R Street Research Compilation: Why Antitrust Proposals to Rein in “Big Tech” Harm Consumers and Innovation
The Senate Subcommittee on Antitrust appears to be ready for its own March madness, setting up a hearing that appears to herald the coming reintroduction of a trifecta of bills aimed at “Big Tech.” These are the American Innovation and Choice Online Act (AICOA), the Open App Markets Act (OAMA) and the Journalism Competition and Preservation Act (JCPA). All three are fundamentally, conceptually flawed, and R Street has written much over the last two years to explain why they would each harm consumers by breaking some of the most popular products and services enjoyed by millions.
American Innovation and Choice Online Act
The AICOA expands antitrust laws to declare illegal a number of common business practices presumptively if they are employed by any of the five largest tech companies. The banned practices include preferencing one’s own products or discriminating against competitors’ equal access to an online platform “unfairly,” including by refusing to allow equal device software interoperability with competitors’ products. At the same time, the AICOA abandons the consumer welfare standard, the established framework for antitrust policy, for a more discretionary approach that may have implications well beyond the tech sector. R Street has explained:
- How the AICOA would harm consumers in the name of “reining in Big Tech” by banning or breaking many commonly used products like Google Maps and Amazon Prime: https://www.rstreet.org/commentary/cutting-off-consumers-to-spite-big-tech
- How the bill claims to promote “Innovation and Choice” but would result in precisely the opposite by banning product integrations that consumers enjoy: https://www.rstreet.org/commentary/the-american-innovation-and-choice-online-act-does-little-for-innovation-or-choice
- How there is little economic evidence to support the claim that the AICOA’s ban on self-preferencing would benefit consumers: https://www.rstreet.org/commentary/expanding-antitrust-laws-to-regulate-big-tech-is-a-bad-idea
- How amendments made to the AICOA in committee last year failed to address any of the fundamental flaws with the bill meaningfully: https://www.rstreet.org/commentary/revised-antitrust-bill-remains-fundamentally-flawed
- How the AICOA’s supporters entirely ignore all the economic evidence of consumer benefits generated by economies of scale and vertical integration: https://www.rstreet.org/commentary/senate-antitrust-bill-places-politics-over-economics
- How the AICOA’s mandated interoperability would create grave cybersecurity and privacy vulnerabilities, according to R Street’s Cybersecurity and Emerging Threats team: https://www.rstreet.org/research/the-ignored-aspects-of-the-senates-antitrust-effort-cybersecurity-and-privacy
Open App Markets Act
The OAMA aims to force the two largest competitors in the mobile app ecosystem, Google and Apple, to allow app developers to use their own in-app payment systems to allow easier “side-loading” of apps and app stores and to allow outside app developers equal access to device hardware and operating system features. R Street has explained:
- How contract disputes between app stores and certain large developers do not justify government interference in a competitive app market that benefits consumers and small app developers: https://www.rstreet.org/research/the-online-app-store-ecosystem
- How, similarly to the AICOA, the OAMA would create major new cybersecurity and privacy vulnerabilities: https://www.rstreet.org/commentary/the-open-app-markets-act-would-raise-app-store-prices-and-decrease-security
- How the app ecosystem is thriving and still evolving to the benefit of consumers: https://www.rstreet.org/outreach/comments-of-the-r-street-institute-on-developing-a-report-on-competition-in-the-mobile-app-ecosystem
- How the basic assumptions underlying the push to “open” app markets at all costs ignore security, stability and consumer trust benefits that the current, more “closed” app stores provide: https://www.rstreet.org/commentary/the-faulty-assumptions-behind-forcing-open-the-app-markets
Journalism Competition and Preservation Act
The JCPA allows news media companies (the definition of which changes with each version) immunity from antitrust laws so they can form a legal cartel that can collectively force large online platforms (principally Facebook and Google) that host links to news content to pay them. R Street has pointed out:
- How allowing these news cartels to create a “link tax” threatens the basic architecture of how content is freely shared across the internet while failing to solve the plight of local journalism: https://www.rstreet.org/commentary/a-news-cartel-wont-save-local-journalism-but-might-just-break-the-internet
- How last-minute revisions to the JCPA in 2022 actually made the bill worse for local journalism while placing extra government pressure on the side of media cartels to force companies to accede to the dangerous “link tax”: https://www.rstreet.org/commentary/jcpa-update-the-dangerous-link-tax-that-still-wont-save-local-journalism
Deeper Dive
Meanwhile, R Street has also done deeper research into the history and dubious economics behind the contemporary progressive “Neo-Brandeisian” movement that is generating the push to expand antitrust enforcement radically, with Big Tech as its test case. We have argued that the bipartisan agreement on these antitrust bills is shallow at best and will backfire on Republicans who support it while risking America’s leadership and competitiveness on the global stage.