Senator Amy Klobuchar (D-Minn.) published a letter from 60 “small” and “medium” sized tech companies in support of S. 2992, the American Innovation and Choice Online Act. Klobuchar has touted the letter as evidence that grassroots momentum exists to ram her bill through Congress before the midterms.
The reality is much different. The letter is part of a long history of smaller firms calling for government assistance to kneecap larger, more efficient firms through new regulation. If anything, the letter shows that the bill would help smaller competitors at the expense of consumers.
It’s a stretch to call AICOA’s corporate supporters – like Spotify, Yelp, Quora and Patreon – small businesses. All of these companies are prominent and well-known amongst consumers and would benefit handsomely if bureaucrats mutilated their larger rivals. By framing these companies as “small” and “medium,” the sponsors of the legislation are implying that they are akin to your local mom-and-pop shop. Instead, they are the furthest thing. In fact, Yelp is only 3 million users behind Google worldwide, and has nearly 4 times the amount of monthly users as Google in the US (189 million for Yelp vs. 48 million for Google.)
Another AICOA supporter is Spotify, which has over 422 million active users worldwide. Ironically, Spotify is actually living proof that it is possible for a smaller, newer company to successfully compete against Big Tech in the current competitive environment.
During Spotify’s Q3 2021 earnings call, “the company said that according to Edison Research and its own internal sources, it ‘recently became’ the No. 1 podcast platform U.S. listeners use the most,” beating Apple Podcasts. Spotify’s comes in spite of Apple’s native podcast app across their Apple products, including but not limited to Apple TV, Apple iPhone and Apple iPad devices. Spotify’s exclusive contracts with prominent podcasters, such as Joe Rogan and Alex Cooper, have attracted listeners to Spotify. Spotify proved that through clever investments and innovations that it can attract customers away from the Big Tech giant, despite Apple offering the same services as Spotify for free on its own service.
Of course, Apple remains a fierce competitor to Spotify, even if Apple is currently losing ground in the podcast space. The Klobuchar bill would enact a litany of business restrictions on Apple while leaving Spotify alone. With their chief rival cut down to size, Spotify could continue to grow without needing to increase efficiency or cut prices to attract new consumers, harming innovation and competition.
Local mom-and-pop shops are not the ones clamoring for the AICOA to pass. In fact, the US Chamber of Commerce and 175 state and local chambers of commerce published a coalition letter last week opposing the legislation. These organizations support the smallest businesses across the US and remain the largest organization representing small business interests to oppose S. 2992.
Their advocacy for small businesses comes from a place of significantly less political bias than the organizations that Klobuchar touts in her press release. The Main Street Alliance, the primary “small business group” that supports the legislation, is a leftist network that historically supports progressive policy agendas. For example, they came out against the Tax Cuts and Jobs Act, despite the 20% deduction included within the legislation for small business owners.
The companies that are aggressively competing, and in some respects beating, these Big Tech companies are the “small” and “medium” sized companies that most serve to benefit from AICOA. They are not supporting this bill because it creates a level playing field – in fact, their competitiveness has shown that the playing field is level enough for them to successfully compete.
Instead, this bill would allow government to hobble larger firms by regulatory fiat, allowing smaller companies to continue growing without needing to innovate, lower prices or do anything to become more attractive for consumers. Despite the machinations of rent-seekers in Washington, passing AICOA would be detrimental to consumers and competition.