PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Targeting Big Tech: When Government Aims at the Big Guys, the Little Guys Usually Get Hit

By at 20 September, 2019, 6:09 pm

by Raymond J. Keating-

There’s nothing new about politicians attacking something they call “Big” – like “Big Oil,” “Big Pharma,” and now, “Big Tech.” It’s almost like certain politicians toss aside sound economics and policymaking in favor of playing political games in order to flex their legislative power or energize their respective bases.

There’s also nothing new about targeting “big” businesses with threats, regulations and taxes. However, the unfortunate consequence of these actions generally hit small businesses. Like storm troopers in Star Wars, politicians who fire off regulatory salvos have notoriously bad aim.

As for the current rage, federal regulators, Congress, state attorneys general, and the Trump administration are lining up against tech companies, such as Amazon, Google, Facebook and Twitter, in the name of antitrust.

In reality, of course, the tech arena is highly competitive, with ever-expanding choices for consumers, and dynamism and innovation pointing to an improved but unknown future. So, one is left wondering what about the politics of antitrust intrusions, and most troubling, the potential damage of such governmental overreach given that politicians are notorious for failing to understand the current state of markets and industries, never mind where they might be headed.

Indeed, to the extent that government intrusions divert resources away from productive investment and innovation, guess who ranks among those who would suffer?

That’s right, small business.

That is evident by the results of a new study from the Small Business & Entrepreneurship Council – The Digital Boost to Startups and Small Business: Online Advertising Delivers BIG Benefits. The report focuses on the impact of online advertising on small businesses. The survey/study makes clear the importance of online advertising in terms of creating substantial savings in time and dollars, as well as generating new opportunities, for startups and small businesses (also see SBE Council’s recent piece titled “Small Business and the Digital Economy: Online Advertising Fuels Startups and Boosts Small Business Growth”).

Listen to SBE Council president & CEO Karen Kerrigan’s interview about the report here, and the policy implications.

Among the findings:

● “By using online advertising, entrepreneurs report that employee hours saved each week average 10.93 hours. On top of that, business owners report that online advertising gives them more of their own time back, saving on average 9.28 hours each week, which is then reallocated to more productive uses in their business.”

● “According to our estimates, employee and owner hours saved as reported by small business owners in the survey combines to an estimated $3.1 billion each week, and $162.8 billion annually for America’s small businesses. Yes, those are big savings. And these are critical resources that can be re-invested back into growth-producing opportunities for their firms.”

● “Not surprisingly, small business owners are investing these savings of time back into the business: 42% have searched for or are investing in new growth opportunities, 31% have invested in new equipment to improve competitiveness, 29% have increased wages or benefits for employees, and 22% increased the size of their staff.”

● “73% of small businesses stated that without online advertising ‘it would impact my ability to effectively market my products and services and to grow my business.’”

● “90% of startups said online advertising provided their business with an affordable option to launch and/or grow my business, and 86% felt online advertising is important to business survival and growth.”

And by the way, what platforms are we talking about here for small business online advertising?

As reported: “Facebook is the most commonly used platform among small businesses advertising online, with more than 8 in 10 reporting using the social network in the past six months. Meanwhile, more than 4 in 10 online advertisers have used Google Ads (44 percent) and Instagram (42 percent). Twitter was the destination of nearly 3 in 10 (28 percent) small business online advertisers.”

Whenever government starts targeting “big” business for potential or actual regulation, it’s never a neat and tidy undertaking. Unfortunately, it usually means misguided politics trumping sound economics, and the little guy, including small businesses, paying a big price.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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