Even as Microsoft hovers around a US$2-trillion valuation, it may avoid being included in a US antitrust bills aimed at big technology companies.
Questions about whether Microsoft would be able to sidestep the measures taken up on Wednesday by the house judiciary committee have been raised by lawmakers including Democrat Pramila Jayapal, the author of one the bills. Republican Jim Jordan and other GOP lawmakers say they want to ensure the software giant doesn’t get special treatment.
Representative Jayapal of Washington state said that while Microsoft clearly exceeds the $600-billion market capitalisation threshold laid out in four of the six bills before the judiciary panel, another criterion might let the Redmond, Washington-based company off the hook.
“There’s another category which is: Are they a critical trading partner? Which means that they control somebody’s ability to access the marketplace,” Jayapal said in a brief interview during a break in the day-long hearing. “That, they may not qualify under.”
A company has to meet all of the criteria in the four tech-focused bills to be considered in scope.
Republican representative Thomas Massie of Kentucky challenged his colleagues on the committee to explain why Microsoft wouldn’t fall under the measures.
‘Mysteriously avoided’
“I’m trying to figure out why one of the biggest offenders, of Big Tech, has mysteriously avoided the scrutiny of this committee and this broad swathe of bills that seek to radically rewrite our antitrust law,” Massie said, waving a draft of the bill that he said was shared with Microsoft before it was public. “I’m talking about Microsoft.”
Democrat David Cicilline of Rhode Island, the chair of the antitrust subcommittee that drafted the bills, denied during the hearing that any company has been granted an exception. He said that the bill in question is based on previous legislation introduced in the senate, so it wouldn’t have been hard to find draft text.
“There are no exemptions in these bills,” Cicilline said. “No company is exempted period.”
A final determination about which companies would be covered by the bills will be made by the enforcement agencies, Cicilline said. “Each of these bills is broadly applicable to firms that meet the definition of a covered platform,” Cicilline said, without saying whether Microsoft would be among them.
The bills before the judiciary committee on Wednesday came out of last year’s investigation of the anticompetitive practices of Facebook, Apple, Amazon.com and Google. Microsoft, which offers products including Windows, LinkedIn, Office and Teams, wasn’t a target of that investigation.
The six bills are likely to be approved by the judiciary committee, but it’s unclear if they have enough support to pass the house. Their fate is even more uncertain in the senate, where legislation needs at least 10 Republicans to pass, making it difficult for them to become law as written.
One change in four of the amendments to be offered on Wednesday by judiciary chair Jerrold Nadler, a New York Democrat, would adjust the definition of “online platform” for the four tech-focused bills.
The current versions of the four bills refer to an “operating system” to define what services would fall under the scope of the bill. Nadler’s amendments would change that to “mobile operating system”.
The draft of the bill Massie displayed during the hearing didn’t mention operating systems at all in that definition. A Microsoft spokesman said the company didn’t request the change.
Asked during a break in the hearing whether Microsoft — which built its success through its Windows operating system for computers — would be in scope of the bills, Nadler said he “would think so”.
Special treatment
Jordan of Ohio, the top Republican on the judiciary committee, took notice of what he saw as special treatment of Microsoft in the bipartisan house bills. He sent a scathing letter to Microsoft president Brad Smith on Monday, saying “Democrats have excluded Microsoft from antitrust scrutiny”, and demanded a clear answer to whether the company believes it would fall under the house proposals.
“That’s what we have here. Bills that supposedly go after Big Tech, being written by Big Tech,” Jordan said during Wednesday’s hearing.
Last week, Smith said in a Bloomberg TV interview that “there are aspects of the legislation that was introduced in the house last week that absolutely applies to Microsoft and many other companies”. That, however, could have referred to the two bills before the committee that offer modest measures to support antitrust enforcers and aren’t focused on the tech industry.
Smith went on to say that he sees US antitrust action focusing on services that aren’t Microsoft’s core business.
“I think in many ways where this is going is a particular focus on technology platforms that serve as gatekeepers,” Smith said. “In other words, they not only serve as a platform like an operating system, but people need to go through them to sell their commerce, whether it’s a product that’s on Amazon or an app, say, in the Apple App Store or through a service like Google search.”
Smith has cultivated strong relationships with lawmakers, including with the top Democrats and Republicans on the antitrust subcommittee. He testified in March in favour of Cicilline’s bill to help newspapers negotiate with online platforms.
He was also in the same class at Princeton University as Colorado Republican Ken Buck, who played a key role in drafting the house bills and in last year’s investigation of Facebook, Apple, Amazon and Google.
One of the bills is Cicilline’s proposal to outlaw any practice that “advantages the covered platform operator’s own products, services, or lines of business over those of another business user”. That could limit how Apple presents its own music and messaging products on iPhones because competitors including Spotify and Facebook’s WhatsApp depend on mobile phones to reach consumers.
Divestiture
The bill from Jayapal, whose district includes the outskirts of Seattle, could force the divestiture of entire lines of business. That could be devastating to Amazon, which is based in Seattle.
The other two measures, including one sponsored by Buck, would limit acquisitions by the covered platforms and would make it easier for users to move their data, like contacts and photos, from one service to another. — Reported by Anna Edgerton, Billy House and Rebecca Kern, (c) 2021 Bloomberg LP