What They Are Saying: Sen. Klobuchar’s Antitrust Bill Would Be Bad For Consumers And Businesses
Criticism of Senator Klobuchar’s radical antitrust legislation is pouring in from all sides. With the bill text still forthcoming, reports suggest the Senate bill will harm consumers like its House counterpart. Tech policy groups and antitrust experts from across the political spectrum agree: Senator Klobuchar’s American Innovation and Choice Online Act is yet another breakup bill in disguise. Here’s what you need to know:
— The Senate Bill will harm consumers just as the House version does
— Voices from both sides of the aisle are raising concerns
— The bill empowers antitrust authorities, especially the FTC, with expansive powers to regulate the economy
The Senate bill will harm consumers and small businesses just as the House version does.
The Senate bill is “just as radical and far-reaching as the House Judiciary Committee bills,” notes Lindsay Mark Lewis, Executive Director of the Progressive Policy Institute. “The antitrust legislation sponsored by Senator Klobuchar will do more harm than good to American families who rely on digital shopping, commerce, and communication every day. Though this bill is trumpeted as bipartisan, the reality is that it is just as radical and far-reaching as the House Judiciary Committee bills.”
“Just like how this summer’s House antitrust package would have reduced affordability, opportunity, and connection for consumers and small businesses across the country, the Senate’s American Innovation and Choice Online Act will brick the internet,” explains NetChoice.
The Senate draft “retains the worst features of the House bills with some new additions” says Robert Bork Jr. in Real Clear Politics. “I’ve since had a glimpse of the latest iteration of the Senate draft, which retains the worst features of the House bills with some new additions.”
— Bork continues: “In sum, the Klobuchar draft – as it has so far unfolded – lacks the clarity and consistency of the current legal benchmark, the consumer welfare standard. For 45 years, courts have held that antitrust actions should be taken only when a proposed merger, acquisition, or practice harms consumers. Thus, courts protect competition to protect consumers. The Klobuchar draft would protect competitors, which would lead to no end of special pleading. The result would be the politization [sic] and weaponization of the law.”
This bill would “turn back the clock” on innovation and works in tandem with the House bill to restrict choice, says Independent Women’s Forum’s Carrie Sheffield. “Unfortunately, Klobuchar’s bill would turn the clock back on Internet shopping innovation, working in tandem with efforts in the U.S. House (a good rundown on those efforts by our Patrice Onwuka is here) to restrict choice and jack up prices.”
Like its House companion, the Senate bill puts politics over small business success, explains the Connected Commerce Council. “This bill, like its companion in the House which has not been moderated at all, demonstrates, again, that Members of Congress do not understand how the digital economy works, or perhaps they are putting politics and optics over our nation’s post COVID recovery and small business success.”
The Senate and House bill would both have harmful consequences for consumers and SMBs, says TechNet.“The legislation announced today in the U.S. Senate, which mirrors harmful legislation previously introduced in the U.S. House of Representatives, would have vast unintended consequences that will hurt consumers and small- and medium-sized businesses in every community in the country.”
Voices from both sides of the aisle are raising concerns about the harmful effects of this bill.
“The effect of this will likely be to diminish product innovation,” say Sam Bowman and Geoffrey Manne in a joint post. “Thus, again, as a practical matter, the difference between the Senate and House bills may be only superficial. The effect of this will likely be to diminish product innovation in these areas, because companies could not know in advance whether the benefits of doing so would be worth the legal risk. We have previously highlighted existing conduct that may be lost if a bill like this passes, such as pre-installation of apps or embedding maps and other ‘rich’ results in boxes on search engine results pages. But the biggest loss may be things we don’t even know about yet, that just never happen because the reward from experimentation is not worth the risk of being found to be ‘discriminating’ against a competitor.”
The bill would ban services that Americans value, limiting consumer choice and convenience, reminds Carl Szabo of NetChoice. “This bill puts the interests of corporations ahead of consumers by banning useful services that Americans value because competitors say those services are difficult to compete against. By banning choices we rely on, Americans would be left with fewer services and conveniences right when they need them most.”
— Szabo continues: “Many vulnerable Americans rely on accessible products to stay safe and independent, but this radical bill could ruin those smart tools we take for granted like same-day contactless delivery and voice integration.”
“[T]his bill takes a hammer to tech products that consumers love,” says Chamber of Progress Founder and CEO Adam Kovacevich. “Preventing Amazon from selling Amazon Basics and banning Google’s maps from its search results isn’t going to do anything to make the Internet better for families. This is like calling a car mechanic to fix your laptop.”
The bill would harm “consumers and small businesses alike,” notes American Consumer Institute Director, Krisztina Pusok. “Consumers and small businesses alike would be harmed. The extreme legal risk created by such proposals will make it difficult for small businesses to access online marketplaces, which have been vital for their growth and success.”
The bill completely disregards the consumer welfare standard, explains Josh Withrow of National Taxpayers Union Foundation. “These proposed restrictions entirely disregard the consumer welfare standard that has guided antitrust enforcement for over four decades. The services and products that could be effectively eliminated by Klobuchar’s proposal are overwhelmingly popular because they provide convenience and value to consumers.”
If passed, the bill would “fundamentally alter the internet” and harm consumer convenience and security, points out the Taxpayers Protection Alliance. “The sweeping legislation would ban America’s most successful technology firms from engaging in practices that are commonplace in the offline world, such as self-preferencing. This would fundamentally alter the internet and personal devices such as smartphones, dramatically harming consumer convenience and security.”
