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Congress Is Going To Throw The Kitchen Sink At Big Tech

For years, Big Tech crushed the competition with relative impunity, squeezing every dollar from would-be rivals to reach unprecedented valuations. And while their anti-competitive practices may well continue, there are now five draft bills circulating in the House of Representatives that represent the biggest threat ever to their standard method of doing business.

The draft bills, which Big Technology obtained in full, contain just about everything Big Tech’s detractors have hoped for on the antitrust front. They take direct aim at Amazon, Apple, Facebook, Google, and Microsoft’s self-dealing, outline new speed bumps for anti-competitive mergers, and empower feeble federal regulators to bulk up and throw some punches.

The bills may change before they’re introduced, and they’ll inevitably go through a political process that will water them down. But even if only a portion of what’s written gets passed, the tech giants will lose several advantages they’ve exploited in recent years.

This week, let’s dig into each bill with some analysis of the text…

Bill 1: Platform Anti-Monopoly Act

This bill from Rep. David Cicilline is a whopper. It contains several provisions aimed at the tech giants’ self-dealing.

The bill would make it illegal for ‘covered platforms’ (companies that have a half-million monthly U.S. users and more than $600 billion in market cap) to do the following:

A) Privilege their own lines of business over their competitors

Text: The bill makes it unlawful to engage in conduct that “advantages the covered platform operator’s own products, services, or lines of business over those of a competing business or potential competing business that utilizes the covered platform.”

Analysis: If this bill passes, Google couldn’t promote its own products in search as it does today (think: Maps, Shopping). Amazon couldn’t do the same with its private label products. And Apple might be breaking the law by insisting you use Apple Music over Spotify within Siri.

B) Use private data from third-party businesses to improve their own, competing products

Text: The bill would make it illegal to use private data from businesses obtained as they use a service “to offer or support the offering of the covered platform operator’s own competing or potentially competing products or services on the platform.”

Analysis: Jeff Bezos, this one’s for you. This provision aims at Amazon’s practice of using data it collects from third-party merchants to enhance its own private label offerings. If it passes, the practice would be blatantly illegal.

C) Prevent businesses from steering users to payments on another platform

Text: The bill makes it illegal to do anything that “impedes dependent businesses from communicating information or providing links on the covered platform to covered platform users to facilitate business transactions on or off of the covered platform."

Analysis: This would make it unlawful for Apple to restrict app developers from telling users that they can pay for upgrades and subscriptions on the web and avoid Apple's 30% App Store tax.

D) Force businesses to buy ads to survive

Text: The bill would make it unlawful to do anything that "conditions access to the covered platform or preferred status on the platform on the purchase or use of other products or services offered by the covered platform operator."

Analysis: This is very clearly aimed at advertising on Amazon, potentially Google as well, where merchants often must pay to gain visibility in the search results.

Bill 2: Ending Platform Monopolies Act

This bill from Rep. Pramila Jayapal may well be called the “Break ‘em up” bill. It paves the way for the Department of Justice to tear apart the tech giants.

Text: “It shall be unlawful for a covered platform operator to own or control a line of business, other than the covered platform, when the covered platform’s ownership or control of that line of business gives rise to an irreconcilable conflict of interest.”

Analysis: The bill says an “irreconcilable conflict of interest” occurs when a platform owns another business and has a substantial incentive to privilege its own products and services over competitors using that business. In the legal world, they’d call this vague enough to cover everything. If passed, it would give the DOJ authority to break up the tech giants.

Bill 3: Augmenting Compatibility and Competition by Enabling Service Switching Act of 2021. A.K.A. ACCESS Act of 2021.

This bill from Rep. Mary Gay Scanlon focuses on data portability.

Text: “A covered platform shall maintain a set of transparent, third-party-accessible interfaces (including application programming interfaces) to initiate the secure transfer of data to a user, or with the affirmative consent of a user, to a competing business or a potential competing business at the direction of a user, in a structured, commonly used, and machine-readable format.”

