These bills are the ultimate outcome of U.S. Congressional House hearings investigating tech companies which included hearings with the CEOs of Apple, Amazon, Google, and Facebook, and ensuing detailed reports.
*American Innovation and Choice Online Act
This bill bans covered platforms from giving an advantage to their own products, services, and lines of business over competitors; disadvantaging competing products, services, and lines of business; or discriminating between similarly situated business users. It further:
-Bars any restrictions on interoperability that do not similarly apply to the platform owner
-Explicitly bans tying (i.e. conditioning the use of one product on use of another)
-Bans the use of data about the activities of third-party businesses to improve the platformâs own product
-Forbids the platform from restricting the right of third-party businesses to use their own data generated on the platform
-Requires platform owners to allow users to uninstall pre-installed applications and change defaults
-Bans anti-steering provisions (i.e. Spotify being able to tell iOS users to subscribe online or link to the web)
-Restricts the platform owner from treating the platformâs own products differently in search or rankings
-Restricts the platform owner from controlling a business userâs pricing
-Restricts the platform owner from limiting a business userâs interoperability
-Bans retaliation by the platform owner against any business user that raises concerns with regulators
The bill does provide a privacy exception: actions that violate the above provisions can be legal if the platform owner can prove they were necessary to preserve user privacy while being narrowly tailored, non-discriminatory, and nonpretextual.
The bill also allows regulators to force the divesture of lines of business if it determines that said line of business presents a conflict of interest that leads to violation of this act.
And, frankly, this is totally bonkers. Here's what would actually happen: you'd go to buy a phone in a carrier store (as many people do) and they'd preload their own App Store and a ton of intrusive tracking junk apps. Is there any evidence that people who are not developers are dissatisfied with how Google and Apple set things up right now? If so, I haven't seen it.
*Platform Competition and Opportunity Act
This bill completely bans acquisitions by covered companies, unless the acquiring company proves that:
-The acquired company does not compete with the platform in any way and:
-Does not provide potential competition for the platform in any way and:
-Does not enhance the platformâs offering in any way.
-For good measure the act includes âuser attentionâ as one of the vectors of competition; like I said, it bans all acquisitions.
*Ending Platform Monopolies Act
This bill is in many respects a repeat of the American Innovation and Choice Online Act, but instead of banning discriminatory behavior it simply bans platforms from owning any product or service that rest on top of its platform and compete with 3rd-parties in any way. The provision is as broad as it sounds, which is interesting to think about in a historical context: operating systems used to sell the networking stack separately â would it be illegal now for iOS to include TCP/IP? Thatâs just one obvious example of how this bill would quickly devolve into product design by the judiciary.
*Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act
This bill mandates API-driven data portability and interoperability, subject to âprivacy and security standards for access by competing businesses or potential competing businesses to the extent reasonably necessary to address a threat to the covered platform or user data.â Platforms will have to petition the Federal Trade Commission (FTC) to make any changes to their interoperability interface. The FTC, meanwhile, will establish technical committees to enforce the measure with a clear charge to reduce network effects while establishing data security and privacy protections.
Unlike the GDPR it does not explicitly limit the sharing of information like a userâs contacts; at the same time, it doesnât explicitly allow it either.
Just a few points on all of this legislation:
As Ben Thompson (a leading tech analyst who trawled through this legislation) notes, it was not an accident that these bills were presented as a package, but I think it has been a mistake in a lot of coverage to view the package as one bill. But the politics is paramount. Start with the fact that while every bill was authored by a Democrat, they all have a Republican co-sponsor; if some combination of these regulations pass they will likely be with overwhelmingly Democratic support, but the fact they are starting out as nominally bi-partisan efforts is savvy.
But the major issues rise immediately. You have an approach both unworkable and undesirable â it leaves the FTC and ultimately the courts as the ultimate arbiter of what is part of a core platformâs offering and what rests on top, and not only does that evolve as technology matures, it also makes it impossible to deliver an experience that is approachable for regular consumers. As I noted above, is a networking stack part of an operating system? Is a browser? Is an App Store?
The tech industry would be right to push back against anti-acquisition bills. Putting a blanket ban on acquisitions would be so destructive to the Silicon Valley ecosystem and consumer welfare.
And maybe (finally) the public will get an "education" on the distinction between platforms and aggregators. Platforms are the most powerful economic and innovation engines in technology: they create the possibility for products that never existed previously, and are the foundation for huge amounts of innovation. It is in the interest of society that there be more and larger platforms, not fewer and smaller.
At the same time, the danger of platform abuse is significantly greater, because users and 3rd-party developers have no other alternative. That means that not only are anticompetitive actions unfair to products that already exist, they also foreclose the creation of an untold number of new products. To that end, regulators should simultaneously encourage the formation of new platforms while ensuring those platforms do not abuse their position. As Ben Thompson noted:
"Regulations on tying, defaults, anti-steering provisions, control of pricing and interoperability, and most of the other parts of Cicillineâs bill are about restricting platforms from exercising the total control entailed by owning the APIs third-parties need to exist; Aggregators, which win by controlling demand, already have built-in pressure release valves given the fact that competition is a URL away.
Thatâs not to say that the American Innovation and Choice Online Act approach doesnât have its own downsides: it would make it much more difficult to deliver an integrated product that appeals to customers by being easier-to-use, and make it more difficult to bring new technologies to market if every improvement has to be accessible to everyone on the platform".
One of the central planks of many of those pushing for new laws in this area are significant limitations on the ability of platforms to offer apps and services, or integrate them in any way that advantages their offerings. In this potential world itâs not simply problematic that Apple charges Spotify 30%, or else forces the music streaming service to hope that users figure out how to subscribe on the web, even as Apple Music has a fully integrated sign-up flow and no 30% tax; it is also illegal to incorporate Apple Music into SharePlay or Shared-with-you or Photos, or in the most extreme versions of these proposed laws, even have Apple Music at all. This limitation would apply to basically every WWDC announcement: say good-bye to Quick Note or SharePlay-as-an-exclusive-service, or any number of Appleâs integrated offerings.
I think these sorts of limitations would be disappointing as a user â integration really does often lead to better outcomes sooner â and would be a disaster for Apple. The entire companyâs differentiation is predicated on integration, including its ability to abuse its App Store position, and it would be a huge misstep if the inability to resist the latter imperiled the former.
The other company that deserves opprobrium is Amazon: while I agree that it is silly that Amazonâs private label service is being held to some sort of higher standard than its retail competitors, particularly given the clear consumer benefits from private labels, Brad Stoneâs compelling account in "Amazon Unbound" (as I have said it is a "must read) of how Amazon prioritized revenue over customer satisfaction in search â particularly in terms of advertising, but also its private labels â is an example of where pursuing short term business gains risked long term repercussions.
And so we are at the end of the beginning. I am always wary of regulation: unintended consequences always loom large, particularly in an industry as dynamic as tech. Then again, tech hasnât necessarily been that dynamic as of late: the big five companies today are the same big five companies as a decade ago, and change does not appear to be on the horizon.
And just one more regulation piece before we move on:
