Consumer Welfare or Corporate Favor? How Microsoft wrote itself out of the Cicilline bills.
Antitrust law is supposed to protect competition, not competitors.
Which is why earlier this week, members of Congress – both Republican and Democrat – noted that the radical Cicilline bill package targeting four companies was apparently altered to exclude their rival Microsoft, the world’s second-largest company.
Here’s a recap on what lawmakers on both sides of the aisles said about Microsoft’s inexplicable exclusion during the markup:
Bill alterations go out of their way to carve out exemptions for Microsoft.
An earlier version of the bill containing a ‘CONFIDENTIAL-Microsoft’ watermark was shared with Rep. Thomas Massie. “Did Microsoft have this bill, and the other bills that we are voting on today, before I had this bill? Why would you have to mark it ‘CONFIDENTIAL – Microsoft’ if they found it on the website for Congress? Why would it have to be marked this way? They’re going to be affected, they need to know this is coming — I don’t know why they need to know before me. But isn’t it strange that one of the biggest changes in this bill, and it’s particular not just to one of the bills but several of the bills today, the bills were going to cover anyone that has at least 500,000 United States based monthly active users.”
The definition of a “covered platform” was increased from 500,000 U.S. Monthly Active Users in the CONFIDENTIAL-Microsoft version to over 50 million in the final bill.
As Rep. Massie points out, this is essentially an explicit carve-out for Microsoft. “Maybe the author of this bill can explain to me why the threshold of this bill was moved from 500,000 to 50 million. Is there a single tech company that meets every other definition of this bill, that would have been covered that is no longer covered because of this change, except for Microsoft?”
Rep. Zoe Lofgren raised another alteration that would exempt Microsoft from coverage. “The [latest version] limited [the definition of ‘online platform’] to only ‘mobile online platforms,”
“That had the effect, for the most part, of exempting Microsoft from coverage of the bill.”
As Thomas Catenacci of the Daily Caller explained, a Rep. Nadler amendment added the word “mobile” before “operating system ” to exclude Windows. “[A] separate alteration to the original bill potentially exempts Windows from the regulations. The first version defined ‘online platform’ as an ‘operating system’ while the latest version defined it as a ‘mobile operating system.'”
Representatives raised questions about why Microsoft should be excluded.
Members of Congress raised concerns that Microsoft may be getting special treatment, per Bloomberg: “Republicans questioned why the criteria for covered platforms in the legislation appeared tailored to exempt Microsoft. Republican Jim Jordan and other GOP lawmakers said they want to ensure the software giant doesn’t get special treatment.”
Ranking Member Jim Jordan recognized that there was no good reason to exclude Microsoft from House Democrats’ investigation and reforms. “Despite Microsoft’s size and market dominance, House Democrats curiously did not significantly examine Microsoft’s conduct during their investigation of competition in digital markets. Democrats also seem to have excluded Microsoft from scrutiny in their large package of bills to radically rewrite American antitrust law.”
Rep. Massie questioned how Microsoft was able to evade scrutiny from the committee. “I’m trying to figure out why one of the biggest offenders [of] big tech has mysteriously evaded the scrutiny of this committee and this broad swath of bills that seek to radically rewrite our antitrust law. I’m talking about Microsoft.”
Rep. Darrell Issa pointed out that suggested interoperability mandates are artificially narrow without companies such as Microsoft included. “This is ill-conceived without Microsoft in it.”
– “Are we looking at too few companies in regard to interoperability?”
Rep. Lofgren emphasized that there’s no “good reason” for excluding Microsoft from the covered platform definition for suggested interoperability mandates. “[I]t appears that the elimination, as I mentioned, of the mobile operating system may have had the effect of excluding Microsoft Windows from the covered platform.”
– “I don’t think there’s any good reason for that distinction. Microsoft services qualify as a critical trading partner and meet the other requirements. If they do, they should be covered.”
And Santi Ruiz of the Washington Free Beacon noted, “Rep. David Cicilline (D., R.I.) exempted Microsoft from a bill he sponsored to regulate big tech three months after he received $5,800 in donations from Microsoft president Brad Smith, FEC filings show.”
These alterations indicate that the proposals are discriminatory against four companies, rather than a good-faith attempt to promote competition.
Rep. Ted Lieu raised the concern that the bills target specific companies, rather than follow a coherent principle. “We are writing what looks like special legislation directed at very specific companies. Why is Microsoft not included? Why, for example, is Walmart.com not included? Walmart has more retail sales than Amazon. It’s got a market cap over $380 billion. Why are we excluding Walmart.com from this legislation?”
Rep. Lieu insisted that antitrust standards should be applied “across the board,” not to single out specific companies. “We don’t do this in other contexts in antitrust law. For example, current antitrust law bans price fixing, but we don’t say, hey, medium-sized companies and large companies can engage in price fixing but one really large company can’t do that. We deem price fixing anti-competitive so we ban it across the board. So my view is if this committee believes a practice is bad when Amazon does it, then it should be bad when Walmart.com does it or any other retailer.”
Rep. Jim Jordan questioned the legitimacy of the investigation and the reform proposals. “Mr. Massie has asked it twice. I’ve asked it once; I want to ask it again. Why did the definition change? I mean, we’ve heard now since 10 o’clock this morning that this was the greatest investigation in history, the most bipartisan investigation; everyone was onboard. The 16-month investigation determined the definition of what a covered platform is, and then, the last week and a half the definition changed. And no one will answer the question, why? Why did it change?”