By Dana Mattioli and Ryan Tracy
House lawmakers proposed a raft of bipartisan legislation aimed
at reining in the country's biggest tech companies, including a
bill that seeks to make Amazon.com Inc. and other large
corporations effectively split in two or shed their private-label
products.
The 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 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 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 platforms 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.
Each of the bills has both Republicans and Democrats signed onto
it, with more expected to join, congressional aides said. 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 panel's top Republican, said he
supports the bill 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 comment on the proposed legislation
Friday. All have defended their competitive practices and said that
they operate their products and services to benefit customers.
Matt Schruers, president of the Computer & Communications
Industry Association, whose members include Facebook, Amazon and
Google, said the House bills would disrupt Americans' ability to
use products that they like. "Writing regulations for a handful of
businesses will skew competition and leave consumers worse off," he
said.
Critics of the tech giants praised the legislation. Roku Inc.,
which competes with several of the tech giants, applauded the
lawmakers for "taking a crucial step toward curbing the predatory
and anticompetitive behaviors of some of the country's most
powerful companies."
Gaining sufficient Republic support for the bills will be an
uphill battle: While Republicans are concerned about technology
companies' power, many are skeptical about changing antitrust laws.
Even if they pass, the laws could take years to implement as
federal agencies try to enforce them over the companies' likely
legal objections.
"The fact that there is day-one support from Republican
antitrust leaders suggests these bills are definitely in the doable
range," said Paul Gallant, an analyst with Cowen & Co. "But the
gap between sounding tough at a hearing and actually voting for a
breakup is significant. I do wonder if these bills can get to 60
[votes] in the Senate."
Friday's announcement covered five bills designed to curb Big
Tech's dominance.
Another of the measures would force online platforms to make
their services interoperable with those of competitors, which could
mean different social networks must 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
platform to acquire rivals or potential rivals. 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 in its first year, the summary said. Similar
legislation recently passed the Senate.
Four of the five bills narrowly focus on big technology
companies. The definitions of companies targeted by the bills say
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.
While the bills don't name any companies, only Amazon, Apple,
Facebook and Google currently meet the parameters laid out in those
bills, according to the person familiar with the matter. They are
the same companies that the House panel 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.
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 Wall Street 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-based company has said that "large
companies are not dominant by definition, and the presumption that
success can only be the result of anticompetitive 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 and Ring doorbells.
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 how Apple operates its app
store.
Congress has blocked or reversed big companies' expansion
before. The Ending Platform Monopolies Act has been compared with
the Glass-Steagall Act, which separated commercial and investment
banking. Though that provision 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 18:45 ET (22:45 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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