Small Businesses Face Threat From Antitrust Bill
Written by Javier Palomarez, President and CEO of the USHBC. This article can also be viewed on Inside Sources.
Senate Majority Leader Chuck Schumer is working with Sen. Amy Klobuchar to bring her antitrust bill — the American Innovation and Choice Online Act — to a floor vote sometime this summer. The bill targets companies that operate online platforms and marketplaces because they’ve reached a specific size — without evidence of anti-competitive behavior or consumer harm.
But economists have found that the legislation could be disastrous to small businesses and consumers.
After struggling to garner support, Klobuchar released a revised version of the bill in May to address the significant concerns raised by her colleagues during the Senate Judiciary markup in January. Klobuchar has claimed the bill “will level the playing field for small business and benefit consumers.” Yet neither she nor the other backers of the legislation have conducted any meaningful economic analysis to support these assertions.
Instead, a recent study by NERA Economics Consulting shows these bills will cost the economy up to $319 billion. If companies like Google, Meta, Facebook, Amazon and Microsoft are forced to “structurally separate,” or break up, they will incur unavoidable increased operating costs to comply with the bills — forcing them to raise prices to stay profitable. Many of these costs would be borne by small- and medium-size businesses in the form of higher prices or the loss of free services, like Amazon Prime’s two-day delivery, Google Search’s integrated Google Maps and Google Workspace options. These tools aren’t just convenient; they enable small- and medium-size businesses to reach millions of consumers affordably.
The NERA report also warned that in the next five to 10 years, the bill would affect at least 13 additional companies that are already close to the proposed size thresholds, including Visa, JPMorgan Chase, Mastercard, Bank of America, Comcast and AT&T. Thanks to Klobuchar’s new revisions, however, these companies can breathe a sigh of relief for now. The latest version of the bill explicitly exempts big banks, credit card and telecom companies — setting its sights squarely on Amazon, Google, Meta, Facebook.
This isn’t the first move of this kind by Klobuchar. Last year, she introduced a competition bill that exempted Target — which happens to have its headquarters in Klobuchar’s home state of Minnesota.
If the bill passes, foreign companies will be the real winners, especially in countries like China and Russia. The legislation targets domestic firms with just tens of millions of American users. Still, it does not affect foreign platforms until they have more than 1 billion users. This means a U.S. business could be forced to break up, while a foreign company almost 20 times as large would not be — ultimately affecting U.S. jobs, market share and competitive standing.
Why isn’t Senate leadership standing firm with American innovators, workers and business owners? Consumers and businesses can’t afford the unintended consequences of ill-conceived legislation as they battle skyrocketing energy costs, historically high inflation and a COVID recovery. Lawmakers in Washington need to focus on fixing the real problems facing Americans rather than wasting time inventing new ones threatening our economy.
