California lawmakers are considering a first-of-its-kind bill aimed at curbing the power of dominant technology platforms and fostering competition in the digital marketplace. Dubbed the “BASED Act” – an acronym for “Blocking Anticompetitive Self-preferencing by Entrenched Dominant platforms” – the legislation seeks to prevent companies with massive market capitalization and user bases from prioritizing their own products and services over those of competitors. The bill, announced by State Senator Scott Wiener, has garnered support from a diverse coalition of tech leaders, advocacy groups, and startup incubators, signaling a growing concern over the influence of tech giants like Apple, Amazon, Google, and Meta.
The core issue at the heart of the BASED Act is “self-preferencing,” a practice where large platforms leverage their control over distribution channels to unfairly advantage their own offerings. This can manifest in various ways, from biased search results to exclusive features and restrictive policies that disadvantage rival businesses. Proponents argue that this behavior stifles innovation, raises prices for consumers, and limits choices in the digital economy. The bill targets platforms with a market capitalization exceeding $1 trillion and serving over 100 million monthly active users in the United States.
What the BASED Act Would Prohibit
Senator Wiener’s office outlined several specific practices that would be prohibited under the proposed legislation. These include manipulating search rankings to favor a platform’s own products, regardless of merit, and utilizing non-public data collected from third-party sellers to develop competing products. The bill similarly aims to ensure data portability, preventing platforms from blocking consumers from transferring their data to other services or sharing it voluntarily with third parties. This data portability aspect is seen as crucial for empowering users and fostering a more competitive landscape.
“For years, giant digital platforms…have used their immense power to promote their own products and services whereas stifling competitors,” Senator Wiener stated in a press release. “The result has been higher prices, diminished service, and fewer options for consumers, and less innovation across the technology ecosystem.” He further emphasized the impact on startups, noting that self-preferencing can effectively lock them out of the market unless they comply with the terms dictated by dominant players.
Broad Support from the Tech Community
The BASED Act has quickly attracted endorsements from prominent figures and organizations within the tech industry. Jeremy Stoppelman, CEO and Co-Founder of Yelp, called it “exactly the kind of common-sense antitrust reform we need if we want the next generation of startups to have a fair shot.” An announcement from Senator Wiener’s office details further support from DuckDuckGo, Proton, Y Combinator, and privacy advocate Cory Doctorow.
Kamyl Bazbaz, Chief Communications and Policy Officer at DuckDuckGo, highlighted the bill’s potential to promote privacy-focused alternatives. “California has led the way on privacy, and now it has a chance to lead on digital competition,” Bazbaz said. “SB 1074 would prohibit the self-preferencing tactics that dominant platforms use to box out competitors — the same tactics that make it harder for people to discover and switch to privacy-respecting alternatives like DuckDuckGo.”
Raphael Auphan, Chief Operating Officer of Proton, echoed this sentiment, stating that allowing users to freely choose alternatives benefits both developers and individuals seeking greater control over their digital lives. Garry Tan, CEO of Y Combinator, framed the issue as one of market corruption, arguing that platforms should compete on the merits of their products, not on their ability to manipulate the rules of the game. Cory Doctorow, a writer and activist, warned that without government regulation, powerful companies will inevitably prioritize their own interests at the expense of innovation and consumer welfare.
The ‘Enshittification’ of the Internet
Doctorow’s statement references a concept he’s popularized – the “enshittification” of digital platforms. He argues that platforms initially focus on attracting users, then attracting businesses, and ultimately extracting value from both, often through anticompetitive practices. This cycle, he suggests, necessitates external regulation to prevent platforms from becoming self-serving gatekeepers.
The bill’s focus on data portability is also gaining attention. Currently, many platforms make it difficult for users to transfer their data to competing services, creating a “walled garden” effect. Allowing users to easily move their data would empower them to switch platforms and encourage competition. This aligns with broader calls for greater data ownership and control for individuals.
The proposed legislation isn’t without potential challenges. Determining the precise scope of “self-preferencing” and enforcing the rules could prove complex. Legal experts anticipate potential challenges from tech companies arguing that the bill infringes on their rights or stifles innovation. Whereas, proponents believe the potential benefits of increased competition and consumer choice outweigh these concerns.
The BASED Act is currently under consideration by the California State Senate. The bill will need to pass through committee hearings and a full Senate vote before potentially moving to the State Assembly. Senator Wiener’s website provides updates on the bill’s progress and opportunities for public comment. The next key step is a hearing scheduled for April, where lawmakers will further debate the merits and potential impacts of the legislation.
This bill represents a significant attempt to address the growing concentration of power in the hands of a few dominant tech companies. Whether it will succeed in leveling the playing field and fostering a more competitive digital ecosystem remains to be seen, but it has already sparked a crucial conversation about the future of the internet and the need for effective antitrust regulation.
What are your thoughts on the BASED Act? Share your comments below and let us understand how you suppose this legislation could impact the tech landscape.
