Crony Capitalism

Amy Klobuchar and Tom Cotton's Big Tech Anti-Monopoly Bill Exempts Their Preferred Firms

Plus: Much ado about Big Bird, one neat trick for fixing Facebook (do nothing), and more...

|


rollcallpix140402 | Tom Williams/CQ Roll Call/Newscom
(Tom Williams/CQ Roll Call/Newscom)

Sens. Amy Klobuchar (D–Minn.) and Tom Cotton (R–Ark.) introduced the Platform Competition and Opportunity Act on Friday, which would prevent so-called Big Tech companies like Amazon, Facebook, and Google from acquiring rival firms unless they can prove to the government that the merger would not constitute one platform swallowing up a competitor.

"Big tech firms have bought up rivals to crush their competition, expand their market share, and to harm working Americans," said Cotton in a statement. "Sen. Amy Klobuchar and I have a bipartisan bill to block these killer acquisitions."

The legislation aims to prevent tech companies from buying up rivals, and is clearly concerned about Facebook's previous business practices. The social media site's acquisitions of WhatsApp and Instagram, which were approved by the Obama-era Federal Trade Commission with little fanfare, are now widely reviled by anti-tech crusaders on both the left and right. Under current law, the onus is on the government to prove that a merger will harm consumers; the Cotton/Klobuchar proposal would shift the burden of proof to the company making the acquisition.

There are all sorts of principled reasons to oppose this sort of government meddling in the affairs of private businesses. Whatever the problems with social media, it can hardly be said that Facebook's acquisitions of Instagram and WhatsApp have hurt consumers or put the company in some sort of monopoly position: The company competes for social media engagement with Twitter, for political advertising with Google, and for people's attention in general with a million different things. Moreover, the dominance of firms like Apple and Amazon has not harmed consumers; these companies are widely beloved because they efficiently meet market demand.

But there's one odiously crooked provision of the Platform Competition and Opportunity Act that deserves special mention. The law would only apply to companies of a certain size—i.e., firms that have a "net annual sales of $600,000,000,000 in the prior calendar year or with a market capitalization of greater than $600,000,000,000." Facebook and Amazon, for instance, both have market caps well over $600 billion, so the law would apply to them.

Note, however, the bill stipulates that it only covers firms that are over the $600 billion line "as of the date of enactment." In other words, if a company has a market cap under $600 billion on the day the bill becomes law, then that company is permanently exempt—even if it later crosses the threshold.

Two companies that are currently under the $600 billion line and thus exempt from the bill are mega-retailers Target and Walmart. These companies are both worth hundreds of billions of dollars, and their e-commerce platforms are growing at a faster rate than Amazon's. But under the Klobuchar/Cotton law, it wouldn't matter if Target and Walmart overtake Amazon—they would be immune from this new antitrust action, as long as they are small enough on the day the bill is signed.

Readers may be interested to note that Target is headquartered in Minneapolis, Minnesota. Walmart is headquartered in Bentonville, Arkansas. Isn't that interesting? It's probably just a coincidence that the $600-billion-at-date-of-enactment provision would shield the two most important companies in Klobuchar and Cotton's home states.

FREE MINDS

Big Bird announced his vaccine status on Twitter, prompting many conservatives to assail the fictitious, publicly-funded bird for promoting the vaccines to children:

In response, Sen. Ted Cruz (R–Texas) tweeted about how Bird Bird was spreading pro-vaccine propaganda. Other conservatives joined in:

If Big Bird had endorsed the Biden vaccine mandate, or said that children should be required to get vaccinated before they return to school, the criticism would have made more sense. But all Big Bird said was that the vaccine "keeps me and others healthy," which is neither wrong nor overtly political. It's thus difficult to understand why the right was so freaked out.

FREE MARKETS

The New York Times' Farhad Manjoo asks, "OK, but What Should We Actually Do About Facebook? I Asked the Experts." He considers several ill-advised schemes—breaking up the company, repealing Section 230—before turning to my idea: Do nothing. More:

In his new book, "Tech Panic: Why We Shouldn't Fear Facebook and the Future," Robby Soave, an editor at Reason magazine, argues that the media and lawmakers have become too worked up about the dangers posed by Facebook.

He doesn't disagree that the company's rise has had some terrible effects, but he worries that some proposals could exacerbate Facebook's dominance — a point with which I agree.

The best remedy for Facebook, Soave told me in an email, is to "do nothing, and watch as Facebook gradually collapses on its own."

Soave's argument is not unreasonable. Once-indomitable tech companies have fallen before. Facebook still makes lots of money, but it has lost consumers' trust, its employees are upset and leaking left and right, and because most of its popular products were acquired through acquisitions — which regulators are likely to bar in the future — it seems unlikely to innovate its way out of its troubles.

I don't agree with Soave that we should do absolutely nothing about Facebook. I would favor strong privacy and transparency rules.

But Soave will probably get what he wants. As long as there's wide disagreement among politicians about how to address Facebook's ills, doing nothing may be the likeliest outcome.

Read the full column here.

QUICK HITS

• Tragedy struck Astroworld, a music festival in Houston, Texas, over the weekend. With rapper Travis Scott set to take the stage, a huge crowd rushed toward the stage. People were so densely packed that many couldn't breathe and some were trampled. Eight people died during the confusion.

• The infrastructure deal passed both the House and the Senate.

• Authorities have charged Igor Danchenko, an analyst who provided information for the infamous Steele dossier, with lying to authorities—providing yet more evidence that much of the intelligence undergirding the Russia collusion narrative was false.

• Green Bay Packers quarterback Aaron Rodgers has spoken up about his unvaccinated status, ruffling some feathers within the NFL.

• American Federation of Teachers President Randi Weingarten de-masked while participating in an indoor conference. She said that people were having trouble hearing her. One wonders if this is also an issue for schoolchildren straining to hear their masked teachers.

• Iraq's prime minister survived a drone attack on his home.

Robby Soave is a senior editor at Reason.