New Study Finds Anti-Tech Bills To Cost Consumers And Businesses Up To $319 Billion
A new study by NERA Economics, commissioned by CCIA, finds that proposed antitrust bills in the House and Senate would cost the U.S. economy a total of up to $319 billion over time. This is the first economic study to offer policymakers quantified costs on the package of proposed legislation that would fundamentally reshape antitrust and competition policy in the U.S.
The study concludes that there are “no quantifiable benefits from the bills for consumers or small businesses.”
The study finds that the bills would:
Impose an economic cost of up to $319 billion that would ultimately be passed on to consumers and business users of the targeted companies “in the form of higher retail costs and the loss of free and valued services.” “The bills would impose approximately $319 billion in additional costs on the five companies—Google, Apple, Facebook, Amazon, and Microsoft—currently targeted by the bills. These cost increases would ultimately be passed through and borne by the consumers and business users of the platforms in the form of higher retail costs and the loss of free and valued services.”
Impact at least 13 U.S. companies in the short term and over 100 companies in the next decade. “The proposed bills would create significant regulatory risks not only to the five primary targets of the bills—Google, Apple, Facebook, Amazon, and Microsoft—but also to at least 13 additional US companies in the near term and possibly to over 100 US companies over the next decade. These risks emanate from an overly broad definition of an online platform, the extensive regulatory framework that would apply to covered platforms, the broad discretions that would be granted to competition authorities tasked with determining compliance, and the extensive financial penalties that would apply for noncompliance.”
Require covered platforms to divest, discontinue, or fundamentally restructure some of their service offerings—including Amazon Prime. The impacts to Amazon Prime alone would harm consumers by up to $22 billion per year. “In the case of Amazon Prime, the proposed bills would require Amazon to divest, discontinue, or fundamentally restructure numerous service offerings, and they would force Amazon to incur increased operating costs, which would be passed through to customers and business users. A consumer survey found that the bills would reduce consumer welfare by up to nearly $22 billion per year for Amazon Prime alone, which is equivalent to a loss of $148.47 for each current Amazon Prime member.”
Have no beneficial impact on price stabilization or inflation. The study concludes that many of the costs of these new proposals would be passed on to consumers in the form of higher prices or reduced services, which would be counterproductive with respect to fighting inflation. “With regards to inflation, 96 percent of the most influential economists at leading US universities do not agree that antitrust interventions could successfully reduce US inflation over the next 12 months, according to a new survey released by the Chicago Booth Initiative on Global Markets. Relatedly, 90 percent of that same group of economists do not agree that a significant factor behind today’s higher US inflation is dominant corporations in uncompetitive markets taking advantage of their market power to raise prices to increase their profit margins. The overwhelming consensus among economists is that regulatory measures in the proposed bills would be a poor substitute for fiscal and monetary policy, and therefore, unlikely to have any effect on inflation in the economy.”
Put American companies at a disadvantage to foreign competitors. “The proposed bills would harm US international competitiveness by applying US-specific size thresholds that would cover US-based online platforms and marketplaces long before they cover foreign competitors of a similar size.”
— “The application of the extensive and costly regulatory framework and compliance requirements to US firms with structural separation as the most likely consequence risks leaving US platforms as diminished competitors on the global stage.”
Reduce venture capital investment in startups by 12 percent. “The proposed bills would jeopardize US technological development because a prohibition on acquisitions would eliminate viable exit options for many US startups and thereby reduce demand to acquire US startups. This would affect not only the purchase prices and number of startups acquired today but would also have long-run implications for the pool of capital funds.”
Provide no benefits to consumers and small businesses. “[A]nalysis demonstrates that the proposed bills are not in the public interest because they create cost inefficiencies not only for the covered platforms but also for many other companies. These additional costs would likely result in both higher retail prices and consumer expenditures as well as lower consumption of valued services. They would also negatively impact small-to medium businesses, startups, and more generally US competitiveness.”