We’ve been pointing out for a long time now that the main antitrust bill making its way through the Senate has a hidden content moderation trojan horse in it. Indeed, it seems likely the main reason the bill has significant Republican support is that they know the bill will be abused to file vexatious lawsuits over content moderation decisions, attempting to get around Section 230 by claiming the decisions were actually anti-competitive. Senator Ted Cruz has admitted he supports the bill because it will “unleash the trial lawyers” to file lawsuits about content moderation against internet companies.
The Democrats supporting the bill more or less know this. The bill’s author in the Senate, Amy Klobuchar, had a chance to fix these issues, but instead chose to pander even more to Republicans by carving out the finance and telco sectors from the bill’s impact, while leaving in the problematic language that will be abused for content moderation purposes.
As the drumbeat about this problem has gotten louder, it’s good to see four Democratic Senators step up and say that this issue needs to be fixed. Senator Brian Schatz, along with Senators Ron Wyden, Ben Ray Lujan, and Tammy Baldwin, have written a letter to Klobuchar, just asking her to fix this one thing in the bill.
As they note, since (the non-disingenuous…) supporters of the bill keep insisting that it’s not meant to impact content moderation at all, there shouldn’t be any problem with amending the bill to make that absolutely clear.
Our understanding is that you do not intend for the bill to limit content moderation in this way, and we want to work with you to fix this issue. We certainly acknowledge that reasonable minds may disagree about the meaning of this provision, and that is precisely why adding the suggested clarification below to the bill makes sense. We believe that adding the following text to the of
Rule of Construction (Section 5) will resolve the issue by simply spelling out what we understand is our shared intent:
Protection for Content Moderation Practices.—Nothing in section 3(a)(3) may be construed to impose liability on a covered platform operator for moderating content on the platform or otherwise inhibit the authority of a covered platform operator to moderate content on the platform, including such authority under the First Amendment to the Constitution of the United States, section 230(c) of the Communications Act of 1934 (47 U.S.C. 230(c)), or any other provision of law.
That language would be a big improvement. And while it won’t fully stop frivolous lawsuits, it would help get most of them dismissed earlier.
So, now the question remains: will Klobuchar accept this fairly straightforward suggestion? Because if she doesn’t, she seems to be acknowledging the open secret: that many of the Republicans are supporting this bill because they want it to be abused in a manner around content moderation.
Either way, kudos to these four Senators for standing up and asking Klobuchar to do the right thing.
We’ve pointed this out a few times over the past year. The main antitrust bills that are floating around both the House and the Senate only have Republican support because they have a trojan horse hidden in them that will make it much more difficult for the biggest websites to do any moderation on Republican culture war propaganda campaigns. The two major bills, the American Innovation and Choice Online Act (AICOA) and the Open App Markets bill, both have clauses against anti-competitive “preferencing.”
However, as we keep pointing out, this would allow Parler to argue that Amazon, Google, and Apple treated it differently than, say, Twitter, when those three companies chose not to do business with Parler. Parler even made some of these arguments in its lawsuit against Amazon, and while that lawsuit flopped, if these laws passed, it would reopen the issue and allow companies to sue.
A number of Democrat supporters of these bills, and various civil society organizations, including many that we’ve worked with and usually support, keep trying to brush aside this issue, and keep insisting that it won’t really matter. Some are even willing to align with outright bigots who are only supporting these bills for this very reason, because they think getting something passed on antitrust is the bigger issue.
However, the Washington Post has a great op-ed from two academics who understand this issue better than just about anyone else: Jane Bambauer from University of Arizona and Anupam Chander from Georgetown. I highly encourage everyone supporting these bills to read their analysis of how these bills could create a real mess for disinformation online.
They also point to the Parler example, but they also, thankfully, take on the main argument I’ve heard back from friends supporting these bills: that courts would throw out such lawsuits. This, to me, has always been an odd take, since they know how damaging even frivolous lawsuits can be, and how much of a chilling effect even the threat of extensive litigation can cause. And as Bambauer and Chander make clear, here the chilling effects can be significant.
But the bills would hand the makers of services and apps that give free rein to hate speech and disinformation a powerful weapon to use in court: If Apple or Google kicked them out of app stores, or downgraded them in search results, these companies could argue that the decisions weren’t about content moderation at all, but rather market domination.
At the least, such claims would have to be litigated — a costly proposition, with no guarantee of victory. Alternatively, Apple, Google and other companies might become less vigilant about screening out hate speech and disinformation. You can be wary of Big Tech’s market power and still think the implication of these bills for the speech that is spread online is extremely bad.
And as the article makes clear, the idea that these cases would quickly be thrown out is hardly a given, especially after seeing how courts around the country are willing to view issues around content moderation through partisan lenses.
