Widespread Criticism Of Cicilline’s Radical Antitrust Legislation
The criticism keeps coming in from thought leaders from both sides of the political spectrum, consumer and small business advocates, antitrust scholars, and tech policy experts regarding the legislation introduced last week by House Democrats. Here’s what they’re saying:
Consumer, entrepreneur, and small business advocates criticized the bills, noting they would…
… Dull our nation’s competitive edge and chill innovation, writes the Consumer Choice Center. “[U]sing the power of the federal government to break up innovative American companies subject to domestic law, especially in the face of mounting competition from countries that are not liberal democracies, such as China, is wrong and will lead to even more unintended consequences. The American people benefit from a competitive and free market for all goods, services, and networks we use online. Weaponizing our federal agencies to break up companies, especially when there is no demonstrated case of consumer harm, will chill innovation and stall our competitive edge as a country.”
… Weaken U.S. economic leadership in the headwinds of economic threat from China, says Michael Petricone at the Consumer Tech Association. “US Senate = passes comprehensive bill countering growing economic threat from China; US House = introduces bills targeting our crown-jewel companies, bolstering China’s campaign to catch and surpass American tech leaders.”
… Reduce innovation and choice of platforms for entrepreneurs and small businesses, says Small Business and Entrepreneurship Council’s President & CEO Karen Kerrigan. “We are concerned that various proposals could cut off access to the massive consumer markets provided by the platforms, and actually harm innovation and choice in the marketplace. Millions of entrepreneurs are using these platforms to start or grow businesses, and certainly during the pandemic, digital tools and platforms have been a lifeline for countless small businesses in reaching and serving new and existing customers.”
… Depress investments in startups and entrepreneurs, says Engine. “Democrats are set to introduce five bills that would dramatically alter the landscape of the technology sector. One of the bills would largely prohibit tech industry leaders from conducting mergers and acquisitions. As we explained in a report earlier this year, acquisitions are a critical part of the startup ecosystem, and have a strong, positive relationship to investment in startups. As Engine has previously warned, policymakers must consider the consequences of these proposals for the startups and entrepreneurs.”
… Demolish the incentives for investors and entrepreneurs to start new businesses, says Center for American Entrepreneurship President John R. Dearie. “[I]f investors can’t get out, they won’t get in – and without investors there is no startup ecosystem. With these concerns in mind, the Center for American Entrepreneurship respectfully urges policymakers to carefully and cautiously study the potential implications and unintended consequences of new anti-trust legislation.”
… Punish tech companies for “providing demanded services,” says the American Consumer Institute Center. “These bills provide further evidence that lawmakers in Washington are attempting to recklessly reign in the power of big tech by embracing an outdated and dangerous ‘big is bad’ mentality to antitrust. In their current form, these bills specifically target big tech and punish them for providing demanded services. Rather than penalizing these companies, lawmakers should be embracing the consumer welfare standard as the basis for antitrust law and accept the fact that large companies can benefit consumers and competition.”
… Unfairly discriminate against specific companies instead of focusing on business practices, says the Chamber of Commerce. “Bills that target specific companies, instead of focusing on business practices, are simply bad policy and are fundamentally unfair and could be ruled unconstitutional. Further, efforts made by these bills to use antitrust law to supplant the role of regulation are equally misguided.”
Antitrust and tech experts say…
…The bills would “damage the welfare and advantages that have characterized the use of technology in the last decades,” says Marianela López-Galdos of the Computer and Communications Industry Association. “These Representatives believe that this is the case only for the services offered by a handful of companies, paradoxically, the ones users like the most. This leads to the conclusion that it seems that there is a clear disconnect between the proponents of these bills, and what these regulations will represent in practice. It is unmistakable how these bills will damage the welfare and advantages that have characterized the use of technology in the last decades, and seriously impair the user experience. Therefore, it is urgent that before moving forward with this regulatory proposal, the House takes a consumer centric approach to their regulatory anxiety, and ensures that any of their proposals do not harm consumers as the current bills do.”
