Waiting in the wings of Congress’ fall calendar is Sen. Amy Klobuchar’s (D-MN) American Innovation and Choice Online (AICO) Act, a bill that purports to tighten oversight over the tech industry under the guise of antitrust, and one that has garnered a surprising amount of Republican support.
Unfortunately, the economic implications of the American Innovation and Choice Online Act are as far-reaching as they are detrimental. Its name and branding efforts notwithstanding, the AICO Act will pour cold water on tomorrow’s innovators and startups, severely hinder some of today’s more popular features of the Internet, and make life even more expensive amid growing inflation-induced headaches that American families are currently facing.
The legislation’s sponsors are trying to harness distrust of “Big Tech” into support of their bill. Labeling the effort as “antitrust,” their bet is no one takes the time to dig into the specifics, especially during the legislative sausage-making. AICO Act supporters gloss over the inconvenient details, most notably the accompanying elimination of many products people have come to rely on: free-two-day shipping via Amazon Prime, the convenience of Google Maps or Apple’s FaceTime video chat. These are examples of popular services that give consumers options that make their life better in small but important ways.
The AICO Act threatens low-cost and generic options by Internet services and sellers by prohibiting certain companies from “preferencing” their own products, leading to a Washington-imposed price hike on yet another expense that Americans will have to take into account when tightening their already squeezed budgets.
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Former Clinton Treasury Secretary Larry Summers, whose early warnings about the threat of inflation were ignored, has cautioned that, “policies that attack bigness can easily be inflationary.” He has labeled the approach as, “hipster antitrust.” Indeed, the AICO Act would apply only to companies whose market capitalization thresholds exceed $550 billion, a specific figure that applies only to a handful of familiar names and leave little room for doubt about the cronyism baked into the bill.
The AICO Act’s intrusion into the private sector haven’t stopped some right-of-center names from supporting the legislation. The Market Institute’s recent white paper shows how the AICO Act undermines the “consumer welfare standard” to judge whether a company is employing unfair business practices, and the predominant regulatory approach that has been used by both Republican and Democrat administrations since the Reagan era. Rather than artificial regulations set by politicians under a model that presumes that “big is bad,” the consumer welfare standard, as its name suggests, focuses on the impact to the actual customer.
At least some of the trend of adopting a more left of center approach is rooted in the dislike of certain technology companies that is simmering in conservative circles, where misplaced accusations of “censorship” are pervasive.
The AICO Act explicitly does not address content moderation, however. Senator Klobuchar admitted as much when faced with progressive pressure. Conservatives seeking to “punish” tech companies over perceived political bias don’t really have a substantive leg to stand on, leaving reasonable observers to note that petty revenge is really their motivating factor.
The amount of political capital Senator Klobuchar has spent on this bill is noteworthy, and begs the question of how much 2024 presidential run considerations are factoring in to her political calculus. Hillary Clinton, Biden’s Department of Justice and Massachusetts Senator Elizabeth Warren all call themselves supporters.
Perhaps most importantly, a bipartisan group of prominent experts in national security have raised concerns about the AICO Act, stressing that it would place the U.S. at a “structural disadvantage” and allow China to “displace us in the tech sector, which will have very dangerous consequences for the United States and our allies and partners around the world.”
None of these issues have been enough to make some Republicans think twice.
Senate Majority Leader Chuck Schumer (D-NY) recently made waves by promising protestors a vote would take place. Still, he has not indicated that he has the necessary 60 votes needed to pass Klobuchar’s “pet project” legislation.
But because this is a salient topic in an important election year and involves companies that are under the spotlight from certain political sectors, opponents shouldn’t breathe easy until it is quite clear that the AICO Act will not be signed into law. Neither should anyone who cares about good governance and protecting innovation in the economy.
Mario H. Lopez is president of the Hispanic Leadership Fund, a public policy advocacy organization that promotes liberty, opportunity, and prosperity for all Americans.
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