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House Judiciary Committee Advances Antitrust Bill That May Lead To Breakup Of Big Tech; WGAW Praises Vote

·11-min read

UPDATE, 12:03 PM PT, Thursday, updated with WGAW comment: The House Judiciary Committee narrowly advanced a sixth and final piece of legislation that has been dubbed the “break up” bill, on the notion that it ultimately could lead to tech giants shedding assets or splitting in two.

The bill, the Ending Platform Monopolies Act, which passed 21-20, would prohibit major tech platforms to sell product lines that they own and control. The bill is aimed at rooting out conflicts of interest that arise when a company like Amazon sells its own lines of products on its platform, giving it the incentive to disadvantage rivals. It also could pose a problem for Google, which ranks videos on its search engine, and also operates YouTube.

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Over the span of 29 hours, the Judiciary Committee also passed five other bills, including one that prohibits major tech companies from discriminatory conduct, and another that requires that platforms make user data portable.

The support and opposition was not along party lines. The Ending Platform Monopolies Act was opposed by four Democrats, including Rep. Zoe Lofgren (D-CA), Rep. Eric Swalwell (D-CA), Rep. Lou Correa (D-CA) and Rep. Greg Stanton (D-AZ). Two Republicans, Rep. Ken Buck (R-CO) and Rep. Matt Gaetz (R-FL), joined with the rest of the Democrats to support the bill.

The legislation now faces a close vote in the full House, although it is unclear when the legislation would get to the floor.

On Thursday, House Speaker Nancy Pelosi told reporters, “There have been concerns on both sides of the aisle about the consolidation of power of the tech companies, and this legislation is an attempt to address that.”

She confirmed a New York Times report that Apple CEO Tim Cook called her to warn her of the potential harms of the legislation.

Pelosi indicated that she told Cook that “Congress will work its will,” and that if Apple has “substantive concerns, and they have members that have voted with them on this, they can put forth what they want to put forth. But we are not going to ignore the consolidation that has happened, and the concern that exists on both sides of the aisle.”

Rep. David Cicilline (D-RI), who along with Buck led the push for the legislation, said that he did not think that the bills would impact Amazon’s planned purchase of MGM, or platform streaming services in general.

Still, the Writers Guild of America, West issued a statement in which it said that the legislation “could profoundly affect the entertainment industry, where traditional media companies and tech company gatekeepers like Apple and Amazon are rapidly consolidating and entrenching their control.

The WGAW added, “Amazon’s intention to add MGM studios to an empire that already dominates markets spanning the entire content value chain—from production via Amazon Studios, to distribution via Prime, to access to consumers via its Channels store and Fire devices—illustrates the imminent need for greater scrutiny and reform. WGAW has been beating the drum for years about the perils of consolidation in our industry and across the economy, and is encouraged by today’s vote.”

UPDATE, 6 AM PT, Thursday: The sun had risen by the time the House Judiciary Committee recessed after advancing a series of bills that will curb the power of tech giants.

It’s also not over yet: The committee is scheduled to meet again at 11 AM ET to consider one of the most consequential of the six bills: The Ending Platform Monopolies Act, which would prohibit major tech platforms to sell product lines that they own and control. That legislation is the one that may force companies like Amazon to shed assets.

Over the span of almost 20 hours, the committee debated — and then passed — five bills. They include legislation that prohibits acquisitions of rivals by dominant platforms, as well acquisitions that expand or entrench the market power of online platforms. Another prohibits discriminatory conduct by dominant platforms. Also passed was a bill that requires that large platforms make their user data portable, as well as their services interoperable with rivals.

Rep. Zoe Lofgren (D-CA) raised a number of concerns throughout the marathon session over the bills, at times siding with Republicans on the committee who put forth a flurry of amendments.

But GOP members often targeted what they saw as the censorship of big tech, and the debate veered into a bit of a civics lesson as some Democrats reminded lawmakers that the First Amendment protects Americans from government limits on free speech, not from private companies.

What is unclear is when or if the legislation will make it to the House floor.

Rep. David Cicilline (D-RI), who along with Rep. Ken Buck (R-CO) is lead sponsor of the legislative proposals, told Deadline on Wednesday that he did not think that any of the proposals would have an impact on Amazon’s plans to buy MGM, even though he and other lawmakers have called for careful scrutiny of that transaction. Cicilline also doubted that the legislation would impact tech platforms’ streaming services.

“I don’t know without studying, and I don’t think there is anything we are doing today that would have an impact on that,” he said.

UPDATE, 4:17 PM PT: What about Microsoft?

The House Judiciary Committee has focused on major platforms Facebook, Apple, Amazon and Google, first as part of an investigation that concluded last year, and then as lawmakers have talked about the need for antitrust legislation.

But some Republicans on the committee, led by Rep. Thomas Massie (R-KY), contended that Microsoft escapes the provisions of the bills even though it has a market cap that recently passed $2 trillion.

The threshold for what companies are covered by the legislation is a $600 billion market cap, but some lawmakers also point to other criteria, including that a platform is a “critical trading partner,” or that they serve as a gatekeeper that controls access to a marketplace.

The argument came as lawmakers debated a bill that would require that large platforms make their user data portable, as well as their services interoperable with rivals.

Massie accused Microsoft of having “mysteriously avoided” scrutiny.

Rep. Darrell Issa (R-CA) questioned why the four tech giants were singled out and not others.

Rep. David Cicilline (R-RI), who leads the antitrust subcommittee, said that there are no exemptions for specific companies in the legislation, adding that it is “broadly applicable to firms that meet a definition for covered platforms.”