Suppose Truth Social — President Donald Trump’s Twitter rival — becomes a hotbed of election disinformation, vaccine misinformation and racist speech, and Apple decides that it is violating its App Store guidelines, which require app-makers to filter objectionable content. Would Truth Social or an ideological ally sue, arguing that Apple was preferencing its own News app, or its business partner Twitter’s app? Some judges, and possibly a Supreme Court majority, would be sympathetic to such claims. After all, this would represent a difference in treatment between similar apps (though Apple could of course argue that all apps that permit disinformation are treated alike). Sen. Ted Cruz (R-Tex.) is among those who have noticed that these bills could lead to results similar to those of the recently eviscerated Texas content-moderation law. The bill targeting app stores would “make some positive improvement on the problem of censorship,” he said during markup for the bill.
Also, the bills’ authors could make it clear that these laws can’t be used to stop lawsuits related to content moderation choices, but they have deliberately chosen not to (because they know they’d lose the Republican support if they do).
The Klobuchar-Grassley bill does allow companies to defend against lawsuits by demonstrating that their actions were taken to protect safety, user privacy or the security of the platform, but this defense would likely prove inadequate. Apple or Google would carry the burden of proving that its actions were “reasonably necessary” to protect those specific interests. And even showing that the removed app or speech was sexist, racist, antisemitic or Islamophobic would not be enough. The other bill’s safeguards against abuse are even weaker.
The article also notes that while some supporters of the bill insist that Section 230 would protect these bills from being abused to stop moderation choices, that also seems unlikely for two reasons. Under the Malwarebytes case, companies can get around the 230 issue by claiming that the moderation decision was anticompetitive, rather than for legitimate content moderation needs, and then 230 gets taken off the table. Also, that depends on no more changes being made to either Section 230 itself, or how the courts interpret 230 — both of which seems like dubious propositions (unfortunately).
But, really, the 5th Circuit’s decision in the case highlights the fact that it’s not at all likely that courts would toss out these cases. And, importantly, given the size of the penalties under at least one of the laws, it would be risky for companies to not act accordingly.
Note that if the Internet platform loses, the Klobuchar-Grassley bill would subject it to a penalty of up to 15 percent of its U.S. revenue (not just profits), a risk that few companies would be willing to take.
Perhaps some companies are willing to risk 15% of their revenue on judges understanding bad faith litigation, but that’s a huge bet.
And, again, the article notes that the bills’ authors could fix this, and make it clear that these scenarios don’t apply to the bill, but it appears Democratic Senators have deliberately chosen not to, because they know they’d lose GOP support for the bill.
The Klobuchar-Grassley bill authors recognize that it could affect moderating activity by platforms. The bill, therefore, explicitly excludes from its definition of unlawful activity any reasonable actions the platforms take to protect the copyrights and trademarks of others. Unfortunately, actions motivated by corporate responsibility and designed to protect against hate speech, harassment or misinformation don’t receive similar protection.
What’s most frustrating to me in all of this is how supporters of these bills refuse to actually engage on this point beyond insisting that the courts will dump these lawsuits. That’s far from certain. And even if it were true, these are the same groups that often point out the chilling effects of even frivolous, vexatious litigation.
If those groups, and the politicians pushing these bills, really believe in the underlying concepts in the bill there’s a solution: amend the bills to make it clear they can’t be used in these kinds of content moderation situations. If they’re unwilling to do that, it just feels like they’re carrying water for disinformation peddlers and trollish bigots who are eagerly looking forward to using these laws to litigate.
Look: there are very real issues with the state of the internet today, including the amount of power a few companies have. But that doesn’t mean any solution is a good solution. Unfortunately, Senator Amy Klobuchar, whenever given the option, seems to put forth the worst possible plan. It’s mind boggling.
For a while now, Klobuchar, along with Senator Chuck Grassley, have been pushing their American Innovation and Choice Online Act (AICOA). It’s got a fair bit of support, including from companies and organizations I often agree with on the issues. But, this bill has serious problems. Many of us raised concerns about those problems, and even made suggestions on how to fix the problems. There are ways to create a bill that would target the actual bad practices of internet companies. But this isn’t it.
For a few months, Klobuchar has apparently been working on a new and improved version of the bill, which was revealed last night. Somewhat incredibly, it fixes none of the problems people raised. The major change: making sure it doesn’t apply to telcosand financial companies.
I only wish I were joking. Of course, this is the same Klobuchar who, on a different antitrust bill, made sure to carve out her state’s largest employer, Target. So, we get it. Klobuchar cares more about making the lobbyists and specific industries happy than tackling the real problems of her bill. It’s pathetic.
