Sen. Klobuchar’s Proposal Is Yet Another Breakup Bill In Disguise
In the face of overwhelming criticism of recent radical House antitrust overhaul bills, including Rep. Cicilline’s American Choice and Innovation Online Act, it’s disappointing to see the Senate follow the House’s lead. The latest such example is Sen. Amy Klobuchar’s American Innovation and Choice Online Act, which, according to recent press reports, is even worse than the House version with the same name. This bill would:
— Hurt consumers by breaking all the same products and services as Rep. Cicilline’s proposal.
— Gravely harm small and medium-sized businesses and developers.
— Undermine America’s global tech leadership.
— Grant the FTC new sweeping powers over the lives of Americans.
The bill would break all the same consumer tools as Rep. Cicilline’s proposal.
The Klobuchar bill is no less destructive than Rep. Cicilline’s proposal, says Chamber of Progress President Adam Kovacevich. “But if Klobuchar’s goal is to ‘ensure that popular tech features, such as pre-installed phone apps or convenient Google Maps features prominently located within Google searches, are not restricted,’ the draft bill doesn’t do that at all.”
Such restrictions would limit consumer choice and actually reduce competition, writes ICLE’s Sam Bowman. “Apart from the obvious reduction in the quality of services and convenience for users that this would involve, this kind of conduct (known as ‘self-preferencing’) is usually procompetitive. For example, self-preferencing allows platforms to compete with one another by using their strength in one market to enter a different one; Google’s Shopping results in the Search page increase the competition that Amazon faces, because it presents consumers with a convenient alternative when they’re shopping online for products. Similarly, Amazon’s purchase of the video-game streaming service Twitch, and the self-preferencing it does to encourage Amazon customers to use Twitch and support content creators on that platform, strengthens the competition that rivals like YouTube face.”
The bill would break many of the tech conveniences that consumers rely on.
The bill would make search engines less helpful to consumers, reversing years of pro-consumer innovation.
Such a bill would effectively end Amazon Prime free shipping, writes Kovacevich. “By requiring equal treatment of all products and marketplace sellers, the bills would make it impossible for Amazon to offer its Prime free shipping service for certain products.”
Consumers are strongly opposed to the impacts of these proposals, shows recent polling from the Progressive Policy Institute.
— 85% of consumers oppose banning Amazon Prime from offering free shipping.
— 76% of consumers oppose stopping Google Maps and Google search results from including real time information like traffic and transit delays, business hours of operation, reviews, and contact information.
— 73% of consumers oppose Requiring Google to sell or shut down YouTube, Google Maps, Waze, Google Photos, Google Drive, Gmail, Play Store, Chrome and Android.
— 70% of consumers oppose requiring Amazon to stop selling its own products through Amazon.
Restricting the ability of companies to offer their own services could harm consumers’ access to information, write the Asia/Pacific Islander American Chamber of Commerce and Entrepreneurship (ACE), Chamber of Progress, Latino Coalition, and U.S. Black Chambers. “We are also concerned that proposals aimed at ‘nondiscrimination’ could restrict major platforms’ ability to provide information and opportunity tools within their services.”
The bill would gravely harm small businesses and developers.
These proposals try to distort business models through Congressional fiat — with consumers and small businesses paying the price, writes Connected Commerce Council president Jake Ward. “When legislators and regulators try to drastically change business models by fiat, ignoring market realities, there are always unintended consequences that are almost always borne by small businesses and consumers in the form of higher prices and diminished service.”
“No one should be surprised,” if small businesses lose access to the Amazon marketplace sales channel as a result of so-called nondiscrimination restrictions, writes CCIA President Matt Schruers. “Like most retailers, Amazon purchases wholesale from brands, and sells directly to consumers. The loss of this line of business, even more so than Amazon’s house brands like Amazon Basics, would have a significant impact. If faced with a choice between relying entirely on third parties to meet consumers’ needs, or reverting to its original business model of being a first-party retailer where it has direct control of its inventory, pricing and fulfilment network, no one should be surprised if Amazon chooses to restructure its store to look more like Walmart.”