… The bills would lead to “higher prices, fewer choices, and less innovation for Americans” and “kneecap” America’s global competitiveness, says Carl Szabo, Vice President and General Counsel at NetChoice. “If passed into law, these bills will result in higher prices, fewer choices, and less innovation for Americans. While President Biden works to advance America’s economic interests at the G-7, these bills would kneecap leading American businesses, fossilize American innovation, and undermine America’s global competitiveness.”
… One of the bills “would ban literally every component of an operating system” says independent tech analyst Benedict Evans, adding it “only makes sense if you have no idea what a platform actually does.” “In principle, this [Ending Platform Monopolies Act] would ban literally every component of an operating system. Everything down to the file manager, network stack and the printing system could be replaced by a competing product and is therefore conflict of interest, and illegal.”
— “There’s a bunch of silly ideas in tech regulation (banning private-label is high on the list) but this whole concept that ‘if you run a platform you can’t compete on it!’ only makes sense if you have no idea what a platform actually does.”
… The legislation is “misguided” says Sam Bowman at the International Center for Law & Economics. “The multi-bill approach here suggests that the committee is trying to throw as much at the wall as possible to see what sticks.”
— “In general, the bills are misguided for three main reasons. One, they 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).”
— “Two, they 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.”
— “Three, they ignore the importance of incentives for innovation. Platforms invest in new and better products when they can make money from doing so, and limiting their ability to do that means weakened incentives to innovate. Startups and their founders and investors are driven, in part, by the prospect of being acquired, often by the platforms themselves. Making those acquisitions more difficult, or even impossible, means removing one of the key ways startup founders can exit their firms, and hence one of the key rewards and incentives for starting an innovative new business.”
… The bills would “ultimately harm innovation and consumers,” says Aurelien Portuese at the Information Technology & Innovation Foundation. “The bills presented by Rep. David Cicilline (D-RI) take direct inspiration from the European Commission’s Digital Markets Act and impose stringent obligations and prohibitions on a handful of innovative companies. This will ultimately harm innovation and consumers. For instance, the prohibition of ‘conflict of interests’ between a platform and its different lines of business disallows standard business practices both online and offline. Also, the prohibition of self-preferencing ignores fundamental economic liberties by forcing a platform to favor its own rivals. The bills unfairly exempt big tech rivals from such obligations—domestic and foreign—without valid justification.”
…The proposals would hurt consumers and smaller players, says Jennifer Huddleston of American Action Forum. “A reminder that while these bills are aimed at “#bigtech” they would actually hurt consumers and smaller players in their efforts.”
Right-leaning experts warn the legislation would…
… End conveniences that consumers and local businesses value, says Patrick Hedger, Vice President at Taxpayers Protection Alliance. “Both bills [the Ending Platform Monopolies Act and the Platform Anti-Monopoly Act] would essentially ban vertical innovations as well as mergers and acquisitions. This is a fancy way of saying that a company covered under either bill would be banned from selling their own products and services as part of another product or service they offer. An easy example is Amazon would be banned from selling often-cheaper Amazon-branded products (something all of their brick and mortar retail competitors have always done). Google would be prohibited from showing Google Maps or Google Reviews in their search results if you are searching for a local business. Apple could be barred from pre-loading its own applications, such as word processors and web browsers onto iPhones and Macs.”
… Compromise U.S. economic leadership and recovery and hurt American consumers, says Jessica Melugin of the Competitive Enterprise Institute. “They [House Democrats’ antitrust bills] reflect fundamental misunderstandings of how platforms create value for consumers, how market leaders compete with each other and the incentives necessary to keep innovative companies churning out useful new products and services for customers. Taken together, these proposed regulations would compromise the U.S. as a global tech leader, strain an already struggling U.S. economy, and hurt American consumers.”
… Favor bureaucrats and less successful companies at the expense of consumers, says Iain Murray of the Competitive Enterprise Institute. “Throughout all of these bills the principle of consumer welfare seems wholly absent. They are written to hurt successful companies that have delivered huge amounts of consumer welfare. The only beneficiaries I can identify will be bureaucrats who get more power and less successful companies who will face less onerous competition but have little room to grow.”
