Rethinking Trade - Season 1 Episode 40: Apple & Google Seek U.S. Trade Attack on Anti-Monopoly Law
October 18, 2021
Right now, Apple and Google are lobbying the U.S. government to attack South Korean anti-monopoly policies. They claim that a recently passed Korean law requiring app stores to allow consumers to use diverse payment systems violates the US-Korea trade deal. Big Tech corporations want to hijack trade pacts to outlaw as a “barrier to trade” anti-trust, labor, environmental or consumer protections that could cut into their profits.
On today’s show, we discuss this case and Big Tech’s current attempts to quietly thwart domestic digital governance and pro-competition policymaking now underway in the U.S. Congress, in various U.S. agencies and in countries around the world by misbranding such policies as “barriers to digital trade.”
Learn more: www.tradewatch.org
Music: Groove Grove by Kevin MacLeod.
Transcribed by Sally King
Welcome back to Rethinking Trade where we don't just talk about trade policy, we fight to change it. I'm Ryan, and I'm joined once again by our in-house trade expert, Lori Wallach. There's a good chance that you're hearing this podcast through an Apple or Google platform, and today we're going to talk about something both of these companies are doing to expand their monopolies. Under the guise of international trade rules. Apple and Google are urging US government officials to attack a recently passed South Korean law that would require app stores to allow consumers to use diverse payment systems, not only those controlled by the App Store, among other monopoly busting features. Lori, can you give us a summary of what this so-called dispute is all about?
You bet. At issue here is a law that was passed by South Korea's Parliament that is attempting to break up what are now monopolies by Apple and Google with respect to consumers who want to buy apps, but also developers who have created apps. Under the current monopoly practices of these two, you, as a developer have to sign a deal that says you only sell through one or the other, and you won't go to any other platforms. But then also, you're required to use the Apple or Google payment system. And those big companies take a cut right out from under the developer. So the idea in this law is to say number one, you can use any payment system you want, if it's listed on Google or Apple. And number two, you can't be limited to where you will sell it. And ironically, there are bipartisan proposals that are identical in the US Congress. Now, what the companies are trying to do is pretend that instead of this being an anti-monopoly initiative, that the US Congress is replicating that somehow this is an illegal trade barrier, and perhaps even a violation of a free trade agreement between the US and Korea, which is, of course, total garbage. But it's a preview of coming attractions of the newest and latest attempt to have a corporate sneak attack via trade agreements.
And in addition to being a preview, this whole story also shines a light on the past. But first off, it reflects a broader big tech strategy to quietly thwart domestic digital governance and anti-monopoly actions by branding them as barriers to trade. But it's also part of a long history of companies arguing that basically anything in the way of their profits such as you know, labor, environmental or consumer protections, constitutes barriers to trade. Can you talk about that dynamic historically, and how big tech has sort of updated it and is utilizing it today?
On this podcast, we often talk about how what is at the heart of today's so-called trade agreements often has nothing to do with trade. But rather these corporate-rigged international agreements end up becoming Trojan horse platforms, where non-trade agendas that are not able to get through the sunshine of public debate end up getting implemented through the backdoor of a so-called trade deal. And that's what we're seeing here. So as governments around the world and finally, even here in the US, are realizing the way that these mega-platforms are threatening our economy, our livelihoods, frankly, our democracy, there is action to try and incorporate some kind of basic consumer protections, gig economy worker protections, and generally established what is often called digital governance. So some rules to ensure these companies are operating in the public interest. And the companies hate this. And along a part of that alongside of those public interest protections is some anti-monopoly actions. So the companies realize that they have finally perhaps come to the end of the road of their wild abuses and lack of government oversight. And so their strategy is this effort to get negotiated in the trade context, what they are calling "digital trade rules," those are air quotes around them folks, digital trade because it's not about trade. And what they hope to do is effectively replay what Big Pharma did in the 80s where they got rules stuffed into free trade agreements that required every signatory country to guarantee the pharmaceutical corporations extended monopoly protections so straight up protectionism and free trade agreements, so that their medicines basically could have monopoly guarantees for higher prices and that governments would be handcuffed from using policies that could bring down medicine prices. And that garbage got stuck in trade agreements that doesn't have anything to do with trade. And basically, every signatory country has to meet it. That is what big tech is up to right now, they want to get the handcuffs on the Congress and Parliament's around the world, on government agencies trying to regulate them and break up their monopolies. And the way they sort of see it is they can do this in one fell swoop worldwide. And sort of, you know, excavate the policy space out from under governments around the world trying to get those big monopolist under control. And it is, you know, it is part of a theme, which is you, you know, have seen over and over non-trade policies that the corporations don't like labeled illegal trade barriers and forbidden. I mean, one of the rules in these so-called Digital trade agreements takes a page out of what the Wall Street firms got stuck into a WTO agreement, which is literally rules that say you can't regulate on the size of a firm, or how many services they offer. That's the law globally, for financial firms in many countries, because of WTO. And that's what big tech, for instance, is trying to get enacted, as well as rules that basically, you know, require governments to allow the free flow of information, your private data, which means privacy rules, basically would be very hard to establish, or that requires governments to protect and secrecy the algorithms and code of these platforms. So like racially discriminatory searches that mean different people only see certain jobs or loan opportunities or housing opportunities, incitement to violence, all of the different abuses and discriminations that can happen online. You could never do the research as an investigator or as a congressional committee, you'd have to know a crime was committed for the government to get any of this information. And similarly, liability protections so that you know, if it's sold online, and may burn down your house, that product, but you can't sue for that dangerous product. All of this garbage is part of this broader digital trade agenda and has nothing to do with trade. And so this is basically just the latest version of corporations hijacking trade agreements to do bad things that would be really hard to get past in public.
