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Thursday, February 2, 2023

Schumer Kills Bills Big Tech Feared Most, But Boosts Budgets of Agencies Targeting Them

There’s bad news and there’s good news for Washington’s anti-monopoly movement.

The bad news is that Senate Majority Leader Chuck Schumer has done precisely what many long feared he would: While rhetorically supporting two bipartisan antitrust bills targeting Big Tech for months, he effectively killed the effort by never bringing the legislative package for a vote on the Senate floor in the final days of the congressional term.

That much was clear this week, when House and Senate leaders introduced a $1.7 trillion end-of-the-year spending package that includes a suite of antitrust bills, but not the two that took direct aim at the tech behemoths: the American Innovation and Choice Online Act (AICOA) and the Open App Markets Act (OAMA). The exclusion amounted to a betrayal in the eyes of antitrust advocates; Schumer had been promising his colleagues a vote on those bills since May. But not only did the New York Democrat block widely supported measures intended to rein in the likes of Google and Amazon, he actually dropped a separate provision that staffers and activists argue was to protect Google from a 2020 Texas lawsuit.
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Yet the trustbusters aren’t walking away empty-handed.

As a consolation, Schumer put an extra $85 million into the nation’s two antitrust enforcement agencies: $50 million to the Federal Trade Commission and $35 million to the Department of Justice’s Antitrust Division, according to multiple Hill sources familiar with the negotiations. Both of those agencies are led by anti-monopoly crusaders—Lina Khan at the FTC and Jonathan Kanter at the DOJ.

The majority leader also allowed an amendment to a measure in the omnibus that lets those agencies immediately collect higher fees from companies that need them to review proposed mergers, a move that is projected to help the FTC and DOJ collectively rake in roughly $1.4 billion over the next 10 years, according to Congressional aide familiar with the matter.

That infusion of cash is no small matter for both agencies, which are starved of resources and are more often than not outgunned by the corporate giants they are up against in court, be they tech firms like Google or Facebook, pesticide manufacturers like Syngenta and Corteva, or the mega-ticket-selling platform Ticketmaster. Both the FTC and the DOJ have fewer lawyers now than they did in the 1980s, but are each ramping up antitrust enforcement at a time when the economy is more highly concentrated than at any point since the original Gilded Age.

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“This is clearly the beginning of this fight and not the end,” Sen. Amy Klobuchar, Democrat of Minnesota, who co-sponsored the Senate versions of AICOA and OAMA told reporters on Tuesday. “I will continue to work across the aisle to protect consumers and strengthen competition.”

But to get such a bump in funding to help Khan and Kanter crack down on corporate concentration, the bipartisan antitrust coalition in Congress took a loss on their opportunity to change the rules of the game for Big Tech.

The AICOA legislation would have prohibited dominant tech companies like Amazon and Google from preferencing their own products over competitors that have to use their platforms to reach customers. The OAMA bill would have forced Apple and Google to open up their app stores to rival marketplaces. The two measures garnered strange bedfellows; they were supported by virtually every Democrat in Congress—except for most from California—and some of the Hill’s most conservative Republicans, such as Sen. Josh Hawley of Missouri and Rep. Ken Buck of Colorado. Both bills passed out of the House and Senate Judiciary committees by bipartisan margins.

For months, though, Schumer, who as Senate majority leader controls what bills make it to the chamber’s floor, refused to hold a vote on them, leaving advocates to worry that he was playing into Big Tech’s strategy of running out the clock. The more cynical anxiety for some staffers and activists was that Schumer’s reluctance stemmed from his two daughters working at Facebook and Amazon.

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Big Tech lobbying firms also waged a multi-million dollar advertising campaign to torpedo both bills, which some Hill sources suspect spooked some Democrats up for reelection in 2022. A Democratic Congressional aide familiar with the matter tells TIME that Speaker Nancy Pelosi had no intention of putting her members through a difficult vote without the measures passing the Senate first, where most legislation in Washington goes to die.

