Pavlo Gonchar/SOPA Images/Sipa USA via AP Images
One bill before the Senate Judiciary Committee would regulate the two dominant app stores to stop monopoly price-gouging and offer choice in managing apps.
If the Senate Judiciary Committee advances a bill it is marking up today, you’re going to die. At least, that’s the assessment of Kent Walker, chief legal officer of Google, who claims that the proposed legislation would “threaten America’s national security,” slow down urgent searches for information like “stroke symptoms,” and hamper access to COVID vaccines.
If it sounds overheated, well, it is. But it’s part of a coordinated, borderline-hysterical campaign from the most powerful companies in the business world, aimed at preventing any restrictions on their practices.
The Judiciary Committee has planned to mark up two bills. The first would prohibit Big Tech platforms from preferencing their own products over rivals, like Amazon cloning third-party seller products and promoting them on their marketplace, or Google hosting restaurant reviews scraped from competitors on its search page. The second would regulate the two dominant app stores (Apple’s and Google’s) to stop monopoly price-gouging and offer choice in managing apps. Both mostly serve to protect smaller businesses put at a disadvantage by the power and aggression of Big Tech companies; they would not put these prodigious platforms out of business, or change their massive valuations. It would merely level the playing field, slightly.
Yet the very idea of regulating the tech industry for the first time in the platform era has triggered an unprecedented firestorm. The U.S. Chamber of Commerce thundered in a Senate letter and at a press event Wednesday that the self-preferencing bill would amount to “arbitrarily subjecting certain companies to one set of rules” and would let regulators “micromanage a large sector of the economy.” Apple and Google’s CEOs have personally lobbied committee members in long phone calls. Tech-funded trade groups and nonprofits like the Connected Commerce Council and the Computer and Communications Industry Association are pushing their messages in the media, including the idea that the bills help CVS and Walmart at tech’s expense.
The very idea of regulating the tech industry for the first time in the platform era has triggered an unprecedented firestorm.
Apple claims the app store bill will lead to malware and scam artists all over your iPhone. Amazon and Google have enlisted their own sellers as a grassroots lobbying army, warning that key services would shut down if the bill passes. (Full disclosure: the Prospect uses Google tools and has signed up for updates from the company on how the legislation “could affect small businesses like yours.”) Google has placed op-eds from small-business partners loaded with their talking points. Industry-aligned academics have been parroting industry claims as well, also offering the patina of “independent” corroboration.
“I think the platforms see it as a slippery slope,” said antitrust economist Hal Singer. “They think these changes will open up the door for future interventions.” Moreover, these bills would be historic, the first efforts at a nondiscrimination regime in the online space, for a group of companies that really thrive on discrimination and manipulation. It’s one thing to send a CEO up for a light congressional grilling, but it’s another to face actual legislation based on a thorough investigation into their conduct. Even relatively modest curbs could lead to more, and become contagious, as Congress tries to wrest back control over the economy.
For their part, 35 smaller businesses that depend on tech platforms announced their support of the self-preferencing bill. But the chances of success are quite uncertain. The House Judiciary Committee already passed the bill along with a suite of others, but that was six months ago, and there is no timetable for them to be taken up on the House floor.
When it moved to the Senate, the bill went into the hands of Sen. Amy Klobuchar (D-MN), chair of the Antitrust Subcommittee. For a bipartisan partner, she did not choose the ranking member of that committee, Sen. Mike Lee (R-UT), who reflexively opposes anything regulatory and any aggressive update of the antitrust laws. (Lee has shown past interest in labeling Google a monopoly, and according to sources, is intrigued by the idea of breaking up the tech giant.)
Instead, Klobuchar turned to Sen. Chuck Grassley (R-IA), who is expert at making Democrats think he might someday be a gettable vote. “Grassley has talked a good game on antitrust since he was seventeen years old,” said Barry Lynn, executive director of the Open Markets Institute. “He always says, ‘Next year, we’ll work it out.’ He’s the senator of tomorrow.”
