Senate Panel Approves Antitrust Bill Restricting Big Tech Platforms

Senate Panel Approves Antitrust Bill Restricting Big Tech Platforms


WASHINGTON—A Senate panel approved antitrust legislation forbidding the largest tech platforms from favoring their own products and services over competing ones, in an incremental victory for backers of stricter Big Tech regulation.

The American Innovation and Choice Online Act now moves to the Senate floor, where several Senators said they wanted to see additional changes before voting in favor of the measure. Thursday’s vote in the Senate Judiciary Committee, 16-6, showed the bill had bipartisan support, but also raised bipartisan concerns.

The bill “is specifically designed to target a small number of specific companies, most of which are headquartered in my home state,” said

Sen. Dianne Feinstein,

who criticized elements of the bill along with fellow California Democratic

Sen. Alex Padilla.

“It’s difficult to see the justification for a bill that regulates the behavior of only a handful of companies while allowing everyone else to continue engaging in that exact same behavior.”

Despite their reservations, both California senators voted “yes” to advance the bill.

The bill targets dominant tech platforms, including

Amazon.com Inc.’s


AMZN -0.32%

e-commerce site,

Alphabet Inc.’s


GOOG 0.81%

Google search engine,

Apple Inc.’s


AAPL 0.79%

App Store, and

Meta Platforms Inc.’s


FB 1.14%

Facebook. Those companies have been working for months to stop or alter the bill, deploying teams of lobbyists and top executives to Washington. Some have funded advocacy groups that oppose the measure and publicly warned that the bill could disrupt popular services.

Supporters, which include smaller tech companies such as

Yelp Inc.

and

Sonos Inc.,

say the bills will benefit consumers by boosting competition on platforms that are abusing their market power. Senators in favor of the bill say it makes exceptions that will protect features consumers like.

“This bill is not meant to break up Big Tech or destroy the products and services they offer,” said

Sen. Chuck Grassley

(R., Iowa), the top Republican on the judiciary panel. “The goal of the bill is to prevent conduct that stifles competition.”

Nevertheless, lawmakers amended the bill Thursday to address concerns by the industry. One new provision is designed to include large foreign-owned tech platforms such as the popular TikTok app owned by China’s ByteDance Ltd., said Mr. Grassley.

The top Republican on the judiciary panel’s antitrust subcommittee,

Sen. Mike Lee

(R., Utah), said he shared concerns about monopoly power in the tech industry, but worried the bill was written too broadly and could cause “collateral damage.”

“It may actually entrench the very four companies at which it is aimed by creating a strong incentive to simply cease doing any business with third parties,” Mr. Lee said. “This could crush thousands of small businesses and it could actually worsen the state of competition in online markets.”

Sen. Alex Padilla (D., Calif.) voted to advance the American Innovation and Choice Online Act, despite having reservations of elements of the bill.



Photo:

michael reynolds/Shutterstock

Similar legislation passed the House Judiciary Committee last June but has stalled in the lower chamber since, in part because of skepticism among Democratic members from California.

The legislation would make it illegal for the largest internet platforms to unfairly favor their own products and services over those of other businesses that use the platform. It lists several categories of outlawed conduct, including a platform preferencing itself in search results or using another business’ nonpublic data to compete with that same business.

Sen. Amy Klobuchar

(D., Minn.), the bill’s primary sponsor, said the provisions reflect testimony by Sonos and Tile Inc., both tech equipment makers, about how big tech companies made it difficult for their products to work on large platforms. She also pointed to a report in The Wall Street Journal about Amazon accessing data to copy products created by

Amazon


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sellers.

“Time and time again we heard about how these companies abuse their power,” Ms. Klobuchar said. “At some point we have to have rules of the road to make things fair.”

Apple’s hardware, software and services work so harmoniously that it is often called a “walled garden.” The idea is central to recent antitrust scrutiny and the Epic vs. Apple case. WSJ’s Joanna Stern went to a real walled garden to explain it all. Photo illustration: Adele Morgan/The Wall Street Journal

Opponents of the legislation say companies aren’t wrong to profit from platforms they created, and discouraging them from doing so will hamper future innovation.

The companies say the legislative language is so broad that it could outlaw services that consumers and businesses like.

Amazon

has said it may not be able to let other businesses sell on its e-marketplace. Google says it might not be able to feature Google Maps in search results. Apple says the bill could undermine its ability to force third-party apps to get permission before collecting data on iPhone users—a concern

Sen. Ted Cruz

(R., Texas) said he heard personally from Apple CEO

Tim Cook.

Senators backing the bill note that it includes exceptions for platform features that improve functionality or users’ privacy.

The bills’ supporters added more exceptions Thursday. One new provision appears to respond to Apple’s concern by stating platforms won’t be liable for requiring consent before allowing access to user data. Another provision exempts fee-for-service subscriptions, such as Amazon Prime.

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Lawmakers also broadened the scope of platforms covered by the bill to include large foreign-owned internet platforms—an apparent response to concerns that the original bill appeared to apply to put U.S. tech giants at a disadvantage.

In general, the bill applies to companies with a market cap greater than $550 billion and more than 50 million monthly active users that are considered “critical trading partners” for other businesses to access customers.

The Federal Trade Commission would decide which tech platforms meet that definition—a provision that concerned some Republicans. The list is expected to be short and include the largest U.S. tech platforms, such as Google, Amazon, Apple, Facebook, and

Microsoft Corp.

Several Senators said the bill should have been subject to further hearings before Thursday’s vote, and would need to be changed to secure their support on the Senate floor.

Supporters of the bill met with White House officials Wednesday in an effort to get them to support the legislation. The Biden administration hasn’t taken a position on the matter yet.

Write to Ryan Tracy at [email protected]

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Rachel Meadows

Rachel Meadows

Trending topics news writer who enjoys cooking, walking her dog and travel.

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