On June 11, 2021, David Cicilline, chairman of the House Antitrust Subcommittee, and Hakeem Jeffries introduced a package of legislative measures called “A Stronger Online Economy: Opportunity, Innovation, Choice” with the purpose of holding Big Tech monopolies accountable and fighting discriminatory practices that have been conducted by some platforms.
The legislative package includes five different bills, with two of them proposing a series of measures that could become quite troublesome for U.S. companies, creating big liabilities for the American Big Tech industry.
The first bill, the American Choice & Innovation Online Act (or H.R. 3816) would make it illegal for covered platforms to engage in “discriminatory conduct,” meaning as actions that “advantage the covered platform operator’s own products, services, or lines of business over those of another business user,” or conduct that “excludes or disadvantages the products, services, or lines of business of another business user.” This bill also contemplates the creation of a Bureau of Digital Markets inside the Federal Trade Commission.
However, this bill would create big liabilities for platforms that engage in “any conduct” that could favor the platform operator’s own products, services, or lines of business over others on the platform. Also, it presents a problem if these platforms exclude, present “disadvantages,” or discriminate against any products, services, or lines of business of another business user on the platform.
Section 6.B. “Suits by Persons Injured” allows any person, including foreign state actors, to sue American Big Tech. That means it would also allow state-owned enterprises to sue for damages for online discriminatory conduct or self-preferencing under the terms of the bill, allowing, for example, Chinese state-owned enterprises to seek damages and potentially injunctive relief.
This means that the bill could create a vast range of conduct that could potentially build a lot of opportunities for foreign actors to abuse such provisions and seek a competitive advantage over American companies.
This bill also mentions that the user’s violation of the Computer Fraud and Abuse Act won’t be considered a dispositive affirmative defense. And yet, we just recently witnessed the OMB hack, perpetrated by the People’s Liberation Army to fill out profiles on U.S. citizens.
The second bill, the Platform Competition & Opportunity Act (or H.R. 3826) would prohibit covered platforms from making acquisitions unless they can show that the acquired company does not: 1) compete with the covered platform; 2) represents potential or nascent competition; 3) enhances the covered platform’s market position; or 4) enhances the covered platform’s ability to maintain its market position.
To put it simply, a big social media company such as Facebook would’t have been allowed to buy out instagram, or any other social media company for that matter. This is not the first attempt by the U.S. officials to fight Big Tech monopolies, in December, 2020, over 40 States and the Federal Trade Commission accused Facebook of buying up its rivals to illegally squash competition, calling for the deals to be unmade.
In imposing this ban on all mergers and acquisitions by “covered platforms”, through Section 7.B. “Suits by Persons Injured”, this extends to private plaintiffs to sue for injunctive relief and treble damages. Thus, the bill opens the door to frivolous, abusive suits by non-antitrust experts—including by foreign state litigants—and could easily be abused by businesses, solely to harm rivals. This strategy may be employed by Chinese state owned companies to damage american Big Tech companies.
Additionally, this bill would also allow for foreign state actors to bring litigation against America’s most successful and innovative companies to interfere with their legitimate business activities, allowing our geopolitical rivals to enhance their own power, and economies, by using U.S. laws to harm American companies, creating a clear threat to our national security.
Overall, in an attempt to boost free market competition this set of bills would only haul America in the wrong direction, punishing big Tech companies for their success and innovation while creating opportunities for foreign state actors to use US laws against US companies (including state owned).