By Tirzah Duren, American Consumer Institute
Antitrust reform is a rare example of bipartisanship. Unfortunately, this consensus radically increases the odds of Congress passing onerous and unnecessary regulations that would unduly burden large tech companies and risk the consumer benefits they provide.
Despite these benefits, Senator Amy Klobuchar (D-MN) has assumed the mantle of Congress’s top trustbuster, leading legislative efforts to transform the antitrust landscape.
Two of her bills, the American Innovation and Choice Online Act (AICOA)and the Competition and Antitrust Law Enforcement Reform Act (CALERA), would constrain a firm’s behavior based solely on its size. The AICOA—which has bipartisan support–would limit certain large companies from giving special treatment to their products, combining products and services for lower prices, and require data sharing with their business partners. CALERA would create stricter limitations on mergers and acquisitions, but only for select companies.
Following this emerging bipartisan consensus, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) have publicly stated their intent to update merger guidelines to make it easier to bring cases against tech giants. While the agencies have not announced any changes, their questions indicate that changes will be to expand antitrust guidelines beyond the traditional realm of market competition.
AICOA and CALERA are problematic because they target firms based on size instead of behavior. Secondly, they shift the discussion away from consumer welfare and towards the codification of big is bad.
Despite the bipartisan attack on big tech, lawmakers should pause to consider the societal benefits that big tech contributes to all parts of the political spectrum.
According to a report by the American Consumer Institute (ACI), the five largest tech firms contributed, directly and indirectly, $7 trillion to the global economy and helped, directly and indirectly, create 12 million jobs. This is in addition to the less tangible benefits of ease, selection, and social connection that the companies provide.
Despite a Democratic senator introducing the AICOA and CALERA and merger guideline changes occurring under a Democratic appointee, antitrust is one of the few bipartisan areas, even drawing support from established Republicans like Senator Ted Cruz (R-TX).
Additionally, despite public fear, the political influence of big tech is waning in the face of new legislation and general hostility. For example, Senator Ted Cruz was reportedly on the phone with Apple CEO Ted Cook as Cook expressed the dangers that AICOA could mean for product development and security. Regardless, Cruz proceeded to vote in support of the AICOA— lawmakers have not yet voted on CALERA.
While discontent with big tech is bipartisan, the specific complaints tend to fall along partisan lines. Unfortunately, for businesses and consumers, concerns from neither side are grounded in economic literature, and their goals are disconnected from reality.
Cruz has publicly expressed his concern over big tech and has classified it as “the single greatest threat to democracy in our day.” However, his concerns, which largely stem from platforms’ ability to censor content they deem harmful, are not addressed in the AICOA. The bill limits self-preferencing, and while there is some discussion as to whether future amendments would address a platform’s ability to regulate speech, that isn’t the intent of the legislation.
On the other side of the aisle, the fear that big tech is too big and drives inequality distracts from the consumer aspect of antitrust. The legislation only applies to companies over a certain threshold and does not consider the consumer benefits that size can bring. For example, Amazon uses its massive shipping infrastructure to deliver on its 2-day Prime promise.
Lawmakers have come together for a rare bipartisan effort, unfortunately, the legislation does more harm than good. Antitrust is designed to protect the competitive marketplace and does not focus on the size of firms or how they moderate their platforms and consumers.
Attempts to weaponize legislation to punish businesses that aren’t politically popular is a dangerous precedent that could well see the federal government become more involved in the economy and the daily lives of Americans. In this instance, the precedent could cost the economy and consumers considerably.
Tirzah Duren is a policy analyst at the American Consumer Institute. You can follow ACI on Twitter @ConsumerPal.