a Better Bubble™
For decades here on Techdirt I've argued that competition is the biggest driver of innovation, and so I'm very interested in policies designed to drive more competition. Historically this has been antitrust policy, but over the past decade or so it feels like antitrust policy has become less and less about competition, and more and more about punishing companies that politicians dislike. We can debate whether or not consumer welfare is the right standard for antitrust -- I think there are people on both sides of that debate who make valid points -- but I have significant concerns about any antitrust policy that seems deliberately designed to make consumers worse off.
That's why I'm really perplexed by the push recently to push through the “American Innovation and Choice Online Act” from Amy Klobuchar which, for the most part, doesn't seem to be about increasing competition, innovation, or choice. It seems almost entirely punitive in not just punishing the very small number of companies it targets, but rather everyone who uses those platforms.
There's not much I agree with Michael Bloomberg about, but I think his recent opinion piece on the AICOA bill is exactly correct.
At the heart of the bill is an effort to prevent big tech companies from using a widespread business practice called self-preferencing, which is generally good for both consumers and competition. Think of it this way: An ice-cream parlor makes its own flavors and sells other companies’ flavors, too. Its storefront window carries a large sign advertising its homemade wares. In smaller letters, the sign mentions that Haagen-Dazs and Breyers are available, too. Should Congress force the ice-cream store owners to advertise Haagen-Dazs and Breyers as prominently as their own products?
That’s essentially what this bill would force a handful of the largest tech companies to do. For instance, Google users searching the name of a local business now get, in their search results, the option of clicking a Google-built map. But under the bill’s requirements, the search results would likely have to exclude the Google map. Similarly, Amazon would likely be prevented from promoting its less-expensive generic goods against the biggest brand names.
Lots of businesses offer configurations of products and services in ways that are attractive to customers, often for both price and convenience. Doing this can allow companies to enter — and potentially disrupt — new markets, to the great advantage of customers.
Yet the bill views such standard business conduct as harmful. It would require covered companies — essentially Amazon, Apple, Google, Facebook and TikTok — to prove that any new instance of preferencing would “maintain or enhance the core functionality” of their business. Failure to comply could lead to fines of up to 15% of a company’s total U.S. revenue over the offending period.
Now, I think there's a very legitimate argument that if a dominant company is using its dominant position to preference something in a manner that harms competition and the end user experience, then that can be problematic, and existing antitrust law can take care of that. But this bill seems to assume that any effort to offer your own services is somehow de facto against the law.
And whether or not that harms these companies is besides the point: it will absolutely harm the users and customers of these companies, and why should that be enabled by US competition policy? The goal seems to be "if we force these companies to be worse, maybe it will drive people to competitors," which is a really bizarre way of pushing competition. We should drive competition by encouraging great innovation, not limiting how companies can innovate.
Even if you don't think that the "consumer welfare" standard makes sense for antitrust, I hope most people can at least agree that any such policy should never deliberately be making consumers worse off.
stLouIST