Still, it was mystifying to the bills’ champions that Schumer—who said he supported the Big Tech antitrust bills—wouldn’t let them be voted on by the full chamber. Over the last year, Schumer would often tell colleagues and reporters that he was still trying to get the votes for the package. But such a proclamation was contradicted by both Klobuchar and another co-sponsor, Sen. Chuck Grassley, Republican of Iowa, who said he had more than 20 Republicans prepared to vote for the package. “It’s very clear that we have the votes to pass both those bills in the House and in the Senate,” Rep. David Cicilline, Democrat of Rhode Island, who authored the House version, told TIME over the summer.

After the election, however, the race was on to get both bills targeting Big Tech over the finish line before Republicans took control of the House in January. Rep. Kevin McCarthy of California, who has the most support within his caucus to be the next House Speaker, has made clear his antipathy for the antitrust push.

In November, the White House began pushing Schumer’s and Pelosi’s offices to shepherd the legislation through. As the prospects of either bill getting an independent vote dimmed, the last hope was to add some antitrust provisions to the final spending bill, a move that staffers on both sides of the aisle say made it easier for Schumer to scrap the more controversial tech-related bills.

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“The only way this would have worked is if there was a standalone bill and a standalone vote,” a Congressional Democratic aide tells TIME. Instead, Schumer was able to tell Democrats that he couldn’t squeeze in the bills because of objections from Senate Minority Leader Mitch McConnell. Then McConnell told his GOP Senators the exact opposite, according to Republican Senate staffers. “They played off each other,” a GOP Senate aide tells TIME.

It was a maneuver that advocates suspect gave Schumer the final off-ramp in his long attempt to sabotage the legislation from passing. “He gave a bunch of lip service to doing this without ever actually doing anything to get it done,” a former House aide and GOP lobbyist tells TIME.

Republicans suspect Schumer was afraid to alienate Big Tech executives who have historically been large donors to Democratic candidates. “Chuck Schumer is not a man of his word,” Hawley tells TIME. “And if you want to know why, just follow the money. Big Tech donated millions to Joe Biden and the Democrats in 2020, knowing they’d have allies in Washington, and they got what they paid for.”

Schumer’s office did not respond to a request for comment on this report.

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While abandoning the Big Tech bills, Schumer initially included three non-tech related antitrust measures in the omnibus. One would increase the merger fees for companies who need their cases reviewed by the FTC and DOJ—but with a two-year delay. Another would require companies to reveal if they received any subsidies from foreign adversaries when they propose a merger or acquisition. The third would end the practice of allowing companies to change court venues when they are sued by state attorneys general to have their cases heard in front of a more favorable judge.

The last one spooked the California Democrats, sources say, because it had a provision to let the prohibition take effect retroactively. That would have impacted which judges would hear cases already making their way through the courts. The most prominent example of such a case is one between Google and Texas Attorney General Ken Paxton over its storing facial geometry and voiceprints from any user they capture. Google had lobbied hard against the legislation all year. Schumer caved to the California Democrats’ demands, Democratic and Republican Hill staffers tell TIME, and ultimately removed the retroactive provision.

But as a tradeoff for that and quashing the Big Tech bills, he added the extra funding for the FTC and DOJ, according to sources familiar with the matter, and eliminated the two-year delayed implementation of the Merger Filing Fee Modernization Act, thereby helping the agencies accrue even more funds quicker.

Yet while those funds are sure to make a difference for the agencies—which will have an even larger weight on their shoulders over the next two years without changes in statute for the tech industry—Schumer has left a nasty taste in the mouths of legislative allies who say he misled them about his intentions to help stop Big Tech from abusing its gatekeeper status.

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“I think we’re in uncharted water,” the Democratic Hill source tells TIME. “I think there’ll be repercussions. And I think it’s something that we haven’t heard the last about at all.”

from TIME
via Time.com

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