The Department of Justice (DOJ) has just officially endorsed the proposed American Innovation and Choice Online Act that mainly prohibits giant digital platforms like Amazon and Google from giving preference to their own products and services over those of competitors, marking the Biden administration’s first full-throated support for the antitrust proposal.
The proposals, according to the DOJ, supplement existing antitrust statutes by specifying what sorts of conduct Congress considers as anticompetitive and illegal, adding that doing so would increase the DOJ’s and the Federal Trade Commission’s authority to challenge that conduct. In this respect, it is necessary to distinguish between how the bill complements current antitrust standards and whether the Act provides the enforcers with stronger remedies to tackle alleged anticompetitive conduct.
Substantively, the law would make it illegal for dominant platforms to abuse their gatekeeper status by favoring their own products or services, disadvantaging competitors, or discriminating against businesses that utilize their platforms in a way that damages competition. It would also make it illegal to engage in some types of behavior that are harmful to small firms, entrepreneurs, and consumers but have no pro-competitive benefit, such as:
Regarding the enforcement of this bill, however, there are no significant reforms. Section 3 of this project states that the current enforcers “shall enforce [the American Innovation and Choice Online] Act in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms of the Federal Trade Commission Act” for the Federal Trade Commision; “the Sherman Act … Clayton Act … and Antitrust Civil Process Act” for the Attorney General; and “the Sherman Act … and the Clayton Act … were incorporated into and made a part of this Act” for any attorney general of a state.
Thus, the main innovation of this Act is its substantive complement to the current antitrust laws and judicial standards. In Europe, the Digital Markets Act, in addition to the new obligations and prohibitions to gatekeepers, also includes new procedural rules to speed up investigations against Big Tech and it increases the fines companies can face.
While one might expect the American Innovation and Choice Online Act would lead to more aggressive enforcement against Big Tech, the bill itself states a few efficiency defenses (e.g., privacy protection) that provide enough leeway to limit the bill’s reach, or at the very least, it may open the door for lengthy litigation. This is because the substantive analysis of this bill would follow a balance among the procompetitive and anticompetitive effects of a particular conduct, and it would be for a judge to decide the outcome.
The DOJ’s endorsement could increase the likelihood of passage of the bill, which has already passed key House and Senate committees. However, it has yet to receive a vote on the floor of either chamber, and it faces industry opposition as well as criticism from both parties. Some conservatives are apprehensive of extending the government’s authority over digital marketplaces, while Democrats, notably in California, argue that the bill unjustly targets a few giant corporations. Opponents of the proposals also argue that profiting from the popularity of their products is reasonable for e-marketplaces, search engines, and app stores. A handful of senators who voted “yes” in the January committee vote said they wanted to see revisions to the bill before backing it on the Senate floor. Senators Amy Klobuchar (D-Minn.) and Chuck Grassley (R-Iowa) are among those who support the idea and are working with their colleagues to construct a version that can pass.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More