Sen. Amy Klobuchar’s battle with tech giants reaches its pivotal moment

The effort led by Sen. Amy Klobuchar to stop the nation’s largest tech companies from harming smaller firms is nearing a climax as Congress races to finish work before the midterm election.

A bill by the Minnesota Democrat and Sen. Charles Grassley, an Iowa Republican, passed a key Senate committee with bipartisan support earlier this year. The companies it aims to restrict — firms including Google, Apple and Amazon, with a market value exceeding $500 billion — responded with a flurry of lobbying and advertising to stop it from going further.

“I’ve taken a pragmatic approach. The companies don’t want anything to pass,” Klobuchar said in an interview last week. “Given the enormity of their power and their percentage of the economy, at some point Congress is going to have to jump in and protect the marketplace. I’m waiting for that moment, which I hope is soon.”

Passage would be the first time Congress restricted the technology giants that now dominate so many parts of American life — how we communicate, are informed and entertained, shop and do business.

But a vote by the full Senate is uncertain. Majority Leader Charles Schumer, D-N.Y., said last month that he planned to have the chamber take it up this fall. Time is short, however, and the companies’ pressure may have been enough to thwart any action before the congressional session expires.

That would be a victory for them in the short run because, with the arrival of a new Congress in January, the legislative process must start anew and the mustering of support along with it.

The legislation targets practices by these companies that lock customers to their technologies. And some of these practices produce huge revenue. Apple and Google take about 30% of the revenue for each app transaction on their mobile platforms. Amazon reaps fees and royalties, sometimes eclipsing the 30% level, each time a small business sells something on its site.

Many businesses complain about onerous terms for access to the most visible and lucrative positions in internet search results of Google and the e-commerce marketplaces of Apple and Amazon. And most of the momentum for action in Congress is being driven by that outcry.

At the same time, a large number of Americans, particularly on the political right, believe that the tech giants restrict or censor their speech — a debate that sometimes overlaps but often grabs more attention than the one on business practices.

Two broader changes also appear to be improving the chance that Congress will restrict Big Tech. One is that the traditional reluctance of Republicans to intervene in the affairs of American businesses eroded during the norm-shattering presidency of Donald Trump.

Additionally, a fundamental shift is happening in the perception of competition regulations, called antitrust for its original target of the giant trusts that dominated U.S. business in the late 19th century.

“The last generation has seen antitrust through a lens of the consumer and the price a consumer pays for something,” said Ed Mills, Washington policy analyst for investment firm Raymond James. “Now antitrust is going through a lens of the power and size of the corporation, which arguably is a return to how it started.”

Indeed, the experience for many consumers is that the products and services provided by the tech giants are constantly improving and making life better. Klobuchar said she has to reconcile with that herself.

“They’ve given us great products, which I use all the time, as do most people,” she said. “But at some point when they start directly competing with the people who are advertising on their site and they use their market power against them, that is a whole other ballgame.”

Her first experience fighting monopoly power came as a young attorney in Minneapolis in the 1980s, when she represented upstart long-distance service provider MCI Telecommunications as it tried to enter the Minnesota market to compete with AT&T, the Bell system that controlled local and long-distance service.

“It’s because I believe in capitalism so deeply that I focus on competition,” said Klobuchar, who last year published a book on the history of antitrust rules.

Congress hasn’t passed any antitrust legislation in the internet era, which began more than 50 years ago. The Justice Department last won a major tech antitrust case in the 1990s, when it got Microsoft to make it easier for computer users to choose other internet browsers in its operating software.

The Justice Department sued Google in 2020 to halt anticompetitive practices and, last month, reports surfaced it is on the verge of a similar suit against Apple.

And last Thursday, the White House signaled President Joe Biden’s willingness to rein in the power of large tech firms. It cited several principles to guide lawmakers and federal agencies, including promoting technology sector competition, adopting robust privacy protections and increasing transparency about platforms’ content moderation decisions.

Klobuchar’s approach is to break down the problems into pieces and see what changes will pass with the most support from both Democrats and Republicans.

“Where people have given a higher probability of something getting done on tech antitrust is the fact that she is one of the few Democrats in Congress who has a history of finding bipartisan compromise,” Mills said.

Grassley joined Klobuchar on what has become the measure aimed at ending “self preferencing,” which is when tech companies put their own products and services ahead of others’. The American Innovation and Choice Online Act attracted 11 more co-sponsors, including senators such as Democrats Cory Booker and Mazie Hirono and Republicans such as Josh Hawley and Jack Reed — names rarely seen together on legislation.

A vocal number of smaller tech firms — Yelp, Spotify, Match — have lobbied for the bill and other restraints on the bigger ones. The National Federation of Independent Business, a trade group of small businesses nationwide, also backed it after surveying its members about their interactions with the tech giants.

Mitch Relfe, its chief of federal relations, said small companies are at the mercy of Google’s pay structure for internet search results. And some retailers have told the trade group that they were buried on Amazon’s site after they stopped using the e-commerce company’s distribution services.

“We feel you need some ground rules,” Relfe said. “It would be a huge shame if Congress doesn’t take this opportunity to act on this very common sense legislation.”

The tech companies say their platforms have become more convenient and useful for consumers as they connected various services. In advertising campaigns online and TV, a handful of other groups funded by the tech firms have tried to raise doubts about the effect of the legislation.

“What does this legislation do? It breaks apart the systems we rely on every single day,” said Carl Szabo, policy director at NetChoice, one of the groups opposing the bill. “It will increase costs to Americans by decreasing choice.”

Those groups have spent heavily — $43 million this spring and summer — on advertising opposing the bill, according to AdImpact, a tracking firm. Their biggest spending was in Georgia, Arizona and Nevada, the three states where Senate races are rated toss-ups for the November election,

At a conference of tech executives in Los Angeles last week, Klobuchar said, “It’s an incredible amount of money I’m up against.”

In the interview later in the week with the Star Tribune, she acknowledged the bill faces a lot of competition on the congressional schedule before its election break.

“With everything in the national agenda right now, a lot of people can look the other way and not deal with it,” Klobuchar said. “My problem is that’s what we’ve been doing for decades now. And they just get more and more power.”

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