U.S. readying New Rules for the Tech Giants

INTERNATIONAL/ ECONOMY/ GOVERNANCE

Topic:

• GS-2: Effect of policies and politics of developed and developing countries on India’s interests
• GS-2:  Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

U.S. readying New Rules for the Tech Giants

Context: Recently, the U.S. House of Representatives Judiciary Committee voted to advance six Bills outlawing business practices that sit at the core of tech companies such as Google, Facebook, Amazon and Apple.

• These Bills constitute the biggest action to come out of the anti-trust scrutiny these companies have been facing in the U.S. over the last few years. 
• While many nations have taken legal or legislative routes to limit the influence of the Big Four, this is the first major move on their home turf. 

What is anti-trust?

• Anti-trust is an American term for laws meant to prevent unfair business practices such as monopolisation, which leads to fewer choices for consumers and higher prices.

Example of Anti-Trust – Microsoft

• Microsoft was sued in 1998 for giving away the Internet Explorer web browser for free with its Windows operating system, which led to the collapse of browser-maker Netscape. 
• Microsoft was found guilty of using its market dominance in operating systems to build a monopoly in browsers and was forced to open up Windows to other developers.

Problem of Anti-Trust with new age companies

• Currently rise in consumer prices is the accepted indicator of unfair practices.
• However, the actions of companies like Google and Facebook that make money off advertising and give many products away for free, makes it difficult to gauge the anti-competitive practices of them
• The new package of six Bills that is now in Congress is an attempt to add more teeth to anti-trust proceedings against new-age tech firms.

What’s in the Bills?

• The Platform Competition and Opportunity Act would prevent big tech companies from nipping competition in the bud by buying up smaller rivals, like what Facebook had done by buying up Instagram for $1 billion.
• The Ending Platform Monopolies Act would prevent companies from becoming players on their own platforms, like how Amazon sells its own brands, competing with smaller retailers that use its e-commerce platform; Apple’s chokehold over developers on App Store is another example.
• The Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act promotes interoperability, forcing platforms to let users take data such as contacts lists and profile information with them while migrating to other platforms.
• The Merger Filing Fee Modernization Act increases the government fee on large corporate mergers to help fund anti-trust law enforcement.
• The American Innovation and Choice Online Act would prevent companies from giving preferences to their own products in the marketplaces they run, such as Google search results prioritising YouTube videos or Amazon highlighting its own brands.
• The State Antitrust Enforcement Venue Act would prevent companies from shifting anti-trust cases to courts that could be favourable to them.

How will the move impact India?

• Ripple Effect: Any behavioural change that these companies may be forced to adopt in the U.S, which is their largest market, would likely be adopted in all their global markets as well.
• More Teeth to similar Indian Laws: India already has versions of some of these laws such as the one that prevents Amazon from selling brands that it owns on its platform. Such rules & laws will get further legitimacy when US passes its bills.
• Level Playing Field: If implemented globally, a level playing field for brand visibility on Google and Amazon will benefit retailers in India.

Connecting the dots: