October 11, 2020 — House Democrats on Tuesday proposed a massive overhaul of U.S. antitrust laws that could make it easier to break up giant tech companies.
If elements of the 449-page proposal are implemented in legislation, it could be a profound re-writing of the relationship between Big Tech and Washington. New rules would restrict the lines of business in which dominant multi-sided digital platforms could operate.
The report, by the House Judiciary Antitrust Subcommittee, is the culmination of a 16-month investigation into the practices of Facebook, Google, Apple and Amazon. It lays out a number of concrete antitrust policy recommendations.
In particular, the report says, Congress should force a “structural separations” of operations within the respective companies.
For example, among the proposals include a ban on tech platforms acquiring future startups or potential rivals. In the case of Amazon, the proposals would bar it from both owning and selling products on an e-commerce hub. Both of those proposals were made with only Democratic support.
Republicans did not support those proposals. Later on Tuesday, the Republican minority committee staff published a separate report entitled, “Reigning in Big Tech’s Censorship of Conservatives.”
In the GOP report, Judiciary Republicans called for revamping the liability protections that shield Facebook, Twitter and other internet companies, or Section 230 of the Communications Decency Act. The Republicans want to open Big Tech up to lawsuits from which they are currently immune.
But there was bipartisan support on the committee for providing new resources to federal antitrust enforcement. Republicans also favor making it easier for officials at the Justice Department and the Federal Trade Commission to “shift the burden of proof” on what makes up an anti-competitive acquisition.
One of the main suggestions calls for Congress to define a new standard for antitrust violations, and enact laws “designed to protect not just consumers, but also workers, entrepreneurs, independent businesses, open markets, a fair economy, and democratic ideals.”
Representative Jim Jordan, R-Ohio, the ranking Republican on the Judiciary committee, said: “Big tech is out to get conservatives. Unfortunately, the Democrats’ partisan report ignores this fundamental problem and potential solutions and instead advances radical proposals that would refashion antitrust law in the vision of the far left.”
Tech companies defended their business practices and touted the popularity of their services among consumers in statements in response to the committee’s reports.
Meanwhile, the Democratic report received praise from consumer advocates and representatives for companies and industries who say they have been harmed by Silicon Valley giants’ anti-competitive conduct.
The next step will be for legislators to turn the recommendations to legislation. Subcommittee Chairman David Cicilline, D-R.I., has discussed plans for action, and said, “In the coming weeks and months, we will have an opportunity to further explore these remedies.”
“I am hopeful that, with Joe Biden in the White House, we will finally end this monopoly moment and restore a free and open internet,” said Cicilline, indicating that the effort may require a Democratic win of the presidency in November to progress.
FTC Commissioner Concerned About Antitrust Impact on Already Rising Consumer Prices
Noah Phillips said Tuesday he wants the commission to think about the impact of antitrust rules on rising prices.
WASHINGTON, May 17, 2022 – Rising inflation should be a primary concern for the Federal Trade Commission when considering antitrust regulations on Big Tech, said Commissioner Noah Phillips Tuesday.
When considering laws, “the important thing is what impact it has on the consumer,” said Phillips. “We need to continue to guard like a hawk against conduct and against laws that have the effect of raising prices for consumers.”
Current record highs in the inflation rate, which means money is becoming less valuable as products become more expensive, has meant Washington must become sensitive to further price increases that could come out of such antitrust legislation, the commissioner said.
Phillips did not comment on how such movies would mean higher prices, but that signals, such as theHouse Judiciary Committee’s antitrust report two years ago, that reign in Big Tech companies and bring back enforcement of laws could mean higher prices. He raised concerns that recent policies are prohibiting competition rather than facilitating it.
This follows recent concerns that the American Innovation and Choice Online Act, currently awaiting Senate floor consideration, will inhibit America’s global competitiveness by weakening major American companies, thus impairing the American economy. That legislation would prohibit platform owners from giving preference to their products against third-party products.
This act is one of many currently under consideration at Congress, including Ending Platform Monopolies Act and Platform Competition and Opportunity Act.
Small businesses have worried that by enacting some legislation targeting Big Tech, they would be impacted because they rely on such platforms for success.
