Business Groups Push Back Against Sweeping EO Aimed At Curbing Corporate Power

July 10, 2021 by Dan McCue
President Joe Biden smiles as he arrives to speak in the economy, in the State Dining Room of the White House, Friday, July 9, 2021, in Washington. (AP Photo/Evan Vucci)

WASHINGTON – Business groups are pushing back this weekend against a sweeping executive order signed by President Joe Biden on Friday intended to curb anti-competitive practice in tech, telecom and other business sectors.

Executive Order 14036, also known by its stated objective, “Promoting Competition in the American Economy,” includes 72 provisions in total that encompass the work of more than a dozen federal agencies.

According to the White House, the order was made necessary by the growing trend of corporate consolidation and by anti-competitive moves by some of the biggest players in technology.

The administration said it sees the actions set in motion by the executive order as a whole-of-government approach to increasing wages for workers, driving down prices for consumers and facilitating innovation in a number of industries.

“Capitalism without competition isn’t capitalism,” the president said as he signed the order in the State Dining Room of the White House. “It’s exploitation.”

But the president’s hard line immediately struck a sour note with many in the business community.

“Today’s executive order is built on the flawed belief that our economy is over-concentrated, stagnant, and fails to generate private investment needed to spur innovation,” said Neil Bradley, executive vice president and chief policy officer of the U.S. Chamber of Commerce. “Such broadsided claims are out of touch with reality, as our economy has proven to be resilient and remains the envy of the world.

“Our economy needs both large and small businesses to thrive — not centralized government dictates,” he continued. “In many industries, size and scale are important not only to compete, but also to justify massive levels of investment.  Larger businesses are also strong partners that rely on and facilitate the growth of smaller businesses.

“This executive order smacks of a ‘government knows best’ approach to managing the economy,” Bradley added, vowing the chamber would “ vigorously oppose calls for government-set prices, onerous and legally questionable rulemakings … and the politicization of antitrust enforcement.”

Similarly, Jay Timmons, president and CEO of the National Association of Manufacturers, described much of the order’s proposals as “solutions in search of the problems” that “threaten to undo our progress by undermining free markets and are premised on the false notion that our workers are not positioned for success.

President Joe Biden hands out a pen after signing an executive order aimed at promoting competition in the economy, in the State Dining Room of the White House, Friday, July 9, 2021, in Washington. (AP Photo/Evan Vucci)

“We have challenges, to be sure, which is why we are advocating infrastructure investment, competitive tax rates, immigration reform, ensuring availability of lifesaving cures, expanded export opportunities and more,” Timmons said.

To underscore his position, Timmons pointed to the association’s second quarter Manufacturers’ Outlook Survey, which he said showed manufacturers expect record levels of full-time employment growth.

Since the 2017 tax cuts, he said  wages rose 3% in the sector  in 2018, 2.8% in 2019 and 3% in 2020—the fastest rates of annual growth since 2003. 

“What’s more, manufacturers have 814,000 jobs to fill right now—opportunities for more Americans to have well-paying, meaningful careers,” he said.

The executive order does not immediately establish any new requirements on businesses or whole business sectors, rather it prompts federal agencies to begin a series of reviews that will in turn establish policies implementing the administration’s goals.

The order goes on to set deadlines for individual agencies to develop guidance or submit reports to a new entity: the White House Competition Council.

The Council, which will be led by the director of the National Economic Council, is charged with monitoring progress on fulfilling the goals of the order and coordinating the federal government’s response to the rising power of large corporations in the economy.

Biden also called for stronger enforcement of existing U.S. antitrust laws, which could trigger greater scrutiny of mergers and acquisitions activity.

Lina Khan, chair of the Federal Trade Commission, and Richard Powers, the acting head of antitrust at the justice department, said in a joint statement: “The current [merger] guidelines deserve a hard look to determine whether they are overly permissive.”

“We must ensure that the merger guidelines reflect current economic realities and empirical learning and that they guide enforcers to review mergers with the skepticism the law demands,” they said.

A core aim of the executive order is encouraging efforts at the FTC and on Capitol Hill to rein in the size and power of large tech platforms like Google and Facebook.

In a tweet, Rebecca Kelly Slaughter, a Democratic member of the commission’s board, said “So excited about @POTUS’s EO on competition; it is an ambitious agenda that will help our markets work better and create a more equitable economy for all people – esp workers, marginalized communities, entrepreneurs, small biz.”

