Last week, Lina Khan, a Columbia Law professor who built her reputation on progressive antitrust policies, was sworn in as chair of the Federal Trade Commission. Her confirmation came just days after Congress introduced five antitrust bills specifically targeting Amazon, Google, Apple, and Facebook (the so-called “Big Four”) for their anticompetitive practices.
While Khan’s 69-28 Senate confirmation seems to indicate a bipartisan push for greater regulation of tech companies, she’ll be entering an agency juggling a monumental lawsuit with very few resources. The FTC launched more than 40 antitrust lawsuits during the pandemic, including a landmark case against Facebook over its illegal monopolization of social network services.
Leaked audio from Mark Zuckerberg in 2019 indicated that the company wouldn’t go down easy against the U.S. government, with the social media mogul stating, “ I don’t want to have a major lawsuit against our own government… But look, at the end of the day, if someone’s going to try to threaten something that existential, you go to the mat and you fight.”
Confronting a billion-dollar company like Facebook requires an enormous expenditure of time and resources. Cases taken up by the FTC cost the agency enormously in fees paid to outside consultants and economists, who can charge as much as $1,350 an hour. At the same time, corporate merger filing fees have fallen during the pandemic, which traditionally serve as a major cash flow for the agency.
According to emails obtained by POLITICO, the lack of funding is also taking its toll on FTC staffing and resources. “[W]e will either need to bring fewer expert intensive cases or significantly decrease our litigation costs (e.g. experts, transcripts, litigation support contractors, etc.),” Executive Director David Robbins said in an October 29, 2020 email.
Robbins said in later emails that the agency would be freezing all hiring, promotions, and end-of-the-year bonuses indefinitely. The FTC may see funding increases in 2021 if Congress passes bills like the U.S. Innovation and Competition Act, which would allow the agency to increase their merger filing fees. However, it’s still unclear how much these fees would be raised and when the new payment schedule could be applied.
But that’s not all—Khan will also be facing a legal system that has had a traditionally narrow view on what constitutes monopolistic behavior.
The two primary laws regulating antitrust, the Sherman Act and the Clayton Act, were both passed over a century ago, and even at the time, pro-labor groups lamented these acts were watered down through the heavily lobbied legislative process. Since these acts were passed, courts have erred on the side of underenforcement of antitrust and made it increasingly difficult to successfully challenge anticompetitive conduct.
According to a report by Democratic members of House Judiciary Committee, which was written with the help of Lina Khan last year, “By adopting a narrow construction of ‘consumer welfare’ as the sole goal of the antitrust laws, the Supreme Court has limited the analysis of competitive harm to focus primarily on price and output rather than the competitive process—contravening legislative history and legislative intent.”
These outdated legal structures are difficult to apply to modern digital companies, with Khan’s own work centering on this tension. In 2017, she gained recognition for her piece “Amazon’s Antitrust Paradox”, which makes the case for evaluating antitrust violations on a different standard than consumer welfare. Consumer welfare cases rely on proving that a company’s high prices are negatively impacting consumers. This legal standard doesn’t really work for companies like Amazon, which offers affordable products, while potentially using predatory pricing and data insights from their platforms to edge out smaller competitors.
As former FTC chairman William Kovacic told The New York Times, “If you want your vision to endure, you have to change law and policy, and you can’t do that by yourself.”
Europe has ramped up Big Tech antitrust enforcement over the past decade, bringing major cases against companies like Google, while the U.S. has lagged behind. The European Commission issued billions of dollars in fines against Google for antitrust violations, while the FTC’s antitrust investigation resulted in a recommendation to not pursue a case against the company. However, leaked FTC documents later revealed that the agency privately concluded that Google had committed three counts of monopolistic abuses of power against its competitors.
Khan’s appointment and new legislation signal a desire from Congress to speed up antitrust enforcement, but it’s going to be a long fight that requires agreement from the FTC, Congress, and the courts. If Congress is serious about cracking down on Big Tech, it will need to equip Khan and the FTC with the tools necessary to get the job done. If not, the FTC may again be resigned to only privately acknowledging wrongdoing, while publicly letting companies off the hook.
To read more on the history of antitrust regulation in America, and the difficulty of regulating Big Tech companies under current regulatory structures, see The New Center’s policy paper, “How Can Washington Take On Big Tech? The Digital Commerce Agency.”
5G’s time has finally arrived, as it is becoming one of the most valuable tools in promoting American innovation and competitiveness in emerging technology. However, despite the growing importance of high-speed connectivity, the United States—which paced the world in developing so many other transformative technologies—is falling behind in the race to 5G. The New Center policy analyst Olive Morris checks in with Doug Smith, the CEO of Ligado Networks, to explore the potential benefits of and barriers to efficient 5G rollout in America.
*This transcript has been edited for clarity.
Olive Morris [00:03]: Hi there. Welcome to a new episode of The New Center podcast. Today, we’re discussing the potential benefits and applications of 5G-enabled services and the challenges facing 5G rollout in America. I’m Olive Morris, a policy analyst at The New Center. A few weeks ago, I spoke with Doug Smith, the CEO of Ligado, an American mobile communications company developing next-generation solutions to support the emerging 5G market. Doug is a real expert in this space—he’s been involved with the development of nationwide cellular networks, spanning every generation of technology, from the first analog networks to the 5G networks that everyone is talking abut now. Here’s our interview on the importance of efficient 5G rollout in America.
OM [00:47]: Thanks for joining us today.
Doug Smith [00:53]: Absolutely. Let me just start by saying it is great to be with you today. It’s wonderful to talk with places like The New Center that are focused on solving the big problems that we face. We consider ourselves problem solvers at Ligado, too, and it’s never been more necessary than over the past year, the year that upended how we work and live. Like every business, we’ve had to adjust how we work, where we work, and when we work. Many of us have young kids at home and their schedules have been changing and we’ve had to adapt to all that.
On the work front, I’m particularly proud of our satellite team. Throughout the entirety of this past year, we have a satellite team that runs our operation center—really critical, important services—and they’ve been there every minute of every day to make sure that we’re providing the connectivity that our mobile satellite customers rely on day in and day out, and certainly have over the course of this last year during the pandemic. There’s really just no question that this past year underscored the necessity of connectivity.
Let me just take a step back and talk to you about who we are. Ligado is a mobile communications company. We operate our mobile satellite network across all of North America, and we provide services to both government and commercial customers. We’ve served the FBI and FEMA, for example, for more than 20 years with extremely reliable and critical communication services. You know, one of the evidences we see of how important they are is that we consistently see a significant increase in our satellite usage during times of natural disaster, like the recent outages outages that we’ve experienced in Texas.
Every disaster before that, we always see that folks rely on our communications services during critical times when other communication options aren’t there. That really does speak to the reliability of the services that we provide. But looking forward right now, we are developing new terrestrial solutions for 5G public and private networks and enhancing the next generation of our mobile satellite service. Across the country, critical industries like manufacturing, energy, health care, and transportation are all trying to find ways to modernize their systems, create new efficiencies, and bolster their security and their operations. As they leverage automation and other digitized solutions, connectivity becomes a critical component here. The more machines you have talking to one another, the more important is to make sure that they are reliably and securely linked.
And that’s where we come in. We have nationwide terrestrial spectrum and in the lower-midband, and we have mobile satellite coverage across North America that can serve the unique requirements in these critical infrastructure companies. They cannot fully be served with a ‘one size fits all’ network. That’s why we are developing a 5G mobile private network solution that will give businesses customers the scale of a public network, but the security and the customization of a private one.
We’re already in the midst of an extremely busy year advancing these solutions. We recently announced a collaboration with an innovative technology company partner to us, Rakuten Mobile, which will result in network trials later this year. We’re also developing the ecosystem for the L-band, which is a slice of spectrum that our networks use and which is critical to accelerating 5G deployment across the U.S. That includes working our way through the spectrum standardization process, the 3GPP, and working closely with leading wireless industry vendors to ensure devices, chip sets, and network equipment are all ready to connect on airways. So on that front, stay tuned for more progress and announcements coming soon.
OM [04:53]: 5G is something that a lot of people have heard about, but maybe don’t know very much about. Can you describe some of the promising future capabilities of 5G?
DS [05:04]: Sure. There’s no question that 5G technologies will drive unprecedented innovation. If we get it right, the U.S. will benefit both from an economic and a national security perspective and lead the world. Let me back up for a minute and talk about prior technological transitions we’ve gone through, and you’re right. We do hear a lot about 5G, you know, but the actual adoption and implementation of 5G is still very much in the early stages. We haven’t even begun to see the extent of what is possible. The transition from 4G to 5G is not like any other wireless technology transition that we’ve been through before.
