The U.S. Senate may soon consider the misnamed “American Innovation and Choice Online Act” (S. 2992). Like most bills (think of the “Affordable Care Act”) the effect of this legislation would be the opposite of its Orwellian title. If S. 2992 became law, it would reduce online innovation and consumer choice but dramatically expand the federal government’s control over online commerce.
For example, the bill forbids “big tech” companies (e.g., Facebook, Google, Amazon) from “preferencing,” meaning they would be banned from using their website to promote their own products over similar products by other companies. If the law applied to brick-and-mortar stores federal agents could go into Wal-Mart to make sure Sam’s Cola is not more easily accessible to customers than Coke or Pepsi. The bill would also give government agents authority to regulate how tech companies deal with third-party vendors who use their platforms.
S. 2992’s passage would be an early holiday present to power-hungry federal officials like Federal Trade Commissioner (FTC) Lina Khan. Commissioner Khan is a leader of the “neo-Brandeisians,” named after Supreme Court Justice Louis Brandeis. Brandeis believed that the purpose of antirust was not to promote efficient markets that benefit consumers, but to stop businesses from becoming “too big.” With an approach to antitrust that “big is per se bad,” Khan and fellow neo-Brandeisians are sometimes called “hipster Bradeisians,” as former Treasury Secretary Larry Simmers used to say.
Admittedly, the idea that the left doesn’t like “big business” isn’t really new.
The real problem is that some conservatives, including Senators Josh Hawley, Ted Cruz, Charles Grassley and Representative Ken Buck, have now taken the bait and are supporting S. 2992, despite the fact that it violates free-market principles. These conservatives say they support S. 2992 because they claim the bill would hurt big tech – which they believe has an agenda that is anti-conservative, as well as ending big tech’s ability to silence conservative users on their platforms. However, Sen. Klobuchar, the bill’s sponsor, has said over and over again that the bill does not affect tech companies’ ability to “moderate” (censor) certain content. Yet S. 2992’s conservative supporter’s still claim it would forbid content moderation.
In fact, some conservative supporters of the bill did so at a press conference where Sen. Klobuchar and Rhode Island Representative David Cicilline (sponsor of the House companion bill to 2992), both repeated that the bill as drafted has no effect on social media companies ability to “moderate” content.
Fortunately, the confusion over the bill’s effect on “content moderation” has led some Democratic senators to demand Klobuchar add language to the bill clarifying that S. 2992 is not indented to effect big tech's ability to “deplatform” conservatives and other “deplorables,” and Sen. Charles Grassley has stated that any changes explicitly allowing content moderation will cause the bill to lose Republican support. and thus will not get the 60 votes necessary for cloture.
The interesting thing about a bill that kills innovation in such a straightforward fashion as S.2992 is that it ends up locking in the big market incumbents' market share and making it harder for the smaller business to take their place at the top. Fighting entrenched businesses that have embedded government support is surely a challenge.
Sorry hipster Brandeisians, cronyism is harder to fight with more regulation and bigger government. The best way to fight big companies is to open up competition. Hopefully, gridlock will keep the bill from passing, so that there isn’t a chance to prove Sen. Hawley, Sen. Cruz, and Sen. Grassley wrong.