Congressional Price Hike: How the American Innovation and Choice Online Act Raises Prices on Consumers

Inflation is hitting four-decade highs, hurting families, workers, employers, and our economy. Remarkably, Senator Klobuchar is still demanding a vote on her misnamed ‘‘American Innovation and Choice Online Act,’’ legislation that would lead to higher prices.

The bill gives the Federal Trade Commission (FTC) and Department of Justice (DOJ) unprecedented new powers to micromanage the economy and dictate whether, when, where, and how certain companies can compete. But across the 24 pages of text, nowhere does it mandate those powers be used to benefit consumers by lowering prices. In fact, the legislation breaks sharply from existing antitrust law, which focuses on the interests of consumers. Existing law recognizes that vigorous competition lowers price, drives innovation, and gives consumers the power to decide winners and losers in the market. References to price or economic efficiency, however, only stand in the way of the bill’s objective, which is to replace the consumer welfare standard with amorphous criteria that allow the government to decide what’s best.

Here are three ways the bill would likely lead to higher prices:

1. Prohibit or make it more difficult for some companies to provide “store branded” products. Many companies offer “store branded” alternatives to name-brand products at cheaper prices. Under the bill, it could be illegal for covered companies to market their private label products in competition with branded products. While this happens in every grocery aisle in America, that same competitive conduct would become illegal for select companies.
2. Prohibit or make it more difficult for some companies to provide benefits like free or expedited shipping on certain products. Amazon and other companies can provide free or expedited shipping because sellers who use certain platforms also utilize the platform’s distribution services. Under the bill, popular offerings like Amazon Prime could become illegal because the bill forbids Amazon from “preferencing” those merchants who use their services.
3. Prohibit targeted companies from providing free ancillary services. Many online companies provide free ancillary services alongside their core services. Ever conducted an internet search and gotten results that also include a map? Google does this all the time, but under the bill, the government could determine that mapping is a different service distinct from search. Google couldn’t offer you Google maps with your search results because those maps would “preference” Google over other map service providers; instead, would have to treat all map services the same.  This approach would eliminate efforts to bundle complimentary services that clearly benefit consumers.

No doubt, government regulators would find plenty of other examples of pro-consumer competition that would become illegal under the law, but at a minimum, the bill would usher in an unprecedented level of government involvement in the economy — without concern for consumers or prices.

Such an approach is never a good idea, but it is especially tone-deaf at a time of inflation. According to a recent poll, an overwhelming majority of Americans (88%) want the government to focus on policies that reduce inflation and the cost of living – not fan the flames. With these numbers in mind, the Senate would be wise to leave this bill on the shelf.

Story by Neil Bradley, U.S. Chamber of Commerce

Neil Bradley is executive vice president, chief policy officer, and head of strategic advocacy at the U.S. Chamber of Commerce. He has spent two decades working directly with congressional committee chairpersons and other high-ranking policymakers to achieve solutions.

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