The American Innovation and Choice Online Act Would Foster Neither Innovation Nor Choice
It’s always fun to see what names politicians come up with for their legislative proposals. Take, for example, the American Innovation and Choice Online Act, which is co-sponsored by Sens. Amy Klobuchar (D-Minnesota) and Chuck Grassley (R-Iowa) and just cleared the Senate Judiciary Committee. Should it pass, it would promote neither innovation nor choice, but would in fact give the Federal Trade Commission and the Department of Justice a mandate to squash innovation.
The measure directly goes after a few politically unpopular Big Tech firms such as Google, Amazon, Apple, Microsoft, and Facebook by preventing these companies from “self-preferencing” their services. When Google places its Google Maps at the top of a search result, that’s self-preferencing. When an iPhone comes with Apple’s flashlight app installed, that’s self-preferencing.
The bill would overturn decades of antitrust rulings in that Google, for example, wouldn’t be able to defend itself by showing that the action was good for competition, the goal of antitrust. Instead, the company would have to explain why putting its map atop its search engine results was necessary to “enhance the core functionality” of the product. If the company couldn’t, it would face fines of up to 15 percent of its total U.S. revenue. This huge risk would simply make it not worth implementing a new system.
Companies will improve their products only if they think it will make them more money. Google can profit through its search engine from improving its maps. Because it could profit from a high-quality product, Google Maps blew past competitors in popularity.