As many California companies continue to struggle under the pandemic, members of Congress are pushing for antitrust legislation that would destroy digital tools and online services to support small businesses. While this misguided legislation targets big tech companies, consumers and small businesses will suffer.
The current package of antitrust laws in the House of Representatives, aimed at a select number of tech companies, would ban certain platforms from advertising their products on their own websites, break up integrated services offered by big companies and ban mergers of a certain size .
Californian companies are particularly vulnerable to this legislation. Our technology industry supports more than 1.8 million jobs and accounts for more than a quarter of America’s nearly $2 trillion innovation economy. For example: Many of the 2 million companies that use Amazon as a sales channel would lose customer access. Local restaurants would no longer appear on Google Maps or business reviews, as these features would be seen as unfair competition with competing services.
Golden State consumers would also suffer. In the past, antitrust policy has focused on consumer protection, including access to and costs of services. Currently, consumers on individual platforms have access to free built-in features like email, maps, shopping, and video streaming. These bills would shift the traditional focus of antitrust enforcement away from consumer protection and toward “corporate competition.”
Under this legislation, integrated services would be split and scattered across the Internet. Businesses would lose the economies of scale gained by bundling services. And consumers may face the reality of paying for services that are currently cheap or free.
Californian innovation would also suffer. Precluding mutually beneficial acquisitions of companies by other companies would make starting a new company less attractive. Founders would find it much more difficult to achieve a profitable exit for their startup. The result: fewer start-ups, low initial investments and a lack of incentives to start new companies, create jobs and innovate.
Amazingly, antitrust laws restrict only US companies, not foreign competitors. The legislation is aimed at a small group of American companies, all with a presence in California. It puts domestic companies at a dangerous competitive disadvantage compared to global competitors.
Ensuring a competitive playing field in US markets must remain an important goal of our economy. These calculations are based on the false premise that large corporations are inherently anti-competitive. In truth, many smaller companies rely on these larger companies for the platforms and services that enable entrepreneurs to build products and markets.
Imagine a craftsman selling handmade utensils on an e-commerce platform. The maker sells unique goods, while the platform also sells its own brand of paraphernalia. Everyone sells goods to consumers on the same website. The artisan is in a better position selling on the site than not because they have access to a global market that they would not otherwise have.
If Congress is serious about protecting fair competition, a better approach than the proposed legislation would be to strengthen agencies like the Justice Department and the Federal Trade Commission. Help them better perform their mandated roles in tracking anti-competitive behavior when it occurs. This measured approach would address inappropriate business activities when they occur, rather than prematurely banning certain business practices for fear they may not be competitive.
Business organizations across the state have risen to urge Congress to veto these bills because they would deprive US companies of their ability to offer integrated consumer products and services, ban mutually beneficial startup acquisitions, and take steps to break up our leading ones innovators to undertake.
Our Golden State has the largest conventioneer delegation in the nation. The delegation was tasked with protecting California consumers, businesses and innovators by rejecting flawed antitrust legislation. These bills are bad politics and politics. They risk impeding our economic recovery, harming consumers and undermining the competitiveness of California businesses.
Tracy Hernandez is the founding CEO of the Los Angeles County Business Federation. Ahmad Thomas is CEO of the Silicon Valley Leadership Group.