The Biden administration’s antitrust crusade risks U.S. competitiveness and security
While both chambers of Congress have advanced a number of pieces of anti-Big-Tech antitrust legislation through committees, the U.S. Department of Justice (DoJ) has decided to put the spurs to one of them in a letter to key senators last week. The not-quite-companion bills, The American Innovation and Choice Online Act (S. 2992) and the American Choice and Innovation Online Act (H.R. 3816), differ slightly in form but share a common goal in making several common business practices, such as self-preferencing, presumptively illegal under antitrust law, but only for the handful of companies the bill is narrowly tailored to afflict—Google, Facebook, Amazon, Apple and perhaps Microsoft.
Both of these bills have passed through the Judiciary committees in their respective chambers and could in theory be brought to a full House or Senate vote at any time. Both, however, also struggle from an odd problem: even many of the members who voted “yes” in committee expressed grave concerns about how the bills would impact both consumers and national security.
As a review, banning self-preferencing as contemplated by both bills would ban Amazon from selling its own products on its platforms and would also effectively scuttle Amazon Prime. It would also prevent Google from integrating Google Maps and reviews into its own search, and Apple from pre-installing some of its own apps on iPhones—but not Samsung from doing the same on its devices.
In addition, the bills mandate that the large platforms implement data interoperability and allow sideloading on mobile devices, both of which may cause the platforms to have to sacrifice cybersecurity in order to comply with the law. A number of cybersecurity and intelligence experts have expressed concern that the vulnerabilities these bills would create won’t only affect individual consumers but may weaken national security, as foreign companies will be able to siphon data from the covered platforms too.
Consumers will clearly not be better off if these popular products and services are broken, but the stated interest of the progressives and populists backing these proposals is to combat the size and power of the largest tech firms for their own sake.
This “big-is-bad” perspective has much more in common with the European regulatory approach to competition policy than the consumer welfare approach that has defined U.S. antitrust enforcement over the last half-century. Indeed, key features of the new European Union (EU) Digital Markets Act (DMA), which is nearing finalization and adoption, include such common policies with the DoJ-backed bills as self-preferencing bans, forced opening of app markets and mandated interoperability.
The EU’s antitrust enforcement against U.S. Big Tech firms has had more of the flavor of protectionism than true competition policy. Nevertheless, the sponsors of H.R. 3816, Reps. David Cicilline (D-R.I.) and Ken Buck (R-Colo.) signed a letter with two members of the EU parliament embracing the pursuit of “common rules, like the DMA” to regulate tech platforms.
In pursuit of tilting at the common windmill of breaking up and regulating large, successful tech firms, U.S. antitrust hawks like Reps. Buck and Cicilline are, whether they understand it or not, serving the interests of foreign competitors as well. U.S. research and development in tech is far more reliant on private investment than in countries like China—with several of the biggest spenders on cutting-edge developments in crucial fields like artificial intelligence and quantum computing being companies like Google and Microsoft. Therefore, handicapping these companies in the way that these bills would do not only threatens to inconvenience consumers but also endangers overall U.S. leadership in technology and innovation.
The DoJ has endorsed these potentially ruinous bills at the same time that they are expressing concerns about our ability to compete with China in technological innovation—their pretense for trying to shepherd a massive package of subsidies for tech development, the America COMPETES Act, through Congress. The dissonance between the administration’s support of America COMPETES and the American Innovation and Choice Online Act is profound.
Attempting to steer American tech innovation via top-down industrial policy is already a questionable idea at best, made more absurd by simultaneously assaulting the very U.S. companies that are doing the most for private research and development. If the Biden administration and Congress are serious about preserving U.S. dominance in tech, they ought to start by not taking an antitrust sledgehammer to some of the very companies that got us there.
Image: faraktinov
