The American Innovation and Choice Online Act Would Regulate Away Consumer Benefits

Perhaps Congress’ enthusiasm for ongoing government oversight of business decisions, embodied in tomorrow’s closed door markup of the American Innovation and Choice Online Act (S. 2992), is best explained by a quote from economist Ronald Coase:

One important result of this preoccupation with the monopoly problem is that if an economist finds something—a business practice of one sort or other—that he does not understand, he looks for a monopoly explanation.

Switch out “economist” for “regulator,” and “monopoly” with “anticompetitive,” but you get my point. If a regulator doesn’t immediately recognize the benefit of a certain arrangement and is already inclined to think the worst of a business, he assumes a sinister, anticompetitive explanation for that behavior.

We see this impulse play out at great cost to consumers in S. 2992’s likely ban on many practices and arrangements currently enjoyed by users of the biggest tech firms, like Google, Amazon, Apple, Facebook, and Microsoft. Examples include, but are not limited to:

• Degraded Google results when you search “X near me” or for local business information;
• Reduced ability of products from these biggest platforms to work interchangeably;
• Restrictions on Prime shipping and lower-priced generics being shown while shopping on Amazon; and
• Apple being forced to offer apps that it would otherwise bar for security or privacy concerns.

A last-minute draft manager’s amendment does little to minimize these risks, although it inadvertently acknowledges them. 

It’s hard to imagine how regulators could not see how these arrangements benefit consumers and instead read into them “anticompetitive” motives, but it’s impossible to enlighten them if bills continue to be pushed through closed-door markups and not subjected to open hearings. A staffer from co-sponsor Sen. Grassley (R-IO) told reporters, “If we make carveouts for all the pro-consumer features, then the bill will be useless.” Yikes!

With all the real challenges facing Americans right now, the least the U.S. Senate can do is refrain from breaking the online services they value and depend on.