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Senate committee approves bill limiting Big Tech's power over marketplaces

Taxing Big Tech
Posted at 2:41 PM, Jan 21, 2022

The Senate Judiciary Committee voted 16-6 on Thursday to advance a bill limiting the way big companies like Amazon, Apple and Google do business.

The American Innovation and Choice Online Act targets a practice known as self-preferencing.

"Self-preferencing is mainly intended to describe situations where, if you're a merchant selling a product through an e-commerce platform, and that e-commerce platform is a competitor of yours who offers the same product, the platform somehow induces the consumer to have a preference for its own product," said Tad Lipsky, an assistant professor at George Mason University.

"It's really easy to find examples of that tension," Lipsky continued. "For Amazon, it could be any of a whole range of products that they offer themselves. Google, same thing. There are a lot of e-commerce searches on Google sites that can relate to products that Google offers."

The bill does not identify any major companies by name. It says any new rules will apply to companies with at least a billion monthly users, a list which would include companies like Amazon, Google and Meta, the parent company of Facebook.

In 2021, Amazon and Meta were two of the top three companies in terms of spending money to lobby Congress, according to Sen. Amy Klobuchar, who spoke at Thursday's hearing.

"They are never going to like this bill," said Sen. Klobuchar. "When companies take them on, they have, for decades, formed an impenetrable shield. They're making a lot of money. They want to maintain and profit and keep their positions as monopoly gatekeepers."

The major tech companies did not comment on Thursday's hearing, but most have raised objections to the legislation moving through Congress.

Amazon has warned third-party sellers that they might be kicked off the marketplaces if the legislation passes.

Sen. Ted Cruz of Texas said during the hearing that Apple CEO Tim Cook called him personally to talk about the bill for more than 40 minutes.

Cruz, and several other senators, said they were advancing the bill for a full Senate vote with the knowledge that more amendments will be made.

"This bill may become law without there ever having been a public hearing about how these particular provisions are supposed to operate," said Lipsky. "They're very extensive, complex provisions. It could lead to a tremendous amount of disruption and intervention in these companies' business, and nobody has established by the usual legislative procedures that there's a need for that to happen."

It's not clear when, or if, the bill will make it onto a crowded Senate calendar for a vote.

If it passes in the Senate, it would still have to clear some hurdles in the House before becoming law. But it has enjoyed some measure of bipartisan support throughout the process, a rarity in an often-divided Congress.

"It's nice and refreshing to see something resembling real debate on substance," said Sen. Cruz. "It's something we as a committee, and we as a Senate, ought to do more often."