David Heinemeier Hansson

June 23, 2021

Here comes the law

It always seems impossible until it’s done. And few fights have demonstrated this more than that against the monopoly abuses of big tech. For over a decade, the likes of Google, Apple, Amazon, and Facebook have been able to get away with murder in digital markets without fear of consequences. Wrapping their tentacles ever more forcefully around the world economy, threatening industry upon industry with subjugation, and watching their valuations rocket into the trillions, as investors grew giddy at the sight of the spoils.

But after several false starts at the US state level, we’re finally witnessing the one governing body in the US that just might be large and powerful enough to withstand the army of lobbyists, the threats of retribution, and the sheer towering presence of trillions of dollars worth of power: The United States Congress.

Five bills were introduced last week by the chairman of the House Antitrust Subcommittee, David Cicilline, and his fellow committee members. I had actually put off reading the bills directly for several days, because I feared the usual disappointment. That these bills were going to be timid, around-the-edges, squint-to-see-silverlining type of deals. I shouldn’t have. These bills are bold. Really bold.

Well, some of them. Others are more like, oh, yeah, that makes sense. Like the Merger Filing Fee Modernization Act by Neguse, which simply asks mega corporations to pay for proper inquiries into their proposed merges. Totally sensible, but not exactly defining a new epoch.

Next is the ACCESS Act by Scanlon, which mandates interoperability for big tech, such that users can always take their data elsewhere. I think this is largely sensible, just like mandating portable phone numbers is, but I don’t think it’s exactly going to up-end the industry. You can already export all your emails from Gmail, yet barely anyone does. Still. Good basic consumer protection.

Then you get to the Platform Competition and Opportunity Act by Jeffries, which is basically a ban on acquisitions for big tech. Wow. Okay, now you have my attention. You’re telling me that Facebook wouldn’t have been able to buy Instagram and WhatsApp, as a matter of basic law, not a prolonged merger approval inquiry? That’s bold.

Next up is the Ending Platform Monopolies Act by Jayapal. Which is essentially Elizabeth Warren’s presidential campaign proposal that you can’t both own the market place and sell on it. That’s super-duper bold. Essentially banning Amazon from carrying its own product lines on Amazon.com. But it also includes a ban on tying services, so Apple wouldn’t be able to require app developers to use their in-app purchasing platform in order to list on the App Store. Or ban competitors from access to the App Store.

But I’ve saved the best for last. Cicilline’s own bill, which is cosponsored by republicans Ken Buck and Lance Gooden (and fellow democrat Jerry Nadler), essentially reads like a Christmas wishlist for any app developer or user of big tech. This bill has it all. It’s the American Choice and Innovation Online Act. And it’s amazing.

You should go read it yourself. Hell, if you care about any of this stuff, you should read all the bills directly. They’re mercifully short, relatively free of legal jargon, and strikingly bold. But anyway, here’s a brief recap of the American Choice and Innovation Online Act:

  1. No more giving your own products and services preference if you own a dominant platform. So no more ads for Apple Arcade in your Settings app. No more hijacking all travel searches on Google to funnel travelers through their own booking services.
  2. No more cramming default apps that can’t be uninstalled down user’s throat. Remember how we just got the basic ability to set our own mail application on iOS this past summer? Yeah, it’s that, but by law, applied to everything. Your own calendar app, your own messaging app, you own everything. Oh, and all those annoying preinstalled apps you don’t want but the platform keeps pushing anyway now have to be uninstallable! Hurray!
  3. No more gag orders on developers. Apple won’t be able to deny developers the right to link to their own damn website. Or tell them where to sign up for a service. Or even tell them that they have a paid service!
  4. NO MORE FORCING IN-APP PURCHASING ON DEVELOPERS!! The bill prevents tying the use of other services, like payment processing, to the ability to publish on the platform. All the dreaded language from Apple’s App Store Guidelines with all the weird loopholes and exemptions for who is and isn’t supposed to pay the 30% extortion will be illegal. Developers will have the freedom to publish on the App Store using their own payment processing (or use Apple’s, should they prefer!).
  5. Basic protections against discrimination and retaliation. This essentially turns the app stores into common carriers. Which is an established antitrust idea of forcing platform owners to offer the same deal to everyone. Just like Net Neutrality prevents ISPs from shaking down individual websites. This bill will prevent app store platforms from shaking down individual app makers according to their whims.

All this is backed up by the potent penalties of up to 15% of the platform owner’s revenue or 30% of injured party’s revenue, whichever is larger. There’s some poetic justice in those rates, as they’re exactly the same as the payment extortion fees demanded by Apple and Google of some app developers.

The FTC and the antitrust division’s attorney general are in charge of enforcing general compliance with the law. But injured parties are also eligible to sue directly under the law. Not just for penalties and damages, but also for injunctions.

If this law had been on the books last summer, we would never have had to endure those awful two weeks of intimidation and threats from Apple when we launched HEY. Presumably Apple wouldn’t even have tried, because there would have been no 3.1.1, but even if they would have, the case to get an injunction would have been a slam dunk.

Didn’t I tell you these bills were bold? If they pass Congress in anywhere near their current forms, we have a veritable revolution on our hands for the digital economy. Powerful protections against big tech abusing their monopoly advantage to shakedown individual developers and entire industries. Strong boundaries to prevent the platforms from expanding their power and marketshare even further through predatory acquisitions. Excellent consumer protections to ensure you can always get your data out, and have the choice to install your preferred default apps for all kinds of services.

But the party isn’t over yet! The main enforcer of all these new bills will be the Federal Trade Commission (FTC), and guess who just got confirmed as the chair of that commission? LINA KAHN!! You seriously could not wish for a more qualified or determined enforcer of these new laws than her. She’s been instrumental in shaping the modern outlook on antitrust, and moving us beyond that dreaded and outdated “consumer welfare” standard that has allowed big tech to run roughshod over everyone else unopposed. She was a driving force behind the House Antitrust Subcommittee’s series of hearings and the ultimate report on digital markets that directly lead to all these new bill proposals. She’s big tech’s worst nightmare and the dream chair for the rest of us.

Sure, you say, but these bills still have to pass Congress before they become law. True, but look at the sponsors for all of these bills. Each and every one of them have sponsors on both the democratic and republican side. Opposition to big tech’s monopoly abuses is one of the very few truly bipartisan issues in Washington these days. I think these bills have an excellent chance to pass exactly because of that.

Taken all together, even just this promise of a chance – just one chance! – to strike at the heart of big tech and end their reign of abuse is invigorating. It’s far more than I could ever have hoped for when I showed up in Colorado in January of last year to testify before the House Antitrust Subcommittee. It more than makes up for the disappointment of seeing Apple and their lobbyists kill the democratic attempts at accountability at the state level.

And as if all of this wasn’t enough, it’s not like things have been quiet on the eastern front either. In Europe, the German competition authorities, called The Bundeskartellamt, just announced they’re pursuing Apple for violations of the a new January 2021 amendment to the German Competition Act. This act gives more teeth and more bite to investigating and sanctioning monopoly abusers, and Apple is the first target in their sights.

At Basecamp, we continue to work with other competition authorities in Europe as well. Just like we’ve done here in the US. Because the power of big tech is not constrained to a single country or territory. It’s a global power that demands a global response. And after more than a decade of slumber on this issue, the leviathans around the globe are finally waking up, and big tech is about to meet the one real obstacle to world domination: Sovereign governments with democratic mandates.

It’s on.

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.