Before Today’s House Judiciary Hearing On Tech, Read This
Today, leading tech services will appear before the House Judiciary Subcommittee on Antitrust to discuss competition and innovation in the tech sector. Ahead of the hearing it’s important to remember four key things:
Small businesses across the country leverage the tools developed by leading tech services
Jake Ward, President of the Connected Commerce Council, notes that “big companies power growing companies to compete and win.” “When considering the role of large tech companies in the market, it is essential Members of Congress think about small businesses’ deep connection to these companies. This market is interconnected and big companies power growing companies to compete and win.”
Multiple reports show that start-ups and VC investments are on the rise
An analysis by Crunchbase finds that with over 34,000 venture capital deals, 2018 was the “most active year on record.” “It was, in part, that explosion in projected deal volume, led by angel and seed-stage, that propelled venture deal volume to such great heights in 2018. With just over 34,000 deals projected for all of 2018, last year was the most active on record. Overall deal volume jumped by over 32 percent since 2017.”
The tech sector is intensely competitive, with “disruptive innovation” across various products and services
Economist David Evans argues that leading tech services “face dynamic competition.” “Online platforms face dynamic competition as a result of: disruptive innovation that provides opportunities for entry; competition from online platforms that have secured a toehold in one area but compete across multiple areas; the fragility of category leadership resulting from the fact that network effects are reversible and entry costs are low; and the prevalence of ad-supported models, which result in seemingly disparate firms competing for consumer attention and advertiser dollars.”
U.S. antitrust laws based on the consumer welfare standard are adaptable to the modern economy.
Joe Kennedy, ITIF Senior Fellow, highlights the consumer welfare standard’s adaptability. “A main strength of the CWS is its flexibility. Over the years it has adapted to handle new developments such as the Internet, reduced trade barriers, foreign investment, and global supply chains.”