The main “focus” of the bill is that it’s supposed to bar certain large companies from preferencing their own products. So, for example, Yelp has spent over a decade whining that Google showed people the results of its own Local search, crowding Yelp results out of search. The bill is designed to say that companies can’t do that any more. Of course, there are legitimate concerns that this will mean certain companies sending people to very useful products that people actually like will violate this bill. The quintessential example of this: when doing a search on a location, Google can point you to Google Maps. But, under this bill, that would be problematic.
discriminate in the application or enforcement of the terms of service of the covered platform among similarly situated business users in a manner that would materially harm competition;
So, Amazon telling Parler that it violates AWS’ terms of service and booting it off the service? That would not be allowed under this bill. Remember, Parler sued Amazon, and a key part of their initial claims was that because Amazon treated Twitter differently than Parler (which wasn’t true at the time, as Twitter had only just signed a deal to use AWS but wasn’t on it yet), that it was anticompetitive for Amazon to remove Parler. The judge in that case was not impressed, but if AICOA becomes law, suddenly we’re going to see a ton of claims like this in response to moderation choices.
Tons of companies already love to claim that moderation decisions are about harm to competition. Hell, for many years, the main company going after Google for antitrust was a really, really spammy tool called Foundem, that was upset that Google had realized that users hated getting sent to Foundem, and downranked the site. Foundem (apparently funded by Microsoft) spent years insisting this was “anticompetitive” rather than “making search work better by not sending users to spammy sites they don’t want.” But, again, under AICOA, arguments like that are going to have to be considered by judges.
Downranking spammy sites and services, or removing sites that ignores terms of service like Parler, now become competition law minefields.
It’s difficult to see how that’s good for anyone, other than the operators of sketchy sites.
As we’ve noted, everyone in the Senate actually knows this. Because the main reason that Klobuchar keeps this nonsense in the bill and doesn’t fix the language, is because she knows that this is the only way to keep Republicans on the bill. Republicans see this content moderation trojan horse in the bill, and are thrilled with it. Because they think it’s going to allow lawsuits to protect Parler, Truth Social, and their other also ran websites.
Remember, Ted Cruz was so excited about this bill because it would, in his words, “unleash the trial lawyers” to sue Google, Facebook and others for content moderation decisions.
Republicans are supporting this bill because they know it will be used to hit internet companies with all sorts of lawsuits over their moderation decisions.
Of course, it appears that some Republicans worried (or, rather, some telco lobbyists told Republicans) that the law might ALSO result in broadband providers facing the same sorts of nonsense lawsuits. Indeed, part of the original bill could have been read as a kind of net neutrality bill in disguise, because larger ISPs would be barred from similarly “favoring” services over others in a way deemed anticompetitive. And you can bet that some telcos that rely on things like zero rating were worried.
So, that brings us to the major change in this new version of Klobuchar’s bill: she carved out the telcos to make sure the bill doesn’t apply to them. Even though telcos are way more of a competition problem than any online service. Here’s some new language in the bill excluding telcos. It explicitly says that the definition of an “online platform”:
does not include a service by wire or radio that provides the capability to transmit data to and receive data from all or substantially all internet endpoints, including any capabilities that are incidental to and enable the operation of the communications service.
Got it? So, no preferencing. Unless you’re the only broadband player in town. Then, go hog-wild, according to Senator Klobuchar.
Nice work there. That won’t make people cynical at all about the political process.
Of course, once again, this is almost certainly appeasement to Republicans, who, for clear political reasons, want to continue to pretend that telcos are no big deal, and that it’s only the big internet providers who are evil.
It makes no sense at all that Democrats like Amy Klobuchar are playing right into their hands, and giving them everything that they want. But, of course, Klobuchuar has decided for political reasons that she wants to be seen as the senator who took on big tech for her next presidential campaign. And, if that means handing Republicans all the tools they need to file a ton of vexatious lawsuits to try to force companies to enable more hate speech and propaganda, so be it.
It’s pure cynical opportunism.
Oh, and also, it looks like financial firms got a little carve out as well. The original bill said the term online platforms would apply to websites that “facilitates the offering, advertising, sale, purchase, payment, or shipping of products or services…” The new version of the bill covers those that “enables the offering, advertising, sale, purchase, or shipping of products or services…”
So, the same list minus payments.
That’s two giant industries — telcos and banks — that were able to secure their carveouts. But, no effort to fix any of the actual problems of the bill.
With the original bill, NERA Economic Consulting had written up an analysis of companies that would be considered covered platforms in the bill, noting that it directly would hit just six: Google, Apple, Facebook, Amazon, Microsoft, and likely TikTok. However, it also noted that there were 13 other companies that were below the size thresholds in the bill, but close enough that they would likely “take measure to avoid significant risk incumbent upon exceeding the thresholds.” Notably, many of those included broadband companies and financial companies. By my count, the new carve outs in the bill likely cut that list of 13 by at least 7.
