ICYMI: PPI Report Outlines The Critical Flaws Of AICOA
With the last Congressional work period before the midterm elections looming, it’s important to remember that the American Innovation and Choice Online Act’s critical flaws have not been—and cannot be—fixed. Earlier this summer, Progressive Policy Institute (PPI) released a report exploring three major critiques of AICOA.
The report explains how “the bill isn’t really based in antitrust law and policy. Rather, it’s an ad hoc set of new rules which replace the current standards for antitrust enforcement based on market power and consumer welfare with a more generalized approach which targets just one industry — online platforms.”
Here are the three criticisms:
1) AICOA intends to punish companies on the basis of their size. “[T]he problem with this size-based approach is that it skirts an essential part of antitrust analysis: Defining the relevant market in which firms operate and determining whether consumers in that market can find substitutes for the goods and services the big platforms offer. By designating covered platforms based on size alone, regulators fail to consider their actual market power.”
2) Large companies may not have “a preponderant or even significant market share.” “An individual firm may be large, but if that size is proportional to the size of the market, that firm may not have a preponderant or even significant market share. And when considering the level of international competition in the market for online platforms, size-based regulation is not going to limit the size of the world’s dominant tech platforms, it’s just going to ensure they’re not American companies.”
3) Ignoring network effects results in an incomplete look at how large companies benefit consumers. “Lawmakers also should acknowledge that consumers benefit enormously from large platforms with network effects. In fact, by network effects alone, the product which is most valuable to the consumer on many online platforms is that [which] has the most users. That potential for growth made possible by network effects is not indicative of a monopoly or even market power.”
Read the full report here.