A Big Defeat for Big Tech

JOSEPH E. STIGLITZ

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Last year, US President Joe Biden’s administration infuriated lobbyists representing Big Tech firms and others that profit from our personal data by denouncing a proposal that would have gutted domestic data privacy, online civil rights and liberties, and competition safeguards. Now, Biden’s new executive order on Americans’ data security reveals that the lobbyists had good reason to worry.

After decades of data brokers and tech platforms exploiting Americans’ personal data without any oversight or restrictions, the Biden administration has announced that it will ban the transfer of certain kinds of data to China and other countries of concern. It is a small, but important, step toward protecting Americans’ sensitive personal information, in addition to government-related data.

Moreover, the order is likely a precursor to additional policy responses. Americans are rightly worried about what is happening online, and their concerns extend well beyond privacy violations to a host of other digital harms, such as mis- and disinformation, social media-induced teenage anxiety, and racial incitement.

The firms that make money from our data (including personal medical, financial, and geolocation information) have spent years trying to equate “free flows of data” with free speech. They will try to frame any Biden administration public-interest protections as an effort to shut down access to news websites, cripple the internet, and empower authoritarians. That is nonsense.

Tech companies know that if there is an open, democratic debate, consumers’ concerns about digital safeguards will easily trump concerns about their profit margins. Industry lobbyists thus have been busy trying to short-circuit the democratic process. One of their methods is to press for obscure trade provisions aimed at circumscribing what the United States and other countries can do to protect personal data.

It might seem obvious that a US president should protect Americans’ privacy and national security, both of which could be jeopardized depending on how and where the vast amounts of data that we all generate are processed and stored. Yet, amazingly, former President Donald Trump’s administration sought to prohibit the US from placing any restrictions on “the cross-border transfer of information, including personal information” to any country if such transfers were related to the business of any investor or service provider operating in the US or other countries signing the agreement.

The Trump administration’s proposal to include this rule in the World Trade Organization did provide for one exception, which ostensibly would allow some regulation “necessary to achieve a legitimate public policy objective,” but it was designed not to work in practice. While Big Tech lobbyists cite the exception to rebut criticism of the broader proposal, the provision’s language comes straight from a WTO “General Exception” that has failed in 46 of 48 attempted uses.

The ban on cross-border data regulation was just one of four proposals that Big Tech lobbyists convinced Trump officials to slip into the revised North American Free Trade Agreement and to propose at WTO-related talks. Written in arcane jargon and buried among hundreds of pages of trade-pact language, these provisions were misleadingly branded as “digital trade” rules.

By prohibiting governments from adopting certain policies, the proposal’s industry-written terms threatened bipartisan efforts in the US Congress to counter Big Tech’s abuses of consumers, workers, and smaller businesses. They also undercut the US regulatory agencies responsible for protecting our privacy and civil rights, and for enforcing antitrust policy. In fact, had the Trump-era rules banning government restrictions on data flows gone into effect at the WTO, they would have barred the Biden administration’s own new data-security policy.

Few people realized the Trump-era proposal even existed – except, of course, for the lobbyists who had been quietly commandeering trade talks. While no previous US trade pacts had included provisions pre-empting executive and congressional authority over data regulation, digital platforms suddenly would have been granted special secrecy rights. The kinds of algorithmic assessments and AI pre-screenings that Congress and executive-branch agencies deem critical to protecting the public interest would have been banned.

After Trump’s loss in the 2020 election, industry lobbyists still hoped to make these anomalous rules a new norm. Their plan was to get the same provisions added to a Biden administration agreement called the Indo-Pacific Economic Framework. But instead of going with the lobbyists, Biden administration officials worked with Congress to determine that the Trump-era proposals were not compatible with congressional and administration goals for digital privacy, competition, and regulation.

Now, we can understand why tech lobbyists were so incensed by the Biden administration’s decision to withdraw support for the Trump-era proposal. They recognized that by casting aside Big Tech’s favored “digital trade” handcuffs, the Biden administration was reasserting its authority to regulate the large platforms and data brokers that Americans across the political spectrum think have too much power. Trade agreements have gotten a bad name precisely because of this kind of behavior by corporate lobbyists.

The US needs a robust debate about how best to regulate Big Tech, and over how to maintain competition while preventing the digital harms that are stoking political polarization and undermining democracy. Obviously, the debate should not be tethered by constraints imposed surreptitiously by Big Tech through trade agreements. US Trade Representative Katherine Tai is exactly right when she says that it would be “policy malpractice” to lock in trade rules limiting action on these matters before the US government has established its own domestic approach.

Whatever one’s position on the regulation of Big Tech – whether one believes that its anti-competitive practices and social harms should be restricted or not – anyone who believes in democracy should applaud the Biden administration for its refusal to put the cart before the horse. The US, like other countries, should decide its digital policy democratically. If that happens, I suspect the outcome will be a far cry from what Big Tech and its lobbyists were pushing for.