Facebook was off the hook yesterday. Other social media services, ones more beloved by youngsters, found themselves in the hot seat instead.
Senators questioned policy representatives from TikTok, Snapchat, and Google’s YouTube for nearly four hours on Tuesday. The three companies sat before the commerce subcommittee on consumer protection, product safety, and data security, whose members grilled them on their efforts to protect children from harm. The Congressional body was the same one that heard testimony from Frances Haugen, the Facebook whistleblower and source of thousands of pages of leaked internal documents, earlier this month.
Top lawmakers came out swinging from the get-go. Sen. Richard Blumenthal (D.-Conn.), the panel’s chair, said that when social media firms learn about teens’ insecurities, “it’s a recipe for disaster” as they seek to serve up addictive content, which can cause mental harm as a side effect. Sen. Marsha Blackburn (R- Tenn.) added that she constantly hears “stories about kids and teens who are suffering” after using these services.
Despite the tech set’s best efforts to distance themselves from Facebook and its tattered reputation, policymakers weren’t buying it. Jennifer Stout, Snap’s vice president of global public policy at Snap, described the service as “an antidote to social media,” but Senators countered the assertion with examples to the contrary. They cited Snap serving up inappropriate, sexualized content; instances of people using the service to buy illegal drugs; and criticism of its now-defunct “speed filter,” which encouraged reckless driving.
Once the target of an attempted ban by former President Donald Trump, TikTok got its share of skepticism too. Republican Senators expressed concerns that ByteDance, TikTok’s Beijing-based parent company, could be sharing data about users with China’s government. Sen. Ted Cruz (R.-Texas) accused the firm of “participating in Chinese propaganda and espionage on American children.” Michael Beckerman, TikTok’s head of public policy in the Americas, retorted, “that is not accurate.”
Senators offered a variety of policy proposals to address the perceived ills of social networks. They suggested changing antitrust laws, rethinking the legal protections afforded to Internet services under Section 230 of the Communications Decency Act, and updating online child safety laws.
The tech executives were, unsurprisingly, mostly non-committal. They agreed with the aims of certain legislative proposals, but generally declined to voice support for particular bills. Leslie Miller, YouTube’s head of government affairs and public policy, said the company would “support the goals of updated comprehensive privacy legislation,” but when asked about a specific proposal, she noted only that her team has had “constructive” conversations about it.
The non-responses had Sen. Ed Markey (D-Mass.), who has been pushing for updated online child protection laws for years, in a tizzy. “This is a crisis,” he said. “We don’t have any more time. We have to get this finished.”
While such testimony is old hat for tech giants like Alphabet and Facebook at this point, this hearing was Snap and TikTok’s first time in the ring. They ducked and parried like the best of them. Such drag downs are practically a coming-of-age ritual for tech companies today, and this hearing shows just how much people are wising up to these apps’ becoming significant rivals to everybody’s-favorite-punching-bag Facebook.
The great irony of all this theater is that it might not be the government’s probing that is Facebook’s undoing, but the shifting tastes of kids.
Robert Hackett
@rhhackett
robert.hackett@fortune.com
NEWSWORTHY
Earnings are burning for some tech companies. On Tuesday, Microsoft and Google-owner Alphabet dropped some stellar quarterly results that broadly topped analyst projections. Revenues from Alphabet's YouTube and Google cloud units—two businesses that represent Alphabet's hope to diversify beyond search—failed to live up to expectations, but investors seemed to have gotten over it pretty easily Wednesday when shares ticked higher 4.8%. Microsoft, meanwhile, turned out yet another three-month stretch of strong sales and profit growth. Its shares climbed 4.2% Wednesday.
Is a settlement ever really settled? Staffers at the Federal Trade Commission have started to examine the troves of internal research from Facebook that were released in part by whistleblower Frances Haugen to see if the social media and ad giant had violated a 2019 settlement with the agency that included a record $5 billion penalty, The Wall Street Journal reports. Among the questions the FTC is now likely asking itself about Facebook is whether the company should have been warning users about the risks its own research has found over the years and if its actions were appropriate in light of the findings, former officials told the Journal.
Jamming at the top of podcast charts. Audio streaming company Spotify may have finally overtaken Apple as the No. 1 home to podcast listening in the U.S. Weeks after analysts forecast the Swedish company was likely to do so, Spotify said Wednesday that it is the top destination among podcast listeners in the U.S., citing Edison Research and its own research, according to TechCrunch. Podcasts were a big windfall to Spotify's business as a whole, too, the company said, though it did not provide specifics about how much ad revenue was generated from such broadcasts. Instead, Spotify said its podcast advertising growth rate was "in the triple digits," TechCrunch reported.
Visa's ties with other big fintechs comes under scrutiny. Card and payments giant Visa is facing new questions about the financial incentives it gave the likes of Square, Stripe, and PayPal, according to The Wall Street Journal. The Justice Department probe, which remains in progress, is focused on whether those incentives from Visa prevented the companies from looking elsewhere for money moving technologies, and if the payments companies felt encouraged to incentivize their own customers to pay using Visa cards.
FOOD FOR THOUGHT
The Internet’s bouncers. Silicon Valley is beefing up the card checks at the doorways to the online world. Following a (still ongoing) wave of concern over whether children are adequately protected online, tech companies like Facebook, Roblox, and Google-owned YouTube have been rolling out different ways in certain markets to check users’ ages. There’s a catch, though, as The New York Times reported.
From the article:
The changes, which have picked up speed over the last two years, could upend one of the internet’s central traits: the ability to remain anonymous. Since the days of dial-up modems and AOL chat rooms, people could traverse huge swaths of the web without divulging any personal details. Many people created an online persona entirely separate from their offline one.
But the experience of consuming content and communicating online is increasingly less like an anonymous public square and more like going to the bank, with measures to prove that you are who you say you are. This month, lawmakers in Washington, which has lagged other world capitals in regulating tech companies, called for new rules to protect young people after a former Facebook employee said the company knew its products harmed some teenagers. They repeated those calls on Tuesday in a hearing with executives from YouTube, TikTok and the parent company of Snapchat.
Critics of the age checks say that in the name of keeping people safe, they could endanger user privacy, dampen free expression and hurt communities that benefit from anonymity online. Authoritarian governments have used protecting children as an argument for limiting online speech: China barred websites this summer from ranking celebrities by popularity as part of a larger crackdown on what it says are the pernicious effects of celebrity culture on young people.
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BEFORE YOU GO
Air Shiba. In a brutal day for cryptos, one unlikely hero emerged for investors: Shiba Inu coin. The Japanese breed has become the darling doggo of crypto land, now acting as the representative of the 10th largest coin (Dogecoin) and the newly anointed 11th biggest in Shiba Inu coin, a joke knock-off of Dogecoin that has since taken off at an alarming rate. The crypto had made a stunning 68% rise over the 24 hours before 5:30 p.m. ET Wednesday.
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