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The Senate panel approves antitrust laws that limit large technical platforms




WASHINGTON – A Senate panel approved antitrust legislation that bans the largest technology platforms from favoring its own products and services over competitors, in a gradual victory for supporters of stricter Big Tech regulation.

The American Innovation and Choice Online Act is now being moved to the Senate floor, where several senators said they wanted to see further changes before voting for the measure. Thursday’s vote in the Senate Judiciary Committee, 16-6, showed that the bill had the support of two parties, but also raised concerns for two parties.

The bill “is specifically designed to target a small number of specific companies, most of which are headquartered in my home state,” said Sen. Dianne Feinstein, who criticized elements of the bill along with fellow Democrat Sen. Alex Padilla of California. “It is difficult to see the rationale for a bill that regulates the behavior of only a handful of companies while everyone else can continue to engage in exactly the same behavior.”[ads1];

Despite their reservations, both California senators voted “yes” to advancing the bill.

The bill targets dominant technology platforms, including Amazon.com Inc. sine

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e-commerce site, Alphabet Inc. sine

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Google’s search engine, Apple Inc. sine

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App Store and Meta platforms Inc. sine

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Facebook. These companies have been working for months to stop or change the bill, and have deployed teams of lobbyists and top executives to Washington. Some have funded advocacy groups against the measure and publicly warned that the bill could disrupt popular services.

Supporters, which include smaller technology companies like Yelp Inc.

and Sonos Inc.,

say that the bills will benefit consumers by increasing competition on platforms that abuse their market power. Senators for the bill say it makes exceptions that will protect features consumers like.

“This bill is not intended to disrupt Big Tech or destroy the products and services they offer,” said Senator Chuck Grassley (R., Iowa), the top Republican on the judicial panel. “The goal of the bill is to prevent behaviors that stifle competition.”

Still, lawmakers amended the bill Thursday to address concerns from the industry. A new provision is designed to include large foreign-owned technology platforms such as the popular TikTok app owned by China’s ByteDance Ltd., said Mr. Grassley.

The top Republican on the legal panel’s antitrust subcommittee, Senator Mike Lee (R., Utah), said he shared concerns about monopoly power in the technology industry, but was concerned that the bill was written too broadly and could cause “collateral damage.”

“It can actually anchor the four companies it’s targeting by creating a strong incentive to stop doing some business with third parties,” Lee said. “This can crush thousands of small businesses, and it can actually worsen the competitive edge of the online markets.”

Sen. Alex Padilla (D., California) voted to promote the American Innovation and Choice Online Act, despite having reservations about elements of the bill.


Photo:

michael reynolds / Shutterstock

Similar legislation was passed by the House Judiciary Committee in June last year, but has since stopped in the lower house, partly due to skepticism among California Democratic members.

The legislation will make it illegal for the largest internet platforms to unfairly favor their own products and services over other companies that use the platform. It lists several categories of illegal behavior, including a platform that prefers itself in search results or uses another company’s non-public data to compete with the same business.

Sen. Amy Klobuchar (D., Minn.), The main sponsor of the bill, said the provisions reflect the testimony of Sonos and Tile Inc., both manufacturers of technical equipment, about how large technology companies made it difficult for their products to operate on large platforms. She also pointed to a report in The Wall Street Journal about Amazon accessing data to copy products made by Amazon AMZN -0.36%

sellers.

“Time and time again we heard about how these companies are abusing their power,” Klobuchar said. “At some point, we need to have driving rules to make things fair.”

Apple’s hardware, software and services work so harmoniously that it’s often called a “walled garden.” The idea is central to the recent investigation of antitrust and Epic vs. The Apple case. WSJ’s Joanna Stern went to a real fenced garden to explain it all. Photo illustration: Adele Morgan / The Wall Street Journal

Opponents of the legislation say companies are not mistaken in making money on platforms they have created, and discouraging them from doing so will hamper future innovation.

The companies say that the legal language is so broad that it can ban services that consumers and companies like. Amazon has said it may not be able to let other businesses sell on its e-marketplace. Google says it may not be able to display Google Maps in the search results. Apple says the bill could undermine its ability to force third-party apps to get permission before collecting data about iPhone users – a concern Sen. Ted Cruz (R., Texas) said he personally heard from Apple CEO Tim Cook.

Senators who support the bill note that it includes exceptions for platform features that improve functionality or users’ privacy.

Proponents of her case have been working to make the actual transcript of this statement available online. A new provision seems to respond to Apple’s concern by saying that platforms will not be responsible for requiring consent before providing access to user data. Another provision exempts subscriptions for service fees, such as Amazon Prime.

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Legislators also expanded the scope of platforms covered by the bill to include large foreign-owned Internet platforms – an apparent response to concerns that the original bill seemed to apply to put U.S. technology giants at a disadvantage.

In general, the bill applies to companies with a market value of over $ 550 billion and more than 50 million monthly active users who are considered “critical trading partners” for other businesses to gain access to customers.

The Federal Trade Commission wanted to determine which technology platforms meet this definition – a provision that worried some Republicans. The list is expected to be short and include the largest US technology platforms, such as Google, Amazon, Apple, Facebook and Microsoft Corp.

Several senators said that the bill should be subject to further hearings before Thursday’s vote, and that it had to be changed to secure their support in the Senate.

Supporters of the bill met with White House officials on Wednesday in an attempt to get them to support the law. The Biden administration has not yet taken a position on the matter.

Write to Ryan Tracy at ryan.tracy@wsj.com

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