5G is much more than just faster speeds and your smartphone and your tablet. It’s really about building next generation mobile networks that will help modernize hospitals, power grids, factories, farms, and all these large complex operations. It’s about modernizing how they operate. And it’s really about accelerating the industry toward transformation. We’re seeing the demand grow each day across all sectors. As an example, according to the CTIA, 5G technology will ensure self-driving cars reduce emissions by up to 90%, cut travel time by 40%, and save lives. That’s really powerful, right? And that is what is possible with increased automation that can come from the deployment of 5G services. Business leaders understand that highly secure, ultra-low latency machine-to-machine communications and enterprise applications are necessary to compete and be successful. They know what their future must look like. It’s a place that we can help them make it a reality. So where Ligado comes in is with our network and our spectrum being deployed for 5G private networks. It’s really an ideal combination.
Our lower-midband spectrum, with the technology that exists with 5G, we can make this automation and the modernization happen, and it will be a game changer for U.S. businesses. So building out 5G capabilities across the U.S. in a customized fashion—and ‘customized’ is really the key there—will allow these entities to deploy new automation tools and to better serve citizens and to do so more reliably. It will also allow them to better compete in a global market and ensure their operations are better protected against outside threats, like the threats we see from China in the technology space.
OM [07:49]: What do you think are the most impactful changes that 5G will have on the American economy over the next decade?
DS [07:57]: So at the highest level, 5G has a potential to bring enormous economic benefits to the U.S. A recent study conducted by the Boston Consulting Group estimates [5G] will add nearly $2 trillion to the U.S. GDP and create over 4 million jobs over the next 10 years. This year has shown us how connectivity is a must for everyone—for work, for school, and to connect with those we love. We’ve watched in real-time as Americans have adjusted how they live and work, and connectivity has been central to most of it. But we haven’t scratched the surface of what it will mean. We see a huge opportunity for advancement, both from a technological and a business perspective, particularly for critical American industries.
Mobile private networks are a 5G solution providing the scale of a public network with the control and security of a private one in a cost-efficient model. Private networks aren’t new, but the rise of automation technology and the Internet of Things, and really connecting machines with other machines, have made them much more important to modern business operations, especially for critical infrastructure entities with large footprints and complex operations, like factories, farms, and public utilities. The ability to build out mobile private networks that have a huge impact, not only in the American economy, but also on improving business operations for America’s most critical industries and delivering solutions to serve the greater public interest.
OM [09:26]: The FCC recently greenlit a long pending licensed petition from Ligado to use it’s midband spectrum for 5G-related enterprises. Why is midband spectrum so critical to 5G rollout in America?
DS [09:39]: This is a really important question. As we think about the rollout of 5G, the spectrum needs are very different than what was required for 4G or the generation of technology before that. So as we think about this, it’s a good time to start with the questions, which are: what are we trying to do and how can we do it?
I think we can all agree that our collective goal as a country is to ensure that everyone has a secure, reliable connection. We get it to them as quickly as possible. The first step is spectrum. We’re asking a lot of 5G, so it requires a right mix of spectrum. Different frequencies provide different benefits—things like super fast data speeds, high density, traffic applications, ultra reliability, and low latency communications. These unique capabilities require a combination of different spectrum assets to leverage each band’s core deployment strength.
Ligado’s spectrum sits in the lower-midband. So I would define that as one to two gigahertz. This is the ideal spectrum on occasion to have both balance of coverage and capacity. For example, a spectrum located in this range covers five times the geographic area compared to spectrum further up the band and the higher-midband (in the range of say two gigahertz up to six gigahertz, such as CBRS, which was auction last year and C band, which was just recently concluded.) Midband spectrum, specifically the L band where Ligado spectrum sits, has a critical role on accelerating 5G deployments in the U.S. by helping to get deployments in the field sooner. You can invest in existing infrastructure and reduce the need to build tens of thousands of new cell towers across the country, which all takes time. And so the result is really a faster deployment, a lower cost, and a higher reliability for the end-users, and it can also help address current 5G rollout gaps in rural areas.
OM [11:47]: Ligado recently announced it’s teaming up with Rakuten Mobile to create a blueprint for 5G Mobile Private Networks. Can you talk a little more about that?
DS[11:56]: Absolutely. Going back to what I talked a little bit about at the onset, which is, we see a really great opportunity in the private network space. We know more and more companies are leveraging the Internet of Things and automating their operations and critical infrastructure. This makes connectivity all the more crucial to their day to day. And because many of these companies provide critical services to American citizens and customers, they have a real need for secure private networks that can ensure they stay up and running.
As we build out these solutions, we’ve teamed up with Rakuten Mobile, which is doing extremely innovative things in the wireless space. In particular, they are global leaders in something called O-RAN technology and network automation, which helps networks be more flexible and save on costs, which are two pretty important components when you’re deploying customized networks. We’re going to work in concert with them, leveraging our dedicated, advanced spectrum in their O-RAN solution in cloud-native network platform to execute network trials for 5G Mobile Private Networks this year. We think our skillsets are the perfect combination for a market that’s likely to grow rapidly.
OM [13:10]: There’s a lot of hope that Open Radio Access Networks can unlock the potential of 5G. Can you talk a bit about how these networks work and how they can be made secure, given that cybersecurity is such a pressing concern in this space?
DS [13:26]: An O-RAN network architecture uses open interfaces and standards, which means lower network costs and more flexibility in terms of ecosystem component versatility. The cost savings are huge and have been proven both by the upstart vendors who promote it as well as Rakuten Mobile, the major wireless operator that is actually using it today. The flexible and virtual network architecture that O-RAN technology provides is crucial for building 5G Mobile Private Networks, but there’s a broader value to O-RAN as well.
It’s really crucial to the United States long-term competitive response to China because it provides trusted infrastructure vendors with an innovation path and strategy to compete with China. Strengthening the supply chain in this way is a win-win. It naturally means more innovation, it increases security, and it combats the dominance of untrusted vendors in China. So we really are proud to be leveraging it as a core component of our solution.
OM [14:30]: There’s a lot of reporting on bureaucratic infighting during the Trump administration, among federal agencies that manage a lot of the spectrum that will be needed for 5G services. However, the FCC’s approval of Ligado was ultimately a unanimous, bipartisan 5-0 decision. Can you talk about the importance of having a unified bipartisan us strategy for 5G throughout government?
DS [14:53]: So of course, you’re right, that our FCC decision was bipartisan and unanimous. It’s important to think about why, and it’s because the FCC follows the science. They base their decision on results of years of rigorous technical analysis, but at a higher level, we absolutely believe that an American economy firing on all cylinders requires a unified approach on spectrum. And here’s what I mean by a unified approach. We have to stop acting like spectrum decisions are an either/or, where someone has to lose for someone else to win. In spectrum proceeding after spectrum proceeding, we’ve seen policymakers work hard to find new ways to use scarce spectrum resources only to get attacked. These disagreements delay progress and unfortunately, the process doesn’t seem to support finding solutions that advance all sides. We have to work together to find practical, technical win-win solutions. And we were smart enough to do that, and we should be committed enough.
We’re on the cusp of deploying 5G networks that promise significant economic and industrial transformation, as well as the international leadership that comes with successful 5G deployment. So the stakes are high, but the upside is much higher. And the key is a cohesive direction from Washington. We’re not going to be a global leader if perspective strategy is driven by political infighting or subject to the whims of special interest. The bottom line is we have to work together towards shared goals.
I can tell you that for us, it wasn’t easy, and there still remains a lot of work to do with federal agencies, including the Department of Defense. That’s a primary focus of ours for the year ahead in Washington, we are ready to work in good faith for a holistic solution, but as we go forward, what we can’t have is for every time the government looks to free up spectrum for 5G, stakeholders come in and try and slow it down. Self-interested protectionism doesn’t help here. If we’re going to win at 5G, we have to find a way to work together, to find solutions that enable us all to move forward.
OM [17:03]: There’s been a lot of media attention towards China’s growing 5G capabilities and its expansive commercial network. What are the implications of China winning the so-called “race to 5G”?
DS [17:16]: The implications are so significant that for us, failure is not an option. We need to lead in the development and deployment of 5G solutions, just like we did in 4G, working together with each other and our allies, because it’s a major pillar of rebooting U.S. infrastructure, boosting our global competitiveness, and protecting our national security. We can strengthen U.S. national security by arming our critical industries with the ultra-secure, reliable networks that improve and strengthen business operations, especially for absolutely critical entities like power grids. It requires a unified front and commitment to problem solving among industry and policymakers.
OM [17:57]: So obviously the U.S. government is juggling a lot right now with the COVID-19 pandemic, but once the world returns to a sense of normalcy, how can the Biden administration best promote America’s 5G network?
