Letter to Senate Judiciary Committee: S. 2992 Creates Barriers to Markets/Tech for Small Businesses, Disrupts Innovation & U.S. Tech Leadership

By SBE Council at 19 January, 2022, 11:41 am

The Honorable Dick Durbin The Honorable Chuck Grassley

Chairman Ranking Member

Senate Judiciary Committee Senate Judiciary Committee

United States Senate United States Senate

Dear Chairman Durbin and Ranking Member Grassley:

As you well know, small business owners and entrepreneurs continue to endure disruptive COVID-related challenges that threaten their viability and competitiveness. That is why we are writing to express our deep concerns about legislation being considered by the Senate Judiciary Committee that would disrupt and curtail market access for many small businesses, and alter the digital tools they have come to rely upon for survival during the ongoing pandemic.

On behalf of the Small Business & Entrepreneurship Council (SBE Council), I am writing to specifically address the first of these efforts, the "American Innovation and Choice Online Act" (S.2992), which is scheduled for Committee vote on January 20. S. 2992 could significantly alter the very digital conveniences that consumers fully enjoy, and those that entrepreneurs and their employees use to access the open consumer marketplaces and digital tools that have resulted in the growth and success of millions of small businesses.

Congress Must Focus on Small Business Priorities: The issue of slicing up and micro-regulating some of America's big tech companies through legislation and regulation is not a priority for American consumers. It is certainly not one for small businesses, as evident by the countless surveys and reports SBE Council publishes, monitors and analyzes on a weekly basis.

The priorities of small business owners include legislative solutions that heal the economy, get our nation past the pandemic, dampen inflation, fix the supply chain mess, and foster affordable health coverage and access. Small businesses do not want to punish America's technology leaders, which in the end would competitively disadvantage this important sector in the global marketplace. They want solutions that restore economic vibrancy and health. They do not view big regulatory initiatives and intrusive government action as being helpful. In fact, they view it as harmful.

Creating Barriers to Markets and Tech Tools is a Massive Step Backwards for Small Businesses: Since our founding 27 years ago, SBE Council has ardently advocated for open access to markets - whether that be global markets, government contracting opportunities and more. Selling in big box stores was a highly limited and exclusive proposition for most small businesses, and reaching a large number of consumers was cost prohibitive - very expensive - through traditional advertising or other means for most small businesses. America's technology platforms with their extensive reach, productive tools, and access to millions of consumers has been a game-changer - TRANSFORMATIVE - for many small businesses and people who want to launch a business.

Indeed,there are now many options available for small businesses to reach consumers online, both big and niche. S. 2992 ignores this market reality. The growth of online marketplaces, big online marketplaces, and diverse online marketplaces is a good news story for small businesses - especially in the COVID economy - but S. 2992 would force only a few companies to separate their marketplace from their own retail offerings, and in the end disrupt a whole range of free or affordable services that both consumers and small businesses benefit from. There is no consumer outcry to do this. Small businesses would be collateral damage. Online marketplaces and options for small business sales are increasing. They are not being limited, which makes the rationale behind S. 2992 a real head-scratcher.

S. 2992's Foundational Premise is Wrong: The Market, Particularly in Retail, is Very Competitive: With all due respect to Senators who think and say otherwise, the rhetoric claiming market stagnation and the lack of competition belies actual facts. This, unfortunately, is the rhetoric of whiners (other businesses) or those who have spent little time in the marketplace. Despite the economic upheaval brought on by COVID-19, 2020 was the biggest year yet for new business applications - more than 4.3 million applications were filed in 2020 (+843,000 more than in 2019) with retail being the fastest growing sector. In 2020, 822,000 applications were filed to launch retail businesses - an increase of 58.2% over 2019. Entrepreneurs see a very different market - one that is very competitive and vibrant - offering opportunity in the growing digital economy.

In 2021, entrepreneurial growth has shattered records: Nearly 5.4 million applications were filed to form new businesses in 2021, based on the latest data from Census Bureau's Business Formation Statistics. Retail trade is the largest overall proportion of applications.

There is no doubt that the growth, diversity, innovative offerings, and existence of big, niche and new online marketplaces are helping to drive startup growth in this sector. It is a competitive sector in itself. Congress should not mess with something that is working, especially now as the economy and our business are fighting to recover.

Digitally Connected: Let's Keep America Competitive, Entrepreneurial and Innovative: U.S. policy must continue to embrace and support digital connectivity and technological innovation/leadership across industry sectors. Stable and neutral policy (that does not pick winners and losers) is especially important now. At a minimum, the Senate Judiciary Committee needs to hear from affected stakeholders about legislation, such as S. 2992 and other legislation, that it plans to vote on. Technology and technology platforms are vitally important to small businesses and the future of U.S. entrepreneurship. SBE Council encourages open dialog and a more thorough vetting of the consequences of "big tech" legislation before moving forward. Thank you, in advance, for your consideration of our views.

Sincerely,

Karen Kerrigan, President & CEO

CC:

The Honorable Marsha Blackburn

The Honorable Dick Blumenthal

The Honorable Cory Booker

The Honorable John Cornyn

The Honorable Tom Cotton

The Honorable Chris Coons

The Honorable Ted Cruz

The Honorable Dianne Feinstein

The Honorable Lindsey Graham

The Honorable Josh Hawley

The Honorable Mazie Hirono

The Honorable John Kennedy

The Honorable Amy Klobuchar

The Honorable Patrick Leahy

The Honorable Mike Lee

The Honorable Jon Ossoff

The Honorable Ben Sasse

The Honorable Alex Padilla

The Honorable Thom Tillis

The Honorable Sheldon Whitehouse