Industry groups are ramping up their fight against regulation.
For several years now, Congress and regulatory agencies have warned that they could, in the future, try to break up Big Tech. In the past week, that threat got more real.
On June 11, Congress introduced a sweeping set of five antitrust bills with notable levels of bipartisan support that targeted the tech giants — Amazon, Apple, Facebook, and Google — and which could potentially break up their core businesses. On June 15, in a surprise move, the White House appointed Big Tech nemesis Lina Khan to be not just a commissioner of the Federal Trade Commission (FTC), but the chair of the powerful federal agency that enforces antitrust laws.
“If I were running a big tech company, my pulse would be running a lot faster today than 24 hours ago,” Bill Kovacic, who led the FTC under George W. Bush’s presidency, told Recode the day after news broke that Khan would chair the FTC.
So now, even though details are still unclear about exactly what Khan or the antitrust bills could accomplish, Big Tech companies’ supporters are ramping up their defenses. And one of the main antitrust critiques that tech industry groups and lobbyists are pushing back against is the idea that Big Tech is too big and needs to be reined in.
These pro-tech groups are arguing that the current proposed legislation is a gross overreach that could damage the US economy and make it harder for everyday Americans to use popular technology that they’re used to getting for free, like email and social media. These tech industry supporters are trying to convince lawmakers that regulating Big Tech will have unintended consequences that will hurt consumers. And they’re particularly taking aim at Khan, who has publicly advocated for breaking up tech companies like Amazon.
“These proposals are ones that are not going to stand up to public scrutiny,” said Adam Kovacevich, who is CEO of the center-left tech advocacy group Chamber of Progress — which is backed by Amazon, Facebook, Google, and other tech companies. “At the end of the day, what people want from Congress is to fix the problems that are broken, not to break the things they already feel are working.”
Why industry leaders are scared of Lina Khan
Khan’s appointment to the FTC — which passed 62–28 with bipartisan support — is seen as one of the most serious regulatory threats to tech companies yet.
That’s because the FTC has broad powers to block major tech companies from buying their competitors, as well as smaller upstarts that could one day become major competitors. This means the FTC in the future could stop Facebook from, say, buying the next Instagram. And the FTC could go even further, by forcing tech companies to retroactively separate acquisitions and existing lines of businesses, like preventing Amazon from selling Echo devices and Kindles on its website (although such an effort would be hard to achieve).
And Khan made a name for herself in 2016 when she published an academic paper that laid out a legal case for breaking up Amazon. Since then, she’s been dubbed the leader of the “hipster antitrust” movement among young scholars who want to expand existing antitrust law to better target issues like corporate concentration and income inequality. Khan has also gained the support of politicians across the ideological spectrum, including progressive Sen. Elizabeth Warren and Republican Sen. Josh Hawley.
The argument in favor of separating some of Big Tech’s business lines is that some major tech companies allegedly harm consumer choice and competitors by running their own marketplaces and giving preference to their own products over those of competitors. One example that’s come up during antitrust investigations is a report that showed Amazon employees used data about third-party sellers on Amazon’s marketplace to launch Amazon-branded competing products.
Under Khan, the FTC could start aggressively pursuing cases on these types of issues. And so some tech industry supporters are taking aim at Khan’s past academic writing, which has been critical of Amazon and the economic power of other big tech companies.
“Lina Khan becoming the chair creates an air of prejudice and bias in the decisions made when it comes to technology businesses,” Carl Szabo, vice president and general counsel of NetChoice, an industry group whose funders include Google, Facebook, and Amazon, told Recode.
Szabo said he believes that, because of her academic work, Khan should recuse herself from any cases involving technology. He noted that back in 1966, a pharmaceutical company called American Cyanamid successfully sued the FTC, forcing the then-chair of the committee to recuse himself from a case because of his perceived bias against the company. Khan has previously dismissed the idea that she should issue a blanket recuse from all tech cases, and said she would consult with the ethics board of the FTC if questions arise about recusal on a particular case. The FTC declined to comment on criticisms of Khan’s past work.
At this point, there’s no indication any major tech company would consider pursuing a legal case on the basis of Khan’s perceived bias, but the fact that tech industry group leaders are floating the idea shows just how alarmed they are by her powerful new role.
Regulating tech is complicated even for experts
The challenges Big Tech is facing extend beyond Khan and the FTC. Congress has introduced five wide-reaching pieces of legislation that could hurt these tech giants. Pro-Big Tech industry advocates are on the defensive, calling up lawmakers to explain why they shouldn’t support this wave of bills.
“There is an effort to educate lawmakers on the unintended and deleterious consequences of bills we’re seeing in the House,” said Szabo.
Chamber of Progress sent a letter to Rep. David Cicilline (D-RI), who is leading Big Tech antitrust legislative efforts as chair of the powerful House Antitrust Subcommittee. In the letter, the group laid out potential worst-case scenarios for consumers if the legislation passes, including a future where Alexa users might not be able to order from Amazon, YouTube might have to let users upload porn, and Apple’s iPhones might be sold without any preinstalled apps.
Bloomberg seemed to confirm at least one of these scenarios when it reported on Wednesday that Cicilline said his bill would block Apple from installing its own apps on iPhones because doing so would disadvantage competing app makers. Tech analysts, lobbyists, and commentators immediately criticized this, mocking the idea of consumers buying an iPhone that’s essentially a blank slate, without apps like the Apple App Store necessary for basic smartphone functionality.
“It’s one thing to say that you’re against discrimination. It’s another thing to say that you’re against iMessage and FaceTime pre-installed on an iPhone,” said Chamber of Progress’s Kovacevich.
Cicilline’s spokesperson later wrote on Twitter that the congressman was misquoted and that the bill would not block Apple from pre-installed apps but would instead force the company to let people uninstall or switch Apple’s default apps. Currently, on newer iPhones, you can delete some — but not all — of Apple’s installed apps. You can already switch the default apps for your email and web browser on newer iPhones, although not on older ones.
The back-and-forth over the details of Cicilline’s bill just shows how messy the battle is becoming between Big Tech’s supporters and the politicians trying to regulate the industry — particularly when it involves nuanced discussions about unintended consequences that could result when you regulate popular consumer tech like iPhones.
It’s undeniable that existing antitrust laws were not designed for the internet age. But there is also an open debate among members of Congress about whether regulation could stifle innovation. It doesn’t help that some DC politicians have been notoriously slow to understand the basics of how major tech companies work, as demonstrated in public hearings in the last several years. And even for the experts, the ramifications of tweaking widely used consumer technologies can be difficult to predict.
On the other hand, politicians like Cicilline leading the charge to regulate tech argue that inaction could stifle innovation in a different way — by preventing the rise of upstarts that could challenge the status quo of the most powerful major tech companies.
It’s an ideological debate that is being fought tactically, with each side making its appeal to lawmakers, particularly to Republican lawmakers who Democrats will likely need to get these bills passed.
Chamber of Progress’s Kovacevich said his group will be launching an ad campaign that specifically targets members of Congress, to try to convince them not to support the tech antitrust bills. It’s just another step in what will be a prolonged fight.
“The question for the [Big Tech] lobbying teams is — are you going to be able to stop this? Or have your opponents circumvented you?” said former FTC leader Kovacic. “This is a contest of ideas.”