DS [18:10]: I think it goes back to this question of a unified approach. We need policies that support swift, ubiquitous, and cost-effective deployment of 5G. The Executive Order on America’s Supply Chain was an important and necessary step. Making sure that we have a diverse, secure, and resilient supply chain is critically important for technology development, adoption, and rollout. What’s at stake is our ability to compete on a global scale and defend our nation from threats of all kinds, especially China. I think it’s absolutely crucial that our spectrum policy follows science and data. We need to adhere to technological fact and prioritize what’s best for the country as a whole. The good news is that I think a lot of Washington is starting to recognize this. There’s so much interest in modernizing our country’s infrastructure, it’s clear that this isn’t something we can put off any longer. And our wireless networks are obviously a crucial component of infrastructure.
The State of Affairs
On May 19, 2021, a reckoning came for the wild cryptocurrency market, with Bitcoin and other crypto assets sinking as much as 40% in a matter of hours—a reminder of the risks of this volatile asset class. It came just weeks after Elon Musk appeared on Saturday Night Live to proclaim himself the “dogefather,” a reference to his regular boosting of the Dogecoin cryptocurrency, whose value had recently run up as much as 12,000% in 2021 alone.
Why does this all matter? Earlier this year, Bitcoin’s market cap approached 10% of the total value for all gold mined globally, and Dogecoin’s market cap exceeds that of Snapchat or General Motors. When an asset class gets this big, it tends to get Washington’s attention, but the U.S. still hasn’t created clear “rules of the road” for exchanges and investors. This primer discusses the state of cryptocurrency and a few major U.S. regulatory developments that could be on the horizon.
What are Cryptocurrencies?
Bitcoin was created in 2008 following the global financial crisis by a pseudonymous developer (or group of developers) named Satoshi Nakamoto. It is considered to be the first “decentralized” cryptocurrency because it is not managed by a central bank, but rather, transactions are peer-to-peer, with every transaction recorded on a public ledger called the blockchain. This blockchain provides each user with a “public key” (a unique user code) to keep individuals’ identities confidential.
Cryptocurrency: Is It Decentralizing and Democratizing Finance or Doing the Bidding of Drug Traffickers? It Depends Who You Ask.
The Case For Crypto
“Bitcoin is one of the greatest technological advances that humanity has ever seen and it can make a bigger impact on society than any of us ever imagined.” — Tim Draper, Venture Capitalist
Crypto advocates suggest it can make global payments more accessible and affordable, and that it can cut out the middleman for a range of transactions. With a single credit card purchase, there can be five or more parties required to complete the transaction: Consumer, Merchant, Issuer, Acquirer, and Switch. For example, say you (the Consumer) buys a shirt from an online retailer (Merchant) using a card provided by Bank of America (Issuer).
Your transaction will be processed by Square (Acquirer), and Visa (Switch) will ensure that the funds are transferred from your account to the Merchant’s Square account. The large number of parties involved means that each transaction can come with a 2-3% transaction fee. Money can also take a long time to move from account to account, with transaction settlement times of up to two days. Since crypto transfers are peer-to-peer, transactions are often faster and cheaper than traditional credit card payments.
The security and privacy provided by cryptocurrency is an additional benefit which is supported by its underlying blockchain technology. Using a cryptographic key unique to each transaction, which is then validated and added to the public ledger, ensures that the system is technically tamperproof. Using cryptocurrency also provides greater confidentiality thanks to its use of digital addresses, which contain no other information about your identity. A new address can be used for each transaction, providing an additional layer of confidentiality. However, this only makes your personal information more secure, as there are still methods to link real-life identities to the public addresses of cryptocurrencies.
The Case Against Crypto
“Of course I hate the Bitcoin success. I don’t welcome a currency that’s so useful to kidnappers and extortionists and so forth, nor do I like just shuffling out of your extra billions of billions of dollars to somebody who just invented a new financial product out of thin air.” — Charlie Munger, Vice Chairman, Berkshire Hathaway
But crypto also has a few distinct issues. Not unlike cash, cryptocurrencies are popular among criminals because they provide relative anonymity to transactors. As a result, cryptocurrencies have gained a reputation as tools for discretely buying drugs and sex online, laundering money, and sponsoring terrorism. According to a 2019 RAND report, groups like Al-Qaeda, the Islamic State of Iraq and Syria (ISIS), and Hezbollah have used cryptocurrencies for drugs and arms trafficking, remittances, and operational funding.
Additionally, many cryptocurrency exchanges may not be as secure as once believed. According to a 2021 analysis from Traders of Crypto, nearly half of the largest cyber thefts of the past decade have involved cryptocurrencies. During the 2018 hacking of Coincheck, which would become the largest financial heist in history, more than $530 million was stolen from users with cryptocurrency stored in the exchange. Another famous example of this type of security failure comes from the hacking of Mt. Gox, which led to the company declaring bankruptcy in 2014. At the time, it was the leading Bitcoin exchange, handling 70% of all transactions worldwide. Mt. Gox announced that over 850,000 Bitcoin (valued at $450 million) belonging to customers was missing or stolen. In the majority of cases, the perpetrators of these heists are never identified, but a large portion of attacks have been traced back to North Korean-affiliated hackers (30%) and the Russian-speaking cybercriminal organization Silence Group (four percent).
The decentralized nature of cryptocurrency can also have its downsides. Coinbase, the leading cryptocurrency exchange in the U.S., lists 62 different tradable cryptocurrencies on their website. However, according to CoinMarketCap, there are nearly 10,000 different cryptocurrencies out there, and more are being created every day. Creating a new cryptocurrency is surprisingly easy, and with only a modest fee, a token generator can create a new cryptocurrency in a matter of minutes.
In an unregulated environment with significant speculative interest, many cryptocurrency creators can use the opportunity as a “get rich quick” scheme and attempt to drum up interest through social media. When enough people have bought in, a cryptocurrency creator can “pull the rug out,” sell their shares, and leave investors with nothing. Similarly, copycat coins, such as Shiba Inu or Dogelon Mars, look to ride the wave of success of other cryptocurrencies or confuse potential buyers in order to make an easy profit.
Dave Portnoy, the founder of Barstool Sports, recently provided a clear example of this kind of risky speculative behavior. While announcing his endorsement of the cryptocurrency named SafeMoon, which rose 20% in the span of a few hours after posting his endorsement to Twitter, Portnoy stated that “he has no idea how this works” and “if it is a Ponzi [scheme], get in on the ground floor.”
The Current U.S. Regulatory Framework Is Nonexistent
The U.S. Securities and Exchange Commission is currently caught between warning consumers of crypto’s potential harms, while also debating the facilitation of its widespread adoption. In a statement released on May 11, the SEC cautioned investors to “consider the volatility of Bitcoin and the Bitcoin futures market, as well as the lack of regulation and potential for fraud or manipulation in the underlying Bitcoin market.” In the same public statement, the SEC further stated that it would “consider whether, in light of the experience of mutual funds investing in the Bitcoin futures market, the Bitcoin futures market could accommodate [exchange traded funds] ETFs.” Past proposals seeking approval for the creation of a crypto ETF have failed under previous SEC leadership, but the latest statement from the SEC at least opens the door to the possibility.
A future crypto ETF would offer greater accessibility to new investors interested in cryptocurrency, but at the potential cost of greater regulatory oversight that runs antithetical to the decentralized nature of cryptocurrency. Prior to such an approval, the SEC may choose to wait until Congress has passed some regulatory framework before giving any sort of endorsement of the risky asset.
Currently, most federal policy for cryptocurrency is set at the agency level, with oversight responsibilities spread out across the Securities and Exchange Commission (SEC), the Commodities and Futures Trading Commission (CFTC), the Federal Trade Commission (FTC), and others. Part of the problem with this framework is that these agencies don’t always communicate with each other, making it more difficult to keep pace with the explosive innovation happening in digital assets. In fact, the U.S. government doesn’t have a uniform definition for what cryptocurrency is, particularly which coins are “securities” (which are regulated by the SEC) and which are “commodities” (regulated by the CFTC).
At the end of 2020, the SEC sued the blockchain company Ripple, citing an unlawful sale of $1.3 billion worth of XRP, the digital currency managed by the company. The SEC labeled XRP as an “unregistered security,” while Ripple argued that coins should be treated as a currency, since the holders of XRP are not seen as stockholders with equity in the company. However, since XRP is highly centralized (largely owned and sold by Ripple), the SEC feels that its assets meet the increasingly outdated definition of “security,” as set forth by the 1946 SEC v. Howey case.
Since companies that manage securities are bound by law to register all sales, companies like Ripple may face similar consequences if their coins are deemed too centralized to qualify as currency. While the rest of the world is setting guidelines, the U.S. retains this type of regulatory and statutory uncertainty that dampens innovation for digital assets and scares off potential investors. For example, in February 2021, Switzerland enacted the Blockchain Act to provide legal standing to tokenized crypto assets, while also implementing anti-money laundering regulations. This bill was lauded by crypto enthusiasts, with Thomas Jutzi, Professor of Financial Market Law at the University of Bern, calling the law “a regulatory framework for blockchain [that is] among the world’s most progressive. Switzerland thereby asserts its leading position not only regarding its innovative blockchain companies, but also regarding its legislation.”
