Posted by on January 14, 2022 9:09 am
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Antitrust bill would destroy Amazon Prime, critics say

This June 4, 2014 photo shows Amazon.com boxes in Phoenix. Amazon reports quarterly financial results on Thursday, July 24, 2014. (AP Photo/Ross D. Franklin) Ross D. Franklin

Antitrust bill would destroy Amazon Prime, critics say

Nihal Krishan January 14, 06:00 AMJanuary 14, 09:00 AM

A bipartisan Senate antitrust bill aimed at reining in Big Tech is gaining momentum, leading to accusations that it imperils certain popular Amazon, Google, and Apple products.

The legislation, introduced last October, would forbid dominant online platforms from recommending or boosting their own products and services, a practice known as self-preferencing. The bill would make it illegal for the Big Tech platforms to discriminate against other businesses that use their platform in a manner that meaningfully harms competition.

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The Senate bill, the American Innovation and Choice Online Act, would prevent Amazon from unduly favoring its own products on its website or creating cheaper copycats of existing products using internal data. It would also ban, for other examples, Google unfairly boosting its own services in search results or Apple charging apps on its App Store a 30% fee to use the platform.

Big Tech companies and consumer advocate groups say the bill, introduced by Sens. Amy Klobuchar, a Minnesota Democrat, and Chuck Grassley, an Iowa Republican, would kill many popular tech offerings, such as Amazon’s Prime shipping and Basics product line.

The bill would empower the federal government’s antitrust enforcers, such as the Federal Trade Commission and the Justice Department, to sue the tech giants for instances of self-preferencing behavior outlined in the bill. If they are found guilty in court, companies could be fined up to 15% of their total U.S. revenues earned during the period when the illegal conduct was occurring.

At least a dozen senators on both sides of the aisle currently support the bill, and it is expected to easily pass the Senate Judiciary Committee later this month before proceeding to the Senate floor. The bill was formally introduced into the Senate Judiciary Committee for consideration Thursday.

The tech giants and mom and pop shops that rely on Big Tech platforms say the language in the bill is too vague and ambiguous in how it defines “unfair” self-preferencing behavior and could unintentionally ruin the tech business models that millions of organizations rely on.

Meanwhile, the bipartisan coalition of supporters say the dominant tech companies are fearmongering.

“It’s a disingenuous, fake grassroots campaign Amazon and others have created to kill the bill,” a policy staffer for Grassley told the Washington Examiner. “It’s a smart lobbying and spin strategy, but it’s not accurate.”

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The staffer said the bill is narrowly targeted at meaningful instances of anti-competitive behavior by the Big Tech companies and is not a significant expansion of country’s antitrust laws.

Only conduct that materially harms competition in ways specified in the bill would be restricted, proponents say. One example would be abusing a business’s data to compete against it, which Amazon has been accused of doing. Another example would be forcing a business to buy the parent platform’s services in order to get preferred placement. Businesses would also be barred from ensuring that they benefit from search results on their own platforms as well as restricting certain businesses’ products from functioning fully within the platform.

Antitrust law is currently based on the consumer welfare standard, a legal doctrine that evaluates the impact of anti-competitive behavior by measuring the change in the price of goods or services.

The bill would, however, direct courts to stop anti-competitive behavior regarding self-preferencing.

“Harm to competition can be assessed in a number of ways, including but not limited to impacts on output in the market, the diversity of products available, innovation, price, and other aspects of consumers’ experience,” an aide for Klobuchar told the Washington Examiner.

“Competition enforcers and courts deal with such competition metrics every day,” the aide added.

The bill’s sponsors, Klobuchar and Grassley, maintain that tech products and features that people use frequently, such as Amazon Prime shipping, Google search results featuring their own maps and videos, and Apple store apps, will not be outlawed by the bill.

Instead, they say, the bill would result in a better consumer experience because certain online services and apps will become cheaper, and the number of options will increase in Google searches, Apple’s app store, and Amazon’s product choices.

