Majority of Senate Judiciary Committee Agrees: American Choice and Innovation Online Act Is Seriously Flawed
Democratic and Republican members expressed concerns about S. 2992 during Senate Judiciary Committee markup today
Washington, D.C. (01/20/2022) – During a meeting of the Senate Judiciary Committee today, a bipartisan majority of senators outlined major concerns with S. 2992, the American Choice and Innovation Act, pointing out how this legislation would negatively impact American consumers, businesses and national security.
Several members of the Committee also raised concerns that the legislation was rushed through the process, including some who voted for the bill in Committee, and they remarked more work was needed before it was ready to come before the full Senate for a vote.
Senators raised issues with the lack of debate around this bill and resulting poorly-constructed language, as well as concerns around national security, data privacy, American consumers and businesses, and international competitiveness in their own words.
Bipartisan senators on how the legislation, as currently written, has been rushed through the process or is not ready for consideration by the full Senate:
U.S. Senator Cornyn (R-TX) said:
- “The rest of the members of this committee have had no opportunity to ask questions of the witnesses and explore the intended and unintended consequences of the bill and I think that’s a reflection of the process.”
- “If you try to jam a bill through before members of the committee have had an opportunity to ask questions and get those answers and explore intended and unintended consequences, sometimes I have seen that fatally damage the chances of getting that bill actually passed into law. I do have concerns about the impact of this bill on American businesses’ ability to compete in the global economy and that it will also create potential harmful impacts on our national security. I think there have also been questions about cybersecurity and data privacy that have not been answered and I would just conclude by saying that the manager’s amendment was circulated less than 2 days ago and in my view, that itself commands further consideration.” Video
U.S. Senator Pat Leahy (D-VT) said:
- “The bill makes it too difficult for online platforms to adequately protect consumers’ privacy. The bill creates a bar far too high for platforms to protect privacy without worrying about being penalized, which I worry could lead to erase the bar of America’s privacy, which I believe will be discussed on the floor. I have other issues I would like to raise with cosponsors of the bill, such as unintended economic consequences for small businesses who rely greatly on online platforms — such as many small businesses in Vermont. I also want to make sure that we are not harming our national security. I know the cosponsors will work with me and I will work with them, which I hope they keep in mind as we move forward.” Video
U.S. Senator Thom Tillis (R-NC) said:
- “I have concerns with this specific bill as it’s currently drafted. I believe the bill overreaches and it needs further refinement before it is considered by the full Senate. I have submitted over 40 amendments, these are offered in the spirit of furthering discussion in a bipartisan and constructive manner.”
Democratic and Republican senators expressed concerns that this legislation would harm our national security and international competitiveness and outlined other issues related to harming consumers’ experience and user privacy.
U.S. Senator John Cornyn (R-TX) said:
- “Mr. Chairman, I’m concerned about the potential national security consequences of this bill. I’m worried that it will harm American business and reward our adversaries, most notably the People’s Republic of China. The last thing that we should be doing is weakening America’s ability to compete in a global economy. I worry that this bill, by disadvantaging American companies, will basically be a big gift to the People’s Republic of China. It serves our homegrown companies up on a platter and does nothing to impact the bad conduct of our adversaries.” Video
- “A major part of this bill is its requirement that the platforms – Google, Facebook, Amazon, Microsoft, Apple – provide access to businesses that compete on its platform. In other words, notwithstanding the huge investment and the complexity and the sophistication of the platforms, they have to offer access to businesses that don’t share those characteristics. They haven’t made any investments, they don’t have the same level of sophistication – let’s say vetting for cybersecurity risks. They would also have to provide these businesses with the same kind of software, data, and other tools that the platforms provide themselves internally, again, over years of experience and investments. This has major national security issues. China, as we know, wants access to American consumer and business information. They are a vacuum cleaner when it comes to hoovering up data. Chinese companies, under this bill, would likely have the right to interoperate with the American platforms and have access to the features and the business data that are proprietary for these businesses.” Video
- “I think we’ve all learned that unvetted access to data, hardware and services raises cybersecurity concerns. Not every potential user that does want to interoperate with a platform will have the level of cybersecurity that Americans deserve. The FBI, NSA, and CISA at the Department of Homeland Security have issued a joint threat alert warning that Chinese state-sponsored cyberactors target the United States repeatedly – I think that’s common knowledge. This bill would make those targets more vulnerable.”
