Quick Facts About Antitrust Bills Introduced in Congress (Part 2 – Bills in the Senate Targeting “Big Tech”)
The national debate over how far to regulate the technology industry is resulting in some potentially significant bills that may very well pass Congress this year.
In Part 1 of this series on antitrust bills being considered by Congress, we began our review of Senate bills that seek to reform antitrust enforcement in significant ways. In this post, we provide a rundown of the antitrust bills in the Senate that would beef up the regulation of large digital technology platforms.
The Senate is home to a diverse group of motivations and perspectives on regulating the technology industry. Sen. Amy Klobuchar, who last year authored a book that combines a history of antitrust with a call for a renewed focus on monopolies, argues that she is just, “making space for competitors” and trying to ensure that, “they cannot give preference to their own products.” Sen. Josh Hawley has put out his own book, arguing that technology companies have an anti-conservative agenda, while proposing to block all mergers involving companies with a market capitalization greater than $100 billion. Sen. Ted Cruz believes that technology companies’ ability to moderate the content on their sites have made them too powerful. And yet all of them, along with an overwhelming majority of the Senate Judiciary Committee, found common cause to support and advance the bills described below.
There are currently two major antitrust bills in the Senate that focus on regulating so-called “Big Tech.” Both of these bills have been reported out of committee with broad support. The first, the American Innovation and Choice Online Act, larger in scope, passed out of the Judiciary Committee on January 20, 2022, on a 16-6 vote. The second, the Open App Markets Act, narrowly applicable only to digital app platforms, passed 20-2 on February 3. Both bills address issues raised by the largest technology companies’ control over their broad platforms, including other companies’ access to those platforms.
Self-preferencing by online platform operators
Sen. Amy Klobuchar (D-MN)
What does the bill try to do?
The bill seeks to address and prohibit discriminatory conduct or self-preferencing by platforms. It would prohibit firms from engaging in “discriminatory conduct” that leverages “dominance” in a core market to disadvantage competitors in related markets.
The bill would make it illegal to: “(1) unfairly preference the platform operator’s own products, services, or lines of business over those of another business user on the covered platform in a manner that would materially harm competition on the covered platform; (2) unfairly limit the ability of another business user’s products, services, or lines of business to compete on the covered platform relative to the covered platform operator’s own products, services, or lines of business in a manner that would materially harm competition on the covered platform; [or] (3) discriminate in the application or enforcement of the covered platform’s terms of service among similarly situated business users in a manner that may materially harm competition on the covered platform.”
Such conduct would be unlawful under the bill if the online platform self-preferences by, for instance, restricting or impeding interoperability, conditioning access to the platform on purchasing other products or services, restricts access to data, restricts ability of users to un-install software applications that are pre-installed, treats covered platforms’ products more favorably when it comes to search or ranking, or retaliates against users who raise concerns about violations of the law by the platform.
Whom does the bill affect?
The bill applies to only certain “online platforms” that are of a certain size (calculated by users and market capitalization).
Online platforms are defined as websites, online or mobile applications, operating systems, digital assistants, or online services that enable a user to generate content that can be viewed by other users on the platform or to interact with other content on the platform; that facilitate the offering, sale, purchase, payment, or shipping of products or services, including software applications, between and among consumers or businesses not controlled by the platform operator; or that enable user searches or queries that access or display a large volume of information.
“Covered Platforms” are defined as online platforms that (1) have at any point in the 12 months preceding the complaint (I) had at least 50 million U.S.-based monthly active users; or (II) had at least 100,000 U.S.-based monthly active business users; (2) at any point during the two years preceding the complaint, were owned or controlled by a company with U.S. net annual sales or a market capitalization greater than $550,000,000,000, adjusted for inflation on the basis of the Consumer Price Index; and (3) were a critical trading partner for the sale or provision of any product or service offered on or directly related to the online platform.
The bill passed out of the Senate Judiciary Committee with a 16-6 vote on January 20, 2022, and is on its way to the Senate floor, although it could return to committee. Follow here.
The Senate bill is similar to the House bill entitled American Innovation and Choice Online Act (H.R. 3816) introduced by Rep. David Cicilline (D-RI-1) and ordered to be reported from the House Committee on the Judiciary. One major difference is that the House bill would allow a court to order a divestiture of a line of business of the covered platform operator if there is a conflict of interest due to the platform’s concurrent operation of multiple lines of business.
Open App Markets Act (S. 2710)
Payment systems on app stores
Sen. Richard Blumenthal
What does the bill try to do?
The Open App Markets Act would limit the restrictions that an owner or controller of a larger user-base app store can place on its sellers. Addressing some of the issues raised in Epic Games v. Apple, the bill limits the number of restrictions and preferences which an app store can place on developers selling on their platform.
Whom does the bill affect?
The bill primarily targets apps’ payment systems, by permitting developers to use other payment systems or use different terms or pricing when the app is offered for sale elsewhere. It would also guarantee parity in user search results and developers’ equal access to the store’s underlying operating system. This bill has a narrower focus than the American Innovation and Choice Online Act, applying only to app stores with over 50 million users and to those apps which can be run on a computer or mobile device. It does, however, give enforcement power to the FTC, the Attorney General, state Attorney Generals, and to injured developers themselves.
It was introduced into the Senate Judiciary Committee in August 2021 by Senator Richard Blumenthal. It passed out of the Judiciary Committee, nearly unanimously, in February 2022.
Although its House equivalent, H.R. 5017, has yet to pass out of committee, it has a viable chance of overall passage.
Stay tuned for Part 3 of this series, in which this blog will give you a quick rundown of the most consequential antitrust bills being considered by the House.
Edited by Gary J. Malone