Federal antitrust bills threaten California businesses big and small

As many California businesses continue to struggle under the pandemic, certain politicians are pushing for a suite of antitrust legislation that would break up the digital tools and online services that assist small enterprises. This misguided legislation may target large tech companies, but consumers and small businesses will suffer.

The current federal package of antitrust bills is aimed at a select number of tech companies and would prohibit certain platforms from promoting their products on their own sites, breaking up integrated services offered by large companies and prohibiting mergers of a certain size.

California businesses are uniquely vulnerable to this legislation. Our tech industry supports more than 1.8 million jobs and accounts for more than a quarter of America’s nearly $2 trillion innovation economy. For example: Many of the two million businesses that use Amazon as a sales channel would lose customer access. Local restaurants would no longer appear on Google maps or in business reviews because those features would be considered as unfairly competing with rival services.

Golden State consumers would also suffer. Historically, antitrust policy has focused on protecting the consumer, including access to and costs for service. Presently, consumers have access to free integrated features like email, maps, shopping and video streaming under single platforms. These bills want to shift antitrust’s traditional focus away from consumer protection toward “business competition.” Under this legislation, integrated services like those above would be broken up and scattered across the internet. Companies would lose the economies of scale of obtained by bundling services and consumers may face the reality of paying for services that are currently low-cost or free.

California innovation will also be harmed by this legislation. Barring mutually beneficial acquisitions of companies by other companies would make starting a new venture less attractive. Entrepreneurs would find it significantly more difficult to reach a profitable exit for their startup. The result: fewer startups, depressed startup investment and disincentivized new company formation, job creation and innovation.

Ensuring a competitive playing field in U.S. markets must remain an important goal in our economy. These bills start from the false premise that large companies inherently harm competition. In truth, many smaller companies rely on these larger companies for the platforms and services that allow entrepreneurs to build products and markets.

Consider an artisan selling handmade utensils on an e-commerce platform. The maker sells unique goods, while the platform also sells its own utensil brand. Each sells goods to consumers on the same site. The artisan is in a better position selling on the site than not, because they have access to a global market that they otherwise would not.