Before the U.S. begins to expand access to coins by approving the creation of crypto ETFs, or legislate on cryptocurrency’s relationship to terrorism, crime, trafficking, and money laundering, it likely has to:
- Make explicit which agencies are responsible for specific crypto-related harms,
- Establish a channel of cross-agency cooperation in the event of overlapping responsibilities, and
- Establish a uniform definition for how to treat various coins.
The Eliminate Barriers to Innovation Act, a bipartisan bill introduced by Rep. Patrick McHenry (R-NC) and Rep. Stephen Lynch (D-MA) in March 2021, would set up such a regulatory framework for digital assets like cryptocurrency. The bill, which was passed by the House of Representatives in April, would set up a working group of members from the SEC, CFTC, and private sector with the goal of “ensuring collaboration between regulators and the private sector in order to foster innovation.” The bill has been received by the Senate but is pending review.
Traditionally a supplementary and underutilized form of health care delivery, telehealth is now one of the frontline pillars of defense against the COVID-19 pandemic. In April 2020, a Morning Consult poll found that 23% of adults have used telemedicine services since the outbreak of COVID-19, and virtual visits surged 50% in March 2020, compared to February. By keeping patients away from busy hospitals, telehealth is helping to reduce the burden on overwhelmed care centers and the risk of infections. However, the potential applications of telehealth extend far beyond this crisis. It could help ease longstanding problems with health care costs and accessibility, particularly in underserved communities. Today, New Center policy analyst Olive Morris checks in with Mei Kwong with the Center for Connected Health Policy to explore the potential of telehealth during and after the crisis.
Olive Morris: [01:03] Can you introduce yourself and your organization?
Mei Kwong: [01:05] Sure. My name is Mei Kwong, the executive director of the Center for Connected Health Policy, which is the federally designated National Telehealth Policy Research Center.
OM: [01:14] Telehealth has sort of a long history. It’s been around in some capacity for decades. Yet, it wasn’t necessarily widespread until recently and it may be a new concept for some of our listeners. Can you just tell us exactly what telehealth is and the different forms that it may take?
MK: [01:33] Sure, telehealth is really using technology to provide some sort of health care service where the patient and the doctor or whatever home health care provider you may be engaging with aren’t in the same location. So you’re just using technology to connect with each other and you’re just not there in person each other.
It has different types of forms in which it can use technology and deliver that service. The most common one and probably the most that people are familiar with is called live video, which is exactly what it sounds like, a real time live video interaction between the two parties. Then there are other modalities, other ways of delivering the services. One is a not in real-time service that’s called store-and-forward, which is kind of self-explanatory. You store some type of information and you forward it to the provider who is not looking at it like right when it comes in, but maybe at a later time.
So, for example, you see your primary care doctor and you have a skin condition and you’re not quite sure what it is. They take a picture of it and they send it over a secure system to a dermatologist. The dermatologist isn’t looking at it right when that email comes in or that message comes in. They may be looking at it at later time. Then a dermatologist looks at it and sends the recommendation or diagnosis back to the primary care doctor. So you’re storing and forwarding some information.
Then the other way of delivering care is something called remote patient monitoring. So that’s a continuous monitoring of a patient and it can be in real-time and not in real-time. So a real time example is if you’re in an ICU unit, you’re intensive is the doctor there, the ICU doctor, who may not be right at that location with the patient at that time, but maybe as monitoring from a different location. But they are doing it in real-time and they’re communicating back and forth with health care personnel, who are there on location with the patient and doing what needs to be done physically.
And then a non-real-time example of how patient monitoring is: think of somebody who maybe has a chronic condition, such as high blood pressure. Your doctor wants to know what your readings are for a period of time to see if maybe medication is working out for you or if you’re experiencing any type of issues. So you’re at home, you’re taking readings, and you’re sending them to your provider. Maybe, you’re doing it like once a day or you’re sending all the readings at the end of the week. Again, the provider probably isn’t looking at them as those readings are coming in, but maybe looking at a later time. Not in a real-time example, like continuous monitoring.
OM: [04:19] Ok, so then what types of modalities do you feel are most commonly being used in telehealth right now?
MK: [04:27] Live video is definitely the most popular one. It’s the one that probably most people are familiar with. It’s the one that you’re talking about people or payers such as Medicare, Medicaid or commercial payers, it’s what they cover it. If they cover any services delivered by telehealth, that’s usually the modality that they cover. So the other two [modalities], while effective for some things, are not as widespread for coverage as live video.
OM: [04:55] Right. So as someone who’s sort of been working in the state and federal policy for your entire career. I’m curious if you can sort of paint us an overarching picture of the trends that you saw telehealth adoption for the past few years before coronavirus, and then maybe talk about how that pace has sort of been accelerated by this pandemic.
MK: [05:20] So I’ve been doing telehealth policy for about ten years. So I would say it wasn’t really until the last five years where you saw telehealth really pickup. And that’s for a variety of reasons. Telehealth has been around for decades, but it wasn’t really ubiquitous throughout the health system or throughout the country. And part of that was that the technology was not there to do what people could imagine it could do. So it was only kind of more recently that the technology kind of caught up with that. So that was one reason why telehealth wasn’t as widespread pre-COVID.
Another reason is that while the technology finally kind caught up, the policies in place didn’t really catch up. So in general, technology evolves much more quickly than policy. So you have your policy probably trending about ten years behind what the technology could do. So you still have like these old limitations—you can only use telehealth to do “x” and get paid for it. Well, if you don’t have those policies in place and whether to allow somebody to use telehealth to do something and provide a way to pay for it, they’re not going to use it a lot. So you have, like, sort of like low usage. The last five years, the policy has been slowly, incrementally getting better. And that’s both on the state and a little bit on the federal level. Federal has been a little bit slower than what the states are doing.
So this is kind of what your landscape is like pre-COVID. It was getting better, but it was still going at a slow and steady rate. COVID-19 rolls around and it just suddenly explodes. I liken it to that unknown actor who suddenly has been cast to be the star of a new Marvel franchise. It’s like, nobody knew who you were before. You were slow and steady and probably doing good work. But nobody is thinking about you. And then suddenly Marvel’s makes you the new Iron Man or something.
So that’s kind of what happened with COVID, and with good reason, because it was so uniquely suited for this pandemic. To address what some of the concerns were, which was that you had people sheltering in place, and you still need to get them to care. You do that through telehealth. You can still minimize exposure for both the patient and the health care provider. Why you saw so many telehealth policy [changes] like temporary waivers or guidance was because those old policies were still in place that limited telehealth. That’s why CMS had to do so many changes because they hadn’t kept pace with what the technology could do. The policies were outdated. So both on the federal or state level, you saw so many changes. The states vary—there are some states that had to do less. And then there were other states that had not done as much with, and they had to do more.
OM: [08:28] So when you talk about sort of these sweeping policy changes that have happened as a result of COVID, can you just give some top-line examples of changes to Medicare, Medicaid, HIPAA that America’s been seeing?
MK: [08:43] A lot of the policies, like the Medicare and Medicaid policies and probably some commercial payers, they didn’t allow the patient to receive services at home. Well, that was kind of one of the major points during COVID, everybody was saying at home.
So that had to be changed—where the patient was located. Another thing that had to be changed was the type of provider providing services. A lot of Medicare and a lot of Medicaid programs limited what type of health care provider could provide a service via telehealth and get paid for it. Medicare has a very short list; it’s like about eight or nine providers that they allow. That had to be expanded because providers that weren’t on that list were some of your allied health professionals like OTs, PTs, and speech pathologists. They’re not on that list, so that needed to be expanded as well.
And also, types of services that are covered, too. So, again, a Medicare example, they are limited to very specific list of services and they go by that. I don’t know if your audience might be familiar, but how health care professionals usually bill is by a code for a specific service and as a definition of what type of services it is. It has a code number to it and that’s how they get paid. They go back to the payer who says, “you provided this service and we would pay you this amount”, because that’s associated with that code. So it thought that CMS says, “oh, we’ll pay for all services associated with treating a skin rash.” No, they don’t say that. They said we’ll pay for these specific codes. So Medicare definitely had like a specific list of some Medicaid programs, too. So they had to extend that because there were other services that they were hoping could be provided via telehealth to people who were sheltering in place.
OM: [10:56] And how do you think the policy changes have differed between people who are publicly insured versus people who are privately insured, when you have these private insurers doing voluntary changes to their policies?
MK: [11:10] It’s been a little more difficult to get a handle on what exactly all the private insurers are doing. So even even before COVID, it was difficult to understand what they were doing with their telehealth health policy. Part of that was because, unlike Medicare and Medicaid, they don’t necessarily make it public. I mean, I’ve seen health plans come out; commercial payers said, “oh, we’re going to cover telehealth services.” It’s like, well, what does that mean? Does that mean every service you cover, you can do it through telehealth? Is it this sort of like a narrow band of services? It hasn’t been clear what some of the payers are covering when they say cover telehealth. So it’s a little harder to judge how expensive their telehealth policy and coverage have been because simply they haven’t made all the details publicly accessible for us.
