Now that presidential candidates are joining the chorus of those calling for the breakup of major tech companies, Congress is also considering the issue. Both the House and Senate Judiciary committees are holding antitrust hearings. Even the Justice Department is jumping in, announcing it will launch an investigation into whether online platforms stifle innovation.
Across the globe, U.S. tech companies – the crown jewels of our economy – are being punished for their success. Earlier this month, France passed a digital tax targeting major U.S. tech companies. The United Kingdom plans to move forward with a tax on large technology companies. And Canada and Australia are weighing GDPR-like privacy rules. The U.S. hearings give our leaders an opportunity to support homegrown global leaders and defend American innovation on the international stage.
There’s a reason for this international backlash – U.S. tech companies are the envy of the world. Unlike other countries, our government doesn’t penalize companies for being big or successful. And because the U.S. framework allows the market, rather than the government, to pick winners, these companies have the freedom to innovate. With that freedom, they’ve developed products and services that transform the world.
Those successful big companies help smaller companies rise to the top, too. Small businesses use tools from Google (ads) and Facebook (product and company pages) to promote their products and services. Without access to their services, big companies’ ability to market their products to a national audience would suffer. In fact, only big companies can provide the R&D investments needed for the world’s biggest challenges. And venture capitalists only fund startups in hope they can be bought by larger companies or go public.
The United States leads the world in producing young big companies. Between 2009 and 2018, the United States produced 133 unicorns, or billion-dollar startups. And it’s one of the reasons the United States is an Innovation Champion in the Consumer Technology Association International Innovation Scorecard – a grading of 61 countries and the European Union on innovation-friendly criteria. By contrast, the European Union – whose laws include strong privacy and worker job guarantees – produced only 28 unicorns in that time.
American tech leadership or any company’s leadership isn’t guaranteed. The history of technology companies is filled with unassailable market leaders who fell by the wayside – think about AOL, Circuit City, Motorola, Myspace, Netscape, Nokia, Palm, Radio Shack and others. A predictable legal environment allows an open market driven by consumer choice to reward companies that prioritize user experience and customer service.
This is not to say the government should never intervene. The consumer welfare standard, which has guided U.S. antitrust policy for around four decades, instructs elected officials to hold companies accountable when they impede U.S. economic growth and harm consumers.
But this is hardly the case with tech companies. Between its direct and indirect contributions, the technology industry accounts for 18.2 million American jobs and generates nearly 12 percent of our nation’s total GDP. Antitrust action against tech companies would only erase economic progress and prosperity.
American antitrust actions or broad new privacy laws would benefit our economic competitors. In particular, China stands to benefit. China has virtually no personal privacy protections – witness the growth of the social credit system – and its companies are obligated to share information with the government on demand. It’s a striking contrast to the present U.S. approach. If U.S. companies are hit at home, it will only give Chinese companies – and their unscrupulous privacy practices – an edge in the global battle for tech dominance.
The United States must maintain its global lead in innovation. Congress should view these hearings as a chance to support U.S. tech companies rather than punish them. By supporting our tech companies, we can ensure the technology of the future reflects American values of liberty and prosperity and promotes these values for generations to come.
Gary Shapiro is president and CEO of the Consumer Technology Association, the U.S. trade association representing more than 2,200 consumer technology companies, and a New York Times best-selling author. His views are his own.
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