America has a vibrant history of innovation and entrepreneurship. This heritage laid the foundation for today’s bustling e-marketplace and its unparalleled successes. Ninety-five percent of Americans participate, creating over 10 percent of US gross domestic product. Nearly three-fourths of small businesses credit ecommerce for their survival through the pandemic. Fifty-three percent reported in 2023 that most of their sales growth came from online activities, up from 49 percent in 2022.
This thriving ecosystem flourishes because of the freedom to innovate, compete, and evolve. Yet, the Biden administration’s recent actions threaten to stifle this dynamism, aiming to make the online ecosystem bland and choke its entrepreneurial spirit.
The administration’s approach is at best a misguided attempt to retrofit the digital age with antiquated regulatory ideas. One glaring example is the push to make broadband a government-directed public utility. The National Telecommunications and Information Administration (NTIA), overseeing the $42.5 billion Broadband Equity, Access, and Deployment program (BEAD), seeks to control broadband providers’ technology choices, labor practices, and pricing — exactly the oppositive of what is needed for growth and innovation. A parallel effort is seen in the Federal Communications Commission’s (FCC) re-adoption of net neutrality rules, applying to modern broadband services a regulatory paradigm designed for monopoly telephone utilities. If successful, these efforts will create a stagnant, uninspired broadband market.
Ecommerce, another pillar of the digital economy, faces a similar threat. Before the pandemic, retail e-commerce was growing at 12.7 percent annually and providing the average American with $1,000 per year in improved purchasing power. The US hosts over half of the world’s 26.5 million ecommerce sites, with online sales comprising nearly 16 percent of all retail transactions in America. Entrepreneurs fueled this dramatic progress by creating diverse, valuable platforms. Customers gave it direction by choosing their favorites. Sellers choose from a vast array of options, and most use more than one. At present, Amazon is their most popular ecommerce solution, enabling businesses to sell 7,800 products per minute in 2022 and earning top ratings in customer satisfaction, second only to Apple.
The administration’s response to this success is perplexing. Rather than celebrating and supporting greater achievement, it seeks to dismantle the leaders. The effort to break up Amazon, for instance, aims to force Amazon to resemble its less successful rivals, denying small businesses a powerful platform and consumers a highly valued service. Similarly, attempts to homogenize mobile platforms like Apple’s and Alphabet’s disregard the value of having distinct, differentiated options.
The Department of Justice’s (DOJ) drive to break up Alphabet further exemplifies this troubling pattern. DOJ views Alphabet’s multiple roles in ecommerce as a threat to the digital marketplace, rather than an asset. DOJ control of the company’s product lines would undermine the very essence of competition and innovation.
Social media, another area of remarkable growth and innovation, is not spared. Countless social media sites, including Facebook, X, TikTok, and Snapchat, connect billions of users, transforming communications from the telephone world – an exclusive club for the 10 percent of the world’s population that could obtain a telephone – into a more egalitarian system of systems whose sum is larger than the world’s population and more information rich than all media of the past.
The administration’s response is to target Meta, the company behind the very popular Facebook, Instagram, and WhatsApp. Meta’s sin? Creating synergies among these platforms, two of which were unprofitable before being acquired by Meta. Apparently it is immaterial that a breakup would destroy billions in customer value.
An American free market paradigm has resulted in an American-led tech industry. Among the largest tech firms globally, eight out of ten are American, and six of the next largest ten also hail from the US. The success extends to small businesses. Some will become the future giants of the tech world, provided they are not stifled by overzealous regulation.
The Biden administration’s current trajectory risks turning the dynamic, diverse online ecosystem into a bland, lifeless domain governed by bureaucratic decrees. It is crucial that the administration recognize and preserve the unique qualities that have driven the success of the online world, ensuring it remains a vibrant, competitive, and customer-focused marketplace.
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