Big Tech: Internet changes for tech giants under US antitrust proposal

Big Tech
Big Tech: Internet changes for tech giants under US antitrust proposal

The legislation comes amid a wave of resentment toward Big Tech but may ultimately hurt consumers by allowing less efficient firms to gain in the marketplace

The antitrust overhaul package unveiled in Congress targeting Big Tech, if enacted, could have far-reaching effects on how people use the internet and on America’s biggest and most successful companies.

Due for a committee vote on Wednesday, the five bills could pave the way for a reorganization or breakup of giants such as Google, Facebook, Apple and Amazon while reshaping the entire internet-ecosystem.

From operating a platform for third parties while offering competing services on those platforms, the measures would stop Big Tech giants dealing a major blow to the likes of Apple and Amazon.

From prioritizing their own products or services, with Google clearly in mind, lawmakers also are seeking to ban Big Tech firms.

Another measure would require data “portability” and “interoperability,” which could make it easier for people to quit Facebook, for example, while keeping their data and contacts.

From acquiring competitors under the package, the Big Tech firms additionally would be barred, which would also add funds for antitrust enforcement.

The legislation stems from the failure of antitrust enforcement in the US and elsewhere to make a dent in the dominance of major Big Tech firms, said, Fiona Scott Morton, a Yale University professor and former US official who has written extensively on Big Tech.

“This is regulation, it’s not antitrust anymore”, Morton said.

Apple might have to sell or shut down its music service so that it doesn’t discriminate against rivals such as Spotify, if the bills are enacted, she noted.

“Apple would have to choose”, she said.

An interoperability requirement “would be very profound for consumers because it would let people join social networks other than Facebook and (Facebook-owned) Instagram and stay in contact with their friends”, Morton noted.

The package comes amid signs of a more aggressive posture by Washington against dominant tech firms, including President Joe Biden’s nomination of Lina Khan — a prominent advocate of breaking up Big Tech — to head the Federal Trade Commission, one of the agencies charged with antitrust enforcement.

In addition to the Democratic leadership, signalling a likelihood of passage in the full House of Representatives, the House Judiciary Committee has scheduled a vote Wednesday on the package, which has some support from Republicans. The fate in the Senate is less clear.

The measures come following a 16-month investigation in the House led by antitrust subcommittee chairman David Cicilline which concluded that Big Tech giants were abusing their dominant positions and had too much power in the economy.

Christopher Sagers, a Cleveland State University professor specializing in antitrust law, said the package represents a radical approach to dealing with Big Tech firms’ growing power.

The bills “would make the platforms operate more like airlines or utility companies, which have to provide their services to anyone who wants them, and not give anyone (or themselves) discriminatory advantages”, said Sagers.

“These laws also could bring an end to some products that are very popular”, he added.

“I’m not sure how Apple could continue even selling its own mobile software, for example, if iOS devices or the App Store were denominated ‘covered platforms,’ and there could be consequences for products like Amazon Prime, Google Maps, books digitized in the Google Books project, and who knows what else”.

But Sagers said the impact might not be bad in the long run because “markets rearrange themselves and new competitors turn up to replace them. But it is to say that these laws seem risky and I find their consequences hard to predict”.

Other analysts offered stark warnings against unforeseen consequences of upending the massively successful firms on which many consumers rely in their daily lives.

Iain Murray, a senior fellow at the Competitive Enterprise Institute, said the measure might mean a firm such as Apple would need to shut its App Store, ship “blank phones” without any apps, or spin off its phone division.

“For the most part, the average consumer will see her user experience severely degraded”, he said in a statement.

According to Aurelien Portuese of the Information Technology and Innovation Foundation, a think tank which often reflects the industry’s views, the legislation mirrors Europe’s Digital Markets Act and is likely to “distort” competition.

Portuese said the legislation comes amid a wave of resentment toward Big Tech but may ultimately hurt consumers by allowing less efficient firms to gain in the marketplace.

“Consumers may no longer be able to benefit from large companies’ economies of scale”, Portuese said in a statement.

Analyst Olivier Blanchard at Futurum Research said in a blog post, the legislative package “reveals a profound lack of practical understanding of how the tech industry operates, and needs to operate, in order to remain competitive, relevant, profitable and innovative”.

Do Big Tech companies hold too much power? You could argue that, sure.

“But if the objective is to keep very large, very powerful companies in check, Congress could approach the problem by establishing guardrails that protect consumers and competition without taking a wrecking ball to an entire system”.

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