News Analysis: Inside The Proposed Digital Giant Anti-Trust Bills
On Friday, June 11th, US lawmakers unveiled a series of five bills designed to limit the influence and power of the digital giants. After years of lengthy investigation by the House Judiciary subcommittee on antitrust, these bills targeted Amazon, Apple, Facebook, Google, and any future company greater than $600 million in market cap and greater than 50 million users. Designed to limit dominant platforms from expanding, these bills would limit the digital giant influence on the consumer front, future mergers and acquisitions, and the expansion into new industries.
Here's a quick synopsis on analysis of the five proposed bills:
American Choice and Innovation Online Act
This bill is about making sure that dominant platform operators can’t favor their own goods online over competitors. For example, Apple App Store, Google Play Store, Amazon Marketplace, ad other dominant platforms would be banned from using data collected on their services that is not public others and would give the dominant platforms a competitive advantage
The bottom line. This bill makes sense as antitrust legislation. However, legislators have to balance the overall good to the consumer and pace of innovation with the costs of limited choice and potential rising costs of a service due to regulation. More importantly, existing anti-trust laws already provide for this.
Ending Platform Monopolies Act
Companies with 50 million monthly active US users and market caps of over $600B could not own a business that represents a conflict of interest The bill restrains dominant platforms from leveraging their control across multiple business types to give themselves unfair advantage and disadvantage competitors. "It shall be unlawful for a covered platform operator to own or control a line of business, other than the covered platform, when the covered platform’s ownership or control of that line of business gives rise to an irreconcilable conflict of interest”
The bottom line. This bill is designed to control market dominance. When a platform operator that’s covered owns or controls a line of business other than the current “swim lane” they are in, or when they achieve a state where they reach “irreconcilable conflict of interest", these digital giants would be limited in their ability to expand into adjacent spaces. While this sounds great on paper, this bill is a bit harder to prove and has the most room for interpretation. The intent is to keep digital giants from entering other industries and stifling competition. This bill will have a lot of support from other industry lobbyists.
Platform Competition and Opportunity Act
This bill makes it harder for M&A by dominant platforms, shifting the burden of proof to the acquirer that they have to prove they are lessening competition instead of the government proving the burden of proof.
The bottom line. Keep in mind, most merger and acquisitions activity was “blessed” by the government in the past. Anti-trust approval is already there. However, this law changes the calculus and burden of proof from the government to the digital giant. The goal is to slow down M&A and this will prove to be the most viable and pragmatic antitrust legislation if approved.
Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act
This bill focuses on data portability and interoperatibilty. Consumers should be able to take their data with them. This puts the burden of switching costs on the business and not the consumer. The goal is to make switching easier. Think of it like number portability in the cell phone era.
The bottom line. These actions make sense as switching costs are the barriers to entry. More importantly, data is the foundation of these data driven digital network platforms. This is key for encouraging competition and allowing consumers to have choice. This bill is required along with a bill in the future that makes privacy data a property right which requires digital giants and any entity to seek consent before use.
Merger Filing Fee Modernization Act
The fees to notify FTC and DOJ of a merger go up. This is the first time in two decades.
The bottom line. The goal is to fund the anti-trust efforts with the increase. Given the need to fund these antitrust activities, this makes sense.
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Do you think it's time for the digital giants to be regulated? What else do you think lawmakers should do?
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