Since the first version of AICOA was introduced in the Senate in 2021, much has happened in the digital tech sector. Decisions in a number of U.S. federal and state digital tech antitrust cases, the industry shakeup around the impact of AI, and the coming of age of the large players give us more clarity on the dynamics of competition. We have also observed the difficulties faced by competition in other countries in implementing laws governing the tech sector.
Any new version of AICOA is likely to pick up where its predecessor left off, but on a much-changed playing field. From inception, AICOA was an awkward approach to competition oversight of the digital sector in the U.S. It rested on a mix of elements of antitrust enforcement and sector regulation that are not likely to best serve the goals of promoting competition, thus protecting consumer welfare and spurring innovation.
Without question, promoting competition on, and between, digital platforms is a critical goal. But the nuts and bolts of the best policies for achieving it deserve careful thought before digital competition legislation advances in Congress. For now, the concern remains that AICOA created unintended consequences for competition, consumers, and innovation. With that in mind and based on more recent learning, there are a few major issues to watch for in any new version of the bill.
First, AICOA set an arbitrary threshold for determining if a digital platform is covered under the law. As commentators observed at the time, arbitrary thresholds based on a fixed number of subscribers or users can foster perverse incentives for competitors to restrict their internal growth to avoid compliance. Other approaches to thresholds, such as those that are tied to some growth metric, also foster perverse incentives, as well as create a “moving target” that would make compliance difficult.
Second, the large monopolization cases that are currently pending or that have been decided already in the courts since AICOA was introduced have important implications for any new version of the bill. Those cases are taking years to work through the courts, so one could see how lawmakers may seek to speed things up under a new version. If so, this would likely come at the expense of slowing down other legal matters in the courts, such as price fixing and harmful mergers that have a direct impact on consumer paychecks and pocketbooks.
Finally, the approach outlined under AICOA puts competition enforcement in the digital sector in the netherworld between antitrust enforcement and sector regulation. AICOA required the courts to engage in highly technical inquiries involving the security and functioning of a platform, data privacy and security issues, and the use of nonpublic data. These issues are more in the wheelhouse of an expert sector regulator than the courts. Moreover, the bill did not anticipate how cases brought under the antitrust laws would interact with AICOA, creating uncertainty around competition enforcement in the digital sector and, potentially, in other sectors.
In sum, the concerns that AICOA could have unintended consequences for competition, consumers, and innovation remain. More thought, based on recent developments, experiences in other countries, and the evolution of antitrust cases, is needed to explore the best policy approaches for promoting competition in the digital sector in the U.S.
