Expanding antitrust laws to regulate Big Tech is a bad idea
Time on this year’s legislative calendar runs short as Congress is weeks away from its August recess, with government funding bills and mid-term elections set to take up most of the rest of their attention. Yet, with price inflation at its worst since the 1970s, and fears of a recession looming, a small cadre of lawmakers is working tirelessly to push Senate leadership to devote precious floor time to expanding antitrust laws to regulate Big Tech.
The American Innovation and Choice Online Act (AICOA), S. 2992, remains the focus of this effort in spite of a long list of fundamental flaws that have caused even some of its supporters and co-sponsors to express reservations about it. An amended version of the AICOA released in May fixed none of these problems; most of the changes appear narrowly tailored to exempt specific companies from accidentally ending up in the crosshairs of a bill that is being sold as only targeting the largest tech firms—Google, Meta, Microsoft, Apple and Amazon.
Such enforcement will not solve—and in some cases would worsen—the major concerns that actual consumers have about so-called Big Tech, such as the collection and security of users’ data, or the way that platforms police the content or products that they host. So why is passing the AICOA such a priority for some members of both major parties in Congress?
Poll after poll after poll has shown that regulating or breaking up tech companies is low on most Americans’ list of policy priorities. What does register high among the public’s concerns in all of these polls is rising prices, and ironically, the very digital ecosystem that lawmakers are seeking to disrupt and regulate is the one sector of the U.S. economy that has been most resistant to price inflation. Yet the big-is-bad approach to competition that the AICOA represents would quickly lead to higher prices, as both the American Consumer Institute and former Treasury Secretary Lawrence Summers have pointed out.
The AICOA would create a number of new categories of behavior that would be presumptively illegal under U.S. antitrust law—but only for this carefully picked handful of large tech companies (for now). These newly illegal business practices include treating one’s own products preferentially to those of competitors on a platform the company owns (think app stores and Amazon.com), discriminating “unfairly” with respect to what products are hosted on the platform and failing to provide open access to business data they collect.
The breadth and vagueness of the AICOA’s provisions led the American Bar Association’s Antitrust Law Section to take the unusual step of issuing a letter warning that the bill as written would be impossible for the targeted companies to comply with. Similarly, antitrust scholar Erik Hovenkamp, who has generally been in favor of more robust antitrust enforcement in the tech industry and elsewhere, called the self-preferencing bans in the AICOA (and in the closely related Open App Markets Act, S. 2710) “an ill-conceived knee-jerk reaction to a set of complex issues requiring a more careful response,” and warned that “while the proposed reforms are intended to promote competition and innovations, they are more likely to diminish both.”
Noted antitrust scholar Douglas Melamed, another advocate for more robust antitrust enforcement, has likewise criticized the AICOA, noting that it “would prohibit conduct that is not anticompetitive,” and “could, therefore, reduce economic welfare.” He notes further that the bill “is likely to impair innovation by the platforms.”
In fact, in the vast majority of cases there is little economic evidence that these so-called “self-preferencing” practices that the AICOA bans are harmful to consumers, and existing antitrust laws already allow cases to be brought to court where such behavior is genuinely anti-competitive. The AICOA instead completely bypasses the consumer welfare framework that governs modern antitrust enforcement, favoring the protection of competitors in the digital marketplace over protecting consumers.
If enforced as written, its new rules could disrupt or entirely break many integrated products that the public has come to love and rely on, from Google Maps to iPhones to Amazon’s free 2-day shipping. The willingness to do away with integrated products and services that customers have benefited from just for the sake of boosting competitors represents a fundamental pivot away from the focus on redressing demonstrable consumer harms that has defined antitrust enforcement for the past half-century. Wittingly or not, lawmakers who support proposals like the AICOA are endorsing a radical shift toward European-style regulation of company size for its own sake.
The only real beneficiaries of passing the AICOA, it would seem, are what could be called “Medium Tech”—large rival companies that stand to benefit from their larger predecessors being kneecapped by government enforcers. Lawmakers should instead keep their focus on consumers—their real constituents—whose best interests are clearly not served by an antitrust policy that stands to make their daily lives less convenient and more expensive.
