A Big Tech lobbying group is running a massive ad blitz around the country opposing landmark antitrust legislation designed to make tech giants stop favoring their own products on their platforms over other sellers. The marketing campaign claims the bill will “break” Amazon Prime, the retail giant’s subscription program offering free, fast shipping and streaming content, plus harm the overall economy.
The multi-million dollar ad campaign shows that in the public relations fight to protect Big Tech monopolies, the industry is betting big on American consumerism. They believe they can capitalize on people’s want of instant gratification in order to mobilize the public against legislation that would make it easier for people and small businesses to sell products and services in the online economy.
The ad campaign was launched by the Computer and Communications Industry Association (CCIA), a corporate lobbying group whose members include Amazon, Apple, Facebook, and Google. CCIA reserved $8.4 million worth of TV ads in March and April and another $200,000 in digital ads, according to data from AdImpact. It’s a staggering sum for an organization that typically raises about that much per year, according to its recent tax returns.
The CCIA ads are designed to drive public opinion against the American Innovation and Choice Online (AICO) Act, a bipartisan bill that would ban some common anti-competitive behaviors by tech giants that harm third-party sellers using their platforms, like ranking their own company products higher on their platforms. The bill, which would increase competition and benefit consumers and small businesses, is a legislative rarity in that it would challenge entrenched corporate power and also has bipartisan support in Congress. President Joe Biden’s Justice Department endorsed the measure last week.
The tech industry, however, is pulling out all the stops to kill the antitrust legislation. Tech front groups have argued the bill would harm U.S. national security interests and boost Chinese tech companies over American ones. According to the Protocol tech newsletter, one tech lobbying group recently started “leading conservative groups in lawmaker meetings to push back on” the AICO Act. Now, CCIA is blanketing the airwaves, and trying to use Amazon’s Prime membership program — and its free two-day shipping policy — as a rallying cry.
"With broken supply chains and lives disrupted, businesses like Amazon have invested to deliver on time for you and help hundreds of thousands of small businesses gain access to millions of online shoppers,” says one CCIA ad. “But Washington politicians have a law that could break Prime's guaranteed two-day free delivery and threaten our fragile economic recovery. Tell your senators: Don't break our Prime.”
Of course, as many Americans know, the global pandemic has already complicated Amazon Prime’s shipping program — often products do not ship as quickly as they did prior to COVID-19. Moreover, advocates say the antitrust legislation would improve the economy by leveling the playing field for small businesses that have little choice but to use the dominant tech platforms to sell their products.
“All that any small business asks for is a somewhat level playing field and a somewhat fair environment in which to compete,” said Mike Brey, president of the Maryland hobby shop business Hobby Works, at a recent event in support of the AICO Act. “We need to set clear and effective rules that protect competition and small firms doing business on these platforms.”
“Preferencing Their Own Products”
For years, tech giants like Amazon, Apple, Facebook, and Google have been criticized for rigging their online marketplaces to crowd out competitors.
Amazon, for example, has long been accused of favoring its own products over third-party sellers on its marketplace. Amazon has reportedly even used data from its third-party sellers to copy their products, while rigging its website’s search results to favor the company’s own knock-off versions.
Apple has been accused of anti-competitive behaviors such as limiting products from outside developers on its App Store and charging big commissions on those developers’ sales. Apple announced changes to its App Store last year in order to close an investigation into such matters by the Japanese trade commission. Last year, three dozen state attorneys general sued Google over similar issues with its Google Play store. States have also sued Google for using anti-competitive tactics to corner the search engine market.
Last summer, lawmakers introduced the AICO Act, which would prohibit tech giants from giving better preference to their companies’ own products or services on their platforms above other sellers. The legislation would also bar the tech giants from using internal data from products sold by third-parties to create and sell their own knock-off versions of those products.
The bill has 30 Democratic and nine Republican sponsors, while the Senate version introduced this fall has seven Democratic and six Republican sponsors.
