Will Congress' Big New Push On Antitrust Actually Solve Any Competition Issues?

from the probably-not dept

On Friday, as has been widely expected for a while, a bunch of House lawmakers led by David Cicilline introduced five new antitrust bills that would, if they become law, completely reshape how antitrust works in the US. At least for tech companies. Somewhat notably, many of the bills seem written specifically to target just one industry and to avoid having to deal with other industries. The text of the bills has been floating around all week as the Democrats who are pushing them hoped to find some Republican co-sponsors. And, based on Friday’s press release, it appears they found at least one Republican to sponsor each bill (though only four Republicans in total, as they got Lance Gooden to agree to sponsor two of the bills).

Now, most of the bills strike me as extremely problematic — and even me just saying so will lead people to claim I’m somehow in the tank for these companies. Nothing is further from the truth. I’m all for creative ideas on how to end the dominance of the largest companies and to increase competition. But I fear poorly thought out proposals will have massive unintended consequences that go way beyond punishing Facebook, Google and Amazon.

Each bill does something different, and there are some occasionally creative and interesting ideas in them, but it really seems like these bills are more designed to destroy the thriving tech industry out of spite, rather than to actually encourage competition. As noted above, I’m in agreement that it would be good if we got more competition in the tech industry, but these bills take a very backwards-looking view on how to do that, basically by punishing companies for building successful products, rather than looking for ways to enable more actual competition. I’ve written before on ways to actually break up the dominance of big tech players, mainly by getting rid of many of the existing rules that have allowed the big players to block and limit competition. But these bills don’t do that. They take a much more punitive approach to successful companies, rather than an approach that enables more competition through innovation. That’s disappointing.

To me, the one that seemed most interesting at a first glance was the ACCESS Act (“Augmenting Compatibility and Competition by Enabling Service Switching Act”) by Rep. Mary Gay Scanlon. It basically requires “covered platforms” to maintain open APIs for interoperability and data portability. And, at a first pass, that is a good thing, and obviously quite consistent with my belief that we need to build a future that is based more on open protocols rather than silo platforms. Portability and interoperability are certainly a step in the right direction for that.

However, the way the bill actually is written suggests a real lack of futuristic technical thinking. It would lock in certain ideas that don’t necessarily make any sense. Basically, all this bill would actually do is make sure that you could transfer your data out of an existing internet giant. The big internet companies already do this… and because of the way it’s been implemented, it’s almost entirely useless and doesn’t help anyone. This bill wouldn’t change that, unfortunately.

On top of that, this bill fails to deal with the very real and very tricky challenges regarding data portability and interoperability as it pertains to privacy. Instead, the bill just handwaves it away, basically saying “don’t do bad stuff regarding privacy” with this data. That’s… not going to work, and is more or less an admission that the drafters of the bill don’t want to deal with the very significant challenges of crafting a data portability/interoperability setup that is also congruent with protecting privacy.

The real way to do this would be to separate out the data layer so that it’s not controlled by the centralized companies at all, but in the hands of the end-users or their agents. But while that could happen as an accident of this bill, it’s clearly not the intent. Thus it seems like this bill would not help very much, and that’s a real missed opportunity. It’s nice that it recognizes portability and interoperability as issues, but it doesn’t do the hard work necessary to make that actually meaningful.

Finally, perhaps the most problematic (by far) part of this bill is that if a “covered company” wants to change its APIs, it would need to get FTC approval — and that seems like a terrible idea. Imagine having to get approval from the government every time you change your API? What? No. Bad.

A covered platform may make a change that may affect its interoperability interface by petitioning the Commission to approve a proposed change. The Commission shall allow the change if, after consulting the relevant technical committee the Commission concludes that the change is not being made with the purpose or effect of unreasonably denying access or undermining interoperability for competing businesses or potential competing businesses.

I mean, yikes. That’s going from permissionless innovation — the very core of our innovation engine — to having the FTC act as the approver of any slight change to an API. That’s really, really bad.

The bill that may get the most attention is Cicilline’s own bill that basically says successful internet companies could no longer promote their own ancillary services over those of competitors. Basically, Google couldn’t insert its own local results, or its own maps, over a third party’s. Think of this as the Yelp Finally Forces Google To Use Yelp’s Listings Act, because that’s the main driver behind this bill. Basically, some companies that do more specialized search and content don’t want Google to be able to compete with them, and more or less want traffic they might not have earned. I can see a slight argument for how the practice of actual monopolies favoring their own services and excluding others could be anticompetitive, but this bill would make it defacto anti-competitive — and that seems likely to create massive unintended consequences that won’t be very good for the internet.

