Antitrust Bills Will Unleash America’s Innovation EconomyCharlotte Slaiman / Jul 25, 2022
Charlotte Slaiman is Competition Policy Director at Public Knowledge.
As we near the midterm election season that marks the end of this Congress’ primary working period, people are increasingly frustrated that lawmakers can’t seem to do anything about the big problems we care about. But there is one important problem that Congress is poised to do something about. The online technology sector -- a crucially important area of our economy that includes everything from search engines to e-commerce -- has been largely closed off to new, innovative entrepreneurs for more than a decade due to the mammoth-sized, consumer-facing internet platforms that control it. These powerful gatekeepers are known as Big Tech, and these companies keep a tight hold on who can effectively compete for consumer attention.
We can unleash America’s innovation economy by opening up these markets for competition. Such competition is a key way we can build a better internet that helps us achieve our goals and keeps up with our values. America is supposed to be a land of opportunity for workers and entrepreneurs who want the freedom to try new things and shake up the status quo. In these key areas of our lives -- communication, information discovery, ecommerce -- we can’t afford to be stuck in a paradigm or with technologies determined by just a handful of giant companies.
People are mad about Big Tech. And they have been mad for a while. Usually, when a very lucrative industry is dominated by one or a few firms and customers are unhappy, antitrust lawyers like me would expect new entrants to come in, offer a better alternative, and siphon customers away from the flagging incumbent. That’s the engine of innovation that competition provides. But the competitive marketplace is broken when it comes to Big Tech. Gatekeeper power allows these companies to keep users locked in even when we’d like to leave.
Big Tech platforms like Google, Apple, Facebook, and Amazon share some special characteristics that make it really hard to compete against them. One is network effects: The more users you have as a platform, the more value you can provide, so a small startup has an even harder time catching up to a large incumbent. Another is the level of control a company has over the user experience in the digital environment, which gives these companies a great deal of power to influence user decisions or pick winners and losers on their platform. Lastly, these firms are heavily vertically integrated, meaning that they own the platform and also businesses that compete on the platform. Senator Elizabeth Warren (D-MA) proposed breaking up these companies so they can’t play the role of both umpire and player in the game.
But here’s a more modest change that can still have a great impact: Ban self-preferencing and other forms of anticompetitive discrimination against companies that rely on these platforms. Nondiscrimination has been an important part of expert discussions of how to rein in Big Tech across the globe. It’s featured in the Digital Markets Act in Europe, and in the U.K. and Australian competition authorities’ investigations of Big Tech. It’s also central to expert reports in the U.S., like those from the House Judiciary Committee and the University of Chicago’s annual competition conference. And it’s the subject of Senator Amy Klobuchar’s and Representative David Cicilline’s “American Innovation and Choice Online Act” (AICO) as well as Senator Richard Blumenthal’s and Representative Hank Johnson’s “Open App Markets Act” (OAMA).
Big Tech platforms control the marketplaces where other companies compete for customers, and they are rigging the rules to benefit themselves and prevent competition against them. That’s how these companies stay in charge and make sure that users like us can’t easily leave for competing platforms when we get mad. Simply put, they control the methods we might use to find another option.
Venture capital and entrepreneurs who want to start new businesses see the writing on the wall. There is no room for their new, innovative ideas to rocket to household name status in search, social networking, e-commerce, or mobile applications. Instead, this talent and money is finding other places to go, like crypto, or worse, supporting the status quo by building a non-threatening business that hopes to get purchased by a Big Tech conglomerate. Neither of these adequately solve the big and important problems we face on the internet today.
To unleash the innovation economy, we need to show American innovators and the investors who fund them that the internet is a contestable space again, and these bills can bust open the gates. I want local innovators and scrappy startups with great ideas to experience a digital marketplace where they could actually unseat Big Tech firms if they have the better product. Instead of Big Tech “kill zones” and locked-in customers, let’s hang a big “Welcome!” sign on our digital economy – an important boost in a time of economic uncertainty.
We are well past due for Congress to exercise its dormant legislative muscle and rein in out-of-control Big Tech. Passing bipartisan legislation like AICO is just the beginning. Doing so should put the rest of the monopolists on notice. American innovators, no longer as wary of the dominant incumbents, can finally have their moment to shine.