The American Innovation and Choice Online Act

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The American Innovation and Choice Online

Act

Updated December 2, 2022

Congressional Research Service

https://crsreports.congress.gov

R47228

SUMMARY

The American Innovation and Choice Online

Act

The competitive practices of large technology companies have attracted considerable

congressional attention in recent years. In October 2020, a House subcommittee concluded a

16-month investigation into the market power of four of the largest platform operators:

Facebook, Google, Amazon, and Apple. The inquiry culminated in a 450-page report

recommending a range of measures to address the allegedly anticompetitive conduct of these

“Big Tech” firms.

R47228

December 2, 2022

Jay B. Sykes

Legislative Attorney

While the subcommittee’s report prompted a range of proposals, attention has turned to bills targeting discriminatory conduct

by the tech giants. The relevant legislation—the American Innovation and Choice Online Act (AICOA)—would prohibit Big

Tech platforms from favoring their own products and services in various ways.

There are different versions of the legislation. During the first session of the 117th Congress, the House Judiciary Committee

ordered a version of the AICOA to be reported to the full House. Bills embodying the legislation are also under active Senate

consideration in the second session. In January 2022, the Senate Judiciary Committee approved S. 2992, which it reported to

the full Senate in March. Senator Amy Klobuchar—S. 2992’s sponsor—later released a different version of the AICOA on

May 25, 2022. The May 25 draft indicates that Senator Klobuchar intends to introduce it as an amendment in the nature of a

substitute, if the Senate takes up the bill. This report provides an overview of the versions of the AICOA pending in the

Senate, while noting certain key differences between versions of the bill pending in the House and Senate.

S. 2992 would apply special rules to “covered platforms.” Under the May 25 draft, covered platforms would include online

platforms that exceed certain thresholds for U.S.-based active users; exceed certain thresholds for annual sales, market

capitalization, or worldwide active users; and occupy positions as “critical trading partners.”

The legislation would prohibit operators of covered platforms from engaging in 10 categories of conduct. Three of the

offenses would require regulators to establish that a platform operator’s conduct resulted in material harm to competition. In

particular, the legislation would bar operators of covered platforms from:



Preferencing their own products or services over those of other business users of their platforms in a

manner that would “materially harm competition”;



Limiting the ability of business users to compete with the operators’ own offerings in a manner that would

“materially harm competition”; and



Discriminating in the application of their terms of service among similarly situated business users in a

manner that would “materially harm competition.”

The remaining seven offenses involve a variety of other issues, including platform interoperability, use of user data, and

restrictions on the uninstallation of software applications. These offenses would not require regulators to prove competitive

harm, but defendants would be allowed to rebut a prima facie case by establishing an absence of such harm.

The legislation would also offer defendants several other affirmative defenses involving user privacy, data security, and

platform functionality. Enforcement authority would rest with the Department of Justice, the Federal Trade Commission, and

state attorneys general.

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The American Innovation and Choice Online Act (S. 2992)

Contents

Covered Platforms........................................................................................................... 2

Unlawful Conduct........................................................................................................... 6

Sections 3(a)(1)-(3): Self-Preferencing, Limitations on Business Users, and

Discrimination That Would “Materially Harm Competition” .......................................... 7

Self-Preferencing ................................................................................................. 8

Material Harm to Competition................................................................................ 9

Content Moderation............................................................................................ 13

Sections 3(a)(4) and 3(a)(7): Interoperability and Access to Data .................................... 14

Section 3(a)(5): Tying .............................................................................................. 16

Section 3(a)(6): Use of Data...................................................................................... 17

Section 3(a)(8): App Preinstallation and Steering.......................................................... 19

Section 3(a)(9): Self-Preferencing Involving Platform Interfaces..................................... 19

Section 3(a)(10): Retaliation for Reports to Law Enforcement ........................................ 19

Affirmative Defenses ..................................................................................................... 20

Enforcement................................................................................................................. 21

Conclusion................................................................................................................... 22

Contacts

Author Information ....................................................................................................... 23

Congressional Research Service

The American Innovation and Choice Online Act (S. 2992)

he competitive practices of large technology platforms have attracted considerable

congressional attention in recent years. In October 2020, a House subcommittee concluded

a 16-month investigation into the market power of four of the largest platform operators:

Facebook, Google, Amazon, and Apple. The inquiry culminated in a 450-page report

recommending a range of measures to address the allegedly anticompetitive conduct of these

“Big Tech” firms. 1

The subcommittee’s report prompted a flurry of legislative activity. 2 The 117th Congress has

featured bills that would impose vertical separation requirements, 3 acquisition restrictions, 4

interoperability and data-portability mandates, 5 and a specialist regulator 6 on Big Tech.

While these proposals cover a diverse range of topics, attention has turned to bills targeting

discriminatory conduct by the tech giants. 7 The relevant legislation—the American Innovation

and Choice Online Act (AICOA)—would prohibit Big Tech platforms from favoring their own

products and services in various ways. 8 The prohibitions would move significantly beyond

existing antitrust doctrine and could have important ramifications for the shape of the digital

economy. 9

There are different versions of the legislation. During the first session of the 117th Congress, the

House Judiciary Committee ordered a version of the AICOA—H.R. 3816—to be reported to the

full House. 10 Bills embodying the legislation are also under active consideration in the Senate in

the second session. In January 2022, the Senate Judiciary Committee approved S. 2992, which it

reported to the full Senate in March. 11 Senator Amy Klobuchar—S. 2992’s sponsor—later

1 I NVESTIGATION OF COMPETITION IN DIGITAL M ARKETS, M AJORITY STAFF REP ORT AND RECOMMENDATIONS, SUBCOMM.

ON ANTITRUST, COM. AND ADMIN. L. OF THE H. COMM. ON THE JUDICIARY , 116TH CONG . (2020). This report lists the Big

T ech firms in the same order as the subcommittee’s report. Since the publication of the subcommittee’s report,

Facebook has changed its name to Meta Platforms, Inc.

2 See CRS Report R46875, The Big Tech Antitrust Bills, by Jay B. Sykes.

H.R. 3825, 117th Cong. (2021).

S. 3197, 117th Cong. (2021); H.R. 3826, 117th Cong. (2021).

H.R. 3849, 117th Cong. (2021).

6 S. 4201, 117th Cong. (2022); H.R. 7858, 117th Cong. (2022).

See, e.g., Lauren Feiner, Lawmakers Are Racing to Pass Tech Antitrust Reforms Before Midterms, CNBC (June 4,

2022), https://www.cnbc.com/2022/06/04/lawmakers-racing-to-pass-tech-antitrust-tech-reforms-before-midterms.html.

While “discrimination” can be a value-laden term, this report uses that language in a purely descriptive sense to refer to

conduct by a vertically integrated firm that preferences the firm’s own offerings over those of its rivals. T hat conduct is

“discriminatory” in this sense does not necessarily entail any conclusions about its competitive effects. See Erik

Hovenkamp, The Antitrust Duty to Deal in the Age of Big Tech, 131 YALE L.J. 1483, 1544 n.290 (2022) (collecting

academic literature debating the circumstances in which platform discrimin ation is anticompetitive); cf. HERBERT

HOVENKAMP, FEDERAL ANTITRUST P OLICY: THE LAW OF COMPETITION AND I TS P RACTICE 621-28 (2011) (discussing the

varied output effects of different types of price discrimination).

8 See Brendan Bordelon & Josh Sisco, Schumer’s Office Says He Plans to Hold Vote on Tech Antitrust Bill, P OLITICO

(Aug. 4, 2022), https://www.politico.com/news/2022/08/04/schumer-tech-antitrust-bill-00049890.

See, e.g., Letter from Fiona M. Scott Morton, et al., to Sen. Amy Klobuchar & Sen. Charles Grassley 5 (July 7, 2022),

https://som.yale.edu/sites/default/files/2022-07/AICOA-Final-revised.pdf (supporting the AICOA on the grounds that it

“significantly strengthens” the antitrust laws vis-à-vis Big T ech platforms); Ryan Bourne & Brad Subramaniam, The

“Big Tech” Self-Preferencing Delusion, CATO I NST. 2 (Feb. 24, 2022), https://www.cato.org/sites/cato.org/files/202202/briefing-paper-136.pdf (opposing the AICOA and arguing that it would “fundamentally alter business conduct on

covered platforms”).

H.R. 3816, 117th Cong. (2021).

11 S. 2992, 117th Cong. (2022) (reported with an amendment in the nature of a substitute) [hereinafter “Reported

Version”].

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released a different version of the AICOA on May 25, 2022. 12 The May 25 draft indicates that

Senator Klobuchar intends to introduce it as an amendment in the nature of a substitute if the

Senate takes up the bill.

This report provides an overview of versions of the AICOA pending in the Senate. The report’s

discussion applies to both the reported version of S. 2992 and Senator Klobuchar’s draft

amendment, unless specifically noted. While the report focuses on versions of the legislation

pending in the Senate, it contains several textboxes highlighting key differences between S. 2992

and H.R. 3816.

Covered Platforms

The AICOA would apply special rules to “covered platforms.” The May 25 draft defines that term

to mean “online platforms”13 that exceed certain thresholds for U.S.-based active users; exceed

certain thresholds for annual sales, market capitalization, or worldwide active users; and occupy

positions as “critical trading partners.”14

The bill would authorize the Department of Justice (DOJ) and Federal Trade Commiss ion (FTC)

to jointly designate firms that meet these criteria as covered platforms. 15 However, the legislation

does not limit its prohibitions to entities that have been formally designated. Rather, the bill

appears to contemplate the possibility that regulators will enforce its prohibitions against

non-designated entities that nevertheless qualify as covered platforms. 16

Under the May 25 draft, the term “covered platform” would mean an online platform that:

12 T he May 25 version of the legislation is available at https://www.klobuchar.senate.gov/public/_cache/

files/b/9/b90b9806-cecf-4796-89fb-561e5322531c/B1F51354E81BEFF3EB96956A7A5E1D6A.sil22713.pdf

[hereinafter “May 25 Draft”].

T he May 25 version of the bill contains a definition of the term “online platform” that appears intended to exclude

financial-services and telecommunications companies from the legislation’s scope. See May 25 Draft § 2(a)(9) (2022).

T he bill defines the term “online platform” to mean a website, online or mobile application, operating system, digital

assistant, or online service that “enables”:



A user to generate or share content that can be viewed by other users or to interact with other content on the

platform;



T he offering, advertising, sale, purchase, or shipping of products or services between and among consumers

or businesses not controlled by the platform operator; or



User searches or queries that access or display a volume of information.

