American Innovation and Choice Online Act

II 118TH CONGRESS 1ST SESSION S. 2033 To provide that certain discriminatory conduct by covered platforms shall be unlawful, and for other purposes. IN THE SENATE OF THE UNITED STATES JUNE 15, 2023 Ms. KLOBUCHAR (for herself, Mr. GRASSLEY, Mr. DURBIN, Mr. GRAHAM, Mr. BLUMENTHAL, Mr. HAWLEY, Ms. HIRONO, Mr. WARNER, and Mr. BOOK- ER) introduced the following bill; which was read twice and referred to the Committee on the Judiciary A BILL To provide that certain discriminatory conduct by covered platforms shall be unlawful, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘American Innovation 4 and Choice Online Act’’. 5 SEC. 2. DEFINITIONS. 6 (a) IN GENERAL.—In this Act: 7 (1) ANTITRUST LAWS; PERSON.—The terms 8 ‘‘antitrust laws’’ and ‘‘person’’ have the meanings 9 VerDate Sep 11 2014 04:01 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2033.IS S2033 kjohnson on DSK79L0C42PROD with BILLS 2 •S 2033 IS given the terms in subsection (a) of the first section 1 of the Clayton Act (15 U.S.C. 12). 2 (2) BUSINESS USER.—The term ‘‘business 3 user’’— 4 (A) means a person that uses or is likely 5 to use a covered platform for the advertising, 6 sale, or provision of products or services, includ- 7 ing such persons that are operating a covered 8 platform or are controlled by a covered platform 9 operator; and 10 (B) does not include a person that— 11 (i) is a clear national security risk; or 12 (ii) is organized under the laws of or 13 controlled by the Government of the Peo- 14 ple’s Republic of China or the government 15 of a foreign adversary. 16 (3) COMMISSION.—The term ‘‘Commission’’ 17 means the Federal Trade Commission. 18 (4) CONTROL.—The term ‘‘control’’ means, 19 with respect to a person— 20 (A) holding 25 percent or more of the 21 stock of the person; 22 (B) having the right to 25 percent or more 23 of the profits of the person; 24 VerDate Sep 11 2014 04:01 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2033.IS S2033 kjohnson on DSK79L0C42PROD with BILLS 3 •S 2033 IS (C) in the event of the dissolution of the 1 person, having the right to 25 percent or more 2 of the assets of the person; 3 (D) if the person is a corporation, having 4 the power to designate 25 percent or more of 5 the directors of the person; 6 (E) if the person is a trust, having the 7 power to designate 25 percent or more of the 8 trustees; or 9 (F) otherwise exercising substantial control 10 over the person. 11 (5) COVERED PLATFORM.—The term ‘‘covered 12 platform’’ means an online platform that— 13 (A) has been designated as a covered plat- 14 form under section 3(d); or 15 (B) is owned or controlled by a person 16 that— 17 (i) at any point during the 12 months 18 preceding a designation under section 3(d) 19 or the 12 months preceding the filing of a 20 complaint for an alleged violation of this 21 Act has at least— 22 (I) 50,000,000 United States- 23 based monthly active users on the on- 24 line platform; or 25 VerDate Sep 11 2014 04:01 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2033.IS S2033 kjohnson on DSK79L0C42PROD with BILLS 4 •S 2033 IS (II) 100,000 United States-based 1 monthly active business users on the 2 online platform; 3 (ii) during— 4 (I) the 2 years preceding a des- 5 ignation under section 3(d), or the 2 6 years preceding the filing of a com- 7 plaint for an alleged violation of this 8 Act— 9 (aa) at any point, is owned 10 or controlled by a person with 11 United States net annual sales of 12 greater than $550,000,000,000, 13 adjusted for inflation on the 14 basis of the Consumer Price 15 Index; or 16 (bb) during any 180-day pe- 17 riod during the 2-year period, 18 has an average market capitaliza- 19 tion greater than 20 $550,000,000,000, adjusted for 21 inflation on the basis of the Con- 22 sumer Price Index; or 23 (II) the 12 months preceding a 24 designation under section 3(d), or at 25 VerDate Sep 11 2014 04:01 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2033.IS S2033 kjohnson on DSK79L0C42PROD with BILLS 5 •S 2033 IS any point during the 12 months pre- 1 ceding the filing of a complaint for an 2 alleged violation of this Act, has at 3 least 1,000,000,000 worldwide month- 4 ly active users on the online platform; 5 and 6 (iii) is a critical trading partner for 7 the sale or provision of any product or 8 service offered on or directly related to the 9 online platform. 10 (6) CRITICAL TRADING PARTNER.—The term 11 ‘‘critical trading partner’’ means a person that has 12 the ability to restrict or materially impede the access 13 of— 14 (A) a business user to the users or cus- 15 tomers of the business user; or 16 (B) a business user to a tool or service 17 that the business user needs to effectively serve 18 the users or customers of the business user. 19 (7) DATA.