Economic Study Estimates Cost of Online Platform and Marketplace Regulation at $300 Billion

Washington — A study by economists at NERA Economic Consulting estimates that U.S. House and Senate legislative proposals subjecting online platforms and marketplaces to common carrier, structural separation, and line of business restrictions would cost the economy approximately $300 billion. The study also finds that the proposals would impact at least 13 additional American companies in the near term and over 100 companies over the next decade. Finally, the study finds that the proposed legislation would have a greater impact on American companies than on foreign companies doing business in the U.S.

This study commissioned by the Computer & Communications Industry Association is among the first to examine the economic costs of the following three House bills:H.R. 3825, Ending Platform Monopolies Act, H.R. 3826, the Platform Competition and Opportunity Act, and the H.R. 3816, American Choice and Innovation Online Act, as well as its Senate companion, S. 2992, the American Innovation and Choice Online Act.

Those proposals’ size thresholds would pressure companies to break into smaller units to avoid regulation, which is essentially the opposite of mergers that tend to bring cost savings that benefit consumers. Preliminary findings show that the breakup of targeted online platforms and marketplaces — Google, Apple, Facebook, Amazon and Microsoft — would cost approximately $300 billion. It is likely these costs would ultimately be passed down to consumers and small businesses in the form of higher retail prices and loss of free and valued services.

The study finds that the proposed bills could create significant regulatory risks not only to the primary targets of the bills but also to at least 13 additional U.S. companies including Visa, Netflix, and Comcast in the next five to 10 years. The broad definitions and wide-ranging prohibitions imply that platforms that are currently below the size thresholds would take measures to avoid the significant legal risk incumbent upon exceeding the thresholds. Notably, these restrictions would not affect foreign operators of online platforms and marketplaces with similar global size, as the bills use U.S.-specific size thresholds that create a bias against U.S.-based companies.

The following can be attributed to study author Christian Dippon, Ph.D. economist at NERA:

“These bills are ostensibly intended to target only large U.S. tech companies, but in reality, would have economic repercussions on small businesses and everyday products and services that consumers use. Not only would restricting online platforms and marketplaces increase costs to small businesses and consumers, but at least 13 U.S. companies who are not the primary targets stand to be impacted over the next decade. These bills would discourage the growth of U.S. startups, jeopardize international competitiveness, and overall make American consumers’ lives more expensive and less convenient.”

The following can be attributed Trevor Wagener, CCIA Director of Research and Economics:

We commissioned this study to offer more data for stakeholders to better evaluate the economic impact of this common carrier legislation at a time of economic recovery.

“The bills are likely to negatively impact consumers, small and medium-sized businesses, U.S. firms’ international competitiveness, and the broader economy. The preliminary findings will inform the public discourse surrounding these bills as policymakers determine whether the legislation’s purported benefits outweigh the costs.”

  • Press Releases

CCIA Releases State Competition Landscape Map

Washington –  State legislatures have introduced a range of bills that could seek to change whether the government protects competing companies from competition, much as Europe does. The U.S. h...
  • Press Releases

CCIA Research Center, Engine Study Finds Startups Rely on Free and Low-Cost Digital Tools to Compete

Washington – In partnership with Engine, the CCIA Research Center released a new study investigating the role of free and low-cost digital tools and services in the startup ecosystem. The study find...
  • Press Releases

CCIA Supports Indiana’s Proposed Online Literacy Legislation

Washington – Indiana is joining a growing number of states who are considering proposals that would establish a digital literacy school curriculum to help children learn how to more safely and respo...