Small businesses throughout the First State ramped up their offerings for Cyber Monday, highlighting the fact that in a post-pandemic world, digital platforms are integral to Main Street success. This is especially true for Black-owned businesses who were disproportionately harmed by the effects of COVID-19, but were able to weather the storm through the use of online platforms.
According to the National Economic Bureau, small businesses that pivoted to digital channels at the outset of the COVID-crisis saw less of a decrease in sales. Businesses who continued to focus on in-person sales lost an average of 39% of their revenue while those who adapted experienced diminished losses of only 23%.
Digital channels are crucial, too, for cultivating the next generation of entrepreneurs willing to take the risk to set out on their own. Whether a business has been open for decades or a twenty-something is contemplating launching a new venture from their garage or living room, technology and data create endless opportunities. And it creates the opportunity for small brands to take on and compete against the big ones. Without platforms like Instagram, beverage and apparel upstarts wouldn’t be able establish themselves as competitors against the likes of Pepsi or Nike.
Indeed, local entrepreneurs don’t just rely on brick-and-mortar sales anymore. They’ve adopted a number of digital methods to reach new consumers and sell their wares throughout the state, region, and country. Besides walk-in traffic, the top revenue-generating sales channels are business-owned websites and online marketplaces like Amazon and Etsy. Social media advertising and click-to-buy platforms also make new connections and drive sales growth, allowing businesses to scale their operations quickly with minimal overhead.
With the intention of increasing competition, these proposals will instead degrade the usefulness of the internet platforms business owners and consumers both depend on.
Why then is Congress continuing to contemplate bills with the potential to disrupt the digital economy and make the tools of the internet much less valuable for small businesses? Aimed at regulating how the largest platform companies like Amazon, Meta, and Google operate, with the intention of increasing competition, these proposals will instead degrade the usefulness of the internet platforms business owners and consumers both depend on. And, when it comes to the tech startup ecosystem, the bill may undermine any future competitor’s ability to get off the ground. Similarly, legislative proposals in the Delaware General Assembly aimed at regulating the free flow of data will stifle business development and impact startups or nonprofits that cannot afford more expensive means of promotion.
While the operations of large tech platforms rightfully deserve scrutiny and it is imperative that lawmakers and regulators ensure fair competition in all markets, the American Innovation and Choice Online Act is deeply flawed legislation. If passed and signed into law, it will bring with it a number of unintended consequences that will be harmful to both consumers and small businesses — the exact contingent that Congress claims to be protecting from behemoth corporations.
[Editor’s note: Check out Bloomberg’s report on Big Tech lobbying against the bill.]
As the Progressive Policy Institute notes, ecommerce and the tech sector are leading job creators. Not just for those with technology backgrounds, but well-paying jobs in construction, fulfillment, shipping, and customer service. We’re talking major benefits for both college and non-college educated employees.
In a separate report, PPI economist Michael Mandel points to just how vague the legislation is. Under some sections of the bill, “unclear and broad language sweeps up a broad range of beneficial business operations.” Those include tools that allow platforms to highlight products from minority-owned businesses. Amazon’s Black Business Accelerator and Facebook’s initiatives to support local businesses and allow them to self-identify as women or minority owned could turn into liabilities rather than helpful tools.
Luckily, Sen. Chris Coons has alerted his colleagues to many of these pitfalls, saying during a debate on the bill earlier this year that he is “not yet persuaded that the legislation would most efficiently address anti-competitive behavior” and that he has concerns “about services that are widely popular with consumers and [his] constituents.” As one of the Delaware’s top elected officials, and a member of the Committee on Small Business & Entrepreneurship, we are thankful for Senator Coons’ leadership on behalf of the state’s many small wonders.
While well intended, the bill has the potential to become another mandate and another tax on struggling small business owners. Dartmouth College economist John T. Scott warns that if passed, the costly ramifications for American small businesses could be quantified at $500 billion in just the first five years after the bill becomes law. That is a staggering amount and, as he notes, should convince lawmakers to tap the breaks on advancing the bill. Unfortunately, with President Biden’s blessing, the Senate is mulling bringing the bill to a vote before the end of the year. As such, we hope that Majority Leader Schumer and the White House consider the issues raised here before continuing down this path. The consequences could be dire.
Michael J. Quaranta is president of the Delaware State Chamber of Commerce. Ayanna Khan is founder, president and CEO of the Delaware Black Chamber of Commerce.
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