Tech giants risk fresh tumult as Congress hefts antitrust hammer

Washington

A HOUSE committee will take up legislation on Wednesday aimed at reining in US tech giants, the first significant bipartisan push to limit the power of Internet platforms, even though the measures lack a clear path to become law.

Most of the six bills to be considered by the Judiciary Committee came out of a 16-month investigation by its antitrust panel into Apple, Facebook, Alphabet's Google and Amazon.com and seek to address the companies' dominance over markets.

Though the proposals that most threaten the companies are unlikely to become law as written, they show that lawmakers are intent on finding a way to curb the dominance of tech behemoths and preview how they're seeking to strengthen antitrust enforcement.

For example, a bill introduced by Rhode Island Democrat David Cicilline, chair of the antitrust subcommittee, would prevent companies from giving advantage to their own services over those of a competitor on their platforms. That could threaten Google's US$23 billion display-advertising business.

A proposal from Democratic Representative Pramila Jayapal of Washington state would prohibit companies from offering some services - and could force Amazon to sell its valuable logistics network of warehouses and delivery hubs.

"It's very hard to regulate a sector as large and as complex as the digital sector," said Fiona Scott Morton, who was an economist at the Justice Department's antitrust division under president Barack Obama and has also advised Amazon and Apple. "There are always things to improve - undoubtedly the Senate will have bills, we'll have a national conversation about these - but the important thing is we have started."

Industry groups supported by tech companies have said that these proposals would hurt innovation and US competitiveness and destroy products like iMessage and Google Maps that people like. Amazon has said the bills would hurt hundreds of thousands of sellers, including small businesses, that rely on its platform to reach consumers.

While 2021 returns vary widely for the big four in lawmakers' sights, investors are hardly panicking over Congress's intentions.

Google parent Alphabet and Facebook are both outperforming broader US stock benchmarks, with year-to-date gains of 40 per cent and 24 per cent respectively. The underperformers are Amazon and Apple, up only 7.6 per cent and 1 per cent.

The bipartisan support for cracking down on the tech behemoths, unusual in a year of deep political divisions, shows the degree of lawmaker anger with the industry. Still, there are notable differences. Some conservatives, including the Judiciary Committee's top Republican, Representative Jim Jordan of Ohio, share that anger but say these bills aren't the best way to punish tech companies for what they describe as censoring right-wing users and viewpoints like those of former President Donald Trump and his supporters.

Some pro-business Democrats have echoed calls from tech groups for the Judiciary Committee to slow down and hear from industry experts about how particular provisions could harm products that are widely used by US consumers.

While the antitrust package reflects a larger push in Washington to take more aggressive action to address market concentration, especially in the tech sector, it's not clear that the House approach is supported by Senate Democrats, much less the 10 Republicans needed for almost any bill to pass the Senate.

Two of the measures have companion bills in the Senate, giving them a better chance of becoming law than the others. The Merger Filing Fee Modernization Act, HR 3843, would give the Justice Department and the Federal Trade Commission, which share antitrust enforcement, more resources to bring cases. The Senate passed its version in early June. The State Antitrust Enforcement Venue Act, HR 3460, would allow cases brought by state attorneys general to remain in the states where they were initially filed.

The other four bills would apply only to an online platform that has at least 50 million monthly users or at least 100,000 monthly business users, a market capitalisation of more than US$600 billion and is considered a "critical trading partner" for other companies. These criteria would apply to Facebook, Amazon, Apple and Google. When asked if they would also include Microsoft Corp, Mr Cicilline said it would be up to the FTC and the Justice Department to declare which firms would be in scope.

The proposals are a good first step, according to Bill Baer, who led the Justice Department's antitrust division under Mr Obama. Mr Baer said bringing antitrust cases can be a long and sometimes fruitless pursuit for enforcement agencies, and the House bills are an attempt to reverse decades of lax enforcement and decisions by conservative judges. BLOOMBERG