Recent GDP estimates show the economy contracted for the second quarter in a row, and some economists fear we may be heading into an earlier recession. Given the seriousness of the economy, recent legislation to crack down on “Big Tech” companies seems premature in isolation.
Federal Trade Commission chief Lina Kahn embraces a neo-Brandesian antitrust model that eschews the notion that merger, market, or firm size is measured solely by its impact on price and consumer welfare. In its place is a commitment to limit large companies simply because being big is inherently harmful. This alternative economic approach also has followers in Congress, such as Senator Amy Klobuchar’s S2992 American Innovation and Choice Online Act, which would advance Khan’s agenda and harm the US economy.
The problem with this type of paradigm is that replacing objective standards with less clear ones makes regulators more susceptible to arbitrary action and political agendas. The current antitrust agenda threatens economic growth through its direct effects on large technology platforms and indirect/secondary effects on the millions of small businesses that rely on those platforms to connect with customers and sell goods and services.
Platforms like marketplaces and app stores created by “Big Tech” companies like Google
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As members of Congress push anti-tech agendas like the American Innovation and Choices Online Act and other legislation, researchers are measuring the potential side effects of turning these bills into law. For example, a study by Dartmouth economist John T. Scott estimates that US small business retailers could lose nearly $500 billion in sales over five years due to ICO implementation, or the equivalent of a new 5.2% “tax” on small businesses. Sales.
But the impact of the legislation goes beyond the typical “main street” small businesses that rely on these platforms to sell goods; A new study by economists Cameron Miller and Liad Wagman found that tech startups will also be affected. Given how important this sector is to entrepreneurship, innovation and US competitiveness, increasing their costs could do more damage to the US economy. Their research shows that using platforms created by major tech companies (such as app stores) and seriously restricting them would result in higher costs for startups, reduced efficiency and the need to hire more programmers to meet security requirements. The complexity it brings.
Undermining the big tech companies is the last thing our economy needs right now, despite the sad fact that we’re on the brink of recession after two decades of productivity growth. A short stop due to the epidemic. A recent analysis by Ruchir Sharma b Financial Times This spells trouble for a society: In the US and elsewhere, slow growth has increased the incentive for governments to bail out high-employer, underperforming companies and keep them out of business. Most of the stated, if mistaken, motivations for government antitrust actions are to protect companies and jobs threatened by the growth of “big tech” companies—the creation of new companies or the expansion of start-ups.
Taking measures to prevent the failure of unproductive and uninnovative firms will ultimately make it difficult for new firms to obtain capital.
For more than two decades in business, they have failed to break up big tech companies out of fear that they will one day become predators, raise prices and disrupt their competitors. The FAANGs (Facebook, Apple, Amazon, Netflix, and Google) have created millions of jobs, trillions of dollars in wealth, and improved living standards for American citizens. Because of ideological opposition to big companies, shutting down these companies would hurt the economy and leave consumers with little or nothing to show for it.
