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Summary: US proposes new regulatory body to oversee “powerful” tech sector

The Bill also proposes a carve-out for small tech companies.

“The new Federal Digital Platform Commission would have the mandate, jurisdiction, and broad set of tools to develop and enforce thoughtful guardrails for a sector that has been left for too long to write its own rules, with serious consequences for everything from teen mental health to disinformation to anticompetitive practices that have hurt small businesses,” US Senator Michael Bennet said on May 12 while introducing the Digital Platform Commission Bill.

The proposed bill looks to create an overarching regulatory body for the US tech sector akin to the Federal Communications Commission for the communications sector and Securities and Exchange Commission for markets. The proposed watchdog will oversee tech companies from social media platforms to e-commerce companies to app stores, with the exception of platforms run by small businesses. “We don’t have to choose between letting digital platforms write their own rules, allowing competitors like China and the E.U. write those rules, or leaving it to politicians in Congress. We should follow the long precedent in American history of empowering an expert body to protect the public interest through common-sense rules and oversight for complex and powerful sectors of the economy,” Bennet remarked.

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What’s the need for the Digital Platform Commission Bill?

  1. Big Tech is too powerful and unregulated: “In recent years, a few digital platforms have benefitted from the combination of economies of scale, network effects, and unique characteristics of the digital marketplace to achieve vast power over the economy, society, and democracy of the United States [and despite this] digital platforms remain largely unregulated,” the Bill explains.
  2. This power has led to demonstrable harm: Some of the most powerful digital platforms have at times produced demonstrable harm, including undercutting small businesses, enabling addiction and other harms to the mental health, disseminating disinformation and hate speech, undermining privacy and monetizing the personal data, etc, the Bill states.
  3. Congress has so far only come up with narrow solutions: Bennet complained that the US Congress has failed to keep pace with fast-moving developments in the tech sector and instead has only offered narrow, reactive solutions after problems have arisen. “The last time Congress enacted legislation to meaningfully regulate the technology or telecommunications sector was the Telecommunications Act of 1996, years before many of today’s largest digital platforms even existed,” the Bill states.
  4. DOJ and FTC have done commendable work but lack the required resources: Bennet acknowledged the work done by the Federal Trade Commission and the Department of Justice in enforcing existing antitrust and consumer protection laws, but noted that these bodies “lack the expert staff, resources, and tech-oriented culture necessary for robust and sustained oversight.” Bennet also pointed out that antitrust and consumer protection laws do not capture issues like disinformation to addiction to the evisceration of local journalism that is present in the tech sector.
  5. The tech sector needs a federal body like other sectors: “This is not the first time a new sector of the economy has emerged to amass extraordinary and unregulated power. In the past, Congress has answered these developments by creating expert federal bodies empowered to provide timely, thoughtful, and durable regulations. Looking back, it is hard to imagine America without the expert oversight of the Food and Drug Administration, the Federal Communications Commission, or the Securities and Exchange Commission. […] No such body currently exists for digital platforms,” Bennet noted while pitching for the Digital Platform Commission.

What will be the role of the Digital Platform Commission?

The Bill proposes to establish a Federal Digital Platform Commission (DPC) that is empowered to hold hearings, pursue investigations, conduct research, and engage in public rule-making to promote:

  1. Access to digital platforms for civic engagement and economic and educational opportunities.
    • Definition of a digital platform: An online service that serves as an intermediary facilitating interactions between consumers, or between consumers and entities offering goods and services. This includes online services directly offering goods and services, provided they are not a de minimis part of the digital platform’s overall business. It excludes the websites of news organizations and small businesses, with the latter based on a definition the Small Business Administration will determine within six months.
  2. Access to government services and public safety.
  3. Competition and consumer welfare, such as lower prices and better quality of service.
  4. Prevention of harmful levels of concentration of private power over critical digital infrastructure.
  5. A robust and competitive marketplace of ideas.
  6. Protection for consumers from deceptive, unfair, unjust, unreasonable, or abusive practices committed by digital platforms.
  7. Assurance that the algorithmic processes of digital platforms are fair, transparent, and safe.
    • Definition of Algorithmic Process: A computational process, including one derived from AI, that processes personal information or other data to determine how information is presented to users of a digital platform, including commercial content, social media posts, and search results.