OM: [12:10] Yeah, it’s been sort of nebulous even for me, just trying to learn about the different changes that they made. So I think I’ve experienced that.
MK: [12:19] I’ll give you like a very firm example here. So, for example, Medicare has said you can use phone to deliver a service. It’s for these types of services and they’ll say very specific codes or something. But they also have a category which they call “virtual check-in services,” which is a quick check-in that Medicare doesn’t classify as telehealth. They classify it as a technology-enabled service. So that’s like a whole in the weeds type of discussion, but you can use phone to deliver that. So that’s what Medicare does when you’re using a phone to deliver services. They’ve said, “you can use these specific things to deliver services, you could deliver these virtual check-in services.” And that’s what makes phone a way of delivering a service. And the health care provider can get paid for it.
A health plan may also say, “we allow phone to be a way of delivery services too.” But they may mean, “we only mean those virtual check-in services”, and not necessarily like these other band of services that you would typically think of, like an office consultation or a mental health type of interaction, perhaps. So that’s that’s also one of the confusions there. Just like how extensive are those policies? And do they mean the same thing of what people may be thinking because they’ve seen the Medicare policies?
OM: [13:46] Yeah, I think that’s a really clarifying example. So in a recent interview, CMS Administrator Seema Verma said, “the genie is out of the bottle” in regard to telehealth. Do you think that a lot of these policy changes are here to stay?
MK: [14:02] I think some of them won’t be. Which ones? I’m not quite sure. I can kind of guess which ones I think probably have the best chance of sticking around. Other ones I think probably will not stick around. You had mentioned HIPAA earlier, some of the rollback on HIPAA. I don’t think those will stick around, for example.
OM: [14:21] Why’s that?
MK: [14:24] Well, for one thing, the rollback on HIPAA was essentially the Office of Civil Rights saying, “we’re not going to find you for a HIPAA violation.” I don’t think that’s going to stick around. Now, the question is, though, does HIPAA right now have something specific related to telehealth? So there’s no specific policy within HIPAA that focuses in on telehealth.
The question is, does that open up a discussion with policymakers say we need to update HIPAA that we have telehealth. But the fact that, you know, they gave this grace period of not fining people. I don’t think we’ll stick around because they’Il want people to go back to protecting health information, abiding by those rules they understood. Right now is an emergency period. But once the emergency is over, I just see that rolling back to what it was before. But the conversation may be open, they need to really updated HIPAA to include this technology that really wasn’t widely available before HIPAA. So again, policy trending a little bit behind technology.
But I do think some of the changes, some of the temporary waivers, will stick around. I’ve gotten questions both on the federal and state level, we’re discussing what to keep. And some of them probably have a better chance than others. For the federal ones, a lot of the barriers were actually statutory barriers. So it would require Congress to pass a bill and the president to sign it. But there are some things that CMS can do administratively and decide on their own to keep around. So those would be kind of like easier things to do if they wish to keep that policy around because they wouldn’t have to go through Congress. So those, I kind of rate as having a higher likelihood of sticking around.
OM: [16:25] One historical barrier to telehealth has been licensing restrictions, leading many states to join into interstate compacts. But, of course, there’s been the issuance of Section 1115 waivers, allowing many doctors who are licensed in one state to practice outside of their state. Do anticipate that these licensing regulations will stick around or change after America fully reopens?
MK: [16:53] I think the licensing issue will become a much more discussed topic than it was before COVID. It was kind of like one of the major barriers identified. It was talked about a lot. I think the discussion will be ratcheted up once we get past the immediate emergency and then you may actually hear policymakers more interested in doing something about it than they were before. You know, it was always a topic of discussion. Sometimes you had policymakers who were resistant. I’ll use California as an example. California is actually not a member of any licensure compact. So there’s just been sort of very strong resistance to joining them.
But I think probably that some of that resistance from policymakers, they have softened in discussing the licensing issue or even even had their interest increased. And the reason I say that is because I think more [people] during this pandemic have become aware that this is a significant issue. And I think part of it may be they’ve either had firsthand experience with it or somebody that know had firsthand experience with it.
I’ll give you an example. I got a policymaker who contacted me and said, “is this true? I have a colleague who’s college student daughter had to come home because the university is shut down.” She couldn’t access her student health provider who she was seeing before this all hit, because it’s a different state now. Why can’t that provider provide a service here in this state? Well, because there’s there would like no specific waiver to provide that service.
And that sparked an interest in that policymaker saying, “wait, you’re telling me this can’t happen because of this licensure issue?” This is from somebody who I know, and had not expressed an interest in the subject before. I think we’ll probably find, like a lot of policymakers who maybe have that firsthand experience or are hearing about from constituents or from friends, relatives, or their own staff, because it’s impacted so many people. Not only like college students, but maybe if somebody got stuck in a state and they can’t travel. I got another call just a few days ago from, like a national organization, saying, “somebody reached out to us. It’s a woman who had cystic fibrosis, who was in one state, but her doctors were in another state and the doctors couldn’t provide services.” I said, “I’m sorry, it’s a licensure issue.”
OM: [19:47] So obviously, there’s a pretty large disparity between the way that different states carry out telehealth and the policies that they have in place. Do you think there are any states that serve as a good example of [telehealth policies that] could lay groundwork for widespread adoption?
MK: [20:05] If you’re talking about their Medicaid policies, California is a good example. So ironically, before COVID, California had just updated and expanded for Medicaid telehealth policies. They had had they still had stuff to do during COVID to expand it. But they actually had less [to do] than what a lot of other states had to do. So California for Medicaid policies has really forward thinking types of policies on Medicaid.
For commercial payers, it depends on what type of statute they have in place. California is one of the states that updated. Then there are a couple other states that have one, you know, more explicit policies on what commercial payers are supposed to do. Hawaii, Minnesota, they’ve got pretty extensive commercial payer policies. So it kind of really depends on what you’re trying to do. But in general, those are kind of the states in those specific areas, like with Medicaid or the partial payer laws, doing what they need to do. Now, the tally up with the commercial payer law, it’s really important how they’ve written them. And it’s also really important how it’s carried out.
There could be some sort of ability for the health plans to interpret it a certain way. So the law would have to be written pretty clearly. And like what, the requiring of the health plan. Then also none of these laws in place actually have any type of punishment if a health plan doesn’t abide by. There’s a there’s never like listed a consequence. So we have encountered conversations with providers where they said, “I tried to do this with my health plan and the commercial plan has told me no.” It’s one or two things: how well was the law written in the first place? There may be a lot of flexibility for a health plan and how they interpret it. They may be able to legally not cover the service that you’re trying to offer via telehealth. And also, if they’re not abiding by what in the law, you’re going to have to make a complaint to whatever authority regulates them in the state and then see what happens. And that’s been kind of rare.
I’m not sure if I heard a lot of people making complaints . There was one of the Midwest states where for the first time, about a year ago, where we did hear of a state agency fine a health plan for not following the telehealth law. They did fine the plan and the plan said it was because [they] just didn’t get our system in place. The law had passed too recently for [them] to get it in place. But that was the first time I had heard of a state action enforcing a private payer.
OM: [23:43] Did you hear any other states bring it up after that or was it sort of an isolated incident?
MK: [23:49] It was isolated, as far as I know. I had not heard of any other states. And they fined it like $150,000 or something. The plan was like, “we’ll pay it. Sorry. We just didn’t get our systems up and running in time.”
OM: [24:07] So I did want to talk a little bit about anticipating problems that are coming out as a result of new policies or some fears that people have about rolling out telehealth. Telehealth providers can now waive patient deductibles and copayments during the emergency. Under normal circumstances, these actions would be interpreted as kickbacks. Some feel that maybe lowering these barriers could cause a wave of billing fraud to CMS. I’m wondering, do you think that that’s going to be a substantial problem? And if so, what can be done to kind of mitigate it?
MK: [24:53] Obviously, there is a concern that during this time when you remove the guardrails, you can just go wild or something, somebody’s going to go wild. And it’s understandable to have that concern. The odds are you’re going to have one bad apple, at least. So I can understand the concerns regarding that, but will that happen? I don’t know.
Part of it is that, historically, there hasn’t been a lot of fraud related to telehealth. I know in recent years there’s been some big news, of arresting 60 people related to telehealth fraud to Medicare. But a lot of that, it’s like that kind of what you see in a typical fraud cases. And it was sort of like, you were prescribing unnecessary prescriptions for people who didn’t even need them. You didn’t even realized you were doing that because you signed them on for whatever reasons. Well, that’s kind of what fraudsters were always doing. You just happened and have had a telehealth element. So it wasn’t just a telehealth thing, but it was something that people had been doing probably since Medicare program was available.
