What Do We Want from Our Platforms?

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Two recently introduced House bills seek to restructure antitrust law, supposedly to tackle purported abuses by “big tech” firms. They aim to change how the online platforms we use every day work with us and the enterprises that use the platforms to reach us. However, seemingly absent from the debate is a simple question: What do we, as consumers, want from our platforms, and will these bills help that?

The two bills are the American Innovation and Choice Online Act, sponsored by Rep. David Cicilline (D-RI) and Rep. Lance Gooden (R-TX), and the ‘Ending Platform Monopolies Act, sponsored by Rep. Pramila Jayapal (D-WA).

Rep. Cicilline calls his bill a “Glass-Stegall for the Internet,” referring to the disastrous Great Depression-era law that forced a separation between retail and investment banking (for more on the ill effects of this bill, see this study by John Berlau and Daniel Press). Its intent is to force the separation of different lines of business by preventing a platform preferencing its own products or services or setting certain rules for the platform, among other things (Sam Bowman of the International Center for Law and Economics has a good list here).

The Jayapal bill goes further, essentially saying that if you offer your services as a platform to an enterprise, you cannot compete with it. This bill would allow federal agencies to break up companies that run afoul of these punitive restrictions.

How might platforms react to these new laws, should they pass? An e-commerce giant could react in several different ways:

  1. Focus on its own products and services and kick competitors off its platform. This would kill thousands of businesses that use the platform.
  2. Take non-preferencing seriously and simply turn into a very basic sales platform, offering up a list of products in response to a search. In essence, this would turn the platform into a high-tech version of classified ads or Craigslist.
  3. Submit to pressure and spin off subsidiaries, losing the benefits of shared information and cross-subsidies, as well as the package deals of services it might offer customers.

Similarly, how might a computer/software/phone manufacturer react? It might:

  1. Shut down its app store and concentrate on its own products, locking developers out of its system.
  2. Ship only blank phones with a bare-bones operating system that you would have to populate yourself.
  3. Spin off its phone division, which means that the interoperable capabilities it has developed with its computer and other devices would wither on the vine.

If any of these came about, would it benefit consumers? In some cases, the tech-savvy or the comparison shopping-obsessed might gain some small utility, but for the most part, the average consumer will see her user experience severely degraded. And that is before we account for the chilling effects on innovation and, yes, competition, that our colleagues Sam Bowman and Jennifer Huddleston identify (there’ll be more from CEI experts soon).

In The Antitrust Paradox, the late Judge Robert Bork argued that the primary purpose of American antitrust laws from their beginning was to safeguard consumer welfare, not the welfare of competitors. Consumer welfare appears to be wholly absent in the intent of these new antitrust laws. They represent nothing less than a rejection of American antitrust law and tradition and the Europeanization of that law.