On Thursday, Sens. Klobuchar and Grassley indicated their plans for a Senate companion to sweeping, controversial legislation approved this summer by a House committee, the “American Innovation and Choice Online Act.”
This is despite the fact that the regulatory initiative has waning support among consumers, and growing bipartisan opposition in the House with House Majority Leader Steny Hoyer (D-Md.) saying the House version was “not ready for floor action.”
The senators’ proposal and the House bill that inspired it would hamstring leading U.S. companies like Amazon, Apple, Google, Facebook, and possibly Microsoft. It would dramatically rewrite the rules of the market for a handful of leading companies, putting regulators in charge of how leading digital products are designed. This is unwise. Technology innovation responds to markets, not ministries.
While framed as antitrust regulations, the proposals actually embrace EU-style industrial regulation. They do not begin by inquiring about businesses’ conduct, and whether it helps or hurts consumers. Instead, these bills ask whether businesses are successful, and imposes restrictions on a few who are.
Today, the U.S. tech industry is the envy of the world. We have the most to lose from getting this wrong. There are more “unicorn” companies in the U.S. than Europe and China, and national security experts have already expressed concerns about the ramifications of giving large Chinese companies an advantage relative to their U.S. rivals. Such proposals, they said, could “degrade critical R&D priorities” and “allow foreign competitors to displace leaders in the U.S. tech sector both at home and abroad.”
Apart from national security implications, consumers have a great deal to lose. These proposals would prohibit integrations across the digital economy, like Google Maps results in Google Search, and iMessage, FaceTime and the Apple App Store integrated into the iPhone. And it could prevent innovations that consumers rely upon like Amazon Basics and Same-Day delivery for Amazon Prime. In fact, by forcing the separation of Amazon’s first- and third-party businesses, legislation could deprive an untold number of small businesses of their preferred e-commerce platform. In addition, these proposals could make it more difficult for digital services to address bad actors online, potentially compelling them to host discriminatory content.
The American success stories that these bills would hobble have helped people work, shop, study, pray, and stay connected to family during the pandemic, and helped thousands of small businesses keep the lights on through an unprecedented economic crisis.
From my perspective heading an association that has advocated for tech competition for nearly 50 years, policymakers do little to promote competition by prohibiting innovations that consumers have come to value. U.S. competition policy has long focused on promoting consumers’ welfare. When policymakers pick winners and losers, consumers’ interests can take a backseat to politics. Concerns about competitive markets should be solved by properly funding enforcers to defend consumers’ interests, rather than gerrymandering regulations around a few successful companies while excluding foreign competitors.
Some policymakers are beginning from the mistaken premise that successful digital services competing aggressively is a bad thing. Consumers want companies battling it out in the marketplace for their business. That’s when consumers win, by virtue of lower prices, even free services, and more innovation. One reason the U.S. has seen such success in the marketplace is that our policies don’t coddle failing competitors, whereas in Europe, companies that compete too vigorously, even in the interest of consumers, risk violating competition regulations.
If U.S. policymakers induce companies to be less aggressive with an EU-style approach, they will slow the pace of product innovation, and the digital economy will suffer.
Matt Schruers is president of the Computer & Communications Industry Association.