Critics of the bill say that the bill should clarify further what kind of behavior will or won’t be permissible within the legislation’s text.

“If the bill’s sponsors are saying it won’t apply to the App Store or Amazon Prime or Google Search, then they should say it clearly in the bill text,” said Neil Chilson, acting chief technologist at the FTC for a year during the Trump administration.

“Ultimately, the bill is about helping some online businesses over others, which will hurt consumers in the long run,” said Chilson, who is now a senior research fellow on tech issues at the Charles Koch Institute, a libertarian research organization.

He added that Republicans, who are traditionally pro-business and not in favor of expanding the government’s power, are supporting the bill because going after the Big Tech companies is politically popular right now.

The bill’s sponsors say that overclarifying which specific companies and their products that will or won’t be affected by the bill does not make sense.

“If we make carveouts for all the pro-consumer features, then the bill will be useless,” the staffer for Grassley said.

The staffer added that the federal government’s competition enforcers, the trade commission and the Justice Department, would have a high bar to prove anti-competitive misconduct.

Republican Rep. Ken Buck of Colorado, a supporter of the Senate bill and the co-sponsor of a similar bill that passed the House Judiciary Committee last year, said the bill was explicit about what constitutes unfair self-preferencing in the bill.

“Amazon deceives third-party sellers by pretending that they’re interested in investing or hosting those third-party sellers, they receive the data for this product … and then they start producing that product on their own, under their own label, for cheaper. That’s unfair. What part of unfair don’t you understand?” Buck told the Washington Examiner.

Buck added that he expects his colleagues in the House to accept the language of the Senate anti-self-preferencing bill and move forward with passing that version of the bill after it passes the Senate.

Conservative antitrust lawyers say the bill will hurt consumers by restricting popular tech products and could unintentionally help President Joe Biden and his liberal agenda.

“This bill is a violation of conservative principles by giving more power and control to the Biden administration’s FTC and DOJ,” said Carl Szabo, a vice president and general counsel at NetChoice, an advocacy group that represents companies, including Amazon and Google, that oppose government regulation of online platforms.

“Republicans who support this bill are helping support Biden’s agenda of blaming American businesses for parts of his failed agenda. If Republicans want to hand over power to the Democrats to run the economy, that’s what this bill will do,” Szabo said

He added that the bill would help fuel the narrative of American companies being at fault for the record price inflation that the country is facing rather than the Biden administration’s policy choices.

Meanwhile, liberal backers say the bill could go further in terms of stopping unfair self-preferencing behavior.

“It would be a modest improvement over the status quo because there’s no private action companies can take in the Senate bill. They have to go through the FTC or DOJ to get relief,” said Matt Stoller, an antitrust expert and author of Goliath: The Hundred Year War Between Monopoly Power and Democracy.

“Private litigants, the businesses who’ve been hurt, are always far more creative than government enforcers. Private lawyers for the businesses are just better at winning cases,” said Stoller, who works for the American Economic Liberties Project, a liberal think tank.

He added that it was “really weird” that Senate Republicans had taken out a provision in the bill allowing a private right of action, which would allow businesses to sue the Big Tech companies directly, and instead crafted the bill that allowed only the federal government to sue tech giants.

“The Republicans seem to trust the government more than private businesses in this case, which is bizarre to see,” Stoller said.

Liberal antitrust scholars say the bill will most benefit lower- and middle-class people who shop online for their daily needs.

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“Most Americans will be surprised that Amazon unfairly cloning products on its marketplace has been tolerated for this long. They’ve been stealing for a decade now,” said Hal Singer, an antitrust economist and professor at Georgetown University who regularly works with Democrats on tech-related legislation.

“Voters are not just consumers, they’re also entrepreneurs, creators, and workers, so they know self-preferencing is just unfair and reduces the incentive to innovate,” said Singer.

© 2022 Washington Examiner

Originally appeared at Washington Examiner

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