By attacking the ad-based internet, the bill would remove a cost-effective marketing channel that small businesses enjoy. As described by a Small Business and Entrepreneurship Council report, “Small business owners report that they have also boosted the competitiveness of their businesses from new revenues generated by online advertising, which they say is extremely effective at driving new sales. In fact, 73% of small businesses stated that without online advertising ‘it would impact my ability to effectively market my products and services and to grow my business.'”
Such a proposal would take away many of the tools that app developers currently use to build their businesses, writes ACT | The App Association. “The legislative proposals that could negatively impact App Association members include:
— A separation of platforms from complementary businesses could prevent software platforms from providing important complementary services that App Association members use now;
— A regime requiring ‘equal terms for equal products and services’ would inevitably require the government to define what constitutes ‘equal,’ in a process that more well-resourced companies on the platform are likely better able to take advantage of than smaller companies;
— A prohibition on self-preferencing could diminish software platform offerings that App Association members leverage now, such as the native camera app, e-mail, messaging, and similar functions software developers interoperate with to offer new products and services.”
The bill would jeopardize a growing sales channel for thousands of American small businesses.
The bill would seriously undermine America’s global tech leadership.
The current U.S. regulatory environment has created an environment where firms are incentivized to innovate, write Jamil Jaffer and Joshua Wright of George Mason University’s Antonin Scalia Law School. “Transforming our core business laws, as a range of legislative proposals seek to do, would be dangerous. U.S. antitrust laws have kept competition vibrant and the economy humming. Modern competition law and the consumer-welfare standard have created a stable, predictable climate for firms to innovate.”
America’s leading tech firms are an important part of keeping the U.S. secure, says former Director of National Intelligence Dan Coats. “U.S. intelligence and law enforcement agencies rely on partnerships with leading tech companies to address threats such as foreign terrorist activity, cyberattacks and influence operations. In particular, large U.S. tech firms have led the way in implementing cybersecurity solutions to detect and thwart foreign cyberattacks, both on their core operations and in the broader ecosystems that they manage. And U.S. tech firms are among the global leaders in research and development, providing a critical counterweight to Chinese R&D efforts.”
Radical antitrust reform proposals would have a plethora of harmful national security implications, say twelve former national security officials. “Recent congressional antitrust proposals that target specific American technology firms would degrade critical R&D priorities, allow foreign competitors to displace leaders in the U.S. tech sector both at home and abroad, and potentially put sensitive U.S. data and IP in the hands of Beijing.”
As we debate whether to crush leading American companies, foreign competitors are “waiting in the wings,” 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.”
Breaking up American tech companies will be a boon to China, says former Senator Rick Santorum (R-PA). “Breaking up and regulating our tech companies will reduce their ability to innovate quickly and remain at the cutting edge of technology. That will be the single biggest boon to China in their quest to run the world’s tech services. Rather than having to innovate and produce competitive services that people want, China will be able to sit back as our government rips apart a key American industry.”
Policymakers should focus on making the U.S. more competitive, rather than “appeasing anti-tech populists,” writes Colin Mortimer of the Neoliberal Project. “American technology policy needs to encourage a pro-growth, pro-innovation environment that cements the US as a place to develop cutting edge technology. 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. “
The “access and interoperability” and the “anti-discrimination” provisions apply only to leading U.S. companies, CCIA points out: “foreign platforms won’t be obligated to provide the same treatment to U.S. products and services. Provisions…also limit the ability of large U.S. companies to offer integrated products, while foreign firms are fully exempt from any comparable regulatory oversight. This would improve the competitive position of foreign companies, who already are leading competitors and who would be able to benefit from the scale and integration advantages that are no longer available to major U.S. platforms.”
The bill would grant the FTC sweeping new powers over the lives of Americans.
Interoperability mandates 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.”