Id. § 2(a)(9)(A). T he definition explicitly excludes services that provide the capability to transmit data to and receive

data from “all or substantially all internet endpoints” by wire or radio. Id. § 2(a)(9)(B). In contrast, the reported version

of the bill would define the term “online platform” to include websites, online or mobile applications, operating

systems, digital assistants, or online services that “ facilitate[] the offering, advertising, sale, purchase, payment, or

shipping of products or services, including software applications, between and among consumers or businesses not

controlled by the platform operator.” S. 2992, 117th Cong. § 2(a)(9)(B) (Reported Version) (emphasis added). Unlike

the May 25 draft, the reported version of the bill would not specifically exclude telecommunications companies.

14 May 25 Draft § 2(a)(5)(B).

15 S. 2992, 117th Cong. § 3(d) (Reported Version); May 25 Draft § 3(d). For additional discussion of the designation

process and other issues related to the bill’s enforcement, see “ Enforcement” infra.

16 See, e.g., S. 2992, 117th Cong. § 2(a)(5)(B)(ii)(I) (Reported Version) (defining a “covered platform” to include

certain firms with large numbers of U.S.-based active users “during the 12 months preceding a designation . . . or the

12 months preceding the filing of a complaint for an alleged violation of this Act”) (emphasis added).

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

Has at least 50 million U.S.-based monthly active users or 100,000 U.S.-based

monthly active business users at any point during the 12 months preceding a

designation decision or the filing of a complaint for a violation of the bill;



Is owned or controlled by an entity with:

 Annual sales exceeding $550 billion at any point during the two years

preceding a designation decision or the filing of a complaint;



An average market capitalization exceeding $550 billion over any 180-day

period during the two years preceding a designation decision or the filing of a

complaint; or



At least one billion worldwide monthly active users during the 12 months

preceding a designation decision or the filing of a complaint; and

Is a “critical trading partner” for the sale or provision of any product or service

offered on or directly related to the platform. 17

The AICOA defines the term “critical trading partner” to mean a person that has the ability to

“restrict or materially impede” a business user’s access to its users, customers, or a tool or service

needed to effectively serve its users or customers.18

Depending on the interpretation of the “critical trading partner” requirement, the legislation may

encompass a range of popular platforms, including:



Facebook (a social network), Instagram (a photo-sharing service), and WhatsApp

(a messaging application)—all of which are controlled by Meta Platforms;



Google Search (a search engine), YouTube (a video-sharing platform), Google

Ads (an online advertising platform), Android OS (a mobile operating system),

and the Google Play Store (a software application store)—all of which are

controlled by Alphabet;



Amazon Marketplace (an e-commerce marketplace) and Amazon Web Services

Marketplace (an online software store);

Apple’s App Store (a software application store) and iOS (a mobile operating

system);

Azure Marketplace (an online software store), LinkedIn (an employmentoriented social network), Microsoft Store on Xbox (an online video-game store),

and Microsoft Windows (a group of operating systems)—all of which are

controlled by Microsoft; and

TikTok (a video-sharing service), which is controlled by the Chinese firm

ByteDance. 19



The bill’s supporters have argued that the criteria governing a firm’s status as a covered platform

are reasonable proxies for the type of “gatekeeping” power that often raises competition

May 25 Draft § 2(a)(5)(B). T he reported version of the bill would apply the same criteria as the May 25 version to

platforms controlled by publicly traded companies. See S. 2992, 117th Cong. § 2(a)(5)(B) (Reported Version).

However, instead of the relevant sales and market -capitalization thresholds, the reported version would apply an

earnings threshold of $30 billion to platforms controlled by non -publicly traded companies. Id. § 2(a)(5)(C) (Reported

Version).

S. 2992, 117th Cong. § 2(a)(6) (Reported Version); May 25 Draft § 2(a)(6).

19 Leah Nylen, Tech Antitrust Bill Threatens to Break Apple, Google’s Grip on the Internet, BLOOMBERG (July 26,

2022), https://www.bloomberg.com/graphics/2022-tech-antitrust-bill/.

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The American Innovation and Choice Online Act (S. 2992)

concerns.20 Critics have contended that the thresholds are arbitrary and that a firm’s market

capitalization, annual sales, and user base have little relevance for its ability to harm

competition. 21

The legislation’s “critical trading partner” requirement arguably addresses some of this concern

about arbitrariness. 22 However, that requirement would need to be interpreted by the DOJ, the

FTC, and the courts. As noted, S. 2992 defines the term “critical trading partner” to mean an

entity with the ability to “restrict or materially impede” a business user’s access to its customers

or necessary inputs. 23 The bill does not contain further clarification of this language, which is not

drawn from antitrust case law. Existing antitrust doctrine instead emphasizes market power,

which is a requirement for most forms of antitrust liability. 24 Plaintiffs typically establish market

power by showing that a defendant occupies a large share of a properly defined antitrust market. 25

In brief, defining an antitrust market involves an evaluation of the range of reasonable substitutes

for a given product or service. 26

The relationship between S. 2992’s “critical trading partner” requirement and these standards

from existing doctrine is not entirely clear. The core concern of market-power analysis—the

availability of reasonable substitutes—seems relevant to whether a platform has the ability to

“restrict or materially impede” a business user’s access to customers or inputs. It is notable,

however, that the AICOA does not employ the familiar language of market power.

The choice to use new language that lacks an accepted meaning may reflect an intent to adopt less

demanding standards than those in the market-power case law. Some commentators have

expressed dissatisfaction with aspects of the relevant doctrine. For example, critics have argued

that the Supreme Court’s 2018 decision in Ohio v. American Express27 —which adopted special

market-definition rules for “two-sided” markets—may hamper antitrust enforcement against tech

20 See, e.g., Adam Conner & Erin Simpson, Evaluating 2 Tech Antitrust Bills to Restore Competition Online, CTR. FOR

AM. P ROGRESS (June 2, 2022), https://www.americanprogress.org/article/evaluating-2-tech-antitrust-bills-to-restorecompetition-online/.

21 See, e.g., Aurelien Portuese, The Revised (But Uncorrected) Version of the Klobuchar Bill, I NFO . T ECH. &

I NNOVATION FDN. (June 21, 2022), https://itif.org/publications/2022/06/21/the-revised-but-uncorrected-version-of-theklobuchar-bill/.

See Scott Morton, et al., supra note 9, at 1 (arguing that the AICOA is “carefully targeted in that its prohibitions

apply only to platforms deemed ‘critical trading partners’”).

23 S. 2992, 117th Cong. § 2(a)(6) (Reported Version); May 25 Draft § 2(a)(6).

24 See, e.g., John B. Kirkwood, Market Power and Antitrust Enforcement, 98 B.U. L. REV. 1169, 1173 (2018)

(explaining that market power “is central to antitrust because it distinguishes firms that can harm competition and

consumers from those that cannot”). A firm possesses market power when it has the ability to profitably charge prices

above competitive levels for a sustained period of time. MARKET P OWER HANDBOOK: COMPETITION LAW AND

ECONOMIC FOUNDATIONS, AM. BAR ASS’N 1 (2d ed. 2012). Many economists contend that proper assessments of

market power involve quality considerations. See id. at 1 n.3. T hus, market -power analysis may require inquiries into a

firm’s ability to degrade the quality of its offerings without facing a meaningful risk of consumer substitution. See

generally John M. Newman, Antitrust in Zero-Price Markets: Applications, 94 W ASH . U. L. REV. 49 (2016); John M.

Newman, Antitrust in Zero-Price Markets: Foundations, 164 U. P A. L. REV. 149 (2015).

25 M ARKET P OWER HANDBOOK, supra note 24, at 18. Plaintiffs can also establish market power with direct evidence of

supra-competitive prices, but this can be a difficult task. See id. at 20.

See id. at 61-63. More technically, market definition typically involves analysis of the cross-elasticity of demand

between different products—that is, the extent to which the quantity demanded of one product will change in response

to a change in the price of another product. Id. at 64.

27 138 S. Ct. 2274 (2018).

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platforms. 28 Other scholars have criticized the market-definition paradigm more generally. 29

Senator Klobuchar—S. 2992’s sponsor—has introduced a different antitrust bill that appears to

reflect both of those concerns.30

This all suggests that the AICOA’s “critical trading partner” requirement is not intended to

incorporate current market-power doctrine wholesale. Nevertheless, the extent to which

preexisting antitrust principles would influence the interpretation of the “critical trading partner”

language remains an open question. One observer has characterized the bill as repudiating any

analysis of market power and criticized it on that basis. 31 However, the legislation might instead

prompt courts to dispense with some of the more demanding elements of current doctrine without

completely abandoning certain general principles that inform it.

These types of interpretive issues recur throughout the bill and could present regulators and courts

with difficult questions if the legislation becomes law.

28 Lina M. Khan, The Supreme Court Case That Could Give Tech Giants More Power, N.Y. T IMES (Mar. 2, 2018),

https://www.nytimes.com/2018/03/02/opinion/the-supreme-court-case-that-could-give-tech-giants-more-power.html.

29 See Louis Kaplow, Why (Ever) Define Markets?, 124 HARV. L. REV. 437 (2010); see also I NVESTIGATION OF

COMP ETITION IN DIGITAL MARKETS, supra note 1, at 399 (recommending that Congress enact legislation providing that

market definition is not required to prove an antitrust violation).

See S. 225, 117th Cong. §§ 9, 13 (2021).

31 Erik Hovenkamp, Proposed Antitrust Reforms in Big Tech: What Do They Imply for Competition and Innovation?,

COMP ETITION POLICY I NT’ L ANTITRUST CHRONICLE 15, 22 (July 2022).

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Comparing Different Versions of the AICOA: S. 2992 and H.R. 3816

In June 2021, the House Judiciary Committee ordered the committee version of the AICOA—H.R. 3816—to be

reported with amendments to the full House. While parts of H.R. 3816 overlap with S. 2992, the bills also differ in

several respects.

Like S. 2992, H.R. 3816 would apply special rules to “covered platforms.” H.R. 3816, 117th Cong. § 2 (2021).

There is some similarity in the criteria used to determine a firm’s status as a covered platform: the bills contain

the same thresholds for monthly active U.S. users and the same “critical trading partner” standard. See S. 2992,

117th Cong. §§ 2(a)(5)(B)(ii)(I), 2(a)(6) (2022) (Reported Version); May 25 Draft §§ 2(a)(5)(B)(i), 2(a)(6) (2022);

H.R. 3816, 117th Cong. §§ 2(g)(4)(B)(i), 2(g)(5).

There are differences with respect to the other criteria. Under H.R. 3816, the relevant sales and

market-capitalization thresholds would be $600 billion, as opposed to $550 billion u nder S. 2992. See S. 2992,

117th Cong. § 2(a)(5)(B)(ii)(II)(aa) (Reported Version); May 25 Draft § 2(a)(5)(B)(ii)(I); H.R. 3816, 117th

Cong. § 2(g)(4)(B)(ii).

