Will the courts determine your buying choices?

Americans are paying considerably more for groceries, household items, energy, and housing than they were 12 months ago. Inflation is at a 40-year high, and analysts say it will continue to stay hot.

In this precarious economic climate, Congress is considering a law that interferes with Americans’ access to lower-priced, everyday products. This would effectively move private decisions surrounding which products you buy and which businesses you deal with out of your hands and into those of the courts.

The American Innovation and Choice Online Act claims to wage war on Big Tech but will only do so by using the force of Big Government. Sponsored by Sens. Amy Klobuchar, D-Minn., and Chuck Grassley, R-Iowa, the bill neither promotes innovation nor customer choice. Instead, it stands to raise costs on middle-class Americans while inflation ravages their paychecks. Even Sen. Grassley’s own office revealed this bill wasn’t pro-consumer when his staffer admitted, “If we make carveouts for all the pro-consumer features, then the bill will be useless.”

The actual mechanics of this act would prevent companies like Amazon from preferencing their own brands, such as Amazon Basics, in their marketing. Other companies like Apple say that the bill “would place in jeopardy a popular iPhone feature requiring apps to seek users’ consent to track their internet activities,” since its App Store requires third-party apps to receive a user’s consent before it tracks their online behavior.

To further exacerbate the effects on American consumers, the vagueness of this proposed law relegates product placement decisions for online stores or search engines to court interpretation. The courts would eventually make those decisions, rather than private business owners and their customers. The bill lacks clear and understandable rules that will likely lead to prolonged and costly legal battles.

In its current form, this legislation narrowly targets Amazon, Apple, Google, Microsoft, and Meta due to their market share, but the principle behind the proposal is akin to federal regulators walking the aisles of Costco and pulling each Kirkland brand product from the shelves and placing it farther back so that consumers would see the pricier, name brand product first.

While the act is currently aimed at a handful of companies, there is little reason it couldn’t apply to far more retailers in just a few years. Companies like Walmart could easily find themselves faced with versions of this bill. Would that end the sale of generic products offered at Sam’s Club? Would it kill a potential competition in the social media space by limiting companies like Discord and Reddit?

The faulty market rationale plaguing this bill is the same that possessed Sen. Elizabeth Warren, D-Mass., to claim that the grocery store chain Kroger should be slapped with antitrust law. For decades, antitrust laws have followed what is known as the “consumer welfare standard,” which is how jurists have determined whether consumers are harmed by a company’s practices. The notion that antitrust law should be triggered solely because a company is big or because customers willingly choose to use its products forsakes this important standard.

If Congress passes this bill, it not only will mean that consumers are less likely to see the more affordable, generic product displayed, but also that any fines levied against the company will likely result in Americans paying higher prices for all the store’s offerings, as the company looks for ways to recoup losses that stem from regulatory compliance.

This poorly constructed bill professes to help small businesses but does so only by punishing big ones. Given the fact that most consumers currently prefer to use a search engine like Google, small nonprofit groups and businesses can get their message to a much wider audience than they might have otherwise. Apple’s App Store allows tech startups to enter a competitive market in a way that simply wasn’t possible before the ubiquity of the iPhone. COVID uncertainties have made Amazon a godsend for many Americans.

The American Innovation and Choice Online Act is a short-sighted, reactionary bill that was fashioned out of a political desire to punish a few corporations for being big rather than out of concern for protecting consumers.

Businesses have the right to preference their own products in advertising, but even beyond that, consumers, particularly those on tight budgets, benefit from these reduced, generic prices. Additionally, startups and small businesses use the digital infrastructure that companies like Google and Meta have built, allowing them to sell to a larger, more diverse customer base than ever before.

There is no evidence the consumer welfare standard has been violated, nor is there any justification for the Senate to run roughshod over the product choices of American households. The federal government has had a significant hand in creating many of today’s economic issues, including inflation, labor shortages, and supply chain woes. This bill is a red herring that tries to hide the scent of Big Government’s meddlesome measures. Americans can little afford more “help” from Washington.