There are, after all, lots of cases where it makes quite a lot of sense for companies to link their ancillary products. Yet, here, doing so will almost definitively lead to a costly antitrust fight, meaning that it will be quite difficult for many companies to build useful complementary services. I don’t see how that benefits the public. Again, it seems that a much better solution would be to remove the barriers that currently limit the ability for third party competitors to step in and build tools that interoperate with the bigger players, but that’s not the goal here. The goal seems to be to restrict the big internet companies to much more limited offerings, rather than providing a wider suite of services.

Another major change comes from Rep. Hakeem Jeffries, and would effectively make it much, much harder for internet giants to buy companies. A key part of the bill is that the acquiring company would have to affirmatively show that the merger is legit, rather than the government having to show that the merger is problematic. Shifting the burden of proof would basically mean that most such mergers would be presumed unlawful, rather than the opposite. This could have huge and problematic implications for how our economy operates today.

On the good side, the bill would give the FTC and DOJ more resources to review acquisitions. However, as we’ve discussed before, in trying to block out anti-competitive acquisitions (which are a legitimate concern!) a bill this broad will almost certainly knock out other kinds of important and useful acquisitions (such as ones that keep failing or flailing services alive). More importantly it may take investment capital away from competitive entrepreneurial ventures.

No good investors invest in a company with a plan to just sell it off to a big tech company (indeed, most investors will ask startups how they would deal with such a competitive threat), but having the big guys act as a buyer is an alternative out — not as successful as succeeding on your own, but still better than losing all of the investment entirely — makes it easier for the investors to make these kinds of bets. Now that possibility of return will become much more difficult, meaning that investment capital is less likely to go to entrepreneurs trying to create competitive solutions. And that’s not good!

A separate bill from Rep. Neguse basically just raises the cost of mergers and acquisitions and… um… sure? Fine. I don’t see that as problematic really. I mean, at the margins, making it more costly to do an acquisition might be a nuisance, but the changes and increases don’t seem particularly significant here — and certainly not enough to stop a major acquisition (though, arguably it might drive down the amount that the owners of the acquired company get, effectively transferring it to the government). Consider it kind of a slight tax on selling your business. The bill would also increase funding to the FTC and DOJ to work on antitrust issues, and that seems reasonable as well.

Finally, there’s Rep. Jayapal’s bill that is pretty clearly designed to just stop Amazon from selling its own goods on Amazon. I know this is an issue lots of people complain about, but it remains unclear to me how much of an actual problem it is. Lots of retailers sell house branded products and compete against others without much of a problem. Costco has its house Kirkland brand, which it sells alongside other companies’ competing products. Is that so problematic?

As some are pointing out already, these bills could kill off (or severely limit) a bunch of services that people actually like, mostly as punishment that the innovations have been so successful. And that’s a problem.

It’s fine to admit that there’s a delicate balance here. How do you stop companies from becoming too powerful such that they alone squeeze out or stifle competition, while at the same time not putting in place stringent rules that, by themselves, stifle useful innovations? There really are two major themes of approaches: (1) punish or limit the ability of companies to act or (2) figure out better ways to create incentives for competitors to succeed. Unfortunately, regulators tend to jump to (1) and avoid even trying (2). That seems to be the case here.

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Companies: amazon, apple, facebook, google

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Comments on “Will Congress' Big New Push On Antitrust Actually Solve Any Competition Issues?”

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ElginS says:

Re: Bogus

… all government antitrust is bogus and has been since the Sherman Antitrust Act.
Feds have never been able to even legally define the term "competition" and certainly have no way of creating competition in the Tech Industry, other than getting out of way.

Congress will solve nothing on this issue, but is instead guaranteed to make things worse.

ElginS says:

Re: Re: Re: Bogus

… there is certainly a loose telecom cartel that exists only because of special grants of commercial privilege to big telecoms from federal, state, and local governments.

…Competition from smaller and startup telecoms is severely restricted by a staggering maze of government laws and regulations, that has built up since 1890.

The very long history of Ma Bell (AT&T) is a textbook case of government-enforced major monopoly against consumers.
The Trust/Monopoly/Cartel problem is always a result of government political malfeasance.

Scary Devil Monastery (profile) says:

Re: Re: Bogus

"Feds have never been able to even legally define the term "competition" and certainly have no way of creating competition in the Tech Industry, other than getting out of way."

One more of those "Only In America" topics? Seems to me the US fear of government interference in the markets have managed to make us socialist europeans far better at reigning in monopolizing entities.

