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Congress’ big antitrust bill is filled with gray areas

January 19, 2022, 6:17 PM UTC

Nearly two years ago, The Wall Street Journal broke a blockbuster story detailing how Amazon employees secretly mined sales data from independent sellers using the company’s e-commerce platform to guide Amazon’s development of cheaper, knock-off products. 

The practice, which Amazon said broke company policies, put independent sellers in a pickle. Amazon is the nation’s dominant sales marketplace, making it a lifeline for thousands of small businesses. But if a mom-and-pop sold a lot on Amazon’s platform, the e-commerce giant could catch wind and undercut the shop straight out of business.

It’s the kind of underhanded practice that seems ripe for government regulation—and a dozen U.S. senators agree. Members of the Senate Judiciary Committee are scheduled Thursday to begin their markup of the American Innovation and Choice Online Act, a bill designed to stop Big Tech firms from using their market power and access to extensive non-public data to stifle competition on the web. 

The 18-page bill, sponsored by a surprising mix of six Democrats and six Republicans, is rooted in a well-meaning mission. 

America’s large tech companies have proven time and again that they will take advantage of their vast reach to pad their bottom lines. Google has been fined billions of dollars for giving preferential treatment to its shopping service on its search site. Apple continues to place strict limits on who can join its App Store and how developers can receive money from apps.

However, the bill represents a gamble on the part of supporters, who are betting that the Federal Trade Commission and the courts—the two institutions responsible for interpreting and carrying out the law—will strike the appropriate balance between reining in anti-competitive behavior and allowing entrepreneurs the latitude needed to flourish in our free-market system. 

As large tech companies opposing the bill correctly point out, the bill contains open-ended language that leaves extensive room for interpretation by the politically charged FTC and courts. Take, for example, the lead provision of the bill, which states that it will be illegal for large tech companies to:

Unfairly preference the covered platform operator’s own products, services, or lines of business over those of another business user on the covered platform in a manner that would materially harm competition on the covered platform.

That statute, if enacted, would raise questions of major consequence. How is “preference” defined? How can companies know in advance whether their practices “materially harm competition”? What if a company truly believes that its product is better than its competitors?

In an open letter posted this week, a Google executive posits the case of Google Maps, the company’s default mapping tool on its search engine. Does Google’s practice of “preferencing” its internal map “materially harm” competitors, such as Bing and MapQuest?

The bill figures to undergo changes in the coming weeks and months, hopefully leading to greater specificity. 

It’s unclear whether the proposed legislation will even make it to the Senate floor and U.S. House of Representatives. If it does, members of Congress will have to decide who they trust more to police the worst anti-competitive practices of Big Tech: Silicon Valley itself, or the federal bureaucracy and judicial system?

Want to send thoughts or suggestions for Data Sheet? Drop me a line here.

Jacob Carpenter

NEWSWORTHY

A timely golden parachute. The embattled CEO of Activision Blizzard stands to make about $375 million before taxes from the potential sale of the video game developer to Microsoft, which agreed to buy the company Tuesday for $68.7 billion. The remarkable payout to longtime Activision Blizzard leader Bobby Kotick would come as the CEO faces accusations of fostering a hostile work environment, allowing mistreatment of female employees under his watch, and mishandling rape allegations made by a staff member. Kotick, who has denied the claims, is expected to remain CEO of Activision Blizzard until the sale closes, likely in 2023. The deal could face antitrust scrutiny in the U.S. and Europe.

Hitting the reset button. Shares of PlayStation parent Sony sank 13% on the Tokyo exchange Wednesday following the announcement of Microsoft’s plans to purchase Activision Blizzard. The potential merger, which would put Microsoft’s Xbox on closer footing with the higher-revenue PlayStation brand, triggered a sell-off that erased about $20 billion from Sony’s market cap. However, some Sony investors argued the Microsoft purchase would not dramatically impact the company’s long-term strategy.

Yet another 5G agreement. AT&T and Verizon reached a deal Tuesday with federal transportation officials to tweak the companies’ rollout this week of higher-speed 5G wireless Internet service, alleviating concerns about the impact on airplane safety, The Associated Press reported. The two telecom giants agreed to delay activating 5G cell towers within a two-mile radius of select airport runways, a response to fears among aviation officials and airline companies that the new service would interfere with in-air safety devices. President Joe Biden said more than 90% of the companies’ 5G towers would still be activated this week.

Eyes on the road, people. Prosecutors in California have filed what are believed to be the first charges of vehicular manslaughter against a motorist using a partially automated driving system. A Los Angeles-area man faces two felony counts after his Tesla Model S ran a red light at a high speed while on Autopilot, hitting and killing two people in another vehicle. Federal officials are reviewing the misuse of Tesla’s Autopilot feature by drivers whose failure to monitor the system preceded fatal crashes.

FOOD FOR THOUGHT

Rolling in the dough. Silicon Valley was awash with cash in 2021, and tech investors see no reason to slow down. That’s the takeaway from a review of venture capital and valuation data by The New York Times, which found that an insatiable investor appetite for tech companies shows few signs of slowing. The deluge of money is leading to whispers of a bubble, but for now, the motto remains laissez le bon temps rouler—let the good times roll. 

From the article

The funding frenzy follows nearly two years of a pandemic when people and businesses increasingly relied on tech, creating bottomless opportunities for start-ups to exploit. It follows breakthroughs in artificial intelligence, nuclear technology, electric vehicles, space travel and other areas that investors say are poised to change the world. And it follows nearly a decade in which tech companies have dominated the stock market.

The activity has crossed into even frothier territory in recent months, as tech start-ups offering food delivery, remote-work software and telehealth services realized that they not only would survive the pandemic but were in higher demand than ever. 

IN CASE YOU MISSED IT

Microsoft-Activision deal could face antitrust challenges over gaming implications, and maybe the metaverse too, by David Meyer

Green hydrogen has long been hyped as a replacement for fossil fuels. Now, one of the industry’s biggest players is preparing its IPO, by Christiaan Hetzner

Airlines are cancelling and modifying flights to U.S. over 5G rollout fears, by Anurag Kotoky and Bloomberg

My A.I. predictions for 2022, by Jonathan Vanian

Hope for your hairline may be coming as biotech startups try to reverse balding, Amiah Taylor

Apple warns U.S. Senators tech antitrust bill would harm iPhone privacy, by Mark Gurman, Anna Edgerton, and Bloomberg

BEFORE YOU GO

Stranded on an island. The satellite Internet future can’t come soon enough for remote nations. The entire kingdom of Tonga relies on a single cable to carry Internet to the Pacific archipelago, home to about 100,000 people. And when an underwater volcano erupted and ruptured the cable last week, prompting a tsunami that killed three people and caused extensive property damage, nearly all of Tonga’s Internet capabilities went dark. As a result, families couldn’t connect with off-island loved ones to deliver updates on their condition. It could take weeks to repair the busted cable, which runs about 500 miles to link to Fiji, Reuters reported.

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