WSJ Editorial: The Graham-Warren Plan to Kill Innovation
Written by Joe Lonsdale. Mr. Lonsdale is managing partner at 8VC.
Sens. Lindsey Graham and Elizabeth Warren are teaming up to try to build something called the Digital Consumer Protection Commission—a new federal agency with the power to sue, write rules and even shut down internet platforms.
I’ve spent my life building technology companies—not in Big Tech, but taking on Big Tech through entrepreneurship and innovation. I invest in and engage in partnerships with hundreds of other entrepreneurs to build technology for America. The DCPC is a terrible idea.
Congress has considered such notions before, and both sides of the aisle have plenty of populist energy to go after Big Tech. As Americans know, Big Tech has flaws. Social-media platforms have policed speech based on viewpoint. Some large platforms’ power also is a concern. Apple uses its App Store to charge a 30% fee on app revenue while deciding which apps are available to the majority of U.S. consumers. But a Digital Consumer Protection Commission would be a disaster for tens of thousands of small and medium-size technology businesses—the beating heart of our innovation ecosystem.
According to Mr. Graham and Ms. Warren, the commission would focus on matters like data privacy, competition, cyberbullying and even artificial intelligence. It would have sweeping authority and little oversight, not unlike Ms. Warren’s earlier brainchild, the Consumer Financial Protection Bureau. It could issue and revoke licenses—à la the Federal Communications Commission—for internet platforms.
Discussing the idea last fall, Mr. Graham said a new tech regulator would “bring both parties together.” The veneer of bipartisanship doesn’t make this proposal better. A Digital Consumer Protection Commission would entrench Big Tech at the top with a regulatory nightmare for any potential rivals—at the expense of current and future entrepreneurs, and the speech rights of Americans.
Mr. Graham and Ms. Warren cite the Nuclear Regulatory Commission as an inspiration. That is laughable. The NRC has been more an obstruction commission than a regulatory one, failing to approve a new nuclear reactor design for nearly 50 years. But maybe that’s the point. The NRC froze the nuclear industry in 1975, and Americans suffered with higher energy costs.
The proposed Graham-Warren commission would impose similar costs on Americans through the technology sector, which already is riddled with bureaucratic pitfalls. If you need permission for something innovative, you have to know people in Washington—and you’d better stay on their good side. If you’ve traveled to Europe recently, you may have noticed that many websites are barely usable as a result of so-called data-privacy regulations. Compliance costs are astronomical and hit smaller businesses hardest.
American citizens benefit from an open internet, as well as the jobs and tax dollars generated by the world’s most vibrant entrepreneurial ecosystem. Technology is one of the rare industries in which products and services continue to become cheaper and better—unlike education and healthcare, which government controls through bureaucratic commissions and licensing bodies. It’s ludicrous to assess what is working in our country and what isn’t and conclude that we need more unaccountable bureaucrats in charge of technology.
The U.S. leads the world in innovation, which is why the best builders want to work here. China and Europe aren’t close, and won’t be if our tech sector remains free and dynamic.
Misguided policies like stopping acquisitions or requiring new entrants to get licenses—effectively ending liquidity for entrepreneurs—would end that. If we can’t sell companies, we can’t raise money, can’t back bold ideas, and the virtuous circle of innovation will slow to a trickle. Dollars that traditionally flowed to the U.S. innovation sector from around the world will go elsewhere. Under that scenario, the Big Tech companies will be all we have left, and they will be even more powerful. An NRC-style commission to slow down our own technology industry might give China a leg up over the U.S.
That should be reason enough for Congress to reject this proposal. But Americans should also be wary about the implications for free speech. Many on the right recently have been skeptical of some Big Tech businesses. When Twitter was a publicly traded company, it engaged in egregious censorship against Americans—with participation and even instigation from the government. Under its new owner Elon Musk, Twitter has begun to change course. The question for those who believe another bureaucracy would improve Big Tech malpractice is simple: If a powerful Graham-Warren-style commission had the authority to punish Twitter last year, would the company have restored freedom of speech on its platform?
Ms. Warren’s own words suggest not. Last fall she complained that Mr. Musk was deciding “in a dark room” whether to reinstate previously censored users. She would prefer that her own bureaucratic entity make such decisions in its own dark room—in Washington.
Ms. Warren has also demanded that Amazon suppress the sale of books offering views that differ from hers on subjects like climate change. She once suggested that the tech and retail giant be broken up after a Twitter spat with its corporate account, saying that antitrust action was needed so that Amazon wouldn’t be “powerful enough to heckle Senators with snotty tweets.” She has shown exactly how she would want a digital regulatory commission to operate. It would use its financial and legal authority to suppress criticism of elected officials, suppress freedom of speech on controversial policy issues, and bully technology companies into obeying every whim of Washington bureaucrats.
Recent leaks from Meta show that executives there worried that if they didn’t censor accurate information that the Biden administration didn’t like, the company could face severe consequences. Given this scandal, is another organ of government censorship advisable?
We don’t need more politically correct nonsense, more censorship mandated by the swamp. A Digital Consumer Protection Commission wouldn’t help and Congress should reject this proposal.