This week, the Senate Judiciary Committee is set to mark up the American Innovation and Choice Online Act (AICO/S. 2992). This bill would make it unlawful for “covered platforms” (those with $550 billion market capitalization, 50,000,000 U.S. based monthly active users/100,000 U.S. based monthly active business users, and is a critical trading partner) to utilize common, pro-consumer business practices like selling their own private labels. Here’s how this bill could disrupt your daily routine:
As part of your New Year's resolution, you go on an early morning run. Proud of yourself for sticking to your resolution, you snap a quick picture to upload to social media.
Impact of bill: This legislation would likely make it an antitrust violation to one-touch upload your photo to your Instagram and Facebook account. AICO would make it unlawful for a covered platform to “unfairly” preference its own lines of business over another. A one-touch integration between these two platforms could be argued to disadvantage other competing social media platforms. While this may be a somewhat minor inconvenience, Congress purposely creating inconveniences for consumers isn’t good policy and won’t create more competition.
At 8 am, you’re making breakfast and drop your coffee mug. You go online to see if you can find a cheap replacement.
Impact of the bill: AICO would stop you from being able to purchase an Amazon Basics coffee mug. While Walmart, Kohls, Target, Costco, and other brick-and-mortar stores would still be allowed to sell their own private labels alongside competitors, this legislation would make it unlawful for covered platforms to offer consumers with additional choices. Private labels are often cheaper alternatives to name brand products and are a pro-consumer business practice. A consumer may decide to purchase a mug from a foreign competitor since these restrictions on private labels would not apply to them. Proponents of this misguided change claim that it will increase competition online, but it instead limits consumer choice, harms small businesses, and undermines U.S. global competitiveness.
At 11:30 am, you’re headed to a meeting and want to see if there’s lunch options nearby for after the meeting wraps up. You type “restaurants” into the Google search bar.
Impact of the bill: This legislation would prevent Google from integrating Google Maps to show you what’s nearby and Google Reviews from showing which restaurants are more popular. This bill essentially punishes companies for offering these free services to help consumers quickly sort and filter the enormous amounts of information online. A consumer could still find this information, but instead of this integrated interface, the consumer would have to cross reference the restaurant list with a map app to see what’s nearby and utilize a review site to see what options are most popular. As evidenced by the numerous other competitors to Google that utilize the same integrations, this is a pro-consumer feature that would arbitrarily be banned for just a handful of U.S. companies. In this case, a consumer may decide it's not worth the hassle and go home for lunch rather than patronize a local restaurant.
You’re running errands in the afternoon, but now you can’t find your phone.
Impact of the bill: Apple, under this legislation, could be prevented from pre-installing the “Find My” app, or any of its apps for that matter. Instead, a new iPhone would come out of the box useless and require the user to download a message, map, email, search engine, and other apps they may find necessary. For an app like “Find My,” the usefulness of it does not become apparent until you need it. Misplacing your phone and utilizing this free service is a big consumer convenience, and the elimination of it does not provide a benefit to consumers or competition.
At 7 pm, your child wants to play games on your iPad.
Impact of the bill: The proposed changes in AICO would make this a lot more risky. As the App Association explains, since a company is presumed liable for removing or discriminating against an app, even a dangerous one, (in their example, an app that violates Child Online Privacy Protection Act), the platform would still need to assume the risk and liability to remove the app. This could lead to less vetting and removal of malicious apps and less security for consumers. The interoperability language in the bill could also require that covered platforms share consumer data, even with foreign competitors.
At 10 pm, right before you’re going to bed, you realize you forgot to buy a birthday present for a friend who lives in another state.
Impact of the bill: AICO would de facto ban Amazon Prime, including the fast shipping. The bill’s ban on “unfairly” preferencing one's own service and conditioning access on preferential status would likely break this popular consumer service, even if the bill does not explicitly say so. In this case, a consumer may not be able to get his friend’s birthday present to him in time and lose access to other Amazon Prime benefits. However, as an aide to cosponsor of S. 2992 stated, “if we make carveouts for all the pro-consumer features, then the bill will be useless.” Consumers, of course, may prefer a useless bill rather than one aimed at taking away the services and products they currently enjoy for no perceivable upside.
The vague and undefined terms in the bill mean that there could be plenty of other harms to consumer convenience in addition to those outlined. Unfortunately, this anti-consumer bill is moving forward without a hearing to flush out how these changes would impact consumer technology and choice. If this legislation were to pass, it would hamper competition by forcing some of the most dynamic companies to donate software features to competitors, and put American companies in the untenable situation of risking steep financial penalties for offering free, consumer-friendly services. By granting substantial powers to antitrust enforcement agencies, lawmakers are simply hoping Lina Khan’s Federal Trade Commission and the Department of Justice would apply these vague standards in a pro-consumer way. That’s a dubious bet.