
US proposes barring tech companies from offering financial services - Anon84
https://www.cnbc.com/2019/07/15/us-proposes-barring-tech-companies-from-offering-financial-services.html
======
runeks
Isn’t a banking license mandatory for a company that offers financial
services? And if so, why does it matter what else a company does as long as it
lives up to regulations?

If it’s problematic that a licensed tech company is offering financial
services, isn’t there something wrong with the requirements for acquiring this
license?

Seems to me that if Facebook lives up to the regulations, it should be allowed
to acquire a banking license. And if there’s something problematic about this,
the requirements for acquiring a banking license should be changed, and
applied to everyone.

~~~
marak830
Perhaps we should start thinking about separation of powers such as modern
democracy(eg separation of church and state).

While not directly comparable, it's imo a good place to start. Advertising
companies perhaps shouldn't also be selling products (what's to stop them
pushing their own product vs someone else's), social media vs banking (a SM
can push their Bank, or similar service though we'll, that would be
advertising wouldn't it).

This isn't a terribly well fleshed out thought, but hopefully a conversation
starter.

~~~
save_ferris
This conversation has been going on for a little while already. Elizabeth
Warren directly addresses proprietary markets (i.e. participating in you own)
in her plan to break up big tech companies[0]. Her argument essentially boils
down to either participating in someone else's marketplace to sell goods, or
running your own marketplace without being able to transact within it, but
preventing the ability to run and participate within a single market.

0: [https://medium.com/@teamwarren/heres-how-we-can-break-up-
big...](https://medium.com/@teamwarren/heres-how-we-can-break-up-big-
tech-9ad9e0da324c)

~~~
Tyr42
Which means steam couldn't be created now, which is a little disappointing

~~~
save_ferris
Not true, theoretically they'd just have to sell their own products on another
marketplace.

~~~
jimbob45
Or offer them at a discount with little to no advertising, which is basically
what they did with Orange Box.

~~~
jrkatz
Or split into steam-the-platform-the-company and valve-the-games-company - and
if that happens I predict half life 3 really will follow.

------
Communitivity
In today's age, can we make the distinction between a tech company and a non-
tech company? How many B2B digital services does JP Morgan Chase offer, how
many consumer-facing digital services? Does that make them a tech company as
well as a financial institution?

I think this may be a knee-jerk reaction to the rise in crypto-currency
adoption, and Facebook's launch of Libra.

Rethinking it, this could also be taking aim at Amazon.

~~~
booleandilemma
My favorite (ridiculous) quote about the blurring of what exactly is a tech
company:

 _”Moxy...will be a technology company that just happens to fly airplanes”_

[https://www.dallasnews.com/business/airlines/2018/09/21/moxy...](https://www.dallasnews.com/business/airlines/2018/09/21/moxy-
jetblue-airways-founder-will-tech-company-just-happens-fly-airplanes)

~~~
nashashmi
UPS: we are a tech company masquerading as a shipping company.

~~~
scarface74
From even the small scale that I use to work at - routing field service
workers (cable installers, propane deliveries, alarm company installers, etc)
efficiently is a “hard problem”. On the scale that UPS operates it takes a lot
f technology.

------
dean177
The title is incorrect.

“A large platform utility may not establish, maintain, or operate a digital
asset that is intended to be widely used as medium of exchange, unit of
account, store of value, or any other similar function, as defined by the
Board of Governors of the Federal Reserve System,”

Its specifically targeted at currencies (libra and perhaps things like xbox
points?). Not all financial services.

~~~
paulddraper
A closer to correct tile would be "US proposes barring tech companies from
offering currencies"

------
wheelerwj
I work in FinTech and I love this idea. Banks and other Financial institutions
have incredibly strict data compliance and personal privacy laws that preclude
them from using customer data the same way the current large tech companies do
(facebook and google specifically). The laws limit both the type of
advertising including the language and representations/disclaimers, as well as
the scope in which their "sales history" can be used or distributed to other
vendors/firms/partners.

This type of service flies directly in the face of the Google and Facebook's
business models, there is absolutely a good reason to fear how these
advertising giants will abuse customer financial data. These services MUST be
kept separate for the health of society.

