Big Tech Digs In As Congress Seeks To Limit Its Market Power

Potential Legislation Considered, Big Tech Says “If It Ain’t Broke” Don’t Fix

Later today, the Senate Judiciary Committee will consider legislation dubbed the “American Innovation and Choice Online Act.” Among other measures, the package would prohibit dominant digital platforms from preferring their own products and services. This would most notably apply to Alphabet’s (GOOGL) Google search engine and Amazon’s (AMZN) ecommerce website.

Those in favor of this legislation argue consumers suffer when a handful of big players dominate any given sector, as innovation is squashed and smaller companies can’t compete. Big Tech maintains the proposed laws would cause them to increase prices, limiting the ability to service small businesses. Meanwhile, an industry group representing Amazon, Google, Meta Platforms (FB), and Apple (AAPL), is also launching a “Don’t Break What Works” ad campaign.

Big Tech Presents Its Argument and Spends Lobbying Dollars

Big Tech’s message is that the proposed legislation would mean a less fulfilling experience for most Americans. For example, Alphabet argues Google Maps directions would be restricted from search results. Apple indicates the legislation would jeopardize a popular feature requiring apps to obtain user consent before tracking data, warning malware attacks could become more common.

Google, Amazon, and Facebook have spent millions of dollars lobbying in recent years, and the tech sector is a major source of campaign donations for both Democrats and Republicans. In fact, employees of Big Tech — including Apple and Microsoft (MSFT) — represented President Biden’s five largest sources of donations. Industry observers call out Facebook parent company Meta Platforms and Amazon in particular, each of which spent upwards of $15 million on lobbying expenses during the first nine months of 2021.

Business Leaders Inside and Outside the Tech World Chime in on Legislation

Smaller tech companies such as Yelp (YELP) and Sonos (SONO) support the legislation, as do some startups including Y Combinator. Smaller outfits maintain it is impossible to compete “on the merits” when dominant tech companies can stack the deck in their favor. Other names in the world of tech backing the legislation include the founder of eBay (EBAY) and one Meta co-founder.

A group referred to as “The Coalition for App Fairness” argues smaller companies need help competing in the mobile application space. Outside the tech world, some small businesses say they worry the legislation would raise the costs associated with Big Tech’s platforms and harm its interests. It’s unclear how likely the legislation is to pass as reports indicate that lawmakers largely agree Big Tech is too powerful, but opinions vary as to solutions.

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