Bipartisan 'Innovation and Choice Online Act' Would Harm Innovation and Choice
In the name of fostering innovation and choice, the bill would accomplish neither.
Today, the Senate Judiciary Committee is set to consider the American Innovation and Choice Online Act (AICOA). The bill, sponsored by Sens. Amy Klobuchar (D–Minn.) and Chuck Grassley (R–Iowa), seeks to criminalize "certain discriminatory conduct" by some online platforms. But in practice, the bill would harm consumers and make simple services more difficult to use.
The AICOA would make it unlawful for any internet service to "materially restrict or impede the capacity of a business user to access or interoperate…in a manner that would materially harm competition" on the service. Under the legislation, not only would Google searches not automatically display Google Maps results, but iPhones could not come with Apple programs pre-installed. Amazon would not be able to offer free two-day Prime shipping, or even sell its popular, lower-cost AmazonBasics brand of consumer goods.
The bill is unlikely to have the intended effects on innovation and choice, and is exceedingly likely to do the exact opposite. In a statement released this week, the center-left Progressive Policy Institute argued that the AICOA "could do irreparable harm to the services and products millions of Americans rely on every day." Further, the bill would lead to "reduced innovation" as companies are forced to "obtain regulatory pre-approval with every new product."
The bill only applies to "covered platforms," which it defines as any online platform with more than 50 million active monthly users or a market capitalization of more than $550 billion. These parameters would cover a limited number of companies: Google, Facebook, Amazon, and a few others. In fact, the bill seems narrowly tailored to apply only to a small selection: Earlier this week, a draft amendment was added to the bill and included an additional qualifier that targeted platforms with more than 1 billion active monthly users worldwide. This provision seems to specifically target TikTok, which reached that milestone at the end of last year.
This week, Klobuchar released a letter that was signed by more than 35 tech companies that support the legislation. The list included some big industry names, such as Yelp and Patreon. The letter claims that the bill "targets self-preferencing to help restore competition in the digital marketplace and remove barriers for consumers to choose the services they want."
But it is not clear that consumers don't already "choose the services they want." After all, retailers have sold their own versions of name-brand products for decades without it becoming the business of the federal government. I use Apple's iMessage for messaging not because it came pre-loaded on my phone, but because it works well. I would not be better served as a consumer if I were forced to download it separately—or worse yet, if I had to pay for it. Apple and Android phones have about a 50/50 share of the smartphone population, and yet by far the most popular navigation app is Google Maps, which comes pre-installed on Android phones, but not Apple phones.
Some of the AICOA's proponents nonetheless feel that these practices are unfair when utilized by tech companies. Last year, a version of the AICOA was proposed in the House. Rep. Ken Buck (R–Colo.), a co-sponsor, complained that Amazon allows merchants to sell products on its site, "and then they start producing that product on their own, under their own label, for cheaper. That's unfair. What part of unfair don't you understand?"
Buck's focus on fairness is notable, as it is not even clear that consumer advantage is the goal. In response to calls for language that would exempt certain popular services, a Grassley staffer told the Washington Examiner, "If we make carveouts for all the pro-consumer features, then the bill will be useless."
Exactly. And the only thing worse than a useless bill is what we have now: an actively harmful one, drafted with "fairness" in mind.