He also said that there was “no mystery” to the legislation, a version of which was introduced in the Senate two years ago.

Rep. Pramila Jayapal (D-WA) said that Microsoft would likely fall under the definition of a “critical trading platform” via its cloud services. Lawmakers also removed language that could have narrowed the scope of which companies were covered by the legislation. They amended the legislation to strike the word “mobile” from “mobile operating system.”

UPDATE, 12:22 PM PT: A bill that could give state attorneys general greater leverage in antitrust cases cleared the House Judiciary Committee, drawing a bipartisan group of supporters and detractors.

The committee voted 34-7 to advance the legislation, which would prevent cases filed by state attorneys general from being transferred to another jurisdiction, potentially to the advantage of a defendant.

Some Democrats opposed the legislation, including Rep. Zoe Lofgren (D-CA), whose district includes parts of Silicon Valley. She said that the legislation risks creating a parallel track of antitrust lawsuits.

UPDATE, 9:57 AM PT: The House Judiciary Committee advanced the first a half dozen bills aimed at big tech, approving a bill that would increase merger filing fees to give the government more money to enforce antitrust laws.

The bill was viewed as the most uncontroversial of the six being marked up on Wednesday, but lawmakers still debated over it for almost three hours, at times getting well beyond the issues at hand.

The committee voted 29-12 to advance the bill. Republicans Ken Buck, Chip Roy, Burgess Owens, Matt Gaetz and Victoria Spartz joined all Democrats in support.

Some Republicans objected to the bill by arguing that it should have placed more restrictions on the Federal Trade Commission and the Justice Department in how they use the money. But Republican backers like Spartz said that it was merely increasing fees, not restructuring the enforcement agencies. Buck noted that similar legislation passed in the Senate unanimously.

PREVIOUSLY: The House Judiciary Committee on Wednesday began a debate and markup of a series of antitrust bills designed to curb the power of major tech platforms like Amazon, Facebook, Google and Apple, even if that means forcing the companies to divest some of their holdings.

The legislation is aimed at so-called “dominant platforms,” or those with at least $600 billion in market cap or net annual sales or at least 50 million monthly active users.

Among the bills are one, the Ending Platform Monopolies Act, that would restrict tech giants from using their platforms to sell product lines that they own. That may force the breakup of companies, as they could not own businesses, like Amazon’s private label products, that pose a conflict of interest. Retailers on Amazon’s marketplace have accused the company of mining their data to undercut them.

In recent days the companies unleashed a flurry of statements, on their own and from industry trade groups, opposing the measures. Apple CEO Tim Cook called House Speaker Nancy Pelosi to warn about the legislation, according to a report in The New York Times.

But the legislation has drawn rare bipartisan among certain Democrats and Republicans on the Judiciary’s antitrust subcommittee, including its chairman, Rep. David Cicilline (D-RI) and its ranking member, Rep. Ken Buck (R-CO). Cicilline led an investigation of tech platforms which was made public in October, concluding that the companies were using gatekeeper or monopoly power to stifle competition.

“We are giving the department and the FTC the tools they need to restore the free markets,” Buck said, arguing that the bills were conservative and even had the support of Fox News host Tucker Carlson.

But Rep. Jim Jordan (R-OH), the ranking member of the Judiciary Committee, railed against the legislation, arguing that it would align big tech with big government, giving more power to the Federal Trade Commission. As he often does, he also chided platforms for alleged censorship against voices on the right. Another Republican on the committee, Rep. Chip Roy (R-TX) proposed an amendment that would prohibit antitrust enforcers from using increased funding to promote critical race theory.

“I think this is a distraction from what we are doing here,” said Rep. Jamie Raskin (D-MD). The amendment failed.

As some of his Republican colleagues complained of the legislation, Buck tweeted, “The House Judiciary Committee’s markup of my antitrust legislation is not rushed. The Antitrust Subcommittee’s investigation was 18 months long. Our bipartisan bills are the result of that investigation, and my colleagues have had the bills for over two weeks.”

TechNet, the industry trade group that includes some of the major platforms, called on the Judiciary Committee to slow down the process and hold hearings. “These bills would fundamentally alter the U.S. economy, stifle innovation, and weaken American competitiveness,” said the group’s president and CEO Linda Moore.

The bills include:

The Platform Competition and Opportunity Act: Prohibits acquisitions of competitive threats by dominant platforms, as well acquisitions that expand or entrench the market power of online platforms.

Facebook in particular has been taken to task for buying Instagram and other smaller rivals to maintain its social media dominance.

The Ending Platform Monopolies Act: Companies are prohibited from using their own tech platforms to sell product lines that they own and control. Companies like Amazon and Google would be prohibited from demanding that businesses purchase a product or service as a condition for access to the platform. The bill also prohibits platforms from owning an alternate businesses that pose a conflict of interest.

The American Innovation and Choice Online Act: Prohibits discriminatory conduct by dominant platforms, including a ban on self-preferencing “and picking winners and losers online.”

The Merger Filing Fee Modernization Act: Updates filing fees for mergers for the first time in two decades to give the Department of Justice and Federal Trade Commission more money for antitrust enforcement. It raises the fees for mergers valued at over $1 billion and lowers them for deals of under $500,000.

The Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act: The bill would require that large platforms make their user data portable, as well as their services interoperable with rivals. The legislation requires platforms to maintain “transparent, third-party-accessible” interfaces to enable the secure transfer of data to a user, or with user’s consent, to a business user at the direction of a user.

State Antitrust Enforcement Venue Act: Ensures that litigation filed by state attorneys general under federal antitrust laws remain in the court that they select, rather than having their cases moved to a court that is preferred by a defendant.

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