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The Senate bill that has Big Tech scared

The Senate bill that has Big Tech scared

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If you want to know how worried an industry is about a piece of pending legislation, a decent metric is how apocalyptic its predictions are about what the bill would do. By that standard, Big Tech is deeply troubled by the American Innovation and Choice Online Act.

The infelicitously named bill is designed to prevent dominant online platforms—like Apple and Facebook and, especially, Google and Amazon—from giving themselves an advantage over other businesses that must go through them to reach customers. As one of two antitrust bills voted out of committee by a strong bipartisan vote (the other would regulate app stores), it may be this Congress’ best, even only, shot to stop the biggest tech companies from abusing their gatekeeper status.

“It is the ball game,” says Luther Lowe, senior vice president of policy at Yelp and a longtime Google antagonist. “That’s how these guys stay big and relevant. If they can’t put their hand on the scale, then it makes them vulnerable to small and medium-size companies eating their market share.”

But according to the tech giants and their lobbyists and front groups, the bill, which was introduced by Amy Klobuchar and Chuck Grassley, respectively the top Democrat and Republican on the Senate Judiciary Committee, would be a disaster for the American consumer. In an ongoing publicity push against it, they have claimed that it would ruin Google search results, bar Apple from offering useful features on iPhones, force Facebook to stop moderating content, and even outlaw Amazon Prime. It’s all pretty alarming. Is any of it true?

The legislation’s central idea is that a company that controls a marketplace shouldn’t be able to set special rules for itself within that marketplace, because competitors who object don’t have any realistic place to go. No business can afford to be left out of Google’s search index, and few online retailers can make a living if they’re not listed on Amazon. So the Klobuchar-Grassley bill, broadly speaking, prohibits self-preferencing by platforms that hit certain size thresholds, like monthly active users or annual revenue. To take a simple example, it would mean Amazon can’t give its in-house branded products a leg up over other brands when someone is shopping on its site, and Google can’t choose to give YouTube links when someone does a video search unless those links are objectively the most relevant.

Beyond that, it’s difficult to say precisely what the law would do, because it leaves quite a bit unspecified. Like many federal statutes, it directs an administrative agency—in this case, the Federal Trade Commission—to turn broad provisions into concrete rules. And it gives the FTC, the Department of Justice, and state attorneys general the power to sue companies for violating those rules. (Last week, the DOJ endorsed the bill, an important signal of support from the Biden administration.) Inevitably, both the rules and any enforcement actions would end up being litigated in court, giving federal judges ultimate say over what exactly the law means.

This leaves plenty of uncertainty around how exactly the law would play out. Into that zone of uncertainty, the tech companies have poured dire warnings.

Perhaps the scariest talking point is that the law, if enacted, would kill Amazon Prime. According to eMarketer, more than 150 million Americans, more than half the adult population, are Prime members. That’s a lot of people who might hate to lose their “free” two-day shipping. (It’s not really free, of course, if you have to pay a subscription fee.)

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