June 25, 2021— Some of the votes were exceedingly close, but in a grueling markup Wednesday and Thursday, the House Judiciary Committee cleared six bills each designed to target the biggest tech companies by limiting what they can do.
The goal of the Democratic-led agenda? To rein in the power of Big Tech through new antitrust liability.
The package follows a 16-month investigation by Judiciary’s Antitrust Subcommittee, completed last year and scrutinizing the business practices of Amazon, Apple, Google, and Facebook. The final report accused the firms of charging high prices to competitors, forcing small customers into low-quality contracts, and acquiring smaller companies that posed a competitive threat.
While some of the measures have gained traction on both sides of the political spectrum, they have also divided both the Republican and Democratic members of the Judiciary Committee. The controversy will continue as the measure goes to the House floor, and – if passed – on to the Senate.
Broadband Breakfast examined each of the six measures voted on by the committee, and some ways that they might impact Big Tech’s business practices.
American Choice and Innovation Online Act, H.R. 3816
The American Choice and Innovation Online Act, H.R. 3816, introduced by subcommittee Chairman David Cicilline, D-Rhode Island, is in some ways the core of a five-bill package introduced by Democrats on June 11.
Referred in short-hand as the “non-discrimination” measure, it aims to limit how online marketplace arbiters operate their platforms by making it illegal for operators to favor their own products over those of competitors in the market that they operate.
Cicilline’s bill would bar designated platforms from sponsoring their own products, and nor could they discriminate against either the pricing of or access to competing services offered on the same marketplace.
The bill applies only to companies with more than 50 million users, 100,000 business users, or a market capitalization of more than $600 billion.
This would make it so that Apple, for example, could not favor their own applications over that of their competitor Google on their own App Store, and visa-versa on Google’s search engine.
Some experts believe this bill would put an end to pre-installed iPhone apps, YouTube results in Google searches, and would bar Google from displaying their own Google map’s service in Google searches.
The committee vote for the measure was 24 to 20.
Platform Competition and Opportunity Act, H.R. 3826
The Platform Competition and Opportunity Act, H.R. 3826, introduced by Rep. Hakeem Jeffries, D-New York, restricts mergers and acquisitions facilitated by “covered platforms” under the same designations as Cicilline’s non-discrimination measure.
The bill prevents designated Big Tech companies from acquiring or merging with other firms unless the firm can prove:
- The acquired assets don’t compete with the buying platform’s business.
- The acquisition does not cover a company that poses a potential competitor, presently or in the future.
- It doesn’t enhance the company’s market position.
- It doesn’t enhance the company’s ability to maintain its current market position.
The bill explicitly states that both consumer attention and collected data count as assets and must be considered when completing a merger of acquisition.
The committee vote for the measure was 23-18, with one Republican, Rep. Burgess Owens, voting “present.”
Ending Platform Monopolies Act, H.R. 3825
The Ending Platform Monopolies Act, H.R. 3825, introduced by Rep. Pramila Jayapal, D-Washington, is similar to Cicilline’s non-discrimination bill, except that instead of prohibiting online marketplace arbiters from promoting their products, it makes it illegal to sell their own product on a market they operate.
The most controversial of the package, this would allow federal regulators to sue to break up companies that both operate a dominant platform and sell their own goods or services on it, if the arrangement poses an “irreconcilable conflict of interest.”
This could potentially target company-branded products sold by Amazon, as well as making it easier to breakup Google and Facebook.
It also explicitly states that covered platforms cannot offer a product that users may purchase to receive “preferred status” on the platform’s marketplace. Consumer Technology Association CEO Gary Shaprio said that the package could put an end to Amazon Prime services.
Also weighing in was Computer and Communications Industry Association President Matt Schruers, who said, “These bills unreasonably target leading U.S. tech companies that have improved users’ experience with innovation, efficiency, and low-cost or free-to-the-user services. These bills would harm consumers and thousands of smaller businesses that use digital services to reach worldwide markets.”
The final of the six measures voted on, the committee vote for the measure was 21-20. Three representatives present for the markup did not vote, and were recorded as neither “aye,” “no” or “present”: Rep. Lucy McGath, D-Ga., Rep. Deborah Ross, D-N.C., and Owens.
Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act, H.R. 3849
The Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act, H.R. 3849, introduced by Rep. Mary Gay Scanlon, D-Pennsylvania, aims to promote competition amidst platforms by making it easier for consumers to leave the platform and take their data to competitors.
Currently, the massive amounts of data that platforms collect help secure user attention for longer periods of time is believed to make advertisers more likely to purchase advertising space on the platform. Because users interact with the content for longer periods, there is a greater chance they will interact with advertised products. Because younger, smaller firms don’t have access to the quantity of data big platforms do, it makes it difficult for them to compete at scale.
The ACCESS Act of 2021 would mandate that all covered platforms maintain a set of “transparent, third-party-accessible” interfaces that enables a secure transfer of data to another business at the user’s request.
The ACCESS Act would prohibit companies from altering the transfer interface without consent of the Federal Trade Commission unless a threat to a user’s security was imminent.
The committee vote for the measure was 25-19.
Merger Filing Fee Modernization Act, H.R. 3843
The Merger Filing Fee Modernization Act, H.R. 3843, introduced by Rep. Joe Neguse, D-Colorado, offers additional resources to the FTC and Department of Justice to police monopoly power, at no additional cost to taxpayers.
The bill amends Section 605 of Public Law 101-162, granting additional funding to the departments. It also increases funding year to year beginning in 2022, based upon the consumer price index and inflation rate.
The bill also increases the cost of pre-filing merger fees and slates it to increase year by year based on the inflation rate.
Although seen as the least controversial of the package, this first measure for the committee resulted in a spirited debate between committee Ranking Member Jim Jordan, R-Ohio, about whether Democrats were writing a blank check to the Biden White House on antitrust enforcement.
The committee vote for the measure was 29-12.
State Antitrust Enforcement Venue Act, H.R. 3460
A sixth antitrust measure also voted on in the markup had been previously introduced by subcommittee Ranking Member Ken Buck, R-Colorado. Buck’s two-page measure was introduced in May.
It would give state attorneys general control over which courts hear antitrust cases. It emerged after Google attempted to move a multistate antitrust suit against it from Texas federal court to a venue in its home state of California.
The committee vote for the measure was 34-7.
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.”
- State Broadband Offices Have Obligation to Explain NTIA Notice of Funding to Applicants
- Mountain Connect Features NTIA’s Alan Davidson, 2 Colorado Senators and State Attorney General
- Senate Bill Would Alter Google Advertising, DOJ Cybersecurity Policy Reversal, Comcast on Hybrid Fiber-Coax
- Rahul Sen Sharma: The Metaverse is Not Web 3.0
- AT&T and DISH Agreement, FCC Adds More States in Robocall Fight, $50M from Emergency Connectivity Fund
- FCC Seeks Comment on Higher Broadband Speeds and Increased Security Measures for Certain Carriers
Signup for Broadband Breakfast
Broadband Roundup3 months ago
Microsoft App Store Rules, California Defers on Sprint 3G Phase-Out, Samsung’s New IoT Guy
Broadband Roundup4 months ago
‘Buy American’ Waiver Request, AT&T Cuts Dividend for Builds, Jamestown Municipal Broadband Program
Broadband Roundup3 months ago
More From Emergency Connectivity Fund, Rootmetrics Says AT&T Leads, Applause for House Passing Chips Act
Broadband Roundup4 months ago
AT&T Speeds Tiers, Wisconsin Governor on Broadband Assistance, Broadband as Public Utility
WISP3 months ago
Wireless Internet Service Providers Association CEO Claude Aiken to Step Down in April 2022
Big Tech2 months ago
‘Cartel’ is ‘Most Absurd Term Ever’ for Media Allowed Revenue Share With Tech Platforms: NMA
Broadband Roundup3 months ago
Rosenworcel’s Proposal for 9-1-1, Harris to Talk Broadband, AT&T Joins Ericsson Startup 5G Program
Blockchain4 months ago
NFTs May Be Central to the Emerging ‘Internet of Value,’ Say Experts at Pulver VON3