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Action to break up ‘Big Tech’ will mean price hikes


In a worrisome sign for the economy, American consumers are feeling a financial pinch. Facing higher prices for gas, groceries, and a range of other goods and services, Congress is considering legislation that, if passed, would mean even higher prices for consumers.

Sen. Amy Klobuchar (D-Minn.) is pushing for a summer vote on a key antitrust bill, the American Innovation and Choice Online Act (AICOA), which prohibits tech giants from providing “store branded” products and services, which are often cheaper than other name-brand products. There is no doubt that AICOA represents an unprecedented disregard towards consumers, families, workers, and the economy, which are all already struggling from spiraling inflation.

This proposed legislation couldn’t have come at a worse time for consumers. Not only are AICOA’s supporters tone-deaf to the looming impact of a recession, but they also ignore the reality that cracking down on large companies might result in higher — not lower — consumer prices, which does not help inflation.

A recent survey by American Edge Project shows that almost 9 in 10 Americans want the government to prioritize policies that reduce inflation and the cost of living — not exacerbate the issues. These findings are corroborated by a recent survey from the American Consumer Institute which found that consumers are deeply skeptical of efforts to regulate large technology companies if doing so risks jeopardizing services like Amazon Prime.

In addition, while the survey found that 22 percent of respondents strongly agreed that “Amazon is too big,” 52 percent of Amazon users either opposed or strongly opposed efforts to break up Amazon into smaller companies and 67 percent of Prime users opposed or strongly opposed legislation that would potentially eliminate Prime services. Only 25 percent of respondents favored or strongly favored such action.

Among consumers shopping at Amazon, the survey found that 97 percent were either somewhat satisfied or very satisfied with Amazon Prime services. Only 1 percent of respondents reported being dissatisfied. One of the major reasons consumers cited for high customer satisfaction was low prices.

To make matters even worse for consumers, AICOA also contains provisions that would prohibit targeted companies from providing free ancillary services such as Google maps alongside Google search results, and require platforms like Amazon, Facebook, Google, and other large tech companies to share customer data with third-party vendors, which could have extensive negative ramifications for consumer data privacy and security.

Moreover, the very same platforms that provide services and products at competitive prices also help small businesses reach a large pool of consumers. Not only do small businesses use these platforms to sell and market their goods, but they also rely on the integrated services provided by these companies, such as warehousing and shipping. Recent research from the Data Catalyst Institute shows that 90% of small rural businesses find these tools valuable to their operations. Online platforms were essential for small business survival during COVID and will remain crucial as we continue an accelerated transition to a more digital economy. In fact, new polls have found that small businesses say online marketplaces help them compete with larger retailers by making it easier to bring new products to market (64 percent), increasing access to new markets (59 percent), and lowering the barriers to connecting with new customers (46 percent).

It is evident that the Senate bill under consideration would “create more problems than it solves,” especially under the current economic uncertainty. As elections approach, Congress should consider addressing issues that consumers and voters care about, like inflation, and not destroy the competitive online marketplace that offers consumers more options at lower prices.

Prioritizing legislation that consumers don’t care about and that would ultimately harm them should not be a priority for Washington.

Krisztina Pusok and Steve Pociask are with the American Consumer Institute, a nonprofit educational and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.



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