New US Bill Aims to Stop Disloyal Competition from Tech Giants

Image of the United States Capitol building where US Bill will be debated on.
Senator Klobuchar believes that there are 60 senators who will vote in favor of the bill.

Following on the bill proposed by the Biden administration back in January, dozens of companies have supported the proposal. They deemed it sensible and deeply needed for the nation’s economy. The new bill will include provisions that will stop tech giants from giving preferential treatment to their products and services over the ones provided by competitors.

At the moment, the bill proposes that the company needs to be worth more than $550Bn to be eligible for this regulation. As a result, it will currently apply to only 3 companies:

  1. Amazon.com (AMZN.O)
  2. Alphabet Inc. (GOOGL.O)
  3. Apple (AAPL.O)

These companies have voiced their opposition to the bill. They claim it will probably raise prices and drop service quality. However, other companies have welcomed the move. Ideally, it should stop internal favoritism shown by these companies for their services and products.

The proposal is championed by Minnesota senator Amy Klobuchar, also serving as the Chair of the Senate Rules Committee. She believes this move is much needed. Klobuchar also trusts that sixty senators will concur for the bill to pass to its final stage.

Additionally, a similar proposal is present in the House of Representatives. Congress is clearly aiming to solve the issue of tech giant dominance as soon as possible.

A Stop to Third Party Exclusion

Companies such as Spotify, DuckDuckGo, and Yelp have all welcomed the proposed changes. In fact, they are the most affected by the tech giants’ dominance. But, they are not the only ones that will see the benefits if the playing field becomes level.

At the moment, Google and Amazon are some of the biggest Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) providers on the planet, rivaled only by Microsoft. They have a direct influence on the prices other companies pay to use their services. That includes their competitors.

The new rules will force the tech giants to unify their conditions. Their subsidiary products and other companies should receive the same services. Aside from retail services such as Walmart on Amazon, this will also include hardware attachments and peripherals.

Image of the Apple Logo on the side of a glass building.
Apple will be one of the companies most seriously affected.

Unified Rules Might Create Issues

This proposition would open the market and presumably have many benefits. However, it may also bring many downsides for tech giants. This may also create more problems. 

As explained by media releases from the tech giants, the bill might affect services like Amazon Basics and Google Maps. These apps work with the platform’s direct support in mind. This support and interconnectivity are integral to these apps’ operations.

Additionally, cybersecurity and data privacy issues may arise. Affected companies will need to share their data with competitors without vetting their standards.

The only alternative Amazon, Google, and Apple will have is to start denying service to smaller companies that don’t meet all the new requirements. This can, in turn, reduce the number of apps on the market. As a result, it will raise the entry cost to the app development industry.

On the other hand, the tech giants might be overstating the negatives of the bill. After all, these companies want to dissuade the senators from adopting it. The change will certainly affect them negatively, but the companies don’t have conclusive evidence on the bill’s negative consequences for their services.

All three tech giants have reported record income and record profits in 2021. As a result, it is hard to believe that this change would force them to reduce services and open their dominant position to competitors.

Supported by Companies, Big, and Small

Undoubtedly, the restrictions against tech giants will mostly benefit small developers and companies. However, much larger companies are also welcoming this change.

Companies like Spotify, which has reportedly reached the value of $19.45B on June 10th this year, see an opportunity in this bill. The bill may make Spotify’s service equal to Apple Music and similar proprietary apps made by the tech giants.

In a message on Monday, Spotify publicly supported the bill. They called it “sensible and moderate”. They also stated their belief that the bill aims to prevent frequent abuses of position and disloyal competition by the largest online platforms.

Eventually though, passing the bill may prove to be challenging. As reported by the Virginia tech lobby group, Chamber of Progress, the senators simply don’t see the need for this move.

Although the voters didn’t express any objections for tech giants to be reined in this way, they also didn’t articulate explicit requests. Compared to other issues for the public, this simply isn’t pressing at the moment.

Other groups have also publicly opposed the bill, including the American Booksellers Association (ABA), the American Independent Business Alliance (AIBA), and the European price comparison company Kelkoo.

Image of a man holding smartphone with google maps on.
Google’s parent company Alphabet reports that some services like Google Maps might not work with the new changes.

Better for the Market

The bill is still in question, so it might be too early to speculate on its results. Senators and lobby groups are still discussing this bill, trying to influence the outcome. As a result, consumers and voters may receive more valuable information soon.

This bill may stifle tech giants’ native apps’ growth and development. The tech giants may eventually decide to move away from these apps, depending on the profits they reap.

Alternatively, the chance might bring in new and better options. That is, if competitors grab the opportunity and propel their position in the free market. In the end, this competition can only bring benefits to the consumer.

In the end, it might be objectively better for tech giants to keep their position as platforms rather than direct-to-consumer operations. We still don’t know how this bill will influence the growth of these tech giants. However, all other options will soon trigger anti-monopoly laws. The federal government will likely take apart the tech giants.

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