Congress is ignoring small businesses on tech antitrust

by | Jul 14, 2022

 


Rob Retzlaff

For years, small businesses nationwide have raised alarms about misguided legislation targeting America’s biggest online companies – Google, Facebook, Apple, and Amazon. But, despite the highly valuable and beneficial tools and services these platforms provide small businesses, Sen. Amy Klobuchar (D-MN) and her colleagues supporting the American Innovation and Choice Online Act (AICOA /S.2992) don’t seem to hear small businesses’ concerns. Frankly, it’s getting ridiculous.

I have met with hundreds of small business leaders from across the country, including many in Florida. I heard their fears during COVID-19 when lockdowns threatened businesses and livelihoods, and I hear their frustrations today about inflation, supply chain issues, and over-regulation. I’ve also heard their exhilaration about the entrepreneurial opportunities of e-commerce and the benefits of affordable marketing and digital advertising.

I hear from the party rental company that barely made ends meet while advertising in the Yellow Pages. Once they started advertising online, their business grew 900% annually, could compete with big-box retailers and national party rental companies, and withstood the uncertainties of the pandemic.

I hear from the Iowa-based inventor of organic body and pet care products. He knows that Amazon’s marketplace launched his business to a whole new level; and that he benefits tremendously when Amazon fulfills his orders and guarantees product delivery in two days or less.

I hear from businesses across rural America that have embraced e-commerce and now reach customers far beyond their small towns. Our latest research documents that online web stores and marketplaces are the leading sales methods for rural small sellers, compared to brick and mortar and wholesale methods as the leading methods for all small sellers. In fact, for rural sellers in Florida, the revenue they generate from online marketplaces makes up 26 percent of their total revenue, compared to 17.5 percent for small sellers generally.

Despite the clear benefits the digital ecosystem provides, some in Congress seem to believe that if it isn’t broke, it still needs fixing. Sen. Klobuchar recently said, “[w]hen dominant tech companies exclude rivals & kill competition, it hurts small businesses.” Lead sponsor of the House companion bill (H.R.3816), Rep. David Cicilline (D-RI 01), said that the legislation will “help ensure lower prices and greater choice for consumers.”

But consumers clearly choose to use free Google Maps and Instagram, and small businesses love free Google Analytics and Google Trends. Small sellers on the Amazon Marketplace use Fulfillment-by-Amazon (FBA) because it is 30% cheaper than fulfilling orders on their own. In reality, these bills would produce higher prices, a more complicated digital ecosystem for small businesses, and more clutter for consumers.

It’s no surprise that H.R.3816’s co-sponsor, Rep. Ken Buck (R-CO02), recently admitted that he doesn’t “know anything about antitrust law.” Perhaps that’s the problem with these proposals. Sen. Klobuchar and her colleagues are blinded by “big is bad” myopia and don’t understand that network effects are powerful and highly beneficial to small businesses that can sell their products and services worldwide. The bill’s proponents are hellbent on restricting four companies’ growth by forcing them to break apart integrated services, increase costs, and hinder them from continuing to innovate. It’s no wonder that 9 out of 10 small businesses worry that legislation and new regulations would make digital tools and services more expensive and less valuable.

In the modern global economy that small businesses operate in, sometimes bigger is better. Large digital platforms invest billions of dollars in R&D to bring small businesses powerful, affordable tools. These companies have extraordinary scale that helps keep prices low for consumers and continues to unlock opportunities for small businesses that help them grow and thrive in their local communities.

Forcing tech companies to change how they operate and dis-integrate products and services so subpar products and services can compete is unfair to small business customers and devalues American ingenuity and hard-earned success. That policymakers cannot see, or choose to ignore this, is truly unfortunate. If Congress rejects these bills and focuses on issues that actually matter to small businesses and the digital economy, they will actually help small businesses instead of hurt them.

Rob Retzlaff is the Executive Director of the Connected Commerce Council (3C), a non-profit organization representing digitally-empowered small businesses nationwide.

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