Tensions between Big Tech and the U.S. government have been brewing up for years over anticompetitive business practices, which culminated into a formal face-off between respective CEOs and lawmakers in 2020. Subsequent to the release of the report of an antitrust investigation that implicated Facebook, Amazon, Google, and Apple of monopolizing the digital economy, the Antitrust Subcommittee has now proposed five new bills to keep Big Tech operations in check.
In one of the rare bipartisan moves in recent years, the United States House of Representatives late last week announced their intent to bring in stringent regulations for anticompetitive conduct. As such, the house proposed five bills as part of the new antitrust reforms, which seek to curtail predatory and competition-suppressing business practices.
If passed, the laws would require technology companies with large clout (we know who you’re thinking about) to mend their ways in multiple areas of business like mergers and acquisitions, e-commerce, and other services where there is a large dependence on the user/customer data.
Currently in the initial stages, we understand that the bipartisan legislative agenda primarily focuses (albeit, indirectly) on curbing the massive influence of Amazon, Apple, Facebook, Google, and other big tech companies on the digital economy, as well as the economy in general.
“The American people sent us to Washington to get things done. Nothing is more important than ensuring every American has an opportunity to get ahead,†said Rep. David Cicilline (D)Opens a new window from Rhode Island, who also serves as the Chairman of the Subcommittee on Antitrust, Commercial and Administrative LawOpens a new window .
“Right now, 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. 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.â€
See Also: Trust in Tech Reaches a New Low, Places 9th in the U.S.: Edelman Trust Barometer Study
Some Perspective on Antitrust Laws in the United States
Technology enterprises, especially the five Big Tech companies (including Microsoft), are currently enjoying their reign under existing laws, which predate World War I, an event that spurred the American economic growth story. One of them — the Sherman Antitrust ActOpens a new window — came into existence in 1890, while the other two — the Clayton Antitrust ActOpens a new window and the Federal Trade Commission ActOpens a new window — were passed in 1914.
Besides the fact that the laws are over a century old, what’s more is that they have not been amended in recent years, even decades after the digital revolution, to include clauses when it comes to carrying out transactions pertaining to modern-day technology business.
The Trump administration, for example, had neither the arms nor the ammunition against GoogleOpens a new window and FacebookOpens a new window for the ongoing lawsuits for anticompetitive business practices. But not all countries are so far behind as the U.S.
The European Union already has two antitrust regulations in place since May 2004, under the Treaty on the Functioning of the European Union. The 27-member bloc’s Article 101Opens a new window and Article 102Opens a new window prohibit “anti-competitive agreements between two or more independent market operatorsâ€, and “abusive behavior by companies holding a dominant position on any given market†respectively.
Under its laws, the EU has already moved against:Â
- Apple: for App Store practicesOpens a new window , mobile paymentsOpens a new window , music streaming services, etc
- Google: for AdSenseOpens a new window , Google FitBitOpens a new window , SearchOpens a new window , etc
- Amazon: for AWS MarketplaceOpens a new window , and others
- Facebook: for Advertising
Facebook was also scrutinized for the acquisition of instant messaging platform WhatsAppOpens a new window , while Microsoft for its big-ticket acquisitions of professional networking platform LinkedInOpens a new window , code repository GitHubOpens a new window , as well as Nokia.
On the domestic front, all of these companies have come into the limelight for the wrong reasons in some form or the other. Google was sued by the Department of Justice, and twoOpens a new window separate coalitionsOpens a new window of U.S. states.
Facebook’s clean chit for the WhatsApp acquisition in Europe, however, couldn’t be cloned domestically. The company was sued by the FTC and 46 states, Guam and Washington D.C.Opens a new window in separate federal and state lawsuits in December 2020 for WhatsApp and Instagram acquisitions, citing them ‘illegal’ and ‘predatory’.
But litigation means little if the judiciary, and especially the litigators do not have teeth to bury in the form of broad anticompetitive laws.
Maybe that’s why Microsoft was slapped with an antitrust case by Slack over the former’s bundled Teams-Microsoft 365 offering, in the EU, despite both being American companies. Or when Spotify accused Apple of anticompetitive behavior. Spotify is a Swedish company so part of the reason why they’re battling Apple in the EU is maybe beside the non-availability of appropriate laws in the U.S.
Nevertheless, it doesn’t help that the world’s biggest economy does not have the regulations that are essential to quash monopoly by Big Tech and to preserve the livelihood of those relying on small and medium businesses.
Why Anticompetitive/Antitrust Regulations are Necessary
The five proposed antitrust bills are the American Innovation and Choice Online Act, Platform Competition and Opportunity Act, Ending Platform Monopolies Act, Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS), and the Merger Filing Fee Modernization Act.
All of these bills harden the official stance on anticompetitive conduct, such as the annihilation of competition through preemptive acquisitions; serving a client as well as its customers through a subsidiary that competes with the client, and more.
House Antitrust Subcommittee Vice Chair Pramila Jayapal (D) of Washington, said, “Not only is self-regulation by Big Tech patently ineffective, but it also comes at the direct expense of workers, consumers, small businesses, our local communities, and the free press. From Amazon and Facebook to Google and Apple, it is clear that these unregulated tech giants have become too big to care and too powerful to ever put people over profits.â€
She adds, “By reasserting the power of Congress, our landmark bipartisan bills rein in anticompetitive behavior, prevent monopolistic practices, and restore fairness and competition while finally leveling the playing field and allowing innovation to thrive.â€
Think about it for a second. You are a small business owner of a meteorological company advertising on Google for your services. What if Google, which also runs a parallel weather service, prioritizes the results to its own advantage?