Are we going to see that? We’re human beings and the odds are you likely will have a bad actor. I would not be surprised if there were some [bad actors]. But I would say probably the majority are legitimate reasons for billing Medicare. They are providing services to people who need it, and they are doing everything correctly. One thing is that they would still need to bill properly in order to get paid for for telehealth. When we’re passed this pandemic, it will be interesting to see what the data is. I’m not going to say there’s not gonna be any fraud. Even with the guardrails in place, you’re still going to have some fraud. We’re human. And if somebody wants to do it, you’re going to find a way to do it. The best you can do is that [telehealth] does open it up so you can get the services to the people who need it, and that the provider will get paid for their efforts to provide services to those folks.
OM: [28:36] I just want to ask quickly about reimbursement rates for health care providers. It seems that there’s been some confusion about how health state Medicaids are going to do that. Maybe there’s been some uneven reimbursement rates: doctors not getting paid exactly what they anticipated they would be paid. Have you seen this as a major problem and are there ways to sort of more efficiently roll out these new rates?
MK: [29:23] So Medicare and Medicaid, for the most part, should still be the same rate as to the person. Where I think probably some of the problem has been is going back to our phone example, where I was talking about the virtual checking codes that came up. CMS and Medicare doesn’t consider it telehealth, but it uses telehealth technology or technology to provide the service. That’s gotten murky and confused in a lot of people’s minds.
So Medicare, what it does is it has essentially two buckets: the telehealth bucket, where they define the services provided via telehealth that they reimburse and have all their policies around. Then, they have another bucket of something that they call “technology-enable” or “communication-based services,” which use telehealth technologies, but they don’t call it telehealth.
This is because telehealth is considered a one-to-one replacement for in-person services. Whereas [sometimes] they have this technology to provide services, but don’t necessarily have a one-to-one match up. So those technology-enable services aren’t underneath the same restrictions as telehealth, though CMS has set up other restrictions. I think the two buckets have merged in a lot of people’s minds. They think telehealth [is the same as] technology-enabled services. It’s not treated that way by the program, though, in how you bill and the codes you use. With Medicaid, some of them have adopted those codes too and adopted that separation. But in some providers’ minds, they think it’s all telehealth.
The reason I’ve gone through that explanation is that some of those technology-enable services pay a lot less than what you would get for a telehealth-delivered service, because the telehealth-delivered services is paid the same amount as in-person.
Something I’ve heard specifically from doctors is that they say, “I used telehealth and I only got paid ten dollars.” I dig a little deeper, and they did a service over the phone and were told to bill a specific virtual check-in code, which does pay ten dollars. The provider though they were doing an office consultation [to be paid] ten dollars. No, you just coded it wrong, as a virtual check-in code.
OM: [32:54] Are there ways that doctors can get more familiarized with these billing codes? What channels would they go through to figure out the root of the problem?
MK: [33:10] Billing is a whole other world that’s very complicated. You could take courses and courses on how to bill Medicare, and then you add this other [telehealth] layer and it get even more complicated. Usually they have to send a question into the telehealth resource centers, which CCHP is one, and we try to sort through the problem. Medicare and Medicaid are usually very good about clarifying which codes to bill and if you fit into the definitions for one of those codes.
Commercial payers are a little more difficult. It’s difficult to get hands on their policies, from an outsider viewpoint. I would assume it’s easier for a provider in their network that can ask them for it. But it is a very difficult landscape to navigate. The biggest issue that I’m hearing from providers during this time is that [billing] is so complicated and [they] have a mix of Medicare, Medicaid, and commercial patients and how to bill for telehealth is different. It is extremely confusing.
And for a consumer to understand what they can do, it’s going to vary for them. The options where they can get information [about coverage] varies. They can ask their health plan what they cover. If they get insurance through their employer, they can talk with their HR department. The resources available to consumers at that specificity are extremely small. California is one of the few states with a consumer portal that provides telehealth information. They can type in their zip code and see the health plans that say they consider telehealth-delivered services, and then [be directed to] the health plan’s site. That varies because [consumers] are sent to the health plan’s site and the available information varies from plan to plan. But that is one of the few examples where states or the federal government [tries to give] more information to the consumer. The Department of Health and Human Services did put out a website with more information for educational information for patients using telehealth. And that was only available during COVID, so nothing was really available pre-COVID. CCHP tried to put out as much information for consumers [as possible], but that’s an area where the consumer relies more on the primary care provider to tell them about it.
OM: [37:45] If our listeners are interested in learning more about telehealth [generally], what sort of resources does CCHP recommend?
MK: [38:07] If they want to get into the policies, they can definitely come to the CCHP website. We track all the state Medicaid policies, the Medicare policies, the state legislation, and the policy changes of COVID. But that can be too dense for some people. [They can also go to] telehealthresourcecenter.org, where you can access all 14 telehealth resource centers and general information. Those two are you best places to start. Depending of the type of person you are [such as a provider, consumer, older person, or parent], there’s a lot of different organizations that are focused in on telehealth such as AARP and the School-Based Health Alliance. I would start with the telehealth resource centers and especially CCHP if you’re interested in the policy side. Feel free to reach out to a telehealth resource center [and ask for] good resources, then we’ll be able to narrow it down on your specific issue.
AV: Thanks for listening to this week’s episode on Centering on Coronavirus from The New Center. Please be sure to visit newcenter.org to sign up for our updates and stay tuned for another episode next week.
President Trump’s threat to reign in social media companies
Last Thursday, May 28, 2020, President Donald Trump issued the Executive Order on Preventing Online Censorship, two days after Twitter placed a fact-checking label on one of his tweets regarding mail-in voting. On May 29, Twitter flagged two additional tweets from the President’s account (@realDonaldTrump) and the White House’s official Twitter account (@WhiteHouse), about protests and looting following the brutal killing of George Floyd by a Minneapolis police officer.
President Trump tweeted that he would “send in the National Guard and get the job done right… Any difficulty and we will assume control but, when the looting starts, the shooting starts.” President Trump posted the same message on Facebook soon after his Twitter posting.
Twitter issued a warning label on the tweets, stating that they violated company policies against “glorifying violence.” President Trump responded by announcing a new executive order compelling the Federal Communications Commission (FCC) and Federal Trade Commission (FTC) to reexamine the scope of Section 230 of the Communications Decency Act of 1996.
Reforming Section 230 would have far-reaching implications for social media platforms and their users—President Trump described the move as “a big day for social media and fairness!” However, telecommunications law experts are arguing that this Executive Order may not be legally enforceable at all.
Section 230: The foundation of the modern internet
Section 230 states that technology companies aren’t considered “publishers” of third-party content, but rather “platforms,” protecting them from liability through safe harbor provisions. In the early years of the internet, it ensured nascent digital platforms and products could grow without being crushed by litigation. However, the provisions are now being widely criticized as outdated and overly broad. Section 230 opponents argue that companies like Google and Facebook need to be more accountable for illicit or misleading content posted by their users and advertisers. President Trump’s Executive Order asks the FCC and FTC to reconsider Section 230, so that the U.S. government may be able to take action against providers that “restrict speech in ways that do not align with those entities’ public representations about those practices.”
Twitter spokesman Brandon Borrman responded to the executive order: “this EO is a reactionary and politicized approach to a landmark law… Attempts to unilaterally erode [Section 230] threaten the future of online speech and Internet freedoms.”
As Twitter doubled down on their warning labels earlier this week, Facebook CEO Mark Zuckerberg firmly stated that the company wouldn’t be labeling President Trump’s same post on Facebook. Zuckerberg’s stance prompted several hundred Facebook employees to refuse to work in a “virtual walkout” on June 1, with some even threatening resignation.
Support for Section 230 has been crumbling
In recent years, Democrats and Republicans have found common ground in questioning Section 230 liability protections, but they have done so for different reasons. President Trump has been an outspoken critic of technology companies “doing everything in their very considerable power to censor in advance of the 2020 Election,” echoing the widespread Republican sentiment that social media companies attempt to curb conservative messaging on their platforms. Conversely, Democrats have condemned what they see as the rise of hate speech and conspiracy theories on social media without appropriate guardrails against the dissemination of misinformation.
In a speech on December 10, 2019, Attorney General William Barr stated that the DOJ is looking into Section 230 and that the law has “extended far beyond what Congress originally intended.” He argued that platforms have legal immunity from “blocking or removing third-party speech—including political speech—selectively” and allow communications within terrorist organizations. Prominent corporate opponents to Section 230 (in its current form) include Oracle, Salesforce, and Microsoft. Facebook CEO Mark Zuckerberg has stated that without Section 230, he wouldn’t have been able to start Facebook, but the company now must take a “broader view of its responsibility,” without providing concrete details.
