By: Randy Picker (Pro Market)
Press reports suggest that Congress might vote on pending antitrust legislation this summer. The bill that is receiving the most attention is S.2992, The American Innovation and Choice Online Act (AICOA). Sen. Amy Klobuchar (D-MN)—disclosure: we went to law school together—has been a key proponent for the legislation. (You can get the current draft of the bill at her Senate website.)
We are sufficiently far in this process that basic features of how the bill would operate should by now be well understood, yet I am not sure that is true. I have written about this here before roughly a year ago, but it is time to update, especially in light of recent developments in Europe.
The bill would alter competition by the big tech firms. The language of the bill speaks of “covered platforms” and the goal here is to create new obligations that would limit the gatekeeper power held by the platforms. That also has been the focus of the European Union Digital Markets Act, which seems to be moving towards becoming law in Europe.
I want to focus on pre-installation of features on the iPhone. The language of the bill is quite general, but it will help to have a concrete example to assess how it might change our everyday experiences. And what happens to the iPhone is hardly a fringe issue as, depending on how the market is framed, it accounts for more than 50 percent of mobile usage in the US. What Apple chooses to install on a new iPhone powerfully shapes the user experience. When Apple launched the iPhone in January 2007, the iPhone came with 15 preinstalled apps. That was it, as there was no app store and no way to add additional apps.
That is not the world we live in today. Wikipedia counts a grand total of 38 apps that are preinstalled on new iPhones, and that list doesn’t include functionality like Siri. The apps include everyday apps like a web browser, Safari; the App Store, so that you can add additional apps; Camera; Mail; and Phone. It also includes much more obscure apps (at least for me) like Compass, Tips, and Shortcuts. And, as the Siri point should make clear, there is also important preinstalled functionality that doesn’t fit into the app framework necessarily. Obviously, the availability of all of this functionality shapes the experience of the new iPhone. It is hard to imagine a smartphone without a browser, a mail application, or some way of making phone calls.
How might the proposed bill change that experience? Section 3(a)(1) of the bill makes it unlawful for a covered platform like Apple to “preference the products, services, or lines of business of the covered platform operator over those of another business user on the covered platform in a manner that would materially harm competition.” iOS is the relevant platform here, and while the bill isn’t clear on exactly what counts as a product, service or line of business, each of the 38 apps would likely qualify, as would functionality like Siri, even if not delivered up in an icon-launched app. Right now, Apple engages in massive amounts of discriminatory preinstallation, meaning that it chooses to install its own apps and not those of other firms…