… Harm American competitiveness and indirectly take “money out of consumers’ pockets to prop up failing competitors,” says Americans For Prosperity. “This jumble of legislative proposals targets American companies, treats them as guilty until proven innocent, mandates that they provide services and data about Americans to foreign competitors in Europe and China, and indirectly takes money out of consumers’ pockets to prop up failing competitors.”
… Massively increase government control over the private sector, says Tom Hebert of Americans for Tax Reform’s Open Competition Center. “These bills are hardly antitrust bills. Taken together, these bills are a test run for unelected Democrats to regulate entire sectors of the American economy.”
Left-leaning experts warn the legislation would…
… Ban many of the convenient, low or no-cost services that consumers love, says Adam Kovacevich of Chamber of Progress. “[B]anning conveniences like Amazon Basics brand batteries, Apple’s Find my Phone tool, or Google Maps appearing in Google search results are ideas that would spark a consumer backlash. Instead of focusing on helping families, these proposals inexplicably target a bunch of technological conveniences that most people really like. Let’s hope Democrats stay focused on the right things.”
… Demolish an innovation ecosystem that is “the envy of the world,” and has created good paying jobs for American workers, says Alec Stapp of the Progressive Policy Institute. “The package of bills proposed by Members of the Judiciary Committee would be a devastating blow to American technological leadership at a time when that leadership is more necessary — and more at risk — than ever. While the current system isn’t perfect — the FTC and DOJ urgently need more resources, for example — our antitrust institutions are part of the overall pro-innovation ecosystem that has enabled the United States to produce technology companies that are the envy of the world. These companies create good jobs for American workers — both directly and indirectly — as well as provide innovative products for consumers around the world.”
… Be “counterproductive, arbitrary, and harmful” to America’s most innovative, fastest growing, and best-paying technology sector, says Colin Mortimer, Co-founder and Director of the Neoliberal Project. “America’s technology sector has been one of the fastest growing, best paying, most successful, and most innovative parts of the US economy for the last several decades. Americans through both birth and immigration have become wealthy working in this sector, and American consumers have benefited immensely from tech sector innovations. The specific regulatory changes in these bills are counterproductive, arbitrary, and harmful. American technology policy should not be focused on arbitrarily punishing the most successful companies in America’s most successful industry.”
… Handcuff America’s most innovative and globally competitive companies, says the Progressive Policy Institute. “Keeping the United States on the leading edge of technological innovation and entrepreneurship is how we win this contest between liberal and autocratic systems. It’s also the key to generating more good jobs that can help our country close stark income and opportunity gaps at home, as well as demonstrating the strength and resilience of liberal democracy to doubters around the world.That’s why it’s baffling and dismaying to see some anti-tech Democrats unveil late last week a flurry of bills aimed at breaking up and otherwise handcuffing America’s most innovative and globally competitive companies. These bills narrowly target a handful of large online platforms whose offerings are eagerly sought by people everywhere.”
… Encourage “crony capitalism” at the expense of consumers, Kovacevich continues. “The statements I’m seeing from companies praising the House antitrust bills say more about the crony capitalism and company-vs-company lobbying behind the scenes…than about any consumer benefits.”
— “By all means let’s debate what’s in consumers’ best interest — and hear from consumers. But let’s not confuse business disputes with good public policy.”
… Stifle the tech sector as the leading job creator in the U.S. economy, says Michael Mandel of the Progressive Policy Institute. “Progressives are supposed to care about jobs. Yet the collection of anti-tech bills just released by members of the House Judiciary Committee go after the companies and industries that have been the most reliable source of job creation in recent years.”
— “Tech-ecommerce job growth from 2015 to 2020 exceeded healthcare job growth in 36 states, including the District of Columbia.”
— “Average tech-ecommerce pay is higher than average manufacturing pay for 43 states, including the District of Columbia.”