It’s possible that some of the others might be excluded as well, though I’m not as sure. Still, it seems pretty clear that these new carveouts were directly because of lobbying by these firms that didn’t want to be included, despite the fact that all are arguably much more problematic, and have much less readily available competition than the companies targeted by the bill.
It’s enough to make one think that senators like Klobuchar don’t really care about doing the right thing at all. They just want to be seen as doing something.
Is there a contest in the Senate to see who can propose the highest number of unconstitutional bills? You might think that the leader in any such contest would have to be a crazed populist like a Josh Hawley or a Ted Cruz, but it seems like Senator Amy Klobuchar is giving them a run for the money. Last summer, she released a bill to try to remove Section 230 for “medical misinformation,” as declared by the Ministry of Speech Director of Health and Human Services. We already explained the very, very serious constitutional problems with such a bill.
In some ways, it’s an improvement on the health misinformation bill, in that she’s finally realized that for any bill to pass 1st Amendment scrutiny it needs to be “content neutral.” But… it’s not. It claims that it’s taking a “nudge” approach — popularized from Cass Sunstein and Richard Thaler’s 2008 book of that name. But the whole point of “nudges” in that book is about small tweaks to programs that get people to make better decisions, not threats of government enforcement and regulations (which is what Klobuchar’s bill does).
The bill starts out fine… ordering a study on “content-agnostic interventions” to be done by the National Science Foundation (NSF) and the National Academies of Sciences, Engineering, and Medicine (NASEM) to look for such content-agnostic interventions that would “reduce the harms of algorithmic amplification and social media addiction.” And, sure, more research from independent and trusted parties sounds good — and the NSF and NASEM generally are pretty credible and trustworthy. Perhaps they can turn up something useful, though historically, we’ve seen that academics and government bureaucrats who have no experience with how content moderation actually works, tend to come up with some ridiculously silly ideas for how to “fix” content moderation.
But, unfortunately, the bill goes beyond just the studies. Once the “initial study report” has been delivered, the bill then tries to force social media companies to adopt its recommendations, whether or not they’ll work, or whether or not they’re realistic. And… that is the unconstitutional part. You can call it “content-agnostic” all you want, but as soon as you’re telling companies how they have to handle some aspect of the editorial discretion/content moderation on their sites, that’s a 1st Amendment issue. A big one.
The bill requires the Commission it creates to start a rulemaking process which would release regulations for social media websites. The Commission would determine “how covered platforms should be grouped together” (?!?), then “determine which content-agnostic interventions identified in such report shall be applicable to each group of covered platforms…” and then (play the ominous music) “require each covered platform to implement and measure the impact of such content-agnostic interventions…”
And here’s where anyone with even a tiny bit of trust and safety/content moderation experiences throws back their heads and laughs a hearty laugh.
Content moderation is an ever-evolving, constantly adapting and changing monster, and no matter what “interventions” you put in place, you know that you’re immediately going to run into false positives and false negatives, and more edge cases than you can possibly imagine. You can’t ask a bunch of bureaucrats to magically come up with the interventions that work. The people who are working on this stuff all day, every day are already trying out all sorts of ideas to improve their sites, and through constant experimentation, and adaptation, they keep gradually improving — but it’s a never-ending impossible task, and the idea that (1) government bureaucrats will magically get it right where companies have failed, and (2) a single mandate will work is beyond laughable (even excluding the constitutional concerns).
Also, the setup here seems totally disconnected to the realities of running a website. “Covered platforms” will be given 60 days to submit a plan to the Commission as to how they’ll implement the mandated interventions, and the Commission will approve or disapprove of the plan. And any changes to the plan need to also be approved by the Commission. Some trust and safety teams make multiple changes to rules all the time. Imagine having to submit every such adjustment to a government Commission? This is the worst of the worst kind of government nonsense.
If companies fail to implement the plans, as the Commission likes, then the bill says the websites will be considered to have committed “unfair or deceptive acts or practices” enabling the FTC to go after them with potential fines.
The bill has other problems, but seems to just be based on a bunch of tropes and myths. It would only apply to sites that have 20 million active users (why that many? who the hell knows?), despite the fact that over and over again we’ve seen that laws that target companies by size create very weird and problematic side effects. The bill is nonsense, written by people who don’t seem to understand how social media, content moderation, or the 1st Amendment work.
And, bizarrely, the bill might actually have some support because (astoundingly?!?) it has bipartisan backing. While it’s a Klobuchar bill, it was introduced with Senator Cynthia Lummis from across the aisle. Lummis has, in the past, whined about social media companies “censoring” content she wanted to see (about Bitcoin?!?), but also was a co-sponsor of a bill that would require social media companies to disclose when the government pressures them to remove content, which is kinda funny because that’s what this bill she’s sponsoring would do.
