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Biden’s gameplan against tech giants faces new legal dangers

1 week ago 32

The Biden administration’s aggressive attempt to regulate tech and telecom giants like Google, Meta and Verizon has relied on the power of federal agencies, which have proposed sweeping rules for the internet age amid inaction in Congress.

The dynamic has granted outsize influence to enforcers at the Federal Trade Commission and Federal Communications Commission, among other agencies, who have pressed to rein in alleged misconduct by industry titans.

The strategy is now under threat after the Supreme Court curtailed agencies’ powers in a landmark ruling, overturning a decades-old legal precedent giving agencies greater leeway to interpret ambiguous federal laws. The court’s decision Loper Bright Enterprises v. Raimondo last week, striking down a principle known as the Chevron deference, has given business and industry groups ammunition to thwart tighter tech regulations proposed by the administration — imperiling some of the most significant actions ever by the U.S. government to check the world’s most powerful companies. If they succeed in slowing regulation, it could put the United States further behind its counterparts in Europe, who have moved more swiftly to set new rules.

Agencies are advancing a raft of proposals to increase oversight of the tech and telecom sectors, including restoring the Obama-era net neutrality regulations, imposing new data privacy regulations on companies and requiring that gig economy workers be treated as employees.

The decision’s full impact is unclear and likely to play out over many years, but it’s poised to pressure Congress to legislate on tech instead — a prospect many view as far-flung.

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“What this really has done is to create a tremendous amount of uncertainty over everything,” said Harold Feld, senior vice president at the consumer advocacy group Public Knowledge.

In April, the FCC reinstated net neutrality regulations that enable greater oversight of internet service providers (ISPs) like Comcast and AT&T, fulfilling a signature pledge by President Biden. But the Supreme Court’s decision on Chevron already has telecom lawyers scrambling to determine if it could unwind the agency’s plans. Others say the impact could be felt even further, implicating rules aimed at preventing “digital discrimination.”

The U.S. Court of Appeals for the 6th Circuit is considering an industry challenge alleging the agency’s net neutrality order amounts to regulatory overreach. The same day of the Loper Bright decision, the court asked the Ohio Telecom Association, Texas Cable Association and other parties to the case to submit briefs by Monday on how the new ruling affects their case.

Helgi Walker, an attorney representing the wireless association CTIA in the proceedings against the FCC, said Loper Bright would be “contextually helpful” for their case. Walker said the courts “should be taking a skeptical eye” to the agency’s authority.

Andrew Schwartzman, senior counselor at the Benton Institute for Broadband and Society, who is working on the case in support of the FCC, said he plans to argue that Loper Bright doesn’t affect the net neutrality issue “much, if at all,” though he concedes it has made the landscape more challenging. “The decision will undoubtedly make it much harder for the FCC to defend its decision in the years to come,” he said.

The FCC said in a statement it is reviewing the impacts of Loper Bright on the agency, but that it didn’t believe the decision undermined its net neutrality rules because it “did not rely on Chevron deference for authority.” But the Supreme Court has previously linked the two, invoking Chevron deference in a 2005 case that upheld the FCC’s regulatory power over internet provision.

Meanwhile, critics of the FTC are celebrating the Chevron ruling and warning that it gives them a new cudgel to beat back any attempts by the agency — a linchpin of the Biden administration’s efforts — to stretch its authority on tech.

“The FTC should really think twice now before trying to implement comprehensive privacy or AI rules,” said Daryl Joseffer, chief counsel for the Chamber of Commerce’s litigation center, which has filed over a dozen challenges against the Biden administration’s attempts to check major businesses.

The FTC has proposed more narrow rules to combat the use of AI for impersonation, but to date has not launched a broader campaign to craft rules for the use of AI across the economy.

Consumer advocates have expressed concern that the Supreme Court’s ruling could kneecap future AI endeavors across the federal government.

Tom Wheeler, who served as FCC chairman under former president Barack Obama, said that our “digital realities are now on steroids with AI,” and yet, “it appears as though the Supreme Court just limited the ability of expert agencies to deal with the impact of that digital revolution.”

The FTC has separately been exploring sweeping new rules to crack down on what it calls “commercial surveillance” — the mass collection of and sale of consumer’s personal data that is the lifeblood of vast swaths of the tech sector. The Chevron decision could give business groups like the Chamber of Commerce fresh ammunition to target any rules that come out of that process.

Ryan Quillian, a former manager of the FTC’s tech enforcement division, said the agency’s ability to craft rules on consumer protection issues like privacy has generally been less contested, but Chevron could factor into areas where they are “trying to expand their authority,” like around unfair methods of competition.

“We don’t expect the court’s ruling on Chevron is going to have a significant impact on agency efforts to protect consumers on issues like privacy and safeguard fair and competitive markets including for innovative new products like AI,” FTC spokesperson Douglas Farrar said.

Joseffer said “Chevron’s demise” is also likely to be “materially important” in an ongoing lawsuit by the Chamber of Commerce and other business groups to halt a Labor Department rule aimed at preventing gig economy companies from treating workers as contractors rather than employees. The department did not return a request for comment.

White House spokesperson Robyn Patterson said the Chevron ruling “doesn’t change the President’s unwavering commitment to protecting Americans from the harms associated with social media and other emerging technologies” and that it “underscores the importance of the actions President Biden has already taken as well as the urgent need for Congress to pass legislation.”

Many in the technology industry view the Supreme Court’s decision overturning Chevron as a positive, according to Jason Mulvihill, founder and president of Capitol Asset Strategies, a policy and regulatory consulting firm. Mulvihill predicted that the ruling will make “laws more specific and regulators more humble.”

But Nik Marda, technical lead for AI governance at Mozilla, said agencies have been one of the “bright spots'' when it comes to setting effective guardrails for tech companies as Congress has struggled to pass tech regulation. Government agencies also have more technical expertise than Congress or the courts, making them better at tracking and understanding changes in tech, he said.

Steven Augustino, a tech regulation attorney at Nelson Mullins, called the idea that lawmakers on could fill more of the gaps on tech rules in the wake of the Chevron ruling “wishful thinking.”

“It’s hard enough to get Congress to act at all,” Augustino said. “The idea that these intractable questions are going to be hammered out in the legislation seems quite a heavy lift.”

Tony Romm, Gerrit De Vynck, Cat Zakrzewski and Lisa Bonos contributed to this report.

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