The Harms of Proposed Antitrust Reforms on Consumers

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Posted by Joseph Murgida on Wednesday, July 14th, 2021, 9:09 AM PERMALINK

Antitrust policy has long been focused on promoting consumer welfare. In sharp contrast to this decades-long tradition, the sloppy House Judiciary Committee antitrust package includes sweeping changes to antitrust law that effectively bans “covered platforms” from certain products or enter certain industries in ways that often benefit American consumers through better choices and lower prices. Modern conveniences that we take for granted will be eliminated in favor of higher prices and less variety of choice. Chamber of Progress CEO Adam Kovacevich presented a list of 15 different ways that consumers will be harmed by this weaponization of antitrust law. 

Amazon

Currently, Amazon offers many resources to help save consumers money, making affordability a key element of their business model. For example, Amazon voluntarily gives discounts based on socioeconomic disadvantages, such as providing EBT and Medicaid cardholders 50% off Amazon Prime subscriptions. Amazon also includes features to help consumers purchase the cheapest available version of a particular product, such as the Amazon Buy Box and offering AmazonBasics products. This service can be assigned to sellers that offer a product for the cheapest price and if a third-party verified seller offers a product for a cheaper price, Amazon “reserve[s] the right not to feature [the buy box].” Kovacevich points out that the Cicilline antitrust package will ban these consumer-friendly services.

The American Innovation and Choice Online Act, sponsored by Rep. David Cicilline (D-R.I.), bans “self-preferencing,” where a platform promotes its own private label goods next to name-brand products just as brick-and-mortar retailers do. This bill prevents Amazon from extending the buy box option to any seller, eliminating a key motivator for businesses to price items cheaply on the online marketplace. It would also ban AmazonBasics products from being sold on Amazon. These products are often cheaper for consumers and encourage competition among online sellers to lower prices.  These measures make it harder for consumers to find cheap prices for products and disincentivizes businesses from providing cheaper prices. 

Apple

Apple prioritizes security and privacy measures for their products. Kovacevich, however, points out two key ways that the Cicilline antitrust package undermines Apple’s commitment to protecting consumers. The App Store has been critical to securing the iOS system by allowing Apple engineers to screen apps for malware or hacking before enabling users to download them onto their devices. The Ending Platform Monopolies Act, however, would force Apple to sell off the App Store. Courts are already deciding whether Apple has engaged in anti-competitive practices through the App Store, so lawmakers should let those cases play out. Forcing Apple to sell off the App Store could create security risks and reduce usability of Apple devices. The American Innovation and Choice Online Act would ban Apple from pre-installing apps on new devices, including iMessage, FaceTime and Find My. These users greatly benefit from select apps being pre-installed on iPhones. If a person does not know how to download apps, they would have a heightened barrier of access for certain essential apps. This would make an iPhone more difficult to use out of the gate. 

Google

Kovacevich also recognizes that similar conveniences would disappear in a consumer’s use of Google products. Users would not be able to locate Google Maps in their search results when looking for a location. Google would also be prevented from displaying YouTube videos when searched. 

The government should not decide the algorithm of Google’s search engine. If Google’s methods alienate consumers, then people can simply use another search engine. At the moment, however, consumers prefer Google to meet their search needs. Similar to Amazon’s inability to show users the cheapest product through the Amazon Buy Box, Google would also be unable to show people the highest reviewed restaurants, shops, etc. on their search results. The elimination of this feature advantages services that appeal less to consumers regarding the quality of their service/products and their pricing. 

Conclusion

The Cicilline Antitrust Package poses a significant threat to the modern economy that will not just hurt big business, but also hurt middle class consumers. Republicans should reject these bills to preserve the conveniences American shoppers use every day. 

 

 

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