With inflation on the rise, Congress must ensure costs for everyday tech services stay low
Sat., July 9, 2022
By Adam Kovacevich
It’s no secret that inflation recently hit a record 40-year high, leaving many Washingtonians struggling to afford basic commodities like groceries and gas. Now, imagine having to budget for your daily life online, too–with access to online tools like Amazon Prime or Google Maps becoming worse or more expensive.
Despite rising costs in other sectors, most tech services remain free or low cost. But if Sen. Amy Klobuchar’s latest antitrust efforts come to fruition, we could see higher costs for the online services that Washingtonians have leaned on during the pandemic and now rising inflation. Especially in an election year, Democrats must recognize how antitrust efforts targeting the tech industry risk harming consumers and small businesses that rely on tech services, creating new financial burdens.
Americans can’t afford this reality.
The internet revolutionized equitable access to information and life-changing tools, often for free. The elimination of free or low-cost online services would bring us back to square one, pricing low- and even middle-class Americans out of online life by rendering now-ubiquitous tools and services useless behind a barrage of paywalls and monthly fees.
Right now, small businesses, including online sellers, are thriving in an ecosystem where tech offers free and valuable ways to connect with countless customers. If those platforms were degraded, one of the groups hardest hit would be the businesses who rely on their online services, like the more than one million U.S. vendors who sell products on Amazon.
Customers are thriving in today’s low-cost tech environment, too. Inflation is substantially lower in the digital sector than other parts of the economy, a reflection of how technology services are uniquely equipped to meet high demand without high prices. Interfering with the industry’s balance of operations risks increased inefficiency and cost for consumers.
In fact, inflation is already pushing Americans to make difficult budgeting decisions, and new fees to access everyday online tools would add up fast for everyone, not just businesses. Considering gas prices in Seattle rose over fifty-six cents per gallon just in the last month, you’d be hard-pressed to find a Washington resident who wouldn’t be negatively affected by the sudden burden of paying more for Amazon Prime’s two-day shipping or more wasted time because of a degraded Google search experience.
Research on the impact of Sen. Klobuchar’s antitrust bill is clear: legislation targeting America’s top tech services and platforms would end up hitting consumers straight in the wallet. According to a study by the National Economic Research Associates (NERA), the pending antitrust bills would cost the economy $319 billion. That includes an estimated $22 billion in lost consumer welfare per year if Amazon were forced to discontinue or reduce Prime membership services.
Policymakers looking to regulate the operations of tech companies cannot turn a blind eye to the potential harmful side effects.
In fact, Democrats only need to turn to their own party to hear sound concerns from economists that antitrust legislation would not only be ineffective at tackling inflation, but poses a real risk. Just this past week, President Bill Clinton’s former Secretary of the Treasury warned that the latest antitrust push in Congress could actually worsen inflation.
Even beyond increasing consumer costs, the increased operational costs from new regulations would bleed into manufacturing and innovation, too. Costs like these would create barriers for businesses and organizations trying to access the best and most innovative tools for their operations–a roadblock that would disproportionately affect small businesses in the Evergreen State and beyond.
With midterm elections on the line, Democrats must be mindful of the inflationary side effects of their legislative efforts and reject legislation that poses a threat to voters who are already navigating strained budgets.
Adam Kovacevich is the founder of a center-left tech industry coalition called Chamber of Progress. Kovacevich has worked at the intersection of tech and politics for 20 years, leading public policy at Google and Lime and serving as a Democratic Hill aide.
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