A raft of recently proposed bills could bring about the biggest changes to antitrust law in 100 years, if they’re passed. The bills, five in total, target America’s tech giants — Amazon (AMZN), Apple (AAPL), Alphabet (GOOG, GOOGL), and Facebook (FB) — by prohibiting practices including self-preferencing their own goods, and limiting their ability to acquire smaller competitors.
“I don’t think you can understate the significance of these bills,” Kellie Lerner, co-chair of The Antitrust and Trade Regulation Group at Robins Kaplan, told Yahoo Finance Live. “They’re essentially a once-in-a-century opportunity to modernize our antitrust enforcement to meet the current economy. It’s a watershed moment for antitrust.”
The proposals, introduced by members of the House Antitrust Subcommittee on Friday, are noteworthy because unlike previous efforts to rein in Big Tech, they have bipartisan support right out of the gate from the likes of Sen. David N. Cicilline (D-RI) and Sen. Ken Buck (R-CO).
Some of the biggest changes the bills would bring, Lerner explained, include curbing the ability for companies to favor their own services — think searching for video on Google and being pointed to YouTube. The bills would also prohibit companies from requiring clients to use their secondary services to use their platforms — think Amazon forcing third-party sellers to use its logistics platform.
“We’re now seeing these platforms being treated the same way railroads were treated in the 1800s with their consolidation of power, which prompted the enactment of the antitrust laws in the first place,” Lerner said.
Penalties for violating the proposed legislation vary from forcing companies to pay as much as 30% of their U.S. revenue during the period of the violation or 15% of the prior year’s total revenue, to requiring firms to divest entire business lines. These penalties, coupled with recent antitrust moves being taken by the European Union’s European Commission, could force greater competition in the tech space. The European Commission has been at the forefront of the antitrust fight with Big Tech, going after everyone from Amazon to Google.
“These proposed bills, if enacted, would be critical to the emergence of new competitors,” Lerner explained. “With this mechanism in place, complemented by what’s going on in Europe, it will finally give some of these newer, up-and-coming startup companies a fair chance, and a level playing field to succeed in the tech space.”
But M.I.T. Sloan School of Management professor Sinan Aral says the legislation doesn’t go far enough in one key category: interoperability. According to Aral, the bills need to better address the ability for consumers to bring their content from one platform to another to build out a more competitive business landscape.
“I think there’s a glaring lack of focus on interoperability legislation, which is a good miss,” Aral told Yahoo Finance Live. “I think if we had that, it would probably be the number one best alternative to create competition, especially in the social media economy for Facebook and the others.”
Platforms should also communicate with each other more easily, he said.
“Imagine if you couldn’t send a text message from Verizon to Sprint. You would think that is ridiculous. Now, we can’t send messages from Facebook to Twitter or Instagram to Snapchat, and that creates more ability for monopolies to retain their power,” Aral said. “If there was interoperability, it would create competition.”
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