I’m all for doing more credible research, so that’s great. But the rest of this bill is just unconstitutional, unrealistic nonsense. Do better, Senator.
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.
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.
Senator Amy Klobuchar really is taking to her role as the Senator most eager to set up a Ministry of Truth in the government. Klobuchar has always been terrible on tech/internet issues, but she’s really taken it to a new level in the past year or so. Over the summer, she released a blatantly unconstitutional bill that literally would empower the Director of Health & Human Services to declare what counts as health misinformation and make social media websites liable for it (imagine how that would have played out under a Trump administration — because Klobuchar apparently can’t remember that far back).
Last week, she sent a ridiculous letter to Mark Zuckerberg demanding he explain Facebook Meta’s handling of misinformation regarding the election. A dozen other Senators — including many who have unfortunately long histories grandstanding against the internet — signed on to the letter as well.
We write to express concern regarding Meta?s role in responding to the rise of online election- related misinformation and disinformation in the United States and the accompanying rise in divisive, hateful, and violent online activity that undermines confidence in the integrity of our elections. The false claim that the 2020 presidential election was stolen fueled a violent and deadly insurrection at the U.S. Capitol on January 6th. The misinformation and disinformation that led to insurrection as well as planning for the insurrection took place largely on online platforms, including Facebook.
Just imagine how much people would freak out if a Senator sent this kind of letter to Fox News — whose false claims about this and many other things have, according to multiple reports, been significantly more responsible for helping such misinformation to be spread. People would, correctly, note the significant 1st Amendment concerns of legislators suggesting that the company did not “properly” handle their editorial discretion.
The letter goes on to demand answers to seven questions — which, again, if equivalent questions had been sent to Fox News, people would rightly freak out about.
Why did Facebook disable controls after the election ? including algorithmic controls to help stop the spread of disinformation and controls to limit the growth of groups that spread disinformation about the election results?
Why did Facebook disband its Civic Integrity Team as a standalone unit and disburse its employees to other teams? When was the decision to disband the team made and who made that decision?
What department or division of Meta is currently responsible for overseeing efforts to prevent the spread of election-related misinformation, disinformation, and violent rhetoric for Meta-owned platforms? How many full-time employees does this department or division have that are dedicated to tracking and countering election-related threats, including in non-election years?
Who is the senior-most Meta employee that directly oversees that department or division?s efforts?
What steps is Meta taking to ensure that Facebook users cannot evade the company?s safeguards to continue promoting claims that undermine election integrity and serve to intimidate voters and election workers?
How many times in the last year has Facebook proactively forwarded information concerning threats to election workers or election officials to relevant law enforcement organizations?
What steps is Meta taking now to protect the integrity of future elections from the spread of misinformation and disinformation, as well as to address violent threats against election officials and workers?
I mean, imagine sending a letter to Lachlan Murdoch and asking him what Fox News is doing to “protect the integrity of future elections from the spread of misinformation and disinformation.” People would be furious about such an intrusion by government into the editorial practices of an organization. So why is it okay to do it with Facebook?
Even worse, this only helps to add more fodder to the grifter-brigade of Trumpists who are constantly filing silly lawsuits claiming that government demands to clean up misinformation and disinformation online somehow makes those companies state actors (which would then deny them the ability to basically do any moderation at all). Thankfully courts have been able to reject the silliest of these lawsuits so far, but the more that Senators like Klobuchar pressure companies to moderate in the way she wants them to, the stronger argument those grifters will have.
In other words, the only likely end result is creating a much worse situation. Grandstanding may be fun for Klobuchar and other Senators like Richard Blumenthal. It may get them headlines that are useful for their next campaign, and it may get them huzzahs from ultra-partisans online, but it’s so incredibly short-sighted and backwards thinking. Stop this nonsense.
If you want to deal with misinformation, come up with an actual plan to counter it, and stop looking to ignore the 1st Amendment.
Karl wrote a bit about how the new antitrust bill from Amy Klobuchar and Tom Cotton pretends that the only industry that has competition issues is the internet industry — despite evidence suggesting other industries are much worse off — and briefly mentioned the fact that their bill conveniently excludes Walmart and Target. But the setup of the bill and those particular exclusions are so nefariously done, and so obviously corrupt, that they deserve a second post to call it out.
First off, when the House version of this bill came out, we highlighted that the $600 billion threshold seemed curiously specific, since it seemed specifically drawn just above a ton of politically powerful companies — including Walmart, Disney, AT&T, Verizon, Visa, Mastercard, JP Morgan Chase, Disney, Bank of America and others. But notably the House version of the bill would put down the $600 billion line as a marker, and if those companies reached that threshold, then they too would be subject to the same rules, and prevented (or, significantly hindered) from buying other companies.
