House Bills Seek to Break Up Amazon and Other Big Tech Companies
House lawmakers proposed a raft of bipartisan legislation aimed at reining in the country’s biggest tech companies, including a bill that seeks to make
and other large corporations effectively split in two or shed their private-label products.
If the bills become law—a prospect that faces significant hurdles—they could substantially alter the most richly valued companies in America and reshape an industry that has extended its impact into nearly every facet of work and life.
One of the proposed measures, titled the Ending Platform Monopolies Act, seeks to require structural separation of Amazon and other big technology companies to break up their businesses. It would make it unlawful for a covered online platform to own a business that “utilizes the covered platform for the sale or provision of products or services” or that sells services as a condition for access to the platform. The platform company also couldn’t own businesses that create conflicts of interest, such as by creating the “incentive and ability” for the platform to advantage its own products over competitors.
A separate bill takes a different approach to target platforms’ self-preferencing. It would bar platforms from conduct that “advantages the covered platform operator’s own products, services, or lines of business over those of another business user,” or that excludes or disadvantages other businesses.
The proposed legislation would need to be passed by the Democratic-controlled House as well as the Senate, where it would likely also need substantial Republican support.
Each of the bills has both Republicans and Democrats signed onto it, with more expected to join, congressional aides said. Seven Republicans are backing the bills, with a different group of three signing on to each measure, according to a person familiar with the situation.
“Unregulated tech monopolies have too much power over our economy,” said Rep. David Cicilline (D., R.I.), the top Democrat on the House Antitrust Subcommittee. “They are in a unique position to pick winners and losers, destroy small businesses, raise prices on consumers, and put folks out of work. Our agenda will level the playing field.”
Rep. Ken Buck
(R., Col.), the panel’s top Republican, said he supports the bill because it “breaks up Big Tech’s monopoly power to control what Americans see and say online, and fosters an online market that encourages innovation.”
The four companies didn’t comment on the proposed legislation Friday. All have defended their competitive practices and said that they operate their products and services to benefit customers.
Matt Schruers, president of the Computer & Communications Industry Association, whose members include Facebook, Amazon and Google, said the House bills would disrupt Americans’ ability to use products that they like. “Writing regulations for a handful of businesses will skew competition and leave consumers worse off,” he said.
Critics of the tech giants praised the legislation.
which competes with several of the tech giants, applauded the lawmakers for “taking a crucial step toward curbing the predatory and anticompetitive behaviors of some of the country’s most powerful companies.”
Gaining sufficient Republic support for the bills will be an uphill battle: While Republicans are concerned about technology companies’ power, many are skeptical about changing antitrust laws. Even if they pass, the laws could take years to implement as federal agencies try to enforce them over the companies’ likely legal objections.
“The fact that there is day-one support from Republican antitrust leaders suggests these bills are definitely in the doable range,” said Paul Gallant, an analyst with Cowen & Co. “But the gap between sounding tough at a hearing and actually voting for a breakup is significant. I do wonder if these bills can get to 60 [votes] in the Senate.”
Friday’s announcement covered five bills designed to curb Big Tech’s dominance.
Another of the measures would force online platforms to make their services interoperable with those of competitors, which could mean different social networks must allow their users to communicate or allow e-commerce sellers to export their customer reviews from one site to another, according to a summary provided by lawmakers.
A fourth bill targets mergers, making it unlawful for a large platform to acquire rivals or potential rivals. The bill would have prevented only “a small percentage of all technology sector deals” over the past decade, the summary said.
Lawmakers also introduced a bill to raise filing fees for mergers valued more than $1 billion and lower them for transactions under $500,000. It would generate an estimated $135 million for antitrust enforcement in its first year, the summary said. Similar legislation recently passed the Senate.
Four of the five bills narrowly focus on big technology companies. The definitions of companies targeted by the bills say they must have a market capitalization of $600 billion or more, must have more than 50 million active monthly users or 100,000 monthly active business users, and must be a “critical trading partner” that has the ability to restrict or impede another business’ access to customers or services.
While the bills don’t name any companies, only Amazon, Apple, Facebook and Google currently meet the parameters laid out in those bills, according to the person familiar with the matter. They are the same companies that the House panel investigated as part of its probe into Big Tech.
for instance, operates an online marketplace and has private-label products, but only has a $392 billion market valuation, so wouldn’t be subject to the restrictions.
The bill on self-preferencing bars actions that “restrict or impede business users from communicating…to covered platform users to facilitate business transactions,” invoking a common complaint from Amazon’s third-party sellers about limits on their ability to communicate with customers.
Amazon operates one of the world’s largest platforms for third-party sellers to hawk their goods, but also competes against these vendors with its business selling similar products under an assortment of its own in-house brands—often priced below the items from its third-party sellers.
Some lawmakers have said that the platform favors Amazon’s own goods at the detriment to sellers and have rebuked Amazon’s use of third-party data to inform its own line of private-label goods. Last year, The Wall Street Journal reported about Amazon employees using the third-party data of sellers on its website to launch its own private-label lines, violating an internal policy.
Amazon later opened an investigation into the practice. When testifying to Congress, Amazon Chief Executive
said: “I can’t guarantee you that that policy has never been violated.”
In the past, the Seattle-based company has said that “large companies are not dominant by definition, and the presumption that success can only be the result of anticompetitive behavior is simply wrong.”
If the Ending Platform Monopolies bill were to be passed, Amazon could have to split its business into two separate websites, one for its third-party marketplace and one for first-party, or divest or shut down the sale of its own products. Amazon’s private-label division has dozens of brands with 158,000 products. It is also a market leader on devices such as Kindle eReaders, Amazon Echos, Fire TV streaming devices and Ring doorbells.
The new bill would effectively mean “a search engine could not own a video service that it has incentives to favor in search results,” the summary from lawmakers said, in a thinly veiled reference to Google’s YouTube.
The bill that aims at self-preferencing could affect how Amazon conducts its retail business and how Apple operates its app store.
Congress has blocked or reversed big companies’ expansion before. The Ending Platform Monopolies Act has been compared with the Glass-Steagall Act, which separated commercial and investment banking. Though that provision has since been repealed, banks are still restricted from nonfinancial businesses under the 1956 Bank Holding Company Act. The 1906 Hepburn Act restrained railroads from ancillary businesses such as coal mining.
Absent congressional action, technology critics are looking to federal agencies. Google and Facebook are already fighting antitrust lawsuits, while Amazon and Apple are under antitrust investigation. Democrats on the Federal Trade Commission also want to explore the agency’s authority to regulate unfair methods of competition, although that authority is relatively untested and could face legal challenges.
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