Possible Anti-Trust Legislation in eCommerce and Amazon’s Plea for Opposition

June 22, 2022

Senate Bill 2992

Up for consideration before the 117th Congress this year is Senate Bill 2992 (S. 2992); known as the American Innovation and Choice Online Act (the eCommerce Antitrust Act). The purpose of the eCommerce Antitrust Act is to make unlawful certain discriminatory conduct by “covered platforms.” As defined in the current draft, a “covered platform” is an online platform that has been designated as such by the Department of Justice:

  • Is owned or controlled by a publicly traded company with at least 50 million U.S.-based monthly active users or 100,000 U.S.-based business users
  • Has U.S. net sales or market capitalization greater than $550,000,000,000
  • Is a critical trading partner for the sale or provision of a product or service on or directly related to the online platform

Critically, this bill would apply directly to Amazon. However, companies like Apple, Alphabet (parent company of Google), Amazon and Meta (formerly Facebook) would also qualify under these conditions.

Unlawful Conduct by Covered Platforms

The federal government’s antitrust arms, the FTC and DOJ, would have the power to enforce ten different violations. Some of the key examples of unlawful conduct by covered platforms that must be proven by a preponderance of the evidence under Section 3 of the bill include:

  • Giving preference to the products, services or lines of business of the covered platform
  • Limiting another business’s products, services, or lines of business of another business competing on the covered platform
  • Restricting or limiting the use of covered platform’s operating system or hardware from another competing business
  • Conditioning access to the covered platform or preferred status or placement of the covered platform’s products or services if they are not part of or intrinsic to the covered platform
  • Retaliating against businesses or covered platforms that raise concerns about violation of the bill.

Amazon has publicly expressed concerns about the bill and its impact on consumers and the small businesses that sell products on its site, and invited sellers and consumers to oppose the bill in posts from VP Dharmesh M. Mehta and VP Brian Huseman. Amazon believes that if S. 2992 is passed, Prime benefits would be severely degraded, Amazon’s marketplace would be jeopardized, cybersecurity would be reduced, small businesses would be harmed, and jobs would be lost. Proponents of the bill believe that it would boost small businesses, create a level playing field on Amazon’s marketplace and protect cybersecurity. While Amazon believes that the penalties associated with violations are severe and excessive, proponents of the bill find that maximum penalties are unlikely, and the associated fines only serve to deter unlawful conduct.

KJK’s Ecommerce practice group will continue to monitor the status of this bill. For more information on the content of this article or to discuss further, please contact Jon W. Groza (JWG@kjk.com; (216) 736-7255), or Alex Jones (AEJ@kjk.com; (216) 736-7241).