By: Michael Petricone, senior vice president of government affairs, Consumer Technology Association (CTA)®
On Monday, the House Judiciary Committee’s Subcommittee on Antitrust, Commercial and Administrative Law releases its long-awaited report about online competition. We hope the lawmakers responsible for this report have found what we know to be true about our vibrant U.S. technology sector – it’s the reason for America’s global innovation leadership and powers our economy. To undercut our nation’s “crown jewel” companies would take our competitiveness out at the knees.
American platforms are the world’s default choices for communications, commerce and entertainment. Our country hosts the world’s most vibrant startup economy. No wonder entrepreneurs across the globe dream of coming here and starting their businesses within our borders.
Much of this extraordinary success is due to America’s pro-innovation competition policy, putting consumer welfare above all else. Our leading technology companies have fulfilled and exceeded this mandate, improving millions of lives while providing extraordinary and cutting-edge services at low or zero cost.
These services have been critical during the pandemic. U.S. tech platforms enable us to work, our children to learn and our kitchens to be stocked—all without leaving our homes.
More, the pandemic has shown the competitive dynamism of the American internet marketplace, as new consumer needs create openings for entrepreneurs. New platforms such as Zoom, Parler, Houseparty and Clubhouse have gained millions of users. Meanwhile, the surge in online shopping has boosted e-commerce companies from large retailers to upstarts like Instacart, Shopify and Etsy.
America’s tech companies are the engine of our economy. The industry is responsible for more than 18 million U.S. jobs and represents 12% of U.S. GDP. Amazon alone has created more U.S. jobs than any other company over the past decade. These companies are ambassadors for the United States, promoting the creativity of our culture and our message of free speech and free markets.
The global success of our tech superstars props up the pension and retirement accounts of tens of millions of Americans, especially in tough economic times. While the S&P 500 is up about six percent this year, take away the five U.S. tech leaders and the market is down two percent.
Some interests – including legacy industries tired of competing with tech—want to weaken and even break up America’s innovation leaders. They prefer to emulate a European-style system where a company’s mere size or success is cause for government intervention. This is a bad idea, and Congress should reject it.
First, when it comes to innovation, Europe is the wrong beacon to follow. Because of its punitive antitrust laws and “big is bad” regulatory policies, Europe dramatically trails both the U.S. and China in unicorns–companies worth over $1 billion. The U.S. surpasses all countries in unicorns, earning an “A” for 133 unicorns founded in the past decade. Of the world’s top 200 internet-based firms, only eight are European. The E.U. has no global leaders in social media, cloud computing or e-commerce.
Second, we know the technology industry is characterized by fast innovation, shifting consumer preferences and tenuous hold on market share. While Amazon, Apple, Facebook and Google may now appear strong, so did Kodak, Polaroid, Netscape, AOL, MySpace, Yahoo and others before. This is why many of America’s top tech companies rank among the world’s top spenders for research and development—a sign of wary competitors, not complacent market leaders.
Finally, the U.S. competes in an increasingly cut-throat global economy. The closest marketplace rivals to American technology champions are almost universally Chinese companies. China’s agenda is no secret: Beijing’s “Made in China 2025” plan sets a goal of becoming the world’s technology leader within five years, fueled by tens of billions in government subsidies. The House subcommittee should not help President Xi by undermining U.S. tech champions to the benefit of their Chinese competitors.
None of this means Congress should back away from its essential oversight of marketplace competition. We urge the Federal Trade Commission to vigorously enforce our pro-consumer antitrust laws that have benefitted American citizens, while fostering U.S. innovation leadership. Also, we encourage the Department of Justice to clarify rules regarding mergers and acquisitions to ensure that American companies can enter into transactions with confidence and certainty.
It would make little sense for the U.S. government to attack our nation’s most innovative companies. No other nation would do this to itself, and the consequences would be dire. Instead, we urge the committee to continue the free market economic principles and narrowly targeted regulations that promote American innovation and ingenuity.