The Senate bill that has Big Tech scared

If you want to know how worried an industry is about a piece of legislation, you can use apocalyptic predictions. Big Tech is troubled by the American Innovation and Choice Online Act.

The bill is intended to prevent dominant online platforms like Apple and Facebook from giving themselves an advantage over other businesses that must go through them to reach customers. One of the antitrust bills that was voted out of committee by a strong bipartisan vote may be the best way to stop tech companies from abusing their power.

“It is the ball game,” says Luther Lowe, senior vice president of policy at Yelp and a longtime Google antagonist. “That’s how these guys stay big and relevant. If they can’t put their hand on the scale, then it makes them vulnerable to small and medium-size companies eating their market share.”

The bill, which was introduced by the top Democrat and Republican on the Senate Judiciary Committee, would be a disaster for the American consumer according to the tech giants and their lobbyists. In an ongoing publicity push against it, they have claimed that it would ruin search results, bar Apple from offering useful features on iPhones, force Facebook to stop moderating content, and even outlaw Amazon Prime. It is all pretty alarming. Is it true?

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The legislation says that a company that controls a marketplace shouldn't be able to set special rules for itself in that marketplace because competitors don't have a realistic place to go. Few online retailers can make a living if they are not listed on Amazon, and no business can afford to be left out of a search index. The bill prohibits self-preferencing by platforms that hit certain size thresholds. It would mean that Amazon can't give its in-house branded products a leg up over other brands when someone is shopping on its site, and that it can't choose to give YouTube links when someone does a video search unless those links are present.

It's difficult to say what the law would do, because it's quite a bit vague. The Federal Trade Commission is given the power to turn broad provisions into concrete rules. The FTC, Department of Justice, and state attorneys general have the power to file lawsuits against companies that violate those rules. The Biden administration's support for the bill was endorsed last week by the DOJ. Federal judges have ultimate say over what the law means, as rules and enforcement actions end up being litigated in court.

There is a lot of uncertainty about how the law would play out. Tech companies have warned of the uncertainty.

The law would kill Amazon Prime. More than 150 million Americans are members of Prime. A lot of people might not want to lose their two-day shipping. If you have to pay a subscription fee, it's not really free.