On a personal note, Facebook was just used to overthrow the democratic process
in the US and the UK, possibly in other nations as well. They certainly need
to demonstrate the ability to control their existing products before they are
given even greater responsibility.

I love what David Marcus is doing and the idea of a crypto currency can do the
world a lot of good. But not in Facebooks hands or in the hands of any other
advertising giant.

~~~
alienallys
Not long ago Facebook was praised especially in "White" countries media on how
Facebook was helping establish "democracy" in "third-world" or "non-white"
countries. Tired of this 'not in my backyard' mentality' of US polity.

~~~
nwah1
You're assuming that the same people are doing the praising and complaining.
In my experience, the people who don't like Facebook, don't like what they are
doing anywhere. The people who like Facebook, who I assume are mainly those
with a financial interest, are pretty happy about Facebook in general.

------
aj7
The financial services industry sees an existential threat. So they respond
with lobbyists.

~~~
Shivetya
financial services industry? try the governments of the world. a currency
outside of their control that is supported by a well known agency, in this
case its obviously facebook, would be just another nail in the coffin for
them.

look, government, namely the politicians, all truly upset that the facebooks,
google, and more, of the world, give anyone the opportunity to get a message
out. decades ago the politicians could reliably count on the press of their
nations to always pony up.

they have lost control of the message mostly, they are trying to claw it back
under the guise of protecting privacy , elections, children, and puppies. they
damn well will get in front of any attempt which could affect their control
over any means of wealth transfer. even regulated and taxed they would lose
manipulation of currency to implement policy.

------
blodovnik
So then would financial services companies not be allowed to offer tech
services?

And what, precisely, is a tech company? How is that unambiguously defined?

~~~
klez
From TFA

> The draft legislation, “Keep Big Tech Out Of Finance Act,” describes a large
> technology firm as a company mainly offering an online platform service with
> at least $25 billion in annual revenue.

~~~
bilbo0s
Like Paypal?

~~~
awinder
There isn't a definition provided for platform utility in this bills text, but
the first mention I saw of the "platform utilities" term was from Warren,
which was referring to select category of companies with this definition:

    
    
      Companies with an annual global revenue of $25 billion or 
      more and that offer to the public an online marketplace, an 
      exchange, or a platform for connecting third parties would be 
      designated as "platform utilities."
    

It looks like PayPal is at around 13B in yearly revenue so they would 100% not
be included for revenue bar alone, but not completely sure how I would read if
they fit into the category based on the rest of the definition.

~~~
Robotbeat
A limit of $25 billion in global revenue? This reads like legislation drafted
by large banks to secure their moat against newcomers with enough heft to
actually make a dent in their market share. I don’t think this will facilitate
competition or protect the consumer in any meaningful way.

~~~
apocalyptic0n3
$25B is the point that Warren has been targeting for a few months now, not
just for banking-related services. She says that at $25B, the company is
sufficiently large that they control a significant portion of whatever
industry they are as well as the economy and people's lives. The goal is to
target companies with too much influence and reign them in with regulations
and/or breakup. Again, this number is being used for _any_ industry, not just
banking and tech (though tech does seem to be the focus at the moment).

------
cheriot
Banks are going to love this. It's called regulatory capture:
[https://en.wikipedia.org/wiki/Regulatory_capture](https://en.wikipedia.org/wiki/Regulatory_capture)

Less threat of competition just means their margins get to stay high. I'd
rather be looking for ways financial regulations can encourage more players to
enter the market.

------
b_tterc_p
> “Such a sweeping proposal would likely spark opposition from Republican
> members of the house who are keen on innovation”

Is this true? I would assume Republicans are more interested in protecting big
bank interests

~~~
bluGill
There are a lot of republicans: don't paint them with a wide brush.
Republicans are in favor of small government - (less so now that they have
power). The large number who believe small government even when in power are
not in favor of big banks which have mostly got by exploiting government
regulations that republicans oppose.

Remember though, the above is the generalization of one significant group of
republicans. There are many different (overlapping) groups with different
beliefs.

~~~
asveikau
> The large number who believe small government even when in power

I believe you are talking fiction here. They don't institute small government
when in power because the campaign rhetoric about small government that they
use to get elected is completely infeasible. Add to that that there are
usually many forms of spending which would be controversial to their campaign
rhetoric were it logically consistent, but they like.

~~~
bluGill
Don't confuse the rank and file voters for those elected. There is a lot of
frustration. Politics is complex.

