House lawmakers have unveiled bipartisan antitrust reforms that could impact big tech companies like Google, Facebook, Apple, and Amazon. Robins Kaplan Partner, Antitrust & Trade Regulation Group Co-Chair Kellie Lerner joins Yahoo Finance Live to discuss.
AKIKO FUJITA: House lawmakers introduced sweeping legislation on Friday aimed at cracking down on big tech's grip on the marketplace. The five bills combined would make it easier to break up businesses with dominance in one area and create new hurdles for acquisitions of startups. Let's bring in Kellie Lerner, Robins Kaplan Partner, Antitrust & Trade Regulation Group. Kellie, it's good to talk to you today.
Giving you an assessment, first of all, of these five bills-- and, obviously, there's still questions about whether, in fact, it gets passed. But if it does gain support in its current form, how significantly would it alter the way these big tech companies operate?
KELLIE LERNER: I really think-- oh, and I should say thank you so much for having me. But I don't think you can understate the significance of these bills. They're essentially a once-in-a-century opportunity to modernize our antitrust enforcement to meet the current economy. It's a watershed moment for antitrust.
ZACK GUZMAN: Yeah, I mean, let's dig into what they are exactly laying out here, because it seems like they're digging into the core of antitrust when it comes to how these platforms operate and give preference to their own, I guess, businesses. If you think about Google and YouTube search results, I mean, how would this change the way they've operated for years?
KELLIE LERNER: Yeah, so we're now seeing these platforms be treated the same way railroads were treated in the 1800s with their consolidation of power, which prompted the enactment of the antitrust laws in the first place. So there's two broad categories of conduct that would be prohibited among the platforms. The first is, is that these platforms cannot favor their downstream subsidiaries who compete with other businesses on the platform.
So think Google in that instance. When someone goes on a search engine and searches for a video, Google would no longer be able to prioritize YouTube, its own subsidiary, in those search results. And the remedy there would be quite significant. They would be required to divest any subsidiary that violates that proposed bill.
The other broad category of conduct that would be prohibited among the platforms is when they favor or require their other services as a condition for access to the platform. So in that instance, think Amazon's Marketplace. And under this proposed legislation, Amazon wouldn't be allowed to require a merchant to buy, for example, its logistic services as a condition of being able to sell its goods on the Amazon Marketplace. So these are very significant updates to our antitrust laws that could have far-reaching implications in the high-tech space.
AKIKO FUJITA: How much teeth do you think these proposals have? These are arguments that we have heard in multiple hearings before Congress. If you look at something like Amazon and not being able to sell your own products or favor your products on the platform, what does enforcement look like?
KELLIE LERNER: So in terms of teeth, the remedies here are quite significant. So I mentioned divestiture as one option. If Amazon were to favor its other subsidiaries that compete, or condition those subsidiaries for access, the remedy there could be up to 30% of a fine of their US commerce affected by the violation. So that's quite significant.
A third remedy-- and it's one that I'm thrilled to see in the proposed legislation-- is a private right of action. This is the first bipartisan antitrust legislation that I can think of in recent memory that included a private right of action. It's something that, as an officer of COSAL, we have been working with lawmakers to encourage them to include, including the staff from Rep Cicilline's office. And we're just thrilled to see that as a component because, historically, private antitrust enforcement coexisting with government antitrust enforcement has been critical to rigorous enforcement of the antitrust laws. And by including that in that language, it ensures that victims of anti-competitive conduct can both bring a lawsuit in federal court and receive restitution for any damages that they've incurred.
AKIKO FUJITA: And Kellie, finally, so much of this is explained in the context of these big tech names that we often talk about-- Amazon, Facebook, Google, Apple. And the idea that, with changes to the country's antitrust laws, some of these startups can emerge and compete in a big way. The flip side of that argument has been what's been playing out in Europe. And some would say, as a result of all the regulation in place, they haven't had some big influential tech companies come out of the region.
What do you make of that argument? And what do these laws collectively-- or these proposals-- collectively do to the competitors and their ability to emerge and compete with the big names?
KELLIE LERNER: So I think these proposed bills, if enacted, would be critical to the emergence of new competitors. When you think about global antitrust enforcement, we've all been a little bit late to recognizing how the amassing of power in this space has impacted our economy. And Europe is ahead of us, absolutely, but not significantly enough that you're going to see the robust competition that you're alluding to. But with these mechanisms in place, complemented by what's going on in Europe, it will finally give some of these newer up-and-coming startup companies a fair chance and a level playing field to succeed in the tech space.