—The term ‘‘data’’ includes informa- 20 tion that is collected by or provided to a covered 21 platform or business user that is linked, or reason- 22 ably linkable, to a specific— 23 (A) user or customer of the covered plat- 24 form; or 25 VerDate Sep 11 2014 04:01 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2033.IS S2033 kjohnson on DSK79L0C42PROD with BILLS 6 •S 2033 IS (B) user or customer of a business user. 1 (8) FOREIGN ADVERSARY.—The term ‘‘foreign 2 adversary’’ has the meaning given the term in sec- 3 tion 8(c) of the Secure and Trusted Communications 4 Networks Act of 2019 (47 U.S.C. 1607(c)). 5 (9) ONLINE PLATFORM.—The term ‘‘online 6 platform’’— 7 (A) means a website, online or mobile ap- 8 plication, operating system, digital assistant, or 9 online service that enables— 10 (i) a user to generate or share content 11 that can be viewed by other users on the 12 platform or to interact with other content 13 on the platform; 14 (ii) the offering, advertising, sale, pur- 15 chase, or shipping of products or services, 16 including software applications, between 17 and among consumers or businesses not 18 controlled by the platform operator; or 19 (iii) user searches or queries that ac- 20 cess or display a volume of information; 21 and 22 (B) does not include a service by wire or 23 radio that provides the capability to transmit 24 data to and receive data from all or substan- 25 VerDate Sep 11 2014 04:01 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2033.IS S2033 kjohnson on DSK79L0C42PROD with BILLS 7 •S 2033 IS tially all internet endpoints, including any capa- 1 bilities that are incidental to and enable the op- 2 eration of the communications service. 3 (10) STATE.—The term ‘‘State’’ means a State, 4 the District of Columbia, the Commonwealth of 5 Puerto Rico, and any other territory or possession of 6 the United States. 7 (b) REGULATIONS.—Not later than 180 days after 8 the date of enactment of this Act, the Commission, with 9 the concurrence of the Department of Justice, shall pro- 10 mulgate regulations in accordance with section 553 of title 11 5, United States Code, to define the term data for the 12 purpose of implementing and enforcing this Act. 13 SEC. 3. UNLAWFUL CONDUCT. 14 (a) IN GENERAL.—It shall be unlawful for a person 15 operating a covered platform in or affecting commerce 16 to— 17 (1) preference the products, services, or lines of 18 business of the covered platform operator over those 19 of another business user on the covered platform in 20 a manner that would materially harm competition; 21 (2) limit the ability of the products, services, or 22 lines of business of another business user to compete 23 on the covered platform relative to the products, 24 services, or lines of business of the covered platform 25 VerDate Sep 11 2014 04:01 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2033.IS S2033 kjohnson on DSK79L0C42PROD with BILLS 8 •S 2033 IS operator in a manner that would materially harm 1 competition; 2 (3) discriminate in the application or enforce- 3 ment of the terms of service of the covered platform 4 among similarly situated business users in a manner 5 that would materially harm competition; 6 (4) materially restrict, impede, or unreasonably 7 delay the capacity of a business user to access or 8 interoperate with the same platform, operating sys- 9 tem, or hardware or software features that are avail- 10 able to the products, services, or lines of business of 11 the covered platform operator that compete or would 12 compete with products or services offered by busi- 13 ness users on the covered platform, except where 14 such access would lead to a significant cybersecurity 15 risk; 16 (5) condition access to the covered platform or 17 preferred status or placement on the covered plat- 18 form on the purchase or use of other products or 19 services offered by the covered platform operator 20 that are not part of or intrinsic to the covered plat- 21 form; 22 (6) use nonpublic data that are obtained from 23 or generated on the covered platform by the activi- 24 ties of a business user or by the interaction of a cov- 25 VerDate Sep 11 2014 04:01 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2033.IS S2033 kjohnson on DSK79L0C42PROD with BILLS 9 •S 2033 IS ered platform user with the products or services of 1 a business user to offer, or support the offering of, 2 the products or services of the covered platform op- 3 erator that compete or would compete with products 4 or services offered by business users on the covered 5 platform; 6 (7) materially restrict or impede a business user 7 from accessing data generated on the covered plat- 8 form by the activities of the business user, or 9 through an interaction of a covered platform user 10 with the products or services of the