The proper and long-recognized goal of antitrust enforcement is to protect consumers. Today, the a new bipartisan strain of thinking suggests that big business is inherently evil—never mind the myriad benefits that vertical integration and economies of scale can offer consumers. The American Innovation and Choice Online Act (AICOA), which some lawmakers are considering reintroducing, is one bill that embodies this wrong-headed approach to competition policy.
Sponsored by Senator Amy Klobuchar (D-Minn.), AICOA targets big tech companies, such as Amazon, Apple, Google, Facebook, and Microsoft, for their allegedly anticompetitive behavior. Far from benefitting consumers, AICOA would introduce arbitrary standards and cumbersome regulations that create an environment of perverse incentives, stalled innovation, shrunken consumer choice, and sundry inconveniences.
Structural defects aside, AICOA’s primary failing was its unapologetically ambiguous language. Rather than utilizing clearly defined terms to communicate the bill’s intentions, its writers resorted to open-ended formulations such as “materially harm,” providing ample opportunity for regulators at the Federal Trade Commission (FTC) to publish guidelines determining how the law would apply. Just like its predecessor (the Biden FTC) the Trump FTC does not seem to possess a sufficient degree of institutional focus or capacity for responsible antitrust enforcement to be trusted with such power.
In addition, the original AICOA sought to prevent large platforms from engaging in self-preferencing, the practice of using one’s own platform to promote one’s own products. Google Maps is one of the top results in Google search rankings, and Apple preloads its iPhones with Apple apps like FaceTime and iMessage. AICOA would have prevented platforms from prioritizing their own products in search results and from using third-party sales data to alter the types of products they offer.
Considered in the abstract, this restriction might seem to promote platform neutrality; however, self-preferencing is a common business practice that often benefits consumers. Supermarkets, drugstores, and retailers self-preference their products. Despite the recognized benefits of the practice, AICOA presumes that it is a transgression when engaged in by Big Tech.
Moreover, AICOA’s emphasis on enforcing platform openness for the benefit of consumers ignores the fact that having a wide range of choices is not the only factor that matters to consumers. Indeed, consumers do not always want maximal choice. According to an article from the Cato Institute, “[c]ustomers seek out a bundle of services that provide the best user experience. This might include accessing a diverse choice of products, yes. But consumers want a responsive platform without glitches, trusted payment and review systems, accurate searches, speedy access to useful information, and in some cases, privacy protections.” For example, although Amazon accepts fewer new sellers than eBay, Amazon can offer consumers a “bundle” of convenient services such as a streamlined payment method and Amazon delivery.
Regulations that force platforms to become more inclusive can also sacrifice security and stability. Many consumers rely on platforms like Amazon, the App Store, and Google Play to vet third-party sellers or app developers. One of the benefits of Amazon is its secure payment system, which centralizes payments and keeps user data from potentially unreliable third-parties. AICOA could force Amazon to share sensitive billing information with less secure third-party sellers. Furthermore, platforms such as the App Store and Google Play have become popular to no small extent because of their intensive vetting processes. Although these platforms do not offer as much variety as their rivals might, consumers benefit from the knowledge that the apps they download are, in the vast majority of cases, malware-free.
Perhaps most worryingly, AICOA would hold back innovation. Since 2022, the pace of advancement in America’s digital economy has only accelerated. Thus far, the U.S.’s relatively uncluttered digital regulatory environment has allowed American tech firms to innovate much faster than their European counterparts. The advocates of AICOA seek to replace this environment of relative freedom with restrictive legislation of the sort found in Europe, exposing U.S. firms to the same pitfalls that plague the small and largely insignificant European tech sector.
AICOA is an example of poorly crafted legislation that has no business being re-introduced in Congress. Policy makers should reject the dogma that big business is inherently bad, that many of their business decisions—no matter how routine in other contexts—should be the object of a regulatory crackdown. Instead, they should recognize the unique benefits that large firms offer to their customers and re-align antitrust policy goals with the interests of consumers.
