OpEd: Why State Tech Antitrust Efforts are Bad for Small Business (Washington, DC) — Small and medium-sized technology companies drive innovation and economic growth across the United States and globally. At ACT | The App Association, we advocate for the interests of these businesses, ensuring they have a seat at the table when it comes to shaping legal and policy environments that reward creativity and provide opportunities for growth.

However, recent antitrust proposals and enforcement actions at the state level threaten to undermine the very foundation of small businesses’ success. While the loudest voices often belong to the largest players in the industry, it’s small and medium-sized companies that could lose the most from these changes. Curated online marketplaces (COMs)—such as Apple’s App Store and the Google Play store, as well as storefronts provided by OpenAI, Amazon, and Oracle—provide small businesses with efficient access to global markets, reduced overhead, and built-in consumer trust.

Yet, regulatory scrutiny and enforcement actions have focused heavily on these online marketplaces, sometimes ignoring how they benefit small businesses. The complementary distribution services offered by COMs, sometimes bundled together with the core distribution function, are crucial for smaller companies that lack the resources of their larger counterparts. These services often enable startups and young businesses to reach millions of potential customers worldwide.

Unfortunately, state enforcement agencies and regulators have sometimes underappreciated the pro-competitive benefits that these marketplaces offer. Proposals like the California Law Review Commission’s study of potential revisions to antitrust laws threaten the COM model that supports smaller companies doing business on those platforms. For example, the proposed expansion of liability for “exclusionary” conduct is exceedingly broad and would protect specific competitors, rather than consumers and competition. Provisions like this could increase overhead costs and barriers to entry for small businesses by illegalizing the COM model itself, while making consumers worse off.

Additionally, larger companies like Spotify and Epic Games have been vocal in their opposition to the practices of major COMs. While some have erroneously described these companies as “small developers” in the context of their disputes with the major app stores, they are in fact multi-billion-dollar giants. Their interests on these issues do not align with those of truly small and mid-sized developers and businesses, which typically have fewer than 25 employees. In fact, since overwhelming majority of app developers do not pay a percentage fee for distribution—and the antitrust complainants’ overarching purpose is to shift distribution costs off of themselves—the ideal world for them involves a far more regressive fee structure that shifts distribution charges downward to entrants like App Association members.

As state attorneys general consider these proposals and enforcement actions, they must prioritize the interests of small businesses and consumers rather than simply catering to the complaints of large, well-resourced competitors. It’s essential to avoid mandating the degradation of integrated distribution offerings that allow small businesses to compete. Instead, the focus should be on ensuring that government intervention does not raise entry costs for app makers and small tech-driven companies.

We remain committed to our mission of supporting innovation and entrepreneurship at the small and mid-sized levels. We urge state lawmakers and state AGs to work with us to protect the true backbone of technological progress and to prevent “big tech”-targeted legislation and antitrust enforcement from harming the very businesses policymakers aim to support. Let’s ensure that the future of technology remains open and accessible to all.

OpEd: Why State Tech Antitrust Efforts are Bad for Small Business

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