Likewise, while S. 2992 could apply to entities that fall below the relevant sales and market-capitalization

thresholds if they have more than one billion worldwide monthly active users, H.R. 3816 would not. See S. 2992,

117th Cong. § 2(a)(5)(B)(ii)(II)(bb) (Reported Version); May 25 Draft § 2(a)(5)(B)(ii)(II); H.R. 3816, 117th

Cong. § 2(g)(4)(B)(ii).

There are also two differences related to designation decisions. First, S. 2992 would allow the DOJ and FTC to

jointly designate firms that meet the specified criteria as covered platforms, while H.R. 3816 appears to permit

either agency to do so independently. S. 2992, 117th Cong. § 3(d) (Reported Version); May 25 Draft § 3(d); H.R.

3816, 117th Cong. § 2(d). Second, designation decisions under S. 2992 would be valid for seven years, as opposed

to 10 years under the House committee-reported bill. S. 2992, 117th Cong. § 3(d)(1)(C) (Reported Version); May

25 Draft § 3(d)(1)(C); H.R. 3816, 117th Cong. § 2(d)(3).

Unlawful Conduct

The AICOA would prohibit covered platforms from engaging in 10 categories of conduct.32

Under the May 25 version of the legislation, firms that violate the bill’s prohibitions would be

liable for up to 10% of their total U.S. revenue for the period in which the violation occurred.33

The bill makes “material harm” to competition an element of three of the offenses. 34 For the

remaining seven categories, defendants would be allowed to rebut a prima facie case by showing

that their conduct would not result in “material harm” to competition. 35 The legislation would also

offer several other affirmative defenses for all 10 offenses. 36

This section provides an overview of the bill’s prohibitions, their relationship to current antitrust

doctrine, and related interpretive issues. The bill’s affirmative defenses are discussed later in the

report. 37

32 S. 2992, 117th Cong. § 3(a)(1)-(10) (2022) (Reported Version); May 25 Draft § 3(a)(1)-(10) (2022).

33 May 25 Draft § 3(c)(6)(B). Under the reported version of S. 2992, violators would be liable for up to 15 percent of

their total U.S. revenue for the period in which the violation occurred. S. 2992, 117th Cong. § 3(c)(5)(B) (Reported

Version).

S. 2992, 117th Cong. § 3(a)(1)-(3) (Reported Version); May 25 Draft § 3(a)(1)-(3).

35 S. 2992, 117th Cong. § 3(b)(2)(A) (Reported Version); May 25 Draft § 3(b)(2).

36 S. 2992, 117th Cong. § 3(b)(1)-(2) (Reported Version); May 25 Draft § 3(b)(1).

37 See “Affirmative Defenses” infra.

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Sections 3(a)(1)-(3): Self-Preferencing, Limitations on Business

Users, and Discrimination That Would “Materially Harm

Competition”

Sections 3(a)(1)-(3) of the AICOA would prohibit covered platforms from engaging in certain

forms of conduct in a manner that would “materially harm competition.”38



Section 3(a)(1) would prohibit operators of covered platforms from preferencing

their own products, services, or lines of business over those of other business

users of their platforms in a manner that would “materially harm competition.”39

Section 3(a)(2) would prohibit operators of covered platforms from limiting the

ability of business users to compete with the operators’ own offerings in a

manner that would “materially harm competition.”40

Section 3(a)(3) would prohibit operators of covered platforms from

discriminating in the application of their terms of service among similarly

situated business users in a manner that would “materially harm competition.”41

Much of the commentary surrounding the bill has focused on the types of conduct that may

trigger liability under these provisions. Some of the practices that commentators have flagged as

potentially prohibited include:



Google Search’s display of Google Maps content with search results, in addition

to its favorable placement of other Google verticals;42

Amazon advantaging its own products in search results on its Marketplace or

favoring itself over third-party merchants in managing its “Buy Box”;43

Apple’s preinstallation of certain software applications (apps) on its mobile

devices;44 and

Microsoft’s prioritization of its own video games in Microsoft Store on Xbox. 45

38 S. 2992, 117th Cong. § 3(a)(1)-(3) (Reported Version); May 25 Draft § 3(a)(1)-(3).

39 S. 2992, 117th Cong. § 3(a)(1) (Reported Version); May 25 Draft § 3(a)(1).

40 S. 2992, 117th Cong. § 3(a)(2) (Reported Version); May 25 Draft § 3(a)(2).

41 S. 2992, 117th Cong. § 3(a)(3) (Reported Version); May 25 Draft § 3(a)(3).

42 Neil Bradley, Congressional Price Hike? How the American Innovation and Choice Online Act Raises Prices on

Consumers, U.S. CHAMBER OF COMMERCE (June 21, 2022), https://www.uschamber.com/finance/antitrust/

congressional-price-hike-how-the-american-innovation-and-choice-online-act-raises-prices-on-consumers.

43 Hovenkamp, supra note 7, at 1546-47; Nylen, supra note 19. Amazon’s “Buy Box” is an icon that allows consumers

to either place items in their carts or buy them with a single click. T hird-party merchants compete with one another and

with Amazon to “win” the Buy Box for a given product at any point in time. Winners are chosen based on factors that

include price and reliability in fulfillment. See Brian Connolly, How to Win the Amazon Buy Box in 2021, JUNGLE

SCOUT (Jan. 4, 2021), https://www.junglescout.com/blog/how-to-win-the-buy-box/.

44 Randy Picker, How Would the Big Tech Self-Preferencing Bill Affect Users?, P RO MARKET (June 16, 2022),

https://www.promarket.org/2022/06/16/how-would-the-big-tech-self-preferencing-bill-affect-users/; but see Hal Singer,

Rep. Cicilline’s Nondiscrimination Bill Would Offer a Lifeline to Independent App Developers, P RO MARKET (July 2,

2021), https://www.promarket.org/2021/07/02/antitrust -self-preferencing-preinstallation-app-developers-apple/

(arguing that similar language in the House version of the AICOA would not prohibit app preinstallation).

45 Nylen, supra note 19.

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The House subcommittee’s October 2020 report on digital competition identified several of these

practices as examples of allegedly anticompetitive conduct by tech platforms. 46 Whether S. 2992

would in fact proscribe this conduct would depend on the application of key terms like

“preference,” “limit,” and “materially harm competition.”

In addition to these behaviors—which principally advantage a platform operator over its rivals—

the legislation may bar certain forms of “secondary line” discrimination. 47 In particular, some

commentators have argued that Section 3(a)(3)’s prohibition of discriminatory terms-of-service

enforcement may limit firms’ ability to remove unwanted content from their platforms. 48

The following subsections review these issues.

Self-Preferencing

The bill’s prohibition of self-preferencing may raise particularly complex questions. Many forms

of conduct by a vertically integrated firm arguably “preference” the firm’s own offerings over

those of its rivals. Interpreted literally, that language could encompass any actions that treat a

platform’s own products more favorably than those of competitors.49 If the term “preference” is

given this type of expansive meaning, Section 3(a)(1)’s “materially harm competition”

requirement would likely do much of the work defining the provision’s boundaries.

At the same time, the concept of self-preferencing may also have internal limits that could

complicate the bill’s enforcement. Several commentators have argued that proving “preferential”

conduct would require regulators to establish some baseline level of neutral treatment from which

a defendant has deviated. 50 In this view, self-preferencing would not encompass a platform

operator’s favorable treatment of its own offerings when they deserve such treatment (i.e., when a

platform operator’s offerings are better than the alternatives). 51

Section 3(a)(1) may thus require regulators and courts to grapple with challenging conceptual

questions. 52 While cases in which a firm overrides its ordinary algorithmic protocols to

disadvantage rivals may be fairly straightforward instances of self-preferencing, other fact

patterns could raise thornier interpretive and evidentiary issues. 53

I NVESTIGATION OF COMPETITION IN DIGITAL MARKETS, supra note 1, at 14 (concluding that Google has “used its

search monopoly . . . to boost Google’s own inferior vertical offerings, while imposing search penalties to demote

third-party vertical providers”); id. at 282 (concluding that Amazon has given itself “favorable treatment relative to

competing sellers” through its control of the Buy Box); id. at 352-54 (discussing Apple’s preinstallation of its own apps

on iPhones).

47 “Secondary line” competitive injury occurs when a company’s discriminatory conduct disadvantages some of its

customers relative to others in a manner that harms competition. See HOVENKAMP, supra note 7, at 632.

See note 82 infra.

49 See Hovenkamp, supra note 31.

50 For versions of this argument, see T homas A. Lambert, Addressing Big Tech’s Market Power: A Comparative

Institutional Approach, 75 SMU L. REV. 73, 98-99 (2022); Daniel A. Crane, Search Neutrality as an Antitrust

Principle, 19 GEO . MASON L. REV. 1199 (2012); Geoffrey A. Manne & Joshua D. Wright, If Search Neutrality is the

Answer, What’s the Question?, 2012 COLUM. BUS. L. REV. 151 (2012).

51 Lambert, supra note 50, at 98-99. A product could conceivably be “better” than the alternatives in th e sense that it is

generally superior, or in the narrower sense that it works better with a platform operator’s other offerings. For example,

Apple might argue that its App Store is “better” than rival stores in the sense that the App Store is categorically

superior, or in the sense that it works better on the iOS operating system.

See generally Lawrence Solum, Legal Theory Lexicon: Baselines, LEGAL THEORY BLOG (Mar. 2, 2009),

https://lsolum.typepad.com/legaltheory/2009/03/legal-theory-lexicon-baselines.html.

53 See Crane, supra note 50, at 1207-08.

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Material Harm to Competition

The “materially harm competition” requirement in Sections 3(a)(1)-(3) has also generated

discussion.