But I wouldn’t go so far as to say the US government is necessarily bad at antitrust. Every time I hear some politician starting up an obvious newspeak spiel about <Big Whatever> I end up trusting it less.

Anonymous Coward says:

Imagine having to get approval from the government every time you change your API? What? No. Bad.

It’s not good, but that’s not really a fair interpretation of the text. The "interoperability interfaces" would be a subset of their API, and the company could arbitrarily add new interfaces without permission. To me, this reminds me of a Microsoft COM interface rule: "[All interfaces] must be immutable. Once they are created and published, no part of their definition may change."

Sure, inexperienced programmers often fucked that up, but there were lots of people who successfully worked under that rule. To extend an object, you don’t change its interface, you make it implement the old interface(s) and the new one (which might just be the old one plus a new method).

That One Guy (profile) says:

'Monopolies are bad! .. for these specific companies.'

Hey great, legislators are proposing regulations to crack down on companies that might use their power to abuse the public, I’m sure they’ll be introducing regulations and laws to reign in the likes of Comcast and Verizon any day now for the same reason, no?

As I’ve noted before it would be a whole lot easier to believe that efforts such as this were being made in good faith if the arguments were turned on other industries for once, but as it is the only thing this looks like is a cheap PR stunt for gullible fools and/or punishment for tech companies for not doing what politicians want them to.

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Anonymous Coward says:

Re: 'Monopolies are bad! .. for these specific companies.'

Who says monopolies are bad? Even a monopoly won’t price its own customers out of the market.

Comcast has pay-as-you-go internet for $45.00 a month and free wi-fi everywhere. They don’t publicize it and it’s probably there to technically avoid antitrust regulation but it is there and very affordable. Internet essentials is $9.95 a month if you’re poor.

PREMIUM is not essential.

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Rocky says:

Re: Re: 'Monopolies are bad! .. for these specific companies.'

Who says monopolies are bad?

Almost everyone. It’s also why they should be regulated.

Even a monopoly won’t price its own customers out of the market.

No, but they will certainly skirt that limit to maximize profits for the least amount of work. You are essentially arguing that you are happy to overpay for your service because you can afford it, which is an extremely stupid position to take. Do you also pay $4 for your cheeseburger at MCD because you can afford it?

I pay $22 for fiber internet, cable and VoIP. No caps, no nothing. That is the result of competition.

I have to ask though, considering the above post, do you work at Comcast or are you just shilling?

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Anonymous Coward says:

Re: Re: Re: 'Monopolies are bad! .. for these specific companies

Stupid would be not making six figures with the time I’d spend worrying about my internet costing $20 too much.

We have competition in many parts of the US and it’s still $40+ a month in these places. Where is it $22? $45 isn’t bad and $9.95 for essentials is fine, though they probably do that to avoid regulators.

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Rocky says:

Re: Re: Re:2 'Monopolies are bad! .. for these specific compa

Stupid would be not making six figures with the time I’d spend worrying about my internet costing $20 too much.

Which is a stupid argument for two reasons: 1. It only applies to a limited amount of people with that type of income. 2. It’s still expensive for what you get if you can get it since 41% of the population in the US can’t even get an internet connection at all or they get something that doesn’t even qualify as broadband (ie +25Mbps).

We have competition in many parts of the US and it’s still $40+ a month in these places. Where is it $22? $45 isn’t bad and $9.95 for essentials is fine, though they probably do that to avoid regulators.

You don’t really have competition in the US when it comes to ISP’s. None of the established big telecoms want to rock the boat, which means they will never really undercut each other when it comes to price and they very seldom try to encroach on each others geographical markets. The US has the 2nd highest average price of internet among all the OECD-countries, which should tell you how broken the market is.

Luckily, I primarily live in Europe where most countries have a healthy competition among the ISP’s. Many governments here actually realized that access to the internet should be treated as an utility, if not in law but at least in practice and LLU is commonplace here.

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Anonymous Coward says:

Re: Re: Re:3 'Monopolies are bad! .. for these specific c

So you’re not in the US? Thanks for playing.

Not everyone has that income? Never said they did, but everyone has the same amount of time. If I chose to learn to make money instead of watching cable all day (I use internet TV btw) of course I’ll have more income, nor will I care about paying more to a monopoly that may even be better than the alternative.

Because I have more money and a life than I do time, I couldn’t care less about my cable bill, as it is a tiny part of a large equation, though for you that might be the opposite.