~~~
asveikau
You said "when in power".

I humbly suggest I have been watching this trend for decades and am not
confused about this disparity. The voters you are talking about by and large
get suckered in by infeasible promises. Sometimes the elected officials are
true believers who only fail once the reality of the situation sets in. Other
times it's active deception.

~~~
bluGill
Sigh...

------
0xB31B1B
I understand the sentiment but have no idea how this could be carried out.
What happens to gift cards? What happens to in game digital currencies, what
happens to ad accounts, what happens to AWS credits.

~~~
onetimemanytime
They can fine tune the law as much as they want

~~~
bilbo0s
If they'd make a simple HIPAA-like law that just criminalizes outright the
sharing of personal data for commercial purposes, we wouldn't have to worry
about fine tuning to catch privacy corner cases. No one even tries to wiggle
or weasel out of HIPAA violations because the law is simple and none of the
big shot hospital CEO's want to spend any time in prison. All the hospital
employees are well aware of what will happen if they violate a patient's
privacy as well. We need that same thing for all personal data, not just our
medical data.

Perfect example of politicians giving us truckloads of junk we never asked
for, like this "Keep Big Tech out of Toilet Paper Printing" or whatever, while
at the same time giving us absolutely no part of what we do want, privacy
protection.

~~~
dragonwriter
> If they'd make a simple HIPAA-like law

So, I've been working fairly intimately with HIPAA for close to 20 years, and
I have to ask: on what planet can a law both be “simple” and “HIPAA-like”,
even if you are only talking about the original 1996 Act and not all the
subsequent additions?

> No one even tries to wiggle or weasel out of HIPAA violations

Yes, they do (well, for privacy violations, not, say, the Administrative
Simplification side, but only because that side isn't enforced with any
seriousness so they don't need to bother.) That's why we got things like
HITECH to make that harder.

~~~
bilbo0s
Look man, I've worked intimately with HIPAA for a long time too. (Full
disclosure, I've taken medical imaging companies public before. My SO runs a
swath of hospitals down in Texas.) The reality is, dealing with the FDA side
of things was about 15000 times more complicated for us than HIPAA compliance.
I'm pretty sure anyone who's ever shipped a medical diagnostic product would
call HIPAA compliance simple compared to what the FDA puts their products
through. The regulatory affairs people at most medical companies are FDA
compliance experts that know how to comply with HIPAA, rather than HIPAA
experts that some how penetrate the FDA requirements. There's a reason for
that.

~~~
dragonwriter
> The reality is, dealing with the FDA side of things was about 15000 times
> more complicated for us than HIPAA compliance.

[...]

> The regulatory affairs people at most medical companies are FDA compliance
> experts that know how to comply with HIPAA, rather than HIPAA experts that
> some how penetrate the FDA requirements.

Well, yeah, the _Health Insurance Portability and Accountability Act of 1996_
is centrally a law regulating _insurance provision_ whose rules and
regulations most significantly impact _payers_ ; the parts impacting providers
(while there is some compliance effort required, particularly regarding
privacy and security) were actually designed to _reduce_ the burden on
providers; the privacy/security elements of HIPAA were included to mollify
fears about the incentivizing and standardization of electronic billing
transactions, they aren't the central focus of HIPAA though they are the part
that (now that the “number of the beast” fearmongering has faded) remains in
the public consciousness.

EDIT: And even then, the HIPAA privacy rules aren't all that simple; if you
want simple privacy rules, the rules for privacy of federally-funded drug and
alcohol treatment patient data are _much_ simpler, and also stronger privacy
protections.

------
jkilpatr
> "A large platform utility may not establish, maintain, or operate a digital
> asset that is intended to be widely used as medium of exchange, unit of
> account, store of value, or any other similar function, as defined by the
> Board of Governors of the Federal Reserve System,"

Define large, platform, and utility please?

They do define large as 25bil.

