech, and increasing numbers of tech insiders want to make sure that their creations do not have a deleterious impact on society.

Despite the common belief in Silicon Valley that leaking is a bad thing, in some cases it is the only thing. Horwitz, The Wall Street Journal reporter behind the series, and Kang both told me that they get tips and documents only when insiders lose hope that they can make change happen internally. And, in my experience, those who leak are not typically disgruntled but frustrated that their best work is being sullied by careless or even malfeasant leaders.

Many years ago, a top Yahoo executive who was exasperated by all the internal information I was able to access at her company called me to ask why people leaked to me.

My answer: Because she wasn’t listening to them — but she sure as heck listened to me.

And they’d all better listen when lawmakers start talking next week.

China moves against crypto

As I wrote recently, China is cracking down on tech, and today it made another big move by hitting hard at the fast-growing (yet still nascent) cryptocurrency sector. The People’s Bank of China put a Q&A on its website that essentially declared the use of digital currency illegal.

You read that right: illegal.

“Financial institutions and nonbank payment institutions cannot offer services to activities and operations related to virtual currencies,” the central bank said. China already moved earlier this year to crack down on cryptomining.

It’s a big blow to the freewheeling sector, and a sign that the Chinese government will not tolerate any other entity grabbing a critical means of social control. No surprise, the value of Bitcoin, Ether, Litecoin and even Dogecoin dropped. Companies that service the crypto sector, including Coinbase, were also down.

It makes noises from the U.S. government seem minuscule in comparison. Earlier this week, in a Washington Post virtual forum, Gary Gensler, the Securities and Exchange Commission chair, said, “I don’t think there’s long-term viability for five or six thousand private forms of money. So, in the meantime I think it’s worthwhile to have an investor-protection regime placed around this.”

Gensler has taught a class in cryptocurrency at the Massachusetts Institute of Technology, but he’s proving to be not much of a fan. He has also taken to comparing the crypto market to the Wild West, sounding like a sheriff who is about to take some of the bad guys down at the saloon.

But it’s all hat and no cattle so far, especially compared with the Chinese. We’ll see what Gensler has to say at my event next week, where we’ll ask him about that and more.

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