Big Tech Vs. Big Government: The Choice is Pretty Bleak

Photo by Umberto on Unsplash

After years of rapid growth without limits, Big Tech’s power is facing challenges from lawmakers that would rein in some of the tactics that made Apple, Google, Facebook, and Amazon four of the largest tech companies in the world.

There are six proposed bills currently in the U.S. Congress. The bills all stem from a 16-month investigation by the House Judiciary Committee’s antitrust subcommittee, which featured an unprecedented hearing in which CEOs of the four major tech companies testified.

An often biting report followed in October of last year outlining major concerns with the growth and practices of the big tech firms.

The resulting proposals, which have all drawn bipartisan support, reflect a wide range of concerns that emerged from that investigation, from tech giants buying out their competition to the companies' using their data-gathering prowess to elbow rivals out.

“I don’t think it’s possible to overstate how significant this is,” Jane Chung, a big tech accountability advocate at the consumer advocacy group Public Citizen, said. “This takes aim at the playbook that Big Tech has used to hoard power and rips it up.”

The bills are in their early stages and haven’t been scheduled for votes, and they vary considerably in scope and ambition. Here’s a roundup.

Bills That Attack Mergers

Part of what has made the big four tech companies so dominant in their industries is their purchase power—both the ability to simply buy potential competitors as well as the ability to use their platforms to boost other lucrative ventures.

When it comes to buying up competition, the subcommittee particularly focused on Facebook’s acquisition of  Instagram in 2012.

“Buying Instagram now … will give us a year or more to integrate their dynamics before anyone can get close to their scale again,” Zuckerberg wrote in a 2012 email to Facebook’s chief financial officer. “Within that time, if we incorporate the social mechanics they were using, those new products won’t get much traction since we’ll already have their mechanics deployed at scale.”

In another email, Zuckerberg said Facebook “can likely always just buy any competitive startups,” according to the committee report.

Facebook didn’t respond to a request for comment.

“In some instances these acquisitions enabled the dominant firm to neutralize a competitive threat; in other instances, the dominant firm shut down or discontinued the underlying product entirely—transactions aptly described as ‘killer acquisitions,’ ” the antitrust committee’s report said.

And now three of the six proposed bills floating around Congress specifically target mergers and acquisitions.

The first, the Platform Competition and Opportunity Act sponsored by Rep. Hakeem Jeffries (D-NY), would make it more difficult for companies to buy their competitors by requiring that they prove the acquisition wouldn’t hurt competition. Current law places the burden of proving that a merger would interfere with competition on federal regulators.

The bill is co-sponsored by nine Democrats and four Republicans.

A second bill, the Ending Platform Monopolies Act, would make it illegal for a platform to own or control a business “ where their gatekeeper power allows them to favor their own services or disadvantage rivals.”

Sponsored by Rep. Pramila Jayapal (D-WA), the bill could, for example, prevent Amazon from owning its Ring surveillance company and promoting its doorbells on the Amazon marketplace, in competition with third-party sellers.

The bill could also, say, prevent Google, which owns YouTube, from favoring YouTube videos over videos on unaffiliated sites in search results.

Amazon did not reply to a request for comment on this bill.

Tech giants that violate this policy could be forced to break up their portfolio of companies.

“It’s not just saying certain practices are illegal; it’s breaking apart the companies, which is part of their biggest fears,” Chung said. “That’s why a lot of the companies see this as an existential threat to their business.”

The bill narrowly passed a markup hearing on June 23 with a 21–20 vote. It’s co-sponsored by seven Democrats and five Republicans.

“This would all dramatically undermine US technology leadership, damage the way small businesses connect with consumers and raise serious privacy and security concerns,” said Mark Isakowitz, Google’s vice president of government affairs and public policy, in an email to The Markup.

A third bill, the Merger Filing Fee Modernization Act, would increase the filing fees for companies who want to have mergers and also increase funding for antitrust watchdogs at the Department of Justice and the Federal Trade Commission.

“Consumers depend on the FTC and Justice Department to vet proposed mergers and guard against anticompetitive practices,” Sen. Chuck Grassley (R-IA) said in a statement for the Senate version of the bill in June 2019. “With major acquisitions on the rise, it’s important that these government agencies have the resources needed to protect consumers and taxpayers.”

With 14 Democrats and nine Republicans co-sponsoring the bill and a companion version in the Senate, the bill has the clearest path to becoming law.

