US lawmakers are taking a massive swipe at big tech. If it lands, the impact will be felt globally

Five antitrust laws proposed in the United States aim to aggressively curb the market power of “big tech” companies and transform the way they do business.

The bill, unveiled on June 11, targets the tremendous economic power wielded by companies like Amazon, Apple, Facebook and Google (owned by parent company Alphabet).

The broad proposals range from splitting up various big tech companies to more effectively preventing mergers known as “killer acquisitions,” in which big tech companies buy out competitors to eradicate threats to their market power.

The proposals would mean a massive change in US antitrust law. US courts applying these laws currently tend to favor the growth of large companies and view their economic strength as a sign of superior economic efficiency.

Each of the bills is supported by Democrats and Republicans. It is noteworthy that, despite record lobbying by major Washington tech companies, the proposals survived to this point.

Even if even some of the proposals get passed into law, they are likely to have a significant impact on the way big tech does business around the world.

Read more: “Big Tech” is not a single large monopoly – there are 5 companies in different industries

Who is being addressed as “Big Tech” and why?

The five bills – collectively called “A Stronger Online Economy: Opportunities, Innovation and Choice” – would apply to any “Covered Platform” that:

• has at least 50 million active monthly users in the US
• has an owner with minimum net sales or market capitalization of $ 600 billion
• and is an important trading partner for the provision of products or services on or in direct connection with the platform.

This would at least capture Amazon, Apple, Facebook and Google. The proposals are the result of a 16-month investigation into these companies by the US House of Representatives Justice Subcommittee on Antitrust Law.

During the investigation, as is well known, the CEOs of Apple, Amazon, Facebook and Google each testified before members of the committee. This culminated in a 450-page report released by a majority of Democrats last October.

The report criticized various corporate strategies as monopolistic and detrimental to innovation, competition and consumers. It said:

Put simply, companies that were once questionable, underdog startups that challenged the status quo, have become the monopolies we last saw in the era of oil barons and railroad magnates.

How the proposals would change Big Tech

The measures contained in the bills are extensive, but four key proposals stand out. First, large tech companies could be forced to split up or sell off certain companies if the operation of both the company and the platform creates a conflict of interest.

For example, Amazon was accused of using data obtained from third-party providers on its marketplace to gain a competitive advantage for its own Amazon Basics products.

Likewise, Apple could be prevented from selling its own products in competition with others in its App Store or Music Store.

Second, platforms could be prevented from favoring their own products over the products of the competition on their platform unless they could prove that doing so would not harm competition.

For example, Google has been accused of preferring its services like Google Shopping in search results. This kind of preference can prevent competing services from having an edge even if they offer a better service.

Third, the proposals target “killer acquisitions” by large tech companies. These relate to cases in which Amazon, Facebook, Apple and Google buy out smaller competitors.

These acquisitions can prevent the creation of better or more innovative products. You remove a vital competitive threat and venture capitalists could be deterred from funding remaining competitors.

Consider WhatsApp, which started out as a privacy advocate in instant messaging. This data protection has been undermined since Facebook was allowed to buy WhatsApp in 2014.

Under one of the bills, big tech companies would face bigger hurdles to making killer acquisitions. It would impose an obligation on the acquiring company to first prove that it is not competing with the target company.

Finally, another proposal would require platforms to allow consumers to easily and securely transfer their digital story to themselves or to another platform on one platform. For example, you could seamlessly transfer your Facebook history to another platform and switch between platforms without losing your data.

How likely is it that the proposals will take effect?

Big tech lobbyists are already at work in Washington, arguing that such laws would weaken successful US companies that would then be overtaken by rivals from China.

On the other hand, representatives of the two major US political parties are behind each of the bills, which could increase the chances of success.

However, this does not represent a general consensus between the parties. Everyone tends to support action against big tech for different reasons.

Many Republicans believe the platforms have a bias towards their party and want more conservative-friendly rivals to emerge. Democrats, meanwhile, are focusing on threats to democracy from the platforms’ economic power and their ability to spread misinformation, including on public health and politics.

While it is unlikely that all proposals will ultimately become law, the strategy and support from both sides of the policy mean that at least some changes are likely to be made law.

Breaking the measures down into different bills also increases the chances of some getting passed. If they were all incorporated into one, the lack of support for a proposal or two could put them all in their place.

Follow in Australia and worldwide

The effects of the proposed antitrust legislation will be felt well beyond the United States.

If measures are successfully imposed on a US company, it may choose to make the same changes worldwide. For example, Google announced last week that it would change its business operations around the world to meet the commitments that Google has made following abuse of European Union (EU) domination complaints.

The EU is already considering its own stricter laws against large digital platforms. Legislators in other countries are likely to be influenced by these steps.

In Australia, the Australian Competition and Consumers Commission has expanded its digital platform investigation to an ongoing five-year investigation and is expected to make recommendations to the government during that period.

Read more: ACCC “world first”: Australia’s federal court found that Google misled users about personal location data

Katharine Kemp, Senior Lecturer, Faculty of Law and Justice, UNSW, UNSW

This article was republished by The Conversation under a Creative Commons license. Read the original article.