ChIPs Global Summit Report 1: Politics and Technology - When D.C. met Silicon Valley

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The AmeriKat was back in Washington D.C. at the ChIPs Global Summit this week for three days of sessions on technology, law and policy.   This year the theme of the Global Summit is "Exploring New Fronts" covering cutting-edge developments in the law, the shifting regulatory landscape for technology companies, challenges facing general counsel, and diversity and inclusion strategies available. At the heart of ChIPs is its mission statement in increasing diversity and supporting women in these areas for the benefit of all society.  After an introduction from Mallun Yen (Co-Founder of ChIPs) (more on that later), Sarita Venkat (Director of ServiceNow) took the stage to expertly chair the first panel of Wednesday on "Technology and Politics:  Take 2" with Jamie Gorelick (WilmerHale), Karen Dunn (Boies Schiller) and Juleanna Glover (RidgelyWalsh).  The opinions expressed by the panel were their own personal views, not of their firms' or clients'.

These panelists were back again after last year when they correctly predicted that, after years of circling each other interest, Washington D.C. was finally going to start examining Silicon Valley with the specter of regulation.  This followed the 2016 Presidential election where tensions were extremely high between D.C. and Silicon Valley on issues ranging from immigration to the use (or misuse) of social media in campaigning.  The panel had predicted that a combination of politicians from the left and right would focus on the power of companies in Silicon Valley and the essentially unregulated nature of the industry.  The panel's message in 2017 was that Silicon Valley needed to start strategizing, self-regulating and engaging with D.C. to avoid D.C. from taking over and regulating the tech industry for them. Over the past year industry has stepped up to the task, engaging with legislators and testifying before committees.  The key message from the panel this year, was that tech companies (both big and small) needed to continue their efforts in educating legislators and engaging with them on potential legislative frameworks.  They could not become complacent.

The AmeriKat summarizes the Top 6 key takeaways from the panel:

Jamie Gorelick (WilmerHale)

1.  The introduction of the EU General Data Protection Regulation (GDPR) has done a lot to aid further thought about whether there will be regulatory intervention in the tech industry in the US.  Jamie noted that features of the GDPR have migrated to the US at the state level.  She cautioned that once state regulation is in place, then there will be a patchwork of conflicting laws that companies have to navigate.  This has focused companies to evaluate how they can build business in such an environment and noted that some companies which are based on the platform model, may feel threatened by this.

2.  The events of Cambridge Analytica also fueled the need to proactively engage with D.C. and with potential legislation, Karen explained.  The last year has seen several tech companies come to D.C. to testify on their companies and practices.  She noted that several weeks ago, for example, a number of tech companies sent representatives to a Senate Commerce committee hearing on privacy and security.  The level of engagement by tech companies is continuing. She explained companies are coming to Congress saying that they want legislation.  However, they are saying that such legislation needs to be comprehensive omnibus legislation.  This effectively turns the tables on Washington.  This is a daunting task for legislators (given how long such legislation may take), especially in circumstances where Washington has never really understood the tech industry. 

Karen Dunn (Boies Schiller)

3.  D.C. has a better understanding of Silicon Valley (at least of the larger companies), but it is by no way complete:  Juleanna noted that she thought that the Senators have an increased understanding of the industry and have a grasp of the treeline view of issues, but was under no delusions that there was still more education that needed to be done.  The tech companies who have been coming to D.C. have been very prepared and  have performed well during their testimony.  However, these are the large companies.  It was noted by Karen, that Washington may sometimes cast all tech companies in the shadow of large companies like Google and Facebook.  But not all tech companies are created equally - they have different business models and resources.  Karen noted that at a recent hearing, the committee was surprised to learn that Twitter had only 2300 employees, as compared to Google's 88,000 or Facebook's 25,000 - which thus meant complying with the GDPR obligations can be more challenging for a company of Twitter's size when compared to the number of users on their platform.  This, Karen noted, seemed to be an "A-ha" moment from the committee.  Thus, companies  - especially smaller tech companies -  needed to engage with the process and explain to the legislators what their differentiating features were, as right now the debate risks being influenced only by the largest tech companies.  Karen explained that we are at a basic stage, where things that are very obvious to us, are new and fascinating to those regulating the industry.

Juleanna Glover (RidgelyWalsh)

4.  Regulation has its limitations:  In response to Sarita's question as to how one goes about teaching legislators that regulation can stifle competition, Jamie explained that regulation is not necessarily a bad thing.  She stated that in the US, we have had swings between laissez-faire capitalism and regulation.  In Jamie's opinion, she did not think that, for the most part, Americans believed in either one or the other. These swings and re-balancing are healthy.  But she did believe that Americans felt that there has to be a degree of regulation when the market cannot regulate itself.  However, when regulation is needed, there needs to be a degree of "regulatory humility".  Regulators tend to want to regulate.  But regulators are not going to be able to predict the future of technology.  The requirements that they may put on someone today, may have an undesired impact on someone who comes to the market with a new innovation not previously contemplated by a regulatory framework.  Jamie said that this point has to be driven home.  For example, companies like Google and Facebook who used to operate in parallel, now compete with each other.  This was not predicted a few years ago.  There are many other examples of that.  She considered that the regulators themselves are aware of this uncertainty, but it is important that legislators do not use regulation as a blunt instrument as it has its own limitations as to what it can achieve in an industry where the speed of innovation is so great.

Sarita Venkat (ServiceNow)

5.  Tech companies must continue to engage and not let their guard down.  Omnibus legislation is a serious prospect.  Companies, equipped with their superior knowledge of their own company and the industry at large, must continue to engage with Washington.  Companies and their executives who come to D.C. and do so get credit from the Senate (i.e. "When I asked Mark Zukerberg that question this is what he said to me, what is your answer?).   Karen cautioned that if another Cambridge Analytica event happened now, we might see draft legislation appear a lot quicker.  She urged that advisers get to their boards now and encourage them to engage with Washington.  Expanding on this urgency, it was commented that it was likely that every aspiring chairperson in the judiciary or commerce committees probably had a bill in their drawer that they think would be a fix for these issues (i.e. a Senator Sarbanes experience), especially those junior senators who are looking to make a name for themselves.   Juleanna noted that there are a lot of ideas out of there, but the question for Silicon Valley was which of the ideas are ones that industry consider are a constructive framework in which to legislate.  

6.  The Midterms may stall this issue or it may speed it up:  With the Midterms coming up in a couple of weeks, Sarita asked the panel to predict how they thought it was going to play out.  On the prediction that the Senate would stay with the Republicans and Congress go to the Democrats, the panel agreed there would likely be more hearings held in the Senate (and indeed it was commented that there were likely to be subpoenas already in Senators' drawers ready for that moment).  It was also noted that there may be some increasing activism in Congress on the issue.  However, opinion was divided as to whether a split legislature would mean a deadlock (which Jamie noted has been historically good for business), or would increase action in an area where the parties can agree (i.e. on the tech industry, as noted by Karen).  It was commented that, in any event, Google and Facebook were likely to again be in the spotlight, especially on issues of privacy.