Amidst the worst economic crisis since the Great Depression – when our nation’s leaders should be boosting our economy and helping small businesses – Rep. David Cicilline has lost his way. Rather than working to expand the Digital Safety Net that has helped millions of American small businesses survive during the COVID pandemic, the House Subcommittee chairman is trying to fundamentally change how the digital economy works, which will instead harm those small businesses at a time when they really need more help.
The report of the House Antitrust Subcommittee that Rep. Cicilline chairs is fundamentally flawed in its understanding of how the digital economy works and its policy recommendations. At the report’s core, Rep. Cicilline and his Democratic colleagues recommend dismantling America’s leading technology companies because they are too successful. If by some tragedy of Congressional process these proposals ever became law, the rules of modern American business would be rewritten and our digital leadership ended. That may be cathartic for Rep. Cicilline, but it would undermine our leading industry, our largest employers and the extraordinary partnership between digital platforms and small businesses nationwide.
Research and common sense tell us that smart use of digital tools and online marketplaces drives small business success. In the best of times, businesses that use affordable, scalable small business tools grow faster and have higher revenue and profits. In a pandemic, access to these tools forms a Digital Safety Net and is often the difference between staying in business and bankruptcy. By attacking Amazon, Facebook, Google and Apple, the Cicilline Report is aimed directly at the Digital Safety Net.
At the heart of Rep. Cicililne’s recommendations is a “single-line of business rule” for digital platforms and marketplaces. This “Glass-Steagall for the Internet” proposal may be clever branding, but really it is a bad analogy built on faulty mythology twisted into bad public policy. The legend was that banks’ bad investments using consumer deposits caused the Great Depression, and the Glass-Steagall Act of 1933 was intended to prevent banks from ever again making risky speculative investments with consumer deposits. But today’s digital economy is not causing a Depression or the COVID recession. America’s digital platforms are delivering billions of dollars of value to consumers and small business and justifiably have been embraced as a result. There is no scandal and no consumer harm, and certainly no reason for Congress to destabilize the digital economy and the Small Business Digital Safety Net.
Another absurd proposal would ban the owners of digital marketplaces from showing any preference for their products. This is laughable. Grocery and department stores have been selling white label and house brands alongside third-party products for decades. Are we also going to require grocery stores to place store-brand cereal on the top shelf where consumers are less likely to find it? Or require Walmart to put its many house brands in the back of the store? Why would digital marketplaces be subject to different rules?
These are just the tip of the iceberg in a lengthy report that includes the most dangerous set of policy recommendations for American small businesses in our nation’s history. The wrong regulations enacted at the wrong time, by legislators who clearly do not understand the digital ecosystem, will have serious consequences that reverberate through our fragile pandemic economy.
Forcibly breaking apart digital platforms will eliminate the gains that small businesses have enjoyed for nearly a decade. Applying outdated, round peg-square hole proposals to the digital economy will undermine the Digital Safety Net that has proven indispensable to small businesses.
This debate cannot just be about the “big” in Big Tech; it must include Main Street and the millions of small businesses that are the backbone of our economy and will drive our economic recovery. To ignore small businesses is to pull out the Digital Safety Net from underneath them at the worst possible time.