The Senate Bill Scaring Big Tech

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If you want to know how concerned an industry is about a pending bill, a decent measure is how doomsday their predictions are of what the bill would do. By that standard, Big Tech is deeply troubled by America’s online innovation and choice law.

The misnamed bill is designed to prevent dominant online platforms — like Apple and Facebook and, crucially, Google and Amazon — from giving themselves an edge over other companies that must go through them to reach customers. As one of two antitrust bills defeated in committee by a strong bipartisan vote (The other would regulate app stores), it may be this Congress’s best, if not only, shot at preventing the biggest tech companies from abusing their gatekeeper status.

“It’s the ball game,” says Luther Lowe, senior vice president of policy at Yelp and a longtime Google antagonist. “That’s how these guys stay big and relevant. If they can’t get their hands on the scale, it leaves them vulnerable to small and medium-sized businesses eating up their market share. »

But according to the tech giants and their lobbyists and front groups, the bill, which was introduced by Amy Klobuchar and Chuck Grassley, the top Democrats and Republicans on the Senate Judiciary Committee, respectively, would be a disaster for the consumer. American. In an ongoing ad campaign, they claimed it would ruin Google search results, prevent Apple from offering useful features on iPhones, force Facebook to stop moderating content, and even ban Amazon Prime. All of this is quite alarming. Is it true?

The central idea of ​​the legislation is that a company which controls a market should not be able to impose special rules on itself within that market, because competitors who oppose it have no real place to go. No business can afford to be excluded from Google’s search index, and few online retailers can make a living if they are not listed on Amazon. Thus, the Klobuchar-Grassley bill, broadly, prohibits self-preference by platforms that meet certain size thresholds, such as monthly active users or annual revenue. To take a simple example, this would mean that Amazon cannot give away its private label products one leg up on other brands when someone makes purchases on its site, and Google cannot choose to give YouTube links when someone does a video search unless those links are objectively the most relevant.

Beyond that, it’s hard to say precisely what the law would do, as it leaves quite a bit unspecified. Like many federal statutes, it directs an administrative body — in this case, the Federal Trade Commission — to turn general provisions into concrete rules. And it gives the FTC, the Department of Justice, and state attorneys general the power to prosecute companies for violating those rules. (Last week, the DOJ approved the bill, an important signal of support from the Biden administration.) Inevitably, the rules and all enforcement actions would eventually end up in court, giving federal judges the final say on what exactly the law means. .

This leaves a lot of uncertainty as to exactly how the law would play out. In this zone of uncertainty, technology companies have issued dire warnings.

Perhaps the scariest talking point is that the law, if enacted, would kill Amazon Prime. According to eMarketer, more than 150 million Americans, more than half of the adult population, are Prime members. That’s a lot of people who might hate losing their “free” two-day shipping. (It’s not really free, of course, if you have to pay a subscription fee.)

Norman D. Briggs