This definition has serious issues if nothing else.

~~~
krastanov
Isn't it normal to be vague when writing laws in a "common law" system like
the US? I thought the practice was defended with the notion that judges will
have to interpret the spirit of the law, having some flexibility with
unforeseen cases. It has its pros and cons, but it seems to be an explicit
design decision in the system of laws.

~~~
cat199
not a lawyer, but there is 'vague allowing room for interpretation' and 'so
vague it cant be interpreted'

~~~
Qwertystop
Well, this isn't that. The interpretation may vary slightly, but there are
definitely established meanings for "platform" and "utility" for a judge to
work from (though "platform" might be only the plain-English meaning,
"utilities" such as power and water companies are a regulated category which
can be used for reference if nothing else).

------
jbverschoor
So you simply start a different company unrelated to the tech company. Similar
to the tarrifs.. Apple gets an excempt because it cannot get their parts
anywhere else; because they are Apple-specific parts, manufactured there.

Governments need to take a look outside their bubble and see that they are
loosing power to global companies.

~~~
klez
> Governments need to take a look outside their bubble and see that they are
> loosing power to global companies.

Look, I know Hanlon's razor and all, but thinking that there's no complicity
between the US government and US companies (you say global, I say US because
FAMGA, in this case) is wishful thinking.

~~~
mrep
> FAMGA

GAFAM rolls off the tong a little better and what the french use (pretty funny
article about them on the french wikipedia [0])

[0]:
[https://fr.wikipedia.org/wiki/GAFAM](https://fr.wikipedia.org/wiki/GAFAM)

~~~
klez
I'm Italian, so neither really sound weird to me :)

------
conanbatt
I find these laws that make BS criteria like "Above X billing" to be a
grotesque violation of the rule of law.

Clearly they want to apply rules to a specific company, but it would be too
crude to say "FANG" and create criteria that apply only to the "FANGS".

------
dooglius
I wish the Constitution prevented laws from discriminating on the basis of
size or industry, the law should only be able to determine what conduct is or
is not permitted.

~~~
PorterDuff
How would you deal with antitrust?

~~~
dooglius
Don't require being a monopoly as a condition, just regulate anticompetitive
behavior. For instance, I think it is a flaw that Microsoft is prevented from
bundling a browser on Windows while Apple gets off Scott-free for much more
egregious behavior on iOS.

~~~
cameronbrown
This makes so much sense if it's actually possible. It also means we can keep
useful companies like Amazon around while keeping them in check.

------
viraptor
I'm curious where they draw the line for "company offering financial
services". Even if Facebook falls into the big online tech bracket, they
explicitly wanted Libra to be a separate entity. In the extreme case, they
could hand over Libra completely to other companies and deeply integrate as a
payment system/wallet for Libra that they have "no control" over.

~~~
klez
From TFA

“A large platform utility may not establish, maintain, or operate a digital
asset that is intended to be widely used as medium of exchange, unit of
account, store of value, or any other similar function, as defined by the
Board of Governors of the Federal Reserve System,” it proposes.

~~~
Robotbeat
So it’s specifically targeted against Libra.

~~~
viraptor
I don't understand it this way. Facebook is the platform and it can organise
Libra in a way that it doesn't actually operate or maintain the cryptocurrency
itself.

I'm assuming that implementing a wallet is not part of operating the currency.

------
buboard
Absolutely. The US needs to protect the banks and Visa

------
tracker1
While I don't want Libra at all... the framing of this is pretty absurd and
overly broad, having not read the proposed legislation.

That said, given the path that technology as a sector has taken to censor and
deplatform people based on their political alignment, I'm not sure I'm really
supportive of any potential currency exchange that does not stay out of any
discussions of legally protected speech. I don't agree with most of those that
would be cast out, but potentially not being able to pay for housing,
utilities, bills, taxes or buy food is a pretty big deal.

------
todaysmistakes
I would be okay with them adding some oversight for online mortgage brokers. I
was recently shopping to refi my home and it is dark and shady shopping for a
mortgage online. Even the bigger name brokers like Loan Depot, Better,
Amerisave, Rocket Mortgage were pushing documents through stages that they had
no right to and were attempting to have me sign my wife's name. It wasn't just
one-off, it seems to be the standard operating procedure for them.

