Break Them Up: Will the Big Tech Escape This Time?

Break Them Up: Will the Big Tech Escape This Time?

After months of antitrust inquiries, bills have finally been approved in the US House that may be the end of big tech as we know it.

On Thursday, a House committee approved far-reaching legislation to curb the market dominance of tech giants, including Alphabet Inc.’s Google and Facebook Inc., after hours of rigorous debate that lasted into the night.

The six-bill package, dubbed American Choice and Innovation Online Act, will hit Silicon Valley tech giants, mainly Google, Facebook, Amazon and Apple in five hard ways. Tech Explore highlights them this way.

BREAKING THEM UP

The legislation would bar the four companies from owning a dominant platform at the same time they own another line of business if having both creates a conflict of interest.

That means they could be forced to sell off businesses in which their market dominance enables them to favor their own services or squash competitors. Because the tech giants often operate both as a platform and as a competitor on the platform, industry critics say, there’s a built-in conflict.

The measure doesn’t name the four companies. But they fit into a new legal category it creates called “covered platforms” that fall under the new restrictions: online platforms with 50 million or more monthly active users, annual sales or market value of over $600 billion, and a role as a “critical trading partner.”

Some critics of the industry have pointed to Facebook’s popular messaging services Instagram and WhatsApp as strong candidates to be divested.

CROSSING OVER

Lawmakers propose enabling users on dominant platforms to communicate directly with those on rival services. It could make it easier for different companies to use products together, with the aim of helping startups and smaller companies.

People would also be able to carry their personal data—photos, videos and all—from one service to another.

“Americans deserve to have more ownership over their personal information, with the ability to seamlessly transfer their data between platforms of their choice,” says Rep. Burgess Owens, the Utah Republican who is a chief sponsor of the measure.

NO MORE FAVORITISM

The legislation would prohibit the tech giants from favoring their own products and services over competitors on their platforms.

An example: Some independent merchants who sell products on Amazon.com have complained to lawmakers about the e-commerce giant’s practices, such as contract provisions and policies said to prevent sellers from offering their products at lower prices or on better terms on any other online platform, including their own websites. Under the legislation, could Amazon be forced to spin off its private-label products that compete with vendors on the platform?

The Seattle company has said that sellers set their own prices for the products they offer on its platform. “Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively.”

HARD TO MERGE

Lawmakers want to make it tougher for giant tech companies to snap up competitors in mergers, which they have completed by the hundreds in recent years, waved through by antitrust enforcers in both Republican and Democratic administrations.

Acquisitions that would eliminate competitors or potential competitors, or expand or entrench the market power of online platforms could be expected to be blocked by regulators.

The burden would shift from the government to the companies to show that a particular merger wouldn’t harm competition.

DIALED UP ENFORCEMENT

Lastly, the legislation would give the Federal Trade Commission more money, and states more power, to enforce the antitrust laws against companies.

It would increase FTC filing fees for any proposed tech mergers worth over $500 million and cut the fees for those below that level. Many state attorneys general have pursued antitrust cases against Big Tech companies, and many states joined with the U.S. Justice Department and the FTC in their landmark antitrust lawsuits against Google and Facebook, respectively, last year.

Both Democrats and Republicans are united in pushing the bill now unlike any other time, with the main area of disagreement being that the bill does not address the alleged censorship of conservative voices by big tech. Seeing the handwriting on the wall, the big tech are intensifying efforts to halt the legislation.

The New York Times reported that Apple’s chief executive, Tim Cook, called Speaker Nancy Pelosi and other members of Congress, warning that the bill would crimp innovation and it would hurt consumers by disrupting the services that power Apple’s lucrative iPhone.

There have been a swarm of lobbyists, advocacy groups and think tanks hired by the tech companies, roving from one office to the other in the Capitol, pushing to halt the bills. They argued that there will be dire consequences for the tech industry if the bills become law.

“The legislation would have significant negative effects on the hundreds of thousands of American small- and medium-sized businesses that sell in our store and tens of millions of consumers who buy products from Amazon,” Amazon’s top lobbyist, Brian Huseman warned in a statement on Wednesday.

The New York Times reported that Google’s senior vice president for global affairs, Kent Walker, has also made calls to lawmakers in recent days, and the company’s top lobbyist, Mark Isakowitz, has weighed in on how the bills would alter how people use the internet. “American consumers and small businesses would be shocked at how these bills would break many of their favorite services,” he said in a statement. A spokesman for Facebook, Christopher Sgro, said that antitrust laws “should promote competition and protect consumers, not punish successful American companies.”

There have been objections also by advocacy groups being funded by the tech companies, joining voices with critics of the bill within and outside the House to sound warning of its consequences.

Former Google executive, Adam Kovacevich, who formed the Chamber of Progress group, urged members of the Judiciary Committee to oppose two of the bills. He warned that the bills would hurt consumers, resulting in Amazon without Prime, the iPhone without text or phone capabilities preinstalled, and Google without Maps.

Though the lawmakers are not all speaking in one voice, as some GOP members see the move as pandering to the wishes of Democrats, the momentum in support of the bills has outgrown the norm that has held calls to break the big tech back for long. Speaker Nancy Pelosi reportedly pushed back on an attempt by Cook and other lobbyists to delay the bills.

After the House committee voted on Thursday in favor of the bills, the only cramp on their way is the California delegation’s hesitation to fully support them, which may spell some trouble for them in the full House before it gets to the Senate. The future of the legislation is still uncertain but they depict trouble for the big tech having come further than ever before.

Share this post

Post Comment