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Rocky says:

Re: Re: Re:4 'Monopolies are bad! .. for these specif

So you’re not in the US? Thanks for playing.

Yeah well, I don’t have to deal with the dysfunctional ISP’s in the US which means I pay less for more.

Not everyone has that income? Never said they did, but everyone has the same amount of time. If I chose to learn to make money instead of watching cable all day (I use internet TV btw) of course I’ll have more income, nor will I care about paying more to a monopoly that may even be better than the alternative.

Which is why your argument is stupid, since it would only be valid if everyone else was in the same situation. It’s also stupid because you think monopoly is just fine since you don’t care and have enough disposable income to be fleeced by the cable-companies without blinking.

And your last sentence in the above paragraph is so stupid it’s mindboggling, since if it’s a monopoly you don’t have an alternative and if they decide that they want to increase their prices you can’t do diddly squat about it since you can’t even switch to another provider.

Because I have more money and a life than I do time, I couldn’t care less about my cable bill, as it is a tiny part of a large equation, though for you that might be the opposite.

Which is why your argument is totally useless in this discussion since it actually doesn’t help the situation one bit, it actually makes it worse.

Scary Devil Monastery (profile) says:

Re: Re: Re:4 'Monopolies are bad! .. for these specif

"So you’re not in the US? Thanks for playing."

That is correct, a lot of us are fortunate not to live in a third world nation where crap telco monopolies from the 80’s are upheld as the best thing since sliced bread.

"…nor will I care about paying more to a monopoly that may even be better than the alternative."

Never happened. Ever. Monopolies are always bad for the consumer in the end. Something you’d think a capitalist nation should know.

"Because I have more money and a life than I do time, I couldn’t care less about my cable bill…"

Your argument was that "monopolies aren’t bad" – if that’s only true for the minority then I think you should know that means your argument fails. If you don’t give a rat’s ass about other people then by all means that’s your business; just don’t pretend you are speaking for anyone other than yourself.

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nasch (profile) says:

Re: Re: Re:4 'Monopolies are bad! .. for these specif

Because I have more money and a life than I do time, I couldn’t care less about my cable bill

You sure are going to a lot of trouble to defend Comcast for someone who doesn’t have time to care about his cable bill.

Lostinlodos (profile) says:

Re: Re: Re:5 'Monopolies are bad! .. for these sp

I don’t really care either. Personally.
xFinity is $140 less than Uverse was for more of everything.

My bill has gone down slightly each year since I switched, going on 6 years now. Except a 2 months ago when the local rebroadcast mandate fees went up.
Mr rates speed is a bit shy of a Gb bit regularly exceeds that.

I don’t have anything to complain about.

That One Guy (profile) says:

Re: Re: Re:8 'Monopolies are bad! ..

Which might serve as a single data-point but is useless at best to the overall discussion, as it’s akin to saying that since you recently had a meal in your own home starvation and homelessness aren’t really that important to you since you don’t have to deal with either.

You might not have seen rate hikes but a whole lot of other people have. You might have decent service but again, a whole lot of other people don’t enjoy that luxury. That a monopoly or near monopoly position of the companies in your area hasn’t resulted in them screwing you over does not change that in general that’s what happens when they have that power, due to that power.

Scary Devil Monastery (profile) says:

Re: Re: 'Monopolies are bad! .. for these specific companies.'

"Comcast has pay-as-you-go internet for $45.00 a month and free wi-fi everywhere."

A typical swedish provider – bahnhof – gets you 1 GB/sec up/down unlimited for around 40$ USD with VPN included and speed/latency guarantee.

Whereas Comcast means you pay 45 USD in addition to consumption costs with, from what I’m seeing, no guarantee save that you’ll spend hours sitting in a tele-queue waiting for some customer "service" representative to tell you to reboot the router and that it probably is all your fault your internet doesn’t work.

"Who says monopolies are bad? Even a monopoly won’t price its own customers out of the market."

No they’ll just charge you as much as they think they can gouge you for over subpar service. I don’t think I’ve seen this blatant an exculpation of shit conditions since listening to an old soviet propaganda prop on how suffering strengthens the soul of the proletariat…

Scary Devil Monastery (profile) says:

Re: Re:

"What do the drafters actually mean by "interoperability"?"

Basically that you can’t lock out competitors from interacting with your platform. Essentially if one party builds a complete search engine or social platform another party must be allowed to partake in the utility of that platform or search engine, possibly in xchange for a fixed cost.

