OPEN LETTER TO CONGRESS: Stability of the Digital Ecosystem is Vital to Small Businesses

By SBE Council at 12 July, 2022, 9:11 am

Untested and colossal “anti-trust” regulatory interference puts small businesses at risk

Small business owners and entrepreneurs have multiple challenges in the current economy. The policy solutions they want from President Biden and Congress do not involve big government interventions, but ones that incentivize businesses to invest and innovate. They want policies that provide relief from tax and regulatory burdens, which have intensified small-business cost pressures during this inflationary period. Throughout the pandemic and up until now, technology platforms and digital tools have been critical assets for small businesses, not millstones holding them down as “big-tech” antagonists claim.

That is why small business owners and startup entrepreneurs are quite wary of big-tech legislation, such as the “American Innovation and Choice Online Act” (AICOA – S. 2992, and its U.S. House counterpart H.R. 3816), as well as various actions the federal government may take to arbitrarily punish America’s biggest technology leaders. AIOCA would vastly change how a handful of large U.S. technology companies are allowed to operate, which would lead to the likely gutting of valuable digital services used by small businesses, or adding new costs to some of the free or low-cost tech services and tools that entrepreneurs and their employees use every day.

The results of SBE Council’s new “Small Business Policy and the Economy Survey” make it clear that small business owners know what’s at stake if far-reaching bills such as S.2992/H.R. 3816 were advanced into law, and what the intended and unintended consequences would mean for their businesses.

Downstream Impact of Big-Tech Legislation is a Terrible Deal for Small Businesses

In our survey, 75% of small business owners say that digital tools and platforms are important to the success and growth of their businesses. Given small business worries about inflation, the possibility of a recession (88% say one is coming), and disorderly supply chains, the last thing entrepreneurs need is disruptive policy that will slow sales and hurt revenues – 55% express worry that legislation and regulatory efforts targeting big tech would negatively impact business sales and operations, and the broader economy.

Small Business Competitiveness Would Suffer

Big-tech regulatory legislation such as AIOCA is being advanced in the name of competition – that is, to make various sectors more competitive. But small business owners know that excessive and unneeded regulation generally ends up hurting small-business competitors and consumers. Sweeping regulatory initiatives mean higher costs for their businesses, steeper barriers to entry, higher prices for consumers, and LESS innovation and choice. Not surprisingly, small business owners are keenly aware of this dynamic. Moreover, 24% of small businesses say they may be forced to closed if such legislation were advanced into law. How is that supposed to be good for competition?

Startups Also Wary of Breaking Up U.S. Tech Platforms

Belying the premise that there’s not enough competition in the economy (which is driving anti-trust legislation such as AIOCA and other anti-trust/regulatory efforts in the federal government), new business applications are at historical highs. According to the Census Bureau, 5.4 million people filed new business applications in 2021, an increase of 53% from 2019 and the most of any year on record. These pandemic startups are a bright spot for our economy and its competitiveness. They also happen to be highly reliant on technology and technology platforms, as noted in our “Pandemic Startups” survey released in early spring. These startup entrepreneurs are quite wary of big-tech policies – 61% of startup entrepreneurs expressed concern that that these anti-trust/regulatory actions would negatively affect their businesses.

In fact, the availability, affordability and efficacy of these tech tools and platforms were cited as critical to the launch of these startups.

Small Business Message to Congress: Focus on Our Priorities

According to both our surveys, the priorities of small business owners and startups seem to be falling on deaf ears in Washington. Not surprisingly, “inflation” tops the list for both, along with tax relief and simplicity, affordable health coverage, supply chain issues, cybersecurity, less regulation, interest rates, the labor shortage and access to skilled workers, and access to capital. Unfortunately, only 5% of startups say that Congress is focusing on policies that “are helping the economy and small businesses like mine.” And only 9% believe President Biden’s policies “make it easy to start or grow a business.”

In addition, small business owners in our June survey put breaking up and regulating big-tech companies at the bottom of the list when provided a list of choices.

If Congress and President Biden want the economy to stabilize and grow, and for inflation to reverse course, policies must focus on the pain points of startups and small businesses. Big-tech legislation and radical regulatory intervention are not priorities for our nation’s small businesses. Moreover, these efforts would trigger risky and costly disruption within the digital ecosystem that would fall disproportionately on startups, small businesses and their employees.

Small business owners and entrepreneurs want Congress and President Biden focused on the key matters that are dragging down the economy and the financial viability of their firms. SBE Council urges you to do just that. Of course, we appreciate all members of Congress who are addressing these key issues and working to support the innovative capacity, competitiveness and reliability of America’s digital ecosystem. The stability of our digital ecosystem is central to small business health and success.

Thank you for support.