Major Anti-Tech Antitrust Package in Congress Moves Forward – Reason
A bundle of new antitrust bills in Congress takes aim at the intersection of free markets and the internet. Taken together, these six measures would have a major impact on the way we shop, chat, entertain ourselves, and otherwise go about our business online.
Say goodbye to Amazon Prime Video, for example. And to low-priced Amazon brand products. And to phones coming pre-loaded with things like weather, calendar, and email apps—even pre-installing phones with an app store app to help users easily acquire these things could be banned. As would Google searches showing Google Shopping or YouTube videos results up top, or Facebook prominently displaying its Marketplace. And forget integration between services now easily linked, like Gmail and Google Calendar, Facebook and Instagram, or LinkedIn and Microsoft Office.
In fact, today’s major tech companies would be forced to downplay—or ditch entirely—a lot of their popular (and free) services, since large platforms promoting their own tools or products over those over of competitors would be off-limits, as would controlling any line of business that could be considered a “conflict of interest.” The result for consumers would likely be less convenience, fewer options, higher prices, or all of the above.
Meanwhile, expect social media, phone apps, and all sorts of digital services to get less secure and more glitchy, as platforms attempt to comply with mandatory interoperability and openness rules. And expect fewer startup ideas to ever make it to the masses, as the rules around acquisitions are tightened.
Amazingly, U.S. lawmakers are touting these proposals in the name of helping tech users. But their solutions seem more aligned with punishing disfavored companies (or wringing more money from them) than actually promoting consumer interests.
“Congress is unhappy with technology companies, but their frustration is political,” said Jake Ward, president of the Connected Commerce Council (3C)—a nonprofit membership association for small businesses—in a statement. “The far wings of both parties believe the other party is weaponizing Big Tech, so their response is to weaponize antitrust law. But antitrust law is not a political tool for Congress to wield on a whim.”
Ward is far from alone in seeing these measures—most introduced just a little over two weeks ago, and all approved by the House Judiciary Committee last week—as more concerned with politics than traditional antitrust goals, such as protecting consumer welfare and preventing abusive monopolies.
“This is not traditional antitrust law,” former Federal Trade Commission (FTC) chair William E. Kovacic told Politico about the legislation. “This is a broader concept of competition policy that borrows some antitrust concepts, but relies on a broader notion on what behavior for individual firms is inappropriate.”
Instead of one set of rules that businesses (regardless of sector or size) must follow, they would create rules that apply solely to large digital platforms, taking aim at the tech giants that are currently culture-war pingpong fodder for politicians. Most of the new rules would apply only to “covered platforms,” defined as those with at least 500,000 U.S.-based active monthly users or at least 100,000 U.S.-based active business users, net annual sales or market capitalization greater than $600 billion, and deemed a “critical trade partner for the sale or provision of any product or service offered on or directly related to the online platform.” Once deemed a covered platform, the designation would last 10 years.
But while tailor-made to punish companies such as Amazon, Apple, Microsoft, Facebook, and Google, it’s less clear what consumers would get out of the new arrangements.
“Two proposals from Rep. David Cicilline and Rep. Pramila Jayapal inexplicably target a whole host of tech conveniences that save people time and money and put tech to work for people,” writes Adam Kovacevich, CEO of the tech industry coalition Chamber of Progress, in a rundown of popular services these bills could interfere with or ban.
Another of the proposals—the Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act, designed to increase data portability and interface interoperability—could give people somewhat more control over their digital data. But it also raises “substantial concerns” about security vulnerabilities, said Rep. Zoe Lofgren (D–Calif.) during debate about the bill.
These measures could also be harmful to small businesses. The 3C has collected signatures from more than 7,000 small-business owners, staff, and customers calling on Congress not to pass these bills. “We understand there are headlines to be made by attacking large companies, but during the pandemic Google, Amazon and other American technology leaders helped small businesses survive,” they say. “Research shows millions of businesses would have closed if they did not have access to digital services and online marketplaces.”
Google has also emphasized the impact that the proposals would have on their individual and business users. “We are not opposed to antitrust scrutiny or updated regulations on specific issues. But American consumers and small businesses would be shocked at how these bills would break many of their favorite services,” said Mark Isakowitz, the company’s vice president of government affairs and public policy, in a statement.
Others worry about the macro effects that these proposals could have on competition, innovation, and free speech.
The bills “ignore the procompetitive effects of digital platforms extending into each other’s markets and competing with each other there, in ways that often lead to far more intense competition—and better outcomes for consumers—than if the only firms that could compete with the incumbent platform were small startups,” notes Sam Bowman, director of competition policy at the International Center for Law and Economics, a nonprofit and nonpartisan research center based in Portland, Oregon.
