Tech has been among the hardest hit sectors in the recent stock market upheaval and it could come under additional pressure as Democrats take control of Congress in the new year and promise intense scrutiny possibly in the form of hearings and investigations, FOX Business has learned.
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Democratic leaders are signaling that at least two major Congressional committees, House Judiciary and House Energy and Commerce, are openly discussing hearings and launching inquiries into technology companies’ use and alleged misuse of customer information, people with direct knowledge of the matter tell FOX Business.
The probes will likely be led by several ranking members of these committees that have oversight of technology related issues: David Cicilline (D-RI) of the Judiciary Committee, Michael Doyle (D-PA), and Tony Cárdenas (D-CA) both of the Energy and Commerce Committee, these people say.
The Democrats’ interest in holding big tech responsible for privacy violations represents somewhat of an about-face for a party that traditionally considered Silicon Valley an ally in progressive causes. Executives at the big tech companies are reliable Democratic donors and have been for years. In fact, many executives on Wall Street expected the new Democratic House leadership to focus its attention and investigatory agenda on the big banks—the long time target of the party's class warfare angst, particularly following the 2008 financial crisis.
While the big banks may not totally escape scrutiny from the likes of Maxine Waters (D-CA), the incoming Chairwoman of the House Financial Services Committee, the party's leadership led by soon-to-be House speaker Nancy Pelosi (D-CA) believes the base of the party is now more wary of the power of big tech companies that exploit user data on their platforms by selling it to third parties, often without public disclosure, these people add.
At issue: a series of data breaches and embarrassing disclosures about selling user data to political operatives particularly by the social media giant Facebook that has generated significant bad publicity for the tech companies over the past year.
If and when the House focuses on the privacy issue, it could pressure stocks of companies like Google, Facebook and Amazon as well as Apple, all of which collate and in some cases have sold user data to third parties to generate enormous profits and massive stock valuations in recent years.
Without a free hand in selling this data, profits and stock prices will fall.
To be sure, the Democrats won't have a free hand in crafting legislation since they control only the House; Republicans added to their majority in the Senate during the recent midterms.
But industry executives tell FOX Business that even Republicans on Capitol Hill are wary of the power of big tech. President Trump is also no cheerleader and has publicly attacked Amazon and its CEO Jeff Bezos on various issues because of what he believes is the liberal bias of the newspaper Bezos owns, The Washington Post.
"When you talk to Democrats on the Hill one of the first things they talk about is tech companies and privacy concerns" said one lobbyist who spoke on the condition of anonymity. "And they will have support on the other side of the aisle in any crackdown."
Officials from the tech firms have been largely silent on the likely heightened scrutiny even as Congress has already held hearings that feature Facebook CEO Mark Zuckerberg taking some heat for data and privacy breaches.
But the new Democratic leadership in the House is signaling that it will turn up the heat on big tech even more—a move that could lead to a public outcry for profit-crimping legislation.
In a statement to FOX Business, Cárdenas seemed to confirm the upcoming assault on tech from the Democrats, “The best opportunity for Congress to adhere to its responsibilities is to bring corporations and organizations to the table in an open and transparent hearing of the Energy and Commerce Committee, of which I am a member.”
As data breaches become more ubiquitous, Cárdenas said it’s up to legislators to play a larger role in monitoring tech companies, “Protecting information and privacy is critically important and is under attack more and more every day.”
Spokespeople for Cicilline and Doyle did not respond to a request for comment.
A Facebook official said: "We look forward to working with Congress on ensuring that all data remains safe and secure.”
Google, Amazon, and Apple did not respond to a request for comment.