Big Tech steps up lobbying to stop 'self-preferencing' antitrust bill

Big Tech executives have met members of Congress to explain why the bill should not become law.

Amazon and Alphabet have stepped up their lobbying efforts to defeat a major bill that could reshape tech industry in the United States.

The companies are targeting a 'self-preferencing' bill, said to be just a few steps away from becoming federal law.

The American Innovation and Choice Online Act, introduced by Senators Amy Klobuchar (D-MN) and Chuck Grassley (R-IA), would prohibit dominant online platforms from promoting or recommending their own products and services, a practise known as 'self-preferencing.' For example, Alphabet would no longer be able to use Google Search to promote its own travel or shopping products.

The law would also make it illegal for large technology platforms like Amazon, Apple and Google to discriminate against smaller companies that utilise their platform in a way that significantly undermines competition.

The measure would provide the federal government's antitrust agencies, such as the Federal Trade Commission (FTC) and the Justice Department, with the authority to file lawsuits against firms that breach the bill's terms - with penalties as high as 15% of their total US sales (collected during the time in which the unlawful behaviour occurred).

"The internet giants are in YOLO [you only live once] mode — they are desperate and are doing whatever they can to change the trajectory," said Luther Lowe, senior vice-president of public policy at Yelp, which has lobbied in support of the bill.

One congressional aide engaged in the bill's promotion stated, "These companies are throwing spaghetti at the wall, using every conceivable argument they can find."

Tech giants contend that the law will put an end to several popular digital services, like Amazon's Prime delivery and Basics product line.

"Sen. Klobuchar's vaguely worded bill would mandate that Amazon allow other logistics providers to fulfil Prime orders," Brian Huseman, Amazon's vice president of public policy, said (not quite - see below - Ed.)

Relevant committees in both the House and the Senate have already approved the bill; the next step for its supporters is to wait for Democrat leaders to bring it up for a vote on the floor.

The rising momentum has frightened Big Tech companies, which are effectively the only ones that will be affected.

"Senate offices right now are hearing from these companies multiple times a day," a congressional leader told the Financial Times.

This year, the Computer and Communications Industry Association (CCIA) has spent more than $10 million on television ads to warn that the law would "break Prime" and "end guaranteed two-day free delivery".

Top executives from Amazon, Alphabet and Apple have reportedly had conversations with members of Congress.

While Kent Walker, Google's top legal officer, has been leading the charge for his firm, four of Amazon's most high-profile executives have been arguing on the e-commerce giant's behalf.

These executives have used a number of different arguments, including:

• Customers prefer to purchase services in packages;
• The law would make Chinese competitors more powerful;
• Compelling companies to cooperate more closely with their rivals might put the confidentiality of their customers' information at risk.

Google has proposed a number of revisions, while Amazon has been lobbying members from its home state of Washington, arguing that it may result in job losses there.

In an interview with CNBC in April, Representative Ken Buck of Colorado, the leading Republican on the House Judiciary subcommittee on antitrust, predicted the self-preferencing bill would "have the votes in both chambers to move forward."

He is optimistic that the bill will be approved before the August recess.

The self-preferencing measure has received support from the Department of Justice, although President Joe Biden has not yet commented.

Buck told CNBC that he thinks the Department of Justice's support indicates that "the administration is on board," and this may potentially be more helpful than a personal endorsement from the president.

"Frankly, I think that a less overt endorsement is helpful," he said.

"I think that getting a few Democrats who are on the fence on board is helpful without knocking a few Republicans who are on the fence over to the other side."

Computing says:

There is some truth in Amazon's contention that the bill would impact Prime, but not necessarily in the way its executives are claiming. The ban on self-preferencing would affect the 'Fulfilment by Amazon' (FBA) service, which third-party sellers have to use to get the Prime label and make their products eligible for Prime shipping - and, of course, they have to pay for the privilege.

Amazon says Prime is impossible without FBA, because it gives the company absolute control over the logistics. But, the bill doesn't explicitly ban FBA; it just says Amazon can't force sellers to pay for it to get the Prime label. If the bill becomes law, third-party sellers would be free to choose other logistics providers, like DHL or Evri, who can make the delivery in the same timeframe.

Basically, the new bill would be doing exactly what it's intended to do: break a Big Tech monopoly. Obviously, Amazon is not a fan.

It's not the first time FBA has come under fire; Italy handed Amazon a €1.1 billion fine last year, driven by FBA's inherent anti-competitiveness.