June 15, 2021— The package of proposed antitrust bills proposed in Congress last Friday is drawing criticism from technology executives who claim the bills will have unintended consequences and destroy certain products that consumers love.
The five proposed bills follow an investigation concluded last year by the House Antitrust Subcommittee which accused Big Tech firms of harming consumer welfare and employing anti-competitive practices.
The bills aim to prevent companies from manipulating marketplaces to promote their own products. They make it harder for media platforms to buy and kill competitors. They mandate that platforms and firms collecting consumer data make it easier to leave and take the data to competitors. And they give the Department of Justice and the Federal Trade Commission extra resources to police monopoly power.
However, the bills have already drawn sharp criticism from technological executives, arguing that the bills would carry with them unintended consequences and damage American interest and harm consumer experience.
The bills’ unintended consequences
“As currently drafted, the package of antitrust bills introduced in the House Judiciary Committee would be a disaster for America innovators and consumers,” Gary Shapiro, CEO and president of Consumer Technology Association, said in a press release. “If signed into law, the bills would cause irreparable harm to small businesses and startups and put the US at a competitive disadvantage against China.”
Shapiro also claims the bills would restrict popular features currently enjoyed by millions of Americans. He says they would put an end to Amazon Prime free shipping, YouTube videos in Google search results, preinstalled iPhone apps, and many more.
The Consumer Technology Association is a trade organization that conducts research and lobbies for policy reform, representing technology companies such as Facebook, Amazon, Apple, and Microsoft.
Law360 reported last Friday that Adam Kovacevich, CEO of Chamber of Progress, a tech policy group sponsored by some large tech companies, said that the bills would ban things like Amazon Basics batteries, Apple’s Find my Phone feature, and Google Maps appearing in Google searches, which he said would “spark a consumer backlash.”
“And strangely, these bills could make it harder, not easier, for platforms to remove hate speech and disinformation,” Kovacevich said. “Instead of focusing on helping families, these proposals inexplicably target a bunch of technological conveniences that most people really like.”
Jessica Melugin, director of the Competitive Enterprise Institute’s Center for Technology and Innovation, called the proposals “regulation at its most economically depressing.”
“[The bills] reflect fundamental misunderstanding of how platforms create value for consumers, how market leaders compete with each other and the incentives necessary to keep innovative companies churning out useful new products and service for customers,” Melugin said.
“Taken together, these proposed regulations would compromise the U.S. as a global tech leader, strain an already struggling U.S. economy, and hurt American consumers.
Proponents of the bill maintain their position
Rep. David Cicilline, D-Rhode Island, chairman of the Subcommittee on Antitrust, Commercial and Administrative Law, said in a statement “unregulated tech monopolies have too much power over our economy.
“They are in a unique position to pick winners and losers, destroy small businesses, raise prices on consumers, and put folks out of work,” Cicilline said. “Our agenda will level the playing field and ensure the wealthiest, most powerful tech monopolies play by the same rules as the rest of us.”
In a letter sent to the leadership of the House Judiciary Committee, the Consumer Federation of America’s director of research, Mark Cooper, said, “The industry has taken the position that any constraint on its actions will end the digital revolution and dramatically increase costs for consumers. The Consumer Federation of America emphatically disagrees.
“The House Judiciary Committee and Antitrust Subcommittee is doing exactly what Congress should do to reboot needed oversight of the dominant incumbent digital platforms,” Cooper added in a press release. “The committees have identified general practices that must be reformed, given concrete recommendations, and provided increased resources for implementing these needed actions.”
Former Federal Trade Commission Chairman Says Biden is Inappropriately Exhorting the Agency
Former Chairman William Kovacic said that Biden’s direction of the FTC raises expectations for the agency.
WASHINGTON, January 28, 2022 – A former Federal Trade Commission chairman criticized the Biden administration’s direction of the FTC to accomplish the president’s antitrust goals.
At a Wednesday forum of the Mercatus Institute, former FTC Chairman William Kovacic criticized Joe Biden’s “instruction, direction, and exhortation” to the FTC, which is an independent agency and not part of the executive branch.
In July, President Biden directed regulators to craft rules preventing manufacturers like Microsoft and Apple from restrict consumers’ ability to fix their own devices. After the FTC voted unanimously to increase its enforcement against “right to repair” restrictions, both Microsoft and Apple announced plans for consumers to repair their own products.
Kovacic said that Biden almost appears to have the attitude that he “gave [the FTC and DOJ] an assignment” to advance the Biden administration’s consumer protection goals.
Then imagining that he was arguing from the perspective of the Biden administration, Kovacic said Biden could argue that he gave the FTC “an assignment to work on those guidelines and an exhortation to the FTC to get the work done,” as opposed to specific marching orders on the topics.
Mismatched capabilities at the FTC
Kovacic, who served as a commissioner at the FTC beginning in 2006, and who chaired the agency from 2008 to 2009, said the FTC has a history of mismatching its commitments with its capabilities.
In developing consumer protection programs, currently a professor of law at George Washington University, said the FTC often fails to ask “basic questions about who would do it, how long it would take, how much it would cost, and whether or not the institution has the credibility or capacity” to administer successful programs.
Kovacic said that in order to achieve a successful regulatory agenda, there must be a “stability of perspectives” that will endure across administrations.
Policymakers should be mindful not to abandon the resistance from total regulatory overhaul that he said “afflicted” his predecessors as chairs of the agency.
