David Heinemeier Hansson

February 26, 2021

Antitrust comes slowly then all at once

If you would have asked me a couple of years ago whether I thought big tech faced any material threat to their dominance from governments, I would have said no. Because it's been twenty years since the last time any of them did.

For basically my entire career, big tech has gotten away with whatever they wanted, whenever they wanted. The opposition has been scattered, regulators uninterested, and the public unconcerned while big tech's power has grown ever larger in lockstep with their market caps. It's hard to believe in remedies against such trends.

But as the saying goes, change comes slowly then all at once. I believe we've just started that "all at once" phase with antitrust now. The past year has seen a tidal wave of investigations, hearings, reports, and testimony finally washing away the innocence of big tech. The monopoly question is no longer one of "are they/are they not", but about what should we do with the fact that they definitely are.

Just yesterday, three different antitrust bodies were making moves at the same time: The House Antitrust Subcommittee, The Arizona House of Representatives, and the Dutch competition authorities.

The House Antitrust Subcommittee under chairman Cicilline met for the first of three hearings to discuss legislation based on their scathing landmark report from last year. The hearing started with an unusual degree of bipartisan harmony between the Democratic chairman and the ranking Republican member Ken Buck. Both declared without hesitation that big tech monopolies are a serious problem, that their abuses are many and need redress, and that they'll work together to make that happen. Bam.

But to me, the more immediately interesting developments are happening in the Arizona House of Representatives. They have a bill called HB2005 that represents the most significant legislation against big tech since the term big tech was coined. It would prohibit dominant app stores on general-purpose computing platforms from coercing app developers into paying the exorbitant 30% tax on payment processing, and prevent the platforms from retaliating against developers. Basically, it would let all developers enjoy the same rights as Uber or other apps that have long been allowed to do their own payment processing on both Android and iOS.

This bill would not only have prevented the two weeks of terror that Apple put us through during the launch of HEY, it would also instantly give us the remedy to make things better for Arizona residents. Should this pass, we'd be allowed to let Arizona residents signup directly in the app, manage their subscription from the app, without having to charge those residents higher prices. Huge win.

In fact, I was just talking with Jason yesterday about whether we could reap the full benefits of this bill, which affords Arizona-based companies the right to use whatever payment processing they please for all their customers while shielding them from retaliation. We've been an Illinois business for twenty years, but if there's anything that could make us change that, it's a bill like this. So we're looking into it!

What's interesting about Arizona is both how fast they have been moving, and who's moving for and against. I testified only this Monday in support of the bill at an appropriations committee hearing, which the bill cleared in a 7-6 vote. And then for a minute, it looked like it would see a vote on the floor of the House already yesterday. But now it's been pushed to early next week. Still, record pace.

I mean, I testified in front of congress a year ago. And now the House Antitrust Subcommittee is holding a series of hearings on what to do about it. And then there'll be proposed legislation. And then that goes through the mill. Who knows when we'll actually see any bills passed, what those bills will look like, and whether any relief is coming at all. I mean, I'm hopeful, but that's all it is: hope.

Contrast this with Arizona! As early as next week, this bill could become law?! And shortly after that, we could start offering the better app to Arizona residents? And if we can make it happen, we could move Basecamp there and enjoy this incredible shield from monopoly extortion and retaliation? I try not to get too excited, but it's hard, because this is very, very exciting indeed!

What's weird, however, is that even though this bill is really simple, makes total sense for Arizona, and is in complete alignment with the investigation conducted by Congress under Democratic leadership, it's the Arizona state Democrats that are fighting it. In the appropriations committee, it was six Democrats voting against the bill, out of the total 13 votes cast. Why?

I don't quite get it. I mean, I get that politics are local, complicated, and dependent on a thousand factors. But to have Arizona House Democrats working against congressional Democrats on this topic within the same week. Well, that's just weird.

But I try to remind myself that awareness of big tech monopolies and the harm they cause is still not evenly distributed. The congressional report is over 400 pages. Not everyone will have read this. So there's still a ways to go on educating lawmakers about this.

That's exactly what I offered, btw. There are 29 Democrats in the Arizona House of Representatives. I've offered to talk to any one of them, if they'd like to learn from one of the victims of big tech monopoly abuses. And that offer still stands. Democratic Rep. Aaron Lieberman has already committed his support! Hopefully he can get some of his fellow Democrats behind it as well.

Either way, it looks like HB2005 is coming up for a vote next week. I keep trying to damper my expectations. Think about the long term. Consider that if it doesn't pass in Arizona, it sounds like there'll soon be other chances in Georgia, Massachusetts, and perhaps even Illinois. But still, what if it did pass?? The world of big tech antitrust would be changed overnight.

The other place that could soon change the world of big tech antitrust enforcement is The Netherlands. Reuters quoted me in a story about an upcoming draft decision by the ACM, the Dutch competition authors. That let the cat out of the bag that Basecamp filed a complaint back in August of last year with the ACM, after we learned that they had a far-advanced investigation into exactly Apple and their IAP monopoly abuses. This investigation now looks to be close to finished, and a draft decision is believed to be just around the corner.

Although it's halfway around the world from Arizona, the issues are identical, and so is the remedy we asked the ACM to consider. Just give us a choice in payment processing options, and we can offer a better app to our Dutch customers, without raising prices like implementing Apple's IAP with the 30% tax would entail. Again, no-brainer for the Dutch to protect their citizens like this, and I sincerely hope that they do.

Also like Arizona, the Dutch is simply the first in a line of European states where competition authorities are looking into these issues. Without imperiling any of the ongoing investigations, I'm happy to say that we've filed complaints elsewhere as well. So it's not like the ACM in The Netherlands is the only option to get relief in Europe. Hell, even the European Commission is looking into exactly this issue, and again with a focus on Apple.

So that's a lot! And that was just this week! It's exhilarating, exhausting, but ultimately deeply motivating to see all these developments. I frequently feel that this big tech monopoly question is draining way too much of my focus and attention, so it's incredibly rewarding to learn it's not all for nothing. It's not just all screaming on Twitter

The wheels of justice may turn slowly, but once they get going, watch out!

About David Heinemeier Hansson

Made Basecamp and HEY for the underdogs as co-owner and CTO of 37signals. Created Ruby on Rails. Wrote REWORK, It Doesn't Have to Be Crazy at Work, and REMOTE. Won at Le Mans as a racing driver. Fought the big tech monopolies as an antitrust advocate. Invested in Danish startups.