The Senate will get its best shot at regulating Big Tech, and Apple, Google and Amazon are already playing defense

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Chairwoman Sen. Amy Klobuchar, D-Minn., speaks during the Senate Rules and Administration Committee hearing on “Oversight of the U.S. Capitol Police Following the January 6th Attack on the Capitol, Part III”, in Washington, January 5, 2022.
Tom Williams | Pool | Reuters

One of lawmakers’ best shots at passing transformative tech antitrust legislation will be within reach on Thursday.

The Senate Judiciary Committee is set to deliberate on the American Innovation and Choice Online Act, which some experts consider to have the most realistic chance of actually becoming law out of broad slate of reforms, while also creating major change in the industry. The committee schedule also lists a markup of the Open App Markets Act, another bipartisan competition bill.

The two bills are similar in that they both would prevent certain dominant tech platforms from favoring their own products or services over others that rely on their marketplaces to do business. But the Open App Markets Act’s impact would pretty much be limited to those that run app stores, like Apple and Google, while the American Innovation and Choice Online Act would be more expansive, potentially preventing a company like Amazon from giving its own private label products a better ranking in its search than a third-party competitor.

Apple and Google could similarly be barred from unfairly ranking their own apps above competitors’ in their mobile app stores, and for Google, the same principle would apply to its general search engine as well.

The American Innovation and Choice Online Act, led by Sens. Amy Klobuchar, D-Minn., and Chuck Grassley, R-Iowa, respectively the chair of the Senate Judiciary subcommittee on antitrust and ranking member of the full committee, hit a legislative sweet spot.

On the one hand, it’s a transformative and far-reaching bill that could significantly impact the way major consumer services operate. And on the other hand, its powerful co-sponsors and relatively lengthy list of bipartisan backers seems to give it a chance of actually passing.

That’s not to say its passage is a given. While taking on the tech industry has remained a popular bipartisan issue over the past few years, both sides still largely disagree on several aspects about how to do so. Antitrust reform has shown some more promise than other issues, like content moderation, in forming consensus, but members on both sides have retained some doubts.

Still, the fact that the bill is sponsored by leaders on the committee suggests it will likely reach the markup stage with significant support.

A similar bill already passed in the House last summer. And while the Senate version may check slightly fewer boxes off progressives’ wish list, the chance to reach the Senate floor finally brings their dreams closer to reality.

The White House has not officially weighed in on the bill, but has generally pushed for measures that lessen concentration of power and broadly supported competition reform. On Wednesday, top White House officials met with a group of companies including Big Tech critics Sonos and Yelp to hear about their concerns about barriers to competition in the tech industry.

Tech industry pushback

The tech industry has launched an all-out attack on the bill, signaling how damaging it thinks its passage would be.

On Tuesday, Amazon, Apple and Google all addressed concerns in the bill through letters to the committee or public blog posts. Apple and Google stressed worries that the bill would force them to take risky moves with users’ data, like share it with other services or allow users to download unvetted apps, which Klobuchar’s office denied it would do.

Both Google and Amazon also stressed that the bill could create negative consequences for consumers and small businesses that rely on their services. Amazon, for example, wrote that it would “make it difficult for us to guarantee one or two-day shipping for those small businesses’ products — key benefits of Amazon Prime for sellers and customers alike.” Klobuchar has previously said the bill would not force Amazon to stop offering Prime benefits.

A draft manager’s amendment to the bill viewed by CNBC ahead of the markup and also shared in part by an industry group on social media showed changes to the original text that would address some of the companies’ privacy concerns. For example, to make clear that the bill in no way compels companies to share information with others considered a national security risk. The bill also allows companies to use narrowly-tailored privacy and security protections as an affirmative defense to avoid liability under the statute.

A senior Democratic aide close to the legislative process who was not authorized to speak on the record told CNBC the bill’s authors thought the original version already included such safeguards for privacy and security, but said the amendment is meant to make that extra clear.

Even so, the industry said those proposed changes were not enough to ease their concerns.

Adam Kovacevich, who leads the tech-backed left of center Chamber of Progress, wrote on Twitter that the changes still leave problematic aspects of the bill in tact while potentially adding new issues.

For example, he pointed to a section of the draft amended bill that says it would not impose liability on companies just for charging a fee for subscription services that gives platform users some sort of benefit, but suggested that may create a loophole to incentivize platforms to use subscriptions rather than free services to escape liability.

“These changes concede every concern that has been raised about the bill — and solve none of them,” Google Chief Legal Officer Kent Walker wrote in a statement. “For example, the amendment acknowledges the real security flaws in the bill by saying that platforms won’t be forced to share user data with companies on the U.S. sanctions list. But it says nothing about provisions that could require sharing data with countless other bad actors and foreign companies.”

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