ASPEN, Colorado, August 15, 2022 – Academics expressed concern Monday about antitrust legislation before Congress that would prevent companies from preferencing their own products on their platforms, arguing the legislation targets only certain companies and hasn’t shown it would benefit consumers.
The American Innovation and Choice Online Act, S.2992, which is currently before the Senate and aims to ban discrimination against third-party products on the host platform, defines targeted companies by their value – which effectively narrows the number of affected companies and makes it a problematic piece of legislation, according to some academics.
“I think it’s very difficult to single out specific companies…for specific rules,” Judy Chevalier, a professor of finance and economics at Yale University, said at the TPI Aspen Forum on Monday.
“It’s hard to imagine what is the principle whereby private label band aids are a bad idea at Amazon but they’re a good idea at Walmart,” she added. “The self-preferencing rule can be applied to Amazon in a way that I think can be interpreted to limit their ability to introduce and promote their private label products.
“It’s not very convincing that this behavior has thus far harmed consumers,” she continued. “So I think singling out particular companies in this broad brush way strikes me as problematic.”
Dennis Carlton, a professor of economics at the University of Chicago business school, said the legislation makes him “nervous” because of the impact on innovation of targeting certain industries over others.
“High tech industries are rapidly changing, and whenever we have regulation or try and have regulation of rapidly changing industries, it is just too hard for the regulators to keep track of what’s going on and they wind up causing delays in innovation,” Carlton said.
“Innovation is one of the strongest ways we improve our products and our standard of living. It makes me very nervous when you target specifically an industry or…make exceptions to other industries without…economic criteria or any attempt to show that this would produce a benefit not a harm. So it makes me nervous these proposals.”
Similar sentiments were expressed on a Broadband Breakfast panel in March, in which an association representing large technology companies blasted the legislation introduced by Senator Amy Klobuchar, D-Minn., as unfairly targeting certain online platforms and excluding large retailers.
“The bill very carefully picks winners and losers,” said Arthur Sidney, vice president of public policy at Computer and Communications Industry Association, which includes members like Amazon, Google, and Facebook.
State AGs weigh in on privacy legislation
On a separate panel at the Forum on Monday, the state attorneys general of Colorado and Nebraska discussed the state of privacy legislation – both in their own state and at the federal level.
Introduced in June, the American Data Privacy and Protection Act (H.R. 8152) cleared the House Energy and Commerce Committee last month for House floor votes. The proposed bill would provide Americans protections against discriminatory use of their data, require covered entities to minimize the data they collect, and prevent customers from needing to pay for privacy.
Despite his state having passed comprehensive privacy laws that are considered leading and a model by some, Colorado AG Phil Weiser said he’s “pragmatic” about a federal law.
“If a federal law is as good and strong as what we worked on in Colorado, I am comfortable with that law preempting Colorado, provided state AGs have the authority to enforce federal law,” he said. “It’s important to me to have that model because, you could imagine a world where the feds are not engaged in active enforcement, then the states can pick up that slack.”
Before the introduction of the legislation, some experts were concerned that having a number of different state privacy laws would harm smaller companies operating across multiple states. One lawyer noted that the longer companies have to wait for a uniform federal law, the greater the burden of compliance on them.
In fact, two Democratic California reps – Anna Eshoo and Nanette Barragan – were concerned that such a federal law would override their own state’s law. Eshoo proposed a provision, which was not included during a markup of the bill, that would have allowed states to add privacy provisions on top of the federal baseline.
“If you do have multiple standards,” Weiser said, “we have to solve for the problem, which is a problem right now of what I call interoperability or harmonization: How do we make sure that different state laws enable compliance across them as opposed to putting businesses in, to me, the unacceptable position of saying, ‘I can either comply with Colorado’s law or California’s law, but not both.’?”
Having had a privacy proposal in its legislature that did not pass, Doug Peterson, AG for Nebraska, said the state is taking a wait-and-see approach, including observing how states, including Colorado, fare with their own laws.