“There would be plenty of consumer aggravation, and no consumer benefits,” says Ryan Young of Competitive Enterprise Institute. “How would the bill work in practice? It would not ban online companies from selling their private brand products, but it would ban them from giving their own products special treatment. Google, for example, would probably not be able to show Google Maps in its search engine, or at least not as a leading search result, which could lead to a lot of frustrated drivers. Amazon’s Prime program might go away entirely. At the very least, Amazon’s house brands would become harder to find and might not qualify for free shipping. There would be plenty of consumer aggravation, and no consumer benefits.”
— Young continues: “The American Innovation and Choice Online Act is clearly not about consumer protection.”
“Customers stand to lose the most from this ill-conceived legislation,” explains James Czerniawski of Americans for Prosperity. “This legislation punishes businesses in the U.S. for creating successful products and undermines their ability to be competitive in the broader global economy. The bill also empowers the FTC’s Chair, already bent on radical reform, to further weaponize antitrust laws for political reasons. In the end, customers stand to lose the most from this ill-conceived legislation. Instead of erecting new barriers, Congress can help give consumers more choices by removing regulatory barriers that prevent competition.”
The Klobuchar bill would effectively “ban or degrade tech services used by millions of voters,” says Adam Kovacevich of Chamber of Progress. “Senator Amy Klobuchar plans to soon introduce her own version of House Democratic legislation that would ban or degrade tech services used by millions of voters. Based on a leaked draft of Klobuchar’s legislation, here’s what we know about what her bill is — and is not.”
— Kovacevich explains: “It would break tech products that millions of Americans use every day.” Klobuchar’s bill would:
— “Block Amazon from offering its low-cost Basics brand products”
— “Ban Amazon from offering free shipping on select products through Amazon Prime”
— “Prevent Google from showing Google Maps in search results”
— “[Put] limits on U.S. products that don’t apply to those companies’ foreign competitors”
The bill, if enacted, would harm consumer choice and convenience, notes Independent Women’s Forum. “If enacted, this bill will leave American households with fewer choices, fewer conveniences, and higher prices. Small businesses will also lose the competitive advantages that allow them to compete successfully.”
This sort of legislation breaks with precedent and antitrust law and will endanger American security, says American Enterprise Institute Senior Fellow Klon Kitchen. “This approach breaks with American precedent, bucks antitrust law, and endangers American security.”
— Kitchen continues: “Instead of railing against these companies because of their size, we instead should be thankful that our free-market economy has produced an alignment of interests where private-sector actors can generate wealth and jobs while also developing capabilities that will provide for the common defense. This uniquely American advantage may well be decisive in an era of escalating geopolitical competition. It would be reckless to give it away.”
This legislation is the latest example of policy that would be “distorting competition and deterring innovation to the detriment of consumers,” explains ITIF’s Aurelien Portuese. “This is the latest example of Congress advancing legislation in the name of antitrust reform that will end up distorting competition and deterring innovation to the detriment of consumers. The House unveiled a deeply problematic package this summer that would reform antitrust laws according to firms’ size instead of their conduct. Now Senators Klobuchar and Grassley say they are planning to introduce a bill that would prohibit technology platforms from favoring their own products and services. In both cases, U.S. lawmakers are taking cues from their counterparts in Europe, who do not have U.S. economic interests in mind.”
— Portuese continues: “It would harm consumers because self-preferencing usually fosters competition rather than undermining it. Prohibiting self-preferencing would put a select handful of companies in a special class that is no longer able to improve their products and offer better prices. In addition to harming consumers, that would create an unfair playing field, since it would exempt other big rivals, many of which are foreign, from the same restrictions. The bottom line is that the Klobuchar-Grassley bill would disrupt innovation without achieving anything beneficial.”
The bill intends to use antitrust to product competitors instead of consumers, notes Asheesh Agarwal. “Bottom line: like its House counterpart, this bill uses antitrust to protect competitors and could harm consumers. And assuredly will lead to unintended consequences.”
The bill empowers antitrust authorities, especially the FTC, with expansive powers to regulate the economy.
If these measures are passed, “the FTC would become a regulatory leviathan,” says Robert Bork Jr. “If Ms. Klobuchar’s measures are embraced by Republicans, the consumer-welfare standard would be no more, and the FTC would become a regulatory leviathan. Her approach includes giving the FTC the power to levy a death-penalty fine on U.S. companies of 15% of their total U.S. revenue for the years the violation occurred. Ms. Klobuchar’s rectification campaign would bring American capitalism under the control of a woke bureaucracy.”
The bill would give the government more power to “micromanage the digital economy,” explains the Small Business and Entrepreneurship Council. “The legislation would also give the federal government significant new powers to micromanage the digital economy. According to the Small Business & Entrepreneurship Council (SBE Council), this massive intrusion into the digital economy would actually lead to less innovation and less choice, and harm small businesses and U.S. tech leadership.”
The legislation would turn antitrust into a tool for the government to manage competition, notes the U.S. Chamber of Commerce. “This legislation is not substantially different from the progressive proposals pushed in the House earlier this year that seek to turn antitrust from a tool to promote competition into one designed to allow big government to manage competition.”
Reports from the Washington Examiner say that the bill would include cumbersome new rules and regulations and would also give the FTC and DOJ broader powers. “The bill will focus on establishing new rules to stop anti-competitive behavior among dominant online platforms, give antitrust enforcers such as the Federal Trade Commission and the Justice Department new powers to tackle the companies”
In their coverage, the Washington Post explains that the bill could give more power to federal agencies. “A news release about the forthcoming legislation said it would give enforcers ‘strong, flexible tools to deter violations,’ including steep fines of up to 15 percent of a company’s revenue during the time it was violating the legislation.”