The American Innovation and Choice Online Act — A Bill Not Ready for Primetime

Proponents and opponents of the main tech-oriented antitrust bills currently before Congress all agree on one thing: To have a chance of passing before the midterms, a floor vote will likely need to happen before Congress starts its August recess. Whether born of desperation or a desire to test-run novel approaches to legislative PR, bill proponents have enlisted the help of, among others, an online tabloid news outlet and a British comedian in their efforts to sell voters on the merits of the American Innovation and Choice Online Act (AICOA).

But legislatively overruling decades of legal precedent, which is what supporters of the bill are proposing to do, is no laughing matter. This legislation has wide-ranging potential consequences and thus requires careful deliberation, not a rushed vote. Neither AICOA nor its companion bill in the House has had a single hearing, where experts have been questioned about any collateral repercussions that might result from them. And make no mistake. AICOA is rife with potentially serious unintended consequences. Below is a sample of issues related to AICOA in its current form.

For decades, the overriding goal of the antitrust laws in the United States has been to protect the interests of consumers. The consumer welfare standard, and its attendant focus on economics in evaluating the relative benefits and harms of corporate actions, has worked extraordinarily well. This is particularly true in the tech space, where it has helped unleash a level of innovation that is the envy of the world. Remarkably, this has led some to surmise that antitrust law is in need of a major overhaul.

AICOA seeks to deliver on this promise by overturning years of antitrust precedent. While Congress can do that, to do so based on legislation that has never been properly vetted, is overbroad, and leaves foundational terms undefined, will create great uncertainty for consumers, businesses, the enforcement agencies, and the courts.

Take, for example, the ban on “self-preferencing” in section 3(a)(1). Looking at the text, the provision seems to ban companies that are covered by the bill from selling or promoting their own products or services if they are in competition with those of their direct competitors. But this interpretation is subject to uncertainty. Not only is the proposal itself silent on what it means by terms like “preference” and “materially harm competition,” these terms are also undefined in existing antitrust law. And this is to say nothing of the practical challenges associated with implementing the rule, even if the above interpretation eventually is confirmed by the courts. A list of search results, after all, must place someone or something first, and deciding which product or service “is the best” is inherently subjective.

Another example of the proposal using language that is woefully unclear centers on the issue of content moderation. Section 3(a)(3) prohibits “discrimination in the application or enforcement of the terms of service.” The Democratic bill drafters, Senator Amy Klobuchar (MN) and Representative David Cicilline (RI), have made clear that, as they see it, the sole goal of the bill is to regulate commercial practices, and they dismiss out of hand any connection to content moderation. The lead Republican sponsors, Senator Charles Grassley (IA) and Representative Ken Buck (CO), on the other hand, are just as adamant that they see AICOA as a helpful tool in fighting what they contend is a liberal bias among digital platforms, and that their support for the bill is contingent on this interpretation.

Irrespective of which side ultimately might prevail, their incongruent understandings of what the bill is meant to do make two things plain. First, whether the Democrats agree or not, since Republican lawmakers have made clear that their support for the bill is conditioned, at least in part, on content moderation concerns that will be part of its legislative history, which could well affect how a court would rule if an appropriate case should come before it. Second, given the importance of the issue, not least in the aftermath of the Supreme Court’s recent decision in Dobbs, it would be almost reckless not to get more clarity on what the bill actually is intended to do in this area before moving it forward.

Beyond these specific examples, however, the bill more broadly gives the Department of Justice and the Federal Trade Commission tremendous leeway to decide what is lawful, which companies are covered, whether such a designation applies to the company’s entire business or only a part of it, and for how long a designation remains in effect. And while section 4(a) states that the enforcement agencies “shall jointly issue agency enforcement guidelines outlining policies and practices … with the goal of promoting transparency …,” the very same provision also says that these “guidelines … do not … bind…” those same enforcement agencies. How the legislative text will be interpreted and implemented, in other words, is left to the whims of whoever oversees the enforcement agencies at any given time.

It would be unreasonable and impractical to demand that a legal text be fashioned with such precision as to leave no room for doubt. That said, the operative language in AICOA is so unclear and malleable that it would be highly vulnerable to shenanigans and political abuse. Because of this, it would behoove bill proponents to find some agreement about what they are trying to accomplish before attempting to push this bill across the finish line.

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