On Thursday, Senator Amy Klobuchar from Minnesota, along with four other Democratic senators, unveiled a major change to antitrust law that would dramatically affect the biggest tech companies. The biggest change is that the law would shift the burden of proof when considering whether an acquisition or merger is anticompetitive.
Currently, the government has to prove that a deal would be bad for consumers because it would hurt competition. The new legislation would require companies with a dominant position in their market to prove that a deal doesn’t “create an appreciable risk of materially lessening competition.” That could be a very high bar to clear.
The law would also add to the Clayton Act to prohibit what it calls “exclusionary conduct,” which it defines as conduct by a dominant company that “materially disadvantages one or more actual or potential competitors.”
Finally, the bill provides additional funding for the Department of Justice’s Antitrust Division and the Federal Trade Commission, and increases the civil penalties available to allow fines of up to 15 percent of a company’s total annual revenue from the previous year, or up to 30 percent of the revenue generated by the anti-competitive conduct.
The bill is still a long way from becoming law, and it could face challenges from Senate Republicans. It also doesn’t apply only to tech companies. It does, however, represent the most significant challenge yet to the dominance of the major tech companies in our lives and in the economy.
Here’s what it could specifically mean for Facebook, Google, Amazon, and Apple:
Arguably, Facebook has the most at risk here. The company is already facing an antitrust lawsuit filed by the FTC and the Attorneys General from 46 states, the District of Columbia, and Guam. Those lawsuits specifically seek to look at Facebook’s acquisitions of Instagram and WhatsApp, and the way it has treated third-party apps and developers that pose a potential competitive threat.
While Klobuchar hasn’t called for breaking up any specific company, the bill would give antitrust enforcers more tools to rein in what they consider bad behavior. The FTC has already said it will request divestiture of those apps and could impose significant restrictions on the social-media giant going forward.
Google is also facing a landmark antitrust case, filed last year by the Department of Justice under President Trump. The biggest area of vulnerability for Google, at least from those lawsuits, appears to be the company’s deal with Apple to be the default search engine for Safari on the iPhone and the Mac.
Under this bill, that would likely be considered exclusionary conduct, forcing Google to end the deal. Apple’s devices account for more than half of all of Google’s search volume, but it could actually be Apple with more to lose here. The deal reportedly brings in $8 billion to $12 billion in revenue for Apple each year.
Amazon CEO Jeff Bezos just announced he was leaving that role in a few months, and he may be getting out at a convenient time. The company has been under pressure to answer questions about how it uses data from third-party sellers.
Amazon has consistently denied that it uses data from individual sellers, but has said that it uses overall information from what consumers are purchasing to “identify categories and products with high customer demand.” The company points out that isn’t different from what other retailers that have private label businesses do. Still, there’s a very real chance that the FTC or Department of Justice could challenge those practices as exclusionary or anticompetitive conduct, especially if Klobuchar’s bill becomes law.
Apple’s App Store has faced criticism from developers and lawmakers, though the company has mostly avoided the same level of intense scrutiny facing its tech brethren. That could change under this law.
For example, regulators might take issue with the fact that Apple sells its own app subscriptions in the iOS App Store while charging a 30 percent fee to developers who make competing apps. That could be considered exclusionary conduct under this law, meaning that Apple could be forced to make changes to the way it operates the largest part of its highly important services division.