Tech companies take aim at Klobuchar antitrust bill
WASHINGTON – Sen. Amy Klobuchar is locked into a pitched battle with the nation’s tech giants, including Google and Amazon, who have used their own platforms, as well as newspaper op-eds and television ads, to try to defeat one of the Minnesota Democrat’s legislative priorities.
In her campaign to rein in some of big tech’s anticompetitive practices, Klobuchar has been true to her legislative practices. She prefers to find bipartisan support whenever she can, and in this campaign has enlisted Sen. Charles Grassley, R-Iowa, as an ally.
Klobuchar has also carefully researched the issue – she delved into the anticompetitive practices of Big Tech in her book, “Antitrust: Taking on Monopoly Power from the Gilded Age to the Digital Age.” She also drew on a detailed report by the House Judiciary Anti-Trust subcommittee, the result of an extensive investigation that included public testimony from Amazon chief Jeff Bezos and other tech titans.
Klobuchar has long sought to tighten online privacy laws and protect children from predators and other dangers on the internet. But the tech bill that would have the biggest impact and could be the crown jewel in her Senate career – American Innovation and Choice Online Act – has been pummeled by an intense lobbying campaign.
The legislation would bar platforms such as Google and Amazon from giving preference to their own services. It would also prohibit taking platform users’ non-public data to create “copycat” products or making businesses buy other services as a condition of getting good search rankings or placement on their platforms.
Klobuchar’s bill would also give the Justice Department, Federal Trade Commission and state attorneys general authority to deter violations and prosecute those who break the law.
“American prosperity was built on a foundation of open markets and fair competition, but right now our country faces a monopoly problem, and American consumers, workers, and businesses are paying the price,” Klobuchar said.
She said her American Innovation and Choice Online Act is “the first tech competition bill to advance to the Senate floor since the dawn of the internet.” Klobuchar also said her legislation would “put common sense rules of the road in place to lower costs for consumers and help small businesses compete.”
With a companion bill sponsored by Rep. David Cicilline, D-R.I., the legislation has been voted out of both the House and Senate Judiciary Committees in a bipartisan manner. And the Justice Department has endorsed the legislation, signifying that it has President Joe Biden’s support.
Klobuchar has also tweaked her bill to try to allay some of her colleagues’ concerns.
But the tech giants have lobbied against Klobuchar’s bill for months. According to the Wall Street Journal, groups representing the tech giants have poured more than $36 million into television and digital ads, compared with $193,000 spent by those backing the antitrust legislation.
And, according to lobbying disclosure reports filed in the Senate, Amazon and Meta – the umbrella company of Facebook, Instagram, etc. – were among the top 10 U.S. companies when it came to spending money on lobbying in the first quarter of this year. Amazon spent $5.3 million and Meta $5.4 million, a notable increase from their lobbying budget in the first three months of 2021.
Amazon, Google and Meta did not respond to request for comments for this story.
The end of Amazon Prime?
NetChoice, a group that says its mission is to “make the internet safe for free enterprise and free expression,” and that the federal government should use a “light touch” when it comes to regulating tech companies, is among the groups that have run digital and television ads against Klobuchar’s bills this year, targeting key senators.
“We want to make constituents aware of what their lawmakers are doing,” said NetChoice Vice President Carl Szabo.
To him, Klobuchar’s bill would ” increase prices, decrease choice and break a number of features Americans have.”
Among the features he said the legislation would end is the alerts he receives when his 9 and 6-year-old sons try to make a purchase on the internet.
But to Szabo, perhaps the worst aspect of the bill is that it singles out certain companies. Under the bill, covered entities are publicly traded companies that have 50 million or more monthly active U.S. users and net annual sales of $550 billion or more in the past two years. That would encompass Amazon, Apple, Meta and Google.
The latest version of the bill also includes private companies that have 50 million monthly U.S. users and 1 billion active users worldwide, which Szabo said was aimed at capturing TikTok.
Szabo said the bill was drafted in a “capricious manner” to unconstitutionally single out certain companies.
“This is a pet project of Klobuchar’s, not to help consumers, but to help companies she likes,” Szabo said.
Meanwhile, the Chamber of Progress, an American trade group that represents technology companies, has called Klobuchar’s legislation “politically toxic.” The chamber counts Amazon, as well as Apple, Google, and Meta among its “partners.”
“The legislation would negatively impact tech products, with Amazon itself acknowledging that Amazon Prime would be ‘significantly degraded,’” one of the organization’s releases said. “Concerns about the bill have caused divisions even within the Democratic party.”
The chamber maintains that Klobuchar’s bill, by requiring Amazon to treat all sellers alike, would mean the end of its popular “Prime” service.
“Breaking Amazon Prime during an election year would be an even bigger political disaster for Democrats than rising inflation,” said Chamber of Progress CEO Adam Kovacevich.
Supporters of Klobuchar’s bill dispute this claim.
“It’s complete BS,” said Sacha Haworth, executive director of the non-profit Tech Oversight Project. “There’s nothing in this bill that would do that.”
Haworth said third party sellers feel obligated to pay Amazon a fee for the “Prime” label. They then send their products to Amazon, which stores, sell and ships them to customers.
“That’s not necessarily the best or cheapest way to get a book to you,” Haworth said. “Big tech monopolies have been abusing their market share too long.”
“They can effectively bleed small businesses dry,” Haworth added.
Other attacks on Klobuchar’s bill focused on what opponents say is the inability of big tech to moderate content if their platforms were open to other users.
Sumit Sharma, a senior researcher for Consumer Reports, another group supporting the American Innovation and Choice Online Act, said “that’s a tortuous reading of what may happen in the bill.”
Sharma said the bill focuses on competition, not content moderation, and would not result in more dangerous content on the internet.
Like other supporters of Klobuchar’s bill, Sharma said there needs to be more federal oversight of the tech industry.
“You feel they make their own rules as they go along,” he said.
Still, four Democratic senators, led by Sen. Brian Schatz, D-Hawaii, wrote Klobuchar last month about concerns her legislation might have on content moderation.
“Limiting the largest technology companies’ ability to leverage their gatekeeper status in anticompetitive ways is a worthy goal, and one that we support,” the senators wrote. “However, it appears that the bill would also hinder content moderation practices, such as the application of community guidelines and policies, which are used to remove hate speech and fight misinformation online.”
Wired pushed back against the senators’ concerns.
“Here is what the bill says about content moderation: nothing,” Wired wrote in an article about the senators’ letter. “The relevant section says that a ‘covered platform’ –the likes of Google, Amazon, Apple, Meta, or Microsoft – cannot ‘discriminate in the application or enforcement of the terms of service of the covered platform among similarly situated business users in a manner that would materially harm competition.’ This does not appear to ban or limit content policies. It suggests, to the contrary, that platforms can continue to enforce their terms of service—just not in a discriminatory way.”
Klobuchar would need 60 votes to bypass any filibuster and win approval of her bill in the Senate. Despite the lobbying war, she and allied groups are confident she has those votes. A greater obstacle may be the Senate calendar, shortened by the election-year need for many senators to campaign.
Szabo of NetChoice said that as lawmakers become aware of it’s impact, momentum on the bill has “come to a screeching halt.”
Still, Klobuchar is optimistic.
“Despite all the millions being spent against us on the airwaves and all of lobbyists and lawyers fighting this bill, we have the American people on our side and the momentum is growing to pass this commonsense legislation,” the senator said.
Haworth of the Technology Oversight Project, said the effort to win approval for Klobuchar’s bill “is truly a David vs. Goliath fight.”
“They don’t have public opinion on their side,” Haworth said of the tech companies. “They do have money. But we have grit.”