Is this EO legally enforceable?
Under the Executive Order on Preventing Online Censorship, the Trump administration will first direct Commerce Secretary Wilbur Ross to file a petition with the Federal Communications Commission (FCC), demanding that they clarify if technology companies should be liable for third-party content.
The FCC, an independent agency, could refuse the Secretary’s petition. The FCC’s leadership is composed of two Democratic commissioners, two Republican commissioners, and Republican Chairman Ajit Pai, though the agency is ostensibly nonpartisan. The two Democratic members have publicly denounced President Trump’s idea, while Republican Commissioner Brendan Carr has openly lauded the Executive Order. Chairman Pai has stayed tight-lipped on his position but noted that the FCC would “carefully review any petition for rulemaking” filed by the Trump administration.
Even if the FCC were to approve this request before the 2020 election, a new ruling on Section 230 would attract legal challenges. Experts expect legal battles would be fought on two fronts: (a) challenges to the rule change as an unconstitutional limitation on free speech, and (b) challenges to the FCC’s rulemaking authority, as the agency doesn’t have the legal mandate to regulate content on social media platforms. As the Executive Order stands, there is little likelihood that it will be legally enforceable in its current form.
The most enforceable way that America can revoke Section 230 is through Congress. With renewed attention to the statute, policymakers will likely begin submitting new legislation or reintroducing old proposals. Before the executive order, Trump allies Senator Josh Hawley (R-MO) and Rep. Matt Gaetz (R-FL) separately announced their plans to introduce Section 230 repeals over allegations of election interference and anti-conservative biases.
Section 230 needs to change, but do it the right way.
Section 230 should be updated for a new era, but it should be done so by Congress, where any changes will likely be bipartisan and durable over time. If designed well, new frameworks for regulating harmful content can contribute to the internet’s continued success by articulating transparent, predictable, and balanced ways for government, companies, and civil society to share responsibilities and work together. If designed poorly, these efforts may stifle expression, slow innovation, and create the wrong incentives for internet platforms.
In June 2019, The New Center suggested potential reforms to Section 230 provisions in a policy paper entitled “Big Tech: Public Discourse and Privacy.” The New Center proposes the following solutions to create a sustainable framework for platform liability and responsibility:
- In line with the First Amendment, online speech should be free unless inciting violence or promoting dangerous obscenity
- Operators should have liability for any demonstrable negligence, as determined by the Federal Trade Commission
- Platforms should provide meaningful notice to those who have their content removed
- Platforms should allow users the right to appeal any content takedown
- Platforms should issue public reports detailing the amount and types of content they remove, along with justifications for removal
Twenty-two million people filed for unemployment in the last month, and many of them are gig workers who had never before been eligible for these benefits.
In our latest installment of the Centering on Coronavirus issue series, The New Center policy analyst Olive Morris sat down with a member of the nontraditional workforce, a restaurant worker named Katherine from central Georgia, to discuss the financial and employment hardships brought on by coronavirus. After you listen, be sure to check out the accompanying issue brief, “Centering on Coronavirus: The Gig Economy,” to understand the unique challenge the coronavirus pandemic poses for America’s nontraditional workers—many of whom aren’t afforded the same financial, regulatory, and legal protections as the traditional labor force.
Olive Morris: My sister-in-law, Katherine Makuch, is a wife and mother of three children, all under the age of 4. She and her husband, my brother, are servers at [a restaurant called] Texas Roadhouse in Macon, Georgia. She makes the bulk of her income from tips, which have been increasingly hard to come by since the outbreak of coronavirus. This pandemic has forced millions in unemployment and totally upended work across America. Here’s Katherine, as she tells it.
Katherine Makuch: We took a vacation before Georgia’s governor issued a state of emergency and locked down the state. We were out of town, and I had already taken off two weeks, so I finished my two-week vacation and came home. I worked a weekend before they closed our dining room and when I came back to work, they had taken everything off the tables. The sugar caddies, the salt and pepper shakers, the menu, all the stake sauces—the tables were just bare.
KM: They put black linen cloths over every other booth, so people had to remain six feet apart. They offered that for a few weeks before they finally closed down their dining room.
OM: And you just came into work one day and saw that?
KM: Yeah. I had asked a few of my coworkers what the situation was and they kind of prepared me, but it was very dramatic. I’m used to seeing my job a certain way, and it was completely different when I came back from vacation.
OM: Not only was Katherine’s job different, her entire city was different. She expected people to panic buy, but she didn’t expect the type of things they would be buying, like guns. As soon as the coronavirus outbreak started getting widespread attention, her handgun was stolen out of her truck. She tells me this story about trying to buy a new gun, and finding the shops flooded with people.
KM: I went to a gun store here in Macon to buy a new firearm. It was really busy, and I didn’t expect it to be busy. I remember, I went to two different gun stores—a pawn shop, then I went to an actual gun store. The pawn shop was packed; it was full of people. I really was not expecting that. Usually, in pawn shops, it’s usually pretty empty. It’s never full like that unless it’s a flea market or a gun show. They had the guns that I was looking for, something small and compact that could fit in a purse. The gun store had a lot of amateurs, people who had obviously never handled a firearm by themselves. They were purchasing Glocks, looking at ARs, or shotguns. It was a lot. I called my husband and I asked if I needed to buy any extra ammo for the house and he told me, “yeah, see what they have in bulk.” But they didn’t have any ammo in bulk. They had small boxes of 22’s and 9mm, but nothing in bulk at all. The guy at the gun store said if I was going to buy ammo, I should do it now because it’s being sold out all across the city.
OM: More than 22 million Americans have had to apply for unemployment insurance in the past month. I asked Katherine, had she had to? And what had that process been like?
KM: We did, probably about a week after we got back from [vacation], about five days after they closed our dining room. We realized that we were not going back to work anytime soon, so we applied for unemployment. We still have not gotten it. That was probably about three and a half weeks ago.
OM: Katherine then described how she reached out to her company’s hotline, which was helping workers get unemployment benefits.
KM: Texas Roadhouse has a support hotline called “Roadie Support”. We were instructed by our general manager to call Roadie Support, and they would be able to push our unemployment application further on their end to get it approved or processed faster. I remember, I applied on a Friday and called Roadie Support that following Monday, and then by Tuesday, I received an email that my application was processed. I got an amount for how much I was supposed to be receiving weekly, which was about $200 for myself, a week.
OM: Since the outbreak of coronavirus and applying for unemployment, Katherine has since gone back to work, but it’s different than how she left it.
KM: Texas Roadhouse is doing a “curbside to go” thing, where you can call in to place an order or order online. We will have somebody bag it up for you and bring it to your car. Or, what they have me doing is working under this giant tent where cars drive through. If they haven’t placed an order, but they want to place an order in person, they park off to the left. I bring them menus and peanuts and drinks. They have picnic tables set up outside and you can order through me and you can sit outside and eat, but it’s not full-service. It’s minimum wage and they have anywhere from nine to 19 servers working and we all pool tips.
OM: So since you’ve gone back to work, do you still expect to get unemployment?
KM: Yes. My boss told me that [the state of Georgia] is not going to be withholding unemployment from anybody. You just cannot work more than 31 hours a week.
OM: And how many hours a week are you working now?
KM: My first week, I clocked in 29.75 hours.
OM: You have such a good memory.
KM: Yeah, I kept up with it. I even had coworkers telling me, “Kat, you need to clock out.” I would clock out, but I would still do my work so that I could finish my job without exceeding my hours. This past week, I’ve gotten into the groove of how it works. I was able to break down the tents a lot quicker, so I averaged 25 hours last week. My hours were cut again this week, and now I’m down to about 18 hours.
OM: Why were [your hours] cut again?
KM: Corporate got very serious about guest perception. Everybody has to wear masks and gloves. Now they’re doing a mandatory temperature check before I’m allowed to clock in. They’re going to take everyone that had already worked and split us into two groups, Group A and Group B. Group A was going to work Wednesday through Saturday, and Group B was going to work Sunday through Tuesday. Instead of doing two shifts a day, they’re going to change everybody to doubles, so we’d all go in at noon and close at 8, or 9 on the weekends. That’s just in case someone gets diagnosed with coronavirus in either Group A or Group B, they can go ahead and cut that entire group who’s been exposed.
OM: So, right now, Katherine is working 18 hours a week at minimum wage, while trying to sustain three children. She’s acutely aware of the amount of money she’s making, and the hours she’s worked. Something you’ll come to see about her through this interview, Katherine has a near-photographic memory for numbers. She’s been this way since high school, as long as I’ve known her. She gave me a detailed breakdown of her financial situation since returning to part-time work.
KM: I’m tired of working for minimum wage. $200 a week is nothing.
OM: Is that how much you’re making with minimum wage right now?
KM: Yeah. The week that I worked the most hours, after taxes, my paycheck was literally $123.57 [for the week]. As far as cash tips go, you go back and pick up your tips from the day before. And the cash tips average out to be about $8.
