Cicilline’s Free-Rider Bill Is A Disaster For Innovation
Rep. David Cicilline’s American Innovation and Choice Online Act would gravely harm both consumers and small businesses, as we’ve highlighted in recent blasts. But that’s not all: the legislation would throw a wrench in the innovation economy and hurt American tech leadership on the global stage. Here’s what the bill would do:
— Chill innovation by forcing select companies to freely share their technology, including to foreign competitors
— Lead to the breakup of some of America’s leading companies to avoid even the perception of a conflict of interest
— Put U.S. companies at a disadvantage to foreign rivals, jeopardizing U.S. leadership
The bill would chill innovation by forcing select companies to freely share their technology, including to foreign competitors.
The bill would allow competitors to free-ride off of leading companies’ data and technology, says CCIA’s Marianela Lopez-Galdos. “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.”
— “Furthermore, in a digital economy that heavily relies on innovation, the obligations to deal and share technology as included in this bill will give a blank check to competitors, including foreign market players.”
— “This bill will essentially change the competition rules in the online services markets, and eliminate the competitive process as we know it for companies operating online, creating negative incentives for those who know how to innovate. Ultimately these companies will cease to innovate.”
The bill would ultimately lead to the breakup of some of America’s leading companies to avoid even the perception of a conflict of interest.
The bill would forcibly split up leading companies, writes Lopez-Galdos. “[T]he bill suggests that structural separation should be mandated if the nature of the business model is not compatible with the enforcement of the discriminatory obligations and prohibitions because the company relies on running multiple lines of businesses and therefore conflict of interests exist.”
Break ups would eliminate many of the services that make consumers’ lives easier, writes Iain Murray of the Competitive Enterprise Institute. “This bill wouldn’t just force the breakup of technology companies, it would break technology we all find enhances our lives. No more streaming video bundled with your delivery subscription. No more maps embedded in search results. Probably no more app stores – or any other proprietary apps – on your new phone. It would have effects far beyond the technology companies it’s aimed at, hitting retail and finance businesses hard.”
The bill would put U.S. companies at a disadvantage to foreign rivals, jeopardizing U.S. leadership.
Breaking up U.S. firms would give Chinese tech companies “the boost they need” to become global leaders, writes ITIF President Rob Atkinson. “With Chinese internet and tech companies waiting in the wings, aggressive antitrust actions against U.S. leaders run the risk of giving a new generation of foreign rivals the boost they need to dominate global markets, just as Japanese and European firms have benefited in the past.”
Imposing onerous regulations on American technology firms could undermine U.S. competitiveness, writes National Security Council alumnus Michael Allen. “The House legislation places sweeping restrictions on U.S. technology firms simply because they are large in size, hampering their ability to grow, innovate, and support the U.S. economy. They would be compelled to give preferential treatment to third-party companies (even to Chinese and Russian competitors).”
Yaël Ossowski, Deputy Director of the Consumer Choice Center, voiced how onerous regulations will hurt America’s competitive edge on the global stage. “[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.”
Hobbling the only sector that competes with China’s state enterprises is misguided, says Colin Mortimer of the Neoliberal Project. “The tech sector is one of the only industries where America’s flagship companies directly compete with China’s state enterprises. Counteracting the CCP and promoting liberal values abroad often means leaning on these firms. These bills would hobble America’s most successful technology companies, and in doing so will cede power to the CCP… Rather than appeasing anti-tech populists with line of business restrictions, tech regulations should be more tightly focused on concerns about privacy, data portability, and increased funding for enforcement – areas where carefully crafted legislation could enhance competition.”