An Epic Regulatory Showdown between Social Media Giants and the Government is Coming Soon

By Jack J. Kelly

The clash of technology companies and U.S. lawmakers over the need for new regulations targeting political ads has just begun.

This week the Senate Intelligence Committee held a hearing intensely focusing upon social media’s role in the 2016 election, relative to alleged Russian meddling.  Lawyers from Google, Twitter and Facebook were dragged to Washington, DC, paraded in front of Congress, testified, and then verbally assaulted by politicians trying to get facetime on television.  The CEOs of these companies were smart enough to stay home and avoid the public lashings, (there is a reason why they are CEOs and multi-billionaires, while their attorneys are only lowly multi-millionaires).

One of the highlights (or lowlights depending upon your politics), of the charade was when Senator Al Franken (yes, the guy from the old Saturday Night Live days) engaged in a semi-comedy routine relentlessly mocking Facebook’s attorneys for allowing the social media behemoth to accept payments for US political ads in rubles and not connecting it to Russian involvement.

The big moment of fear came from Senator John Kennedy (yes, he is related to the  thousands of other Kennedys holding or previously holding political office).  Kennedy said to the executives, “I don’t believe you have the ability to identify all your advertisers“, and then added menacingly, “I don’t believe you have control over what’s really happening on your internet space”.

When the Senators are grandstanding on TV, which they love to do, and asserting that ads on the social media platforms caused chaos, plus the execs can’t seem capable of handling this problem themselves, then there’s only one draconian solution left, (cue the scary, ominous music) — the federal government and regulators will have to do it for them! 

If that’s what happens, and it very well may occur (unless these Senators get some really big contributions to their reelection campaigns from the techies), a regulatory change could be coming fast.

Tech companies are understandably worried that the fun and carefree days of being overlooked by regulators are over.  It will most likely start with political ads being regulated, followed by other areas of their businesses.

A small number of media companies, including Facebook, Google, Amazon and Twitter, rule the internet like an old-fashioned oligarchy.  These media companies are not dominating everything online and have minted many billionaires because they are stupid.  The executives realize that they have been getting away with the “aw shucks, we’re just nerdy guys in hoodies, jeans and flops” shtick for far too long.  They know the reality is far from that.

The people running these companies are smart, sharp business people and recognize that they are underneath the regulatory radar.  They are savvy enough to have learned lessons from watching other industries such as Wall Street, finance and banking getting pummeled by regulators, tied-up in restrictive red tape,  and forced to pay billions in fines and legal costs. Once the government and regulators get their claws into you, they will never let go.  I’m sure that they are getting a little nervous and anxious.

Be prepared for an upcoming  showdown between tech titans and regulators.

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