Setting The Record Straight: Where The Democratic HJC Report Goes Too Far
The highly-anticipated Democratic House Judiciary Committee Report was released yesterday. Despite being 449 pages in length, the report’s missteps when it comes to antitrust reform are clear from the start. Experts agree that the report paints a false picture of the technology industry and offers recommendations that would harm startups, consumers, and small businesses nationwide.
Sifting through the report’s pitfalls is no easy feat—as you continue to digest its content, keep these important points in mind:
— The report dismisses the consumer welfare standard and instead offers recommendations that will hamper technology’s benefits for consumers nationwide.
— Today’s technology sector embodies strong competition, growth, and investment—all of which are threatened by the report’s recommendations.
— Overbearing antitrust action could harm small businesses and upstarts, who uniquely benefit from digital tools during COVID-19.
The report dismisses the consumer welfare standard to offer recommendations that will hamper technology’s benefits for consumers nationwide.
Iain Murray Of The Competitive Enterprise Institute Notes That The Report Largely Dismisses Consumer Welfare, The Bedrock Of Antitrust. “The report has only a couple of references to ‘consumer welfare,’ both dismissive. No consideration is given to why consumer welfare became the antitrust standard. It is good for consumers *and* drives businesses to improve their practices.”
— “House majority report on big tech antitrust just out is clearly a not-so-stealthy attempt to destroy consumer welfare doctrine of AT law and replace with ‘big is bad,’ regulators-pick-winners-and-losers model.”
Congressional Implementation Of “Burdensome Regulations” Could Have Sweeping Consequences, Notes Robert D. Atkinson, President Of ITIF. “Using antitrust law to impose significant regulatory burdens on America’s most innovative firms will reduce consumer welfare, cede America’s lead in Internet services, and stifle the transition to a broader Internet platform economy. We need a scalpel, not a pick-axe. Today’s report follows a year-long investigation by the Subcommittee and is part of a broader effort to toughen antitrust laws, especially as they apply to the largest Internet platforms. Going forward, these efforts should be guided by three principles:
— Antitrust policy should recognize the tremendous benefits large firms bring to the economy. Consumers receive thousands of dollars in value for free. Unwise regulation could easily impose more costs than benefits.
— Antitrust policy should continue to focus on consumer welfare. It should not protect firms from legitimate competition by larger, more efficient companies.
— Regulators must recognize that we are part of a global economy and American technology companies compete globally. Handicapping American companies will slow growth and lower living standards and further erode America’s already declining competitive edge.”
Today’s technology sector embodies strong competition, growth, and investment—all of which are threatened by the report’s recommendations.
The Report Bases Its Claims On Only A Handful Of Companies, But Could Drastically Impact The Entire Technology Sector & Economy, Reminds Marianela Lopez-Galdos Of The Computer & Communications Industry Association. “The mere fact that the Majority Report suggests introducing changes to the competition regime because a selected group of companies (and here it’s only 4 companies) is said to have engaged in anticompetitive practices raises serious procedural and substantive questions. Engaging in a drastic change to the antitrust norms shouldn’t be based upon a series of assumptions regarding the conduct of only a few companies where the competition norms would be applicable across the entire economy, disregarding the sector or industry.”
The Report “Wrongly Equates Business Success With Monopoly,” According To A Statement From The Alliance On Antitrust. “If the recommendations become law, they would harm American consumers, stifle innovation, and penalize businesses for their successes. The report wrongly equates business success with monopoly. While acknowledging the strength and importance of the American digital economy, the report goes on to make claims and offer recommendations that would restrict consumer choice and weaken the American economy. The report reflects a results-oriented approach to antitrust that seeks to weaponize the law to empower those who govern at the expense of the governed, while sacrificing basic economics and the rule of law.”
Alec Stapp Of The Progressive Policy Institute Highlights That The Report Ignores Evidence Of Widespread American Approval Of Tech Companies. “The report cites 1 poll showing that Americans are concerned with how much data Big Tech has & that they want more government regulation. But this is at odds with the bulk of polls showing Americans approve of & trust tech companies more than other institutions (like Congress!).”
Matt Schruers, President Of The Computer & Communications Industry Association, Warns That The Report Seeks To Harm Today’s “Fiercely Competitive Ecosystem.” “Writing new rules specific to a handful of prominent U.S. digital services won’t necessarily create an industry of equally dynamic small companies: it could instead hobble U.S. leadership and cede ground to foreign competitors. America’s global lead in technology is attributable to a highly competitive free market in which companies battle constantly for consumers’ interest and attention. This fiercely competitive ecosystem, characterized by permissionless innovation that regularly disrupts and transforms the economy, has served U.S. consumers well. Politicians should be wary of trying to fix what isn’t broken.”
Overbearing antitrust action could harm small businesses and upstarts, who uniquely benefit from digital tools during COVID-19.
Jake Ward Of The Connected Commerce Council Warns That The Report’s Recommendations Could Wreak Havoc On American Small Businesses—Especially Amid Today’s Economic Challenges. “According to Digitally Driven, a survey of more than 7,000 small businesses, tools that enable e-commerce, digital marketing, more efficient operations and working from home give American small businesses a fighting chance during the COVID recession… The Cicilline proposal is a square peg in the modern economy’s round hole, and the resulting chaos will create inefficiencies and force higher prices for online ads, marketplaces, business collaboration tools, and many more services that today work brilliantly for millions of small businesses.”
Scott Kupor Of Andreessen Horowitz Points Out That The Report’s Claims Of Reduced Entrepreneurship And Venture Capital Spending Are Misguided. “According to the House, big tech has reduced entrepreneurship and VC activity. The data show otherwise: from ’06-’19, total # of VC deals/$ up 4x to 12,211 deals/$135.8b, early-stage deals/$ up 3x to 4,157 deals/$46.3b, angel/seed deals/$ up 10x to 5,107 deals/$10b.”
The Connected Commerce Council Also Pointed Out That Digital Tools Largely Drive Small Business Success Today. “Research and common sense tell us that smart use of digital tools and online marketplaces drives small business success. In the best of times, businesses that use affordable, scalable small business tools grow faster and have higher revenue and profits.”