Even More Widespread Criticism Of Cicilline’s Radical Antitrust Legislation
As the House Judiciary Committee markup continues, the criticism has continued to roll in from thought leaders across both sides of the political spectrum, consumer and small business advocates, antitrust scholars, and tech policy experts. Here’s what they’re saying:
NEW: Consumer, entrepreneur, and small business advocates criticized the bills, noting…
… They would threaten the digital safety net for millions of small businesses, says 6000+ small businesses and the Connected Commerce Council in an open letter to Congress. “Research shows millions of businesses would have closed if they did not have access to digital services and online marketplaces. We did not ask you to spend precious time and taxpayer dollars going after companies that help small businesses. The labor market is shifting, uncertainty is slowing recovery, and Congress should be focusing on helping people. Do not play politics in the name of competition. Instead, talk to small businesses that rely on the scale, security, and low prices digital tools and services provide to help with recovery and find success.”
… These bills would limit consumer access for small businesses and leave consumers with limited access to products and services, says Edward Longe of the American Consumer Institute. “Further regulation would only disincentivize large tech platforms from providing small businesses access to such a large consumer base leaving them less profitable and consumers with less choice.”
… They would weaponize antitrust laws while ignoring the needs of small businesses, writes Jake Ward of the Connected Commerce Council. “Motivation matters, and it’s obvious that these bills are not about small businesses that did not ask for them and don’t support them. The far wings of both political parties are mad because they think Big Tech is being weaponized by the other political party, but antitrust is not a political tool and ought not be used as such by Congress. These bills don’t come within a country mile of addressing the frustrations that both sides claim are their chief grievances, which cannot be solved by antitrust laws. Instead, Congress should stop grandstanding, and start listening to small businesses by supporting the recovery and the digital economy.”
… These bills fail to “consider the impacts policy decisions will have on the rest of the technology ecosystem,” says Engine. “Competition issues are in the spotlight in D.C. and state capitals across the country. At Engine, we’re encouraged when lawmakers think about ways to boost competition and innovation, as startups stand to benefit if sound policy makes it easier for small and new companies to launch and grow. But much of the current policy conversation is centered around a few companies and fails to consider the impacts policy decisions will have on the rest of the technology ecosystem, which is inherently interconnected.”
… These bills would destroy “companies whose size, scale and simplicity are precisely what help small businesses,” says Jake Ward of the Connected Commerce Council. “Now, when the economy and millions of small businesses are struggling in the pandemic’s turbulent economic wake, is not the time to attack digital industry leaders that helped small businesses stay open and avoid a global depression. Small businesses need more PPP loans, more digital education and economic stability. They don’t need overreaching ‘anti-monopoly’ proposals that regulate companies whose size, scale and simplicity are precisely what help small businesses. The digitally empowered small business success story should be embraced by Congress, not attacked for its scale.”
… The bills would punish small players and prohibit benefits that app developers and consumers utilize, says Morgan Reed of the App Association. “Once again Congress moves in a direction that could hurt the same small businesses it wants to protect. As drafted this legislation does nothing to lower competitive barriers for new entrants and small businesses and instead rewards the top one percent of the app economy by prohibiting benefits that our members and consumers rely on for privacy protection, trust, and more.”
… They “threaten an ecosystem that benefits both platform companies and developers,” write The App Association, Developers Alliance, and Engine in a letter to the House Judiciary Committee. “Recent polling has shown there is significant reliance on these tools and services by developers, and an acknowledgement by users of their added monetary value. Regulation of application marketplaces threatens an ecosystem that benefits both platform companies and developers by reducing the incentives for collaboration that drive our platform partners to create tools, services and educational support for emerging app companies. Removing these incentives for platforms to provide tools and services to the companies in their application marketplaces would hinder progress across the sector at a time when there should be exponential growth.”
… These bills would “fundamentally undermin[e] U.S. tech competitiveness and giv[e] an unearned advantage to foreign rivals,” says the Computer and Communications Industry Association. “At a time when U.S. technology leadership is under threat from competitors abroad, a series of bills introduced in the House would take a sledgehammer to America’s most successful, dynamic companies – fundamentally undermining U.S. tech competitiveness and giving an unearned advantage to foreign rivals. These proposals conflict with critical R&D priorities, facilitate foreign access to sensitive U.S. data and IP, and open the door to a future where the U.S. is no longer the global technology leader.”