The AICOA’s supporters have identified that requirement as a key limiting principle in response

to allegations of overbreadth. 54

The bill’s opponents have argued that there are two senses in which the meaning of the

“materially harm competition” standard is unclear. First, the term “materially” does not have an

established meaning in antitrust doctrine. While Section 7 of the Clayton Act prohibits mergers

and acquisitions that may “substantially” lessen competition, 55 neither the antitrust statutes nor

the case law employ S. 2992’s language of materiality. The legislation’s critics have argued that

this novelty is likely to create significant uncertainties about the bill’s application. 56 S. 2992’s

proponents have answered that the new terminology is intended to strengthen existing law, which

they argue has proven inadequate to grapple with anticompetitive conduct by tech platforms.57

Second, some commentators have argued that the “materially harm competition” standard may be

interpreted in ways that depart from current understandings of competitive harm. 58

One source of this concern involves differences between S. 2992 and H.R. 3816. The “materially

harm competition” standard in S. 2992 differs from language in H.R. 3816 that offers defendants

an affirmative defense for conduct that does not harm “the competitive process by restricting or

impeding legitimate activity by business users.”59 Critics have contended that this contrast

suggests “a shift away from protecting competitive processes towards protecting individual

competitors.”60

Another observer has argued that the AICOA’s omission of certain traditional antitrust concepts

like market power may prompt courts to conclude that the bill seeks to move beyond preexisting

notions of harm to competition. 61

See, e.g., Aaron Schur, The Critiques Against the American Innovation and Choice Online Act Miss the Mark,

P RO MARKET (July 18, 2022), https://www.promarket.org/2022/07/18/the-critiques-against-the-american-innovationand-choice-online-act-miss-the-mark/; Scott Morton, et al., supra note 9, at 6; Bill Baer, Why Amazon is Wrong About

the American Innovation and Choice Online Act, BROOKINGS I NST. (June 14, 2022), https://www.brookings.edu/

blog/techtank/2022/06/14/why-amazon-is-wrong-about-the-american-innovation-and-online-choice-act/; Conner &

Simpson, supra note 20.

55 15 U.S.C. § 18. Senator Klobuchar has introduced other legislation that would amend Section 7 of the Clayton Act to

prohibit mergers and acquisitions that “create an appreciable risk of materially lessening competition.” S. 225, 117th

Cong. § 4(b) (2021). T hat legislation defines the term “materially” to mean “more than a de minimis amount.” Id. S.

2992 leaves the term “materially” undefined.

56 See, e.g., Comments of the Am. Bar Ass’n Antitrust L. Section Regarding the Am. Innovation and Choice Online Act

(S. 2992) Before the 117th Congress at 9 (Apr. 27, 2022), https://www.americanbar.org/content/dam/aba/

administrative/antitrust_law/comments/at -comments/2022/comments-aico-act.pdf [hereinafter “ABA Comments”].

57 Scott Morton, et al., supra note 9, at 2 (characterizing the novelty of the “materially harm competition” standard as a

“feature, not a bug” of the AICOA); Conner & Simpson, supra note 20.

A. Douglas Melamed, Why I Think Congress Should Not Enact the American Innovation and Choice Online Act,

COMP ETITION POLICY I NT’ L (June 19, 2022), https://www.competitionpolicyinternational.com/why-i-think-congressshould-not-enact-the-american-innovation-and-choice-online-act/; Portuese, supra note 21; ABA COMMENTS, supra

note 56, at 5-6, 9, 20.

59 H.R. 3816, 117th Cong. § 2(c)(1)(A) (2021).

60 ABA COMMENTS, supra note 56, at 5.

61 Melamed, supra note 58.

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Some of the AICOA’s supporters disagree. Representative David Cicilline—H.R. 3816’s

sponsor—has contended that S. 2992’s reference to harm to “competition” incorporates that

concept’s established meaning in the case law, which encompasses harm to the “competitive

process” but not harm to individual competitors standing alone. 62 In this view, the difference

between H.R. 3816’s reference to harm to the “competitive process” and S. 2992’s notion of harm

to “competition” is stylistic rather than substantive.

While harm to “competition” is a central concept in antitrust jurisprudence, its precise meaning is

contested in multiple ways. There is a long-standing debate over whether various goals—like

protecting “consumer welfare,” the “competitive process,” or “trading partner welfare”—

accurately reflect the meaning of “competition” that has developed in the antitrust case law. 63

Some if not all of those goals themselves have several possible meanings. 64 Finally, in addition to

these doctrinal debates, there are differences of opinion over the types of harm to “competition”

that antitrust should preclude. 65

It is unclear whether these debates would play a role in the interpretation of S. 2992’s “materially

harm competition” standard. If the bill became law, courts may conclude that the standard ratifies

prevailing notions of competitive harm, whatever the courts determine those to be. To similar

effect, judges steeped in the reigning approach to antitrust may be hesitant to embrace innovative

theories of harm without more explicit legislative direction. 66

There are possible counterarguments, however. Recent efforts to reorient antitrust’s focus might

support the conclusion that the meaning of harm to “competition” in S. 2992 is not identical to

preexisting understandings of that concept in the case law. For example, the October 2020 House

subcommittee report on digital competition that laid the groundwork for the AICOA concluded

that the Supreme Court “has limited the analysis of competitive harm to focus primarily on price

and output rather than the competitive process.”67 In place of the current approach, the report

endorsed a broader standard that protects “not just consumers, but also workers, entrepreneurs,

independent businesses, open markets, a fair economy, and democratic ideals.”68 This diagnosis

and prescription could suggest an intent to reform and not merely ratify existing concepts of

competitive harm.

Several Members of Congress have noted these theoretical debates and expressed uncertainty

about the role that “consumer welfare” would play in the AICOA’s application. 69 These concerns

62 Letter from Rep. David N. Cicilline to Hon. Brian Schatz, et al., at 2 (June 15, 2022), https://cicilline.house.gov/sites/

evo-subsites/cicilline.house.gov/files/evo-media-document/2022-0615-cicilline-letter-to-senators-re-contentmoderation.pdf [hereinafter “Cicilline Letter”] (“The antitrust concept of ‘harm to competition’ exists under current

law and means ‘harm, not just to a single competitor, but to the competitive process, i.e., to competition itself.’”)

(quoting NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 135 (1998)).

See, e.g., Herbert Hovenkamp, The Slogans and Goals of Antitrust Law, U. Penn. Inst. for L. & Econ. Research

Paper No. 22-33 (Oct. 2, 2022), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4121866# .

See id. at 49-89.

65 See, e.g., Barak Orbach, How Antitrust Lost Its Goal, 81 FORDHAM L. REV. 2253 (2013); Maurice E. Stucke,

Reconsidering Antitrust’s Goals, 53 B.C. L. REV. 551 (2012). T here is also a dispute over whether antitrust needs a

more specific normative benchmark than general notions like “competition.” See, e.g., Eleanor M. Fox, Against Goals,

81 FORDHAM L. REV. 2157 (2013).

66 See Scott Morton, et al., supra note 9, at 3 (“[A] judiciary weighted with years of experience and jurisprudence will

have significant inertia, and it is therefore unduly optimistic to imagine outcomes under the [AICOA] would veer

drastically away from past understandings of core concepts like harm to competition.”).

I NVESTIGATION OF COMPETITION IN DIGITAL MARKETS, supra note 1, at 391.

68 Id. at 392.

69 See, e.g., T ranscript of Markup of S. 2992 at 53 (Jan. 20, 2022) (on file with author) [hereinafter “S. 2992 Markup

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led the House Judiciary Committee to adopt an amendment to H.R. 3816 that provides an

affirmative defense for conduct that “increases consumer welfare.”70 S. 2992, in contrast, does not

contain a parallel affirmative defense. The role that consumer benefits would play in the

application of the “materially harm competition” standard thus remains unclear. If consumer

benefits and other efficiencies would not register in the application of that standard, then the

meaning of the term “competition” in S. 2992 would diverge from the meaning that many courts

ascribe to that concept under current law. 71

Efforts to equate harm to “competition” with harm to the “competitive process” do not

necessarily resolve such ambiguities. 72 The “competitive process” has been invoked for a variety

of purposes, some of which are in tension with one another. For example, that phrase has been

used:



To distinguish harm to “competition” (which qualifies as a cognizable harm

under current antitrust law) from harm to individual competitors (which does

not);73

To refer to a general standard under which antitrust is or should be concerned

with the protection of competition as a process rather than with the achievement

of specific economic outcomes;74 and

T ranscript”] (Sen. T hom T illis) (“It’s not clear how existing competitor or competition jurisprudence would support or

be changed by [S. 2992]. T he purpose of competition law is to eliminate harm to consumers not to pick winners and

losers. I’m also aware of the spirited debate [over] whether decades of antitrust law based on [the] consumer-welfare

standard should be put in the burn pit. I’m open to having [a] separate discussion about potential changes to that

standard and I hope that we will. But as it stands in relation to this bill, what standard will enforcers look to [?] What

about amendments [that] would insert [the] consumer welfare standard back into the definition of material harm to

competition?”); T ranscript of Markup of H.R. 3843, the Merger Filing Fee Modernization Act, et al., at 16,866 -16,869

(June 23, 2021), https://www.congress.gov/117/meeting/house/112818/documents/HMKP -117-JU00-Transcript20210623.pdf [hereinafter “H.R. 3816 Markup T ranscript”] (Rep. Cliff Bentz) (“[W]e should also take into [account]

consumers, since that is the proper focus and long-time focus, over the past 40 years at least, of our antitrust law.”); id.

at 16,887-16,888 (Rep. Zoe Lofgren) (“[I]n this bill there’s no consideration whatsoever for consumer benefit.”).

70 H.R. 3816, 117th Cong. § 2(c) (2021); H.R. 3816 Markup T ranscript at 17,309-17,310.

See, e.g., United States v. Microsoft, 253 F.3d 34, 59 (D.C. Cir. 2001) (explaining that if a plaintiff makes a prima

facie case of anticompetitive harm under Section 2 of the Sherman Act, the defendant may proffer a procompetitive

justification for its conduct —that is, “a nonpretextual claim that its conduct is indeed a form of competition on the

merits because it involves, for example, greater efficiency or enhanced consumer appeal”); see also NCAA v.

Alston, 141 S. Ct. 2141, 2151 (2021) (explaining that in Rule-of-Reason cases under Section 1 of the Sherman Act, the

goal is “[a]lways” to “distinguish between restraints [of trade] with anticompetitive effect that are harmful to the

consumer and restraints stimulating competition that are in the consumer’s best interest”) (internal quotation marks and

citation omitted).

See Hovenkamp, supra note 63, at 51 (“The ‘competitive process’ can mean pretty much what anyone thinks it

means. As a result it embraces mutually inconsistent antitrust ideologies.”); John M. Newman, Procompetitive

Justifications in Antitrust Law, 94 I ND . L.J. 501, 514 (2019) (“[T]he actual content of the competitive-process approach

remains mercurial, a cipher . . . . More than a half-century has passed since the [Supreme] Court first clearly invoked

the competitive process approach to condemn a restraint of trade, yet terms like ‘competition’ and ‘competitive

process’ are still ‘wonderfully ill-defined.’”) (citation omitted); Stucke, supra note 65, at 569 (arguing that the

“competitive process” standard fails to provide meaningful guidance because “it simply shifts the debate [over

antitrust’s goals] to a larger, unresolved issue, namely defining an ‘effective competitive process,’” and “[n]o

consensus exists in the United States or elsewhere on an effective competition process or a unifying theory of

competition.”).