U.S. Senator Dianne Feinstein (D-CA) said:
- “I’m very concerned about the bill this committee is considering. It’s not really the type of legislation that we usually consider, where the rules are laid out and everyone is expected to comply. Instead, it’s specifically designed to target a small group of companies, most of which are headquartered in my home state of California. If the conduct this bill seeks to prevent is unfair and improper, I believe that conduct should be prevented from anyone who engages in it, not only a small handful of companies. Instead of updating anti-trust law for our modern online economy as it aims to do, this bill will create two separate legal standards. One that poses very significant barriers to the business operations of a few large tech companies and one for everyone else.” Video
- “I’m concerned that this is really going to be very dangerous legislation. It may end up giving a competitive advantage to other large global businesses that narrowly escape being regulated by the bill. I recognize that our nation’s original antitrust laws were inspired by practices of specific sets of companies but those targeted all anti-competitive behavior across the market, not just the practice of a small set of companies. As we consider improving anti-trust laws for the online economy, I believe we should continue to legislate fairly to everyone who engages in the behavior we are concerned with, and not just a few. I also want to note, and we will discuss this further, that the bill causes some very significant security concerns. Today, major platforms like Apple and Google take measures to address the privacy and cybersecurity of the users. That may not be perfect — we may want them to do better or work more closely with law enforcement. But this bill would actually prevent companies like Apple from taking steps to ensure that an app is safe before you download it from your phone. This makes no sense. We’re requiring companies to take down protections that are in place today and instead allow hackers and those looking to steal personal data to access the devices. I’m told that Federal agencies have concerns about this, but this committee has not had the benefit of their input. For these reasons, I will oppose this bill today.” Video
U.S. Senator Mike Lee (R-UT) said:
- “I believe strongly that we’ve gotta first do no harm and in order to determine that we are doing no harm we must understand the legislation. This thing has not received the airing that it needs.” Video
- “Will the bill, as drafted now, result in the removal of popular products and services that have benefited consumers? How will the interoperability requirements impact cybersecurity and privacy? Will judges interpret the bill to protect consumers or individual competitors? It’s an important question because our antitrust laws in this country have also been focused on protecting competition with an eye towards the consumer. The minute we start focusing on competitors rather than competition and consumers is the minute we could end up with a very different product.”
- “I do think there are issues. I do think that if we can address those issues in ways that are sustainable and can address the problem meaningfully, I’d love to get the yes and I have been trying to figure out ways to do that. But I’m not there yet. We’re not there yet. This bill isn’t there yet. And I respectfully don’t believe that we should be passing this bill out of committee.” Video
- “I also worry that quite perversely and unintentionally it may actually entrench the very four companies which it’s aimed, by creating a strong incentive to simply cease doing business with third parties. This could crush thousands of small businesses and it could actually worsen the state of competition in online markets.” Video
- “The bill results, as drafted, in the removal of popular products and services that have benefited consumers. How will the interoperability requirements impact cybersecurity and privacy? Will judges interpret the bill to protect consumers – or individual competitors? It’s an important question given that U.S. antitrust law, our competition policies in this country, have always focused, to our great benefit, on protecting competition itself. Protecting competition, with an eye towards the consumer. The minute we start focusing on competitors rather than competition and consumers, is the minute we could really end up with a very different product and we really have to be careful about doing that.” Video
- “When I look at this bill, I see it doing primarily two things: First, it abandons market definition and monopoly power concepts. And second, it prohibits a broader range of conduct than is addressed by our antitrust laws. Now when it comes to big tech, I’m actually open to the first change. The second change, however, risks, I fear, doing more harm than good by putting the government in charge of this issue and putting the government in the position of picking winners and losers and punishing competitors for conduct that other competitors may not like – but that happens to be good for consumers.”
