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Bipartisan antitrust legislation that could limit tech giants' ability to exhibit a preference for their own products over competitors' on online platforms has advanced to the U.S. Senate floor. If passed, some say the bill could do more harm than good.
The American Innovation and Choice Online Act sponsored by Sen. Amy Klobuchar (D-Minn.) and Sen. Chuck Grassley (R-Iowa), would prohibit online platform operators like Apple, Google and Amazon from unfairly limiting other businesses' operations on the platforms those companies operate, like Amazon's marketplace or Apple and Google's app stores.
The U.S. Senate Committee on the Judiciary advanced the bill Thursday to the Senate floor in a 16-6 vote after senators proposed numerous amendments to the antitrust legislation, which would apply to platforms with at least 50 million monthly active users or at least 100,000 active business users.
"We've got to have fair competition in this country," Klobuchar said during the Senate judiciary committee's markup of the bill. She said that Google, for instance, controls more than 90% of the online search market.
A similar bill introduced by U.S. House of Representatives members advanced to the House floor last year. Congressional leaders and federal regulators alike are zeroing in on the chokehold they believe tech giants have on digital platforms and have attempted to address the issues through new laws and lawsuits. President Joe Biden issued an executive order last year tasking the Federal Trade Commission with creating rules for competition in online marketplaces.
Antitrust legislation gains approval
Some applaud the American Innovation and Choice Online Act, including the nonprofit consumer organization Consumer Reports.
The organization submitted a letter to the Senate judiciary committee noting that the bill would address unfair market power by "setting fair market rules to prohibit discriminatory conduct by the covered platforms that materially harms competition."
Indeed, research demonstrates that digital marketplaces are subject to "winner-take-all dynamics and high entry barriers," said Michael Kades, director of markets and competition policy at the Washington Center for Equitable Growth.
Kades said that as a result, the digital marketplaces are susceptible to anticompetitive abuses that can harm consumers and small businesses alike.
"A well-drafted bill can prevent self-preferencing that harms competition, which would open the door to new competition and encourage existing platform to compete on the merits," he said.
Concerns about big tech regulation
Others argue that the bill doesn't consider the benefits delivered by these large firms. Their sheer size gives them the ability to compete globally, while offering a wide range of services at low prices, say critics of antitrust legislation.
Consumers have benefitted from digital giants' scale through bundling of internet streaming, online shopping and cloud services, said R "Ray" Wang, principal analyst and founder of research and advisory firm Constellation Research.
Breaking up digital giants and limiting their ability to scale is dangerous, he said, particularly as the U.S. finds itself in a tech race with countries like China where the "digital giants are giving us every bit of advantage we need."
Wang said if a digital giant is abusing its power by increasing prices, limiting choices, pushing out competitors and stopping startups from succeeding, then action should be taken. But he argues the American Innovation and Choice Online Act is not taking the right steps.
"Should they break their 'social contract,' then we have to think of ways to increase competition and open access to their ecosystems," Wang said. "This bill would need to be more clear on how we open up markets and keep prices competitive for everyone."
Earlier this week, the U.S. Chamber of Commerce also opposed the legislation.
"This legislation stems from a misplaced view of what is best for consumers," said Neil Bradley, executive vice president and chief policy officer for the U.S. Chamber of Commerce, during a press call. "We know that what consumers are looking for is choice and lower prices. The fact is that the platforms that are being targeted under this legislation have expanded choice for American consumers and have helped lower prices."
Also this week
- Microsoft announced plans to acquire game developer Activision Blizzard Inc. as part of the company's effort to accelerate growth in its gaming business. The deal, expected to close in 2023, will need U.S. antitrust approval. "We're investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all," said Satya Nadella, Microsoft chairman and CEO, in a statement.
Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.