Cutting off consumers to spite big tech
There’s an old saying about not cutting off your nose to spite your face—and Sen. Amy Klobuchar (D-Minn.) may be falling victim to it. In a war against any large technology platform, the Senator just announced legislation that would throw consumers to the wayside so long as the firms suffer. Stemming from an outdated “big is bad” mindset, the bill would make thousands of innovative and consumer-friendly features illegal just so Congress can continue its attack on “big tech.”
On Thursday, Sen. Klobuchar announced a Senate bill similar to the American Innovation and Choice Online Act. According to reporting, the legislation would impose non-discrimination provisions and limitations on preferencing a company’s own products or services. This is designed to prevent firms from favoring their own products in online marketplaces. Practically speaking, broad limitations on unfairly preferencing products and services on a given platform may make things consumers love illegal—such as low-cost Amazon basics brand products, or iPhones that come with Facetime pre-installed. Even a Google search for that restaurant you’re going to for lunch wouldn’t return a Google Maps result first, simply because Google Maps is also a Google product. As proponents argue, these types of provisions are necessary to ensure that competitors have a level playing field.
While we will have to wait and see what is in the final bill when it’s introduced, this approach to antitrust actually focuses more on the competitors than on competition writ large. This strain of antitrust thinking ignores that protecting competitors is not, and should not be, the focus of U.S. competition policy. Indeed, rival firms provide critical checks on the behavior of industry leaders and incumbents, ensuring their services provide the most utility to consumers at the lowest cost. But the market doesn’t work when the government artificially props up competitors, a tactic which ultimately fails consumers. Instead, so long as every firm in the market can compete, the firms that provide the most value to consumers will excel and those competitors which don’t will fall behind or go out of business.
That is a good thing. So long as the competitive process is protected, new firms will constantly rise and old firms fall as innovation continues to drive new products and offerings.
Instead of focusing on the competitive process, consumers, or even improving the ability for competitors to innovate, recent efforts appear to simply target big tech. Considering the Senator’s position, it is unsurprising that this new legislation appears to attack big tech for being big, instead of caring about competition or even the competitors themselves. By limiting how firms can leverage information gathered about consumers and using different services to provide options consumers want to use, Congress would limit or even take away products and services that consumers rely on. It seems many on Capitol Hill may be willing to throw consumers under the bus because doing so would also hurt big tech.
And despite concerns with tech self-preferencing, brick and mortar self-preferencing would remain legal if this bill were enacted. Stores from Walmart to Costco have popular store brands that are similar to existing products, cheaper and often the same quality level. If the issue is self-preferencing, or more narrowly using data about product purchasing to generate competitive offerings, then applying it only to the online economy shows the goal is hurting tech, not protecting competition.
It is understandable why proponents of this type of legislation seek to impose restrictions on leveraging products from one market to gain a competitive advantage in another: the massive efficiencies they create can be difficult to compete with in a given product market. Sure, a review website may struggle to attract viewers if a user can find reviews on the first page of a search result without having to go to a dedicated website. But when a user searches for something, forcing the search to return undesired results as a way of making it harder for the search engine comes at the cost of the user, not the search engine itself.
There has been a significant push to attack big tech in recent years, but it will be the consumers who suffer the most if we focus on hurting the companies.
Image credit: Sushiman