Two bipartisan bills that aimed to bar alleged anti-competitive behavior by Big Tech companies failed to reach the U.S. Senate floor for a vote in 2022 despite an 11th-hour lobbying push to include them in the end-of-year spending bill unveiled early Tuesday morning.
The bills in question were the Open App Markets Act and the American Innovation and Choice Online Act, which would have opened the door for third-party payment systems and barred self-preferencing, respectively. Tech giants including Amazon, Apple, Meta, and Google parent company Alphabet opposed the legislation and spent tens of millions of dollars on federal lobbying this year.
Lobbyists for all four companies reported more activities related to the American Innovation and Choice Online Act than any other bills during the first nine months of 2022, an OpenSecrets analysis of federal lobbying disclosures found. Only the Open App Markets Act tied for the top-lobbied bill by Apple lobbyists.
These tech companies waged an all-out offensive against the bills. Apple CEO Tim Cook and Google CEO Sundar Pichai reportedly met with members of the Senate Judiciary Committee – which passed both bills out of committee with broad bipartisan support – in January, and congressional aides told Bloomberg they had received more outreach on the bills than any other they’d worked on in years.
Using OpenSecrets data, a report released Friday by the progressive group Public Citizen found entities opposed to the American Innovation and Choice Online Act spent nearly $277 million on lobbying on all issues, including the act, over the last two years. That’s compared to just $45 million the companies and groups supporting the legislation spend on all federal lobbying through the same period – a six-to-one advantage.
Lobbyists opposing the American Innovation and Choice Online Act also reported more than $2.3 million in contributions to members of Congress through Oct. 19 of the 2022 election cycle, compared to just $734,000 in contributions by lobbyists supporting the act.
Even though the White House reportedly made it clear that passage of the Open App Markets Act is a top priority before Republicans retake control of the House in January during private meetings with Senate Majority Leader Chuck Schumer (D–N.Y.) and House Speaker Nancy Pelosi (D–Calif.), the bipartisan Open Markets App was not brought for a vote on the Senate floor.
Schumer, whose daughters work for Amazon and Meta, seemed to be the roadblock. The majority leader told Bloomberg he did not believe he had the votes even though the bills’ cosponsors, including Sens. Marsha Blackburn (R–Tenn.) and Richard Blumenthal (D–Conn.), said they had the numbers.
“Big Tech has once again exerted its insidious influence through powerful armies of lobbyists and deceptive promotion campaigns, setting back essential efforts to protect kids and consumers,” Blackburn and Blumenthal wrote in a joint statement to OpenSecrets. “It has succeeded in obstructing reforms to make kids safer online and to ensure a fair marketplace for app consumers.”
Lobbying was, of course, not the only nail in the bill’s coffin. In an interview with 45 lawmakers, lobbyists, tech experts and advocates, Bloomberg heard reports of personal animosity between key lawmakers, a hierarchy of legislative priorities and good-old-fashioned partisan gridlock.
A historic fine announced Monday morning against one of the leading advocates of the Open App Markets Act didn’t help.
On Monday, Epic Games announced an agreement to pay the Federal Trade Commission $520 million to settle a lawsuit alleging that the video game company illegally collected children’s data and tricked users into making unwanted purchases. It’s the largest fine ever issued for an FTC violation.
Epic Games agreed to pay $275 million in civil penalties, the largest civil penalty ever imposed for a violation of the Children’s Online Privacy Protection Rule, according to a press release issued by the Department of Justice. Epic Games also agreed to pay an additional $245 million to refund consumers the FTC alleges were duped by deceptive billing practices and “dark patterns” used to nudge players into making unintentional purchases, all while obscuring cancel or refund features.
“We accepted this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players,” Epic Games said in a press release.
Supporters “consistently focused” on Open App Markets Act, Senators vow to reintroduce
Since Epic Games hired its first lobbyists in January 2021, the Fortnite developer has reported spending $790,000 on federal lobbying. Natalie Munoz, a spokesperson for Epic Games, told OpenSecrets lobbying “has been consistently focused on supporting the Open App Markets Act and addressing app store competition.”
When asked why Schumer seemed to be stalling in an interview with The Verge last week, Epic Games CEO Tim Sweeney said, “Well, perhaps it has something to do with the vast amount of lobbying that Apple and their associated lobbying and trade groups are doing to prevent the legislation.”
Apple lobbyists reported lobbying on the Open App Markets Act and the American Innovation and Choice Online Act more than any other piece of legislation during the first nine months of 2022, an OpenSecrets analysis of federal lobbying disclosures found. The tech giant has spent $6.5 million during the first nine months of 2022, more money than it’s spent over the same period in any previous year.
An Apple spokesperson told OpenSecrets in August that the bill would “undermine the privacy and security protections our users depend on.”
Munoz pointed out that Apple has faced its own legal challenges regarding privacy. In 2014, Apple paid $32.5 million to settle its own FTC lawsuit alleging the company charged for kids’ in-app purchases without their parents’ consent. The Justice Department is reportedly weighing an antitrust investigation into Apple.
An Epic Games lawsuit against Apple alleges anti-competitive behavior related to third-party payment in its App Store, something the Open App Markets Act would directly tackle. Both sides appealed a September 2021 “split decision” in which a federal judge ruled Apple is not a monopoly but found the company cannot restrict payments to App Store purchases.
But the Coalition for App Fairness, a nonprofit that advocates for “freedom of choice and fair competition across the app ecosystem” on behalf of its more than 70 members, pushed back on Apple’s claims that only its App Store security can protect consumers from malware and other attacks.
The coalition has reported spending $320,000 on federal lobbying during the first nine months of 2022, almost entirely focused on passage of the Open App Markets Act. Epic Games, Spotify and Tile – a consumer tracker company that was acquired by Life360 in 2021 – are all founding members of the nonprofit. All are engaged in high-profile disputes with Apple.
Their efforts won’t die with these two bills, Munoz told OpenSecrets in a written statement: “We along with many other developers will continue to push for competition in App Store distribution and payments.”
In a joint statement to OpenSecrets, Blackburn and Blumenthal said they plan to reintroduce the Open App Markets Act in the 118th Congress.
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Source: OpenSecrets.org