73 E.g., Broadcom Corp. v. Qualcomm, Inc., 501 F.3d 297, 308 (3d Cir. 2007).

E.g., T im Wu, The “Protection of the Competitive Process” Standard, Colum. Pub. L. Research Paper No. 14-612

(2018), https://scholarship.law.columbia.edu/cgi/viewcontent.cgi?article=3293&context=faculty_scholarship ; Lina M.

Khan, Amazon’s Antitrust Paradox, 126 YALE L.J. 710, 745 (2017); Gregory J. Werden, Antitrust’s Rule of Reason:

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

In ways that are difficult to distinguish from canonical statements of the

“consumer welfare” standard. 75

Accordingly, courts would likely face a range of plausible meanings in interpreting and applying

S. 2992’s “materially harm competition” standard, even if that standard is equivalent to H.R.

3816’s reference to harm to the “competitive process.”76

In sum, then, the “materially harm competition” standard would have to be fleshed out in

practice. The AICOA would direct the DOJ and FTC to issue guidelines outlining their

interpretation of that language. 77 Those guidelines could give regulated entities some clarity as to

the standard’s scope, 78 but would not be legally binding. 79 As a result, the judiciary would likely

unpack the legislation’s meaning over time, presumably operating under the assumption that the

“materially harm competition” standard is intended to be more restrictive than certain aspects of

general antitrust doctrine. 80

Only Competition Matters, 79 ANTITRUST L.J. 713, 732 (2014); Eleanor M. Fox, Modernization of Antitrust: A New

Equilibrium , 66 CORNELL L. REV. 1140, 1152-54 (1981).

E.g., T own of Concord v. Boston Edison Co., 915 F.2d 17, 21 -22 (1st Cir. 1990) (Breyer, J.) (stating that a practice

harms the “competitive process” if it “obstructs the achievement of competition’s basic goals—lower prices, better

products, and more efficient production methods”); see also Lina M. Khan, The Ideological Roots of America’s Market

Power Problem , YALE L.J. F. 960, 971 n.48 (2018) (“Even when courts claim to be analyzing the competitive process,

they tend to use consumer welfare as a proxy to assess it.”) (citing United States v. Microsoft Corp., 253 F.3d 34, 58

(D.C. Cir. 2001)).

Like the “competitive process,” “consumer welfare” has several possible meanin gs. See, e.g., Stucke, supra note 65, at

571-73; Barak Orbach, The Antitrust Consumer Welfare Paradox, 7 J. COMP ETITION L. ECON. 133 (2011). One scholar

has explained that “under the consumer welfare . . . principle as most people understand it today,” antitrust “encourages

markets to produce output as high as is consistent with sustainable competition, and prices that are accordin gly as low.”

Herbert J. Hovenkamp, Is Antitrust’s Consumer Welfare Principle Imperiled?, 45 J. CORP . L. 101, 102 (2019). Some

commentators have argued that —properly understood—the “consumer welfare” standard incorporates non-price

benefits to consumers, such as product quality and innovation. See, e.g., Christine S. Wilson, Welfare Standards

Underlying Antitrust Enforcement: What You Measure is What You Get, Luncheon Keynote Address at Geo. Mason L.

Rev. 22nd Annual Antitrust Symposium at 5-7 (Feb. 15, 2019), https://www.ftc.gov/system/files/documents/

public_statements/1455663/welfare_standard_speech_-_cmr-wilson.pdf.

76 Disputes over whether the “competitive process” standard is already the law may further complicate the interpretive

task. Some commentators have argued that the “competitive process” approach represents an accurate statement of

current antitrust doctrine. E.g., Werden, supra note 74, at 732. Others have been explicit that they regard the

“competitive process” standard as a desirable replacement for prevailing understandings of competitive harm in the

case law. E.g., I NVESTIGATION OF COMPETITION IN DIGITAL MARKETS, supra note 1, at 391-92; Wu, supra note 74;

Khan, supra note 74, at 745; see also Einer Elhauge, Should the Competitive Process Test Replace the Consumer

Welfare Standard?, P RO MARKET (May 24, 2022), https://www.promarket.org/2022/05/24/should-the-competitiveprocess-test-replace-the-consumer-welfare-standard/ (criticizing efforts to replace the “consumer welfare” standard

with the “competitive process” standard).

77 S. 2992, 117th Cong. § 4 (2022) (Reported Version); May 25 Draft § 4 (2022).

Scott Morton, et al., supra note 9, at 2 (“Any uncertainty about the meaning of words like ‘competition’ will be

resolved in [the agencies’] . . . guidelines and over time with the development of caselaw.”).

S. 2992, 117th Cong. § 4(d) (Reported Version); May 25 Draft § 4(d).

80 In particular, Sections 3(a)(1)-(3) seem intended to repudiate the permissive rules that currently govern unilateral

refusals to deal. See Verizon Commc’ns Inc. v. Law Offs. of Curtis V. T rinko, LLP, 540 U.S. 398 (2004). T hose rules

would likely apply to much of the conduct targeted by Sections 3(a)(1) -(3), if such conduct was challenged under

existing law. For an overview of this case law, see Hovenkamp, supra note 7, at 1495-1502. By subjecting the specified

forms of conduct to a general standard of competitive harm, the AICOA appears to dispense with such conduct -specific

tests.

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Content Moderation

Commentators have also debated Section 3(a)(1)(3)’s possible effects on content moderation by

covered platforms. As discussed, that provision would prohibit operators of covered platforms

from discriminating in the enforcement of their terms of service among similarly situated

business users in a manner that would “materially harm competition.”81

Some observers have concluded that this language may restrict firms’ ability to remove unwanted

content from their platforms. 82 To those concerned about alleged discrimination against

conservative viewpoints, this would be a virtue. 83 To some of those worried about discouraging

tech platforms from policing hate speech and disinformation, it is a cause of unease. 84

Whether Section 3(a)(1)(3) would in fact prohibit certain forms of content moderation is unclear.

As discussed, the “materially harm competition” standard is subject to differing interpretations,

making it difficult to confidently predict whether it would reach discriminatory content

moderation.

Several commentators have argued that it is unlikely that courts would find that

content-moderation decisions have the requisite anticompetitive effects. 85 During H.R. 3816’s

markup, Representative Cicilline also repeatedly stated that the bill is not intended to affect

content moderation. 86

Others have argued that it is plausible that courts would read the AICOA to apply to

discriminatory content moderation and have raised concerns that the bill may chill content

moderation regardless. 87 Additionally, during H.R. 3816’s markup, multiple Members stated or

81 S. 2992, 117th Cong. § 3(a)(1)(3) (Reported Version); May 25 Draft § 3(a)(1)(3).

See, e.g., Letter from Sen. Brian Schatz, et al., to Sen. Amy Klobuchar (June 14, 2022), https://www.freepress.net/

sites/default/files/2022-06/senate-letter-asking-klobuchar-for-content-moderation-fix-on-s2992.pdf; Jane Bambauer &

Anupam Chander, Bills Meant to Check Big Tech’s Power Could Lead to More Disinformation, W ASH . POST (June 6,

2022), https://www.washingtonpost.com/outlook/2022/06/06/antitrust -bills-big-tech-hate-speech-disinformation/;

Maria Curi, Tech Antitrust Bill Stokes Content-Moderation Worries, BLOOMBERG LAW (May 12, 2022),

https://news.bloomberglaw.com/privacy-and-data-security/tech-antitrust-bill-stokes-lawmaker-content-moderationworries.

See, e.g., Michael R. Davis, Conservatives Must Use Antitrust to Rein In Big Tech Monopolies, FOX NEWS (July 12,

2022), https://www.foxnews.com/opinion/conservatives-must-use-antitrust-rein-big-tech-monopolies.

See, e.g., Bambauer & Chander, supra note 82; Mark MacCarthy, Two Ways to Improve Senator Klobuchar’s

Needed Antitrust Legislation, BROOKINGS I NST. (Feb. 8, 2022), https://www.brookings.edu/blog/techtank/

2022/02/08/two-ways-to-improve-senator-klobuchars-needed-antitrust-legislation/.

85 See, e.g., Schur, supra note 54; Gilad Edelman, The Weak Argument Jeopardizing Tech Antitrust Legislation , W IRED

(June 16, 2022), https://www.wired.com/story/american-innovation-choice-online-act-democrats-argument/; Cicilline

Letter, supra note 62, at 2; Conner & Simpson, supra note 20.

H.R. 3816 Markup T ranscript at 15,687-15,689, 16,077-16,079.

During that markup, the House Judiciary Committee rejected a proposed amendment that would have explicitly

insulated platforms from liability for certain types of content moderation. See id. at 16,813-16,814; Amendment to the

Amendment in the Nature of a Substitute to H.R. 3816 Offered by Ms. Lofgren of California (June 23, 2021),

https://docs.house.gov/meetings/JU/JU00/20210623/112818/BILLS-117-HR3816-L000397-Amdt-4.pdf.

Some Members who voted against the amendment explained that they believed it was unnecessary because the bill

does not involve content moderation. See H.R. 3816 Markup T ranscript at 16,071-16,072 (Rep. David Cicilline).

Others voted against the amendment because of concerns that platforms would use the amendment’s protections to

discriminate against conservative viewpoints. See H.R. 3816 Markup T ranscript at 16,592-16,601 (Rep. Matt Gaetz).

87 See, e.g., Letter from Samir Jain, et al., to Sen. Amy Klobuchar and Sen. Charles Grassley (Mar. 9, 2022),

https://cdt.org/wp-content/uploads/2022/03/S2292-CDT -letter-3-9-22-FINAL.pdf.

During S. 2992’s markup, Senator Alex Padilla raised concerns that the bill may be const rued to prohibit certain types

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suggested that they interpreted the bill to prohibit discriminatory content moderation involving

business users. 88

The legislation’s interaction with Section 230 of the Communications Decency Act and the First

Amendment—both of which insulate firms from liability for certain forms of content

moderation—may also raise complicated legal questions. 89 For example, Representative Cicilline

has argued that Section 5(2) of S. 2992—which provides that the legislation shall not be

construed to limit the application of “any law”90 —would preserve Section 230’s protections for

content-moderation decisions. 91 Other commentators have responded that Section 5(2) does not

resolve concerns about the AICOA’s effect on content moderation because the bill may prompt

courts to adopt narrow interpretations of Section 230. 92 A full discussion of this debate is beyond

the scope of this report.

