Senate Panel Approves Antitrust Bill
Restricting Big Tech Platforms
Legislation would bar
Amazon, Google, Apple and others from favoring their own products over
competitors’
By Ryan Tracy,
WSJ, January 20-21
WASHINGTON—A Senate panel approved antitrust legislation
forbidding the largest tech platforms from favoring their own products and
services over competitors’, scoring a win for backers of stricter Big Tech
regulation against fierce industry opposition.
The American Innovation and Choice Online Act moves next to
the Senate floor, where several senators said they wanted to see additional
changes before backing the measure. Thursday’s 16-6 vote in the Senate
Judiciary Committee showed the bill had bipartisan support but also raised
bipartisan concerns.
The legislation “is specifically designed to target a small
number of specific companies, most of which are headquartered in my home
state,” said Sen. Dianne Feinstein, who criticized elements of the bill along
with fellow California Democratic Sen. Alex Padilla. “It’s difficult to see the
justification for a bill that regulates the behavior of only a handful of
companies while allowing everyone else to continue engaging in that exact same
behavior.”
Despite their reservations, both California senators voted
“yes” to advance the bill.
Clearing the Senate panel was a big win for the measure’s
backers in the face of heavy tech-industry lobbying. Sen. Amy Klobuchar (D.,
Minn.), a primary sponsor, called the vote “the first time that a major tech
bill on competition has advanced to the Senate floor since the dawn of the
internet.”
But Ms. Feinstein’s concerns foreshadowed hurdles ahead.
Another California Democrat, House Speaker Nancy Pelosi, hasn’t brought similar
antitrust legislation up for a vote amid divisions within her caucus, and
lawmakers have limited time to resolve differences before midterms campaigns
accelerate later this year.
The bill targets dominant tech platform, including
Amazon.com Inc.’s AMZN -5.69% e-commerce site, Alphabet Inc.’s GOOG -1.52%
Google search engine, Apple Inc.’s AAPL -0.97% App Store and Meta Platforms
Inc.’s FB -3.60% Facebook. Those companies have been working for months to stop
or alter the bill, deploying teams of lobbyists and top executives to
Washington. Some have funded advocacy groups that oppose the measure and
publicly warned that the bill could disrupt popular services.
Supporters, including smaller tech companies such as Yelp
Inc. and Sonos Inc., say the legislation would
benefit consumers by boosting competition on platforms that are abusing their
market power. Senators in favor of the bill say it makes exceptions that
protect features consumers like.
“This bill is not meant to break up Big Tech or destroy the
products and services they offer,” said Sen. Chuck Grassley of Iowa, the top
Republican on the judiciary panel. “The goal of the bill is to prevent conduct
that stifles competition.”
Nevertheless, lawmakers amended the bill Thursday to address
industry concerns. One new provision is designed to include large,
foreign-owned tech platforms such as the popular TikTok
app owned by China’s ByteDance Ltd., said Mr.
Grassley.
Apple’s hardware, software and services work so harmoniously
that it is often called a “walled garden.” The idea is central to recent
antitrust scrutiny and the Epic vs. Apple case. WSJ’s Joanna Stern went to a
real walled garden to explain it all. Photo illustration: Adele Morgan/The Wall
Street Journal
The top Republican on the judiciary panel’s antitrust
subcommittee, Sen. Mike Lee of Utah, said he shared concerns about monopoly
power in the tech industry but worried the bill was written too broadly and
could cause “collateral damage.”
“It may actually entrench the very four companies at which
it is aimed by creating a strong incentive to simply cease doing any business
with third parties,” Mr. Lee said. “This could crush thousands of small
businesses, and it could actually worsen the state of competition in online
markets.”
Similar legislation passed the House Judiciary Committee
last June but has stalled in the lower chamber since then, partly over
skepticism among Democratic members from California.
The bill that advanced in the Senate Thursday would make it
illegal for the largest internet platforms to unfairly favor their own products
and services over those of other businesses that use the platform. It lists
several categories of outlawed conduct, including a platform preferencing
itself in search results or using another business’s nonpublic data to compete
with that same business.
Ms. Klobuchar said the provisions reflect testimony by Sonos and Tile Inc., both tech equipment makers, about how
tech giants made it difficult for their products to work on large platforms.
She also pointed to a Wall Street Journal article about Amazon accessing data
to copy products created by sellers on its online marketplace.
“Time and time again, we heard about how these companies
abuse their power,” Ms. Klobuchar said. “At some point we have to have rules of
the road to make things fair.”
Opponents of the legislation say that companies aren’t wrong
to profit from platforms they created and that discouraging them from doing so
would hamper future innovation.
The companies say the legislative language is so broad that
it could outlaw services consumers and businesses like. Amazon has said it
might not be able to let other businesses sell on its marketplace. Google says
it might not be able to feature Google Maps in search results. Apple says the
bill could undermine its ability to force third-party apps to get permission
before collecting data on iPhone users—a concern Sen. Ted Cruz (R., Texas) said
he heard personally from Apple Chief Executive Officer Tim Cook.
The companies had no further comment Thursday. The Computer
and Communications Industry Association, a trade group representing the
companies, said the bill “endangers U.S. digital leadership and puts consumers’
security and privacy at risk.”
Senators backing the bill note that it includes exceptions
for platform features that improve functionality or users’ privacy.
Proton Technologies AG, whose ProtonMail
email service competes with Google’s Gmail, called the vote a step to
revitalize American tech innovation.
“The problem with Big Tech is not necessarily that it has
gotten so large, but instead how it got so large and what it does with its
power. On both counts, the answer is cartel-style behavior,” said Proton CEO
Andy Yen.
The bills’ supporters added more exceptions Thursday. One
new provision appears to respond to Apple’s concern by stating that platforms
wouldn’t be liable for requiring consent before allowing access to user data.
Another exempts fee-for-service subscriptions, such as Amazon Prime.
Lawmakers also broadened the scope of platforms covered by
the bill to include large, foreign-owned internet platforms—an apparent
response to concerns that the original bill appeared to put U.S. tech giants at
a disadvantage.
In general, the legislation applies to companies with a
market cap greater than $550 billion and more than 50 million monthly active
users that are considered “critical trading partners” for other businesses to
access customers.
The Federal Trade Commission and the Justice Department
would decide which tech platforms meet that definition—a provision that
concerned some Republicans. The list is expected to be short and include the
largest U.S. tech companies, such as Google, Amazon, Apple, Facebook, and
Microsoft Corp.
Several senators said that further hearings on the bill
should have been held before Thursday’s vote and that the measure would require
changes to secure their support on the Senate floor.
Supporters of the bill met with White House officials Wednesday in an effort to secure their backing. The Biden administration hasn’t taken a position on the matter yet.