The wind has been knocked out of Biden’s agenda on Capitol Hill, impacting everything from more partisan issues such as budget and tax policy to bipartisan legislation aimed at competition with China, as well as Russian sanctions.
A Republican House majority would severely limit the prospects for enactment for much of the progressive agenda, including tax hikes and legislation that’s less business-friendly.
Legislative Logjam Will Shift to Regulatory Activity
While a flurry of activity on Capitol Hill is expected after Biden’s State of the Union Address, we expect the crisis in Ukraine will weigh heavily on the legislative process, and it could come to a grinding halt sometime in the second quarter. This leads us to where we see a sizable portion of the action taking place for the remainder of the year: the regulatory agencies, with a target on Big Tech coupled with antitrust policy.
Headwinds for Dominant Tech Platforms
Big Tech antitrust and competition policy battles will likely pick up this year, particularly when the Democrats finally have a 3-2 majority on the Federal Trade Commission (FTC). Lawmakers on Capitol Hill will continue to make plenty of noise about the perils of Big Tech, but the more tangible threat to Alphabet (Google), Meta (Facebook), Amazon, and Apple probably emerges from the bureaucratic trenches.
The FTC is now split evenly along party lines, but Biden’s pick for the fifth seat (and third Democrat) on the FTC awaits Senate confirmation. The Senate is split on this nominee (Prof. Alvaro Bedoya), but we think he will probably squeak past Republican opposition and win final confirmation, perhaps with Vice President Kamala Harris breaking a tie vote. If not, the White House has some more work to do if it wants the FTC to fulfill Biden’s competition policy agenda.
The president highlighted two FTC tech-policy priorities in a recent executive order that calls for more aggressive competition-policy enforcement and implementation throughout the federal government. Yes, the FTC is technically an independent agency, but the majority members will likely push a partisan agenda in service to the president that put them in office.
In the executive order, the president requested that the FTC adopt regulations addressing “unfair data collection and surveillance practices” and “unfair competition in major Internet marketplaces.” We’ll see what the FTC ultimately proposes, but the agenda appears to threaten data collection on users to support targeted digital advertising models (Facebook and Google) and Amazon’s treatment of third-party sellers. We have long doubted the power of the FTC to adopt rules to define “unfair” competitive practices, but the new FTC Chair, Lina Khan, appears committed to testing the agency’s legal limits so a fight over upcoming tech regulatory proposals seems likely.