Cicilline’s Free-Rider Bill Is A Disaster For Consumers
Rep. David Cicilline’s American Innovation and Choice Online Act would endanger a host of benefits that consumers love and expect from modern companies. In the first of a series of blasts on the bill, we’re highlighting how this bill would disrupt if not ban convenient products consumers use every day.
Here’s what the bill could do:
— Break affordable services, reduce consumer choice, and raise prices on basic goods
— Deter innovations that benefit consumers and make their lives easier
— Make it practically impossible for companies to protect consumer online safety
The bill would break services, reduce consumer choice, and raise prices on basic goods.
Adam Kovacevich, Founder and CEO of Chamber of Progress, lays out how the bill would ban conveniences consumers love, such as:
— Amazon Prime free shipping and Prime Video as part of the Prime membership
- Google Maps appearing in Google search results
— Apple’s App Store recommending the best apps
— Google recommending the top-rated florist
— Find My Phone in Apple’s iOS
After voters learned about the possible impacts of Rep. Cicilline’s bill, they increasingly opposed the bill, according to the survey conducted by the Chamber of Progress.
- 59% were more likely to oppose the proposal after learning that it would ban Amazon Prime free shipping;
- 49% were more likely to oppose the proposal after learning that it would ban Google Maps in Google search results; and
- 49% were more likely to oppose the proposal after learning that it would ban Amazon Basics products
In addition to banning services consumers enjoy, the bill could limit consumer choice, explains Marianela Lopez-Galdos of the Computer & Communications Industry Association. “[T]his 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.”
This bill denies consumers “easy access to the cheapest products available,” say Krisztina Pusok and Edward Longe of the American Consumer Institute. “Covered platforms would be banned from business practices that ‘advantages the covered platform operator’s own products, services, or lines of business over those of a competing business or potential competing business that utilizes the covered platform.’ Amazon, for example, would not be able to prioritize its own products over the products of its competitors. For consumers, this likely means they will be denied easy access to the cheapest products available.”
American consumers would face higher prices on products and services that made their lives easier during the pandemic, warns Kir Nuthi, Public Affairs Manager of NetChoice. “If even one of these bills makes it through the cracks of Congress, the result would devastate American consumers — driving up the prices of products we love while also taking away a digital ecosystem that’s gotten easier to use and kept our social lives moving last year during the coronavirus pandemic.”
The bill would deter innovations that benefit consumers and make their lives easier.
The bill “fails to understand the innovation dynamics” and “throws consumers’ interests out of the window,” writes Marianela Lopez-Galdos of the Computer & Communications Industry Association. “This bill fails to understand the innovation dynamics that characterize the digital economy and the importance of promoting successful business models. As such, it not only distorts the digital services space, but also imposes restrictions on the digitization of the economy as it creates negative incentives for traditional businesses to transform themselves into consumer-centric multi-sided business models. In the end, this bill throws consumers’ interests out of the window and instead focuses upon what antitrust frameworks do not seek to pursue, i.e. protect competitors rather than the competitive process.”
The bill would undermine the ability of leading companies to “offer efficient and innovative products and services for American consumers,” reminds Aurelien Portuese, Director of the Information Technology and Innovation Foundation. “[To] prohibit a company to offer bundled services such as a smartphone with pre-installed apps, would destroy the incentive to innovate with new and cheaper products. As innovation requires market power to materialize, the bills would drastically reduce large companies’ ability to offer efficient and innovative products and services for American consumers.”
The bill would “harm consumers by restricting choice and competition” by reducing manufacturers’ ability to innovate and provide market-ready products, says Jennifer Huddleston, Director of Tech and Innovation Policy at American Action Forum. “Contrary to concerns, this [self-preferencing] is typically benign behavior that often benefits consumers and has long occurred in traditional retail. For example, this proposal would limit the ability of app stores to set rules, prices, offer preinstalled apps on devices, or offer generic brands of other sellers’ products. Such restrictions will likely harm consumers by restricting choice and competition, and by reducing manufacturers’ ability to provide products that are ready to go right out of the box.”
The bill would prohibit a wide array of behaviors that “can improve the quality of digital services for users,” says Sam Bowman, Director of Competition Policy at the International Center for Law & Economics. “On a basic level, these would prohibit lots of behavior that is benign and that can improve the quality of digital services for users. Apple pre-installing a Weather app on the iPhone would, for example, run afoul of these rules, and the rules as proposed could prohibit iPhones from coming with pre-installed apps at all. Instead, users would have to manually download each app themselves, if indeed Apple was allowed to include the App Store itself pre-installed on the iPhone, given that this competes with other would-be app stores.”
The bill would make it practically impossible for companies to protect consumer online safety.
The bill would force platform operators to host spam and malicious content or risk being accused of anticompetitive behavior, writes TechDirt’s Mike Masnick. “In short, this antitrust bill would open up a huge loophole for propaganda or garbage fire websites that were banned (or even just diminished) to claim it was an antitrust violation, because they were treated differently than ‘similarly situated business users.'”
- “[E]veryone who is on the receiving end of a moderation decision they disagree with, insists that they are being treated unfairly compared to some other ‘similarly situated’ user, even if the reality (and context) suggest otherwise. But by saying that it’s an antitrust violation to discriminate between ‘similarly situated’ business users, that’s going to make those claims become particularly legally fraught.”
If they pass this bill, policymakers will “open the floodgates of reprehensible content,” writes CCIA’s Arthur Sidney. “Policymakers need to know that their vote on this bill has major consequences for content moderation, and that they have now opened the floodgates to reprehensible content that digital services must host. This so-called ‘Nondiscrimination’ bill contradicts itself and requires a handful of digital services to host discriminatory, reprehensible, and malign content.”
The bill would “inhibit a developer’s ability to use privacy measures as a competitive advantage and reduce consumer trust,” highlights the App Association. “The legislation would render most platform-level privacy measures illegal and force platforms to accept an app’s access to personal information. This text would greatly inhibit a developer’s ability to use privacy measures as a competitive advantage and could reduce consumer trust in platform curation. Why would consumers trust a device that is forced to allow an app to access all personal information or operating system controls?”
The bill’s interoperability mandates, meanwhile, would take content moderation decisions out of the hands of companies and into the hands of the Federal Trade Commission (FTC), highlights Cathy Gellis from TechDirt. “If these bills were to become law in their current form, the decision not to conform moderation policies might still be seen to flout the law’s requirement for interoperability. And, at least initially, it would be up to the FTC to decide whether it does and thus warrants taking an enforcement action against the platform. But that means that the FTC could easily be in the position of making content-based decisions in order to decide whether the platform’s content moderation decision (in this case not to conform) looks like an antitrust violation or not.”