Many of the proposals also seek “to make digital platforms into narrow conduits for other firms to operate on, ignoring the value created by platforms curating their own services by, for example, creating quality controls on entry (as Apple does on its App Store) or by integrating their services with related products (like, say, Google adding events from Gmail to users’ Google Calendars),” Bowman writes.
Berin Szóka of the tech-focused think tank TechFreedom suggested that the measures would speed along the FTC’s evolution “from being an apolitical law enforcement agency into a political football.” (See Szóka’s Twitter thread for some play-by-play of the judiciary committee markup of the bills.)
The new legislation is sponsored largely by Democrats but has attracted some Republican supporters. Last week, the House Judiciary Committee passed all six of the measures out of committee, setting them up for a vote by the full House.
Below is a very brief rundown of each of the six measures.
The American Choice and Innovation Online Act (H.R. 3816)
Sponsor: Rep. David Cicilline (D–R.I.)
Co-sponsors: Nine Democrats and five Republicans
Main thrust: Stopping Big Tech platforms from giving any preference to their own products, services, or sites. The measure would also prohibit covered platforms from doing anything that “excludes or disadvantages the products, services, or lines of business of another business relative to the covered platform operator’s own products, services, or lines of business;” ban them from restricting “dependent businesses” access to software, tools, or user data on different terms from the platforms’ own business lines; ban them from preventing users from uninstalling apps that are preinstalled; and establish a Bureau of Digital Markets within the FTC.
The Ending Platform Monopolies Act (H.R. 3825)
Sponsor: Rep. Pramila Jayapal (D–Wash.)
Co-Sponsors: Seven Democrats and five Republicans
Main thrust: Stopping Big Tech companies from operating in multiple realms and letting the Department of Justice (DOJ) or the FTC sue those that do. Under this measure, covered platforms would be banned from controlling any line of business deemed a conflict of interest or line of business that creates a “substantial incentive” to self-preference.
The Platform Competition and Opportunity Act (3826)
Sponsor: Rep. Hakeem Jeffries (D–N.Y.)
Co-Sponsors: Nine Democrats and four Republicans
Main thrust: Preventing many—perhaps almost all—new acquisitions by Big Tech companies. A covered platform would only be allowed to acquire another company if it could provide “clear and convincing evidence” that said company doesn’t compete with any part of the platform’s existing business lines, pose any potential competitive threat, or stand to enhance the platform’s market position in any way.
The ACCESS Act (H.R. 3849)
Sponsor: Rep. Mary Gay Scanlon (D–Pa.)
Co-Sponsors: 10 Democrats and seven Republicans
Main thrust: Mandatory openness. The ACCESS Act would give the federal government the power to sue covered platforms that don’t follow new interface interoperability and data-portability rules set by the FTC.
The Merger Filing Fee Modernization Act (H.R. 3843)
Sponsor: Rep. Joe Neguse (D–Colo.)
Co-sponsors: 13 Democrats and eight Republicans
Main thrust: Appropriating more money for antitrust enforcement—$252 million to the DOJ’s antitrust division and $418 million to the FTC—and raising fees for high-value mergers of all sorts (not just tech). Similar to a bill in the Senate from Sens. Amy Klobuchar (D–Minn.) and Iowa Republican Chuck Grassley (R–Iowa) that passed recently as part of the U.S. Innovation and Competition Act. The House version would lower fees for smaller value mergers, but only marginally (from $280,000 to $250,000 for some, from $125,000 to $100,000 for some, and $45,000 to $30,000 at the lowest level). Meanwhile, those involved in larger mergers—for which fees are now capped at $280,000—would see fees up to $2.25 million. “Antitrust enforcement and litigation is hugely expensive and time consuming,” said Judiciary Committee Chairman Jerrold Nadler (D–N.Y.) in a statement, noting that the two cases the feds filed last year against Facebook and Google “may take years to litigate.” This bill would help fund such enforcement, he explained.
The State Antitrust Enforcement Venue Act (H.R. 3460)
Sponsor: Rep. Ken Buck (R–Colo.)
Co-sponsors: Eight Republicans and two Democrats
Main thrust: Making antitrust cases easier on state attorneys general by disallowing the Judicial Panel on Multidistrict Litigation to change a case’s venue from one district court to another after it is filed or consolidating it with private antitrust claims. (Defendants could still seek a change in venue.)