“This bill is probably the least controversial and makes a lot of policy sense. The effect will increase the fees, and clearly both the FTC and the DOJ’s antitrust division need greater resources,” Samir Jain, the Center for Democracy and Technology’s director of policy, said. “It stands to have the greatest chance of passage.”

Going After Big Data

The American Choice and Innovation Online Act, sponsored by Rep. David Cicilline (D-RI), would make it illegal for a major platform to preference its own products. It would also make it illegal for a platform to use data it collected from competitors using its services to gain an advantage.

Investigation by The Markup last July found that among more than 15,000 search results on Google, 41 percent of the first page on mobile devices were Google’s own properties.

“In submissions to the Subcommittee, even some of the largest and most well-known verticals stated that they depend on Google for up to 80–95% of their traffic,” the antitrust subcommittee wrote in its report.

“Internal documents from Google show that it has used its dominance in general search to closely track traffic to competing verticals, demanding that certain verticals permit Google to scrape their user-generated content and demote several verticals.”

Amazon has also been found to give its own products top billing when customers search for things on Amazon’s marketplace. Though Amazon says it forbids its employees from using such data, the subcommittee’s report described multiple instances of the behavior, calling it “increasingly systemic, rather than isolated business practices.”

In April 2020, The Wall Street Journal reported that Amazon used data from independent sellers to develop its own competing products.

“In an interview with subcommittee staff, a senior executive at a social media company referred to this ability as akin to having ‘a spy camera on the production floor’ of a competitive threat,” the report said.

Amazon didn’t respond to a request for comment.

Google’s Isakowitz said that the company isn’t “opposed to antitrust scrutiny or updated regulations on specific issues” but argued that the proposed legislation would “break” many services available.

This bill is co-sponsored by nine Democrats and five Republicans.

Another bill, the Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act, would make it easier for users to transfer the data they give any platform.

The proposed legislation defines data as “information that is collected by or provided to a covered platform” that’s linked to you, which could include your personal information, your username, and your photos.

The bill would essentially remove barriers for switching services and require tech companies to make their platforms accessible and interoperable with their competitors.

“In many cases, large technology firms can maintain market power in part because it is not easy for users to switch away from the incumbent’s technology,” the report said, and also noted, “Similarly, social networks like Facebook exhibit powerful direct network effects because they become more valuable as more users engage with the network—no person wants to be on a social network without other users.”

The law, sponsored by Rep. Mary Gay Scanlon (D-PA), co-sponsored by 10 Democrats and seven Republicans, also wants to prevent platforms from blocking interoperability with their competitors.

In 2011, Facebook announced a company policy that would block any competing social platforms from accessing its API. Documents released by the U.K. Parliament in 2018 include an email in which Facebook CEO Mark Zuckerberg moved to cut off data access for Vine, a competing social network, the same day it launched.

In December 2020, a group of state attorneys general filed a lawsuit to break up Facebook and cited this practice as evidence of Facebook's dominance.

A judge dismissed the case in June, noting that “there is nothing unlawful about having such a policy.”

Facebook didn’t respond to a request for comment.

Making Court-Shopping Harder

The State Antitrust Enforcement Venue Act, sponsored by Rep. Ken Buck (R-CO), would prevent companies from making requests to change venues in federal antitrust cases in which a state is a complainant, in the same way they are currently prevented from such requests where the federal government is a complainant. The bill is co-sponsored by nine Republicans and three Democrats.

Transfer requests in cases brought by states allow companies to “venue shop” for more favorable jurisdiction and can also cause delays and higher costs for the cases as they become multistate litigation.

Like the Merger Filing Fee Modernization Act, this bill is likely to pass because of how uncontroversial it is, the CDT’s Jain said.

After the Texas attorney general filed a lawsuit against Google over anticompetitive practice last December, the tech giant requested to have the case moved to California, its home state.

Google argued that because it was facing similar lawsuits in California, and because Google is headquartered in California and more documents were located in the state, it would be more convenient to move the case, especially because many of its witnesses also live in the state.

In May, a Texas judge denied the request, noting that Google couldn’t prove that California would be a more convenient venue than Texas.

“This change ensures that states can effectively litigate antitrust cases without unnecessary delays, inefficiencies, and higher costs that occur when state antitrust cases are transferred or combined,” Rep. Jerrold Nadler (D-NY), chairman of the House Judiciary Committee said in a statement.

Credit

“A group of bipartisan lawmakers hopes to pass antitrust legislation that takes aim at tech giants buying out the competition and hoarding data. By: Alfred Ng” This article was originally published on The Markup and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.