OM: What? Wait, $8 a day in tips?
KM: $8 in cash and then credit card tips can be anywhere between $20 and $45. When this first started, I had three ladies on three different days come by and leave hundreds of dollars in tips for everybody to split. People were being very generous at first. Were making minimum wage, but they understood that it was nothing compared to what we were used to making.
OM: Though Katherine hadn’t seen any state unemployment benefits yet, she did get $3,900 from her stimulus check, a financial package created by the CARES Act passed in March. This kind of money goes a long way in Macon, Georgia. I then asked Katherine if she knew about how the federal government is contributing additional funding to unemployment benefits. Also created through the CARES Act, unemployed Americans are eligible for $600 a week, on top of whatever their state unemployment benefits are. Remember, when she applied for unemployment, Georgia’s Department of Labor reported that she would receive $200 a week. Katherine should have been eligible for a federal boost of $600 a week until July, meaning she should be receiving around $800 a week, nearly four times what she’s making at [the restaurant] now. Katherine, like many Americans right now, isn’t sure if and when she’s going to receive state benefits or this federal boost.
KM: I have no idea. Nobody has spoken to me about it. As far as I know, none of my coworkers have heard anything about it or given any kind of instruction. All of my coworkers have applied for unemployment. The last time that I checked the Georgia Department of Labor’s website, it did mention the extra $600 [a week] stimulus check, but it didn’t say how we were supposed to get it. But I would imagine that if you applied for unemployment, they would just send it to that bank account that you have attached to your application, or they would just use the account you have for your last tax return.
KM: Do you want to know a fun fact?
OM: Yeah, go ahead.
KM: The state of Georgia released emergency food stamps for anyone who has ever had an active food stamp card. They were giving out about $1,500 in emergency food stamps.
OM: Do you guys have that?
KM: Yes. I actually hadn’t received benefits since January, because I was finally in a place where I did not need to rely on food stamps to buy groceries for myself. I didn’t renew my application. I was unaware that they were doing that. One day, I decided to check the balance on my EBT card and just see what’s on it. I looked, and it was $1,500 that had been deposited three days prior.
OM: And no one let you know about this?
KM: No, I wouldn’t have been aware.
For more Context on Coronavirus, read the rest of our series:
“Vaccine Development” is focused on how the typical vaccine development process is being accelerated–technologically, bureaucratically, and financially–to meet this unprecedented challenge.
“Voting During a Pandemic” details the various implications of the coronavirus on our elections, how states have responded, and why a massive expansion of mail-in voting may be the only feasible way to conduct the November general election.
“The Ventilator Shortage” gives an overview of the importance of ventilators in the fight against coronavirus, what is causing their current shortage, and how governments and the private sector are responding to it.
“The Gig Economy” discusses the importance of the gig economy and the unique challenges of nontraditional workers in the fight against coronavirus.
“Diagnostic and Antibody Testing” explores how the United States got behind the testing curve and how we might still be able to correct our course and move toward a safe reopening of our economy.
On Wednesday, January 29, President Donald Trump signed the United States-Mexico-Canada Agreement (USMCA) into law, which will replace the North American Free Trade Agreement (NAFTA) that came into effect in 1994. The agreement enjoyed wide bipartisan support in both chambers of Congress, with only ten senators voting against the USMCA, including 2020 presidential candidate Bernie Sanders, eight Democrats, and one Republican.
Despite opposition, a contentious provision remained in the USMCA that grants liability protections for internet platforms, echoing language from Section 230 of America’s Communications Decency Act of 1996. In the agreement, many technology companies aren’t considered “publishers” of third-party content, but rather “platforms,” protecting them from liability through safe harbor provisions. Effectively, this shields companies like Google and Facebook from legal penalty for illicit or misleading content posted by their users and advertisers.
These provisions were met with backlash from both sides of the aisle. In December 2019, Democratic House Speaker Nancy Pelosi made a push to remove safe harbor provisions from the draft USMCA, but her request was made after the deal’s finalization. Similarly, Republican Senator Ted Cruz wrote in a letter to U.S. Trade Representative Robert Lighthizer that “members of both the Senate and House of Representatives [are] seriously considering whether to amend or eliminate Section 230’s grant of immunity” and that he believed “enshrining it in our trade agreements would be a mistake.” Despite their qualms, both Pelosi and Cruz voted in favor of USMCA in their respective chambers.
Although Democrats and Republicans have found common ground in questioning these liability protections, they have done so for different reasons. Senator Cruz has been an outspoken critic of what he’s called “Silicon Valley’s blatant political censorship,” echoing the widespread Republican sentiment that technology companies have been trying to curb conservative messaging on social media platforms. Conversely, Democrats have condemned what they see as the rise of hate speech, misinformation, and conspiracy theories on social media.
Outside of the trade agreement, the original Section 230 has also come under fire from both the Department of Justice (DOJ) and some in the private sector. In a speech on December 10th, Attorney General William Barr stated that the DOJ is looking into Section 230, and that the law has “extended far beyond what Congress originally intended.” He stated that platforms have legal immunity from “blocking or removing third-party speech–including political speech–selectively” and allow communications within terrorist organizations. Outspoken technology company opponents to Section 230 include Oracle, Salesforce, and Microsoft. Facebook CEO Mark Zuckerberg has stated that without Section 230, he wouldn’t have been able to start Facebook, but the company now must take a “broader view of its responsibility.”
Section 230 and an array of social media regulations are currently being reevaluated by stakeholders. In June 2019, The New Center suggested potential reforms in a policy paper entitled “Big Tech: Public Discourse and Privacy.” The New Center proposes the following solutions to create a sustainable framework for platform liability and responsibility:
- In line with the First Amendment, online speech should be free unless inciting violence or promoting dangerous obscenity
- Operators should have liability for any demonstrable negligence, as determined by the Federal Trade Commission
- Platforms should provide meaningful notice to those who have their content removed
- Platforms should allow users the right to appeal any content takedown
- Platforms should issue public reports detailing the amount and types of removed content, along with justifications for removal
For solutions forged in the center, read the full paper here.
Earlier this month, the California State Legislature passed the year’s final amendments to the California Consumer Privacy Act (CCPA), a bill to enhance personal data privacy and consumer protection online. These changes are expected to be enacted into law by October 13th, pending a signature from California Governor Gavin Newsom. On September 25th, policymakers released an additional “CCPA 2.0” initiative—The California Privacy Rights and Enforcement Act of 2020—to be placed on next year’s presidential election ballot. Among other things, CCPA 2.0 would establish an independent data protection agency, create a new class of “sensitive information” (such as passport and social security numbers), and include additional notice requirements for businesses.
Since its inception, the CCPA has been a political lightning rod. Congressional Democrats have called the bill a “floor,” not a “ceiling,” for federal privacy legislation. Conversely, Republicans have argued that stringent privacy laws create high compliance costs which pose a threat to small businesses, innovation, and consumer choice.
Policy experts have noted that California’s privacy laws often become de facto national standards. Members of Congress on both sides of the aisle have warned against simply transposing the CCPA into a model for federal legislation, even though Congress has yet to produce a politically viable alternative.
One major sticking point in the federal legislation debate is “preemption”—the ability for a federal law to preempt (override) state laws, such as the CCPA. Republicans have advocated strongly for preemption, warning against a patchwork of state laws that may disrupt interstate commerce and compound compliance costs. Some Democrats, particularly those with a hand in crafting or promoting the CCPA, are opposed to the idea of preemption, fearing that a national law might water down state laws.
In 2018, Congress had reached a consensus on the need for a strong federal privacy framework in the United States. Senator Robert Wicker (R-MS), head of the Senate Commerce, Science, and Transportation Committee, stated that he anticipated “a federal law on the books by the end of 2019.”
But Congress has yet to act. Still, many in Congress and the tech industry recognize that a clear nationwide privacy standard would be easier to comply with than different state by state laws.
Earlier this year, Senate Majority Whip John Thune (R-SD) stated that “the question is no longer whether we need a federal law to protect consumers’ privacy. The question is what shape it should take.”
In June 2019, The New Center suggested potential reforms in a policy paper entitled “Take on Big Tech: Protecting Privacy and Public Discourse”. The New Center proposes the following solutions to create a sustainable and sensible framework for managing privacy concerns:
- Enacting federal legislation to protect online privacy
- Allowing the FTC to issue trade rules under the guidelines of the Administrative Procedure Act (APA), or creating a new privacy watchdog organization with APA rulemaking ability
- Creating a legal framework to promote transparency in content moderation
- Fostering a system of algorithmic accountability for AI use in moderating online content
- Restoring of the Office of Technology Assessment
For privacy solutions forged in the center, read the full paper here.
Olive Morris is a policy analyst for The New Center, which aims to establish the intellectual basis for a viable political center in today’s America.