Sections 3(a)(4) and 3(a)(7): Interoperability and Access to Data

Section 3(a)(4) of the bill would impose interoperability requirements on covered platforms. The

provision would make it unlawful for operators of such platforms to “materially restrict, impede,

or unreasonably delay” a business user’s ability to access or interoperate with features that are

available to the operators’ own competing products or services. 93

Section 3(a)(7) would address the related issue of access to data generated by business users on

covered platforms. The provision would make it unlawful for operators of covered platforms to

of content moderation. See S. 2992 Markup T ranscript at 61-62 (“[T]his bill may hamper the efforts of platforms to

address the spread of hate speech and misinformation and disinformation efforts online that have caused so many

recent problems for our democracy.”). Senator T ed Cruz also expressed support for the legislation based on his belief

that it would limit discriminatory content moderation. Id. at 65 (“I believe the bill would make some positive

improvement as it concerns the problem of censorship . . . . [T he bill] would provide protections to content providers

[and] to businesses that are discriminated against because of the content of what they pr oduce.”).

88 During H.R. 3816’s markup, the House Judiciary Committee considered a proposed amendment that would have

granted a private right of action to persons whose content is subject to “politically biased content moderation” by a

covered platform operator. H.R. 3816 Markup T ranscript at 15,598-15,982; Amendment to the Amendment in the

Nature of a Substitute to H.R. 3816 Offered by [Mr. Jordan of Ohio] (June 23, 2021),

https://docs.house.gov/meetings/JU/JU00/20210623/112818/BILLS-117-HR3816-J000289-Amdt-3.pdf.

Representative Zoe Lofgren contended that this amendment was unnecessary because the bill already prohibited

covered platform operators from discriminating among similarly situated business users. H.R. 3816 Markup T ranscript

at 15,651-15,655, 15,657-15,663. Representative Jim Jordan—the amendment’s sponsor—responded that the

amendment was intended to extend the legislation’s prohibition of discriminatory content moderation to encompass

discrimination involving individuals as well as business users. Id. at 15,664-15,665, 15,674, 15,790-15,794. T he

proposed amendment was not adopted. Id. at 15,981-15,982.

89 For an overview of Section 230 of the Communications Decency Act, see CRS Report R46751, Section 230: An

Overview, by Valerie C. Brannon and Eric N. Holmes. For a discussion of the First Amendment issues involved in

regulating content moderation by social-media companies, see CRS Report R45650, Free Speech and the Regulation of

Social Media Content, by Valerie C. Brannon; CRS Legal Sidebar LSB10618, Trial Court Rules State Social Media

Law Likely Unconstitutional, by Valerie C. Brannon.

S. 2992, 117th Cong. § 5(2) (2022) (Reported Version); May 25 Draft § 5(2) (2022).

91 Cicilline Letter, supra note 62, at 2.

92 Letter from T echFreedom, et al., to Hon. Brian Schatz, et al. (June 27, 2022), https://techfreedom.org/wp-

content/uploads/2022/06/2992-Response-to-Cicilline-letter.pdf.

93 S. 2992, 117th Cong. § 3(a)(4) (Reported Version); May 25 Draft § 3(a)(4). Unlike the repo rted version of the bill,

the May 25 draft contains an exemption for cases in which such access would lead to a “significant cybersecurity risk.”

May 25 Draft § 3(a)(4).

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“materially restrict or impede” a business user from accessing data it generates on such platforms

or data that platform users generate by interacting with a business user’s products or services.94

Like the remaining prohibitions discussed below, these provisions would not require regulators to

establish that a platform’s conduct harmed competition. Rather, absence of competitive harm

would be an affirmative defense. Defendants could rebut a prima facie case under

Sections 3(a)(4) and 3(a)(7) by establishing that their conduct had not and would not result in

“material harm to competition.”95 The legislation would also offer several other affirmative

defenses involving user privacy, data security, and preservation of platform functionality that are

discussed below. 96

Interoperability requirements like Section 3(a)(4) are a response to the network effects that give

large tech platforms powerful incumbency advantages.97 In markets characterized by strong

network effects, a platform’s services become more valuable as more people use the platform. 98

Network effects can thus operate as entry barriers that make it difficult for newcomers to compete

with an established firm. Such effects create a dilemma: upstart tech platforms may not be as

attractive to consumers as an incumbent because upstarts lack similarly large user bases, which

they cannot attain without being attractive to consumers. 99 This phenomenon makes many digital

markets susceptible to “tipping”—once one platform reaches a certain scale, its network

advantages reinforce themselves and cement its dominance. 100

In theory, interoperability mandates may be able to mitigate these effects. 101 For example, such

requirements could prevent a covered platform from cutting off rival app developers from the

tools needed to access their platforms—a strategy that a powerful firm could use to preserve its

dominant position or leverage that position into adjacent markets. 102

Broader interoperability duties could also facilitate competition by allowing consumers who do

not directly use a dominant network to indirectly benefit from its scale. For example, if

interoperability requires Facebook to allow users of other social networks to communicate with

its users, then upstart social networks may find it easier to attract customers.103 Whether

94 S. 2992, 117th Cong. § 3(a)(7) (Reported Version); May 25 Draft § 3(a)(7).

95 S. 2992, 117th Cong. § 3(b)(2)(A) (Reported Version); May 25 Draft § 3(b)(2).

See “ Affirmative Defenses” infra.

97 See Michael Kades & Fiona Scott Morton, Interoperability as a Competition Remedy for Digital Networks, W ASH .

CTR. FOR EQUITABLE GROWTH 1-2 (Sept. 23, 2020).

DENNIS W. CARLTON & JEFFREY M. PERLOFF, MODERN I NDUSTRIAL ORGANIZATION 392-93 (4th ed. 2005).

99 See REP ORT, COMM. FOR THE STUDY OF DIGITAL PLATFORMS, MARKET STRUCTURE AND ANTITRUST SUBCOMM.,

GEORGE J. STIGLER CTR. FOR THE STUDY OF THE ECONOMY AND THE STATE , UNIV. OF CHI. BOOTH SCH . OF BUS. 17

(July 1, 2019), https://research.chicagobooth.edu/-/media/research/stigler/pdfs/market -structure-report.pdf.

100

Kades & Scott Morton, supra note 97, at 7-9; UNLOCKING DIGITAL COMPETITION, REPORT OF THE DIGITAL

COMP ETITION EXPERT P ANEL , HER MAJESTY ’S TREASURY 4 (Mar. 2019), https://assets.publishing.service.gov.uk/

government/uploads/system/uploads/attachment_data/file/785547/unlocking_digital_competition_furman_review_web.

pdf. In such cases, competitive pressures must come from outside the relevant market —for example, from firms that

create new markets via disruptive technologies. In the jargon, competitive dynamics in tipped markets shift from

“competition in the market” to “competition for the market,” which may not be forthcoming for extended periods of

time. UNLOCKING DIGITAL COMPETITION, supra note 100, at 4, 38-41.

101 Kades & Scott Morton, supra note 97, at 12.

102 T he FT C has alleged that Facebook used this strategy when it withheld critical tools from certain rival app

developers, including a rival social network called Path. See FT C v. Facebook, Inc., 560 F. Supp. 3d 1, 6 (D.D.C.

2021). A House subcommittee also found that Apple has denied certain application programming interfaces and device

functionalities to competing developers. I NVESTIGATION OF COMPETITION IN DIGITAL MARKETS, supra note 1, at 354.

103 Kades & Scott Morton, supra note 97, at 11-12.

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Section 3(a)(4) would entail such duties would depend on the details surrounding its

implementation.

Section 3(a)(7)’s data-access requirement would address related issues. By allowing business

users to access data involving their activities and customers on covered platforms, the provision

could mitigate the switching costs that can diminish consumers’ willingness to abandon an

incumbent platform in favor of a smaller rival. 104

Interoperability requirements also have their skeptics, however. Depending upon their details,

such requirements may prove costly to implement. 105 They may also dampen investment

incentives by forcing firms to share the fruits of their innovation with rivals. 106 Additionally,

specific types of interoperability may create privacy concerns and data-security risks.107 While the

AICOA’s affirmative defenses attempt to address these latter concerns, defendants would bear the

burden of establishing their applicability. 108

Section 3(a)(5): Tying

Section 3(a)(5) of the legislation would prohibit certain tying arrangements, whereby firms offer

one product on the condition that customers purchase a separate product as well. The provision

would make it unlawful for an operator of a covered platform to condition access to or preferred

placement on the platform on the purchase or use of other products offered by the platform

operator that are not “part of or intrinsic to” the platform. 109

Section 3(a)(5) resembles existing tying doctrine, with certain key differences. Under current law,

a plaintiff can prevail on a tying claim by showing that:

1. The defendant offered two distinct products;

2. The defendant conditioned the sale of one product (the tying product) on the

purchase of the other product (the tied product);

3. The defendant possessed sufficient economic power in the tying product market

to coerce purchasers into acceptance of the tied product; and

4. The defendant’s conduct affected a non-trivial amount of interstate commerce. 110

Some courts have also required plaintiffs to demonstrate that a tying arrangement had

anticompetitive effects in the tied product market. 111

104 See Fiona M. Scott Morton, et al., Equitable Interoperability: The “Super Tool” of Digital Platform Governance,

YALE T OBIN CTR. FOR ECON. POLICY, Discussion Paper No. 4 at 26 (July 13, 2021).

105 ABA COMMENTS, supra note 56, at 14.

106

See, e.g., Howard A. Shelanski, Unilateral Refusals to Deal in Intellectual and Other Property, 76 ANTITRUST L.J.

369, 380 (2009).

107 See, e.g., Krisztian Katona, AICOA’s Data Security, Privacy, and Content Moderation Issues Call for Risk

Assessment, DISRUP TIVE COMPETITION PROJECT (June 7, 2022), https://www.project -disco.org/privacy/060722-aicoasdata-security-privacy-and-content-moderation-issues-call-for-risk-assessment/; Josh Withrow, The Revised American

Innovation and Choice Online Act (AICOA) is Still Fundamentally Flawed , R ST. I NST. (May 26, 2022),

https://www.rstreet.org/2022/05/26/revised-antitrust-bill-remains-fundamentally-flawed/.

108

See “ Affirmative Defenses” infra.

