On Monday, the Wall Street Journal reported that the U.S. Department of Justice wrote to the Senate Judiciary Committee to endorse the American Innovation and Online Choice Act, a bill seeks to preserve online competition by banning self-preferencing conduct by online platforms with large numbers of users or annual revenues of more than half a trillion dollars.
The letters sent to the Senate and House Judiciary Committees by Peter Hyun, Acting Assistant Attorney General, were provided to Tech Policy Press by the Justice Department. Hyun writes:
The Department views the rise of dominant platforms as presenting a threat to open markets and competition, with risks for consumers, businesses, innovation, resiliency, global competitiveness, and our democracy. By controlling key arteries of the nation’s commerce and communications, such platforms can exercise outsized market power in our modern economy. Vesting the power to pick winners and losers across markets in a small number of corporations contravenes the foundations of our capitalist system, and given the increasing importance of these markets, the power of such platforms is likely to continue to grow unless checked. This puts at risk the nation’s economic progress and prosperity, ultimately threatening the economic liberty that undergirds our democracy.
The legislation, if enacted, would emphasize causes of action prohibiting the largest digital platforms from discriminating in favor of their own products or services, or among third- parties. In so doing, it would provide important clarification from Congress on types of discriminatory conduct that can materially harm competition. This would improve upon the system of ex ante enforcement through which the United States maintains competitive markets with legal prohibitions on harmful corporate conduct. By confirming the illegality of behaviors that reduce incentives for smaller or newer firms to innovate and compete, the legislation would supplement the existing antitrust laws in preventing the largest digital companies from abusing and exploiting their dominant positions to the detriment of competition and the competitive process. The Department is strongly supportive of these objectives and encourages both the Committee and Congress to work to finalize this legislation1 and pass it into law.
The Department views the legislation’s new prohibitions on discrimination as a helpful complement to, and clarification of, existing antitrust authority. In our view, the most significant benefits would arise where the legislation elucidates Congress’ views of anticompetitive conduct—particularly with respect to harmful types of discrimination and self-preferencing by dominant platforms. Enumerating discriminatory and self-preferencing conduct that Congress views as anticompetitive and therefore illegal would clarify the antitrust laws and supplement the available causes of action and legal frameworks to pursue that conduct. Doing so would enhance the ability of the DOJ and FTC to challenge that conduct efficiently and effectively and better enable them to promote competition in digital markets. The legislation also has the potential to effectively harmonize broad prohibitions with the particularized needs and business practices of individual platforms over time.
If enacted, we believe that this legislation has the potential to have a positive effect on dynamism in digital markets going forward. Our future global competitiveness depends on innovators and entrepreneurs having the ability to access markets free from dominant incumbents that impede innovation, competition, resiliency, and widespread prosperity. Discriminatory conduct by dominant platforms can sap the rewards from other innovators and entrepreneurs, reducing the incentives for entrepreneurship and innovation. Even more importantly, the legislation may support the growth of new tech businesses adjacent to the platforms, which may ultimately pose a critically needed competitive check to the covered platforms themselves. We view these benefits as significant. For these reasons, the Department strongly supports the principles and goals animating the legislation and looks forward to working with Congress to ensure that the final legislation enacted meets these goals.
The bills in the House and Senate advanced out the committees with bipartisan support, but still face an uncertain future.
Read the letters:2022.03.28-OUT-Durbin-et-al.-DOJ-Views-Letter-S.-2992-and-H.R.-3816
Justin Hendrix is CEO and Editor of Tech Policy Press, a new nonprofit media venture concerned with the intersection of technology and democracy. Previously, he was Executive Director of NYC Media Lab. He spent over a decade at The Economist in roles including Vice President, Business Development & Innovation. He is an associate research scientist and adjunct professor at NYU Tandon School of Engineering. Opinions expressed here are his own.