Small Business Is Hurt the Most When Congress Goes After Big Tech
(Photo: Business Wire)
Small Business Is Hurt the Most When Congress Goes After Big Tech
(Photo: Business Wire)
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It’s no secret that the COVID-19 pandemic devastated small businesses and that elected officials have tried mightily to help. For the first time in our history, the federal government delivered hundreds of billions of dollars directly to small businesses in their time of desperate need. This was a critically important tourniquet when the patient was bleeding out. But now Congress is poised to tear open the wounds with new digital economy policies that will undercut the recovery and leave small businesses less prepared for the next crisis.

While proposed new laws are focused on restraining or breaking up very large technology companies like Facebook, Google and Amazon, their impact will be felt by small businesses and entrepreneurs nationwide that are just beginning to recover. New regulations on digital marketplaces, pricing, mergers, and data may be well intentioned. Still, they will throw sand in the gears of digital marketing and e-commerce, which arguably are the greatest small business growth engines in history.

Recent research documents that using digital tools may be today’s most critical factor in promoting small business success. Digital education, adoption, transition, expertise and experience are the jet fuel that makes small businesses smarter, faster, and more resilient. Small businesses that embraced digital technologies and tools before the pandemic experienced far less pain than digital skeptics. Digitally advanced small businesses enjoyed 50% more revenue and hired twice as many employees during COVID. This isn’t just a digital divide; it’s a digital chasm that our government should help fix by encouraging more companies to get online.

If all digitally skeptical businesses were digitally advanced, their businesses and communities would be stronger, and our economy would recover faster. But breaking up large digital companies into smaller services will only make it harder for digitally nervous small business owners to jump in. Imagine if Facebook and Instagram require two separate logins and passwords, and a local artist or chef has to upload every photo twice instead of once. Imagine if customers could not send messages to small businesses right from their apps or websites, but instead must use separate websites or services to make a restaurant reservation or buy movie tickets. This is a recipe for digital regression, not advancement.  

As a researcher and small business advocate, I’m dumbfounded that Congress would inflict its might on Amazon, which has hired more than a half million people in the last year, pays well above minimum wage, and leads an industry that annually delivers billions of dollars of value to more than 6 million marketplace sellers. The biggest struggle for most small businesses is reaching more potential customers. Amazon, Facebook and Google solve that problem affordably and with remarkable precision.

If Congress wants to help small businesses, it should not focus on tearing down big businesses that already are great supporters of small businesses. Instead, Congress should invest in digital skills education by partnering with community colleges, Farm Bureaus, and other community programs.

Teaching practical marketing, e-commerce, and operational software skills will rapidly create measurable success for millions of small businesses. And when digital skeptics enjoy a little success and see return on their investment, they are bound to dive deeper into the digital pool and enjoy even more success and become evangelists in their communities. They will also be better prepared for the next pandemic or economic crisis.

Congress also has to live in the real world and not invent new theories of competition. Millions of small businesses have embraced affordable and powerful solutions from the world’s largest technology companies because they deliver the goods. Facebook, Amazon,  and Google (as well as TripAdvisor, Etsy, Yelp, OpenTable, and many more) provide affordable and effective small business tools and access to millions of potential customers. Instead of rewriting the laws and disrupting what works, Congress should support the digital economy that is already succeeding brilliantly for small businesses.

David Audretsch is a Distinguished Professor and economist at Indiana University’s O’Neill School of Public and Environmental Affairs and is Editor-in-Chief of Small Business Economics.

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