In filing two bills this month that would rewrite the nation’s antitrust laws, Sen. Josh Hawley made clear that he doesn’t much care for big tech companies.
The Missouri Republican is, however, an eager user of their platforms. He recently took to Twitter, for instance, to urge followers to buy his new tech-bashing book on Amazon.
He presumably chose that particular social media site and e-commerce marketplace because he values their immense size and reach. That’s ironic, because the core message of Hawley’s new antitrust bills is that big is bad.
Unfortunately, if his proposals become law, future consumers will have less ability to benefit from technology’s incredible economies of scale, and future entrepreneurs may not find backing for their innovative ideas.
One of Hawley’s bills, the Trust Busting for the Twenty-First Century Act, would ban future acquisitions by any company with a market capitalization of more than $100 billion. If selling to Google or Microsoft, or Merck or Pfizer, isn’t a potential exit strategy, venture capitalists will be less willing to invest in startups.
“It’s really going to hurt innovation in places like St. Louis that are trying to create a startup culture,” said John Barrios, an assistant professor of accounting at Washington University’s Olin Business School. “It stifles innovation and makes it less likely that people are going to start a business.”
Hawley’s companion Bust Up Big Tech Act would prohibit a company like Amazon from owning related businesses, such as its marketplace for third-party sellers or its cloud-computing unit. It would also make vertical mergers, such as purchasing a supplier, more difficult.
Such mergers spur a lot of innovation, though. Tesla bought a series of battery companies because it needed their technology for its electric cars. Amazon pioneered cloud computing as a more efficient way to run its e-commerce platform.
“There’s no economic rationality” to Hawley’s bills, said Aurelien Portuese, antitrust policy director at the Information Technology and Innovation Foundation. “This ignores business reality and market reality, and it ignores the way companies grow.”
In one of his news releases, Hawley complains that “woke” big tech companies “have been coddled by Washington politicians for years.” In another, he claims that his changes will “prevent antitrust cases from devolving into battles between economists.”
While such statements may burnish the senator’s populist, anti-elitist credentials, they make no sense as guides to policy. Whether a company is “woke” shouldn’t matter in an antitrust case; what matters is whether a merger is good or bad for consumers. And economists are pretty good at doing that analysis.
Barrios said that even if a rule seems like a bright line, such as Hawley’s $100 billion threshold for making acquisitions, companies will find loopholes. They can set up elaborate structures to control a subsidiary without owning it outright, and then have that subsidiary make an acquisition.
“The big companies will be harmed, but at the end of the day they will survive and cope with the regulations,” Portuese said. “The large and powerful companies can afford the lawyers, but the smaller companies are the ones that will be hurt.”
In addition to harming consumers and stifling innovation, Portuese argues that a crackdown on Big Tech will hurt U.S. competitiveness.
“If we break up Facebook, TikTok will be very happy,” he said. “If we break up Amazon, Alibaba will benefit. If we impose massive constraints on the tech industry, China will be the prime beneficiary.”
For an America-first populist like Hawley, that should be a sobering thought.