Why Aren’t Policymakers Listening to Small Businesses on Anti-Tech Legislation?

Over the past two years, there has been a forceful effort by a coalition of unusual parties that have been working to completely rewrite America’s antitrust laws and upend the digital economy, hurting small businesses in the process. Progressive members of Congress seem hellbent on punishing success, conservatives claiming private entities that remove hateful or inaccurate information from their platforms violate the first amendment, and NGOs receiving millions in shadowy “foundation money,” all seem to believe big is bad no matter how much it saves consumers and small businesses. 

Over the last year, 3C has published and sponsored several research studies on the impacts proposed anti-tech antitrust legislation would have on small businesses and surveyed thousands of businesses about the important role digital tools play in their businesses. According to recently published reports, proposed anti-tech legislation would cost American small businesses approximately $500B in sales within the first five years after the legislation becomes law. This legislation (if passed) would amount to a “digital economy tax” on small businesses of $1,712 per small business per month.  In addition, more than 30,000 small business leaders and advocates have sent letters to their members of Congress urging them to consider the unintended consequences to small businesses from the proposed antitrust legislation. 

In their myopic fervor to create more “competition” for billion-dollar companies against trillion-dollar companies, the mountain of evidence of small business harm and opposition has largely gone unheeded, no matter how much it’ll cost small businesses. 

Below is a recap of 3C research findings that should be considered when discussing Congress’s anti-tech bills (S.2992 – American Innovation and Choice Online Act / H.R.3816 – American Choice and Innovation Online Act).

Digital tools are widely used and continue to unlock opportunities for small businesses

• Digital tools help level the playing field for small businesses and disproportionately help minority-led businesses drive more revenue and create more jobs. 85% of Hispanic-led and 83% of Black-led small businesses said digital tools increased their businesses’ ability to collaborate, work efficiently, be more agile and shift strategy in response to changed circumstances. (Digital Tools Continue To Unlock Opportunities For U.S. Small Businesses, Feb. 2022).  
• Online marketplaces help small sellers scale, save and grow, with nearly two-thirds (64%) reporting that marketplaces help their business compete with larger retailers, with 50% reporting significant savings ($20,000 or more annually) from using integrated tools and services. (Small Business Sellers Value Online Tools and Marketplaces, May 2022) 
• Small businesses use several different sales methods to sell their products, but online sales methods are disproportionately more important to rural sellers than small sellers generally. For rural small businesses, online sales account for 56% of their total revenue, and thanks to these online sales methods, 46% of sales are made outside of the sellers’ rural area.  In addition, a third said online marketplace and web stores are the most effective method for selling outside their geographic area. (The Importance of Online Sales Methods to Rural Small Sellers – Connected Commerce Council, June 2022).

The significant cost to small businesses

• Proposed anti-tech legislation would cost small businesses $500B in sales in just the first five years after the legislation becomes law. This legislation (if passed) would amount to a “digital economy tax” on small businesses of 5.2% of their sales, or an average of $1,712 per small business per month. (Estimates of Harm to Small Business Retailers from Antitrust Legislation Directed at Large Digital Platforms, July 2022). 
• Anti-tech legislation would harm small businesses and startups that use large tech platforms to reach customers, operate more efficiently and sell their products to run and grow businesses. Specific provisions of the legislation would lead to increased costs to develop products and services, increased costs to reach or service their customers, and reduced customer demand and revenue. How Populist Antitrust Legislation Would Harm the U.S. Tech Startup Ecosystem, July 2022).

Small businesses’ actual policy priorities

• The top concern for small businesses across the country is inflation, not tech. 60% of small businesses believe inflation is the most critical issue facing them right now, followed by gas prices (51%), COVID (32%), and supply chain issues (31%). Congress Isn’t Aligned with Small Business Priorities, May 2022). 
• In contrast, only 7% of small businesses consider restricting large tech companies a top priority, and 87% worried that Congress’s anti-tech legislation would make small business digital tools more expensive and less useful. (Breaking Integrated Digital Tools and Services Hurts Small Businesses, June 2022).

When asked to choose the top three issues the President, his Administration, and Congress should be most focused on, access to capital and small business regulatory burden were 2.9X and 2.4X more important than restricting large tech companies. Even consumer data protection and privacy ranked higher than increasing regulation on large tech companies to small businesses. (As Small Businesses Worry About Supply Chains and the Economy, Congress Pushes Wrongheaded “Digital Disruption” Instead, June 2022).