How new antitrust bills may disrupt big tech

House lawmakers have introduced bipartisan antitrust reforms that could affect large tech companies like Google, Facebook, Apple and Amazon. Robins Kaplan Partner, Co-Chair of the Antitrust & Trade Regulation Group, Kellie Lerner, attends Yahoo Finance Live to discuss.
Video transcript
AKIKO FUJITA: The House legislature put sweeping laws in place on Friday aimed at combating the influence of big tech on the marketplace. The five bills together would make it easier to dissolve companies with a dominance in one area and create new hurdles for the acquisition of startups. Let's bring in Kellie Lerner, Robins Kaplan Partner, Antitrust & Trade Regulation Group. Kelly, it's good to talk to you today.
To begin with, to give you an assessment of these five bills - and of course there are still questions as to whether they will actually be passed. But if supported in its current form, how much would it change the way these big tech companies work?
KELLIE LERNER: I really think-- oh, and I should thank you so much for having me. But I don't think you can underestimate the importance of these bills. They are essentially a once in a lifetime opportunity to modernize our antitrust enforcement to keep up with the current economy. It is a turning point for antitrust law.
ZACK GUZMAN: Yeah, I mean, let's dig deeper into what exactly they are interpreting here because it seems like they are digging into the very core of antitrust law when it comes to how these platforms work and prefer their own, think i company. When you think of search results from Google and YouTube, how would that change the way you work for years?
KELLIE LERNER: Yes, so now we see that these platforms are being treated as the railways were treated in the 19th century with their consolidation of power, which led to the adoption of the antitrust laws in the first place. So there are two broad categories of behaviors that would be prohibited on the platforms. The first is that these platforms cannot favor their downstream subsidiaries that compete with other companies on the platform.
In that case, think of Google. If someone went on a search engine and looked for a video, Google might no longer prioritize YouTube, its own subsidiary, in those search results. And the cure there would be pretty significant. You would be required to dispose of any subsidiary that violates this proposed law.
The other broad category of behavior that would be prohibited among the platforms is that they prefer or need their other services as a prerequisite for accessing the platform. In that case, think of Amazon's Marketplace. And according to this legislative proposal, Amazon is not allowed to require that a retailer, for example, buy its logistics services in order to be able to sell its goods on the Amazon Marketplace. So these are very important updates to our antitrust laws that could have far-reaching implications for the high tech space.
AKIKO FUJITA: How many teeth do you think these suggestions have? These are arguments that we have heard in several hearings before Congress. If you look at something like Amazon and don't sell your own products or prefer your products on the platform, what is the enforcement like?
KELLIE LERNER: So as far as the teeth are concerned, the remedies are quite important here. So I mentioned the divestment as an option. If Amazon favored its other competing subsidiaries or conditioned those subsidiaries for access, the remedy could amount to up to 30% of a fine on their US trade affected by the violation. So that's pretty significant.
A third remedy - and I am delighted to see it in the proposed legislation - is a private right of action. This is the first bipartisan antitrust legislation that I can think of recently that includes a private right of action. As a senior officer at COSAL, we have worked with lawmakers to encourage them to include this, including those from the Rep Cicilline office. And we're very excited to see this as a component, because in the past, the coexistence of private antitrust enforcement with state antitrust enforcement was critical to the rigorous enforcement of antitrust laws. And by including this in that language, it ensures that victims of anti-competitive behavior can both file a lawsuit in federal court and receive compensation for the harm they have suffered.
AKIKO FUJITA: And Kellie, after all, so much is explained in connection with these big tech names that we talk about a lot - Amazon, Facebook, Google, Apple. And the idea that with changes in the country's antitrust laws, some of these startups can emerge and compete on a large scale. The downside of this argument is what is going on in Europe. And some would say that due to the regulations in place, the region did not have large, influential tech companies.
What do you think of this argument? And what do these laws collectively - or these proposals - do collectively to the competitors and their ability to emerge and compete with the big names?
KELLIE LERNER: So I think that these legislative proposals, if they come into force, would be crucial for the emergence of new competitors. When you think about global antitrust enforcement, we all realized a little late how the accumulation of power in this area has affected our economy. And Europe is absolutely ahead of us, but not clear enough to see the stiff competition you are alluding to. But with these mechanisms, complemented by what's going on in Europe, it will finally give some of these newer emerging startups a fair chance and a level playing field to succeed in the tech space.
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