House Bills seeks to smash Amazon and other big tech companies

House lawmakers have proposed a series of bipartisan laws aimed at restricting the power of Big Techs, including a bill to make Amazon.

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com Inc. and other large companies have effectively split into two companies or have abandoned their private label products.

If the bills become law – a prospect that still faces significant hurdles – they could dramatically change America’s most valued companies and reshape an industry that has extended its impact to nearly every aspect of work and of life.

One of the proposed measures, called the Ending Platform Monopolies Act, seeks to require the structural separation of Amazon and other big tech companies to break up their businesses. This would make it illegal for a covered online platform to own a business that “uses the covered platform for the sale or provision of products or services” or that sells services as a condition of access to the platform. . Nor could the platform company own any businesses that create conflicts of interest, for example by creating the “incentive and capacity” for the platform to optimize its own products against its. competitors.

A separate bill takes a different approach to target platform self-preference. This would prohibit them from any conduct that “favors the Covered Platform Operator’s own products, services or lines of business over those of another business user”, or that excludes or disadvantages other companies.

The bill is expected to pass the Democratic-controlled House as well as the Senate, where it would likely need substantial Republican support as well. While Republicans are concerned about the power of tech companies, many are skeptical about changing antitrust laws.

Each of the bills is signed by both Republicans and Democrats, with more expected to join in the coming days, congressional advisers said. In total, seven Republicans are backing the bills, with a different group of three signatories to each measure, according to a person familiar with the situation.

“Unregulated technology monopolies have too much power over our economy,” said Representative David Cicillin (D., RI), the top Democrat on the House antitrust subcommittee. “They are in a unique position to pick winners and losers, destroy small businesses, raise consumer prices and put people out of work. Our program will level the playing field. ”

Rep. Ken Buck (R., Col.), the top Republican on the panel, said he supports the legislation because it “breaks the monopoly power of Big Techs to control what Americans see and say online, and fosters an online marketplace that encourages innovation. . ”

The four companies did not immediately comment on the bill. All four companies have defended their competitive practices and said they operate their products and services for the benefit of customers.

The proposed bills are among five bills announced on Friday that seek to curb the dominance of tech giants.

A third bill would oblige online platforms to make their services interoperable with those of competitors, a provision that could force different social networks to allow their users to communicate or allow e-commerce sellers to export their customer reviews from ‘from one site to another, according to a summary provided by lawmakers.

A fourth bill targets mergers, making it illegal for a large online platform to acquire competitors or potential competitors. The bill would have prevented only “a small percentage of all transactions in the tech sector” over the past decade, according to the summary.

Lawmakers also introduced a bill to increase filing fees for mergers valued at over $ 1 billion and reduce them for transactions under $ 500,000. That would generate around $ 135 million for antitrust law enforcement agencies in its first year, according to the summary. A similar law was recently passed by the Senate.

Amazon Worldwide Consumer CEO Jeff Wilke discusses the prevalence of corporate private labels. He talks to WSJ Tech Live.

Four of the five bills focus only on large tech companies. The definitions of the businesses targeted by the bills state that they must have a market capitalization of $ 600 billion or more, must have more than 50 million monthly active users or 100,000 monthly active business users, and must be a “Essential business partner” who has the ability to restrict or prevent another company’s access to customers or services.

Only four companies – Amazon, Apple, Facebook and Google – currently meet the parameters set in invoices, according to the person familiar with the matter. These are the same companies that Congress investigated in its Big Tech investigation. Walmart Inc.,

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for example, operates an online marketplace and offers private label products, but only has a market valuation of $ 392 billion, and therefore would not be subject to the restrictions.

While the bills don’t name any companies, they do reflect the issues raised by Big Tech critics. The Self-Preference Bill prohibits actions that “restrict or prevent business users from communicating … with covered platform users to facilitate business transactions,” citing a common complaint from Amazon third-party sellers regarding the limits of their ability to communicate with customers.

Amazon operates one of the largest platforms in the world for third-party sellers to sell their products, but also competes with these sellers, with its business selling similar products under an assortment of its own internal brands, often to third-party vendors. prices lower than those of its third parties. party vendors.

Some lawmakers have said the platform promotes Amazon’s own products to the detriment of sellers, and berated Amazon’s use of third-party data to inform its own line of private label products. Last year, the Journal reported that Amazon employees were using third-party data from sellers on its website to launch its own private label lines, violating an internal policy.

Amazon then opened an investigation into this practice. During his testimony to Congress, Amazon CEO Jeff Bezos said, “I cannot guarantee you that this policy has never been violated.”

In the past, the Seattle-based company has stated that “large corporations are not dominant by definition, and the presumption that success can only be the result of anti-competitive behavior is simply false.”

If the Ending Platform Monopolies Bill were to pass, Amazon might have to split its business into two separate websites, one for its third-party market and one for the first-party, or divest or stop selling its own products. Amazon’s private label division has dozens of brands with 158,000 products. It is also a market leader in devices such as Kindle e-readers, Amazon Echos, Fire TV streaming devices, Ring doorbells and a range of portable devices.

The Ending Platform Monopolies Act has been compared to the Glass-Steagall Act of the banking sector, which separates commercial banking from investment banking.

The new bill would effectively mean that “a search engine could not own a video service that it has incentives to promote in search results,” the lawmakers’ summary said, in a thinly veiled reference to Google’s YouTube.

The self-preference bill could affect the way Amazon conducts its retail business and the way Apple operates its app store.

Congress has already blocked or canceled big business expansion. Although the separation of investment banks and commercial banks in the Glass-Steagall Act of 1933 has since been repealed, banks are still prohibited from non-financial activities under the Bank Holding Company Act of 1956. The Hepburn Act of 1956 1906 prohibits the railways from ancillary activities such as coal mining.

In the absence of congressional action, tech critics are turning to federal agencies. Google and Facebook are already battling antitrust lawsuits, while Amazon and Apple are under antitrust investigation. Democrats at the Federal Trade Commission are also keen to explore the agency’s authority to regulate unfair competition methods, although that authority is relatively untested and could face legal challenges.

Write to Dana Mattioli at [email protected] and Ryan Tracy at [email protected]

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