… These bills would “stymie innovation, harm consumers, and weaken America’s technology leadership,” says the U.S. Chamber of Commerce. “Antitrust should remain a law of general application and focused on the economic interest of consumers. The misguided approach taken in these bills will stymie innovation, harm consumers, and weaken America’s technology leadership. While ostensibly targeting ‘Big Tech,’ this approach to antitrust would broadly impact American business and our economy. They should be voted down.”
… Rep. Jeffries’ bill would reduce profitability for entrepreneurs, thus “negatively impacting employment, wages, and innovation,” writes Bobby Franklin of the National Venture Capital Association. “H.R. 3826 would make it harder for startups to be acquired by reducing the number of potential acquirers. The impact of this is considerable: fewer potential acquirers would mean a reduced sales price for the company due to less bidders, resulting in less profitability for the entrepreneurs. This reduced profitability will make new company formation less attractive than it currently is relative to other opportunities, thereby negatively impacting employment, wages, and innovation.”
NEW: Antitrust and tech experts say…
… These bills would harm consumers and small businesses and endanger U.S. global leadership in innovation, says Matt Schruers of the Computer & Communications Industry Association. “These bills unreasonably target leading U.S. tech companies that have improved users’ experience with innovation, efficiency, and low-cost or free-to-the-user services. By singling out a handful of popular, consumer-centric businesses, these industrial policy bills are anti-consumer. These bills would harm consumers and thousands of smaller businesses that use digital services to reach worldwide markets. They put the U.S. economy and the U.S. position as a leader in innovation at risk. Instead of boosting U.S. innovation to compete with threats from abroad, as did the recently enacted USICA, these bills would dis-incentivize innovation by affording foreign rivals a free ride on a few U.S. companies’ R&D investments.”
… These bills would ban tech services and products that work well for consumers, write 13 bipartisan tech and consumer advocacy groups in a letter to members of the House Judiciary Committee. “At a time when voters are looking to Congress to address the country’s most pressing challenges, it seems hard to believe that Congress is instead on the verge of banning Amazon Prime and Amazon Basics; banning the preinstallation of iMessage and FaceTime on iPhones; and banning Google from including Google Maps in its search results.”
— “We believe that voters want Congress to fix things that are broken — not break or ban things that they feel are working well.”
… These bills ignore that the goal of antitrust laws is to maximize consumer welfare, says Douglas Holtz-Eakin of the American Action Forum. “These proposals represent a move away from the consumer welfare standard as the anchor for antitrust policy. All policy should be about maximizing consumer welfare. This is a country of consumers, the market system is responsive to their desires (especially for Twizzlers), and public policy should be guided by them as well. Allow mergers, acquisitions, new product development, data collection, market entry, and other activities when they raise consumer welfare and step in when they don’t.”
… These bills would hamstring our nation’s largest driver of innovation and job creation, says Michael Allen of the National Security Institute. “The House’s proposals set its sights on knee-capping America’s largest technology providers while affording more favorable treatment to foreign technology rivals. As the largest investors in R&D, America’s big technology companies will continue to represent a growing share of America’s future workforce, as well as enhance our ability to counter the influence of foreign subsidized technology companies. The House bills could not only hamstring some of the largest drivers of U.S. innovation, but also impede the ability of these companies to create millions of new American jobs just as the economy is gearing up for a rebound.”
… These bills would undermine consumer welfare and U.S. competitiveness, says Adam Thierer of the Mercatus Center. “America’s new #antitrust policy approach will apparently mandate a return to the flip phone era. This is recipe for not only undermining consumer welfare but for destroying US national competitiveness. A horrible step backwards.”
… Significant power given to the FTC should make Members of Congress nervous, says Sam Bowman of the International Center for Law & Economics. “It is concerning enough that this legislative package would prohibit conduct that is good for consumers, and that actually increases the competition faced by Big Tech firms. Congress should understand that it also gives extensive discretionary powers to an agency intent on using them to pursue broad, political goals.”
… Three of the package’s proposals would take away beneficial services enjoyed by consumers and small businesses, says Jennifer Huddleston of the American Action Forum. “[F]ocusing on competitors and concentration rather than consumers could undermine the very consumer protection that antitrust is designed to provide. The impact of these bills will not be felt merely by today’s tech giants, but by consumers and small businesses who lose out on services they find beneficial. Antitrust law serves an important role by ensuring a competitive market, but it should continue to focus on where consumer welfare is harmed rather than being used to achieve other policy goals or intervene into a currently competitive market.”