Or if Facebook, whose biggest services barring Facebook itself have been via acquisitions, takes over the next big idea *coughs*Instagram*coughs* and has even more of your data and preferences. Even the ‘like’ feature on the world’s largest social network is an almost $50 million purchaseOpens a new window , among others when it acquired FriendFeedOpens a new window .
Amazon also has deep pockets, while Apple’s reach through its iPhone and other products and services is tremendous. Put together, the Big Tech revenue for Q1 2021 stands at $343.085 billion, or approximately 6.86% of the total U.S. GDP for the same period. The combined market value of the five companies at the end of Q1 2021 is a whopping 8.38 trillion, approximately half of China’s annual GDPOpens a new window , and nearly $1 trillion more than the combined GDP of Germany and the United Kingdom.
See Also: UK Forms New Agency To Scrutinize Big Tech’s Market Dominance
The Five New Antitrust Bills by the Antitrust Subcommittee
i. American Innovation and Choice Online Act
Applicable for e-commerce players, the American Innovation and Choice Online Act would enable fair competition between the products sold by a company that owns the platform, and the company which is availing the platform. Thus, the dominant company won’t be able to take an unfair advantage.
ii. Platform Competition and Opportunity Act
The Platform Competition and Opportunity Act makes it easier for smaller companies to literally exist without being eyed for an eventual takeover by a bigger fish. It aims to “promote competition and economic opportunity in digital markets by eliminating the conflicts of interest that arise from dominant online platforms’ concurrent ownership or control of an online platform and certain other businesses.â€
iii. Ending Platform Monopolies Act
This third bill focuses on the conflict of interest when it comes to similar products/services. If passed, this bill would make it illegal for any company to both own the platform and offer services based on it. For instance, YouTube is significantly reliant on Google searches.
And if they are interdependent, which they are in the case of Google & YouTube, the parent company Google (or Alphabet) will have to let go of YouTube.
iv. Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS)
This bill focuses on user data portability through the lens of competition. It would enable users/customers to seamlessly switch between platforms by lowering barriers to entry and switching costs for businesses.
This bill also proposes companies provide a transparent, third-party-accessible interface like an API to facilitate data interoperability between different platforms, as well as to enable the user to download it.
v. Merger Filing Fee Modernization Act
The fifth and final bill would mandate higher acquisition fees for transactions valued at $1 billion or more. The higher funds collected from companies under the proposed bill will be earmarked for greater enforcement of the antitrust laws.
See Also: Now Facebook Joins Amazon, Apple as EU Probes Possible Antitrust Conduct
Will the New Antitrust Bills Be Passed?
As noted earlier, the new bills are in the initial stages of being enacted as laws. Each of the five bills will have to be approved by the Judiciary Committee before being brought to a vote in both the lower house, as well as the Senate (upper house), before being signed into law by the President.
Still, the question remains whether the powerful Big Tech lobby manages to influence the U.S. lawmakers to go the opposite way. There’s no question that lobbyists will try to turn the tide.Â
Neil BradleyOpens a new window , executive vice president, and chief policy officer at U.S. Chamber of Commerce, a business lobbying group, saidOpens a new window , “Bills that target specific companies, instead of focusing on business practices, are simply bad policy and are fundamentally unfair and could be ruled unconstitutional. Further, efforts made by these bills to use antitrust law to supplant the role of regulation are equally misguided.â€
A ray of hope, if you’re in the pro-antitrust laws boat, is that the tide is bipartisan. “Big Tech should see this for what it is: Congress sending a clear message that the party is finally over for them,†stated Robert WeissmanOpens a new window , president of Public Citizen, a non-profit group and think tank advocating for consumer rights.
“This bipartisan package is a huge step toward finally holding these abusive and dominant Big Tech companies accountable and stop them from abusing their monopoly power in nearly every aspect of their businesses. Monopoly power lowers wages, reduces innovation and entrepreneurship, undermines the free press, and perpetuates toxic systems of racial and class dominance,†Weissman addedOpens a new window .
Closing Thoughts
The five bills were proposed over seven months after the conclusion of the 16-month long probe in October last year by the Antitrust Subcommittee within the House Judiciary Committee. The investigation revealed that Facebook, Amazon, Google, and Apple did, in fact, abuse their position to monopolize respective business areas.
What followed was a grueling hearing session of CEOs Mark Zuckerberg, Sundar Pichai, Jeff Bezos, and Tim Cook of Facebook, Google, Amazon, and Apple respectively, which painted a grim picture of where the tech industry is heading.
Facebook has over 2.8 billion usersOpens a new window , Google’s share in the web searches is over 92%Opens a new window , Amazon takes up 38% of online salesOpens a new window in the U.S. in 2019, and iss expected to grab 50% of the total e-commerce retail sales in 2021Opens a new window , while Apple’s apps available on the Apple App Store continued to outperform Android’s Play Store in terms of revenue generation, despite a lower user count.
This alone represents the enormous scale of operations of these companies and the task at hand for the lawmakers.
Big Tech has also been bellicose with the governments of other countries besides the U.S., and the EU. Facebook and WhatsApp, along with Amazon have been at odds with the Indian government over some data privacy policies, while Japan will possibly open a new antitrust investigation against Apple, and Google, according to NikkeiOpens a new window .
Canada is alsoOpens a new window investigating Amazon over anticompetitive concerns.
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