A Populist Attack on Big Tech
In my most recent Defining Ideas article, “Let Freedom Rein in Big Tech,” I made a case against the kind of regulation of Big Tech that many on the right favor. In that article, I promised to lay out the problems with some of the regulations of Big Tech that many on the left favor. One such set of regulations is in the American Innovation and Choice Online Act (AICO), sponsored by Senator Amy Klobuchar (D-Minnesota). My further research surprised me. I had thought that this was a bill favored mainly by the left. But it seems to have populist anti-big-business support from both left and right. Five of the bill’s co-sponsors are Democrats and six are Republicans. That makes analyzing the bill more, not less, important.
The fact that the words “innovation” and “choice” are in the bill’s title might suggest that the bill’s sponsors think those are good things. But what the bill would actually do, if implemented, is severely restrict innovation and choice when those innovations are undertaken by the Big Tech firms that are targets of the bill. Just as antitrust laws in the past seemed more designed to protect competitors rather than consumers, so with AICO. Moreover, what the proponents seem not to recognize is that innovation often occurs in unpredictable ways and that the firm with market power today is often, ten years later, the firm that has been displaced by innovative competitors.
This is from David R. Henderson, “A Populist Attack on Big Tech,” Defining Ideas, March 3, 2022.
I hadn’t realized until I started to look into AICO how bipartisan it is.
AICO defines a “covered platform” as one that has “at least 50,000,000 United States–based monthly active users on the online platform” or “has at least 100,000 United States–based monthly active business users on the online platform.” It must also have net annual sales or a market capitalization greater than $550 billion. Why $550 billion? The answer is telling.
Originally, the cutoff in the bill was $600 billion. But on February 8, 2022, the market capitalization of Meta, owner of Facebook, fell below $600 billion for the first time since May 2020. CNBC writer Lauren Feiner thought at the time that the lower market value could help Meta avoid being regulated under AICO. But no such luck. Senator Klobuchar quickly revised the bill to make the threshold $550 billion, which was below, and is still below, Meta’s market cap. If there was ever any doubt as to one of her targets, Klobuchar’s revision of the bill removed that doubt.
I also dig into the “robber baron” issue.
Read the whole thing.