The Web Is Our Nation’s Strongest Financial Engine—Let’s Not Kill It With Misguided Regulation
Stopping the digital driver of the economy: Perhaps well-intentioned, but misguided bill in … [+]
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Here’s an eye opener no matter what industry you’re in: The internet economy has grown seven times faster than the entire US economy in the past four years and is now making an amazing one 12% of US GDP. That is coming from a relatively young industry that has caught the attention and the imagination across the country, and that is evident from the latest edition of a report titled “The Economic Value of the Internet Advertising Ecosystem” by Interactive Advertising Bureau and John Deighton, Harold M. Brierley Professor of Business Administration Emeritus at Harvard Business School – a report I was fortunate enough to be born when I was CMO at IAB in 2008. Now the fourth version of it comes in a 136-page report with a new and somewhat long title: “The Economic Impact of the Internet Market-Making – Advertising, Content, Commerce, and Innovation: Contribution to US Employment and BIP. “This marketing ending to a title is likely to convey how big the economic impact has become!
The internet economy’s contribution to US GDP has increased 22% per year since 2016, in an economy that is growing between 2 and 3% per year. In 2020 alone, the ad-supported internet economy contributed $ 2.45 trillion to the country’s GDP of $ 21.18 trillion. Confusing.
The report goes on to find that the ad-supported Internet is a source of innovation and jobs, not just for large companies, but for thousands of small businesses across the country. Namely:
- The commercial Internet created more than 17 million jobs in the USA, 7 million more (!) Than four years ago.
- More jobs on the internet (38%) were created by small businesses and self-employed than by the largest internet companies (34%).
- And every single convention district lives in part from internet-dependent jobs – and in many cases at least 10% of their residents work directly in the internet ecosystem in those counties, which is 9% of all internet employment in the US.
In fact, the study shows something that one might not assume. Jobs powered by the digital economy have developed across the country and are not just concentrated in places like Silicon Valley that most people would expect. To quote the report itself: “Despite the widespread perception that Silicon Valley and several other areas are home to the Internet, the top 10 congressional districts had only 12% of the jobs and 25% of the jobs were among the lighter 50.” % of congressional districts. No district had fewer than 347 Internet-dependent jobs because infrastructure workers were dispersed and people selling or creating on the Internet. “
This news is coming out as more and more people in Washington, DC think they know better than digital economy leaders how to get into the operations and run the businesses that are opening up new avenues for communication and entertainment – and jobs – for us to have . Politicians who have never worked in a digital company claim the expertise to be able to decide in which direction these companies should go. Digital media, fueling the nation’s hunger for growth like no other source, has become an easy target from which any politician can devise a populist, if uninformed, new campaign fundraising strategy.
Suddenly everyone is an expert. Do you have a seat in Congress and no real world job? Obviously, these qualifications make you an expert on how digital media should work. For God’s sake, you’ve used social media and search to raise money for your campaigns, and you’ve read newspapers and magazines all your life. You know how this stuff works …
Nowadays the left only seems to agree with the right that digitization needs its bottomless intervention in order to function properly. Put the crazy internet on a leash and voilà – happy America. No matter where you sit on the political spectrum, whether you’ve started a digital publication, or are a talking head on cable news broadcasts, or whether you’re in the lower or upper house of Congress in DC, you are an expert on what’s wrong and how to make multibillions – Dollar repairs companies that employ millions of people across the country.
The national conversation is awash with naive – and constitutionally dangerous – ideas that include asking business owners to monitor in real time and choking dynamic language they are supposed to consider “unacceptable”.
The same inability to understand digital advertising and why the solutions provided are really more harmful than useful applies to the bipartisan Legislative proposal by Senator Amy Klobuchar (D-MN) and Senator Chuck Grassley (R-IA). Without supporting data, it cites “harm” to competition, online businesses and consumers out of nowhere. If you want to know who and what will endanger the country, read the text of the law.
What the data tells those of us who are not blamed in the emotional tornado of the Internet is that the existing ad-supported Internet is creating new markets and fueling job growth for businesses big and small. Current leaders in this field are facing constant challenge and competition from smaller companies. There is competition as investment flows into new emerging businesses, not just into the supposed boogie man of “big tech” – a 124% increase in total funding in early-stage / VC funding in the US last year alone. Does Senator Klobuchar want to wipe out the booming small-tech investments in Minnesota that were not held back by Big Bad Tech, but instead grew 643%? Who do we trust more to drive this type of investment and innovation? A former lawyer and her bipartisan colleague who has been in Congress since 1981 – or a marketplace for technology pioneers?
The National Economic Research Associates (NERA) just released a report estimating the total economic cost of seven recently proposed Congressional antitrust laws against technology giants. The company estimates that it would ultimately cost consumers $ 300 billion to subject these companies to the legislature’s proposed restrictions. Remember, any claim by politicians that “the economy” is taking the bill forget that the tab is always being passed on to you-know-who.
But wait, it’s getting worse. NERA’s analysis also shows that these anti-trust measures would disproportionately affect American companies and weaken their competitiveness on a global level.
Is there any doubt that Congressmen across the aisle can’t even agree on who was elected president last November, but we should trust their sudden approval? I don’t know about you, but I wonder why an issue of historic importance to the survival of the country is being pushed under the tactics of industrial intervention. And in the case of the legislation in question by two people who haven’t driven nowhere near as many jobs and dynamic economic changes as the ad-supported Internet.
Another misguided bill, the Ending Platform Monopolies Act, sponsored by US MP Pramila Jayapal (D-WA) of Amazon’s home district in Seattle, is effectively forcing Amazon to choose between its first- and third-party retail platforms. Regardless, Amazon third-party vendors have created an estimated 1.8 million jobs in the US that manage, operate, and support their Amazon-related businesses. While this number is a bit inflated, many jobs will be lost if the law passes.
Good grief. Can’t we do what we normally do and agree to disagree? Wouldn’t that be any less worrying than jumping together on the same delusional score that if only Washington politicians get into managing the Internet, then our nation’s problem will finally be fixed?
Billions of dollars are currently flowing in the open market to businesses of all sizes and to white-collar workers and the self-employed (hello!). Rather than trying to stifle our best business with some misguided general wisdom of ill-considered legislation, we should encourage these companies to help fund the historic ideas we have for infrastructure and the entire Build Back Better Agenda.
Lawmakers claim that all of these laws are bipartisan and popular and good for you. But let’s face it, like castor oil, it’s a really out of date, even bitter, treatment. In addition, none of his claims to cure any disease are backed by real data.