Rule-making an investigative authority: The Act establishes the Commission’s authority to promulgate rules and directs it to tailor any such rules, as appropriate, based on the size, dominance, or other attributes of particular digital platforms. The Act also allows the Commission to inquire into the management and business practices of digital platforms subject to this Act and obtain information from those platforms necessary to carry out its duties.

What is the jurisdiction of the Commission?

  1. All digital platforms with US connection: The Bill establishes the jurisdiction of the DPC over all digital platforms which originate from or provide services in the United States or affecting interstate or foreign commerce.
  2. Additional jurisdiction over Systemically Important Digital Platforms: The Bill includes a special designation for larger platforms, based on attributes outlined further below, allowing for additional regulation and oversight by the Commission. For platforms designated as Systemically Important Digital Platforms, the Commission can decide within six months whether to issue rules concerning:
    • Data portability and interoperability.
    • Requirements for algorithmic systems to be fair, transparent, and without harmful or anticompetitive bias.
    • Transparency requirements for terms of service, including content moderation policies.
    • Requirements for regular public risk assessments about the distribution of harmful content on the platform and steps the platform is taking to mitigate those harms.
    • General transparency and disclosure obligation to enable oversight by the Commission, third-party audits, and trusted third-party research.
    • Accessibility for users from certain populations, such as individuals who are blind.
  3. Power to expand or restrict jurisdiction: The Bill grants the DPC flexibility to expand or restrict its jurisdiction over a digital platform or class of digital platforms.
  4. Platforms can seek forbearance: The Bill allows any digital platform to petition the DPC to forebear the application of its rules, codes, standards, or other policies. If the Commission does not grant the petition within 18 months, it is dismissed without prejudice. The Commission may grant or deny the petition, subject to the Administrative Procedures Act.

What are systemically important digital platforms?

The Commission can designate platforms as systemically important digital platforms based on the following criteria:

  1. Open to the public on one side and has significant engagement among users, which may take the form of private groups, public groups, and the sharing of posts visible to some or all users;
  2. Conducts business primarily at the interstate or international level, as opposed to the intrastate level;
  3. Has operations with significant nationwide economic, social, or political impacts, which the Commission will define through a public rulemaking process. Attributes the Commission may consider in determining what constitutes this include:
    • The ability of the platform to significantly shape the dissemination of news
    • The ability of the platform to cause a significant person immediate and demonstrable economic, social, or political harm by exclusion from the platform
    • The platform’s market power
    • The platform’s unique daily users
    • The dependence of business users on the platform to reach customers

The Commission can promulgate rules specific to systemically important digital platforms and may also require annual reports from them.

How will the Commission be organised?

  1. Five commissioners appointed by the President: The Digital Platform Commission will have five commissioners, including one chair, appointed by the President and confirmed by the Senate for five-year terms. The Bill also lays out the duties of the Chair and other commissioners.
  2. Qualifications for the commissioners: The commissioners must be US citizens and they or their immediate family should not have any financial interest in any of the regulated platforms. Additionally, there can be no more than three commissioners of the same political party.
  3. Staff with relevant skills in technology: The Commission can appoint officers, engineers, accountants, attorneys, inspectors, examiners, and other employees as are necessary in the exercise of its functions. The Commission may also recruit and train volunteers to help monitor violations of this Act or regulation prescribed by the Commission. The Bill requires the Commission to prioritize the hiring of staff with a demonstrated academic or professional background in computer science, data science, application development, technology policy, and other areas the Commission may determine necessary to perform its functions.
  4. Location: The DPC will be located in Washington, D.C. but may hold special sessions across the country.
  5. Meetings: The Commission must hold at least one meeting a month.

