AI rules could hurt small businesses more than big tech companies

(TNS) As U.S. lawmakers and regulators consider policies born out of concerns about Big Tech, such as data privacy and artificial intelligence, they should carefully consider how such changes could ultimately trample on small and medium-sized businesses that drive innovation and competition.

Policymakers may have Google and Facebook in mind, but actual policies may unintentionally create new regulatory burdens that discourage investment in small businesses or discourage new companies from emerging. there's a possibility that. For example, calls to repeal portions of Section 230 of the 1996 law that protects Internet companies from some lawsuits paint it as benefiting Big Tech, when in reality it is , that means emerging social media companies will be held liable early on, making it more difficult to sue. Prevent the distribution of user-generated content that competes and provides new opportunities and ways to connect.

Thus, regulations that policymakers believe target Big Tech could ultimately benefit the largest companies by imposing additional burdens on potential competitors.

In the United States, the government has generally taken a hands-off approach to the technology industry, keeping barriers to entry low and fostering entrepreneurship. Today's giant companies were once small startups that grew with light regulatory intervention and generated unexpected benefits for consumers. Our economy and consumers need this attitude to continue, so that today's startups have a chance.

You can see this theory play out in the real world. Europe is taking a very different approach to technology policy, which is hampering the growth of small and medium-sized enterprises. For example, after Europe's privacy law, the General Data Protection Regulation, came into force in 2018, investment in small and medium-sized enterprises and startups decreased due to concerns that small and medium-sized enterprises would struggle to comply with the new rules. Did.

In the short term, such investments fell by 36%, and large companies gained market share in the advertising sector. According to a study by the National Bureau of Economic Research, one of the effects of this regulation is a lost generation of innovation. Apps added to smartphone app stores dropped by nearly a third.

To protect consumers from exploitation by Big Tech, some U.S. policymakers are taking a more European approach. However, many of the proposed policy changes would increase compliance costs and liability burdens for new and smaller players who cannot afford them. This includes calls by senators to impose state-level data privacy policies and AI licenses that risk creating a messy and costly patchwork.

Beyond issues with compliance costs such as data privacy and AI, some critics of Big Tech are calling for antitrust enforcement to protect small businesses from kill zones before growing startups are acquired by larger companies. There is. The company's rival. These critics are also calling for changes that could limit mergers and acquisitions.

But this approach creates a false dichotomy between big and small businesses that misunderstands how the startup ecosystem works. This strategy can hurt small businesses in many ways. Some of them want to grow into challengers, while others are founded in the hope of getting sold. Startup investors are often looking for the right time for the company to be acquired so they can recoup their investment. This works too. The cycle leads to more investment and more innovation.

Blocking mergers and acquisitions could force small businesses to remain small or, worse, go out of business. Antitrust laws dedicated to reining in Big Tech companies will ultimately harm the industry, the economy, and consumers.

This phenomenon was recently brought to light when regulators blocked Amazon's acquisition of iRobot. As a result, there will likely be no new competition, but consumers will have fewer options as iRobot faces tough financial times and lays off employees. If we continue to put more pressure on mergers and acquisitions and shift away from a focus on consumers, this phenomenon could become more frequent, harming both small businesses and consumers.

Small businesses and startups play an important role in the technology ecosystem and have thrived under the light influence of U.S. regulators. After decades of experience, allowing policy to be shaped by today's hostility toward Big Tech is a dangerous turn that could have unintended consequences for startups and consumers.

The Los Angeles Times in 2024. Distributed by Tribune Content Agency, LLC.

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