As America celebrates National Small Business Week and the hardworking entrepreneurs who form the backbone of our economy, policymakers must do more than recognize the vital contributions of small businesses. Indeed, Congress must redouble its determination to support small business owners and the nearly 60 million workers they employ following a year in which “the pandemic resulted in the permanent closure of roughly 200,000 U.S. establishments above historical levels.”
One critical way those in Washington can help shore up a sector responsible for almost two out of every three new jobs in the United States each year is by fortifying a keystone of its success: domestic tech tools and digital platforms.
Prior to the COVID-19 pandemic, these tools and platforms were certainly a beneficial asset that small businesses utilized to bring their products or services to a larger audience. Per a 2018 U.S. Chamber of Commerce study on the subject, for instance, “84 percent of small enterprises [used] at least one major digital platform to provide information to customers,” while “75 percent [used] tech platforms for sales.” That same year, the robust digital economy supported 8.8 million jobs and accounted for 9 percent of GDP or $1.85 trillion.
Yet, during the lockdowns and ever-changing COVID-19 landscape, domestic tech products were swiftly elevated from a convenient feature to a critical lifeline for scores of small business owners. It didn’t take longer than a couple of months into the crisis for nearly one-third of small businesses to report that, “without digital technology, they would have been forced to close all or part of their businesses.” In all, “U.S. consumers spent 32 percent more online in 2020 than in the year prior,” with “$1 in every $5 spent on retail purchases happening online” in the fourth quarter alone. Meanwhile, moving forward, “43 percent of small businesses plan on expanding their businesses through digital and related technology as a response to COVID-19, and 30 percent have already added ways to deliver products and services digitally.”
And so, while each one of the foregoing 200,000 business closures certainly amounts to a gut-wrenching consequence of COVID-19, it is important to remain mindful of the fact that this figure may well have doubled without the sales, degree of interconnectedness, safety measures, and customer engagement opportunities powered by domestic tech innovators. As the same report continues, “U.S. business failures have been fewer than some economists expected. One earlier study estimated that more than 400,000 small businesses had closed in the first three months of the pandemic.”
Given the indispensable role of America’s tech innovators in buoying both the small business sector and the economy at large, it is rather confounding that some in Congress are attempting to hamstring the industry’s efforts with anti-competition legislation. The package of sweeping antitrust bills before the House would hamstring the engine of growth that is America’s tech edge – and, as we’ve previously detailed, hasten China’s hope of dominating the digital landscape.
As with the best interests of small business owners, the push is also at odds with the views of voters in 32 congressional frontline districts, who believe on an overwhelming basis that breaking up domestic tech companies is a misguided solution that does more harm than good. Per a new Ipsos survey released by the American Edge Project, “there is virtually no constituency for breaking up U.S. tech companies…just 14 percent support such a move, including just 15 percent of Democrats, 12 percent of independents, and 12 percent of Republicans.
Voters have therefore made it clear that they will support candidates who keep U.S. tech companies globally competitive and reject candidates who support aggressive counterproductive regulation – and one need not possess the acumen of a political guru to appreciate the fact that policymakers who are proposing legislation to break up our country’s tech companies should consequently expect political fallout.
What’s more, voters in frontline districts also believe that “without the top American companies intact, the U.S. could be less economically competitive” and “there could be unintended negative consequences like greater threats to U.S. national security and the U.S. losing its economic competitive edge.” And as it relates to the deleterious impact on what is presently a healthy entrepreneurial ecosystem, voters are rightfully worried that “American small businesses that rely on tech platforms to reach consumers could be hurt because they could be forced to buy into additional platforms to reach the same number of consumers.”
We share these well-founded concerns and strongly encourage our former colleagues in Washington to defend the future of America’s global tech leadership role. Harmful policies to break up tech companies would result in alarming downstream ramifications for small businesses – and, in turn, ought to be dismissed on a sound and swift basis.
