Overnight Cybersecurity

Hillicon Valley: Warren offers plan to break up big tech | K Street preps for privacy fight | Dem asks DOJ to probe if White House interfered on merger | Chelsea Manning jailed for refusing to testify in WikiLeaks case

Stefani Reynolds

Welcome to Hillicon Valley, The Hill’s newsletter detailing all you need to know about the tech and cyber news from Capitol Hill to Silicon Valley. If you don’t already, be sure to sign up for our newsletter with this LINK.

Welcome! Follow the cyber team, Olivia Beavers (@olivia_beavers) and Jacqueline Thomsen (@jacq_thomsen), and the tech team, Harper Neidig (@hneidig) and Emily Birnbaum (@birnbaum_e).


WARREN PUTS BULLSEYE ON BIG TECH: Sen. Elizabeth Warren (D-Mass.) called for breaking up Silicon Valley’s largest companies on Friday, saying that the tech giants have gained “too much power over our economy, our society, and our democracy.”

“To restore the balance of power in our democracy, to promote competition, and to ensure that the next generation of technology innovation is as vibrant as the last, it’s time to break up our biggest tech companies,” Warren said in a post on Medium.

{mosads}Warren is the first major 2020 Democratic presidential candidate to call for breaking up companies like Facebook, Google and Amazon, though the idea has gained traction among progressives in recent years amid growing concerns about data privacy and the potential to use social media to spread disinformation.

Warren is hoping to shine a light on the firms’ market power and how it has been used to influence the economy and society as a whole.

“I want a government that makes sure everybody — even the biggest and most powerful companies in America — plays by the rules,” Warren wrote. “And I want to make sure that the next generation of great American tech companies can flourish.”

The high stakes: Such an effort would be a massive undertaking for any administration, likely resulting in years of court battles. But Warren argued that the U.S. has a “long tradition of breaking up companies when they have become too big and dominant ” like AT&T, JPMorgan and Standard Oil.

Tech reacts: Warren’s plan is sure to set off shock waves among the largest tech companies, which have been under siege by policymakers around the world.

Amazon and Facebook declined to comment. A Google spokeswoman did not immediately respond when asked for comment.

“The Warren campaign’s call to breakup big tech companies reflects a ‘big is bad, small is beautiful’ ideology run amok,” the Information Technology and Innovation Foundation, a tech policy think tank, said in a statement.

“Breaking up large Internet companies just because they are large won’t help consumers,” the group added. “It will hurt them by reducing convenience, reducing quality of service and innovation, and in some cases leading to the introduction of priced services.”

NetChoice, a trade association that represents Google and Facebook, blasted Warren’s “hipster” views on antitrust and argued the internet economy is not lacking in competition.

The specifics: In her post, Warren outlined a two-pronged approach to cracking down on internet giants. One part of the plan is to pass legislation that would designate certain large online services as “platform utilities” — companies with annual revenue of more than $25 billion that “offer to the public an online marketplace, an exchange, or a platform for connecting third parties.”

Under her proposal, any company that owns such a platform would be barred from owning any entity that participates on that platform.

Warren also vowed to nominate officials who would unwind past mergers that have been approved by regulators. She singled out as potential targets Amazon subsidiaries Zappos and Whole Foods; Google’s Nest and DoubleClick; and Facebook’s WhatsApp and Instagram.


TECH FLOODS K STREET AHEAD OF DATA PRIVACY FIGHT: K Street is going on a lobbying blitz as lawmakers begin work on drafting the first federal privacy bill, a high-stakes debate for the tech industry.

Lawmakers are still in the early stages, but lobbyists and tech groups are already busy trying to sway a complicated debate – and prepare clients for the massive changes ahead.

“I think the top concern among our clients, both bigger companies and the smaller startups, is that depending on how privacy legislation is drafted, it can affect their business models pretty dramatically,” Greta Joynes, Brownstein senior policy advisor and a leader in the firm’s privacy practice, told The Hill.

The numbers: Google, the Alphabet Inc., subsidiary, spent over $21.2 million on lobbying in 2018 and had 26 firms on retainer, a jump from the $15.4 million spent on 23 firms in 2016.

Amazon has been increasing its D.C. presence, a trend likely to continue with its second headquarters coming to northern Virginia. The company spent $14.4 million on lobbying in 2018, with 16 firms on retainer. The company notably has hired major players — Akin Gump, Brownstein and Squire Patton Boggs, among others–beginning in 2012, when it spent $2.5 million on lobbying.

In 2018, Facebook spent over $12.6 million on lobbying expenditures and had 13 firms on retainer, a big increase from 2016 when it spent just under $8.7 million on six firms.

The divisions: There’s a stark split between what tech industry giants will accept in a privacy bill and what smaller firms are seeking.

