The Unintended Consequences of Attacking Big Tech
The Liberal Libertarian Party (LLP) believes Central Planners often make poor decisions because they don’t have all the information to fully understand the unintended consequences of attacking big Tech.
The latest legislative crusade gaining traction in Congress among Democrats and Republicans alike is a series of antitrust bills targeting ever-reviled “Big Tech” companies such as Google and Amazon. The bills are before the House Judiciary Committee today, June 24, 2020, for debate and mark-up.
The LLP would like to see more discussion about the actual problem that requires community intervention and how that intervention will actually solve the problem.
Rep. Pramila Jayapal, a Democrat from Washington state, and Rep. Lance Gooden, a Republican from Texas, have introduced the so-called “Ending Platform Monopolies Act.”
According to CNBC, this law would make it illegal for large digital platforms to “own or operate a business that presents a clear conflict of interest,” with a conflict of interest defined as “anything that incentivizes a business to favor its own services over those of a competitor or disadvantage potential competitors that use the platform.”
One of the other landmark bills, introduced by Rep. Gooden and Rep. David Cicciline, a Democrat from Rhode Island, is the so-called “American Choice and Innovation Online Act.” It would do something similar to the first law. Per CNBC, Cicciline’s bill would“prohibit dominant platforms from giving their own products and services advantages over those of competitors on the platform.”
You may have noticed something of a theme in the rhetoric promoting these bills. Advocates attack “monopolies” and promise to promote “competition” and “innovation.” Yet, in reality, their legislation would simply hamstring consumers. Their bills would make illegal many of the key features and services we all rely on and enjoy.A letter released by 13 policy nonprofits from across the political spectrum (some of which do receive funding from tech companies) warned that these two bills “would dramatically degrade services which hundreds of millions of Americans use every day” by preventing companies “from offering integrated tech conveniences to consumers.”
To put this critique in more tangible terms, under these laws it would suddenly be illegal for YouTube videos to show up in Google search results, for Apple’s own apps like FaceTime to come pre-installed on the iPhone, or for Amazon to offer and promote its low-cost “Amazon basics” product line in its search results, just to name a few of literally countless examples.
The Competitive Enterprise Institute’s Iain Murray aptly explained how companies would likely respond to this legislation.
E-commerce platforms such as Amazon would have to take one of the following approaches, Murray writes:
- Focus on its own products and services and kick competitors off its platform. This would kill thousands of businesses that use the platform.
- Take non-preferencing seriously and simply turn into a very basic sales platform, offering up a list of products in response to a search. In essence, this would turn the platform into a high-tech version of classified ads or Craigslist.
- Submit to pressure and spin off subsidiaries, losing the benefits of shared information and cross-subsidies, as well as the package deals of services it might offer customers.
Meanwhile, Murray explains that software or phone manufacturers such as Apple would have to make some of the below changes:
- Shut down its app store and concentrate on its own products, locking developers out of its system.
- Ship only blank phones with a bare-bones operating system that you would have to populate yourself.
- Spin off its phone division, which means that the interoperable capabilities it has developed with its computer and other devices would wither on the vine.
Right now, Google, Amazon, and Apple provide hundreds of millions of Americans with free, innovative services. The CliffsNotes version of this legislation is that consumers would suffer and the products we use every day would change for the worse.
The true motivation behind the legislation is political: Republican lawmakers are angry about perceived anti-conservative bias and censorship by Big Tech, while Democratic lawmakers view Silicon Valley as tax-evaders and greedy capitalists.
Whether you agree with these underlying motivations or not shouldn’t really matter here, because the actual legislation does little to address either concern. It’s just a weapon to hit the targeted companies over the head with. Yes, these politically-motivated bills would punish Big Tech—but they would do so largely at the expense of everyday American consumers.
For more on this please see:Section 230 Overview