Grassley has been meeting with small-business advocacy groups, who believe they have moved him on a few core issues. However, the Senate version did take away the private right of action to enforce self-preferencing violations, which Singer described as a major blow. “When someone steals your idea and disappears you in search, you can sue and then get a temporary injunction,” Singer said. “When you strip out the private right of action, you force the merchant to go knocking on doors. You’re layering up the process with a time delay, when time is of the essence.”
The app store bill is being led by Sens. Richard Blumenthal (D-CT) and Marsha Blackburn (R-TN). Both bills have bipartisan support.
However, none of the public-interest groups have seen the final text as the bills head into markup. Google and its allies clearly have. In Kent Walker’s screed claiming that stroke victims would collapse if the self-preferencing bill advanced, he notes in an update that “members of the Senate Judiciary Committee have circulated an amendment to the [self-preferencing] bill.”
Lynn points out that there’s sadly nothing unusual about this. “The way our democracy works, the terrible people in the big corporations get to see the text, but the public-interest groups don’t get to look at it.”
That said, the industry’s mouthpieces may be protesting too much for their own good. Rachel Cohen, communications director for Sen. Mark Warner (D-VA), shot back at the Chamber of Progress, another Big Tech front group, for “taking 4 words from an hour-long interview” with Warner to claim that he doesn’t have faith in the self-preferencing bill. Warner is a co-sponsor.
The markup will provide insight into whether senators are willing to resist the tech lobbying assault. Even then, however, the path to passage is not assured. In the House, both leaders appear to be lukewarm on the bill. Speaker Nancy Pelosi (D-CA) hasn’t scheduled floor action in half a year, and Republican Leader Kevin McCarthy (R-CA), while rhetorically strident against Big Tech, remains an advocate for their interests when the cameras are off, assuring tech lobbyists that he’s just being loud to keep other Republicans at bay.
However, McCarthy has signed on to get a separate bill, which would prevent antitrust enforcement lawsuits from state attorneys general to be consolidated in the home district of Silicon Valley firms, a House vote. He signed a “discharge petition” initiated by Republican ranking member of the House Antitrust Committee Rep. Ken Buck (R-CO). So far, 79 members have signed the discharge petition; if it gets a majority, it’s guaranteed a vote.
Discharge petitions rarely work, but it shows the bipartisan interest in doing something about the power and influence of the tech platforms. That puts pressure on Pelosi, as did the White House’s recent favorable comments about the Big Tech bills. “The president has been very clear in his view that we need more competition in the tech industry,” Press Secretary Jen Psaki said at a briefing on January 5. “The large platforms’ power gives them unfair opportunities to get a leg up on small businesses that rely on them to reach customers.”
Psaki continued that the president was encouraged to see bipartisan interest in Congress on the Big Tech antitrust bills. Democratic supporters of the legislation met with the White House just before Christmas.
House leaders “are stressing out that Biden looks too weak, and they want to give him victories,” said Lynn. “If the White House says we have bipartisan support, and working with Manchin ain’t working, maybe let’s exploit this bipartisan support, would [Pelosi] oppose that?”
Clearly there is a lot of smoke around doing something on Big Tech, and with good reason. Recent revelations from an unredacted lawsuit show that Google rigged auctions and lied to advertisers to take money out of each transaction. Microsoft just announced a $70 billion deal with Activision, explicitly to keep up with Facebook in the battle for the metaverse and the evolution of the internet.
Whether Congress gets something done, or whether we’ll have to rely on the Federal Trade Commission and Justice Department’s alteration of merger guidelines to move things forward, remains to be seen. There are plenty of tools to achieve the goals of more competition. But elected representatives, on a bipartisan basis, actually acting on a societal problem would be novel enough to really strike a new chord in Washington. That’s why the tech CEOs are nervous.