And that’s where the Senate version is so nefarious. Under the terms of the Klobuchar/Cotton bill, it only applies to companies who are over the $600 billion line on the day the bill is signed. In other words, while the House version would eventually impact Walmart (largest employer in Tom Cotton’s state) and Target (largest employer in Klobuchar’s state), Klobuchar and Cotton conveniently changed the rules in the bill so that they would not impact the biggest companies in their home states.
There is no way to look at that other than as corrupt.
And, as Pat Hedger points out, Walmart has been growing like crazy over the last five years or so (which seems odd, considering we keep hearing that Amazon has “monopolized” commerce and is driving out all the competition):
So, as I type this Walmart is valued at a little over $400 billion. That might seem far off from $600 billion, but as recently as 2016 Walmart was valued below $200 billion. $600 billion in the next few years is not at all out of the question. And if this bill passes, it won’t matter for Walmart.
So both of those companies — which compete fairly directly with Amazon — have been growing like gangbusters, and their own Senators are introducing a bill that will block Amazon from acquiring companies, but has a built-in exemption that keeps both of these competitors from being limited in the same way Amazon is being limited.
Is there honestly any way to view this setup other than out and out corruption by Klobuchar and Cotton? Protecting the largest employer in each of their states by shackling the major competitor to each, and making sure their own companies are exempted from the law no matter how large they grow?
So we’ve noted a few times that the recent Congressional fixation on “big tech monopolies” is weirdly myopic. As in, the United States is absolutely jam-packed with heavily monopolized sectors including banking, telecom, energy, and air travel that simply aren’t seeing anywhere near the same level of hyperventilation. While it’s true that giants like Facebook, Google, and Amazon are engaged in dodgy behavior at unprecedented scale, most of the “solutions” bandied about so far are oddly selective, sometimes harmful, and routinely performative.
For example, back in June we noted how the big “antitrust reform” bills being proposed in the Senate ignored entire industries and had major carve outs that didn’t make much sense. Several of the bills, for example, applied only to companies that made more than 50 million monthly active U.S. users and have a market cap of over $600 billion. They effectively ignored that countless other companies (Visa, Walmart) or industries (telecom) even exist, which is…odd.
Amy Klobuchar and Tom Cotton formally introduced their Platform Competition and Opportunity Act (the counterpart to a similar bill proposed in the House) last Friday. The bill, purportedly, helps thwart companies that capture and kill their competitors via acquisition:
“Big tech firms have bought up rivals to crush their competition, expand their market share, and to harm working Americans,” said Cotton in a statement. “Sen. Amy Klobuchar and I have a bipartisan bill to block these killer acquisitions.”
Existing antitrust standards require that regulators prove that a deal is anticompetitive if they want to block it. Given our fairly broken court system, significant corruption, and steadily eroded antitrust standards, that’s often ridiculously difficult even in obvious cases of harm. This bill would require that tech giants (and only tech giants) have to prove a merger helps competition before it will be approved. But there are a few problems with such a narrow focus. This aggressive destruction of competitors is how countless U.S. business sectors operate, but nobody is doing a damn thing about most of those.
The bill’s definition is so narrow it won’t even apply to sectors like telecom, where crushing competition via acquisition has been a 30 year favored pastime. Or companies like Target or Walmart, despite the fact they compete via the, you know, internet. The bill only applies to companies that as of the bill’s signing have a market cap of $600 billion, meaning that non “big tech” companies who grow overlarge later wouldn’t be covered. Which is, again, a weird thing to include if you’re genuinely concerned about corporate and monopoly power:
“Two companies that are currently under the $600 billion line and thus exempt from the bill are mega-retailers Target and Walmart. These companies are both worth hundreds of billions of dollars, and their e-commerce platforms are growing at a faster rate than Amazon’s. But under the Klobuchar/Cotton law, it wouldn’t matter if Target and Walmart overtake Amazon?they would be immune from this new antitrust action, as long as they are small enough on the day the bill is signed.”
Target is headquartered in Klobuchar’s home state (Minneapolis, Minnesota). Walmart is headquartered in Cotton’s home state (Bentonville, Arkansas). Surely that’s a coincidence, though.
So why are these proposals so weirdly narrow? In part because the only “monopolies” the discourse cares about right now are of the “big tech” variety. The few Democrats who do care about monopolization see an opportunity to leverage GOP outrage to push some fairly narrow bills under the idea that narrow and weird progress is better than no progress at all. The problem? The GOP’s beliefs on “antitrust reform” are hugely performative, and they historically never show up when it’s time to vote for actual reform.
