The House Judiciary Committee Takes on Big Tech – JD Supra

Mark my words: Change is coming. Laws are coming. That was the warning David Cicilline (D-RI) the House Judiciary Antitrust, Commercial, and Administrative Law Subcommittee Chairman gave on February 25th at the first in a series of hearings following the Subcommittees 16-month probe into Big Techs gatekeeping power. This one, titled Reviving Competition, Part 1: Proposals to Address Gatekeeper Power and Lower Barriers to Entry Online, focused on three proposed reforms: interoperability and data portability requirements, nondiscrimination rules, and structural separation. The majority of the hearing witnesses, ranging from the CEO of Mapbox to the Director the Competition Advocacy Program at the Global Antitrust Institute, were clear supporters for these proposed reforms. While none are new ideas, each, if passed, would be a significant sea change in competition law.

Interoperability and Data Portability

Imposing interoperability and data portability is not a new idea. It already permeates our technological world. For example, telecommunications would not be possible without one users carrier networks interconnecting with other carrier networks. The Subcommittees proposal is to impose interoperability and data portability requirements. Applied to Big Tech, interoperability and data portability would require dominant platforms to make their services compatible with other networks, and make content and information portable between them. Snap Inc.s 2019 Annual Report illustrates this concern: [T]he vast majority of our computing [runs] on Google Cloud and AWS, and our systems are not fully redundant on the two platforms. Any transition of the cloud services currently provided by either Google Cloud or AWS to the other platform or to another cloud provider would be difficult to implement and will cause us to incur significant time and expense. Witnesses testified that interoperability requirements should be tailored, requiring technical detail and frequent updates to address changing technology. There was also some support from witnesses for Congress to give an agency rulemaking authority to oversee interoperability for gatekeeping platforms. Congress may like the idea of interoperability, but implementation is another question. What will count as a gatekeeping platform? How much interoperability will be required? How will any such requirements balance a need for access without deflating the incentive to create market-changing platforms in the first place?

Nondiscrimination Requirements

The nondiscrimination requirements proposed by the Subcommittee are two-fold. First, dominant platforms would be prohibited from engaging in self-dealing. Second, dominant platforms would be required to offer equal terms for products and services that are equal. Apple, for example, can give preference to its owns apps in an app store that it also runs, to the detriment of third-party offerings. Nondiscrimination requirements is not a new idea either. They play important roles in facilitating transportation and communications. For example, the Federal Communications Commissions Open Internet Order implemented nondiscrimination principles in prohibiting internet service providers from blocking or discriminating between lawful content on the internet. Advocates of a nondiscrimination regime also support a tribunal to police discrimination, which could require a recidivist discriminator to sell off a content arm of its business, and a private right of action to victims discriminated against by dominate platforms.

Structural Separation

Structural separation would prohibit certain dominant platforms from operating in an adjacent line of business. In other words, one could not be both a platform and own the content on the platform. By mandating separation, the idea is to remove perceived conflicts of interest between platforms competing with those that depend on them for access to customers. The Subcommittee also discussed using structural separation to introduce competition where a dominate platforms could both lock in users and keep competition out by tying products and service. Structural separation has also been imposed to restore competition in the past, namely in the railroad industry, under the Bank Holding Company Act of 1956, and with the breakup of AT&Ts Bell System.

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As one witness pointed out, [t]his is not the first time that Americans have heard proposals to apply the existing antitrust laws or extend them to limit or reduce perceived excessive concentrations of economic power. Political realities are in play just as much as legal ones. Without harnessing some bipartisan support, antitrust reform is unlikely as long as the legislative filibuster remains. Interest in antitrust reform is undoubtedly on the rise, but only time will tell if we are at the dawn of a new era, or just at high noon in the constant cycle of antitrust enforcement.

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The House Judiciary Committee Takes on Big Tech - JD Supra