“Everybody will step forward and say, ‘I have my list.’ I suspect the Commission already is getting a letter each day from members of Congress saying, ‘here’s another one.’”
Recalling the many prior presidents’ push for regulators to control petroleum prices – including by President Biden in November – Kovacic said the FTC can’t always deliver.
“Whenever there’s going to be a problem the new leadership, seen as competition policy superheroes, will be exhorted to do something, and it will not be an adequate response to say, ‘we’ve already got a lot on the agenda, we’ll get to it when we can.'”
Consolidation, Bloat, and a Waning American ‘Brand’ Hurt the Economy, Says Tim Wu
He argued that fundamental changes must be made to restore peoples’ faith in an American system that works for everyone.
WASHINGTON, January 26, 2022 –White House Special Assistant Tim Wu said Wednesday that the U.S. economy is over-consolidated and bloated in the middle.
Speaking at an event hosted by the Institute for Local Self-Reliance, Wu, a member of the National Economic Council with a portfolio over Technology and Competition Policy, argued that that the “American dream” has suffered major setbacks in recent decades.
Wu, who is credited with coining the term “net neutrality” and a longstanding critic of telecom monopolies, has more recently become an outspoken critic of big technology companies.
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“We can see very vividly how fragile this concentrated economic system we built has been and how poorly it is working for the whole country,” Wu said.
“Our country has become too centralized. It is too national in its character – in terms of where businesses are location – too centered on consumption, as opposed to production.
“Too many of the [economic] returns go to too few people who often live very far away from the communities they serve.”
Hearkening to the post-World War II decades in which Western nations endorsed significant government intervention in the economy as part of social democracy, Wu said that America is “relearning the virtues and merits of a mixed economy – that is the truer American tradition of small and medium business – market structures where [people] can all survive and prosper; what [President Joe Biden] calls ‘an economy that works for everyone.’”
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Wu distilled his criticisms to three primary points: Too many industries have become too consolidated, a bloated “middleman” economy has emerged, and the “American brand” has diminished.
“We have all seen so many industries consolidate into just the ‘big three’ or ‘big four,’” Wu said. “That is a traditional problem that I think extracts a lot from the economy.”
Wu went on to explain the “middleman” economy – a rise of a “highly concentrated middle layer” across many industries. This bloat on the processing end takes place somewhere between the inception of a product or service and the consumer is extracting too much revenue, Wu said.
“When you think about monopoly – which is just high prices – it leads to this problem where the middlemen have power over their suppliers and are able to squeeze their suppliers and also often able to squeeze their employees,” Wu said. This is “a new kind of problem for the economy, and one that we need to face.”
What is the ‘American brand’?
Wu’s final point related to what he referred to as the “American brand.”
“There has been a real sense that the sense of opportunity that has been the ‘American brand’ has diminished,” he said. “The statistics are a little depressing that confirm this.”
75 percent of U.S. industries are controlled by fewer companies than they were 20 years ago, Wu said. He pointed to mergers that skyrocketed in the 1980s and predicted that 2022 will feature a record number of mergers.
“These are real challenges and I just want to assure you that the administration of the White House is very focused on [them] and we see it not just in terms of the economy, but in terms of the Democratic soul of this nation,” Wu said. “Freedom and opportunity are not trivial things when it comes to describing what democracy is all about.
FTC Mum on Microsoft-Activision Deal, Proposes Review of Merger Guidelines
The deal would elevate Microsoft in an even more favorable position in the games-as-a-service market.
WASHINGTON, January 24, 2022 – As Federal Trade Commission Chairwoman Lina Khan does media rounds this past week, she has refused to comment on last week’s news that Microsoft has agreed to buy video game making giant Activision-Blizzard for nearly $70 billion.
As per policy, the FTC and the Department of Justice, which on Tuesday jointly held a press conference on merger reform on the same day of the announced consolidation, said they could not comment on the deal, which would increase the Xbox maker’s gaming market share and allow it to better compete with Japanese behemoth Sony.
During the press conference, Khan, installed as chairwoman in June as an already outspoken critic of certain big tech practices, announced that the organizations would be launching a review of merger guidelines. Khan stressed that the current guidelines do not adequately protect consumers and promote competition in the era of the digital economy.
“While the current merger boom has delivered massive fees for investment banks, evidence suggests that many Americans historically have washed out with diminished opportunity, higher prices, lower wages, and lagging innovation,” she said. “These facts invite us to assess how our merger policy tools can better equip us to discharge our statutory obligations and halt this trend.”
She reiterated those goals on a CNBC interview on Wednesday. The purchase of the highly influential Call of Duty franchise maker will have to go through her office. It also presents another stress test for the office, as it is already engaged in an existing lawsuit against Facebook practices. Both Facebook and Amazon have asked for Khan to be recused from investigations in their companies because of her past positions on them.
The deal would significantly expand Microsoft’s Game Pass platform, which offers free games to play for a monthly subscription. Microsoft announced on the day of the proposed deal that Game Pass surpassed 25 million subscriptions.
“Upon close, we will offer as many Activision Blizzard games as we can within Xbox Game Pass and PC Game Pass, both new titles and games from Activision Blizzard’s incredible catalog,” said Microsoft Gaming CEO Phil Spencer said in a statement.
Despite its numerous successful intellectual properties, Activision Blizzard has been marred with scandal in recent years. In 2021, the company was sued by California Department of Fair Employment and Housing for promoting a “frat boy” culture, whereby female employees were not only allegedly discriminated against, but also subjected to sexual assault and misconduct.
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