The press and much of the discourse can’t admit it, but the GOP doesn’t genuinely care about monopolization or unchecked corporate power. There are 40 years of documented evidence showing how a primary party platform has been to enable and protect monopolies in the telecom, banking, and energy sectors.
What the press and punditry tells you is happening: the GOP, outraged over censorship and the unchecked power of Silicon Valley technology giants, is interested in good faith reform of the sector and its business practices.
What’s actually happening: the GOP is mad at a bunch of California social media executives for belatedly and sloppily cracking down on race-baiting propaganda, a cornerstone of party efforts to retain power in the face of shifting demographics and a sagging electorate. So they’ve decided to pretend they’re being “censored” by “big tech” to animate the base, and are seeking out any leverage they can find to bully tech platforms into carrying their beloved propaganda. They’re also being pressured by AT&T and Rupert Murdoch, who are eager to erode big tech’s advertising revenue market share.
That’s not to say that a lot of what Google and Facebook have been doing isn’t hugely problematic. The recent revelations of Google paying both wireless carriers and smartphone vendors not to compete in the app store space is pretty cut and dry. And the recently unredacted portions of the AG lawsuit against Google (oddly ignored under the din of Facebook news) also shows a company that was clearly and aggressively anticompetitive on the ad front. But again, most of these are behaviors the entirety of Congress are perfectly ok with across numerous other industries. We’ve done virtually nothing about, say, Comcast, for example.
But I’m not entirely sure that corrupt and gridlocked Congress, at least this incarnation of it, is actually capable of fixing any of these these problems in big tech or elsewhere. The bills we’ve seen so far offer some inconsistent help, but even here I’m doubtful that GOP and centrist Democratic policymakers have the stomach to support even piecemeal reform. I think we’ll see several years of posturing on “big tech,” followed by very few if any competent solutions out of Congress. Any change that arrives will likely come via lawsuit, the Lina Khan FTC, or in response to bad press. And given the limitations of all of those avenues, that’s probably not going to be enough.
In the wake of data breaches at Target and Equifax where hackers compromised the personal information of millions of Americans and the Cambridge Analytica scandal, customers and policymakers are increasingly worried about the privacy and security of our personal information online. Unfortunately, policymakers often confuse these privacy and data security concerns with broader anti-tech fervor against America’s leading technology businesses. But simply put, kitchen-sink anti-tech responses could exacerbate, not ease, concerns regarding data privacy and security.
Sen. Klobuchar’s American Innovation and Choice Online Act proposed in the Senate this month provides a clear example of how “solutions” driven by animosity towards “Big Tech” could undermine consumer privacy. Lawmakers who are currently pushing antitrust proposals to attack tech businesses are creating a scenario where companies might be unable to undertake the privacy and security features that their consumers trust and rely on.
This latest legislation would undermine existing privacy features and lead to more risky sharing with third-parties which has been at the heart of many privacy scandals. By making it illegal for the tech giants covered by the law to “restrict or impede” a business user’s access to data created through the platform or to limit portability, the result is simple—this will likely undermine companies’ attempts to improve consumer privacy such as Apple’s new App Tracking Transparency. In most cases, this bill also requires companies to share their data with rivals, even those that might have ill-intentions against the company, its consumers, or even the United States.
Thanks to the requirements in the American Innovation and Choice Online Act, malicious businesses, including foreign companies, could exploit its data portability loophole and gain access to user information. It opens up businesses to the very actions at the heart of other previous data privacy scandals and dilutes their ability to respond with what consumers want—better security and privacy options. And as a result, Klobuchar’s antitrust proposal would likely harm users’ privacy online and create more harm to consumers than the current tenuous claims about tech giants’ market behavior.
This bill won’t just harm consumer privacy, it’ll harm small businesses to boot. Under the Klobuchar bill, Amazon, Google, Microsoft, and Apple would not be able to limit the use of data by those with questionable or unethical data practices and would be greatly limited in their ability to remove fraudulent apps or other awful actors from their app stores.
These companies would generally have two options: either accept all sellers into their phones and app stores, regardless of poor data privacy and security standards, distasteful products, and customer service quality, or end these programs altogether to avoid accusations of self-preferencing and significant consequences associated with it under Klobuchar’s bill.
Both options would mean consumers likely lose the benefits of knowing that only approved apps can access their data, while developers of these apps and other small businesses that use these services would not benefit from the consumer trust these marketplaces currently provide.
The interoperability requirements of the bill also fail to truly provide the users themselves with the increased options. Instead, they make user data and to whom it can be ported further subject to the decisions of companies and third-parties. New opportunities for data portability between platforms can provide users more control and lower the cost of switching between services. Take the Data Transfer Project, which allows users to choose to transfer certain data like photos between project member services. This gives users more options for where they can choose to keep such information. But the Klobuchar proposal structurally doesn’t help users and would require companies to provide portability and interoperability to other companies,not to the users themselves.
