Competition & Regulation

House Democrats Take Aim At Consumer Convenience With Misguided Antitrust Proposal



House Democrats are planning to introduce five pieces of antitrust legislation in the coming days. One such proposal is a radical “Glass-Steagall” style legislation aimed at forcing structural separation policies that would harm consumers and disrupt the economy. Contrary to its mission, the proposed legislation would have a chilling effect on innovation and leave consumers worse off. Lawmakers should reject this ill-advised attempt to undermine the consumer welfare standard and reshape the economy.
The Ending Platform Monopolies Act would make it unlawful for a “covered platform” (those with 50,000,000 United States-based monthly active users, $600 billion in market capitalization, and considered a critical trading partner) to operate or control any line of business other than the platform when the new line of business gives rise to “irreconcilable conflict of interest.” Irreconcilable conflict of interest, according to this bill, arises when a platform has the “incentive and ability” to advantage the platform’s own products or services or exclude or disadvantage the products or services of a competing business. In other words, even if a covered platform does not unfairly favor its own products, but is deemed to simply have the ability and incentive to do it, the platform would be deemed to have violated the law. This gives government bureaucrats free reign to limit consumer choice and take a wrecking ball to the free market.
For over forty years, antitrust enforcement has been tied to objective measures of consumer harm. However, this legislation would be a departure from this consumer-first approach and allow for ideologically driven government intervention. It would give unelected bureaucrats troubling flexibility to determine what private companies have an incentive to do, absent any real measure of consumer harm. As NTU Foundation’s Director of Technology Policy, Josh Withrow, points out, regulators are poor predictors of the direction of the economy. Without having to prove any anticompetitive harm, regulators will be a bull in the china shop. The losers under this proposal would be consumers, who currently enjoy the variety of offerings and the convenience of using them. Using aggressive heavy-handed intervention would undermine the United States’ role as the world leader in technological innovation.
Taking a step back, this legislation targets commercial behavior that is not only widespread, but in many cases a benefit to the consumer. In addition to being retailers, Costco, Walmart, and Target all have private labels that compete directly with name brands in their stores. Costco’s Kirkland Signature brand vodka competes side-by-side with a name brand like Grey Goose, and it could easily be argued that this gives Costco the incentive and ability to favor its own product. However, this is a pro-consumer relationship that benefits both parties, increases variety, and creates more competition. John Deere, while famous for their tractors, started off by making plows. They now have expanded their business offerings to include construction equipment, lawn mowers, and technology like JDLink to allow consumers to work more efficiently. Consumers are the greatest beneficiary of this increased offerings of products and services.
Using laws and regulations to target a particular industry can lead to unintended consequences, but the targeting of just a handful of companies within an industry could lead to even more problems for consumers. The ramifications of a “Glass-Steagall” style structural separation would be much more expansive than lawmakers may realize. Google Maps, AirPods, Prime Video, and many more offerings would be deemed unlawful under this legislation. Similarly, other businesses rely on the innovation and services of these technology companies. For example, Uber, Snapcat and numerous other companies utilize Google Maps and this reduces the redundancy of multiple companies spending resources developing their own maps that may be peripheral to their service offerings. Not only would consumers lose access to products and services they enjoy, it would also disincentivize companies from innovating. This bill is not pro-competitive, and instead would create a massive regulatory hammer that bureaucrats can use to bludgeon growing American companies.
Republicans should be wary of the approach Democrats are taking to target a handful of large companies. The attempt to scale down the size of successful American companies fits into the larger progressive goal of creating a more equitable (not equal) economy. As can be seen with progressives’ tax priorities, creating government-enforced equity requires a lower ceiling on how much individuals and companies should earn. While so-called “Big Tech” may be a source of bipartisan frustration, progressive Democrats are unlikely to stop there and will continue their crusade to other sectors of the economy. The proposed framework, especially if it garners strong bipartisan support, could be used to pursue actions to limit the size of other large companies in a result-oriented antitrust agenda. Conservatives should be extremely concerned about proposals to import European-style competition policy here. At the start of the 21st century, 41 of the world’s most valuable companies were based in Europe, but that number has dropped to just 15 today.
Essentially, this legislation would attempt to outlaw consumer convenience.  As we’ve seen with the retirement of Internet Explorer, sale of AOL and Yahoo, and mass exodus of users from MySpace, the position of even large online platforms is far from assured. These companies must constantly adapt and innovate to stay competitive and relevant. Banning companies from expanding their offerings is antithetical to free market capitalism and leaves consumers worse off. Addressing consumer harm and protecting the competitive process should be the goal of antitrust laws. Punitive measures will hurt our economy and leave consumers with less power to choose which products they want to use.

Will Yepez is a Policy and Government Affairs Associate for National Taxpayers Union.