Something similar exists in many nations when it comes to core infrastructure and strict utility, like water mains and the power grid, where enforced leasing ensures you can’t just build a water main, power grid or fiber network and become the sole supplier. Usually in europe infrastructure these days is always a joint venture with half a dozen or more parties involved, leading to vibrant competition.

The issue here is that the "utility" part of the internet would be the network backbone and the cabling. The precise parts of the online environment not covered by these suggestions. Instead they seek to apply this legislation to the online version of a bar or hotel.

morganwick (profile) says:

I mean, there are certainly plenty of industries with blatantly anticompetitive mergers where the companies involved have pleaded to save the poor, dying company whose investors really just don’t want to bother anymore that would leave you with the impression that maybe the burden of proof should be reversed, some of which have even been covered on Techdirt (Sprint-T-Mobile comes to mind). What’s that? This bill only covers the newest, least politically connected, and therefore scariest of them, and doesn’t do anything to crack down on anticompetitive mergers in telecom, broadband, media, or the like?

(Granted, this particular bill may in fact cover those fields but I’m not wading through the whole thing to find out when I’m on mobile and the PDF display on this page goes past the edge of the screen)

Anonymous Coward says:

"How do you stop companies from becoming too powerful such that they alone squeeze out or stifle competition, while at the same time not putting in place stringent rules that, by themselves, stifle useful innovations? There really are two major themes of approaches: (1) punish or limit the ability of companies to act or (2) figure out better ways to create incentives for competitors to succeed. Unfortunately, regulators tend to jump to (1) and avoid even trying (2). That seems to be the case here."

I have an idea – create incentives, just like you say! Create incentives to invest in real research and development by paid employees, and then protect what you invent! Let’s call it "The Masnick Innovation System", after you!

Or, you could call it the patent system. On the other hand, maybe calling it the Masnick Innovation System would make it more popular here.

ECA (profile) says:

For all the logic

None is to be had.
IF you want competition, OPEN things up, NOT lock them down.

WE all know the old, beginnings from 2000 and the battles faught by allot of small groups to create things. And how many got SWATTED down, taken to court, COPIED another site and got taken away.
The Problem in the Real world is this hasnt happened to the Other corps. Forced competition, Get rid of contracts and handshakes, that Make each Corp Stay in their OWN corner. Non-compete Contracts are the Shame of Competition. We have more regs covering this crap in real sports and Olympics on TV, then we do in the real world.
What has stopped anyone from taking over the ATT/DSL area’s in the USA? NO ONE WANTS TO BUILD IT, even after the gov. has PAID THEM to do it.
They are all bill collectors.

NOW, lets talk about the ones that are Supposed to be doing the work. Since the Main companies we can see ARNT. Why are we paying the ISP’s money? When we could pay the companies that BUILD the infrastructure. After you give the money to the ISP, they just stick it in the pocket. They Arnt the builders.

Why are we fighting the Internals of the internet? the Ones that BUILT what is there?
How long did it take to build up the Cellphone system, even after we watched in on TV, on Hawaii 5-0. 1968? 30+ years. Who remembers ROAMING. Out of service areas? Tech has come along ways but it was the Building the system that took time. NOW we can have the Net build up fairly quickly, and Stomp on it? For doing what is Possible?

REALLY want to Adjust the net? GET the larger corps to QUIT fronting for other companies. Just cause it says Amazon or Walmart, dont mean you are getting it from there.

IF they keep messing around all we are going to have is a GIANT internet MALL.

Lostinlodos (profile) says:

Monopoly time again!

I always cringe when the government wants to break up a monopoly in any field. Because it’s rarely “for the people” and actually “we don’t like you”.

But seriously WTALF:
“ “Finally, there’s Rep. Jayapal’s bill that is pretty clearly designed to just stop Amazon from selling its own goods on Amazon. ”
Uh, I don’t even know how to respond to that.
Think about comparison … so Walmart would sell their Sam’s Cola at… Kroger? Lol.
If Amazon didn’t sell Amazon products on Amazon, the leading online marketplace, how does that help consumers?
Idiots!

Scary Devil Monastery (profile) says:

"Uh, I don’t even know how to respond to that. "

Naked fraud and an attempt to exercise eminent domain, perhaps?

Forced interoperability is a good and valid mechanism when it concerns core infrastructure – a water main, power grid or fiber cable network often becomes a natural monopoly. You literally can’t build multiple versions of it very often. Hence enforced share-lease is a common model for such in europe which results in a great many joint ventures being the usual force of infrastructure expansion.

But this bill, as you note, isn’t about infrastructure. It’s about someone building a storefront on their own land and government then telling that actor they need to let their competitors take up the shelf space.

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