It’s Time to Fix the Unequal Power Dynamic Over Small Businesses and Enforce a Competitive Market
By John Arensmeyer, Founder & CEO, Small Business Majority
Time and again, we see that larger businesses use their market power to stifle smaller businesses. Our research shows that small businesses are at a competitive disadvantage, with 44% of small companies agreeing that there has been an increase in monopolistic practices in recent years. It’s time to rein in big companies and level the playing field for small businesses. One of the ways to do this is by passing bipartisan bills to promote competition–including U.S. Senators Amy Klobuchar (D-MN) and Chuck Grassley’s (R-IA) bill prohibiting tech platforms from favoring their own products.
There is a growing unlevel playing field between small and large companies and although the Senate is currently discussing a possible vote on antitrust legislation that would prohibit the largest tech platforms from self-preferencing, it’s also important to note that the lack of fair competition isn’t limited to tech platforms. Across industries, small businesses are being put at a distinct and competitive disadvantage when it comes to pricing, advertising, contracts and agreements, and antiquated laws and policies that disincentivize entrepreneurship. Anti-competitive practices have impacted how small businesses:
- Access markets.
- Increase their bottom lines.
- Become innovative.
- Build wealth and good jobs within local communities.
Even before the pandemic, small firms didn’t have the resources and time to create layered strategies that could compete with big monopolies. But any challenges that small business owners faced before COVID-19 were exacerbated during the pandemic as small firms pivoted their businesses to stay afloat, and thousands of people launched new entrepreneurial endeavors. These problems were particularly acute among the smallest businesses in under-resourced communities, including businesses owned by people of color and women. As more businesses worked to stay afloat by moving to underregulated technology platforms and were forced to identify new ways to access capital and provide employee benefits, the chasm between success and failure grew wider.
Small businesses have very little leverage in dealing with large platform companies like Amazon, DoorDash, and GrubHub. These big companies use their oversized market power to monopolize a so-called free market. Our polling revealed that 83% of small business owners agree that larger companies have the resources to take small businesses’ creative ideas, mass-produce them, and drown them out with their market power. We see this with excessive fees, predatory pricing, self-preferencing, and language barriers for business owners for whom English is not their first language. Entrepreneurs are exposed to competitive inequalities almost every day and strongly support policies to create a more equitable environment in which to do business.
An example of a policy needed to address monopolization is President Biden’s executive order on Promoting Competition in the American Economy. The proposals in the executive order call on the leading antitrust agencies, the Department of Justice (DOJ) and Federal Trade Commission (FTC), to enforce antitrust laws vigorously and challenge prior bad mergers that past Administrations did not previously challenge. Additionally, Senators Klobuchar and Grassley’s American Innovation and Choice Online Act (AICO) is needed to address increasingly concentrated online markets that prevent our nation’s job creators and innovators from thriving. This bill would have profound implications for dominant platforms like Amazon, Apple and Google by prohibiting them from engaging in discriminatory behavior — namely, self-preferencing. The AICO makes an effort to limit strong-arm tactics used by big tech to disadvantage their consumers and exclude competitors from the marketplace. Small businesses support these efforts and know that new legislation is needed to influence positive, long-term change.
We hear legions of horror stories from our network and other small business organizations across the country, corroborating that large corporations have a stranglehold on the competition. On top of that, we know small businesses are still struggling to recover from the pandemic. Nearly 4 in 10 small businesses say their revenue has declined since last year, and only half think their business will survive indefinitely without additional funding or market changes.
Combating years of harmful anti-competitive business practices and outdated laws will take multiple policies that can comprehensively address this common problem across the entire economy, but it’s necessary because small businesses are critical to a strong economic recovery and growth. We urge policymakers to recognize that small businesses are seeking a level playing field to compete with the titans of the industry who have held the reins for far too long. It’s time to enact legislation that would stop anti-competitive business practices and passing the AICO is a good first step.
