Over the last few months, lawmakers in the House and Senate have considered a slate of antitrust proposals that would do everything from enshrining the consumer welfare standard into law to forcibly breaking up big tech companies. Despite many bills under consideration, Congress is yet to pass anything, even though lawmakers continue their verbal assaults on big tech companies and the public continues to express deep concern over the influence of these companies.
Despite this relative quietness on the antitrust front, speculation has emerged that the Senate could soon vote on Sen. Amy Klobuchar’s American Innovation and Choice Online Act, which would mark a fundamental shift in how Congress approaches antitrust and competition policy. This shift, underpinned by some Republican support, will move the focus away from the consumer and prioritize arbitrary metrics and outdated philosophies.
Congress must do better and avoid harming consumers in dealing with big tech.
If the Senate moves forward and votes on Klobuchar’s bill, it would alter three primary business practices.
First, it would “prohibit conduct that unfairly preference(s) the covered platform operator’s own products, services or lines of business over those of another business user on the covered platform in a manner that would materially harm competition on the covered platform.”
Second, AICOA “would disallow unfair interference with competitors who seek to offer their products, services or lines of business on the covered platform if those options compete with the covered platform operator’s own products or services.”
Finally, “the bill would forbid firms that operate covered platform from discriminating in the application or enforcement of their terms of service against other business users on the platform.”
These onerous restrictions would not be evenly applied. Instead, they target just a handful of “covered platforms,” namely online tech platforms that have (1) “at least 50 million monthly active users (or 100,000 business users); (2) annual market capitalization or U.S. net sales exceeding $550 billion; and (3) that serve as a ‘critical trading partner’ for its business users.”
Understanding these arbitrary limits is important because Congress explicitly targets large corporations and disregards their effects on consumers.
Most alarming about the bill is the bipartisan support it enjoys, particularly from Republicans who have traditionally been more averse to big government playing an increased role in economics. When the Senate Judiciary Committee marked up the bill, it was supported by all Democrats as well as Republican senators Chuck Grassley of Iowa, Lindsey Graham of South Carolina, Ted Cruz of Texas, Josh Hawley of Missouri and John Neely Kennedy of Louisiana.
The Republicans’ support is particularly noteworthy because it dramatically increases the likelihood of passage in an equally divided Senate. Presuming the GOP support for the bill in a full Senate vote, Democrats would only need the support of five other Republicans to break a filibuster and all but ensure the final passage. Survey research confirms that consumers are generally opposed to these legislative efforts if the result undermines the online services they use.
Consumers and small businesses should be alarmed by the increased probability that AICOA could become law. Not only would self-preferencing be prohibited, a practice that provides consumers with the opportunity to buy goods at the lowest price, but businesses could find it harder to access the millions of consumers who shop on online platforms every day. The bill could also make it considerably easier for cybercriminals to get sensitive consumer information.
All of this translates into lost consumer benefits.
While the last few months have been relatively quiet in the battle between Congress and big tech, legislative movement is just around the corner. While such maneuvers may enjoy some public support, the fact remains that any change to antitrust law that explicitly targets big tech will harm consumers in the long run. Rather than targeting tech companies for their size and imposing onerous regulations for perceived harm, Congress should be targeting companies that inflict actual harm on Americans.