Top 10 From 2019: The Best Of Competition And Tech Commentary
From defenses of the consumer welfare standard to dissections of tech companies’ enormous contributions to U.S. economic growth, 2019 was a great year for competition in tech. We’ve compiled ten of our favorite analyses, reports, and opinions — here are Springboard’s Top 10 of 2019:
1. Larry Downes And Blair Levin: Is The Tech Backlash Going Askew?
In a January op-ed in the Washington Post, Georgetown’s Larry Downes and Brookings Institution’s Blair Levin argued that alternatives to the consumer welfare standard risk politicizing antitrust enforcement. “We’re concerned, however, by the tendency of some to shoehorn pet theories into the debate — notably the passionate but incomplete argument that it’s time to jettison decades of antitrust policy that limits the government to intervening only when market concentration has, or could, cause higher prices for consumers. The vague alternative, proposed by critics on the left and right, is a return to a failed framework that boils down to, at best, a general belief that ‘big is bad’ and, at worst, to politically-based payback for companies on the wrong side of an election.”
2. Herbert Hovenkamp: Antitrust Law Should Focus On Maximizing Consumer Welfare
In March, the “Dean of Antitrust” Herbert Hovenkamp released a paper arguing that some recent competition law reform proposals miss the mark, and would harm consumer welfare. “Any time a merger or other practice reduces a firm’s costs or improves its products or services, it boosts competition by putting pressure on obsolete or less efficient rivals. But protecting these rivals should not be the purpose of the antitrust laws. Rather, the focus of antitrust laws should be on maximizing output, which benefits both consumers and workers.”
3. BEA: Digital Economy A “Bright Spot” In The U.S.
In April, the Bureau of Economic Analysis (BEA) released a report finding that the digital economy plays an outsize role in driving economic growth. “The relative strength of the digital economy led it to consistently contribute more to economic growth than its share of the economy. For example, in 2017, the digital economy accounted for just 6.9 percent of the economy; however, real value-added growth of 8.3 percent in the digital economy accounted for 25 percent, or 0.55 percentage point, of the total 2.2 percent growth in real GDP.”
4. Bloomberg Editorial Board: Don’t Declare War On Tech
In June, the Bloomberg Editorial Board affirmed that tech companies are “the pillars of the American economy”: “Finally, it’s important to remember that, for all their faults, these companies shouldn’t be vilified. After all, they’re pillars of the American economy. They collectively employ almost 900,000 people. They’ve made it easier than ever to start a business. They’ve invented entirely new categories of products and services — and often charge users nothing for them.”
5. Ed Black: Competition Is Alive And Well In Tech America
Later that month, then-CCIA president and CEO Ed Black opined that calls to break up tech companies are misguided, in part because competition in the U.S. tech sector is as intense as ever. “Competition is alive and well in tech America. Unfortunately, you wouldn’t know it listening to cottage industry tech critics that parrot ‘big is bad’ arguments about the impact of large tech companies on new and smaller firms. In reality, the U.S. leads the world in the number of startups valued at more than $1 billion. In 2017, 32 of the 57 ‘unicorn’ startups were American. The mythical ‘kill-zone,’ where investors won’t invest because of successful incumbent companies, doesn’t exist; startups are nourished, not suffocated, in the current venture capital climate. Actually, VC investment in the tech sector is at a 20-year high, performing exceptionally well compared to venture capital investment in other industries.”
6. PPI Report Highlights Intense Competition In The Digital Ad Space
In July, the Progressive Policy Institute (PPI) released a report showing disruption in the ad industry is an example of the free market at work. Digital ads have overturned newspapers’ oligopolistic power over ad sales, driving down the cost of advertising and benefitting advertisers and consumers.
7. 2019 Polling: Tech Breakups Not A Priority For Americans
In September, we compiled some recent polling showing that regulating tech companies is not a policy priority for Americans. Some highlights:
— Tech came in 15 out of 19 industries Americans want presidential candidates to criticize (Morning Consult/Advertising Week, August)
— Majorities of Americans oppose the breakups of leading tech services (RealClearPolitics, June)
— Only 17% of registered voters believe regulation of tech companies should be a “top priority” for Congress, the lowest proportion of all issues surveyed by the poll (Morning Consult/POLITICO, May)
8. Muris and Nuechterlein: It’s Difficult To Justify Forced Retroactive Breakups
In November, former FTC Chairman Timothy Muris and former FTC Counsel Jonathan Nuechterlein wrote that it would be extremely difficult for the government to make a case for retroactively breaking up technology companies. “It is appropriate for the antitrust agencies—the FTC and the Department of Justice—to take a fresh look at the U.S. tech sector. But they would face unusually heavy burdens if they sought to break companies up on the premise that long-consummated mergers were unlawful and should have been blocked years ago. It is one thing to hold a merged company liable for engaging in anticompetitive conduct today using assets it acquired in a merger. It is quite another to hold a company liable on the theory that its long-past merger itself suppressed competition in ways that eluded merger enforcement at the time of consummation.
9. Jake Ward: Tech Platforms Help Small Businesses Compete
Later in November, Connected Commerce Council President Jake Ward argued that tech platforms’ size helps small businesses compete. “It is indisputable that large digital platforms, services, and marketplaces provide small businesses with affordable, scalable, and secure business solutions. They have opened up new markets and allowed small businesses to compete globally and in ways that were unimaginable a few decades ago. What is not understood is that these solutions are affordable, scalable, and secure because of the platforms’ relative size. Big is not always bad and in this instance, big is essential. It is the size and scale of platforms and marketplaces that enable them to invest in new tools and provide the price flexibility that gives small businesses a pathway to viability, growth, and success.”
10. Tech Companies Shine In PPI’s 2019 “Investment Heroes” Report
To close out the year, the Progressive Policy Institute (PPI) released its annual “Investment Heroes” report, identifying the top nonfinancial companies investing in the US. The findings? The Tech/E-Commerce sector had the largest capital expenditures of any industry surveyed, with over $72bn in capital expenditures in 2018.