PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Small Business Owners and FTC Diverge on “Big Tech” Antitrust Attack

By at 3 January, 2024, 9:35 pm

by Raymond J. Keating –

It’s hard to think of a more activist administration over the past half-century when it comes to antitrust regulation than that of President Joe Biden’s. And that’s saying a great deal because the two previous administrations weren’t exactly sitting on the sidelines when it came to antitrust activism.

But with the likes of Lina Khan heading up the Federal Trade Commission (FTC), American entrepreneurs, businesses, and consumers are experiencing a breathtaking overreach by government on the antitrust front. What does that mean? It means that political appointees are overruling entrepreneurs, businesses and consumers operating in the competitive marketplace. Through a variety of actions, FTC regulators and trying to seize control over how entire industries function – consider the assaults on tech firms like Amazon, Alphabet, and Facebook, for example – and working to nearly shut down mergers and acquisitions in the U.S. economy. (See SBE Council’s recent statement and more here.)

One of the pillars of the Biden administration’s antitrust attacks on leading U.S. technology businesses is that somehow these tech leaders are hurting small businesses. But SBE Council’s latest “Small Business Check Up Survey” makes clear how ridiculous, and economically dangerous, that assumption is. Again, small business owners understand the reality of how the economy works. For example, with respect to Amazon:

● 65 percent of small businesses purchase products or goods on the Amazon platform, and 89 percent of small business customers are highly satisfied with Amazon’s service.

● Among the top reasons that small businesses purchase from Amazon were convenience (73 percent), speed and reliability (73 percent), a wide variety of choices (64 percent), and low or fair prices (61 percent).

● Small businesses, however, do more than just purchase products via Amazon, 22 percent use Amazon to sell their products. In fact, as SBE Council has noted, “more than 60 percent of the products sold in Amazon’s store are sold by independent sellers, that is, mostly small businesses. By the way, this 60 percent of sales from small businesses is up from 40 percent on Amazon a decade ago.”

● 93 percent of small business sellers on Amazon agree that Amazon provides them with significant support, and 89 percent agree that they pay a fair price for using Amazon services and that helps them stay competitive.

● This latest “Small Business Check Up Survey” found that the median per product or per-good profit margin for small business sellers was a notable 16.2 percent, with 45 percent reporting higher profit margins on Amazon than other sales channels. That’s more good news for small businesses.

● Also, Facebook ranked as the most important social media and technology platform for branding and income generation among small businesses (61 percent), followed by Instagram (40 percent), Amazon (38 percent), YouTube (34 percent), and LinkedIn (25 percent).

Looking at these survey results, and the simple economic fact that businesses only gain market share under free enterprise by providing value to others, should make clear that the Biden administration’s antitrust attacks are all about economic ignorance and politics. Indeed, it’s important to keep in mind that a robust market economy involves both competition and cooperation between enterprises, including between small and large businesses.

Rather than seeking to undermine U.S. entrepreneurial success stories, perhaps policymakers would do better by reducing government barriers and costs so that more entrepreneurs and investors are able to create and build successful businesses.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist and The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist.

 

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