Last month, Colorado Congressman Ken Buck published a new book called Crushed: Big Tech’s War on Free Speech. The book, released to local media fanfare, makes the case that the rise of “Big Tech” serves as a unique threat to the “very core of our political system” with serious implications for free speech and healthy market competition.
In the book, Buck calls out companies like Google, Facebook, Apple and Amazon, which he believes dominate the market with their “money, monopoly power, and hubris that comes with the unchecked exercise of power.” He argues these companies participate in harmful “self-preferencing practices” to keep themselves on top of market competition and coerce consumers into purchasing their products.
These arguments are based on flawed logic and misunderstand both the nature of self-preferencing and the impact it has on consumers. Rather than being a nefarious mechanism to keep competition down, self-preferencing is when a “firm modifies its operations to privilege its own, another firms’, or set of firms’ products or services.” In other words, self-preferencing is simply the action a company takes to promote its own products, something almost all companies do and have done for a very long time.
To assume that Big Tech companies have a monopoly on “self-preferencing” and that they’re therefore uniquely deserving of punishment is ridiculous. Just as tech companies like Amazon prefer consumers purchase electronic products from their private label AmazonBasics, so too do a variety of brick-and-mortar stores like Walmart, which prefers consumers purchase groceries from its store brand, Great Value.
Similar examples exist for virtually every store and industry imaginable. Even small mom and pop shops tend to preference their own products, like when a micro-brewery has more of its own beers on tap. It’s not just more convenient and economical; it’s also good business. To be guided by self-interest is perfectly natural for companies, regardless of their size or the merits of their reasoning. It shouldn’t matter if the company is Amazon or any other firm.
Self-preferencing can also take numerous forms. Most grocery stores display their branded goods at eye level, and often at the front of the store. These decisions are intentional and designed to influence consumer behavior, which is frequently driven by convenience and impulse buying. Self-preferencing can also manifest itself in the order in which products are displayed online or in how goods and services are bundled together. Countless other forms of self-preferencing exist, and most are so commonplace that the average consumer is unlikely to even notice.
That’s because self-preferencing is not, contrary to Buck’s thesis, always harmful to consumers. In fact, most antitrust literature acknowledges that self-preferencing is frequently “linked to the very pro-competitive benefits.” Whether these benefits appear in the form of product innovation resulting from supply chain integration and product imitation, lower prices necessary for convincing consumers to purchase their products or in enhanced competition spurred by newcomers challenging incumbent companies, self-preferencing has been shown to produce positive outcomes for consumers.
None of this is to say that self-preferencing can’t, on occasion, be abused by a company if it decides to weaponize the practice against competitors. However, this scenario is uncommon, and specific companies shouldn’t be singled out by lawmakers on account of their size or industry. Instead, lawmakers should take the time to distinguish between bad actors and those that use self-preferencing as a legitimate tool for standard business operations. A blanket ban on self-preferencing for Big Tech will only serve to “deter innovation, and distort the competitive process.”
Many of Buck’s colleagues on Capitol Hill share sympathy with the arguments Buck puts forth in his book, and they’ve made no secret of the fact that they would like to ban self-preferencing. Last year, Sens. Amy Klobuchar and Chuck Grassley introduced the American Innovation and Choice Online Act (AICOA), which, if passed, would have required third-party data sharing, outlawed self-preferencing and prohibited covered platforms from disadvantaging other companies’ products and services in favor of their own. It would have also made it very difficult for companies like Amazon to continue selling high-quality products to consumers at affordable prices and offering them popular services like Amazon Prime, which, among other benefits, provides two-day free delivery.
AICOA failed to become law in 2022, but the bill, or something similar to it, could easily be introduced again in the near future. Some lawmakers like Sen. Mark Warner are already calling for Congress to “restart” antitrust legislation. If this happens, it’ll largely be the brainchild of a small group of powerful individuals who’ve already made up their minds about Big Tech companies. They’ll have prioritized this crusade over the situation on the ground, wherein companies like Amazon provide consumers with immense benefits and polls consistently find a high level of satisfaction with their services.
Rather than encouraging government agencies like the Department of Justice (DoJ) and Federal Trade Commission (FTC) to “act more like attack dogs” against Big Tech, lawmakers like Buck should re-commit to the “free and unregulated market” principles in which they claim to believe.
Nate Scherer is a Policy Analyst with the American Consumer Institute, a nonprofit education and research organization.