Critics and Supporters Trade Views on American Innovation and Choice Online Act
American Innovation and Choice Online Act is intended to protect fair competition among businesses, but panelists differed on its impact.
WASHINGTON, May 10, 2022 – Experts differed on the effect that antitrust legislation targeting big tech companies allegedly engaging in discriminatory behavior would have on small businesses.
Small businesses “want Congress not to do anything that will screw up or weaken the services that they rely on for their business,” said Michael Petricone, senior vice present of the Consumer Technology Association, at a Protocol Live event on Thursday.
Petricone said that antitrust bill would encourage tech companies to relocate to other countries, harming the American economy. He said small businesses would be affected the most.
Instead, Petricone called for a “smarter immigration policy” to allow foreign innovators access to American tech market, as well as the defeat of the antitrust legislation.
But other said that small businesses suffer from predatory behavior by big tech companies. “Companies can’t get their foot in the door when there is already self-preferencing,” said Awesta Sarkash, representative for Small Business Majority, an advocacy organization, adding that 80% of small businesses say they want antitrust laws to protect them.
Self-preferencing on online platforms is detrimental to the success of small businesses who rely on social media advertising for business, she said. The new antitrust proposals would ensure an level playing field and promote fair competition, she said.
The American Innovation and Choice Online Act would prohibit certain online platforms from unfairly preferencing products, limiting another business’ ability to operate on a platform, or discriminating against competing products and services.
The bill sponsored by Sen. Amy Klobuchar, D-Minn, was introduced to the Senate on May 2 and is awaiting Senate floor consideration.
The debate follows concerns raised by both democrats and republicans about America’s global competitiveness as the bill would weaken major American companies.
If passed, the bill will follow the European Union’s Digital Services Act which similarly sets accountability standards for online platforms, preventing potentially harmful content and behavior.
Watchdogs Cannot Allow Another T-Mobile/Sprint Merger Under New Consolidation Guidelines, Event Hears
A Yale economics professor called on the FTC and DoJ to make it easier for them to pursue harmful mergers.
WASHINGTON, May 10, 2022 – A professor of economics said at an Information Technology and Innovation Foundation event late last month that the Justice Department and the Federal Trade Commission, during its recently announced review of mergers, should ‘plug those holes’ that previously allowed T-Mobile to acquire Sprint.
“I would say that one thing that we have accumulated a great deal of evidence on is that we are missing problematic mergers – that we are not [stopping] mergers that turn out to be harmful,” said Fiona Scott Morton, the Theodore Nierenberg Professor of Economics at Yale University School of Management, at the April 28 event, referring to the FTC’s failure to stop the Sprint/T Mobile merger and accused it of not appropriately protecting consumers.
“We are under enforcing as a general matter and we should therefore use this review of the merger guidelines to plug those holes,” she said, adding, “Are we catching nascent competitors that are going to prove to be important competitors in the future? It turns out we are not doing that,” she said.
“Here is where I am going to play fiscal conservative,” she said. “How about we change the rules to make it easier for the government to bring these cases and then we do not need to spend $2 billion more, we could spend half a billion dollars more because there would be a significant deterrent effect and the government would have less work to do.”
Merger guidelines will give industry more certainty
In January, the FTC under Chair Lina Khan and the Justice Department’s antitrust division launched a public inquiry into modernizing merger guidelines established under previous leadership, on which Khan said was an attempt to “accurately reflect modern market realities and equip us to forcefully enforce the law against unlawful deals.” Public comments were due on April 21.
Howard Shelanski, a partner at law firm Davis Polk, said at the ITIF event that FTC guidelines serve several purposes.
“One thing is certainly, just to let parties considering mergers to have an idea of what kind of scrutiny they are in for at the agencies,” he said.
He explained that the guidelines serve to inform stakeholders at which levels of industry concentration presumptions of harm will be triggered and what theories of harm the FTC will pursue.
“I think [guidelines] also let parties know how agencies will consider different kinds of defenses that [will] likely be raised,” Shelanski added. “So, the guidelines certainly serve a public purpose, but they also signal to courts about what lies behind the [FTC’s] thinking when it chooses to investigate and ultimately challenge a merger.”
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