Take Five: Leveling the playing field for small businesses
A recently signed executive order from President Biden aims to reign in large corporations and Big Tech that advocates say are taking customers away from small businesses.
President Biden’s executive order on competitiveness has been lavished with praise from those who think it’s long overdue and criticism from those who don’t believe that federal agencies can be trusted to regulate big business without harming the economy. Shawn Phetteplace, manager of the Main Street Alliance of Wisconsin, is with the first group and he explains why in this Take Five interview.
First, you’re the Wisconsin manager of an organization that represents small and independent businesses that many say are the engine of the economy. This executive order has been done, and the subsequent regulatory review will be done, on behalf of small businesses. If you were talking to a skeptic about the merits of this order, how would you explain how it will help small businesses and consumers by shaping a more competitive business landscape?
This important action moves us closer to real solutions to combat increased corporate consolidation and levels the playing field against monopolistic market practices. That lack of competition drives up prices for consumers. As fewer large players have controlled more of the market, markups have tripled. Families are paying higher prices for necessities — things like prescription drugs, hearing aids, and internet service.
Barriers to competition are also driving down wages for workers. When there are only a few employers in town, workers have less opportunity to bargain for a higher wage and to demand dignity and respect in the workplace. In total, higher prices and lower wages caused by lack of competition are now estimated to cost the median American household $5,000 per year, and there are fewer opportunities for existing small and independent businesses to access markets and earn a fair return.
This executive order creates a whole-of-government effort by more than a dozen federal agencies to include competition as a benchmark for regulatory and programmatic change — including giving teeth to regulatory enforcement by antitrust agencies.
Given the businesses that your organization represents, what part of the president’s executive order do you most like and why?
In particular, the guardrails on Big Tech are incredibly important to small businesses competing on and with these giant platforms that also determine and control the avenues to reaching customers. Tech is not the only industry impacted by consolidation, and so small businesses applaud the over 70 initiatives that will impact industries long-suffering from corporate overreach, including health care, financial services, agriculture, and more. For Wisconsin in particular, this will support family farms.
In addition to the focus on Big Tech, we are encouraged by initiatives to expose and limit monopoly control in health care and prescription drug pricing and small business lending — two critical issues for small business owners.
Is there any part of the order that the Main Street Alliance is concerned about? Executive orders can be reversed by future administrations with the swipe of a pen.
While this executive order demonstrates the Biden-Harris administration’s seriousness of tackling longstanding corporate concentration, there are limits to what an executive order can do. We also need Congress to be serious about addressing market power problems and committed to making the competition a priority. Legislators must take up the package of antitrust bills that recently moved through committee.
For policymakers interested in a robust, competitive small business economy, passing new anti-monopoly laws must be a key federal priority in 2021. Antitrust regulation is one place where we can look to build a more resilient and fair economy coming out of the pandemic.
One practice that will get some scrutiny occurs when large companies run retail marketplaces and in so doing, they see how the products of small businesses sell. Consumer and small business advocates charge that these large companies then use data accumulated from that retail marketplace to launch competing products. In issuing the executive order, the White House notes that retail marketplaces can market their “copycat” products more prominently than small businesses can display their original products. So, our question is whether this is something that small business victims of this controversial practice occasionally or frequently complain about to the Main Street Alliance in hopes that your organization will lobby on their behalf?
We are hearing this from our members. One member in particular [Natasha Amott of Whisk, a retail cookware business in New York] has a story of shoppers coming into her retail store with a product from Amazon on their phones, asking her why her prices are not the same, and when she looked at the Amazon price, she saw that they were taking a loss to undercut the market. It was lower than wholesale.
Another [Sarah Piepenburg, owner of Vinaigrette, an olive oil and vinaigrette store in Minneapolis] was kicked off her shipping contract because they took a larger one with Amazon and she then had to scramble to find a new, four times more expensive shipping partner. These aren’t isolated stories and so we’ve teamed up with small business groups across the country to form the Small Business Rising coalition, which puts reigning in monopoly power at the center of the platform.
Another common impact we are hearing of is monopoly practices in the tech space where small businesses are being nickeled and dimed to reach the customer followers they have cultivated. So, it goes beyond the products, but also the advertising avenues, shipping lines, and across the economy.
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