Story by Sean Heather, US Chamber of Commerce
Fill me in:
Today, American companies are the envy of the world because they have the freedom to invest, innovate, scale, and compete – and America’s antitrust laws have long been a bedrock of America’s economic success, leading to world-class innovation, products, and services.
The strength of U.S. antitrust law has long been its simplicity. The law applies to all companies and is designed to root out anticompetitive conduct to spur market forces to drive greater economic outcomes and innovation. Alleged anticompetitive conduct is evaluated to determine if consumers are harmed or whether there are countervailing benefits to the conduct in question which provide on balance net value to the consumer.
So, what is the problem?
All of this would change if pending antitrust legislation were to become law. These proposals specifically target leading American companies, while doing little to actually protect consumers. The pending legislation would force impacted companies to provide their competitors with equal access to their platform; require them to share user data with other companies; prevent them from making certain new acquisitions or investments; and could even break them apart into smaller businesses, which means less money for cutting-edge research and development, and diminished U.S. technology leadership.
The legislation will manage rather than promote competitive outcomes in the market. But the impact goes beyond reshaping our domestic economy, it will also serve to undermine our global competitiveness and national security.
Why does it matter?
Today, the global balance of power will be determined by who leads in the development of the technologies of the future such as artificial intelligence, quantum computing, semiconductors, and the next generation of 5G telecommunication technologies. The United States’ advantageous position is reliant on the private sector successfully underwriting not only our economic vitality, but also ensuring the necessary technological advantage needed to safeguard our national security.
In a new report, the U.S. Chamber outlines how proposed changes to U.S. antitrust law would alter the global landscape given the backdrop of industrial policy developments in China and Europe.
In China, technology policy is specifically designed to ensure their companies have every possible advantage as they pursue global dominance. China’s tech giants operate in a protected domestic environment insulated from foreign competition, and they are encouraged to aggressively expand into overseas markets.
In Europe, policymakers are pursuing a path of “tech sovereignty” through a range of industrial policies including – the Digital Markets Act, AI Act, and Data Act. It has further set out to boost European technology firms while limiting the success of American competitors by building a “European” cloud with its Gaia-X project and adopting a draft subsidy regime
The efforts in both China and Europe directly or indirectly hamstring American companies, while boosting domestic champions. Yet, some in Congress blindly support changes to antitrust that would serve to further clear the way for foreign rivals to overtake leading American companies.
If this legislation were to become law, it would not only require the firms captured to support their domestic competitors, but it would also have them offering privileged access to foreign competitors. All of this will not be lost on the rest of the world, as the U.S. will effectively green light a wave of additional legislative and regulatory measures in countries around the world adding to the list of constraints we will have imposed on our own leading firms.
The U.S. is poised to continue leading the world in technological innovations. For decades, we have proven that when American companies are allowed to innovate, grow, and openly compete in a free market they have an advantage over those operating under state control. However, we risk losing all we’ve gained if we turn antitrust into a form of economic regulation that singles out leading U.S. technology companies and effectively forces them to aid their foreign competitors.
The U.S. Chamber supports vigorous enforcement of antitrust laws. No company should be sheltered from antitrust scrutiny, but America cannot afford to rewrite U.S. antitrust laws to attack its own strongest assets. It is the definition of self-defeating.
What other experts are saying:
Last year, professors from Duke University’s Fuqua School of Business found that U.S. antitrust legislation would discourage U.S. companies from investing in strategically vital technologies and instead clear the way for foreign rivals to overtake them.
In a recent letter to Congress, 12 former U.S. national security officials expressed significant concerns about the legislative proposals, stating: “Recent congressional antitrust proposals that target specific American technology firms would degrade critical R&D priorities, allow foreign competitors to displace leaders in the U.S. tech sector at home and abroad, and potentially put sensitive U.S. data and IP in the hands of Beijing.”
What can Congress do to promote America’s long-term global competitiveness?
Congress should reject these legislative proposals and consider adopting the following strategies that would allow America to remain a global leader:
- Operate on the overarching principle of “do no harm.” Congress should avoid giving license to foreign jurisdictions that are targeting the hard-won comparative advantage of U.S. firms.
- Market capitalization should not be a legislative or regulatory trigger for targeting companies.
- Adopt narrowly tailored responses to well-documented digital economy concerns through targeted regulation, not changing antitrust laws that target particular companies.
- Address rapidly accelerating market distortions that arise from non-market policies, including excessive concentrations under State ownership and influence. Congress should bolster the U.S. government’s toolkit in combating non-market economy practices globally.
- Institute regular briefings from the U.S. national security community on China’s approach to antitrust, data, standards and technology development and acquisition policies impacts U.S. competitiveness, innovation, and national security.