Those representing start-ups and smaller firms worry companies like Google and Facebook will set the tone for regulations. Those larger companies would have an advantage complying with new rules. Many are already dealing with GDPR in Europe. A law with tough restrictions on the use of consumer data could also hamper younger competitors.

Others counter that the largest online companies have the most at stake.

“What sort of investment do you have to make in compliance?” Joynes said. “It’s a different level of impact for a smaller company than for one of the big tech players.”

One key focus for smaller tech companies is ensuring that any data law doesn’t impede innovation, John Hayes, the chief technology officer and co-founder of BlackRidge Technologies, which develops cybersecurity products, told The Hill.

“The real challenge the federal government faces is: how do you balance getting what you need and managing and allowing true innovation to occur,” he asked.

More on tech’s lobbying game here.


VAN HOLLEN HOLLERS: Sen. Chris Van Hollen (D-Md.) on Friday asked the Department of Justice (DOJ) to investigate possible attempts by the White House to block the recent $85 billion AT&T-Time Warner merger.

Van Hollen’s letter comes after The New Yorker this week reported that President Trump asked DOJ lawyers to sue to block the deal.

“I request that you open an investigation into whether White House aides and officials have improperly tried to influence DOJ regulators in order to meet the objectives of President Trump,” Van Hollen wrote in his letter to Attorney General William Barr.

Multiple lawmakers and Democratic figures have suggested that Trump sought to block the deal because of his longtime feud with CNN, a channel owned by Time Warner and acquired by AT&T during the merger.

The New Yorker reported that Trump ordered Gary Cohn, then the director of the National Economic Council, to pressure the DOJ to intervene against the merger.

What Van Hollen wants: Van Hollen on Friday called on the DOJ to investigate whether Trump or other White House officials had encouraged the DOJ to oppose the merger. He also asked the DOJ to probe whether the White House had inquired about the Disney-FOX merger, which was approved last year, or any other mergers.

“The President of the United States should not use his office to direct the DOJ to punish those who he perceives to be his adversaries or to reward his friends,” Van Hollen wrote. “This investigation and subsequent report should be made public to the American people to reassure them of the executive branch’s integrity and your agency’s independence.”

Democratic lawmakers in the House have also weighed in following The New Yorker report, questioning whether Trump sought to intervene out of spite for CNN, which he has accused of being biased against his administration. House Judiciary Chairman Jerrold Nadler on Thursday demanded documents from the White House and the DOJ on the merger.

Read more here and here.


WHISTLEBLOWER MANNING JAILED: Former Army intelligence officer Chelsea Manning was jailed Friday for contempt of court after she refused to testify in a closed-door grand jury hearing related to WikiLeaks, the site to which she sent classified documents in 2010.

A statement from Manning’s legal defense team confirmed that the whistleblower was taken into custody by order of a judge until she testified to the grand jury or the panel was dissolved.

“I’ve found you in contempt,” Judge Claude Hilton, a Reagan appointee, told Manning, according to The Washington Post, “either until you purge yourself or the end of the life of the grand jury.”

A brief notice from Manning’s representatives said that a statement was forthcoming. Manning reportedly told journalists outside the courthouse on Friday that she was ready to go to jail and would only testify in a public setting.

“These secret proceedings tend to favor the government,” she told reporters, according to the Post. “I’m always willing to explain things publicly.”

Prosecutors told reporters Friday that they had no wish to hold Manning in custody and added that the facility to which she was headed had experience holding transgender inmates.

“The government does not want to confine Ms. Manning,” said Tracy McCormick. “She could change her mind right now and decide to testify.”

The ruling comes a day after Manning released a lengthy statement asserting that she was prepared to go to jail in order to stand by her principles her demand for public testimony.

Virginia prosecutors want Manning’s testimony as part of an ongoing case against WikiLeaks, the anti-secrecy website that posted thousands of documents related to U.S. warfare in the Middle East in 2010 after obtaining them from Manning.

Julian Assange, the site’s founder, has been living in the Ecuadorian Embassy in London since 2012, originally to avoid a now-dropped rape charge in Sweden and currently to avoid U.S. prosecution, according to his statements.

Manning was convicted of leaking classified documents to the website and sentenced to 35 years in prison in 2013, but she had her sentence commuted by former President Obama four years later.


AN OP-ED TO CHEW ON: The flight of SpaceX’s Dragon and the coming age of commercial spaceflight.


A LIGHTER CLICK: Better than a baby.



YouTube fought Brie Larson trolls by changing its search algorithm. (The Verge)

The sun may be setting on the old privacy rulebook. (Axios)

Does Elizabeth Warren’s break-up plan for the tech giants mark the end of a political romance? (The Washington Post)

An email marketing company left 809 million records exposed online. (Wired)

The man deciding Facebook’s fate. (The New York Times)

Tags Chris Van Hollen Donald Trump Elizabeth Warren Gary Cohn Jerrold Nadler
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