For 20 years, as technology has rapidly changed and become an integral part of Americans’ lives, Congress has stood still and failed to regulate technology.
Democrats promised to change that in the last election cycle. In winning the presidency and both houses of Congress, he vowed to rein in the massive and growing power of big tech companies like Apple Inc.’s AAPL.
Alphabet Inc. GOOGLE,
Gog
Amazon.com Inc. AMZN,
and Facebook parent Meta Platforms Inc. META,
By revising the antitrust law.
With less than a month to go before members of the 117th Congress set out to rally voters again, they haven’t quite gotten it done. The next opportunity for some legislative change is antitrust legislation that many believe is flawed, but could be voted on by the Senate this September.
Don’t miss: As Congress pushes for Big Tech regulation, the FTC isn’t waiting around
The American Innovation and Choice Online Act is designed to prevent major companies from offering their own services and harming their competitors, or from discriminating against businesses or from biasing search results against their own services. It’s a bid to dominate today’s big digital platforms, all of which have faced criticism for these kinds of practices — Google favors in-house shopping results, Apple and Android restrict payment services to their respective app stores and iPhones. Amazon competes with its own merchants on the e-commerce platform, with Facebook’s “buy it or clone it” approach to competition.
The legislation, co-authored by Sen. Amy Klobuchar (D., Minn.) and Sen. Chuck Grassley (R, Iowa) and sponsored by the Senate, has been stalled for months with insufficient votes to move forward. followed by impressive hearings involving tech CEOs. Sen. Chuck Schumer (D., N.Y.), the Democratic majority leader, said he would get the bill in May, but legislation is more urgent.
Now, with a narrow three-week window before September’s midterm elections take Congress away from the Capitol, Republicans have a chance to take a majority in one or both chambers. They’re sending a message again that Schumer is trying to get the bill to the floor, but even that might be a hollow vote if a lame-duck house is set to change most. A companion bill, introduced in the House by Rep. David Cicilline (D., RI), has long stalled.
For more: Republicans’ midterm lead over Democrats erodes in this one key indicator.
But the Klobuchar-sponsored bill is flawed in its current form. Instead of trying to determine and share the market size of the various platforms that only the biggest of Big Tech can play, the bill targets companies based on their valuations — companies worth $550 billion or companies with annual revenue of $550 billion or more in any 180-day period over a 2-year period.
For now, there’s no need to worry about the revenue part – Amazon might get there next year, but none of them have hit that mark even though they’re having their best year yet. Facebook’s parent Meta, which recently struggled in the ad industry, has fallen below $450 billion in market value, falling below $550 billion. While Meta Platforms may still hit the target based on previous reviews, staying this low for a while could clear it from the new standards as long as they are implemented.
The bill attempts to specifically target these big tech companies with a new antitrust law, which is a concern of critics of the self-selection law.
“It’s not a very good bill as it’s designed,” said Herbert Hovenkamp, an antitrust expert at the University of Pennsylvania, Penn Carey, and James G. Dinan University Professor of Law at the Wharton School.
“It limited its coverage to very large digital platforms like Apple, Facebook, Google and Amazon,” Hovenkamp said. “Secondly, it classifies these rules as self-selection without considering the product’s market share. In antitrust, we look at the product’s market share.”
While the antitrust law upset traditional views, the self-selection law didn’t go far enough to satisfy those who wanted a bigger push against the power of Big Tech. Ed Mills, an analyst at Raymond James in Washington, who tracks government policy, said: “We’re still going from edge to edge” with the current law.
“Even if these do pass — and the tech industry would prefer these bills not to pass — I don’t see anything that changes the business model of the tech industry,” said Ed Mills, an analyst at Raymond James. Washington, which tracks government policy, talks about both this bill and data-privacy efforts.
One reason supporters of tech regulation feel the bill doesn’t go far enough is because Big Tech means big money and big influence. By the time these bills make it out of committee for a vote, they’ve been watered down by lobbyist influence and technology company concerns. They seem imperfect on many levels.
Read from John Swartz: Congress is running out of time to pass Big Tech antitrust legislation.
“Lobbying is a big part of it,” said Rebecca Howe Allensworth, a law professor at Vanderbilt University who teaches antitrust. A course focused on Big Tech. “That’s always going to play a role. And the point that everybody can’t agree on, that’s the problem…Progressives are against this legislation.”
Unlike in Europe, US lawmakers have been convinced not to act on the argument that measures taken against Big Tech will also hurt smaller players. That’s a common talking point for the company and lobbyists. The widespread complaints of discrimination by third-party sellers in their ratings on Amazon will ultimately result in Amazon eliminating third parties, and thus resulting in less choice and higher prices for consumers.
The latest antitrust reform bill lowered the penalties from 15% to 10% of revenue, but many fear that if some choices are eliminated, the real cost will be to higher-paying consumers. This argument, despite what technology companies like to focus on, is that their services are free, they offer a low-cost service, and they offer more choice.
While Hovenkamp acknowledges he’s not an everyday congressional watcher, he says the bill needs to be broader, and also identifies markets where self-selection becomes a problem.
“Google has over 90% of searches, but why do we want to mess with grocery sales and all that stuff because that’s going to be expensive.”
A better approach to antitrust, he believes, is to focus on regular anti-competitive acquisitions by tech giants, rather than special preference accounting, to eliminate and consolidate less likely threats.
“The major platforms are buying up the challengers before they can compete,” Facebook said, using Instagram as a major showcase before the company’s 2012 IPO. And now, “Facebook is afraid of TikTok today. There are many things we can do where there are real competition problems than these bad choices.
Read more about Meta Platform’s latest earnings risk
The Federal Trade Commission is getting more aggressive because Congress is in a bind. In late July, the FTC sued Within Ltd., the developer of the popular virtual reality fitness app called Supernatural, alleging that Facebook’s parent was trying to “buy its way up.” He filed a lawsuit against Meta to block him from buying.
We cannot rely on the FTC and other regulatory bodies to act without the appropriate legislation. Recent attempts at litigation have largely failed. For example, the Federal Trade Commission’s first attempt at an antitrust lawsuit against Facebook’s parent was dismissed. The FTC filed a new version of the case last year. The case is still pending.
“This is seismic change at a glacial pace,” says Raymond’s James Mills. “It’s going to take time and maybe one step forward, two steps back, because actions taken at the regulatory level will probably be overturned in the courts.”
Congress has failed to make a single step forward in the past two years, and one vote on a bill in September — if they can even achieve that — will do little to ignite change. If Democrats want to use Big Tech to score points with voters, they must follow through on their promises and finally take control of the Internet, as their predecessors have long avoided doing.
