The agreement on the Digital Markets Act (DMA) released on March 24, 2022 has clearly been a source of inspiration for S.2992,”The American Innovation and Choice Online Act,” now pending before the Senate, and its companion bill, H.R.3816, in the House. Finding the right balance between the many and varied interests that these bills seek to address requires difficult tradeoffs that need to be considered carefully and not on a rushed timetable. Given what’s at stake, we cannot afford to get this wrong.
SIIA is concerned that these legislative proposals will –
- Weaken national security. Large U.S. tech companies are critical to important R&D in emerging technologies like AI and quantum computing and provide a significant portion of the backbone for the global internet. Hobbling them will have profound effects on U.S. national security. First, it will create a vacuum that will be filled in the short term by massive non-U.S. companies that do not subscribe to the democratic values that the U.S. believes are essential for the future of tech and our geopolitical order. This will strengthen certain companies tied to authoritarian regimes as there are no large platforms in other democratic nations – including Europe – primed to provide the services and access that these U.S. companies do. This puts the U.S. government at a disadvantage for national security and law enforcement needs while bolstering China’s bid to overtake the United States in economic power and technological innovation.
- Weaken cybersecurity. At a time when we are more vulnerable to cyberattacks, ransomware, and privacy intrusions by malicious state and non-state actors, these bills will hinder the ability of large platforms to maintain a safe and trustworthy internet ecosystem. By restricting these companies in their ability to protect consumers’ personal information, the bills, if enacted, will make the enforcement of strong cybersecurity policies more difficult and put at risk the security of the U.S. and its allies and partners.
- Weaken privacy protections. The bills will also undermine consumer privacy. Tech platforms often compete by offering better privacy protections than their competitors. But such company-specific privacy policies could easily run afoul of the bills’ duty not to discriminate. In addition, the proposals require large U.S. tech companies to turn over user data to any company that requests it, irrespective or where it is located. Under the domestic laws of China and Russia, for example, the government can compel the disclosure of information, which would pose a threat to U.S. persons.
- Diminish consumer welfare. For decades, U.S. antitrust law has been guided by the consumer welfare standard with the focus of competition policy being on protecting the interests of consumers. Under this standard, the conduct of individual companies is only relevant if it is anti-competitive. Competition law normally applies to all businesses, not just a small group of large companies. These proposals break with those principles and are likely to result in consumers having to pay more for products and services that also might become harder and less convenient to access.
- Create unintended but serious spillover effects. Based on trends in another country that has adopted similar-type rules, there is concern that while the bills only directly apply to a small group of companies, it will come to be seen as the rulebook on good business behavior and therefore expand its reach to a much larger group of companies and the broader economy.
The blunt force of antitrust will not address perceived concerns around “big tech” in the United States. Those revolve largely around how companies collect, store, and use personal data. While the DMA may serve the EU’s interest in fostering European tech champions, that concern does not justify the significant consequences that the U.S. legislation is likely to have on U.S. consumers, small- and medium-sized businesses, and national security.
We think these bills are fatally flawed and cannot support final passage.