Op-Ed: The American Innovation and Choice Online Act is a Bad Idea in Almost Every Way
By Peter Pischke
This was originally published by Counter Punch on January 28, 2022.
A consumer cyanide pill veiled in popular anti-Big Tech sentiment, the American Innovation and Choice Online Act (AICO) is the hottest new ‘anti-trust’ bill in Congress. For consumers’ sake, let’s hope Congress votes it down.
The bill, which passed through the Senate Judiciary Committee last week and is now headed to the US Senate Floor, would beef up antitrust enforcers — supposedly to stop big tech companies like Amazon and Apple from taking advantage of small businesses. But protecting the little guy isn’t really what this bill is about. AICO is a cynical play by politicians to use the public’s distrust of Big Tech to score some political points and anti-trust cred. If it’s enacted, its destructive, half-hearted measures aimed at hurting Big Tech will miss their mark and harm consumers instead.
Senator John Kennedy (R-LA), one of the original 11 co-sponsors of this bill, says the bill is supposed to stop Big Tech companies “unfairly limiting consumer choices and thwarting free-market competition” by “establishing commonsense rules of the road for dominant digital platforms to prevent them from abusing their market power to harm competition, online businesses, and consumers.”
In simpler terms, the bill is supposed to stop big companies like Amazon or Apple from utilizing the user and business data they receive to support and promote their products and services over others on their platforms. The official term is self-preferencing. Think Apple or Google restricting a popular app and replacing it with its own version on the App store. Amazon is infamous, as Reuter’s put it last year in a report, for “knocking off products it sells on its website and of exploiting its vast trove of internal data to promote its merchandise at the expense of other sellers.”
But would this bill stop bad behavior by Big Tech? A review of this legislation says not.
The legislation only applies to “covered platforms” with 50 million monthly users or a market capitalization greater than $550 billion. Meaning it only applies to the five Big Tech companies (Meta, Amazon, Apple, Microsoft, and Alphabet), plus two more (Tencent and Bytedance). AICO completely ignores smaller behemoths like PayPal, and Shopify. Keep in mind the bill would only apply to online businesses, so brick-and-mortar companies like Walmart get off scot-free.
An earlier version of the bill did contain a provision that would have allowed private litigants to take online companies like Amazon to task for unfair behavior, but Republicans removed it. As it’s written now, only Justice Department and Federal Trade Commission bureaucrats would be allowed to enforce the proposed law.
As for the bill, there is no definition of what constitutes bad behavior by tech companies beyond a vague wording of “unfair” behavior. But the penalties for this undefined sin are quite punitive. If a tech company was found guilty, even for a small infraction, they could be penalized up to 15% of, not income, but all yearly revenue.
With a crime so vaguely worded and a potential punishment so steep, the bill would greatly disincentivize Big Tech from working with any small companies for fear of offending the federal government. In addition, the limitations set upon tech companies are so restrictive, it would make the popular innovations and cheap perks offered by companies like Amazon, that fall under the self-preferencing umbrella, such as free two-day shipping on Prime, and Amazon Basics, in effect illegal. Top-rated apps like iMessage or Facetime would no longer come pre-installed on iPhone. The security advantages to a platform like IOS would be lost. And the costs to consumers for formerly cheap or free features would skyrocket.
Instead of giving consumers more options and allowing smaller companies to thrive on giant company’s platforms, AICO would shrink the menu available to consumers and shut out many smaller companies. Who stands to benefit from this bill are the smaller Silicon Valley whales, like Yelp and Patreon, which, like at least 33 others, just so happen to support this bill.
What’s worrisome about AICO is that it has a decent shot of becoming law, and is the speartip of an antitrust assault on Big Tech, with seven other antitrust bills working their way through Congress. The bill is sponsored by 11 big-name Senators from both sides of the aisle, but there is no voice for consumers. When the Washington Examiner asked if co-sponsor Senator Chuck Grassley, would change the bill in consideration of consumers’ concerns, his staffers complained that “If we make carveouts for all the pro-consumer features, then the bill will be useless.”
The American Innovation and Choice Online Act is a bad idea in almost every way imaginable. A lazy solution for an important problem. Voters should pressure their leaders to think twice before they support a half-baked bill that will take away IMessenger and Prime 2-day shipping.
Published on January 31, 2022