Amazon Reportedly Astroturfs Competitiveness Coalition Fighting Big Tech Legislation

Photo of the US Capitol Building.
The new bill aims to prevent companies like Amazon from treating competitors differently.

The Competitiveness Coalition has reportedly fought big tech legislation. This coalition is an advocacy group focused on so-called “light touch regulation.”  And according to sources familiar with its funding, the Coalition has received over $1 million from Amazon.

The group primarily focused on a new US bill meant to stop disloyal competition. This bill should prevent tech giants from favoring their products on their platforms. For now, though, the legislation only includes Amazon, Alphabet, and Apple. 

The  Competitiveness Coalition poses 3 arguments against the bill:

  1. Affects US taxpayers
  2. Impacts the already fragile economy
  3. Introduces anti-entrepreneurship

The Competitiveness Coalition is, in name, supported by several firms. Together, they want to give companies the freedom to improve their standing. As a result, they fight against restrictive legislation.  The bill in question sounds like something these firms would be against. However, free market advocates would nominally support the goal of the new bill, S.2992.

Additionally, Amazon and Alphabet partly funded this Competitiveness Coalition. This also raises questions about the legitimacy of the arguments. Is the coalition astroturfed?

Astroturfing is a deceptive practice. Basically, it tricks the public into supporting a company’s grassroot participants. However, the astroturfed company, in essence, receives financing from other parties. That includes governments, businesses, or political parties.

Competitiveness Coalition Did Not Disclose Funding

Under federal law, companies that promote policy and advocate for various values in Washington are not required to disclose the names of their donors. Generally, this rule protects free advocacy. However, it has also birthed dishonest firms, lying about their agendas.

The Competitive Coalition is financed by the firms the bill is fighting against. And this insinuates that the coalition’s arguments are inorganic and insincere.

In their explanation, the coalition doesn’t focus on any specific bill verbiage. Rather, it relies on the idea that this legislation, in general, is anti-free commerce. They also claim it would impact the US economy.

Image of the slogan of the Competitiveness Coalition from their website.
While the slogan of the Coalition resonates with consumers, fighting disloyal competition arguably helps the free market.

Fighting the American Innovation and Choice Online Act

Bill S.2992, named the American Innovation and Choice Online Act, is already with the US Senate. The Senate shall vote on it next month. Additionally, the bill has bipartisan support. Namely, Democratic Senator Amy Klobuchar sponsors this bill.

Generally, third parties often use these giants’ services. However, this bill will force tech giants to give those parties the same treatment as they do their own in-house products.

At the moment, judging by the bill’s wording, the change will only affect three companies. These include Amazon, Alphabet, Google’s parent company, and Apple.

The bill has raised several questions since no strict measures are in place. In effect, a company can’t predict if it’s liable to uphold the articles of the bill. Additionally, the proponents described why the three tech giants would be on the bill. Yet, they did not show how a different company might also qualify.

Still, the proposed legislation has garnered significant support from other companies. These companies also depend on the fairness of operations by Amazon, Google, and Apple.In fact, these giants also affect companies’ online markets and search options.

The bill, if passed, will prevent more issues with disloyal competition by tech behemoths. This is also reminiscent of the case of SalusCare against Amazon.

Arbitrary Choice on Which Companies Are Affected

Many companies have supported the bill. For instance, the Swedish music app, Spotify, called it  “sensible and moderate’’. However, many questions are still surrounding the bill.

Legal experts have raised some arguments against the proposal. Primarily, they cited the arbitrary nature of which companies might be affected. The experts also mentioned the proposed active defense against accusations.

In the first case, the legislation may not affect companies that reach tech giant status in the future. These companies may also find ways to avoid falling under the current rules. In addition, nothing legally distinguishes between presumed marketplaces and Platform as a Service (PaaS).

Additionally, the named companies will have to actively defend themselves. As a result, they’ll need mechanics to prove their fair treatment. But this might fall under proving a negative. We do not know the standard that will help prove that tech giants haven’t broken the rules.

Image of the Google logo with background LED lights.
Google is also one of the companies that will be affected, and also finances the Competitiveness Coalition.

Some Arguments May Hold Water

The Competitive Coalition argues this bill would diminish US tech giants’ competitive edge. It is also focusing on the competition with foreign companies, namely Chinese companies.

These foreign companies do not have the same hurdles as American companies. Additionally, they often work in concordance with their respective governments. And in turn, these governments allow for multiple concessions.

However, bill supporters counter this argument. They claim that the bill primarily aims to ensure equal treatment and innovation. The US-based tech giants’ success is not the policymakers’ primary goal..

The  US Department of Commerce blog from July 11th also shows a similar approach. In fact, the Biden administration aims to improve innovation and competitiveness. In this context, the proposal by Senator Klobuchar would be in accordance with these values.

What Does This Legislation Mean for the US Market?

In theory, the proposed bill should give equal opportunities for smaller tech developers.

This will also allow retailers to use the Amazon market. The platform cannot favor its connections anymore. As a result, retailers no longer have to fear discrimination. Ultimately, it would bring consumer prices down through competition. This bill would also further optimize the domestic distribution network.

But we may wonder whether this bill would backfire or work as intended. In the worst-case scenario, this legislation might bring about worse options for everyone. The bill would reduce innovation and bring consumer prices up. And this will be especially troublesome in times of increased inflation and joblessness.

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