… Rep. Cicilline’s bill would “create massive unintended consequences” for the internet and the public, says Mike Masnick of Techdirt. “I can see a slight argument for how the practice of actual monopolies favoring their own services and excluding others could be anticompetitive, but this bill would make it defacto anti-competitive — and that seems likely to create massive unintended consequences that won’t be very good for the internet.There are, after all, lots of cases where it makes quite a lot of sense for companies to link their ancillary products. Yet, here, doing so will almost definitively lead to a costly antitrust fight, meaning that it will be quite difficult for many companies to build useful complementary services. I don’t see how that benefits the public.”
… Rep. Cicilline’s bill would eliminate consumer choice, mandate breakups, and enable foreign players, says Marianela López-Galdos of the Computer & Communications Industry Association. “This bill is known as the ‘Non Discrimination Bill’ but could be well referred to as the ‘Discrimination Bill’, the ‘Break-up Bill’ or the ‘Free Ride Bill’. As explained further in this post, this bill will have many negative effects and won’t promote consumer choice; in fact, it is fair to say that this bill is an example of what can be called ‘regulatory hypocrisy’. If adopted, Representative Cicilline’s bill will not only prevent consumers from enjoying online services they like, limit their choices, and mandate companies to be broken into separate small businesses, but will also force opening up some digital services to competitors, including Chinese competitors that will take this opportunity to free ride on U.S. investments.”
— “Today may be the last Prime Day where consumers can enjoy discounted prices on a variety of goods and services if the bill is passed. According to this bill, selling products and services at cheaper prices should be regulated if the company not only sells its own products, but also sells the products of third party sellers. Indeed, Amazon Prime as a service may end altogether.”
… “[T]his law wouldn’t just ban Apple Music and Google Maps – it would ban iOS and Android,” says Benedict Evans, an independent tech analyst. “There’s a very basic misunderstanding at play here – you can’t ban a platform from having ‘any’ feature, service or product that someone else might want to make, because that describes literally every single thing that a platform does. There is, to repeat, a very real problem here – this was the whole Microsoft/Netscape case. You can certainly carve out specific issues, such as Apple Music, or private label on Amazon, though as I wrote here, worrying about private label is a pretty irrational moral panic. But, you’ll need to spend a lot more time thinking about how this stuff works and what the word ‘platform’ really means, because this law wouldn’t just ban Apple Music and Google Maps – it would ban iOS and Android. I wrote in detail about the bundling problem here.”
… Rep. Jeffries’ bill would slow down the growth of U.S. tech and undermine U.S. competitiveness, says Marianela López-Galdos of the Computer & Communications Industry Association. “[A] ban on M&A activity on a handful of companies will eventually favor other ecosystems outside the U.S. It is foreseeable that the public sector will take advantage of regulatory frameworks that slow down the growth of U.S. tech, and subsidize local businesses that have not been able to organically compete against leading U.S. tech companies. A ban on M&A activity will only favor the foreseeable protectionist approach that will likely reign in the near future, and eventually will harm U.S. competitiveness.”
… Rep. Jayapal’s bill would “punish consumers and antitrust institutional design,” says Marianela López-Galdos of the Computer & Communications Industry Association. “[T]his bill is a discriminatory effort to avoid competition enforcement and break up designated companies regardless of whether as a result consumers and the economy would be better off or not. As a spillover effect, this bill is likely to weaken the FTC’s authority to identify and pursue section 5 cases beyond what is defined by Rep. Jayapal’s bill, decreasing the agency’s competence to win cases against businesses’ conduct that may have a real negative impact on consumers. In essence, this bill will punish consumers and antitrust institutional design, which are the opposite effects of what members of the House are seeking to achieve by introducing the legislation being analyzed in this series of blog posts.”
NEW: Right-leaning experts warn…
… These bills would hurt Americans by taking away convenient tools and services that help voters and businesses every day, says NetChoice. “New radical antitrust legislation will hurt Americans, taking away not just conveniences, but tools and services that help American voters and businesses every day, in moments big and small. Here are just a few examples of how the proposed legislation would take away connection, innovation, and opportunity, hurting Americans in all areas of their lives — especially in the moments that matter.”