109 S. 2992, 117th Cong. § 3(a)(5) (2022) (Reported Version); May 25 Draft § 3(a)(5) (2022).

110 HOVENKAMP, supra note 7, at 435 (summarizing the test employed by most federal circuit courts of appeals).

111 Id. at 435-36.

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Unlike this test, Section 3(a)(5) does not contain an explicit market-power requirement. As

discussed, the AICOA instead uses certain quantitative criteria and a “critical trading partner”

standard to identify the platforms that would be subject to its prohibitions. 112

Section 3(a)(5) would also depart from the tying test employed by some federal courts of appeals

that requires proof of anticompetitive effects. 113 Instead of requiring regulators to prove such

effects, S. 2992 would allow defendants to rebut a prima facie case under Section 3(a)(5) by

establishing an absence of competitive harm. 114

Section 3(a)(5) has attracted special attention because of its possible impact on Amazon Prime—a

subscription service that offers Amazon customers fast shipping of eligible products, among other

benefits. 115 An Amazon executive has argued that Section 3(a)(5) would prohibit the firm from

requiring third-party merchants to use Amazon’s fulfillment services as a condition of

participating in Prime. 116 According to the company, such a rule would harm consumers because

it would prevent Amazon from being able to guarantee prompt delivery of Prime packages. 117

The AICOA contains a provision that appears to be directed at this concern. The bill contains a

rule of construction that insulates firms from liability triggered “solely” by offering a

“fee-for-service subscription that provides benefits to covered platform users.”118

Section 3(a)(5)’s effect on Amazon Prime and other services likely to fall under the act’s

coverage may ultimately depend on the meaning of the term “solely” in this rule of construction.

For example, while the rule might insulate Amazon from certain types of claims involving Prime,

this limiting language may preserve the possibility of liability for specific ways that Amazon

structures the Prime program. In such cases, Amazon may need to rely on the general affirmative

defenses discussed below. 119

Section 3(a)(6): Use of Data

Section 3(a)(6) of S. 2992 would prohibit operators of covered platforms from using non-public

data generated by business users or the customers of business users to support their own

competing products or services. 120

112

See “ Covered Platforms” supra.

113 See, e.g., Kaufman v. T ime Warner, 836 F.3d 137, 141 (2d Cir. 2016); Amey, Inc. v. Gulf Abstract & T itle Inc., 758

F.2d 1486, 1503 (11th Cir. 1985); Driskill v. Dallas Cowboys Football Club, Inc., 498 F.2d 321, 323 (5th Cir. 1974).

114 S. 2992, 117th Cong. § 3(b)(2)(A) (Reported Version); May 25 Draft § 3(b)(2).

115 Compare Fact Sheet: How the American Innovation and Choice Online Act ( S. 2992) Would Break Amazon Prime

and Reduce Access to Amazon Basics, CHAMBER OF P ROGRESS (Nov. 29, 2021), https://progresschamber.org/fact sheet-how-the-american-innovation-and-choice-online-act-s-2992-would-break-amazon-prime-and-block-amazonbasics/ (arguing that S. 2992’s tying prohibition would eliminate the logistics model that makes Amazon Prime

possible), with Sen. Chuck Grassley, Q&A: Reining in Unbridled Big T ech (June 10, 2022),

https://www.grassley.senate.gov/news/news-releases/qanda-reining-in-unbridled-big-tech (arguing that S. 2992

“explicitly does not impact subscription services, such as Amazon Prime”).

116 Brian Huseman, Antitrust Legislation and the Unintended Negative Consequences for American Consumers and

Small Businesses, AMAZON (June 1, 2022), https://www.aboutamazon.com/news/policy-news-views/antitrustlegislation-and-the-unintended-negative-consequences-for-american-consumers-and-small-businesses.

117

See id.

118 S. 2992, 117th Cong. § 3(c)(7)(A)(vi)(II) (Reported Version); May 25 Draft § 3(c)(8)(A)(vi)(II).

119 See “ Affirmative Defenses” infra.

120 S. 2992, 117th Cong. § 3(a)(6) (Reported Version); May 25 Draft § 3(a)(6).

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The provision appears to respond to concerns that tech platforms have used their unique access to

user data to identify and imitate popular offerings. For example, in October 2020, a House

subcommittee concluded that Amazon had used third-party seller data to find profitable

opportunities to develop its own private-label products.121 Apple has also allegedly used

information from app developers to build competing offerings and integrate certain functionalities

into its iOS operating system. 122

Challenges to such practices have traditionally sounded in intellectual-property (IP) law rather

than antitrust, to the extent that they involve possible patent infringement. 123 The two bodies of

law stand in some tension: while antitrust safeguards competition, IP law offers temporary

monopolies over protected technology to incentivize innovation. 124

Some commentators have argued that the innovation concerns driving IP law may extend to

certain non-patented technology that tech platforms stand accused of copying. 125 For example,

when a platform copies non-patented technology that nevertheless requires significant investment

in innovation, the platform’s conduct arguably raises the same free-rider problems that motivate

IP law. 126

In addition to these innovation issues, anti-copying measures like Section 3(a)(6) may be

motivated by fairness considerations. 127

In practice, however, these animating principles would not necessarily play a direct role in

Section 3(a)(6)’s application. S. 2992 would allow a defendant to rebut a prima facie case under

that provision by proving an absence of harm to competition—not innovation or fairness. 128 As

noted, those goals can pull in different directions.

Depending on the interpretation of the relevant language, the burden to prove an absence of

competitive harm may be fairly easy to satisfy. A platform’s entry into a new market—whether it

involves copying a rival product or not—will typically increase the type of competition that

antitrust protects.129 To the extent that Section 3(a)(6) is motivated by concerns other than

121 I NVESTIGATION OF COMPETITION IN DIGITAL MARKETS, supra note 1, at 274-82.

122

See, e.g., id. at 361-64; Reed Albergotti, How Apple Uses its App Store to Copy the Best Ideas, W ASH . P OST (Sept.

5, 2019), https://www.washingtonpost.com/technology/2019/09/05/how-apple-uses-its-app-store-copy-best-ideas/.

123 Herbert J. Hovenkamp, Monopolizing and the Sherman Act, Faculty Scholarship at Penn Law 52 (Jan. 2022),

https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=3772&context=faculty_scholarship .

124 Herbert Hovenkamp, The Intellectual Property-Antitrust Interface, in 3 I SSUES IN COMP ETITION L AW AND POLICY

1979, 1979 (2008). Many commentators and judicial decisions have discussed the different strategies of IP law and

antitrust for promoting economic welfare. See, e.g., SCM Corp. v. Xerox Corp., 645 F.2d 1195, 1203 (2d Cir. 1981)

(“T he conflict between the antitrust and patent laws arises in the methods they embrace that were designed to achieve

reciprocal goals. While the antitrust laws proscribe unreasonable restraints of competition, the patent laws reward the

inventor with a temporary monopoly that insulates him from competitive exploitation of his patented art.”).

125 See Sam Bowman, Amazon’s Tightrope: Balancing Innovation and Competition on Amazon’s Marketplace , T RUTH

ON THE MARKET (Apr. 27, 2020), https://truthonthemarket.com/2020/04/27/amazons-tightrope-balancing-innovation-

and-competition-on-amazons-marketplace/.

126 See id.

127 See generally Francesco Ducci & Michael T rebilcock, The Revival of Fairness Discourse in Competition Policy, 64

ANTITRUST BULLETIN 79 (2019).

128

S. 2992, 117th Cong. § 3(b)(2)(A) (2022) (Reported Version); May 25 Draft § 3(b)(2) (2022).

129 See Hovenkamp, supra note 124, at 1979 (“As a general proposition, the more firms that offer a product the more

competitive will be its output and price.”).

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competition, then, the affirmative defense for an absence of competitive harm may narrow the

provision’s scope in ways that are inconsistent with its theoretical underpinnings.

Section 3(a)(8): App Preinstallation and Steering

Section 3(a)(8) of the AICOA would make it unlawful for the operator of a covered platform to

“materially restrict or impede” platform users from uninstalling preinstalled apps or changing

default settings that steer users to the platform operator’s products or services.130 Such restrictions

would be permissible, however, when necessary for the security or functioning of the platform or

to prevent data from being transferred to the government of the People’s Republic of China or a

foreign adversary. 131

The provision is a response to concerns that Apple and Google—which control the leading mobile

operating systems, iOS and Android—have used app preinstallation, default settings, and related

contractual restrictions to favor their own apps over rivals. 132

Section 3(a)(9): Self-Preferencing Involving Platform Interfaces

Section 3(a)(9) of the May 25 draft would prohibit operators of covered platforms from using

their platform interfaces (including search or ranking functionalities) to treat their own products

or services more favorably than those of other business users “in a manner that is inconsistent

with the neutral, fair, and non-discriminatory treatment of all business users.”133

The provision appears to overlap with Section 3(a)(1)’s self-preferencing prohibition, but there

are three apparent differences.



First, unlike Section 3(a)(1), Section 3(a)(9) would not require regulators to

establish competitive harm.

Second, Section 3(a)(9)’s prohibition is limited to a platform operator’s use of its

platform interface, while Section 3(a)(1) is not.

Third, Section 3(a)(9) would require regulators to establish that a platform

operator’s conduct was “inconsistent with the neutral, fair, and

non-discriminatory treatment of all business users,” while Section 3(a)(1) does

not include such a requirement. 134

Section 3(a)(10): Retaliation for Reports to Law Enforcement

Section 3(a)(10) of the AICOA would make it unlawful for the operator of a covered platform to

retaliate against business users that raise good-faith concerns with law-enforcement authorities

about actual or potential violations of law. 135

130 S. 2992, 117th Cong. § 3(a)(8) (Reported Version); May 25 Draft § 3(a)(8).

131

S. 2992, 117th Cong. § 3(a)(8)(A)-(B) (Reported Version); May 25 Draft § 3(a)(8)(A)-(B).

132 See I NVESTIGATION OF COMPETITION IN DIGITAL M ARKETS, supra note 1, at 352-58, 379.

133 May 25 Draft § 3(a)(9). T he reported version of the bill would prohibit operators of covered platforms from using

their platform interfaces to favor their products or services “relative to those of another business user than under [sic]

standards mandating the neutral, fair, and nondiscriminatory treatment of all business users.” S. 2992, 117th

Cong. § 3(a)(9) (Reported Version).

134 May 25 Draft § 3(a)(1), (a)(9).

135 S. 2992, 117th Cong. § 3(a)(10) (Reported Version); May 25 Draft § 3(a)(10).

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Comparing Different Versions of the AICOA: S. 2992 and H.R. 3816

While S. 2992 would bar operators of covered platforms from engaging in 10 categories of conduct, H.R. 3816

contains 13 prohibitions. See S. 2992, 117th Cong. § 3(a)(1)-(10) (2022) (Reported Version); May 25

Draft § 3(a)(1)-(10) (2022); H.R. 3816, 117th Cong. § 2(a)-(b) (2021). The additional offenses in the House

committee-reported bill involve restrictions on business users’ communications with platform users, interference

with business users’ pricing of their products and services, and specific types of interoperability. See H.R. 3816,

117th Cong. § 2(b)(6), (b)(8)-(9).