Analysis: Data portability always seems nice in theory, but it isn’t easy to appreciate in practice. Big Tech’s competitors need lots of aggregate data, not ported data from individuals, so it’s hard to see how this evens out the competitive balance. Rather than — or perhaps, on top of — data portability, Congress should make the big platforms agree to delete all the data they have on you with a push of the button.

Bill 4: Merger Filing Fee Modernization Act of 2021

This bill from Rep. Joe Neguse would increase fees for mergers and help fund the regulators.

Text: “There is authorized to be appropriated for fiscal year 2022— $252,000,000 for the Antitrust Division of the Department of Justice; and $418,000,000 for the Federal Trade Commission.”

Analysis: Finally, Congress is getting serious about funding the regulators with this long-overdue increase. Here at Big Technology, we’ve repeatedly highlighted how the FTC and DOJ’s antitrust divisions are severely underfunded. The FTC had to pause bonuses, institute a hiring freeze, and cut back on expert witnesses and IT spending. This bill would add many millions more to these regulators’ war chests, giving them a better chance to check the tech giants, who make the equivalent of their annual budgets in a matter of days.

Bill 5: Platform Competition and Opportunity Act

This bill from Rep. Hakeem Jeffries would make it harder for Big Tech companies to acquire competitors.

Text: The bill would prevent Big Tech companies from making acquisitions unless they can show the company they’re acquiring does not A) “compete with the covered platform or with the covered platform operator for the sale or provision of any product or service offered on or directly related to the covered platform; (B) pose a potential competitive threat.”

Analysis: Big Tech’s regular practice of acquiring and killing competitors or buying out their most threatening competitors would end with this law. It could also shut off an exit route for startups that can’t make it independently, a potential adverse effect.

Bottom line

Taken together, these laws would be a revolution in antitrust law, adapted for an era where Big Tech marketplaces, not railroads, are the dominant businesses of the day. They could also have many serious unintended side effects, so the final form of these laws matters a lot. That said, after years of talk about Big Tech antitrust, we’re finally seeing some action. 🚀🚀🚀

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Further Reading:

House Democrats about to uncork 5-pronged assault on tech (Politico)

News Briefs:

Amazon successfully presses to leave consumer protections out of Senate China bill (Washington Post)

Amazon doesn’t want counterfeit products on its website — it is ‘customer-obsessed,’ after all — yet the company just helped kill a law that would push online sellers to remove counterfeiters. The move might sound strange, but for Amazon it’s all about tradeoffs. The company accepts some counterfeits will appear on its site, and finds that sacrifice worthwhile so it can provide access to hundreds of millions of products. So Amazon would rather not have the government enforce anything here, and work independently to minimize counterfeiting to a level it deems acceptable.

Will Apple Mail threaten the newsletter boom? (Platformer)

Apple recently announced plans to block tracking pixels in emails, and the changes are causing some panic among email marketers and newsletter writers, who want to know how many people open their emails. For those who are mass spamming large lists, this is a fair worry. But it’s less of an issue for email newsletters with quality readership like this one (Thank you for reading. And thanks to those who filled out our survey — no tracking needed). Casey Newton digs into Apple’s planned changes in Platformer, and I shared some thoughts about how Big Technology views these changes.

Apple’s walled garden is becoming harder to escape (Slate)

Apple’s big release events are starting to look like presentations outlining how the company will kneecap competitors and keep you using its devices. Damon Beres at Slate outlines how this week’s WWDC event highlighted a slew of forthcoming Apple services and upgrades that will make the company’s products even harder to get rid of. “Consider well how much of your life you cede to its digital realm,” Beres warns. “You may find it’s hard to take it back.”

Bo Burnham And The Online Condition (Galaxy Brain)

If you watched Bo Burnham’s much-discussed Netflix special, Inside, I recommend this breakdown. I watched the special on Sunday and have dipped into it every day since to re-watch certain segments. It’s madness, fun, scary, and brilliant. And Burnham’s commentary on the internet is worthy of a thoughtful breakdown, which this story delivers.

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Congress Is Going To Throw The Kitchen Sink…