U.S. Senator Thom Tillis said:
- “This bill is styled as an innovation and choice bill, yet it would disrupt the leading players in our digital economy at a time when we need all times on deck. Big can be, and many times is bad. But big is not always bad. Anti-competitive behavior is bad. Hyper competitive behavior in this landscape is good and we need to make sure we distinguish the differences. We need to be focused on maintaining U.S. global technology leadership and maintaining innovation. The bill as it is currently drafted is stifling innovation, curbing investments that would stimulate our nation’s leading research and development community.” Video
U.S. Senator Alex Padilla (D-CA) said:
- “On the other hand, I respect that many consumers like the convenience of self-preferencing that enables them to type something into a search engine and receive answers to their queries right then and there without having to go through additional clicks or additional links. This is now a staple feature across search engines today. Now this may be a simple example, but a lot of what has powered technological innovation over the past couple of decades has been the power and convenience of integrated services working together to the consumer’s benefit. But given the broad language in this bill: here’s a question. Is this committee willing to trust regulators and courts to crack down on harmful self-preferencing practices while allowing activity that benefits consumers? I think we should approach this problem in a more measured manner to ensure we clearly identify and distinguish self-preferencing activity that hurts consumers from activity that actually helps consumers. And when the bill doesn’t even define the term preferencing, for each covered platform, what constitutes that covered platform’s operators, products, services, or lines of business? Or in the affirmative defenses section, what part of a covered platform constitutes “core functionality” – important terms. Or even how the courts and litigants determine which services constitute a critical trading partner under this bill. If we want to crack down on anti-competitive behavior, and I do, and we agree it exists, we need to be thoughtful about how we actually do that.” Video
- “It’s no secret that this bill was designed to go after Facebook, Amazon, Google, and Microsoft. But my question is, why are we concerned about just them in a competition bill that should be improving competition across industries? Why distinguish between Amazon Marketplace and Walmart Marketplace if the practices are comparable? A 10 billion dollar company vs a 100 billion dollar company – they both have economic significance. If the concern is that self-preferencing – the activity, the practice – is bad, when these few companies do it because of their dominance, then isn’t it also bad when other large firms beyond these five adopt these same practices? So while I genuinely, trust me, wholeheartedly embrace the premise of this bill in trying to reign in anticompetitive behavior by dominant tech firms, the bill, again as currently drafted, doesn’t quite completely hit the mark.” Video
U.S. Senator Tom Cotton (R-AR) said:
- “I have concerns with provisions in the bill that could require data sharing between American companies and bad actors under the control of the Chinese Communist Party. I don’t think that’s the intent of the bill or the drafters based on our conversation but I do think we can improve that language to make it safer for our companies and citizens. And finally, while this bill applies to the companies we all know and recognize as big tech – companies like Apple, Facebook, Amazon – I think it also includes language that could catch up a lot of other firms that are nothing like this companies. Firms like Publix, or Home Depot, or Visa, could be designated covered platforms under the text of this bill as I read it.” Video
- “I’m afraid that this bill leaves a lot of discretion to the Federal Trade Commission to define unfair conduct. I have real concern giving any agency that much power and discretion.” Video
U.S. Senator Chris Coons (D-DE) said:
- “I have significant concerns to balance about whether or not this bill achieves the right balance between the costs and inefficiencies between litigation and compliance and potentially unintended negative consequences on the competitiveness globally of our digital democracy principles on the world stage and whether or not we are achieving enough progress on combating anti-competitive behavior on the other.” Video
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