Proponents of Klobuchar’s bill will likely point out that the bill establishes an affirmative defense to avoid these requirements if it would undermine privacy. However, this still would not solve all the concerns. Companies that pursue that route would face a high burden in court and the high costs associated with litigating such a case. As a result, many companies will favor compliance and handing over consumer data rather than risk the penalties if an affirmative defense fails, even if they believe consumer privacy may ultimately be undermined. In fact, the inclusion of an affirmative defense wouldn’t even be sufficient to overcome the additional privacy problems that Klobuchar’s bill would create.
Rather than resolving data privacy concerns, antitrust proposals like Senator Klobuchar’s could make keeping our information safe online an impossible task for tech companies. Policymakers should not have consumers and small businesses pay an unfair price and lose privacy protections just so they can go after big tech companies.
Jennifer Huddleston is Policy Counsel at NetChoice where she focuses on emerging technology issues like privacy, competition policy, and intermediary liability.
There is a reason that the Constitution contains the provision, “Congress shall make no law [?] abridging the freedom of speech.” And this new bill proposed by Senator Klobuchar (who really should know better) gets at the heart of it. Because what her bill would do is make a law that, at its core, pointedly interferes with freedom of speech by allowing the government to penalize certain expression. And there is absolutely no reason to believe that its choices for which speech to favor will be sound and healthy ones for society. In fact, given the performance of the previous presidential administration, there’s plenty of reason to believe the result would be the exact opposite.
The mechanics of this interference are fairly straight forward. Her bill, “The Health Misinformation Act of 2021,” would condition Section 230’s platform protection to apply only to platforms that moderate user content as the government has decreed they should moderate it. The constitutional problems with this scheme should thus be readily apparent: First, it directly violates platforms’ First Amendment rights to moderate user content as they see fit by effectively forcing them to moderate content as the government has decided they should, lest they risk the loss of a critical statutory protection they otherwise would have had. Secondly, the bill inherently allows the government to put its thumb on the scale of deciding which points of view are the allowed ones and which are the ones subject to legal penalty, which obviates freedom of speech since some ideas are obviously no longer effectively free to be expressed if they can attract a censorial government-induced penalty.
The Klobuchar bill would like to pretend that the means somehow justify the ends. The government certainly has a legitimate interest in keeping the population alive and healthy, so it’s not an inherently corrupt goal she’s trying to further with this bill. She just wants to suppress medical misinformation that has been prolonging the pandemic.
But there’s nothing about the bill that confines it to such benevolent purpose. There can’t be, because that’s not how government power works, which is why we have the First Amendment because we always need to be able to speak out against the government when it gets things wrong.
And we know it gets things wrong. It has gotten things wrong even just with respect to this particular health crisis that the bill is supposedly limited to. At best it made innocent mistakes, like when it discouraged masks early on in the pandemic. But then there were people in the highest offices of government touting hydroxychloroquine snake oil and discouraging social distancing. There are still people in government discouraging vaccines. How can we possibly have a law where the government gets to decide what speech is favored or not when the government itself has, even within the very same health crisis that this bill is supposedly limited to, been so conspicuously unable to reliably make those choices competently? This crisis has already outlasted one administration, and while this one might like to keep people alive with credible, scientific information, the last one did not, and who knows what might be in store with the next one. But this bill would empower a Trump Administration as much as a Biden Administration to take away the right and ability of the public to speak out against its mistakes, no matter how deadly they may be. Because a government that can force platforms to only allow, for example, pro-vaccine messages on its systems can just as easily disallow them as well. And if it does, people will die.
Furthermore, if a bill like this could be allowed for this crisis, it could be allowed for any. The government can always articulate some reason for why free expression needs to be curtailed. And throughout history it has regularly tried. A law like this, if it could get on the books, would signal it to keep trying on every policy issue that can possibly bear on our lives and the security and stability of our country ? which is effectively all of them. Because today it’s health misinformation the government is unhappy about. Tomorrow it could be elections. Policing. Terrorism. The draft. Even potentially something as banal as tax policy. There’s always a reason the government can cite for why society should not be exposed to ideas out-of-step with what it has decided are the better ones.
But it’s the people’s job to decide, not the government’s. Per the constitution, it’s not allowed to be the government’s job. The Founders got the government out of the business of choosing which views could be permitted which could be punished with its “make no law” admonishment because there is no way for the government to pick the winners and losers in the marketplace of ideas and not risk serious damage to discourse, and with it the democracy that depends on it.
And everyone in government needs to remember that.
