New Congress signals shift in scrutiny of tech industry

Donald Trump remains in office, but the newly empowered Democratic Congress is poised to launch investigations and exert leverage over budget and defense legislation, impacting the tech industry’s favored policies.

The shift in power arrives after a period where the Trump administration largely adopted a hands-off approach to regulation, particularly concerning artificial intelligence. This included overlooking a divest-or-ban law regarding TikTok, a decision the company publicly acknowledged with gratitude. Tech companies, including Google, Amazon, and Microsoft, contributed millions to Trump’s inauguration fund, and the White House hosted events showcasing initiatives like OpenAI’s Stargate Project. The administration also appointed tech leaders as advisors and even ordered a technology to be renamed.

The electoral outcome reflects broader public anger fueled by Trump’s policies, including trade wars and immigration crackdowns. The tech industry has become a focal point of this discontent, with hyperscale data centers facing increased scrutiny and public concern rising over the potential impact of AI on employment and safety.

Democrats are expected to investigate issues such as a $24.5 million legal settlement involving Google, and Trump’s financial ties to the cryptocurrency industry. Allegations of financial benefits for Elon Musk stemming from his relationship with Trump, alongside concerns about his actions involving DOGE, will also likely be examined.

While comprehensive legislation is unlikely under Trump’s continued presidency, congressional investigations can uncover information that may lead to legal liability for tech companies. Furthermore, newly elected Democratic state officials are expected to continue pushing back against data centers, and a Democratic majority could pursue federal action, potentially forcing Trump to publicly defend his support for the industry. The prospect of a federal moratorium on state AI laws, previously championed by Republicans, appears to have diminished.

Democrats will likely avoid replicating the Republican strategy of accusing social media platforms of censorship, but they are positioned to investigate the alliance between the Trump administration and the tech industry, including the actions of figures like FCC chair Brendan Carr. However, there is a risk that despite the mandate for change, lawmakers may fail to enact meaningful reforms, mirroring past inaction on issues like antitrust and data privacy. Tech companies, including Meta, are already attempting to recalibrate their approach, but the period of unchecked influence appears to be over.