Sen. Amy Klobuchar has been berating her colleagues for the past year to take up a few of her own proposals in Congress, albeit unsuccessfully. Now, she wants to use the Lame Duck session, not for a must-pass congressional agenda, but for these same progressive pet projects.
The cornerstone of Klobuchar’s push is S. 2992, the so-called American Innovation and Choice Online Act (AICOA). While this proposal would ironically do nothing to increase innovation and choice online, it contains many additional, fatal flaws that undermine American growth and the legislative process.
Here are 10 reasons why Members of Congress should reject AICOA:
- It increases inflation.
Several studies show that AICOA will increase inflation for Americans. It would do so by dramatically raising the costs for companies to operate. This abysmal finding comes on the heels of prices—especially on food—rising consistently across the U.S. for the last year.
In a recent paper, economist Art Laffer explained that digital goods and services have been working to decrease costs throughout the economy. This reduction in prices shows that technology companies are not behaving monopolistically but are actively engaged in intense competition with their competitors to create better products. For example, the average cost of the technology now found in a smartphone in 1991 was $3,055. In 2022, the average cost is now $208. But if passed, AICOA would place high regulatory and legal costs on these services, which would then be passed onto consumers.
This sentiment is being echoed by economists across the political spectrum. Obama’s National Economic Council Director Larry Summers tweeted that the Biden administration’s attempts to change antitrust law “are likely to raise costs & prices.”
Americans also know this. In our polling, over 75% of Americans expressed concern that proposals to regulate tech will increase prices, make it easier for politicians to influence tech companies and make tech more difficult to use.
- Americans will lose jobs.
The tech industry is in the midst of an industry-wide hiring freeze and layoffs. Some estimates note that more than 100,000 people at tech companies have lost their jobs in 2022 so far.
Because AICOA sets an arbitrary measurement for a company’s size—rather than focusing on whether a company is actually behaving anti-competitively and harming consumers—businesses will take steps to come under its enforcement threshold, such as reducing or limiting their workforces.
Additionally, by reducing the ability of tech services to make money, AICOA will limit businesses’ ability to reinvest their earnings into growing their workforce and developing new technologies that could help relieve economic pressures on families and small businesses.
- It is an arbitrary attack on America’s leading businesses.
By defining a “covered platform” as companies with a market capitalization of over $550 billion and 50 million monthly users, AICOA sets an arbitrary size standard, rather than measuring a company’s actual dominance within the marketplace or whether Americans are actually being harmed.
For example, under this arbitrary standard set by AICOA, Ticketmaster’s likely anti-competitive actions would not be covered. LiveNation, which owns Ticketmaster and many of the concert venues in the U.S., holds around 80 percent of the ticketing sales market and the second largest share of the ticket resale market. However, current antitrust laws do indeed cover this type of behavior as there is a clear case that consumers are being harmed by Ticketmaster’s actions.
To protect consumers from anticompetitive, bad actors, America’s current laws actually do a pretty good job and provide an objective standard for regulators to analyze. They just have to be enforced.
Focusing on bad actors, not arbitrary “largeness” designed by politicians, protects consumers.
- It creates data privacy and security risks.
By making it unlawful for covered companies to restrict “interoperability”, AICOA would unintentionally open up tech users to increased cybersecurity and privacy threats. Specifically, ITIF’s Daniel Castro notes that “The interoperability provision would prohibit platforms from restricting third-party apps, even if those apps present potential privacy or security risks to users, such as capturing their logins or misusing their personal data.”
- It will help prop-up foreign adversaries.
By squeezing American companies both domestically and internationally, AICOA will disadvantage American industry on the global stage by bogging them down in regulation, making products less affordable and undermining security services.
Sen. Diane Feinstein (D-Calif.) echoed this concern, as The Washington Post noted: “Feinstein raised concerns that the legislation could advantage tech companies’ global rivals, a prospect she called ‘very dangerous,’ and warned of ‘very significant security concerns’ in the bill.”
- Concerns of content moderation remain unaddressed.
Many Republicans have claimed that free expression is not as prevalent online due to the content moderation practices of some companies. But if passed, AICOA would worsen these issues by giving regulators more power over content moderation online. This would likely chill freedom of speech online, as bureaucrats and politicians would have more influence on what is “acceptable”. The nonpartisan Congressional Research Service (CRS) pointed out that the language in S. 2992 is so broad that whether it “would in fact prohibit certain forms of content moderation is unclear.”
We’ve seen this “disinformation” power be abused before by the government, with COVID, energy discussions and other topics. As NetChoice Counsel Chris Marchese notes, “the bill empowers the federal government—and whoever inhabits the White House—to decide what the language means.” AICOA would open the door to granting this increased power and influence over online speech.
- Americans don’t want it.
Polling from multiple firms show that Americans do not want Klobuchar’s antitrust pet project. In our recent survey with Echelon Insights, only 2% of Americans said regulating the tech industry is a top 3 priority for them right now, and of those who desire regulation, they want Congress to focus on data privacy, not breaking up large tech companies. This has also been reflected in other polling on this topic.
- Not a single congressional hearing has been held on the bill.
Despite the bill’s proponents claiming that it is incredibly popular and is ready for a floor vote, AICOA has not received a single legislative hearing. Klobuchar pushed her colleagues in the Senate Judiciary Committee to skip regular order and rush S. 2992 to markup. She likely took this step because if properly scrutinized by experts, many of her colleagues would come to realize that AICOA is flawed at its core.
- Even the nonpartisan CRS warns about the legisaltion’s defects.
In its report on S. 2992, the nonpartisan CRS found significant flaws and unknowns in this legislation. One notable finding is that the language is so vague and unclear that “[i]nterpretative issues recur throughout” and it “could present regulators and courts with difficult questions” about the law’s meaning. This means that the bill is so poorly written that its details will likely need to be adjudicated in court. As such, investors and innovators will be deterred from creating new, helpful products and businesses for consumers, and trial lawyers will get a big pay raise at the expense of our economy.
- There is bipartisan agreement in Congress against passing it.
One of the most notable dings against AICOA is that Members of Congress—even Democrats—seem to not want it passed. In May, Rep. Eric Swalwell (D-Calif.) penned an op-ed against AICOA expressing national security concerns and fear that the legislation would harm his constituents.
Sens. Diane Feinstein and Alex Padilla, both California Democrats, expressed serious concerns over how the bill would impact Californians and their businesses. According to The Washington Post, “Feinstein, who initially said she intended to oppose the bill, warned that it unfairly targeted a handful of companies and said it could introduce new privacy risks to consumers.” In addition, Politico reported in June that Democrat Reps. Zoe Lofgren, Suzan DelBene and Lou Correa also expressed their concerns with a similar proposal to AICOA in the House. Klobuchar doesn’t have the votes needed to complete her progressive pet project.
While Sen. Klobuchar may be itching to get her antitrust pet project across the finish line before the end of this Congress, it hasn’t gone through the proper processes, it is riddled with flaws that will severely cost Americans and our economy, she doesn’t have the votes needed, and Americans don’t want it.
Sen. Klobuchar: it’s time to let go of this lame duck fantasy and turn toward fixing problems, not fueling them or creating new ones.