Big Tech Guide for State Lawmakers: Adopt Common Carrier Rules to Stop Big Tech’s Self-Preferencing

November 9, 2021 State and Local PolicyTech

The Problem:

The fact that many Big Tech corporations both run platforms and compete on those platforms with their own products gives them a large incentive to self-preference, or put their own products in front of consumers who are searching for a given item or piece of information, even if better products or information are available elsewhere. For instance, Google will give Google Maps or Google Shopping more prominent placement in search results, even if another service has better geographical information for that location or more and better choices for consumers, or if Google’s own service is rife with scams and misinformation.[1]

Studies have shown that users prefer the results Google’s algorithm naturally provides, rather than those it produces when it engages in self-preferencing, so Google is actively degrading its own chief product.[2] It does so anyway because directing users to other Google properties keeps them within Google’s ecosystem, allowing Google to show them more ads and thus make more profit. As of 2019, fewer than half of searches that originate on Google result in a click away from Google.[3]

Such self-preferencing harms not only Google’s direct competitors, but local businesses with listings and information on sites that are pushed further down Google’s search results, making it harder for them to find customers, or forcing them to pay Google for ads that increase their visibility. And this issue is not limited to Google: Self-preferencing also occurs on Amazon’s platform, when it lists its own private-label products above those sold by third-party sellers, or gives preferential treatment to third-party sellers that use Amazon’s other services, such as its fulfillment and distribution services.

The Policy:

State lawmakers can designate tech platforms as common carriers, meaning they have to act as neutral arbiters of content, not preference their own services. Common carrier rules for digital platforms were recommended in a report by the House Antitrust Subcommittee last year, as well as in a lawsuit against Google filed by Ohio Attorney General Dave Yost.[4] As Economic Liberties has explained, such rules will ensure that “anyone engaged in legal behavior has access to this infrastructure on equal terms for equal service.”[5]

The Pushback:

Critics claim that common carrier rules are an inappropriate intrusion into private business activities, but the U.S. has a long history of imposing such rules. For example, in the early 1900s, Congress made it illegal for railroad owners to transport products in which they had a financial interest. Common carrier-like rules have also been imposed on banks, telephone networks, and television networks, to ensure that vital avenues of commerce can not be co-opted to benefit one particular corporation’s products.[6] Most states have broad powers to designate certain corporations as public utilities or common carriers.

Notes:

[1] Pat Garofalo, “Close to Home: How the Power of Facebook and Google Affects Local Communities,” American Economic Liberties Project, August 30, 2020, https://www.economicliberties.us/our-work/close-to-home-how-the-power-of-facebook-and-google-affects-local-communities/.

[2] Michael Luca, Tim Wu, Sebastian Couvidat, and Daniel Frank, “Does Google Content Degrade Google Search? Experimental Evidence?,” Harvard Business School Working Paper No. 16-035, 2015, https://scholarship.law.columbia.edu/faculty_scholarship/1931; Hyunjin Kim and Michael Luca, “Product Quality and Entering through Tying: Experimental Evidence,” Management Science 65.2, November 2018, https://pdfs.semanticscholar.org/98b7/8685df1812c91fb22647963c8b2b280abf79.pdf?_ga=2.179720416.535816151.1591294487-2003198443.1591294487.

[3] Rand Fishkin, “Less than Half of Google Searches Now Result in a Click,” SparkToro, August 13, 2019, https://sparktoro.com/blog/less-than-half-of-google-searches-now-result-in-a-click/.

[4] “Investigation of Competition in the Digital Marketplace: Majority Staff Report and Recommendations,” House Judiciary Committee’s Antitrust Subcommittee, October 6, 2020, https://judiciary.house.gov/news/documentsingle.aspx?DocumentID=3429.; State of Ohio ex rel Dave Yost, Ohio Attorney General v. Google, Case No. 21 CV H, Filed June 8, 2021, https://www.ohioattorneygeneral.gov/Files/Briefing-Room/News-Releases/Filed-Complaint-(Time-Stamped).aspx.

[5] Matt Stoller, “How To Prevent the Next Social Media-Driven Attack On Democracy—and Avoid a Big Tech Censorship Regime,” American Economic Liberties Project, February 3, 2021, https://www.economicliberties.us/our-work/how-to-prevent-the-next-social-media-driven-attack/#_ftn3.

[6] “Investigation of Competition in the Digital Marketplace: Majority Staff Report and Recommendations.”