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The U.S. Cannot Afford to Stifle Innovation in its Technology Industry


Gary Shapiro, President and CEO, Consumer Technology Association
This month, the House and Senate Judiciary Committees will hold hearings to consider accusations of monopoly and abuse made against U.S. tech companies. The hearings mark a crossroad for our nation, as these companies – the crown jewels of our economy – face increasing scrutiny at home and abroad.
 
I urge our politicians to recognize our amazing good fortune to have created scores of large successful companies that every other developed country envies. We should be careful not to hobble these companies. If we hurt them, we endanger the American economic miracle. In the 2018 book, “Big is Beautiful” Robert D. Atkinson and Michael Lind compellingly argue these companies are the bedrock of our economy and our growth in jobs.  
 
They are not only a core element of our economy, but they are increasingly the core of many of our freedoms. They ensure our First Amendment freedom to associate, to share ideas, to create content, to share American culture, to exercise our choice in religion, to access the internet and to choose our politicians. 
 
Other regions of the world want what we have. Of course we need to discuss the appropriate legal frameworks for evolving technologies affecting much of what we do, but our national strategy should be focused on how we can unite to ensure our best companies can compete globally.
 
Across the Atlantic, the European Union (EU) has marshaled a series of attacks on U.S. tech firms. Citing antitrust principles as a subterfuge, EU leadership is challenging the underpinning of our most successful companies. They have enacted overbroad, vague privacy rules (known as General Data Protection Regulation), and now plan to issue broad innovation-choking rules for artificial intelligence. Europe has stifled fair use and the ability to link to content, and its policymakers are also considering raising taxes on companies like Facebook and Google. 
 
Our federal leaders should resist the increasing pressure to follow the European model. Although individual nations in Europe like the Nordic countries, England, France and the Netherlands have leaders focusing on innovation, the EU as a bureaucracy has choking rules, ambiguous laws and favors extreme privacy over innovation. Its approach to regulation has helped put the European economy at a distant third behind Asia and the United States. In CTA’s 2019 International Innovation Scorecard, which evaluates more than five dozen countries and the EU on their innovation friendliness, the EU earns modest marks because of high taxes and restrictive policies for new innovations like self-driving technology. And according to a World Economic Forum study, the region failed to produce a single unicorn — an industry nickname for a billion-dollar startup — in 2017. To put that in perspective, the U.S. produced 32 unicorns last year, and China produced 18. One tech executive summarized the situation succinctly: “This is cyber-protectionism, pure and simple.”   
  
But while Europe is our military ally through NATO, and shares our passion for liberty and democracy, China is our shared long-term concern as it ignores democratic principles, human rights and basic liberties we share with our European allies. The Chinese blocked and then copied many of our best tech companies, and now the ascendancy of Chinese tech companies has created real competition. If we give American innovators, dreamers and doers free rein to compete with China, our tech engine can compete and thrive. 
 
As President Trump meets with American tech leaders Thursday, he will certainly hear that our future shared challenge is China. He likely will also hear that attacking our best companies and putting painful tariffs on Chinese imports is not helpful to our competitive position and in the long run only helps the Chinese.
 
Our American success is not manifest destiny. Our generation must not be the one that squanders our good fortune. In my upcoming book, Ninja Future: Secrets to Success in the New World of InnovationI address how the rise of innovation in the United States isn’t only due to geography or luck. We are flourishing because our culture and our lawmakers generally favor a light-touch policy approach that supports progress and disruptive, consumer-enhancing businesses.   
 
We need U.S. policymakers promoting and even protecting those companies created or investing here. That means creating reasonable and clear regulatory guide rails and sticking to a framework of fair, free and open markets.  U.S. tech companies can and will work with federal leaders to ensure consumers and competition are protected. We want uniform federal privacy legislation. But the global future economic battle will go to those that develop 5G, AI, self-driving vehicles, robotics and other core technologies, many of which require access to data and the type of huge investments only big companies or governments can make.  
 
Let’s remember the lessons of the past. Microsoft and IBM each floundered as our own government confounded their leadership with vague antitrust theories. In retrospect, the government was wrong as the technologies they created leapfrogged these so-called monopolists. While each company eventually recovered, the lesson we must remember is that the marketplace replaces bad players, especially in the internet space where financial barriers to entry are lower. 
 
Our government has a shared opportunity to work with the tech industry to protect our nation, safeguard liberty and ensure our children’s economic future. But top-down, restrictive rules emulating Europe, restricting flexibility or creating new barriers to entrepreneurship and innovation will only bolster businesses in other nations. Our shared goal should be to focus on our economy, protect our democratic principles and enhance our position as a leader in entrepreneurship and innovation.
  
Consumers want convenience and competition, privacy and connectivity. Effectively balancing these issues is at the heart of the backlash against tech companies. I’m confident that our leaders can develop a solution that defends our national champions and promotes American innovation and ingenuity on the international stage.   
  
Gary Shapiro is president and CEO of the Consumer Technology Association, the U.S. trade association representing more than 2,200 consumer technology companies, and a  New York Times best-selling author. His upcoming book, Ninja Future: Secrets to Success in the New World of Innovation, will be released December 31 and is available now for pre-order. His views are his own.  
  
 
 

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