The day before the Senate Judiciary Committee began debating legislation to tighten U.S. competition laws for large technology companies, Republican Senator Ted Cruz spent 40 minutes telephoning with Apple CEO Tim Cook.
Cruz said Cook had warned him that the American Innovation and Choice Online Act, which aims to prevent large technology companies from giving preferential treatment to their own products, could make it impossible for Apple to allow customers to refuse to go through their applications to be detected.
The next day, Cruz, a Conservative Republican known for defending the free market, voted in favor of the bill. which is easily over with a vote of 16 to 6. He even proposed tightening it up by allowing private citizens to sue companies that do not comply.
If Big Tech executives needed an indication of their position on Capitol Hill, and how seriously they should take the prospect of much stricter regulation, they had it.
“It’s a big deal,” said Matt Stoller, director of research at the progressive American Economic Liberties Project, which campaigned in favor of the bill. “We did not expect to get 16 votes – that’s a big political signal.”
Of all the regulatory threats facing major technology companies, from new privacy laws to stricter content moderation requirements, the possibility that U.S. officials could try to break their market power is one of the most existential.
Technical executives argue that by offering multiple products together, they enhance their customer experiences: for example, by directing people using Google to search for a location directly to Google Maps.
Prior to Thursday’s hearing, they had bombed lawmakers with serious warnings about the bill and its consequences. Cook was not the only CEO to hit the phones – as was Sundar Pichai, head of Alphabet, Google’s parent company.
Google and Amazon both wrote statements opposing the bill, and the U.S. Chamber of Commerce held a call with Washington-based reporters to set out its concerns.
This is a sensitive time for Big Tech in Washington. U.S. President Joe Biden has installed progressive on top of the Federal Trade Commission and the Department of Justice’s antitrust division, which this week kicked off the process of rewriting guidance on mergers and acquisitions.
Their offices are also dealing with antitrust cases against major technology companies, including Google and Facebook, and will have to consider whether they will try Microsoft’s $ 75 billion acquisition from Activision Blizzard.
Meanwhile, members of Congress are considering a series of measures that will strengthen regulators’ hands, one of which is the bill passed by the Judiciary Committee on Thursday, led by Amy Klobuchar, the Democratic senator from Minnesota.
Among other things, the bill will prevent companies from misusing data to gain a competitive advantage and skew search results to favor a search engine’s own products, known as self-preference. Violations of the law will be punishable by fines of up to 15 percent of a company’s U.S. revenue.
Members of both parties have promised tougher action against the industry for years, but those proposals have usually come to a standstill. However, Thursday’s vote shows that anger against Big Tech has now reached such a level that lawmakers are willing to put aside previous demands to get something done – a rarity in the deeply divided Congress.
The bill was rushed through the Senate Judiciary Committee, without any public hearing before Thursday. Even his supporters admit it is vaguely worded, giving regulators and judges ample leeway to determine exactly what should be considered self-preference. Klobuchar has promised to introduce further amendments before the full Senate votes on it.
That speed upset some of the tech industry’s defenders. Aaron White, director of communications for the pro-technology Progressive Policy Institute, called it “too broad and cumbersome” and described the process by which it was passed as an embarrassment to the Senate.
But for others, the vagueness of the bill may favor Big Tech. William Kovacic, a former Republican chairman of the FTC, said the bill’s poorly defined provisions would allow federal judges to stray on the side of lighter-touch regulation.
“Joe Biden will not be able to choose judges quickly enough to change that state of mind,” he said.
Final part is far from certain. The House Legal Affairs Committee approved similar legislation, along with four other bills aimed at tightening aspects of antitrust legislation. But most of these are to be opposed by a group of Democrats from the centrist wing of the party and that of California, Silicon Valley’s home state.
Zoe Lofgren, one of the outspoken Democratic representatives to speak out against the measures, tell the Washington Post last month she thought they were “still missing the mark”. Nancy Pelosi, the Democratic Speaker of the House, who is also from California, has not yet brought them to a floor vote, perhaps aware of the differences in her own ranks.
With Democrats divided over the bills, the position of the White House could be key. When Biden puts his political weight behind them, many feel he can persuade faltering colleagues. The White House, according to officials, provided “technical support” to the drafting of Klobuchar’s bill, but has not yet issued a statement urging senators to vote in favor.
The president, who is struggling with problems on several other fronts, including Covid-19 and stubbornly high inflation, may decide to put the fight off. But some believe it could prove the kind of bipartisan measure that would be appealing to a president looking for a major legislative victory.
“The White House’s position is going to be key,” said one corporate lobbyist. “At the moment I will give the Klobuchar account a 20 to 50 percent chance of success. But that changes when Biden gets involved. ”
Even if it does not succeed, Thursday’s vote achieved two important things, the bill’s supporters say.
First, it gave a signal to the judiciary of Congress’s concerns about the enforcement of existing competition laws. “The Senate tells judges they do not like the way they interpreted antitrust law when it comes to Big Tech, and judges will hear it,” Stoller said.
Second, it pierced the aura of invincibility surrounding Big Tech’s army of corporate lobbyists in Washington.
“The technology companies have outplayed their hand,” says Stacy Mitchell, co-director of the Institute for Local Self-Reliance, a nonprofit that targets the power of big business. “Their tactics illustrated that they had too much power; their efforts to try to stop legislation from conducting a case study on the issue itself. “