But Gary Shapiro, chief executive of the Consumer Technology Association that counts Apple, Facebook and Google among its members, said, “elements of this executive order threaten our global leadership and hard-won success.” 

“The most concerning aspect is increased scrutiny of business mergers – even those that were completed years ago, entirely within legal bounds,” he said. “This strays well beyond legitimate government guardrails and threatens our ability to innovate. 

“Countless startups launch with the goal of being acquired by a large company, a process that allows big ideas to become marketplace realities. Prohibiting these acquisitions will dry up venture capital, harm entrepreneurs and small businesses and make our economy less competitive,” Shapiro said.

“A government effort presuming ‘big is bad’ or trying to pick marketplace winners and losers will reduce innovation, cost our nation countless jobs and upend the savings and retirement plans of millions of Americans. Not all challenges are solved with new rules,” he said.

Jonathan Spalter, the chief executive of the U.S. Telecom Association, was also blunt in his criticism.

“Context and facts matter,” Spalter said in a lengthy statement. “Context and facts about the performance and track record of broadband providers and the overall state of today’s red hot communications marketplace is key to making rational and productive decisions about connectivity policy.

“Unfortunately, when it comes to its comments on broadband, context and facts are largely missing from the executive order’s fact sheet,” he said.

In a year when the cost of most goods and services has been going up, the price of broadband – at all price points – went in the opposite direction, Spalter said. 

“This is a continuation of a years-long, downward trend in broadband prices that coincides with accelerating speeds that have unlocked broadband-fueled innovation across the country,” he said. “The truth is: more Americans have less expensive, more reliable and better broadband service choices today than they did one year ago. In addition, American consumers enjoy twice the facilities-based competition as their EU counterparts and new competitive services and technologies are announced regularly.

“You wouldn’t know any of this from reading the executive order exhumed from some time capsule in an alternate universe,” Spalter said.

“To look back on the last 15 months and the explosion of streaming, zooming, distance learning and digital transformation – made possible by the world’s best performing and most resilient networks – and conclude that America has a net neutrality crisis is neither a credible nor productive policy debate 15 years on. Ideological? Yes. Common sense? No. Fact-based? Certainly not,” he concluded.

One of the most far-reaching parts of the order encourages the FTC to establish new rules on online surveillance and the accumulation of users’ data. That could have significant effects on all the big platform companies. 

The White House fact sheet says that “many of the large platforms’ business models have depended on the accumulation of [extraordinary] amounts of sensitive personal information and related data.”

The executive order directs the FTC to establish new rules on surveillance and the accumulation of data and to bar “unfair methods of competition on internet marketplaces.” 

Though the executive order does not call out any specific companies by name, it does state that “Big Tech platforms” unfairly compete against small businesses.

“The large platforms’ power gives them unfair opportunities to get a leg up on the small businesses that rely on them to reach customers. For example, companies that run dominant online retail marketplaces can see how small businesses’ products sell and then use the data to launch their own competing products. Because they run the platform, they can also display their own copycat products more prominently than the small businesses’ products,” the White House fact sheet says.

Carl Holshouser, senior vice president of TechNet, a bipartisan network of innovation economy CEOs and senior executives, said Friday that the latest executive order from the White House “could delay how consumers receive goods needed for their health, safety, and well-being; limit access to critical information; and deny conveniences — and, in some cases, necessities — those consumers have come to rely on throughout the COVID-19 pandemic. 

“They put at risk free services that consumers use to message and call loved ones, get directions, connect with health care professionals, consume online content — including news and educational content — and much more.  They would also limit several services that small businesses depend on to reach customers, grow their businesses, and add jobs,” he said.

However, not all of the executive order’s provisions were controversial. One, for instance, called for the Department of Health and Human Services to consider rules within 120 days to allow hearing aids to be sold over the counter.

Even Gary Shapiro of the Consumer Technology Association, liked that one.

“This executive order does propose some good ideas,” he said. “Instructing the Food and Drug Administration to create rules allowing hearing devices to be sold over-the-counter will put less expensive, cutting-edge technology into the hands of many more Americans who suffer hearing loss. Also, ordering the Federal Trade Commission and Department of Justice to challenge states’ overly broad job-licensing requirements can help out-of-state physicians and health care workers deliver better care and telehealth services to more patients.”

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