GENIUS Act Props Up Terrorists, Antitrust on the March, Meta's Creepy Chatbots

The Tech Oversight Project

The Tech Oversight Project

— 6 min read
GENIUS Act Props Up Terrorists, Antitrust on the March, Meta's Creepy Chatbots

Welcome back to The Dispatch from The Tech Oversight Project, your weekly updates on all things tech accountability. Follow us on Twitter at @Tech_Oversight and @techoversight.bsky.social on Bluesky.

🚨🚨🚨 BIG TECH HANDOUT: STABLECOIN LEGISLATION HEADS TO SENATE FLOOR: Senate Majority Leader John Thune is planning to bring the GENIUS Act, a bill which would allow Big Tech CEOs to issue their own crypto currencies – game-ifying our financial markets and putting the U.S. dollar at risk.

BOTTOM LINE: This bill will hurt consumers, raises prices across our entire economy, and endanger our national security by propping up terrorist financing systems.

GENIUS Act/STABLE Act Toolkit:

⚖️SUNDAR PICHAI’S DAY IN COURT: Last week, a judge heard testimony from CEO Sundar Pichai in the remedy phase of the DOJ’s Google Search antitrust trial, which the monopoly lost last August. (Last month, Google also lost in a separate ad tech antitrust case.) The two sides are pretty far apart:

  • The DOJ’s proposal would force Google to share its search data with competitors, to spin off its Chrome browser, and stop paying for exclusive deals where phones default to using Google for search (like the $25-billion-a-year deal Google made with Apple, uncovered during the trial).
  • Of course, Google is asking for a more slap-on-the-wrist approach: it wants to keep Chrome and keep buying up distribution channels and merely have its placement deals be reviewed.
  • No dice says the DOJ: given Google’s current market penetration, letting them off the hook would amount to handing over the AI chatbot market.

TOP’s Sacha Haworth: “Google tore an asteroid-sized hole in the digital economy, and we are pleased that the Justice Department recognizes the scope of that problem and put forward a robust, yet warranted, proposal to right that wrong.”

Last week, The Tech Oversight Project hosted a fireside chat with leading experts about the Google search remedy trial. The program included remarks from former Acting Assistant Attorney General Doha Mekki and moderated discussion with Sacha Haworth of TOP, Lee Hepner Senior Legal Counsel at AELP, and Kamyl Bazbaz Vice President of Public Affairs at DuckDuckGo. Watch the full program here.

🤢 META'S CREEPY CHATBOT: Did you know that Mark Zuckerberg created companion chatbots to sext with your kids? Sound crazy? Well, unfortunately, it isn't.

Last week, the Wall Street Journal published an explosive exposé on Meta's "digital companions" – detailing how chatbots with names like "Submissive Schoolgirl" are crossing ethical lines by engaging in romantic and sexual roleplay with users – even minors. And now, Meta employees are sounding the alarm on Zuckerberg and Meta senior leaders.

DIRECT QUOTE: "The staffers also warned that the company wasn't protecting underage users from such sexually explicit discussions."

Think thirsty companion chatbots for your kids is a byproduct of happenstance? Wrong! This was a conscious business decision.

Zuckerberg said, "I missed out on Snapchat and TikTok; I won't miss on this."

"Internally, staff cautioned that the decision gave adult users access to hypersexualized underage AI personas and, conversely, gave underage users access to bots willing to engage in fantasy sex with children” according to people familiar with the episode.

Meta still pushed ahead, as long as it was "in the context of romantic roleplaying."

Let that sink in. "As long as it was in the context of romantic roleplaying." This speaks volumes about Meta's direction as a company, and it raises the question: Does Meta want to be a porn company that markets its products to minors?

There hasn't been a lot of action at the federal or state level to install safeguards around companion AI chatbots, but that might change. Senators Padilla and Welch launched a probe into the operations of major chatbot companies to see what safeguards exist for minors and if further oversight is needed.

An interesting nugget from the piece: The Wall Street Journal handed over their investigation to Meta months ago. There's a real opportunity for oversight here, and we hope Members will step up and ask pointed questions of Mark Zuckerberg and Meta.

🤥 EPIC SHOWDOWN: A federal judge didn’t just rule that Apple violated a court order to change its illegal App Store policies, she also found that the company and its executives committed perjury and is referring the case to the Justice Department for potential criminal prosecution. The blistering ruling emerged from Fortnite maker Epic Games’ 2021 lawsuit against Apple.

Judge Yvonne Gonzalez Rogers: "In stark contrast to Apple's initial in-court testimony, contemporaneous business documents reveal that Apple knew exactly what it was doing and at every turn chose the most anticompetitive option. To hide the truth, Vice-President of Finance, Alex Roman, outright lied under oath."

Consumer advocates are cheering as app makers have already begun lowering prices and making product changes in anticipation of less onerous App Store policies and fees. Spotify announced it would start letting users out of App Store jail, accepting more payment methods and letting users manage accounts directly. Proton said they would be cutting their prices, now that they’d be able to bypass Apple’s 30% App Store “subscription tax.”

Monopolies stifle innovation, and we’re witnessing change in real time. That’s a win for everyone.

🚸 TWO MORE STEPS IN THE RIGHT DIRECTION: In both Texas and California, bipartisan majorities have moved children’s social media warning label bills forward.

Texas legislators advanced HB499, which would require social media platforms to post a warning for minors about the well-documented links between significant social media usage and mental health issues, through the House to the Senate. California’s social media warning label bill, AB 56, passed out of committee on a near-unanimous bipartisan vote.

The digital habits of our youngest children are changing rapidly:

  • 40% of children have a tablet by age 2
  • 20% of kids under 8 watch devices to go to sleep every night
  • 81% of parents and 72% of teens favor adding social media warning labels

Source: Common Sense Media, February 2025

“Young people deserve to know that social media can cause lasting mental harm and this is a common sense step to educate children and adults alike about how to take care of their mental health when online.”

– Ayaan Moledina, an Austin 9th grader and spokesperson forStudents Engaged in Advancing Texas (SEAT)

WIRED: The Meta Trial Shows the Dangers of Selling Out

In 2012, Instagram was about to close a $500 million investment round when suddenly the company found itself in play, with Facebook in hot pursuit. In an email at the time, Facebook’s CFO asked Zuckerberg if his goal was to “neutralize a potential competitor.” The answer: yes. But that wasn’t what he told the Instagram co-founders: he promised they’d control Instagram and could grow it their way, giving them the best of both worlds — independence, and Facebook’s backing. Turns out they ended up with neither.