— “Americans will lose access to authoritative information when they need it most”
— “Americans will lose access to help in an emergency”
— “Americans’ privacy and security will be at risk”
— “People will not be able to locate a phone or—more importantly—a loved one”
— “Businesses will lose over 2 billion customer connections”
… These bills would “harm companies that have provided reliable goods and services for Americans,” says Daniel Savickas of the Taxpayers Protection Alliance. “Once that door was opened, Democrats are far more comfortable bringing the hammer of government down on American businesses and are willing to do so more ruthlessly. These bills would fundamentally shift the way America does business and actively harm companies that have provided reliable goods and services for Americans across the nation.”
— “The common thread with all of these bills – at both the federal and state level – is that the best interest of consumers is not the focus.”
… These bills relied on the deeply flawed House Judiciary Antitrust Subcommittee Democratic staff report, which “ignored scholarly research, embraced myth over evidence, favored disgruntled Big Tech rivals over consumers, and cited regulatory failures as regulatory successes,” says Mark Jamison of the American Enterprise Institute.
… These bills would deprive Americans of choice and access to convenient services and stifle the robust competition, write 26 conservative groups and grassroots activists in a letter to Congress. “Apple would no longer be able to operate the App Store or Apple Music. Google would not be able to display YouTube links or Google Maps directions when searched. Amazon would lose the ability to offer free Prime shipping or AmazonBasics products.”
— “A vote for this package is a vote to give bureaucrats even more power to pick economic winners and losers. This is neither a conservative nor free-market approach, and would stifle the robust competition that guarantees the best products and lowest prices for every American.”
… These bills would hurt consumers, innovation, and economic growth by allowing the federal government to centrally plan the economy, says The Heritage Foundation. “[T]hese far-left bills are the antithesis of conservative principles: They punish success, presume that the federal government can centrally plan the economy, would force companies to divest businesses, cede private business decision-making authority to the federal government, and hurt consumers, innovation, and economic growth.”
… Consumers would pay the price if they could no longer search for deals from Amazon and other sellers at the same time, says Patrick Hedger at the Taxpayers Protection Alliance. “The last thing Americans need coming out of a pandemic and faced with surging inflation is being forced to pay more for basic goods. Companies have competed with the generics brands of brick-and-mortar retailers for generations, and there’s no justification for banning Amazon from doing the same thing, especially in the name of ‘competition.'”
… These bills would turn platforms into “little more than public utilities” and undermine incentives to invest and innovate, says Wayne Brough of the R Street Institute. “The bills introduced in the House are an assault on digital commerce, one of the bright spots in the U.S. economy. At best, these new laws are a direct threat to permissionless innovation, with the approval of federal regulators becoming a prominent roadblock when trying to do business in a dynamic and rapidly changing marketplace. At worst, this would turn covered platforms into little more than public utilities—platforms for others to do business. Any efforts to utilize economies of scale or scope may trigger enforcement actions, giving platform operators fewer incentives to invest in new technologies that drive innovation.”
… These bills would risk widening the digital divide, says Patrick Hedger of the Taxpayers Protection Alliance. “Congress has spent billions and is gearing up to spend billions more to address the issue of the digital divide. But in the classic case of the left hand not having a clue what the right hand is doing, Ken Buck, David Cicilline, and their colleagues on the House Judiciary Committee stand poised to widen the digital divide, even in places where it had previously closed.”
… These bills would move U.S. antitrust law away from the proven consumer welfare standard and target a handful of successful companies, says Grover Norquist of Americans for Tax Reform. “Antitrust law under the consumer welfare standard is designed to protect consumers and the competitive process, not individual competitors in a market. Instead of bringing antitrust cases against companies that harm consumers, bureaucrats would target companies above a government-determined size with predatory litigation for beating their rivals, an essential element of competition.”
— Innovative, convenient services and products that consumers have long relied on are at stake, Norquist continues. “The bills would ban Apple from blocking the removal of pre-installed iMessage or FaceTime apps on all devices. Amazon could no longer offer free Prime shipping on some products or sell AmazonBasics products. Google could not prioritize YouTube links or Google Maps directions when you search them. The list goes on and on.”