Although several of the other prohibitions in S. 2992 and H.R. 3816 overlap, there are also key differences. Unlike

S. 2992—which would make harm to competition an element of three offenses—none of H.R. 3816’s prohibitions

would require proof of competitive harm as part of a plaintiff’s case-in-chief. S. 2992, 117th Cong. § 3(a)(1)-(3)

(Reported Version); May 25 Draft § 3(a)(1)-(3); H.R. 3816, 117th Cong. § 2(a)-(b).

Affirmative Defenses

Section 3(b) of the bill would provide operators of covered platforms with several affirmative

defenses.

Section 3(b)(1) of the May 25 draft would offer an affirmative defense to all of the bill’s

prohibitions for conduct that is “reasonably tailored and reasonably necessary, such that the

conduct could not be achieved through materially less discriminatory means, to”:



Prevent a violation of, or comply with, federal or state law;



Protect safety, user privacy, the security of non-public data, or the security of a

covered platform; or

Maintain or substantially enhance the “core functionality” of a covered

platform. 136



As discussed, Section 3(b)(2) would offer an affirmative defense to the prohibitions in

Sections 3(a)(4)-(10) for conduct that “has not resulted in and would not result in material harm

to competition.”137

Defendants would bear the burden of proving these defenses by a preponderance of the evidence

(i.e., by proving that the relevant propositions are more likely true than not true). 138

The bill’s proponents have argued that the defenses appropriately place the burden to defend

potentially anticompetitive conduct on platform operators, who have more information about their

products than regulators.139 The May 25 version of the legislation also relaxed certain language in

136 May 25 Draft § 3(b)(1). T he parallel defense in the reported version of the bill would allow defendants to rebut a

prima facie case under Sections 3(a)(1)-(3) by showing that their conduct was “narrowly tailored, nonpretextual, and

reasonably necessary” to achieve any of the goals identified in the May 25 version. S. 2992, 117th Cong. § 3(b)(1)

(Reported Version). For the other seven offenses, the reported version of the bill would allow defendants to re but a

prima facie case by showing that their conduct “was narrowly tailored, could not be achieved through less

discriminatory means, was nonpretextual, and was reasonably necessary” to achieve any of those same goals. S. 2992,

117th Cong. § 3(b)(2)(B) (Reported Version).

137 S. 2992, 117th Cong. § 3(b)(2)(A) (Reported Version); May 25 Draft § 3(b)(2).

138

See S. 2992, 117th Cong. § 3(b)(1)-(2) (Reported Version); May 25 Draft § 3(b)(4); United States v. Watkins, 10

F.4th 1179, 1184-85 (11th Cir. 2021).

139 Scott Morton, et al., supra note 9, at 3-4.

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previous iterations of Section 3(b)(1) in response to criticism that the earlier defenses would have

been overly difficult for defendants to establish. 140

Critics have contended that even the less demanding language in the May 25 draft may chill

platforms’ efforts to promote privacy and data security. In particular, these commentators have

argued that platforms often engage in duplicative efforts to protect customers, which may leave

them vulnerable to claims that they could achieve their goals through “materially less

discriminatory means.”141

Comparing Different Versions of the AICOA: S. 2992 and H.R. 3816

The affirmative defenses in H.R. 3816 differ from those in S. 2992. As discussed, S. 2992 would allow defendants

to rebut a prima facie case under Sections 3(a)(4)-(10) by proving an absence of “material harm to competition” by

a preponderance of the evidence. See S. 2992, 117th Cong. § 3(b)(2)(A) (2022) (Reported Version); May 25

Draft § 3(b)(2) (2022). In contrast, the corresponding defense in H.R. 3816 would require defendants to prove an

absence of harm to “the competitive process” by clear and convincing evidence. H.R. 3816, 117th Cong. § 2(c)(1)

(2021).

The clear-and-convincing-evidence standard is more stringent than a preponderance-of-the-evidence burden. The

latter requires evidence that makes it more likely than not that a proposition is true. See, e.g., United States v.

Watkins, 10 F.4th 1179, 1184-85 (11th Cir. 2021). By contrast, the clear-and-convincing-evidence test demands

that the evidence makes a contention “highly probable.” Colorado v. New Mexico, 467 U.S. 310, 316 (1984).

According to a large empirical study, many judges regard 75% probability as a reasonable approximation of the

clear-and-convincing-evidence standard. See C.M.A. McCauliff, Burdens of Proof: Degrees of Belief, Quanta of Evidence,

or Constitutional Guarantees?, 35 V AND. L. R EV. 1293, 1328-29 (1982).

The House committee-reported bill would also offer affirmative defenses related to privacy and data security.

Defendants could rebut a prima facie case under H.R. 3816 by establishing by clear and convincing evidence that

their conduct was “narrowly tailored, could not be achieved through less discriminatory means, was

nonpretextual, and was necessary” to prevent a violation of law, protect user privacy, or protect non -public data.

H.R. 3816, 117th Cong. § 2(c)(2). While the evidentiary standards differ, the substantive language in this defense is

similar to—but not identical with—parallel affirmative defenses in the reported version of S. 2992. See note 136

supra. As discussed, Senator Klobuchar’s May 25 draft relaxed the relevant language in several respects.

Unlike both bills in the Senate, H.R. 3816 would not offer an affirmative defense related to the maintenance or

enhancement of platform functionality. The House committee-reported bill would, however, offer a defense that

does not appear in either version of S. 2992. Specifically, defendants could rebut a prima facie case under H.R.

3816 by establishing by clear and convincing evidence that their conduct “increases consumer welfare.” H.R. 3816,

117th Cong. § 2(c)(3).

Enforcement

S. 2992 would grant enforcement authority to the DOJ, the FTC, and state attorneys general. 142

The bill does not contain a private right of action.

140 See, e.g., Letter from Aurelian Portuese to Sen. Dick Durbin, et al., 3 (Jan. 19, 2022), https://www2.itif.org/2022-

IT IF-letter-S2992.pdf (criticizing an earlier iteration of Section 3(b) for establishing “insurmountable thresholds” for

the relevant affirmative defenses); Letter from T imothy Powderly to Sen. Dick Durbin, et al., 2 (Jan. 18, 2022),

https://9to5mac.com/wp-content/uploads/sites/6/2022/01/Apple-letter-full.pdf (criticizing an earlier iteration of

Section 3(b) for establishing “a nearly insurmountable test”). For the relevant language in the reported version of the

bill, see note 136 supra.

141

See, e.g., Lawrence J. Spiwak, The Third Time is Not the Charm: Significant Problems Remain With Senator

Klobuchar’s Antitrust Reform Bill, T HE FEDERALIST SOC’ Y (June 7, 2022), https://fedsoc.org/commentary/fedsocblog/the-third-time-is-not-the-charm-significant-problems-remain-with-senator-klobuchar-s-antitrust-reform-bill.

142 S. 2992, 117th Cong. § 3(c)(1) (Reported Version); May 25 Draft § 3(c)(1).

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As discussed, the legislation would empower the DOJ and FTC to jointly designate firms that

meet the relevant criteria as covered platforms. 143 Such designations would be valid for seven

years, though the DOJ and FTC would be allowed to reevaluate designation decisions upon

receiving a request showing that a platform no longer meets the relevant criteria. 144 Designated

platforms would also be permitted to seek judicial review of their designations. 145

Section 4 of the bill would direct the DOJ and FTC to jointly issue guidelines outlining their

interpretation of the “materially harm competition” standard in Section 3(a) and the affirmative

defenses in Section 3(b), in addition to their policies regarding civil penalties. 146

Under the May 25 version of the legislation, firms that violate the bill’s prohibitions would be

liable for up to 10% of their total U.S. revenue for the period in which the violation occurred.147

In cases of recurring violations, the legislation would authorize courts to order a firm’s chief

executive officer to forfeit any compensation received during the 12 months preceding the filing

of a complaint. 148

Comparing Different Versions of the AICOA: S. 2992 and H.R. 3816

The versions of the AICOA pending in the Senate and the House would adopt different enforcement schemes. As

discussed, the May 25 version of S. 2992 would authorize penalties of up to 10% of a defendant’s total U.S.

revenue over the course of a violation. May 25 Draft § 3(c)(6)(B) (2022). Under H.R. 3816, by contrast, violators

would face penalties of up to (1) 15% of their total U.S. revenue for the previous calendar year, or (2) 30% of the

U.S. revenue of entities “affected or targeted” by the offending conduct, calculated over the course of a violation.

H.R. 3816, 117th Cong. § 2(f)(1) (2021).

H.R. 3816 also explicitly contemplates that divestiture orders may be appropriate remedies for violations of the

bill. The legislation provides that, if a court determines that a violation arises from a “conflict of interest” related

to a platform operator’s control of multiple business lines, the court “shall consider” and “may order” divestiture

of the business lines giving rise to the conflict. H.R. 3816, 117th Cong. § 2(f)(2)(D). S. 2992 does not contain an

analogous provision, but instead makes clear that it does not “prevent or limit” regulators from seeking equitable

relief. S. 2992, 117th Cong. § 3(c)(5)(C)(ii)(V) (Reported Version); May 25 Draft § 3(c)(6)(C)(ii)(V).

One of the most significant differences involves the legislation’s would-be enforcers: H.R. 3816 includes a private

right of action for treble damages, while S. 2992 does not. H.R. 3816, 117th Cong. § 6(a).

Conclusion

The AICOA reflects many of the concerns about digital competition that have occupied

congressional attention over the past several years. It also implicates difficult questions involving

innovation, privacy, data security, and online speech. Regardless of whether S. 2992 or H.R. 3816

ultimately becomes law, the issues motivating the bills may continue to garner legislative interest.

143 S. 2992, 117th Cong. § 3(d)(1) (Reported Version); May 25 Draft § 3(d)(1).

144 S. 2992, 117th Cong. § 3(d)(1)(C), (d)(2) (Reported Version); May 25 Draft § 3(d)(1)(C), (d)(2).

145 S. 2992, 117th Cong. § 3(d)(3) (Reported Version); May 25 Draft § 3(d)(3).

146

S. 2992, 117th Cong. § 4(a) (Reported Version); May 25 Draft § 4(a).

147 May 25 Draft § 3(c)(6)(B). Under the reported version of S. 2992, violators would be liable for up to 15 percent of

their total U.S. revenue for the period in which the violation occurred. S. 2992, 117th Cong. § 3(c)(5)(B) (Reported

Version).

148 S. 2992, 117th Cong. § 3(c)(5)(D) (Reported Version); May 25 Draft § 3(c)(6)(D).

Congressional Research Service

The American Innovation and Choice Online Act (S. 2992)

Author Information

Jay B. Sykes

Legislative Attorney

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Congressional Research Service

R47228 · VERSION 5 · UPDATED

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