And what are these companies asking the US to do specifically, and what mechanisms exist through our existing free trade agreement with South Korea that they can utilize to challenge the South Korean government on this?
The big tech companies are asking the US government to threaten to challenge the App Store anti-monopoly policies in Korea as violations of the US Korea Free Trade Agreement. And as well to threaten them with some kind of sanction or other kinds of economic pressure if these laws are allowed to stay on in the books. And number one, the US Congress is about to pass similar laws, there are bipartisan proposals just identical to the Korean law in both the House and the Senate. And number two, if those laws weren't here, and it wasn't a race to see who could pass them first, Korea did, then we shouldn't have laws like that, because we shouldn't have these kind of monopolies that are bad for consumers and bad for app developers that basically allow Apple and Google to harm both the consumer and the developer. And the notion that somehow it should be the US government's business to protect two mega-platforms, online monopolies is just obscene.
And you mentioned this just now. And you also mentioned it earlier with regards to the US. Are there other countries adopting similar measures, as I was in South Korea? And are there threats to those actions by big tech firms as well, I guess, in addition to the US that you mentioned?
Yes, so part of the reason we suspect that Google and Apple are being so fierce piling on the Korean policy is it is one of the first one that has been enacted in such a big country that basically sends a signal to the rest of the world of, "Oh, well, if they're doing it. We wanted to do that. Let's join." I mean, certainly, the US plays that role if the European Union does that. A lot of developing countries can get beaten up by these companies and frankly, by you know, the US government, but when a country like Korea does it well then the big tech companies are really in a swivel about it, because and that's when they call in the US to the EU to beat up the other developed powerful country, because the tech platforms themselves don't have the ability to just single-handedly bully their way into say intimidating the entire Korean parliament.
So my last question Lori is about the US response. So far, the US Trade Representative has not taken up this case and has not come out to challenge the South Korean government at the behest of Apple and Google. Why is it important that they maintain this position and not elevate these attacks, and maybe you could just reflect on the US government's posture towards this?
So this issue right now is in what's called an interagency process, that is to say a bunch of different US government agencies are weighing in and what the US position on this should be. And it is worthwhile, if you care about these issues, to leave comments in support of busting up the App Store monopolies with the USTR to mention it to members of Congress and tell them you support it because some other agencies like the Commerce Department, are basically flacking for the big tech corporations. The United States Trade Representative's office, his position has been basically, of course, they're not going to tolerate laws that discriminate literally are set up to go after US companies because they're US companies. But if there is a law that is neutral, ie just simply bans his behavior. And the reason that it impacts these monopolist is because while they're monopolist, they have an undue size, therefore, they're bigger, they're affected more. Those are the kinds of policies the US government should not go after. Those are antitrust policies. And we really urge the trade representative's office to stick to their principle of evaluating everything on the basis of what does it mean for working people? What does it mean, for consumers? It's been really refreshing to see a trade representative's office that isn't just like the Commerce Department still is thinking about what the big companies want. And so in this interagency process, because they're still talking it out, it really seems that the Trade Representative and that's Katherine Tai is the cabinet-level ambassador. USTR Katherine Tai it seems like she and her team have thought this through carefully and want the rule to be is there real discrimination or is this a legitimate policy? And there are some other agencies that would love to just go after this law because big tech wants it. And so you know, what we need to do is make sure that the good policy prevails because otherwise, you know, what are the implications? It's setting up a circular firing squad, because if we start this fight on a nondiscriminatory policy because some US companies don't like it, then you know, when we have a regulation here that impacts some other countries platform that is neutral, but it happens to impact them because they're a big player in the US, then it's going to come after us. And in the end, it's the consumers and the people who create apps. It's basically everyone but the handful of mega big tech platforms that end up losing under that scenario.
Rethinking Trade is produced by Public Citizens Global Trade Watch. To learn more, you can visit rethinktrade.org. You can also visit tradewatch.org. Stay tuned for more and thank you for listening.