What is the Code Council and what role will it play?

  1. A council of technical experts to help frame policies: The Bill directs the DPC to establish a Code Council of technical experts and representatives from industry and civil society to develop and propose voluntary or enforceable behavioural codes, technical standards, or other policies for digital platforms.
  2. Members of the Code Council: The Council would comprise 18 members appointed by the Chair of the DPC, including 6 representatives of digital platforms, 6 representatives from nonprofit public interests groups, academics, and other financially disinterested experts, and 6 technical experts from fields like data science, communications, and engineering. They will have a term of 3 years.
  3. The process to introduce or revise policies: The Council can propose policies through a “code process” which can be initiated either by the Commission or the Council. If the “code process” is initiated, the Council will allow for feedback from interested parties, make public the factual record, and vote on whether to submit a recommendation to the Commission for a proposed code, standard, or policy. It can complete this process no earlier than six months, but not later than one year. After the Commission receives the Council’s recommendation, it must decide whether to approve or reject it no earlier than 45 days and no later than 90 days. The Commission can also review and update any code, standard, or other policy established through the “code council” process.
  4. Standard-rule making process exists regardless: The “code process” does not preclude the Commission from issuing codes, standards, or policies through its standard rule-making process and no recommendation of the Council is binding without approval by the Commission.

How will the DPC work with other regulators?

  1. MoUs with other regulators for overlapping jurisdiction: The Digital Platform Commission shall enter into memoranda of understanding (MoU) with the Federal Communications Commission (FCC), the Federal Trade Commission (FTC), and the Department of Justice (DOJ) to ensure maximum coordination, collaboration, and effective use of federal resources in areas of overlapping jurisdiction.
  2. DPC must provide support to other regulators: The Bill requires the Commission to provide support to any other federal agency that requests its expertise or technical assistance.
  3. Other regulators must seek DPC advice on relevant matters: Any federal agency, including the FTC and DOJ, engaged in activities concerning digital platforms must consult with the DPC in carrying out that work. The Bill similarly requires the Commission to consult with other federal agencies in doing the same.
  4. Role in approving mergers involving systemically important digital platforms: The Commission will receive any Hart-Scott-Rodino (HSR) filing for a merger involving a systemically important digital platform and may request additional information from the merging parties. Based on its analysis, the Commission may provide a recommendation to the DOJ and FTC about whether to allow the merger or not and the DOJ and FTC must give the recommendation substantial weight, the Bill states.

How does the Bill seek to enable research in this sector?

  1. Establishment of a Research Office: The Bill proposes establishing a Research Office at the Commission to conduct internal research, collaborate with outside academics and experts, and competitively award grants to conduct research consistent with the purposes of the Commission.
  2. Sharing of data collected by platforms with researchers: The Bill proposes establishing a pilot programme that allows vetted, financially disinterested experts to access data collected from a digital platform by the Commission to conduct research in the public interest while ensuring protections for user data and the digital platform’s business interests.

How will the Bill be enforced?

  1. Complaints by private persons and governmental entities: The Bill allows anyone damaged by a digital platform to complain to the Commission or bring a civil action to petition for the enforcement of any provision in the Bill. If a digital platform does not satisfy this complaint, the Commission shall investigate the matter. It will conclude this investigation within six months, and as a result of the investigation, may order the digital platform to pay the complainant for relief.
  2. By the Commission and Department of Justice: The DPC may issue an order to cause a person violating this Bill to cease and desist or pay restitution and can also establish a civil penalty for any digital platform that knowingly violates this Bill.
  3. Penalties up to 15 percent of turnover: The Commission can establish penalties in an amount it deems necessary to deter future violations but the total amount of civil penalties imposed on a digital platform during a year can be no more than 15 percent of its total global revenue in the preceding year.
  4. Appeals: The Bill allows platforms to appeal any decision or order by the Commission to the U.S. District Court for the District of Columbia or any district court in which the platform resides.

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