Senate Judiciary approves bill cracking down on tech monopolies

Sen. Klobuchar slams 'overgrown standing army of monopolists' as Big Tech pushes back

Sens. Charles E. Grassley and Amy Klobuchar are pushing legislation aimed at stopping digital giants from preferring their services and goods over those of smaller companies. (Tom Williams/CQ Roll Call)
Sens. Charles E. Grassley and Amy Klobuchar are pushing legislation aimed at stopping digital giants from preferring their services and goods over those of smaller companies. (Tom Williams/CQ Roll Call)
Posted January 20, 2022 at 3:16pm

The Senate Judiciary Committee on Thursday overcame stiff opposition from tech companies and a prolonged debate to approve a bipartisan bill that would prohibit digital giants like Apple, Amazon, Facebook and Google from giving preference to their own products and services over those of their competitors.

The bill, backed by Sens. Amy Klobuchar, D-Minn., Charles E. Grassley, R-Iowa, and nine others, would cover companies that have at least 50 million U.S.-based monthly active users and a market capitalization or annual sales greater than $550 billion in two prior years.

The bill was agreed to on a bipartisan vote of 16-6. It would give the Federal Trade Commission and the Department of Justice the ability to assess which companies are covered by the measure, should it eventually clear both chambers and be signed into law by President Joe Biden.

Should enough lawmakers and Biden sign off, the bill would be the first to challenge the market power of large tech platforms since internet-based devices and online commerce became commonplace.

The House Judiciary Committee in June of last year approved a similar measure backed by Reps. Pramila Jayapal, D-Wash., and Lance Gooden, R-Texas, that would authorize the Federal Trade Commission to break up companies if they are found to engage in conflict of interest practices, such as preferring their own products over those of their competitors.

While the Senate bill was uniformly opposed by several tech industry groups, it was welcomed by groups representing smaller tech companies and consumer groups including Consumer Reports.

The House and Senate bills emerged after a 16-month investigation by the House Judiciary Committee led by Reps. Jerrold Nadler, D-N.Y., and David Cicilline, D-R.I., that found the four largest tech companies each possess significant market power over large swaths of the U.S. economy. That probe recommended, among other steps, legislation prohibiting platforms from engaging in self-preferencing.

While top tech companies including Apple, Google, Facebook and Amazon have given consumers "incredible innovations that employ many people," they also have amassed market power, Klobuchar said, citing the example of Google controlling 90 percent of the online search market.

"The invisible hand of competitive entrepreneurship is the key to a strong capitalist economy," Klobuchar said, citing the Scottish economist Adam  Smith, adding many forget Smith's views about the role of government in curbing the "overgrown standing army of monopolists."

Grassley said the bill would "help level the playing field for small businesses and entrepreneurs that rely on dominant big tech platforms to reach consumers," adding the measure is not intended to "break up big tech or destroy the products and services they offer."

The aim is to prevent conduct that stifles competition, Grassley said.

The measure was opposed by the U.S. Chamber of Commerce, the Chamber of Progress, which represents tech companies, as well as the Information Technology & Innovation Foundation (ITIF) and TechNet, among others.

Several lawmakers — including Sens. Dianne Feinstein, D-Calif., Mike Lee, R-Utah, Tom Cotton, R-Ark., Ted Cruz, R-Texas — opposed some elements of the bill and some offered amendments that would alter the scope and definitions of the legislation.

Feinstein — whose state is home to Apple, Google's parent Alphabet, and Meta, the parent of Facebook — said the bill, rather than being broadly written to address anti-trust measures, targets specific U.S. companies.

Feinstein also contended, without citing a specific department, that some U.S. agencies oppose the bill because it could weaken cybersecurity and privacy measures. She did vote to move the bill as amended out of committee, however.

Sen. Thom Tillis, R-N.C., said he had as many as 82 amendments but would withdraw them on the understanding that his concerns would be addressed as the bill progresses in the chamber.

Sen. John Cornyn, R-Texas, proposed an amendment that would prohibit certain Chinese companies and other entities in adversary countries from obtaining data from Apple, Alphabet, Meta and Amazon. His proposal was further amended by Klobuchar, and agreed to by the panel.

The U.S. Chamber said the bill "charts a dangerous new course for antitrust by singling out specific companies instead of focusing on conduct, as in current law."

The ITIF said the bill would hurt U.S. companies in the online music streaming business — for example, Apple Music, Amazon Music and YouTube Music — while leaving untouched the market power of Spotify, a Swedish company, which ITIF said has a 32 percent market share.

But the bill was widely backed by 40 smaller tech companies, including online search company DuckDuckGo and Sonos, the maker of connected speakers.

Those companies said "dominant technology companies' ability to give their own products and services preferential placement, access and data via online platforms and operating systems prevents companies like them from competing on the merits."

Consumer Reports backed the bill, saying it would open "technology innovation to a broader and more diverse set of companies and individuals."

Consumer Reports said, for example, that the maker of a smartwatch competing against Apple Watch has only two options at the moment: "Offer its own smartphone and smartwatch bundle of services that a consumer would prefer over the iPhone and Apple Watch; or hope that Apple allows any competing smartwatch to have the same level of integration and interoperability with iOS as the Apple Watch does."

The Senate bill, if it becomes law, "will allow everyone to innovate without artificial restrictions resulting in more innovation and choice for consumers," Consumer Reports said.