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Confusion Can Make for Good Politics, but Bad Economics

 |  July 27, 2022

By: Brian Albrecht (Inside Sources)

With the clock ticking down on Congress’ legislative calendar before the midterm election season begins, sponsors of the American Innovation and Choice Online Act (AICOA) are left with a problem. As leadership seeks to wrangle the needed 60 votes in the Senate, even the measure’s putative backers appear confused about precisely what it would, or would not, do.

Sen. Ted Cruz, R-Texas, says he supports the legislation because it will limit Big Tech’s ability to censor, or deplatform, Republican-friendly users. Sen. Ron Wyden, D-Ore., has expressed reservations about the bill for precisely the same reason. Sen. Amy Klobuchar, D-Minn., the bill’s primary sponsor, insists that it will do no such thing. But she’s also been reluctant to add explicit language that would either affirm Cruz’s interpretation or assuage Wyden’s fears.

Vague and equivocal language can sometimes make for good politics, although it remains unclear whether that is the case here. It is clear that legislation with such fundamental uncertainties will make it harder for companies to operate and innovate, making their services worse for consumers.

The bill would make it illegal for large technology firms like Google, Apple, Amazon, Microsoft and Facebook to “self-preference.” Self-preferencing is when a company gives some kind of advantage to one of its own products. When you search “nearby restaurants” on Google and see a Google Maps box at the top, that is self-preferencing. Under AICOA, this behavior would likely be illegal and subject Google to massive fines of 10 percent of its U.S. revenues.

I say likely because no one knows what will be illegal if the bill becomes law. As the American Bar Association’s Antitrust Law Section put it in a recent letter to Congress, the bill’s prohibitions “are vague and fact-specific, preventing advance prediction of what conduct is protected and what conduct is prohibited.” The uncertainty here runs deeper than usual, so supporters can have different readings of what it would do, specifically around content moderation…