Facebook, Twitter Brace for New Election-Ad Rules From Congress

(Bloomberg) -- After two rocky days in Congress, the social media giants face rising momentum for regulation of political ads to curb Russian election meddling, although some key Republicans remain skeptical and urged the companies to do a better job on their own.

Facebook Inc., Twitter Inc. and Google again declined on Wednesday to endorse a bipartisan bill that would force them to join broadcasters in disclosing who pays for the political ads they carry -- although Facebook Chief Executive Officer Mark Zuckerberg and Twitter’s top lawyer said they support some form of transparency rule.

“We’re working with Congress on legislation to make advertising more transparent. I think this could be very good, if done well,” Zuckerberg said on a conference call Wednesday, adding that what the Russians did “is wrong and we are not going to stand for it.” Sheryl Sandberg, Facebook’s chief operating officer, wrote online that the company will label ads related to federal elections “so it’s clear who paid for them.”

All three companies said at hearings Tuesday and Wednesday that they’re working on new voluntary tools for blocking foreign manipulation of their networks. But lawmakers lambasted them for failing to stop the flood of deceptive Russian propaganda intended to divide Americans or interfere in last year’s election, and for only taking the issue seriously under pressure from Congress.

Several Republicans said they’re ready to back new regulations.

Representative Michael Conaway of Texas, the Republican leading the House Intelligence Committee investigation into Russian election interference, said he’d support social media disclosure legislation to close what he called a “gap in the law.”

“Having the same standard of disclosure as to who paid for an ad that we currently have on all print media, TV media -- all the stuff we normally do for our campaigns -- having that apply on these three platforms would certainly make sense to me,” Conaway said after the panel hearing Wednesday.

Republican Senator Lindsey Graham, who led a Senate Judiciary subcommittee hearing with the three companies a day earlier, said he likes the concept of the proposal by Senate Democrats Amy Klobuchar and Mark Warner and Republican John McCain to require online ad disclosure, but needs to look at the specifics.

“The idea of regulating social media advertising is a no-brainer,” said Graham of South Carolina. “It’s got to be very similar to what we do on radio and TV. It would be crazy not to have a system to regulate advertising on social media, that have more contact with people than broadcast and radio.”

The Federal Election Commission has split in the past on whether to regulate online ads under existing laws that apply to broadcasters, but has asked the public for more comments following the Russia revelations.

‘No Exception’

“You all acknowledge that FEC law applies to you. But it hasn’t been lost to me that all of you asked for an exemption for the applicable FEC law,” Senate Intelligence Chairman Richard Burr told the company executives. “Let me make it perfectly clear, there is no exception to the disclosure as it relates to foreign money used to influence elections. That is a national security issue.”

“I’d hope that if there’s a takeaway from this, it’s everybody’s going to adhere to FEC law,” said Burr of North Carolina.

The companies have long resisted federal regulation. Eric Schmidt, the chairman of Google’s parent, Alphabet Inc., told a conference in Washington last week that “we worry about premature regulation. I would be very, very careful about simple answers to these problems.”

Sean Edgett, Twitter’s acting general counsel, said his company supports the general idea of ad disclosures but has some ideas for “fine-tuning.”

‘Very Small Piece’

But Senator John Cornyn, the No. 2 Senate Republican and another Intelligence Committee member, said he’s less interested in new ad disclosure rules.

“That’s not really the problem,” said Cornyn of Texas, adding that most of the Russian efforts didn’t involve advertising. “It’s a very small piece and maybe almost infinitesimal. I’m not so much worried about foreign governments buying advertising for or against candidates as I am them sowing the fake news stories and the propaganda.”

Senator Susan Collins of Maine, another member of the Intelligence Committee, also isn’t yet sold on new regulations, but wants changes from the companies.

“They need to do a far better job of knowing who is placing the ads on their social media platforms,” the Maine Republican said. “If they are going to be unfettered then they’ve got to take more responsibility for this.”

‘The Human Element’

Collins said she sees the companies’ reliance on algorithms as a key problem that actually helps spread Russian propaganda. “They’ve taken out the human element,” she said.

Other lawmakers pressed the companies on whether they have an obligation to tell users who may have been misled by fake Russian accounts in their feeds. Facebook General Counsel Colin Stretch said doing so would be challenging.

Democratic Representative Mike Quigley of Illinois asked about the likelihood that many foreign-bought ads still haven’t been found.

“There’s some likelihood,” conceded Twitter’s Edgett. Facebook’s Stretch added, “I share Mr. Edgett’s concern.”

“We don’t know what we don’t know,” Google General Counsel Kent Walker said.

‘Way Beyond Dialogue’

Klobuchar said she hopes to have additional Republican co-sponsors for her legislation this week, and blasted the companies for failing to sign on now.

“We’re way beyond dialogue and discussion about this issue. It’s time to pass this bill. The 2018 election isn’t that far away,” she said earlier this week. Her bill would also force Facebook and other companies to try to block foreign social media posts meant to influence U.S. elections.

“If you look at what they did in France, they were able to take ads down” before that country’s election in May, said Klobuchar of Minnesota.

Senator Dianne Feinstein, a California Democrat who is considering legislation of her own that would require social networks to notify law enforcement when they detect terrorist planning or recruiting, accused the companies of not understanding the importance of what was happening -- the start of a cyberwar.

“You have to be the ones who do something about it -- or we will,” she said.

©2017 Bloomberg L.P.