Anti-Tech Legislation Would Slam Small Businesses With $100,000 “Digital Economy Tax”

Washington, DC (July 13, 2022): A new study estimates that the American Innovation and Choice Online Act (AICOA / S.2992), spearheaded by Sen. Amy Klobuchar (D-MN), would cost millions of small businesses nationwide on average more than $100,000 each during the first five years after the law takes effect. The report by Dartmouth College economist John T. Scott, a longtime scholar of industrial economics, shows that anti-tech legislation targeting Google, Amazon, Meta and Apple would cost small businesses a total of roughly half a trillion dollars, which equates to more than $1,700 in monthly revenue. The study was published by the Data Catalyst Institute (DCI) and commissioned by the Connected Commerce Council (3C).

The AICOA would prohibit the above-mentioned companies from so-called “self-preferencing,” a common business practice where companies promote their own products and services on their platforms. This effectively would break apart integrated services like Amazon Prime + Fulfillment-by-Amazon and Google Maps + Google Search. Other companies, however, would not be subject to the same prohibitions. 

“By forcing large digital platforms to disaggregate affordable advertising and marketing services that millions of small businesses utilize, the legislation would cause immediate and substantial harm to small businesses nationwide,” said Professor Scott. “Legislative destruction of very effective services will force small businesses to use more expensive and less effective alternatives, and that will hurt individual businesses and our economy broadly.”

“Small businesses face dire times, with inflation, skyrocketing prices, and a recession looming,” said Rob Retzlaff, 3C Executive Director. “Yet, Sen. Klobuchar and Rep. Cicilline are so hellbent on restricting four companies that they are willing to wreak havoc and massive damage on small businesses and our economy. They clearly don’t understand how integrated services from large online companies help small businesses grow and save money. If AICOA passes, the Digital Economy Tax will be a skunk in our economy for many, many years.”