the inside game

The Democrats’ Divorce From Silicon Valley Is Almost Final

Photo-Illustration: Intelligencer. Photo: Getty Images

The last Monday in June was shaping up to be a relatively quiet one in Washington when a federal judge unexpectedly delivered what looked like a dramatic hammer blow to critics of the country’s massive technology corporations. For years, this growing crowd had argued against the behemoths’ disproportionate power. Now, here was the D.C. District Court’s James Boasberg dismissing an antitrust suit brought by 48 states, arguing that they had waited too long to argue against Facebook’s acquisition of Instagram and WhatsApp. He tossed the national government’s case, too, questioning whether the Federal Trade Commission had adequately defined social networking or convincingly explained why Facebook supposedly had a monopoly on it. Facebook shares shot up, and the company broke a $1 trillion market capitalization for the first time in its history.

So it would have been understandable if Amy Klobuchar — who leads the Senate’s antitrust subcommittee, and who literally published a book called Antitrust this spring — weren’t exactly in the mood to talk. But 24 hours later, the Minnesota Democrat sounded almost vindicated. First, she told me, the FTC should of course refile its case, a door Boasberg had left open. Second, she said, the episode was really just “Exhibit A for what I’ve been saying all along: that our competition laws need to be updated.”

To Klobuchar and her allies in the Democrat-led fight to scale back the tech giants’ influence, here was an undeniable and conveniently high-profile example of courts standing in the way of progress. It was grist for some lawmakers’ increasingly loud point that legislation is the only way forward — and that, in Klobuchar’s words, new rules to take on big tech “have to be as sophisticated as the companies that are now gatekeepers of major sections of our economy.”

This might all sound like pretty basic “I’m-not-mad-you’re-mad”–style spin, except that in the weeks before we spoke, a spray of legislation designed along those lines had just passed out of a crucial House committee with bipartisan support, and a new enemy of the tech titans was easily confirmed to lead the FTC. And in the hours after the ruling, Klobuchar was joined in her conviction not only by the House progressives helping lead the legislative fight, but by a handful of powerful and staunchly conservative Republicans, too. (For example, Colorado’s Ken Buck, a right-wing congressman who ran the state GOP during the late Trump years, tweeted after the Facebook ruling that “Congress needs to provide additional tools and resources to our antitrust enforcers to go after big-tech companies engaging in anticompetitive conduct.”)

The last few years have seen a slow-motion breakup between the big-tech companies and Washington — especially Democrats skeptical of their market share, anticompetitive behavior, speech policies, and labor practices. But this spring and summer have seen the divorce papers finally being drafted. It’s a pronounced shift in the landscape that’s been understandably overshadowed by D.C.’s other dramas, and it’s an area where lefties are mostly happy with the Biden administration’s moves while most centrist Democrats and even some of their GOP colleagues are coming around, too.

It’s still pretty slow-motion, of course — it’s Washington. Not long ago, Google & Co. were the darling of the Obama-era center-left, and the current retreat from that posture is still probably far from what we’d be seeing in an Elizabeth Warren or Bernie Sanders presidency, considering their campaign-season pledges to centralize this fight. The dismissal of the states’ case against Facebook was a significant setback to the argument against the company, and even as Biden’s government has signaled its willingness to take on the big tech companies more aggressively than its predecessors did, it’s been slow to fill some important roles in that effort, like an assistant attorney general for antitrust. Meanwhile, much of the D.C. power structure is still enthralled by the tech titans: Just a few hours before the ruling on Monday, Politico’s Playbook spent a paragraph musing about when Jeff Bezos would start throwing parties at his Kalorama neighborhood supermansion. As such, some of the companies’ biggest critics remain pessimistic about how much will change. It doesn’t help, they say, that Biden himself has far less of a history as an outspoken skeptic than other members of his party.

But the evidence of a new environment is piling up. Momentum had been shifting toward the tech skeptics since Democrats won back the House in 2018, at which point David Cicilline, a Rhode Island congressman who serves on Nancy Pelosi’s leadership team, took over the Judiciary subcommittee overseeing antitrust law and launched a massive investigation into Google, Facebook, Apple, and Amazon. When Biden won and Democrats took back the Senate, Klobuchar introduced legislation to reform antitrust laws in her own committee. She proposed more funding and regulatory teeth for the FTC and Justice’s Antitrust department, and aimed to put the onus on the companies to prove their mergers were above board.

Biden, too, stepped in. First, he hired Tim Wu, one of the country’s leading big-tech critics and scholars, to his National Economic Council with a mandate to focus on competition. Soon after, the president weighed in on a bitter dispute in Alabama, where Amazon employees were considering whether to unionize. The union drive failed, but Biden’s expression of support for the workers’ right to organize was a presidential first, and in June Kamala Harris met with unionized Google contractors in Pittsburgh, too. By that point, Biden had nominated Lina Khan, another leading scholar on tech companies’ anticompetitive practices and an adviser to Cicilline’s investigation, to chair the FTC. When she was easily confirmed in June, she almost immediately moved to review Amazon’s proposed acquisition of MGM.

