New York Senate Passes Antitrust Invoice Focusing on Tech Giants

The New York State Senate passed bill Monday making it easier for plaintiffs to win antimonopoly lawsuits in the latest state effort to contain large tech companies in the absence of Congressional action.

The antitrust law was rejected by corporate groups and supported by unions and other critics from corporate giants such as Amazon.com Inc.

and alphabet Inc.’s

Google. In order to become law, it must also pass the state parliament and be signed by the governor.

The 43-20 party vote on Monday marked a gradual victory for advocates of tougher antitrust laws who will seek to use them as a stepping stone for tougher laws in other states and at the federal level.

“We have a problem in this country. The problem we have is that there is tremendous market power in very, very few hands, ”New York State Senator Michael Gianaris, a Democrat and main sponsor of the law, told a virtual press conference Monday. “Small start-ups and medium-sized companies have no chance to grow and be innovative.”

Opponents of the bill said it would lead to a spate of class action lawsuits.

“It’s disguised as anti-big-tech, but the reality is that this will attract a lot of small businesses,” said New York State Republican Senator George Borrello. “It will create unnecessary litigation and have a negative impact.”

Mr Gianaris said he will keep fighting for New York law if it doesn’t go into effect during the current session of the state legislature, which ends this week. No further legislative days are planned for this year, but more could be added.

If the bill is not passed this year, it would have to be reintroduced next year. The office of New York Governor Andrew Cuomo had no immediate comment.

Congress is considering amendments to the federal antitrust law, but that effort has not made much headway this year as lawmakers focus on other priorities. States like Maryland and Florida have passed new laws targeting powerful tech companies.

The proposed New York law has a broader goal. It would make it illegal for a company with a dominant position to conduct any business to abuse that dominant position. A company would generally be considered to be dominant if it had a market share of more than 40%.

The Amazon headquarters in Seattle. The antitrust law was rejected by corporate groups and supported by unions and other critics of companies like Amazon.


Photo:

David Ryder / Getty Images

This is a more plaintiff-friendly standard than current US federal and state antitrust laws. Generally, under these laws, a company is considered a monopoly if it controls two-thirds of a market and its conduct is not considered to be anti-competitive unless it can be shown to harm consumers.

Antitrust lawsuits against big tech companies would be more justified in New York when the bill goes into effect, said Eleanor Fox, a law professor at New York University.

“It’s easier to prove that the company has sufficient market or monopoly power, and it’s easier to prove that the behavior is illegal. The big tech cases are challenging both elements, ”she said.

Lauren Weinstein, a partner at MoloLamken LLP, said New York law is similar to European laws, which give competitors an opportunity to file antitrust complaints against larger competitors.

“Certain aspects of Amazon’s business, such as price cuts, are not harmful to consumers, but can be quite harmful to competitors,” she said.

Under the proposed law, companies could be considered dominant if they have “unilateral wage-setting powers” or contractual provisions that prevent workers from switching from their current employer to a competitor.

The Teamsters union in New York supported that. Union member and employee of United Parcel Service Inc., Anthony Rosario, said Amazon’s dominance in online retail allows Amazon to demand terms that degrade delivery workers’ working conditions and wages.

“Where do you draw the line between what a company can do or how much power a company can have?” He said.

Supporters of the bill include longtime critics of Google’s market power from Alphabet Inc., such as local search provider Yelp Inc.

and music website Genius Media Group Inc.

Amazon and Google did not have an immediate comment.

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Lev Ginsburg, senior director of government affairs at The Business Council of New York State, a trade association of approximately 2,400 members including Amazon and Google, said, “We essentially punish success and prohibit all kinds of ordinary pro-competitive behavior.”

New York law would only apply within its boundaries, although Mr Gianaris said that “no industry or market players, especially the big ones that are not present in New York.”

Other states have taken different approaches. Maryland enacted a gross income tax on digital advertising revenue, with proponents saying online businesses have become dominant with the state’s infrastructure without paying their fair share.

Florida passed law preventing social media companies from banning political candidates’ accounts. This measure also empowered the state to put companies that violate the law on a list of antitrust violators and prevent them from contracting with public institutions.

Corporate groups have challenged both Maryland and Florida laws in court, arguing that they are unconstitutional.

Write to Ryan Tracy at ryan.tracy@wsj.com

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