Tech Is Mobilizing Against Growing Momentum for Regulation

This is not just about political ads; it's about monopoly power, which neither political nor business interests have tolerated in tech once it reaches a certain threshold. JL 

Kenneth Vogel and Cecilia Kang report in the New York Times:

Google, Facebook and other tech giants, once celebrated as benevolent drivers of innovation and economic growth, are facing mounting criticism on both sides of the Atlantic for complex tax avoidance efforts, the hosting of pages used in sex trafficking, lax privacy protections and increasing monopoly power. With Facebook and Google alone capturing an estimated 85% of all digital political ads, self-policing won’t cut it.“They have to realize the world has changed.”

Senator John McCain and two Democratic senators moved to force Facebook, Google and other internet companies to disclose who is purchasing online political advertising, after revelations that Russian-linked operatives bought deceptive ads in the run-up to the 2016 election with no disclosure required.

But the tech industry, which has worked to thwart previous efforts to mandate such disclosure, is mobilizing an army of lobbyists and lawyers — including a senior adviser to Hillary Clinton’s campaign — to help shape proposed regulations. Long before the 2016 election, the adviser, Marc E. Elias, helped Facebook and Google request exemptions from the Federal Election Commission to existing disclosure rules, arguing that ads on the respective platforms were too small to fit disclaimers listing their sponsors.

Now Mr. Elias’s high-powered Democratic election law firm, Perkins Coie, is helping the companies navigate legal and regulatory issues arising from scrutiny of the Russian-linked ads, which critics say might have been flagged by the disclaimers. In a two-front war, tech companies are targeting an election commission rule-making process that was restarted last month and a legislative effort in the Senate.

“I’m not going to tell you they support this bill right now,” said Senator Amy Klobuchar, Democrat of Minnesota and the lead author of the proposed Honest Ads Act.

But she and her co-author, Senator Mark Warner, Democrat of Virginia, urged the social media companies to take greater responsibility for the content that lands on their sites, including political ads and other content meant to sow discord or chaos. With Facebook and Google alone capturing an estimated 85 percent of all digital political ads, self-policing won’t cut it, they said.“They have to realize the world has changed,” Ms. Klobuchar said.

Since 2006, most online political activity has been exempt from the rigorous regulations to which paid television, radio and print political advertising has been subject for years. The Federal Election Commission justified the so-called internet exemption rule by declaring the internet “a unique and evolving mode of mass communication and political speech that is distinct from other media in a manner that warrants a restrained regulatory approach.”

That attitude has many fewer adherents after the revelations that, in the run-up to the 2016 election, Facebook sold more than $100,000 worth of ads to a Russian company linked to the Kremlin, while Google sold at least $4,700 worth of ads to accounts believed to be connected to the Russian government.

Federal election law bars foreigners from spending money to try to influence United States elections.

“It’s ridiculous,” said Ann Ravel, a Democrat who served on the election commission from 2013 until this year. “We need to rethink all the exemptions for the internet because even if Facebook might not have known about the Russian advertising, they knew — and we all knew — that this was possible.”

The new bill would require internet companies to provide information to the election commission about who is paying for online ads.

The content and purchasers of the Russia-linked ads that ran on Facebook and Google in 2016 “are a mystery to the public because of outdated laws that have failed to keep up with evolving technology,” Ms. Klobuchar and Mr. Warner said.

The regulatory pressure comes at a particularly trying time for Google, Facebook and other tech giants. The companies, once celebrated as benevolent drivers of innovation and economic growth, are facing mounting criticism on both sides of the Atlantic for complex tax avoidance efforts, the hosting of pages used in sex trafficking, lax

privacy protections and increasing monopoly power.

In response, they have ramped up lobbying and public relations campaigns, with Facebook’s chief operating officer, Sheryl Sandberg, last week whirring through Washington on an apology tour and charm offensive.

Yet government officials working on the investigations into the Russian-funded ads and the efforts to enact stricter disclosure requirements say Facebook and Google have been less than enthusiastic partners.

