Last week, the Senate Judiciary Committee marked up S. 2992, the American Innovation and Choice Online Act. While the bill ultimately passed out of committee, several members, including some cosponsors of the bill, raised concerns about consumer privacy, competition with China, national security, and the rushed process. If you missed it, here are seven highlights from the Senate Judiciary markup:
“Now, nearly 40 years later [after the birth of the internet] we are still here without a single piece of meaningful competition legislation addressing the massive economy it has created” - Senator Amy Klobuchar (D-MN)
Unsurprisingly, the massive economy created by the internet thrived without the heavy-handed government regulations being proposed in this markup. Low barriers to entry and less burdensome regulations allowed for rapid, innovative growth. Similarly, the federal government shouldn’t create new competition legislation for every new sector of the economy. Competition policy should target barriers to competition and focus on harms to consumers, not target growth or particular companies. Congress should act with a reasonable federal data privacy standard instead of attempting to target the services consumers enjoy and create more privacy and security concerns.
“Mentioning a bill at a hearing is not the same as having a hearing” - Senator Mike Lee (R-UT)
A recurring criticism in this markup was the lack of a hearing to flush out the impact to consumers and address problems with this legislation. While Senator Klobuchar and others claimed there were hearings on self-preferencing, and the House had hearings on their bill, Senator Lee is correct in critiquing this rushed process. There was no hearing on this Senate bill prior to markup, and the broad language and discretion it gives antitrust enforcers deserved to be fully debated. This legislation would have massive ramifications for consumers if passed. While lawmakers are eager to “do something” about Big Tech, consumers deserve to know how this legislation would affect them.
“Instead of updating antitrust law for our modern online economy, as it aims to do, this bill will create two separate legal standards. One that poses very significant barriers to the business operations of a few large tech companies, and one for everyone else.” - Senator Diane Feinstein (D-CA)
Senator Feinstein correctly notes this bill would create two separate standards. While a consumer could search for a product on Walmart or Target and see their private labels populate in the search first, Amazon would be barred from this exact same practice, or potentially, from selling Amazon Basic products at all. As Senator Feinstein stated, this also has the potential to give a competitive advantage to foreign competitors that narrowly escape these thresholds. If “self-preferencing” one's own products is harmful to competition, it makes little sense that it is only harmful if a company with a $550 billion market cap does it. Apparently, a company with a $450 billion market cap self-preferencing would not harm competition. Strange.
To my fellow Republicans on the committee, I’d ask what do we gain? What do we gain here by giving deep state bureaucrats control over Big Tech? - Senator Mike Lee (R-UT)
Nothing. This bill doesn’t address conservatives’ concerns about content moderation. While Twitter booting President Trump off the platform generated outrage among conservatives, Twitter is far too small to be affected by this bill. Facebook would likely be covered by this bill, but conservatives’ hope that antitrust enforcers will fight to protect their ability to use the platform is likely misplaced. Politically, with poll after poll showing Republicans are poised to retake the House and possibly the Senate, it is strange to see them sign onto this legislation that does not address their concerns.
“It goes after classic monopolist behavior when you have giant monopoly platforms who are using their monopoly power to self-preference their own products and services and affiliated sites against, and to the detriment of, independent third party competitors and providers.” - Senator Josh Hawley (R-MO)
Another recurring theme in this markup was the laser focus on how this bill helps competitors. This undermines the consumer welfare standard and puts the federal government in a position to pick winners and losers. The consumer welfare standard puts guardrails on antitrust enforcement by tying enforcement to consumer harm and economic analysis. Senator Hawley’s “big is bad” approach has been tried before, and to the detriment of consumers.
“Is this committee choosing to trust regulators and courts to crack down on harmful self-preferencing practices while allowing activities that benefit consumers?” - Senator Alex Padilla (D-CA)
Yes. This bill does not define key terms in the bill, like the term “preferencing,” and instead gives federal antitrust enforcers broad discretion to dictate innovation. Proponents of the bill claim that covered platforms can fight the government in court to defend their innovations, but the “guilty until proven innocent” standard and substantial financial penalty for being in violation of this legislation would likely lead to less innovative services for consumers. Giving unelected bureaucrats broad authority and power, and trusting them to do what’s best for consumers without caving to political pressures is not a recipe that generally works out for consumers.
“We’re not really concerned about the mom and pop store. Even if they engage in bad conduct, the mom and pop store doing so has really limited scope.” - Senator Ted Cruz (R-TX)
While true that a mom and pop shop has comparably less reach than the large technology companies, this bill does not primarily help mom and pop shops. It would be difficult to claim Walmart, Target, and Kohls, who likely escape being covered by this bill, are “mom and pop shops.” Similarly, the other competitors that this is aimed at helping like Epic Games, which is worth tens of billions of dollars, are hard to classify as mom and pop shops. Additionally, Senator Cruz notes at one point the committee would have drafted a bill targeting AOL. NTU Foundation has warned, “the moment in time when public cries of ‘monopoly!’ are loudest is in retrospect often when a company is at or past its peak.” Robust competition and innovation in the digital space means no company is safe from being usurped by a competitor, or from seeing their service offerings becoming obsolete.
Ultimately, like its House counterpart, this legislation is not ready for a floor vote. It undermines the consumer welfare standard and would give government bureaucrats substantially more power to dictate economic growth. The rushed proceedings, without even having a hearing on the bill, also leaves several unanswered questions on the impacts to consumers and the future of the U.S. as a global leader in innovation.
For additional information on this legislation from NTU and NTU Foundation:
- NTU Warns Antitrust Bill Would Negatively Impact Consumer Technology
- How the Senate Antitrust Bill Could Disrupt Your Daily Routine
- Klobuchar’s Assault on Big Tech “Self-Preferencing” Ignores Economics and Consumer Welfare
- Coalition of 17 Urges Senators to Oppose Misguided Antitrust Legislation
- Klobuchar's Big Tech Antitrust Broadside Aims Squarely At Consumers