As Congress considers sweeping new antitrust legislation to address the so-called “big tech” companies, the bill’s supporters are indeed right in asserting that the revamped competition rules may disrupt some digital players. But if passed, these bills would also disrupt consumers’ lives, making them worse, not better. Congress needs to slow down and consider the implications more carefully.
The Senate recently voted out of committee the American Innovation and Choice Online Act, and it is expected to do the same with the Open App Markets Act, bills that would ban so-called self-preferencing and restructure app stores, respectively. These bills not only impose stringent obligations on companies that are likely to translate into costs for consumers, but they also err in three fundamental respects.
First, the bills mimic Europe’s flawed Digital Markets Act (DMA), placing the United States even more in a position of regulation-taker rather than regulation-maker. Because U.S. regulations will never be as stringent as Europe’s, European regulations will effectively overshadow American regulations and U.S. administrations will never be in a credible position to contain the pervasive effects of European rules on American companies.
For instance, price controls on app store fees and prohibitions on self-preferencing by online platforms are both in U.S. antitrust bills and the DMA–but Europe’s harsher stances will prevail given the effectiveness of Brussels’ regulations as opposed to Washington’s gridlock.
As the Senate looks at Europe to revamp antitrust, the United States altogether surrenders its leverage in forums such as the newly launched Joint Technology Competition Dialogue between the United States and the European Union. U.S. antitrust bills are “a dream come true” for European policymakers.
Second, the Senate antitrust bills do not lay down “commonsense the rules of the road for the digital economy,” as Sen. Amy Klobuchar (D-Minn.) claims in support of them. They single out a handful of companies with a market capitalization higher than $550 billion, leaving multi-billion-dollar rivals (domestic or foreign) free to engage in the very conduct that these bills prohibit. This creates a two-level playing field, thereby creating unfair competition, not fairer competition. To extend the metaphor further, these are not the rules of the road but somewhat different rules for the same roads depending on one’s car value: They don’t make sense for safety, efficiency, or fairness reasons.
Antitrust enforcement has traditionally focused on anticompetitive conduct, not merely on size, because, as a federal judge aptly said recently, “success is not illegal.” Indeed, the case law considers that “the possession of market power will not be found unlawful unless it is accompanied by an element of anticompetitive conduct.”
Against this background, these bills depart from the American tradition of incentivizing success and deterring bad conduct, because they prohibit pro-competitive and pro-innovative conduct for a few companies while leaving other big rivals free to engage in the very same beneficial conduct. To preemptively prohibit pro-competitive conduct is a precautionary approach, not an innovation-based approach.
Third and finally, the bills adopt such vague language that every word will constitute grounds for yearlong litigation. The bill’s supporters claim they are simply updating outdated antitrust laws by drawing “bright line” rules. But the bills actually would lead to endless judicial battles. Think about it: The bills designate “covered platforms” with complex and subjective criteria; they prohibit self-preferencing without defining it; they prohibit the use of “nonpublic data” without defining it; they force companies to allow consumers to install third-party apps through means other than app stores, but how this controversial obligation of “sideloading” would play out remains unclear. The statutory language of the bills is so vague that not only will it take endless litigation to provide clarity, but also such vagueness will be prone to the most far-reaching interpretations.
These bills are not the only way forward. Congress should strengthen antitrust enforcement through increased resources for agencies while preserving antitrust as a judge-made law process fostering dynamic competition and not an obsolete view of competition populated by small firms unable to compete globally.