When lawmakers and regulators go too fast, they break things. But then the break appears to be the main point of a bipartisan group of senators pushing for legislation that would punish Big Tech companies. The bill received little debate, but Majority Leader Chuck Schumer wants to hold a vote right away.
Giant corporations have always emerged during times of technological upheaval. But their dominance has faded over time amid competition or business mistakes – think General Motors,
Note that Big Tech stocks have plunged this year in part due to slowing growth and monetary tightening.
In January, the Senate Judiciary Committee voted 16-6 to advance the misleadingly named U.S. Online Innovation and Choice Act. The bill has six Republican co-sponsors. Some Republicans want to go after tech companies to censor conservatives while posing as small business advocates.
We’ve criticized Big Tech platforms as much as anyone for stifling political debate. But states are experimenting with legislation to crack down on censorship, and Elon Musk’s bid to buy Twitter is a deal-breaker. While companies sometimes engage in anti-competitive practices, competition regulators and courts are equipped to deal with them under existing law. The Senate bill will create more problems than it solves.
The bill empowers the Federal Trade Commission and the Department of Justice to restrict the business practices of “covered platforms.” Bill would initially capture Amazon,
Alphabet (Google), Apple,
Meta (Facebook), Microsoft,
Tencent (WeChat) and ByteDance (TikTok), although it may eventually sweep others, including Twitter and Walmart.
These platforms would be prohibited from giving “preference” to their own products or services. Regulators will have wide discretion to decide what that means. Is Amazon prioritizing its own delivery service by offering free two-day shipping to its Prime members? Does Apple favor its Safari browser by pre-installing it on iPhones?
Tech companies should redesign their platforms to avoid complaints from regulators and competitors. As a result, Amazon Prime subscribers might also not be eligible to stream Amazon original movies and TV shows for free or enjoy free two-day shipping. A host of services that benefit consumers could disappear on a bureaucratic whim.
Google’s favoritism of its own products in search has understandably irritated smaller rivals. But nothing prevents users from going directly to sites like Yelp or Expedia.,
which can also sue Google for abusing its dominant position in search to restrict competition.
The bill would also require platforms to make their products interoperable with their competitors. This would be technically difficult, or even impossible in some cases, and could make the products less functional. This would reduce cybersecurity, as the United States is increasingly attacked by hackers, including state actors. Ensuring platforms are interoperable could make it easier for cyber thieves to steal user data. Apple may need to allow competing app stores and apps on iPhones that offer below-average security protection.
The bill says its mandates don’t apply if they pose a “significant cybersecurity risk,” but the platforms would bear the burden of proving that their features are necessary to protect security or privacy, or “maintain or significantly improve the base functionality”. of their platforms. In short, the platforms would be guilty of anti-competitive behavior unless they prove their innocence.
One irony is that Meta, Facebook’s parent that politicians abhor, might be least harmed by the bill’s conduct bans because it offers fewer in-app products. Facebook could benefit as it might be able to develop a competing app store for iPhones. Apple may be forced to hand over user data to Facebook.
It’s hard to predict how regulators would enforce the bill’s conduct prohibitions and mandates. But there is no doubt that the bill would create enormous uncertainty that would slow down American innovation. It would hit America’s tech industry even as Beijing backs down from its antitrust assault on Chinese tech giants after discovering the damage it has done to its economy.
Some Republican senators who supported the bill on the Judiciary Committee have long and rightly complained about an excessive administrative state. Still, the bill would give antitrust regulators enormous discretion to interpret vague provisions. A Senate vote will say a lot about the economic priorities of Texas Senator Ted Cruz, among others.
The US economy is suffering from inflation, interest rates are rising and a recession is possible. The last thing America needs is another regulatory shock from Congress.
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Appeared in the June 6, 2022 print edition.