Soon thereafter, the House Judiciary Committee approved six bills over the objections of some Republicans and California Democrats, including a measure to stop tech companies from giving preference to their own services over competitors’, another that would make it harder for them to acquire their growing competitors, and one that would grant federal regulators more avenues to sue to break up such companies.

“Most of these bills are going to have a fighting chance on the floor in the House and the Senate, just given the energy of these issues,” predicted Luther Lowe, the senior vice-president for public policy at Yelp and a longtime and outspoken Google enemy. “It’s clear that the Overton window has totally shifted and we’re in a different place from even six months ago.”

Even on the day Facebook won its big court victory, countervailing winds were blowing. News broke that the Biden administration was considering issuing a new executive order to spark competition and degrade the power of corporations that grew too dominant in their field, and that Department of Justice investigators were redoubling efforts to investigate Google’s ad practices.

It’s quite a flurry of activity, considering that the party’s leaders are still publicly largely playing nice with the industry. Pelosi, for one, fell out with Mark Zuckerberg in 2019 over his refusal to remove doctored videos, cutting off personal and staff contact with Facebook at the time and since calling it a “shameful company.” But the San Francisco congresswoman hasn’t gone as far as Cicilline or others in her caucus, like Pramila Jayapal, in explicitly seeking to unravel its peers’ power. Her cautious number two, Steny Hoyer, said recently that the bills passed out of the Judiciary committee weren’t quite ready for a full vote in the House.

Biden, meanwhile, sat for his first fundraising event as president in late June, and was greeted by his host, LinkedIn co-founder Reid Hoffman. The president has hired a series of top aides with deep ties to the broader tech world, too: His White House chief of staff Ron Klain had been working with ex-AOL CEO Steve Case; his COVID czar, Jeff Zients, only recently left the Facebook board; and Cynthia Hogan joined his VP search committee in 2020 only after stepping down as Apple’s top lobbyist. Even Antony Blinken, Biden’s longtime aide and secretary of State, had spent his time out of government consulting for companies including Facebook and Uber.

Still, it’s a far cry from even five years ago, when a handful of Google, Apple, and Facebook officials were in contention for senior Cabinet or administration roles in Hillary Clinton’s theoretical administration and former Google executive Eric Schmidt appeared at her Election Night party in STAFF credentials. And some Republicans’ interest in joining the fight for reasons other than their frequent (and frequently debunked) Trump-era claim that tech companies were censoring conservatives has been welcomed by those like Klobuchar as a mark of progress.

Klobuchar and Cicilline have found some common cause with GOP figures like Buck, Iowa senator Chuck Grassley, and Utah senator Mike Lee because, Klobuchar said, they’ve agreed that ensuring capitalism flourishes means encouraging competition. She said she knew the message had sunk in when she was trying to pass her merger legislation out of committee earlier this year. She was expecting Republicans to add amendments watering the proposal down, and had preemptively gotten Grassley and Tennessee’s Marsha Blackburn to stick with her to defeat any such attempts — but the roadblocks never even came.

The companies themselves are implicitly acknowledging the shift in the political waters, too, hiring armies of new lawyers, launching new advocacy groups, and occasionally trying to play hardball. Lowe said he’d never seen the tech companies’ lobbyists and advocates as agitated as they are now. “They’re clearly treating this as a five-alarm fire in Mountain View and Menlo Park.”

The companies have adopted more aggressive stances as they’ve come to recognize the potential severity of their circumstances — that things could get bad quickly if the latest bills became law or Biden’s new administrators started ruling against them. In April, Apple at first refused to send a representative to a hearing Klobuchar was leading about its App Store and Google’s Play Store. The company had said ongoing litigation — its fight with Epic Games over the App Store — was complicating its ability to speak in public, but that month CEO Tim Cook had sat for an interview with Kara Swisher. Only after Klobuchar and Lee sent and publicized a furious letter to Cook did the company relent, offering its top compliance official. Then, shortly after Khan took over at the FTC and moved to investigate Amazon’s MGM deal, that company requested she be recused from matters concerning it, given her previous statements asserting it had violated antitrust rules.

Failing to shift political sentiment, they’re trying some personal appeals, too. Cook even called Pelosi and some other lawmakers directly before the House committee considered its slate of tech bills. It wasn’t enough to derail them.

They shouldn’t have been surprised.

Klobuchar, for one, was once close with Sheryl Sandberg, but in 2017 the Facebook exec tried to get the senator to weaken a proposal on political ad transparency. Klobuchar, who’s taken to referring to the tech companies’ influence as “an updated version of the Gilded Age,” was unmoved. Then, when the Times reported the next year that Facebook had contracted a Republican-aligned consultancy to dig up dirt on lawmakers who were set to question Sandberg — including by circulating how much money they had accepted from Facebook itself in political donations — Klobuchar drew a line. She made it clear that it wasn’t worth trying to lobby her anymore. She said the company hasn’t tried since.

The Democrats’ Divorce From Silicon Valley Is Almost Final