Mark Jamison
The two antitrust bills before the Senate Judiciary Committee are showing their warts. The American Innovation and Choice Online Act (AICOA) and the Open App Markets Act, which are set for markup today, have drawn criticism from large numbers of scholars, researchers, and pundits across the political spectrum. I have written about the legislation directly on two occasions, and about 40 other writers representing over 20 organizations from the political left, right, and center have written in opposition to the bills.
My complaints have been that the bills, if enacted, would:
Gift brand value, product placement, and software to companies that never earned or built them;
Limit future innovations by requiring uneconomic interoperability and restricting companies’ abilities to leverage the knowledge they legitimately gain;
Weaken cybersecurity;
Turn valuable platforms into dumb pipes;
Regulate companies that become large for perhaps no other reason than customers enjoy their services;
Damage the seamless iPhone experience that many customers love; and
Decrease the competition Big Tech firms face.
In addition to my concerns, my colleagues and counterparts on the left and right have pointed out that the bills, if enacted, would lower the value of services that millions of Americans choose to use almost daily, distort competition to favor lower-quality products, harm tech startups, harm low-income Americans that rely on smartphones for their internet access, protect politically favored companies, and threaten popular services like Amazon Prime, Apple’s FaceTime, and Google Maps.
With so much substantive opposition, one must wonder why our elected officials would move forward with the bills. Sponsors of the bills claim the legislation would promote competition. But for that to be true, the definition of competition must be turned on its head. Archeology has shown us that markets have been present since prehistoric times and are instrumental to human progress. Adam Smith explained that markets work because when customers, rather than governments, choose what consumers buy and from whom they buy it, market forces direct business self-interest to the public interest. Such competition requires that customers and businesses be free to choose. The bills before the Senate Judiciary Committee misrepresent this meaning by labeling government design of products and businesses as competition.
Broad awareness that the bills are troubling for the US economy is evidenced by rumors of a manager’s amendment to the AICOA. My knowledge is limited as the amendment is not yet publicly available, but it appears to change some important aspects of the original bill by being less autocratic in defining what businesses can and cannot do. It would, however, still rely largely on companies’ sizes to trigger regulations, which would tend to punish companies that grow simply by making a lot of customers happy.
But even with the rumored manager’s amendment, the prescriptive nature of the bills spells trouble for US tech leadership. The bills attack “covered platforms,” and the authors seem to have in mind Amazon, Apple, Facebook, and Google. But this is viewing the future through a rearview mirror. Today’s emerging platforms are those in the metaverse, which is likely to be highly competitive even though many of the participating platforms will have millions of users. It would be a mistake to pass laws that push metaverse development into other countries. As the European Council on Foreign Relations notes in its assessment of the EU’s regulatory approach to tech, “Referees do not win the game.”
What should be done? Congress should stay the course with our historic tech competition policies that allow liberty for innovation and avoid punishing business success. As Gary Shapiro, president and CEO of the Consumer Electronics Association, described in 2015, “It’s no coincidence that the American regulatory system is open and permissive, and fosters the innovation so crucial to tech success.”
Courtesy (AEI.org)
