By Dana Mattioli and Ryan Tracy
House lawmakers proposed a raft of bipartisan legislation aimed
at reining in the power of Big Tech, including a bill that seeks to
make Amazon.com Inc. and other large companies effectively split
into two companies or shed their private-label products.
The House bills, announced Friday, amount to the biggest
Congressional broadside yet on a handful of technology companies --
including Alphabet Inc.'s Google, Apple Inc. and Facebook Inc. as
well as Amazon -- whose enormous size and power have drawn growing
scrutiny from lawmakers and regulators in the U.S. and Europe.
If the bills become law -- a prospect that still faces
significant hurdles -- they could substantially alter the most
richly valued companies in America and reshape an industry that has
extended its impact into nearly every facet of work and life.
One of the proposed measures, titled the Ending Platform
Monopolies Act, seeks to require structural separation of Amazon
and other big technology companies to break up their businesses. It
would make it unlawful for a covered online platform to own a
business that "utilizes the covered platform for the sale or
provision of products or services" or that sells services as a
condition for access to the platform. The platform company also
couldn't own businesses that create conflicts of interest, such as
by creating the "incentive and ability" for the platform to
advantage its own products over competitors.
A separate bill takes a different approach to target platforms'
self-preferencing. It would bar them from conduct that "advantages
the covered platform operator's own products, services, or lines of
business over those of another business user," or that excludes or
disadvantages other businesses.
The proposed legislation would need to be passed by the
Democratic-controlled House as well as the Senate, where it would
likely also need substantial Republican support. While Republicans
are concerned about technology companies' power, many are skeptical
about changing antitrust laws.
Each of the bills has both Republicans and Democrats signed onto
it, with more expected to join in the coming days, congressional
aides said. A total of seven Republicans are backing the bills,
with a different group of three signing on to each measure,
according to a person familiar with the situation.
"Unregulated tech monopolies have too much power over our
economy," said Rep. David Cicilline (D., R.I.), the top Democrat on
the House Antitrust Subcommittee. "They are in a unique position to
pick winners and losers, destroy small businesses, raise prices on
consumers, and put folks out of work. Our agenda will level the
playing field."
Rep. Ken Buck (R., Col.), the top Republican on the panel, said
he supports the legislation because it "breaks up Big Tech's
monopoly power to control what Americans see and say online, and
fosters an online market that encourages innovation."
The four companies didn't immediately comment on the proposed
legislation. All four companies have defended their competitive
practices and said that they operate their products and services to
benefit customers.
The proposed bills are among five bills announced Friday that
aim to curb the dominance of technology giants.
A third bill would force online platforms to make their services
interoperable with those of competitors, a provision that could
force different social networks to allow their users to communicate
or allow e-commerce sellers to export their customer reviews from
one site to another, according to a summary provided by
lawmakers.
A fourth bill targets mergers, making it unlawful for a large
online platform to acquire competitors or potential competitors.
The bill would have prevented only "a small percentage of all
technology sector deals" over the past decade, the summary
said.
Lawmakers also introduced a bill to raise filing fees for
mergers valued more than $1 billion and lower them for transactions
under $500,000. It would generate an estimated $135 million for
antitrust enforcement agencies in its first year, the summary said.
Similar legislation recently passed the Senate.
Four of the five bills are narrowly focused only on big
technology companies. The definitions of companies targeted by the
bills state that they must have a market capitalization of $600
billion or more, must have more than 50 million active monthly
users or 100,000 monthly active business users, and must be a
"critical trading partner" that has the ability to restrict or
impede another business' access to customers or services.
Only four companies -- Amazon, Apple, Facebook and Google --
currently meet the parameters laid out in the bills, according to
the person familiar with the matter. They are the same companies
that Congress investigated as part of its probe into Big Tech.
Walmart Inc., for instance, operates an online marketplace and has
private-label products, but only has a $392 billion market
valuation, so wouldn't be subject to the restrictions.
While the bills don't name any companies, they reflect issues
raised by Big Tech critics. The bill on self-preferencing bars
actions that "restrict or impede business users from
communicating...to covered platform users to facilitate business
transactions," invoking a common complaint from Amazon's
third-party sellers about limits on their ability to communicate
with customers.
Amazon operates one of the world's largest platforms for
third-party sellers to hawk their goods, but also competes against
these vendors with its business selling similar products under an
assortment of its own in-house brands -- often priced below the
items from its third-party sellers.
Some lawmakers have said that the platform favors Amazon's own
goods at the detriment to sellers and have rebuked Amazon's use of
third-party data to inform its own line of private-label goods.
Last year, the Journal reported about Amazon employees using the
third-party data of sellers on its website to launch its own
private-label lines, violating an internal policy.
Amazon later opened an investigation into the practice. When
testifying to Congress, Amazon Chief Executive Jeff Bezos said "I
can't guarantee you that that policy has never been violated."
In the past, the Seattle company has said that "large companies
are not dominant by definition, and the presumption that success
can only be the result of anti-competitive behavior is simply
wrong."
If the Ending Platform Monopolies bill were to be passed, Amazon
could have to split its business into two separate websites, one
for its third-party marketplace and one for first-party, or divest
or shut down the sale of its own products. Amazon's private-label
division has dozens of brands with 158,000 products. It is also a
market leader on devices such as Kindle eReaders, Amazon Echos,
Fire TV streaming devices, Ring doorbells and a line of wearable
devices.
The Ending Platform Monopolies Act has been compared with the
banking industry's Glass-Steagall Act, which separates commercial
and investment banking.
The new bill would effectively mean "a search engine could not
own a video service that it has incentives to favor in search
results," the summary from lawmakers said, in a thinly veiled
reference to Google's YouTube.
The bill that aims at self-preferencing could affect how Amazon
conducts its retail business and Apple's app store.
Congress has blocked or reversed big companies' expansion
before. Though the separation of investment and commercial banks in
the 1933 Glass-Steagall Act has since been repealed, banks are
still restricted from nonfinancial businesses under the 1956 Bank
Holding Company Act. The 1906 Hepburn Act restrained railroads from
ancillary businesses such as coal mining.
Absent congressional action, technology critics are looking to
federal agencies. Google and Facebook are already fighting
antitrust lawsuits, while Amazon and Apple are under antitrust
investigation. Democrats on the Federal Trade Commission also want
to explore the agency's authority to regulate unfair methods of
competition, although that authority is relatively untested and
could face legal challenges.
Write to Dana Mattioli at dana.mattioli@wsj.com and Ryan Tracy
at ryan.tracy@wsj.com
(END) Dow Jones Newswires
June 11, 2021 15:04 ET (19:04 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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