PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

WTAS: “American Innovation and Choice Online Act” (S. 2992) and Small Business

By at 27 January, 2022, 2:10 pm

Many U.S. Senators voiced significant concerns about the “American Innovation and Choice Online Act” (S. 2992) during a January 20 Senate Judiciary Committee markup of the bill. None-the-less, the bill was voted out of committee. Many Senators stated that if their concerns do not get addressed, they will vote against S.2992 on the Senate floor.  As noted by various Senators – and voiced loudly by a variety of business and small business groups including SBE Council – the legislation did not receive a customary hearing before markup.

The impact of S. 2992 would be quite harmful for the economy and small businesses.

As Senator Patrick Leahy (D-VT) stated, S. 2992 would have “unintended consequences for small businesses.”

Senator Mike Lee (D-UT) noted that provisions within S. 2992 “could crush thousands of small businesses, and it could actually worsen the state of competition in online markets, and I know this is not the intent of the bill, but we’ve got to be very careful when we do this to make sure that we’re not creating more of the same problems that we’re trying to address.”

The small business community shares these concerns, and it is why various groups warned committee members about the need to engage with small businesses and hear their views about S. 2992 and its potential impact. The ramifications for startups, small businesses and entrepreneurs should have been fully understood before committee action on S. 2992.  That did not happen, but it should not stop Senators from engaging with the small business community on the future course of S. 2992 and other “big tech” legislation.

U.S. Hispanic Chamber of Commerce:

The consequences could “disproportionately harm small and minority-owned businesses.”

Letter to Senate Judiciary Committee Chairman Dick Durbin (D-IL) and Ranking Member Chuck Grassley (R-IA).

● We understand the need to regulate technology and social media platforms. However, we urge you to carefully consider the unintended consequences that any technology related legislation could have on the communities that depend on these channels to keep their businesses open and afloat. We believe that these consequences could disproportionately harm small and minority-owned businesses as we have adopted these technologies at a far greater rate than our non-Hispanic counterparts.

● Technology and social media regulation must not cripple our Hispanic small businesses, their entrepreneurs, innovators, job-creators, and customers. We have all come to depend on various technologies and social media platforms in order to survive. We believe that legislators must conduct the necessary research and outreach to arrive at a comprehensive solution that solves today’s problems without taking a lifeline away from our nation’s most vulnerable businesses and communities.  

Small Business & Entrepreneurship Council:

Creating market barriers is “a massive step backwards for small businesses.”

Letter to Senate Judiciary Committee Chairman Dick Durbin (D-IL) and Ranking Member Chuck Grassley (R-IA).

● Since our founding 27 years ago, SBE Council has ardently advocated for open access to markets – whether that be global markets, government contracting opportunities and more. Selling in big box stores was a highly limited and exclusive proposition for most small businesses, and reaching a large number of consumers was cost prohibitive – very expensive – through traditional advertising or other means for most small businesses. America’s technology platforms with their extensive reach, productive tools, and access to millions of consumers has been a game-changer – TRANSFORMATIVE – for many small businesses and people who want to launch a business.

● U.S. policy must continue to embrace and support digital connectivity and technological innovation/leadership across industry sectors. Stable and neutral policy (that does not pick winners and losers) is especially important now. At a minimum, the Senate Judiciary Committee needs to hear from affected stakeholders about legislation, such as S. 2992 and other legislation, that it plans to vote on. Technology and technology platforms are vitally important to small businesses and the future of U.S. entrepreneurship. SBE Council encourages open dialog and a more thorough vetting of the consequences of “big tech” legislation before moving forward.

Small Business Roundtable:

Let’s work together to find “a fair set of rules” protecting Main Street and customers while also “harnessing the power of tech and digital tools” for small businesses.   

Letter to U.S. Senate and U.S. House leaders.

● Millions of small businesses are successfully navigating the “Great Pivot,” and have leveraged tools and knowledge to modify business operations and sales to succeed. As we have noted in our research, much of that success is tied to taking businesses online and engaging in digital commerce in online marketplaces.

● The story here is not black and white. Writing a new set of rules in a vacuum doesn’t help entrepreneurship or small business. Neither does ignoring the fact that new rules are needed to build a more equitable economy than the one we had before Covid-19.

● As this next session of Congress moves forward, we encourage you to work together to find solutions that provide a fair set of rules that protect consumers and Main Street while also harnessing the power of technology and digital tools that has helped many small businesses survive and grow during a pandemic.

Coalition of Small Business Tech Groups and Community Leaders:

S.2992 would produce “unacceptable cybersecurity, privacy and national security threats” and small businesses would “bear the brunt of those risks.”

Letter to U.S. House and U.S. Senate Leaders on S. 2992 and its House counterpart, H.R. 3816.

● These bills seek to increase competition litigation by expanding regulation for a variety of platforms. Unfortunately, they would cripple the platforms small firms use as a launchpad at a time when small businesses need all the help they can get. On this front, small businesses and voters find alignment, as they both seek to fend off growing security and privacy threats and economic challenges amid an ongoing global pandemic and a fitful economic recovery.

● Unfortunately, S. 2992 and H.R. 3816 would prohibit many of the most valuable platform services small, innovative companies demand—and even offerings that some app makers rely on to do business—which would hurt small competitors, while benefiting some of the largest sellers with specific lobbying goals.

● In the retail context, S. 2992 and H.R. 3816 would demolish the platform service bundles, which benefit smaller sellers the most because they benefit more heavily from offloading the core overhead costs of competing. In fact, the legislation would disproportionately advantage the largest sellers on the platforms by raising costs for the smallest companies that threaten to outcompete them.

● S. 2992 and H.R. 3816 would dismantle the trust framework on smart devices by requiring software platforms to allow fraudsters, copyright thieves, malware, and security threats on their stores.

● As a result, S. 2992 and H.R. 3816 would directly introduce unacceptable cybersecurity, privacy, and national security threats to Americans through their own smartphones. Small companies in your states and districts bear the brunt of those risks, and the bills would force them to cede hard won success to larger rivals that can more easily overcome the costs and challenges of a threat-ridden marketplace.

Connected Commerce Council:

The bill “actually eliminates choices and opportunities” and “undermines the high-value benefits that small businesses gain from these platforms.” Competition and choices are thriving due to “evolving tools and availability of e-commerce options.”  

Legislative analysis on S. 2992.

● …the bill as written will actually eliminate choices and opportunities, including the tools that small businesses value most… proponents of the Senate legislation fail to understand how banning “self-preferencing” could completely change the way digital platforms support small businesses.

● Another S.2992 provision undermines the independence and consumer-friendliness of search services, which have always innovated in response to consumer demand. Search preferences benefit small businesses in many ways… If S.2992 means that Amazon cannot favor Prime sellers in Prime consumers’ search results, or that Google Search cannot favor Google Business Profiles that a small business manages for accuracy and efficiency, that would be absurd for consumers and would squarely undermine high-value benefits that small businesses gain from these platforms.

● But research documents that an overwhelming majority of Amazon sellers also sell on eBay, Walmart.com, Etsy and Target.com. Millions of small businesses, including Amazon sellers, also operate online stores powered by Shopify and WooCommerce. They do this because the evolving tools and availability of e-commerce options provide new opportunities to grow their businesses.

● If Congress really wants to help small businesses, it should pay attention to the risks of collateral damage resulting from so-called antitrust reform and protect millions that thrive with the support of technology digital platforms.

See SBE Council’s latest analysis on S. 2992: The Senate Takes its Turn at Destabilizing U.S. Tech Leadership.

 

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