Big Tech’s Three Biggest Regulatory Threats

When the Senate Judiciary Committee voted last Thursday to advance the American Innovation and Choice Online Act, a bipartisan antitrust bill, it set the path for the bill to potentially be adopted by the full Senate. While this is probably the biggest regulatory threat for Google, Amazon, Apple and Meta right now, there are two other bills that may have a significant impact on Big Tech: the Open App Market Act and the Digital Markets Act in Europe. Other regulatory initiatives in the U.S. and Europe also represent a regulatory threat. Here’s a breakdown of the top regulatory threats to Big Tech.

United States Senate — American Innovation and Choice Online Act 

This bill aims at preventing Big Tech firms from favoring their own services over others. This bill would make it unlawful to unfairly preference a platform’s own products, services or lines of businesses over those of another business user and to limit the ability of another business user’s products or services to compete on the platform. 

The Senate Judiciary Committee voted 16-6 to advance the bill, but before it reaches the senate floor for a vote, it will likely be amended. The bill was already amended before the committee vote to ensure that it would be applicable to non-U.S. firms like TikTok. Senators have already offered over 100 amendments, and these will need to be discussed before a vote. 

To become law, the bill will need to obtain a majority vote in the Senate (51 votes out of 100), and at this point, despite the strong vote of confidence in the committee and the bipartisan support, it isn’t clear if the bill will be approved. 

United States Senate — Open App Markets Act 

This bill was included in the agenda of the Senate committee last Thursday for discussion, but it was finally withheld after the vote on the first bill. A new hearing to vote on this bill hasn’t been scheduled yet. 

This bill would primarily affect Google and Apple. If approved, the bill will ban the tech companies from requiring developers to use in-app payment systems as a condition of being distributed on an app store. This would allow developers to distribute their apps in the app stores using a more favorable payment system, since Google and Apple charge developers 15% or 30% for any purchase made in the app store. 

Read More: Apple and Google Face Moment of Truth With Senate Hearing Over Antitrust Bills 

Federal Trade Commission — New Merger Guidelines 

In January, the FTC and DoJ launched a joint public inquiry to review merger rules, strengthen enforcement and clamp down on big mergers, especially in digital markets. 

The review will focus on how to assess mergers that include free services where the traditional antitrust analysis may not bring accurate results. The agencies are also seeking input to update the market definition analysis so that it better accounts for non-price competition. 

The agencies will still need a few months to receive feedback from the public and to design a new merger guideline, but unlike the bills, regulators can adopt guidelines without going to Congress. New merger guidelines may not be as big a threat for Big Tech firms as the antitrust bills, since these guidelines would only limit the companies’ ability to acquire some firms. 

Read More: FTC, DOJ Launch Consultation To Tighten Grip on Big Tech M&A 

European Parliament (EP) — Digital Markets Act (DMA) 

The EP approved the DMA in December 2021. The DMA essentially blacklists certain practices used by large platforms acting as “gatekeepers.” This bill includes most of the conduct that the EU has considered anticompetitive in the past after investigating Google, Amazon, Apple and Meta. 

This law includes the same prohibitions as the American Innovation and Choice Online Act, and it also contemplates the possibility of breaking up a company in case of repeating wrongdoings. However, the risk of a breakup is unlikely — before proposing such a drastic measure, the regulator would have to find violations of the law in three different investigations in a very short timeframe. 

The law has been approved by the EP but still needs approval by the 27 member states, which could happen by mid-year;  the law would probably enter into force in early 2023. 

European Parliament — Digital Service Act (DSA) 

The EP approved the DSA on January 20. In summary, this bill aims to make companies responsible for the content they publish on their platforms and to include better content moderation practices. The EP will now start negotiations with the 27 members states to get the law ratified and approved.  

Read More: EU Parliament Approves Digital Service Act Targeting Big Tech