By Doug Kelly
Recent news reports say the White House backs “the bipartisan progress being made in Congress” in advancing a series of anti-innovation bills. So-called antitrust reformers were elated about this nod to their efforts to date.
Still an open question, however, is how much public support and political capital the White House will spend to turn these bills into law. And when the White House really digs into the many national security and economic problems these anti-innovation bills contain, its final verdict may be far different than its current nod in support of “progress.”
The antitrust bills being debated target America’s biggest, most innovative technology companies, with the goal of breaking them up, restricting lines of business, or prohibiting acquisitions. There are four main problems with these bills:
1) The anti-innovation bills will hurt our national security and benefit our foreign adversaries, especially China.
China’s grand ambition is to be the world’s leading power. To accomplish that, China knows it must erode our technological edge, both by acquiring core technologies and increasing its own capacity for innovation. Even President Xi himself admitted that China’s low-level of domestic innovation is its “Achilles’ heel” of its global plans. China is using every any means available, including trade, acquisitions, and outright theft of more than $500 billion in intellectual property each year from the United States.
But instead of passing legislation to check China’s ambitions and aggressions, the anti-innovation bills would have a grave impact on U.S. national security, including by: 1) risking the misuse of U.S. data and intellectual property by foreign actors, 2) reducing the effectiveness of data streams to law enforcement, 3) weakening efforts to combat foreign influence and misinformation, and 4) giving foreign companies favorable treatment without requiring it in kind. For example, one of the bills would effectively ban large U.S. technology companies from making any further acquisitions. This would not only reduce investment opportunities for rising U.S. tech startups, but it also would pave the way for China’s tech giants to fill the void.
2) The anti-competition tech bills will hurt our economy, especially small businesses, startups, and local innovation ecosystems.
America’s most innovative large technology companies have helped millions of small businesses thrive and grow. Amazon, Google, Apple, and Meta are some of the most sophisticated and effective marketing platforms ever created, and small companies can tap into these at little or no cost to find new customers and create more jobs. Technology is also reducing the costs of starting and operating a business, and tech protects employers and their customers’ information from cyberattacks. Nearly 50 percent of all small businesses are affected by cyberattacks, costing an average of $200,000 per year.
But Congressional “reforms” could force America’s most innovative companies to stop providing some of these services or could make services more expensive. That might be acceptable for deep-pocketed incumbent companies, but for America’s small and midsized businesses, increased costs have a direct impact on employment levels and survivability.
Additionally, bills to restrict acquisitions by large technology companies could severely reduce the incentives and ability of entrepreneurs to start and grow the next generation of great U.S. companies. The bills would hinder many startups from securing additional rounds of financing, and even if they were to secure financing, their value will be lower because certain acquirers will be out of the market. Worse, some antitrust bills apply only to the largest, most competitive technology companies in the U.S. and not foreign adversaries. This means Chinese and Russian companies could remain active in the U.S. merger and acquisition space, acquiring critical startups with cutting edge technologies like facial recognition.
3) These bills will hurt consumers.
The presence of Amazon, Apple, Google, and Meta in the market have greatly benefited consumers. They deliver free (Meta/Google) or low-margin products (Amazon/Microsoft) to consumers, and they all compete among each other in various markets. This means consumers benefit from lower prices and a wider variety of goods and services that are easier to obtain, consumers have greater confidence when purchasing, and all-in-one features on platforms ease and speed transactions.
But the bills in Congress could eliminate many consumer-supported features, reduce choice and selection, slow delivery times, and ultimately increase prices. Yet, instead of focusing on protecting American consumers, many in Congress want to rewrite antitrust laws and regulations to protect the business rivals of America’s innovators, including foreign competitors. That’s a misguided approach. For decades, antitrust law has used the “consumer welfare” standard to ensure that judges and government agencies focus on how business conduct affects real people, rather than favored political groups or individual competitors. If technology companies are delivering innovative, high-quality products at low prices, then the government should not interfere.
4) Hurting technology companies is a low-priority item for voters.
Policymakers pushing heavy technology regulations are out of touch with voters. Polling in 32 frontline districts found that just 19 percent of voters said regulating technology is their top priority. Instead, they want Congress to focus on: national security (91 percent top-major priority, 61 percent top priority), jobs (88 percent top-major priority, 52 percent top priority), and health care (86 percent top-major priority, 58 percent top priority).
Furthermore, voters know that breaking up America’s most innovative companies has negative consequences. They say that breaking up these employers will make the U.S. less economically competitive (83 percent), more vulnerable to cyberattacks (87 percent), and less able to conduct counterterrorism efforts because would-be terrorists will be more dispersed across multiple platforms, making it more difficult for law enforcement to find them (84 percent).
The bottom line: Instead of rushing forward to pass harmful bills that could have lasting negative, unintended consequences, Congress and the Biden Administration should learn from the past. American manufacturing used to be the envy of the world. But then Congress passed a series of bills that devastated this sector, costing our country nearly five million manufacturing jobs over two decades, with many of those jobs shipped to China. During those debates, lawmakers repeatedly said these changes would be good for America and good for jobs. They couldn’t have been more wrong.
Technology is too important for Congress to get it wrong again. Slow down the process. Fully understand the myriad of challenges with this legislation. And realize that current antitrust law and the market is working as it should — protecting consumers and rewarding innovation.