business user, 11 such as by establishing contractual or technical re- 12 strictions that prevent the portability by the business 13 user to other systems or applications of the data of 14 the business user; 15 (8) materially restrict or impede covered plat- 16 form users from uninstalling software applications 17 that have been preinstalled on the covered platform 18 or changing default settings that direct or steer cov- 19 ered platform users to products or services offered 20 by the covered platform operator, unless necessary— 21 (A) for the security or functioning of the 22 covered platform; or 23 (B) to prevent data from the covered plat- 24 form operator or another business user from 25 VerDate Sep 11 2014 04:01 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2033.IS S2033 kjohnson on DSK79L0C42PROD with BILLS 10 •S 2033 IS being transferred to the Government of the 1 People’s Republic of China or the government 2 of a foreign adversary; 3 (9) in connection with any covered platform 4 user interface, including search or ranking 5 functionality offered by the covered platform, treat 6 the products, services, or lines of business of the 7 covered platform operator more favorably relative to 8 those of another business user and in a manner that 9 is inconsistent with the neutral, fair, and non- 10 discriminatory treatment of all business users; or 11 (10) retaliate against any business user or cov- 12 ered platform user that raises good-faith concerns 13 with any law enforcement authority about actual or 14 potential violations of State or Federal law on the 15 covered platform or by the covered platform oper- 16 ator. 17 (b) AFFIRMATIVE DEFENSES.— 18 (1) IN GENERAL.—It shall be an affirmative de- 19 fense to an action under subsection (a) if the de- 20 fendant establishes that the conduct was reasonably 21 tailored and reasonably necessary, such that the con- 22 duct could not be achieved through materially less 23 discriminatory means, to— 24 VerDate Sep 11 2014 04:01 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2033.IS S2033 kjohnson on DSK79L0C42PROD with BILLS 11 •S 2033 IS (A) prevent a violation of, or comply with, 1 Federal or State law; 2 (B) protect safety, user privacy, the secu- 3 rity of nonpublic data, or the security of the 4 covered platform; or 5 (C) maintain or substantially enhance the 6 core functionality of the covered platform. 7 (2) ADDITIONAL AFFIRMATIVE DEFENSES.—It 8 shall be an affirmative defense to an action under 9 paragraph (4), (5), (6), (7), (8), or (9) of subsection 10 (a) if the defendant establishes that the conduct has 11 not resulted in and would not result in material 12 harm to competition. 13 (3) EFFECT OF OTHER LAWS.—Notwith- 14 standing any other provision of law, whether user 15 conduct would constitute a violation of section 1030 16 of title 18, United States Code, shall have no effect 17 on whether the defendant has established an affirm- 18 ative defense under this Act. 19 (4) BURDEN OF PROOF.—The defendant has 20 the burden of proving an affirmative defense under 21 this subsection by a preponderance of the evidence. 22 (c) ENFORCEMENT.— 23 (1) IN GENERAL.—Except as otherwise pro- 24 vided in this Act— 25 VerDate Sep 11 2014 04:01 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2033.IS S2033 kjohnson on DSK79L0C42PROD with BILLS 12 •S 2033 IS (A) the Commission shall enforce this Act 1 in the same manner, by the same means, and 2 with the same jurisdiction, powers, and duties 3 as though all applicable terms of the Federal 4 Trade Commission Act (15 U.S.C. 41 et seq.) 5 were incorporated into and made a part of this 6 Act; 7 (B) the Department of Justice shall en- 8 force this Act in the same manner, by the same 9 means, and with the same jurisdiction, powers, 10 and duties as though all applicable terms of the 11 Sherman Act (15 U.S.C. 1 et seq.), Clayton Act 12 (15 U.S.C. 12 et seq.), and Antitrust Civil 13 Process Act (15 U.S.C. 1311 et seq.) were in- 14 corporated into and made a part of this Act; 15 and 16 (C) any attorney general of a State shall 17 enforce this Act in the same manner, by the 18 same means, and with the same jurisdiction, 19 powers, and duties as though all applicable 20 terms of the Sherman Act (15 U.S.C. 1 et seq.) 21 and the Clayton Act (15 U.S.C. 12 et seq.) 22 were incorporated into and made a part of this 23 Act. 24 VerDate Sep 11 2014 04:01 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S2033.IS S2033 kjohnson on DSK79L0C42PROD with BILLS 13 •S 2033 IS (2) COMMISSION INDEPENDENT LITIGATION AU- 1 THORITY.—If the Commission has reason to believe 2 that a person violated this Act, the Commission may 3 commence a civil action, in its own name by any of 4 its [Text truncated for display. 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