Overregulation Of Early Stage Technologies And Startups Will Stifle American Innovation
FTC Chair Lina Khan’s remarks at a recent University of Utah event calling for regulation early in the development of emerging technologies threatens to stifle America’s startup ecosystem, the importance of interoperability and sandboxing, and how leading technology companies continue to drive significant innovation in the U.S. through innovation.
American innovation, including in emerging technology, is driven by leading tech companies.
The United States is the clear leader in R&D spending in software, hardware, and internet sectors, finds data from a Dealroom.co report.
America’s innovation leadership is due in part to the investments and risks taken by leading American companies, finds data from FDI intelligence. American firms, including Alphabet, Amazon, and Microsoft, comprised 12 of the top 20 publicly listed companies ranked by annual R&D in 2020.
American companies spend more on R&D as a percentage of revenue than leading companies in other industries, shows the Innovation Frontier Project.
These leading American technology companies are consistently named the most innovative in the world. For example, BCG’s Most Innovative Companies 2022 rankings list Alphabet, Amazon, and Microsoft as among the top five most innovative companies in the world.
Leading American tech companies play an important role in researching innovative next-generation technologies such as artificial intelligence and quantum computing. For example, In 2020, researchers affiliated with Google published more papers accepted at the leading AI conferences than any other institution—including Stanford and MIT combined.
America’s startup ecosystem remains strong.
The United States has a large presence in the global startup ecosystem, finds a Startup Genome report. “With Silicon Valley, New York, and Boston located here, North America is the global leader in producing startups, making up 47% of the share of global leaders.”
— The report also found: American metro areas comprised five of the top ten regions in Startup Genome’s 2022 Global Startup Ecosystem Rankings.
North American tech startups continue to achieve unicorn status at a growing rate, per a Startup Genome report. “More than 300 North American tech startups achieved unicorn status in 2021, an impressive leap from fewer than 100 in 2020 and a large proportion of the 540 total global tech unicorns.”
The Government should not interfere in the sandbox.
Just as it does with financial markets, the government’s role is and should be to set up rules for the sandbox and ensure that everyone can play in it. Regulatory sandboxes are programs allowing companies to test a new product or service without being heavily regulated.
According to a United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development report, “A regulatory sandbox brings the cost of innovation down, reduces barriers to entry, and allows regulators to collect important insights before deciding if further regulatory action is necessary.”
— Furthermore, the UNSGSA report also states: “Regulatory sandboxes may also encourage competition and cooperation between incumbents and challengers to the benefit of excluded and underserved customers.”
Instead of blocking acquisitions that fuel competition and innovation, the government should focus on creating standardized interfaces to ensure that everyone has access to the sandbox.
See more from Springboard on how American innovation is strong and how to avoid curbing potential growth and innovation here and here.