Sen. Amy Klobuchar (D-Minn.), the lead sponsor of the AICO Act in the Senate, laid out the case for the bill at an event last week held by progressive advocacy groups supporting the legislation.
“[The bill] prevents dominant tech platforms that have the power to control how — or even if — businesses can reach their customers online from preferencing their own products in ways that harm competition,” said Klobuchar. “So monopolies like Google won’t be able to put their products ahead of competing products and search results just because they control the search engine and have 90 percent of the market. And Amazon won’t be able to use small businesses’ proprietary data to compete against them.”
The Justice Department recently endorsed the legislation, saying it offers potential economic benefits and would protect entrepreneurs.
“If enacted, we believe that this legislation has the potential to have a positive effect on dynamism in digital markets going forward,” said Acting Assistant Attorney General Peter Hyun. “Our future global competitiveness depends on innovators and entrepreneurs having the ability to access markets free from dominant incumbents that impede innovation, competition, resiliency, and widespread prosperity. Discriminatory conduct by dominant platforms can sap the rewards from other innovators and entrepreneurs, reducing the incentives for entrepreneurship and innovation.”
R.I.P. Prime
Amazon has been aggressively fighting the AICO Act from the start. CNBC reported last summer that Amazon was contacting its third-party sellers — the companies that would benefit most from the proposed legislation — and asking them to set up meetings with a member of Amazon’s lobbying team to discuss the bill.
The retail giant has claimed that the legislation “would jeopardize our ability to allow small businesses to sell on Amazon” and could result “in hundreds of thousands of American small and medium-sized businesses losing access to Amazon’s customers and services.”
Amazon has also claimed the AICO Act would “make it difficult for us to guarantee one or two-day shipping for those small businesses' products — key benefits of Amazon Prime for sellers and customers alike.”
According to Wired, this argument is based around a provision in the AICO Act that would block tech giants from conditioning placement on their platform on "the purchase or use of other products or services offered by the covered platform operator that are not part of or intrinsic to the covered platform.”
In Amazon’s case, in order for third-party sellers to qualify for Prime, the company requires them to use their Fulfillment by Amazon program. That means those sellers must keep their inventory in Amazon's warehouses and allow Amazon to handle shipping, and they must pay Amazon for this service.
It’s hard to believe Amazon wouldn’t find a way to maintain independent sellers on its platform: According to a recent study by the Institute for Local Self-Reliance, Amazon generates huge fees from its third-party marketplace — and the company uses those fees to “subsidize its own retail division, enabling it to sell household staples, such as diapers and laundry detergent, at prices that are competitive with Walmart.”
Wired reports that, in order to deal with the proposed rules, Amazon would simply have to “have to let third-party sellers choose other logistics providers.” The legislation does not mean the inevitable death of Prime.
Still, the CCIA lobbying group representing Amazon and other tech giants is now leading a swarming multi-million ad campaign based around that claim, anyway.
Some of the ads are regionally specific. “By air and by road, from stores in Albany to front doors in Augusta, Amazon Prime delivers free two-day shipping and affordable prices,” says a CCIA ad airing in Georgia. “But Congress is voting on a bill that could break Prime’s guaranteed two-day free delivery for millions of members and raise costs for families and businesses across Georgia.”
But all the ads end with the same stark message: “Don’t Break Our Prime.”
The ads are running in the D.C. area, as well as in key swing states in the 2022 midterm elections like Arizona, Georgia, Nevada, and Wisconsin. The heaviest recent spending is in Georgia — nearly $2.2 million — followed by $1.9 million in the D.C. region, $1.7 million in Arizona, and $1.4 million in Nevada. CCIA is also running nearly $900,000 worth of spots in the Boston area that appear to be targeting New Hampshire.
“By air and by road, from stores in Plymouth to front doors in Portsmouth, Amazon Prime delivers free two-day shipping and affordable prices,” the ad says.
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