------
aasasd
Huh? It seems every second company that has a website now tries to be a
financial middleman, _not_ even counting the cryptocoins. Open an account with
McBank to pay for your burger! Oy, we now have a bazillion of customers'
dollars on our hands, that we get to hold for five minutes each. Better invest
them in the meantime, I guess.

Anyway, the quotes in the articles are so vague that they have no chance or
regulating anything.

~~~
ativzzz
Retail has been doing this for a long time. Every single retail store seens to
have their own credit card.

------
deepakhj
Sears, the original amazon, offered many financial services.

Sears -> Discover (founded) H&R Block (located in stores) Dean Witter
(acquired) Allstate (founded)

------
monocularvision
In the interest of discussing the actual proposal and not the headline of this
article, here is a link to the draft:

[https://www.scribd.com/document/417056845/Keep-Big-Tech-
out-...](https://www.scribd.com/document/417056845/Keep-Big-Tech-out-of-
Finance-Act-Discussion-Draft)

------
oarabbus_
Robinhood is a tech company which offers financial services. What does this
bill even mean?

------
webninja
If Facebook’s Libra is successful, it would benefit every American
tremendously by strengthening the American Dollar. Up until now the USA’s main
export has been the American Dollar.

------
fartzzz
it seems that the US financial regulations are 1 big mess of patches. (For an
uninformed outsider like me). For example are onion futures are made illegal,
The Pattern day trading rule seems strange, gift cards etc. it seems
problematic that there is a need for creating very specific regulations when
it’s about financial services. This seems way too specific to be able to
uphold and cause uncertainty for startups. It is not possible to create a more
broad regulations?

------
OrgNet
They would finally be able to take care of Paypal.

------
mandelbrotwurst
Would $1M per day be a large enough penalty to discourage Facebook from
pursuing Libra?

For comparison, MasterCard's annual revenue is $12.5B.

------
CryptoPunk
Consumers should decide whether they use the banking services of tech
companies, not politicians or regulators.

------
sjg007
I wonder what the specific worry is? Anti-trust? How is this different than
being a different payment network?

------
jdlyga
Where does Bloomberg fall in this? They're a tech company, but they're also a
financial company.

~~~
umeshunni
But their revenues are less than $25B, which is the arbitrary limit set in
this proposal.

------
squirrelicus
It's easy to ridicule this post, as this comment section demonstrates, but
there's a point hidden behind the apparent ignorance insofar as cnbc has
reported it.

Startup culture has demonstrated that they are uninterested in following and
very interested in subverting long standing regulations that exist for good
reasons.

It's not clear how to solve this problem, and there's a certain
quasilibertarian bias that legitimizes it, as the federal register is
incomprehensibly large, such that only long established networks of expensive
lawyers can wrangle it, which stifles innovation.

The difficult part, however, is making the case that innovation ought to
happen in this space anyway.

~~~
CryptoPunk
>>subverting long standing regulations that exist for good reasons.

Do you have evidence that they exist for good reason? It seems to be central
economic planning, based on the delusional idea that cookie-cutter rules
designed to regiment every class of interactions will preempt misbehavior and
promote socially beneficial behaviour.

The opportunties for special interests to stifle competition with regulations
are replete, so there are many explanations for regulations existing besides
their being in the public interest.

------
alt_f4
let's keep financial services in the hands of Wall Street, where everyone is
very reputable and well-intentioned

~~~
raxxorrax
Wall Street just takes advantage of any financial advantage they can get their
fingers on no matter the casualties.

Tech companies like Google or Facebook are actively trying to shape your
opinion. Must have been an ingenious move they made to look worse than Wall
Street in a few years.

edit: The unpersoning they have committed isn't a viable strategy in the
financial industry. Even if players like Mastercard have fallen into that
trap. But I wouldn't trust them with a penny.

------
ptah
quite a few large investment banks have the refrain that they are technology
companies first. will this impact them?

------
Mirioron
Would this also affect Visa and MasterCard?

~~~
yohann305
I have met engineers from Visa and American Express and they are as
knowledgable as their counterparts in the said "tech companies" and do work on
bleeding edge tech.

In other words, the proposition to bar tech companies from offering financial
services is a joke. How can you tell what a tech company is? Every company
uses tech in some way shape or form.

~~~
liopleurodon
This ^

