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The Senate's Big Tech Antitrust Bill Does Not Hit Key Summer Vote Milestone
Report from Bloomberg
In Brief – After months of lobbying by anti-Big Tech champions and backing from both progressive and conservative quarters, the leading bill to reform federal antitrust law to pare back the power of the largest digital platforms will not come up for a vote in the US Senate before the August recess. The American Choice and Innovation Online Act (ACIOA), which aims to block the digital giants from preferencing their own products and services, has been touted by backers as the lynchpin measure with enough bipartisan backing to break through the Senate’s key 60 vote threshold. They repeatedly targeted a vote before the August recess as an important milestone to getting the measure enacted in 2022. However, at a recent fundraising event, Senate Majority Leader Chuck Schumer (D-NY) responded to a question regarding the bill’s status noting that it was not supported by 60 Senators at this point and would not be brought to floor before the coming recess, a fact confirmed by antitrust reform champion and bill sponsor Amy Klobuchar who is now looking to the fall.
Context – Once the EU enacted the Digital Markets Act (DMA) and Digital Services Act (DSA), we said that the top digital policy question for the rest of 2022 is whether this US antitrust overhaul for Big Tech is enacted. Despite repeated claims of vote count optimism by Democratic and Republican backers (which is often not a sign of actual strength), there have been ongoing Democratic holdouts, questions over whether Republicans would “give” congressional Democrats a high-profile win before the election, growing partisan controversy over FTC policies that belies giving the agency major new power, and legitimate questions over whether voters would like stocks of tech giants further harmed in a major down market. We’ve consistently said the odds were against the bill and those odds have now gotten worse. On the US policy front, look to court cases and progressive activism at the FTC for action. And since the EU has jumped into digital platform regulation with two feet, we should get a giant regulatory A/B test as the DMA and DSA roll out without US equivalents.
Indonesian "Social Media Law" Goes Into Effect with Search, Payments and Gaming Platforms Impacted
Report from Reuters
In Brief – As the Indonesian Government fully implemented enforcement of its strict online content moderation law enacted in November 2020, a range of search, gaming and payments platforms including Yahoo, Steam, Epic Games and PayPal were completely blocked by the Ministry of Communication for failing to appropriately register under the new regime. It is reported that access to PayPal was temporarily restored to allow users to move funds as well as to give the company additional time to register if they choose to go that route. The law gives authorities broad powers to compel platforms to take down content within 24 hours that is deemed unlawful or that "disturbs public order", as well as disclose user data. It has faced sharp criticism from civil libertarians and free speech defenders. Popular social media platforms were considered the primary target of the measure and all the major players including Google, Meta, TikTok and Twitter had signed on by the deadline, but the law's scope covers nearly all types of digital platforms and platforms as varied as Apple, Microsoft, Amazon, Alibaba, Netflix and Spotify have registered as well.
Context – Despite its position as the world’s fourth most populous country, a top twenty economy, and a leader in the fast-growing Southeast Asian digital market, the increased regulation of online activity in Indonesia is oft overlooked. But it’s another example of a government seeing content they don’t like online and pushing platforms to police it. China, Russia, Turkey, India and a growing number in Central Asia and Africa are easy to criticize as online censors. Indonesia too. But Germany, Australia and France were early adopters as well. While the EU’s Digital Services Act and UK Online Safety Bill claim to set rules for online content moderation and demand free speech protection at the same time, they are certain to create similar tensions, although likely over different disfavored content. Free speech advocates see their efforts empowering authoritarians nonetheless.
FTC Sues to Block Meta’s $400 Million Acquisition of VR App Developer Within Unlimited
Report from Bloomberg
In Brief – The Federal Trade Commission has filed suit to block Meta Platforms from acquiring virtual reality (VR) application developer Within Unlimited alleging that the digital giant is already “a key player at each level of the virtual reality sector” and that adding the popular developer of fitness app Supernatural to its business will undermine competition and harm consumers. The FTC complaint, filed in Federal District Court in California, requests that the court issue a temporary restraining order blocking the acquisition as they challenge it in administration proceedings. Meta responded that the FTC suit is “based on ideology and speculation, not evidence” and would send “a chilling message to anyone who wishes to innovate in VR.”
Context – Yes, FTC Chair Lina Khan, champion of the progressive antitrust reform movement, passed on Amazon’s $8 billion purchase of MGM. Now, as they challenge Meta’s $400 million effort to buy a VR app developer, Microsoft’s mega deal for Activision, is squarely in view. The FTC's Democratic majority moved forward on this "experimental" Meta case against the recommendation of commission staff. Both Republican commissioners opposed. Republican Commissioner Noah Phillips criticizes activist antitrust regulators for being aggressive with small deals but shrinking in the face of the giant deals. This is not just a US phenomenon. The UK CMA’s big stand has been to unwind a similar-sized Meta deal, the $315 million acquisition of US startup Giphy, a business with no UK or EU operations. And the European Commission’s competition authority now claims the right to challenge any acquisition it says could impact Europe without any size threshold at all. The current US regulators may not object to Europeans blocking US startup deals, but that might not be the case in a few years. Finally, the FTC is also in court trying to undo Meta’s long-ago acquisitions of Instagram and WhatsApp claiming they monopolized social media. But now their market cap is falling fast and they are changing to operate like growth giant TikTok.
Anti-Online Marketplace Riders are Dropped and CHIPS and Science Bill Passes
Report from the Wall Street Journal
In Brief – The $280 billion spending bill dubbed the CHIPS and Science Act aimed at boosting US semiconductor manufacturing and a range of other science and technology initiatives passed the House of Representatives following Senate approval and will be signed into law by President Biden. Although the measure faced late opposition from Republican leaders after Democrat-only climate, Medicare prescription drug, and tax legislation appeared to be moving through the Senate, the initiative framed as standing up to the challenge posed by China passed with bipartisan support. More than $200 billion of the spending in the bill comes in future years and depends on further congressional action, but $52 billion will be funneled to chip manufacturers without further action, including $39 billion in direct financial assistance to help construct manufacturing facilities, $11 billion to support semiconductor research and workforce training, and $2 billion to push laboratory advances into military applications. Finally, the bill also creates a 25% investment tax credit for companies that invest in semiconductor manufacturing in the US.
Context – The biggest news related to the CHIPS and Science Act for digital platforms was not what was included in the final compromise bill, but what ended up being left on the cutting room floor. Among the big pieces of extraneous baggage that was tossed off the semiconductor and science train as it was leaving the station for the last time were the INFORM Consumers Act requiring online marketplaces verify larger third-party sellers and suspend those who do not meet the disclosure requirements in the bill, the SHOP SAFE Act that aimed to overturn online trademark liability law to pin liability for counterfeiting by third-parties on marketplace platforms themselves, and the Country of Origin Labeling Online Act. Each of these pieces of legislation include major initiatives of long-time opponents of online commerce platforms, especially the traditional retailers and luxury brand manufacturers, who are certain to now look for other vehicles to continue their many-year legislative campaigns.
Platform Economy Insights aims to provide small-to-mid-sized digital platform business leaders, investors and firms that support industry growth, and public officials, staff and media who track the platform economy, with expert analysis of public policy trends impacting the digital platform industry globally.
Executive Editor Brian Bieron and Senior Advisor Tod Cohen are recognized Internet, trade and platform policy leaders who have served as top global public policy experts to some of the Internet industry's leading platform businesses. They are now providing insights, analysis and reporting to wider audiences through a public policy platform that challenges the reach of all but the largest Internet industry public affairs teams.