… These bills would embolden the government to intervene in every aspect of economic life without boundary, says Ethan Yang of the American Institute for Economic Research. “The neo-Brandeisian model of antitrust that we are seeing emerge today will essentially open the floodgates for a government that seeks to intervene in every aspect of economic life that fancies regulators. It will expand the scope of such regulation beyond the appropriate boundaries of combating cartels and genuine monopolization, towards an ever more paternalistic as well as arbitrary model of governance.”
… Consumers and small businesses have become a non-factor in the attempt to regulate leading tech companies, says Patrice Onwuka of the Independent Women’s Forum. “These bills would restrict how these tech titans operate and the services they provide. The (unintended) impact may be to hurt consumers and smaller businesses in ways that no one would want.”
— “The tech space has entered a new phase with these proposed regulations. Until now, the internet flourished under a light regulatory touch. It is questionable whether all of these bills will pass out of committee and be voted on in both Houses. However, the signal is clear that Congress wants to do something about Big Tech regardless of how harmful it may be to Americans.”
… Rep. Jayapal’s bill would “hurt our economy and leave consumers with less power to choose,” says Will Yepez of the National Taxpayers Union. “Essentially, this legislation would attempt to outlaw consumer convenience. As we’ve seen with the retirement of Internet Explorer, sale of AOL and Yahoo, and mass exodus of users from MySpace, the position of even large online platforms is far from assured. These companies must constantly adapt and innovate to stay competitive and relevant. Banning companies from expanding their offerings is antithetical to free market capitalism and leaves consumers worse off.”
NEW: Left-leaning experts warn…
… Americans oppose the legislation once they learn of its consequences, shows polling from the Chamber of Progress. “Before the impacts of the proposed legislation were described, 53% of voters in the survey expressed support for greater tech regulation (with 25% opposed). But after the impacts on everyday tech conveniences were described, voter sentiment flipped to 45% opposed, 39% support. Independent voters were especially opposed to the proposals after learning more, with 46% opposing and 34% supporting.”
— Adam Kovacevich of the Chamber of Progress summarizes: “The message here is clear: consumers want the government to scrutinize and regulate the tech industry, but don’t want Congress redesigning the apps and services that make their lives easier. After voters learn what these proposals would actually do, they flip from supporters to opponents.”
… Proceeding without full legislative hearings would bypass concerns that these bills would “weaken personal privacy protections, cybersecurity, and increase the spread of dangerous conspiracy theories and misinformation,” writes the New Democrat Coalition to House leadership. “The scope and impact of these bills could have a tremendous impact on the products and services many American consumers currently enjoy and the competitiveness of our innovation economy. Notably, stakeholders and policy experts are raising concerns these proposals may weaken personal privacy protections, cybersecurity, and increase the spread of dangerous conspiracy theories and misinformation. On behalf of the New Democrat Coalition, instead of proceeding directly to markup, we respectfully request you hold full legislative hearings on these specific bills to better understand their impacts and the intended and unintended consequences of the legislation.”
…These bills would force Amazon to spin off its private label business, even though this business works the same in Walmart or CVS, notes Progressive Policy Institute‘s Alec Stapp. “Amazon would be forced to spin off its private label goods business (e.g., Amazon Basics) and Amazon Marketplace because those two lines of business compete with the traditional retailing model where Amazon takes inventory of the product from wholesalers and then resells it at a markup. Amazon would also be forced to spin off its Amazon Prime Video streaming service and Amazon Web Services…And of course, private label goods on Amazon work just the same as they do in Walmart or CVS — they offer consumers similar quality to name brands at lower prices.”
… One of the bills would target conveniences that benefit consumers and degrade consumers’ experiences online, writes Adam Kovacevich of the Chamber of Progress in a letter to Rep. Cicilline. “Our organization shares your goal of promoting healthy competition online, but we are concerned that your bill targets conveniences that make consumers’ lives easier and imposes mandates that would degrade consumers’ experiences online. Given the stakes involved for hundreds of millions of Americans, we encourage Congress to proceed carefully and cautiously in this area.”
… Rep. Jayapal’s bill would make it more difficult for small businesses to reach new customers through integrated tools, writes a coalition of the APIA Chamber of Commerce and Entrepreneurship, the Chamber of Progress, the Latino Coalition, and the U.S. Black Chambers in a letter to Reps. Nadler and Cicilline. “By removing the current cross-subsidization for these free services, this proposal could force consumers to pay for these standalone services — making technology and opportunity less accessible. That in turn could also make it more difficult for small businesses like those we represent to reach new customers using these tools.”