Photo

Sheryl Sandberg, Facebook’s chief operating officer, back left, with Representative Tony Cárdenas, Democrat of California, last week in Washington. Credit Drew Angerer/Getty Images

After initially resisting requests to turn over Russian-linked ads, Facebook has provided them to a congressional committee investigating Russian meddling in the 2016 election. But Google has yet to do so, and neither company has made the ads public.

And in the weeks leading up to the introduction of the Klobuchar-Warner-McCain bill, Facebook told congressional aides that it is too difficult to figure out if an ad is political or commercial because candidates are often changing messages and topics. The company added that with the sheer number of ads on the site, the engineering involved in identifying political ads would be extremely challenging.

When the Federal Election Commission moved to strengthen its online disclaimer requirements in 2011 and again last year, the companies either ignored requests for input or suggested that new rules could “stand in the way of innovation,” as Facebook asserted in a 2011 comment to the commission.

Around that time, both companies paid Perkins Coie to seek exemptions from the election commission to one of the few election rules that do apply to online political activity — that political ads placed on third-party websites contain disclaimers revealing who paid for them. The exemption requests, written by Mr. Elias, the head of Perkins Coie’s political law practice, argued that it was impractical to require disclaimers on ads the size of those then being offered on Google and Facebook.

While the election commission approved Google’s request, which was submitted in 2010, by a 4-to-2 vote, it deadlocked 3 to 3 on Facebook’s request, which was submitted the next year. Facebook nonetheless proceeded as if it was exempt from the disclaimer requirement, declining to mandate that political advertisements on its platform list their sponsors.

Such disclaimers and other disclosure requirements might have helped deter the Russian-funded ads and other online efforts to meddle in the election, say advocates for stricter campaign finance rules. Mr. Elias went on to help lead research into Russian efforts to help Donald J. Trump and damage Mrs. Clinton during the 2016 presidential campaign.

It was “kind of like the chickens coming home to roost,” said Ms. Ravel, the former commissioner.

She argued that since Facebook was not granted an exemption to the disclaimer requirements, it should have required advertisements to include disclaimers for the past half-dozen years. But referring to Mr. Elias, she said that “the savvy political insiders understand that there is not going to be any enforcement from the F.E.C.” because the commission has frequently deadlocked along partisan lines over enforcement matters in recent years.

Mr. Elias rejected suggestions that he helped Russia hurt Mrs. Clinton.

“Russia found a number of ways to aid Donald Trump and hurt Hillary Clinton, and the F.E.C. disclaimers would not have stopped them,” he said. The ads in question would not have required the disclaimers, he said, because — according to Facebook — they did not explicitly mention Mr. Trump, Mrs. Clinton or the election. In a blog post, Facebook wrote that the ads focused on amplifying “divisive social and political messages across the ideological spectrum, touching on topics from L.G.B.T. matters to race issues to immigration to gun rights.”

Citing United States intelligence findings that Russia was behind the hacking and dissemination of damaging emails from the Democratic National Committee in 2016, Mr. Elias said, “The Russians were willing to break the law to help Donald Trump. I doubt the F.E.C. disclaimers were going to be the straw that broke the camel’s back.”

Critics are not accepting that. Google and Facebook had ample opportunity to work with the Federal Election Commission to devise and put in place effective and practical disclaimer rules, “but they were silent,” said Lawrence M. Noble, a former general counsel for the election commission who now serves in that position with the Campaign Legal Center, a nonprofit that pushes for stricter rules governing money in politics.

“And they are still trying to avoid regulation,” Mr. Noble said.

A Facebook official said that the company would submit comments to the election commission as it considers tightening its disclaimer rules.

And the company’s vice president for United States public policy, Erin Egan, said, “We look forward to continuing the conversation with lawmakers as we work toward a legislative solution” to “achieve transparency in political advertising.”

She pointed out that the company had enacted new policies to self-police its ads, which Facebook asserted in a company blog post “would have caught these malicious actors faster and prevented more improper ads from running” in 2016.

Riva Sciuto, a Google spokeswoman, said that strict ads policies, including limits on political-ad targeting and prohibitions on targeting based on race and religion, already exist at Google. But the company is “taking a deeper look to investigate attempts to abuse our systems, working with researchers and other companies, and will provide assistance to ongoing inquiries.”