The First Major Technology Antitrust Bill Lumbers Towards Reality
The first major technology antitrust bill lumbers towards reality
Significant Senate legislation that would prohibit technology companies from favoring their own products and services recently cleared a significant legislative hurdle, moving it one step closer to becoming law.
Following today's vote, the Senate Judiciary Committee recommended that the American Innovation and Choice Online Act be sent to the full Senate for consideration. The bill passed its committee vote on Thursday by a vote of 16-6, with five Republicans joining Senate Democrats in voting to advance the legislation.
Technology platforms are prohibited from "favoring their own products or services, disadvantaging competitors, or discriminating against businesses that use their platforms in a way that materially harms platform competition," according to the legislation. Also prohibited under the legislation are dominant platforms from preventing other services from interoperating with them and from using another company's data stored on the platform to compete against them.
This Act would provide antitrust enforcers with "strong, flexible tools," including "civil penalties, the authority to seek broad injunctions and emergency interim relief," as well as the potential for executive compensation to be forfeited.
During a hearing on the legislation, Sen. Amy Klobuchar (D-MN), who chairs the Senate Judiciary Committee's Subcommittee on Competition Policy, Antitrust, and Consumer Rights, said it was the first significant tech competition bill that had advanced to the Senate floor "since the dawn of the internet." As a result of a handful of amendments that did not obstruct the bill's progress on Thursday but could still have an impact on the final language, it is possible that the bill will change.
However, despite the fact that the bill still faces an uphill battle to be included on a crowded and mostly dormant legislative agenda, the bill's momentum has prompted Google and Apple to weigh in earlier this week.
Google President and Chief Legal Officer Kent Walker wrote in a blog post that "every day, millions of Americans use online services such as Google Search, Google Maps, and Gmail to discover new information and accomplish tasks." Walker is the President and Chief Legal Officer of Alphabet Global Affairs. This and other popular online services could be rendered unusable or insecure as a result of legislation currently being debated in the House and Senate, jeopardizing the competitiveness of the United States.
Apple attempted to intervene as well, sending a letter to Senate Judiciary Chairman Dick Durbin, ranking Republican Chuck Grassley, Antitrust Subcommittee Chair Amy Klobuchar, and ranking member Mike Lee of the subcommittee, as well as other members of Congress.
Tim Powderly, Apple's Senior Director of Government Affairs, wrote in a letter to Congress that "after a tumultuous year marked by multiple social media controversies, whistle-blower allegations of long-ignored risks to children, and ransomware attacks crippling critical infrastructure, it would be ironic if Congress responded by making it significantly more difficult to protect Americans' personal devices' privacy and security." "Unfortunately, that is the result of these legislations," she says.
Consumer security, both companies argued in their submissions, would be jeopardized if the bill were passed in conjunction with another piece of legislation known as the Open App Markets Act. Third-party apps and app stores would be permitted under the latter bill, and developers would be required to inform consumers where they could obtain the same software at a lower cost.
The anti-self-preferencing legislation was supported by a group of technology companies led by Yelp and DuckDuckGo as well as Sonos, Spotify, Proton, Match Group and the startup accelerator Y Combinator, as well as venture capital firm Initialized Capital, who spoke out earlier this week in support of the legislation.
Several anticompetitive self-preferencing tactics used by dominant technology companies to achieve and entrench their gatekeeper status in the market at the expense of competition, consumers, and innovation, according to the findings published by the companies in the United States and other countries. It is the goal of the American Innovation and Choice Online Act to "assist in the restoration of competition in the digital marketplace and remove barriers to consumers choosing the services they desire."
Regulatory reform for the technology industry is a rare issue in Congress that has garnered bipartisan support, which is yet another indication that the industry should brace itself for new restrictions on its operations, even if those proposals continue to move slowly down the road.
Amy Klobuchar (D-MN) and Chuck Grassley (R-IA) introduced the legislation, which is also co-sponsored by Senators Dick Durbin (D-IL), Lindsey Graham (R-SC), Richard Blumenthal (D-CT), Cory Booker (D-NJ), Cynthia Lummis (R-WY), Mark Warner (D-VA), Mazie Hirono (D-HI), Josh Hawley (R-MO), Sheldon Whitehouse (R-MT).
Earlier this month, the House Antitrust Subcommittee, led by Chairman David N. Cicilline (D-RI) and Ranking Member Ken Buck (R-CO), passed out of committee and is now awaiting consideration by the full House.
