Small businesses have long faced ups and downs competing against large corporations. But, recently, the playing field has become even lower, with the pressure of the mammoth tech platform and corporate consolidation creating much larger goliaths, to name a few. What’s more, the epidemic exacerbated the problem, as many small businesses struggled to stay afloat.
The results of a survey of 500 small business owners, including up to 100 employees, conducted by Small Business Majority, a small business advocacy group in Washington, DC, in December.
“Our economy is one where large enterprises often have unequal power over small businesses and may engage in unfair competition practices,” said John Arensmeyer, founder and CEO of Small Business Majority.
In addition, according to Arensmeyer, the challenge industry is agnostic. “This lack of fair competition exists throughout the economy,” he said. “Expressions may differ in different sectors. But the facts are the same. ” Tech platforms, which get a lot more attention, are “just the tip of the iceberg,” he says.
Some specific results:
A An unequal playground. Most small business respondents — 83%. Despite the fact that entrepreneurs are among the most notable innovators, the big players have the muscle to take their ideas and immerse them.
A A great lot of anti-competitive practice. A majority of respondents pointed to a variety of predatory and anti-competitive practices by larger companies. For example, 55% refer to predatory prices, where large companies charge less for a product or service, forcing other businesses to lower their prices, potentially leaving their business; 50% refers to copycating, where large companies copy a small business product or service; And cites a 40% exclusion agreement, a practice where platform or major industry players prohibit a business from selling products or services on a competing platform or with competing players.
A Interest in policy change. Something 84% of respondents favor different types of policies that can cope with the anti-competitive pressure of large companies. These include better enforcement of existing anti-trust laws and other provisions to protect small businesses against anti-competitive practices (80%); Specific restrictions on various hunting practices, as well as activities that make it difficult for small businesses to complete (76%); And relax or standardize licensing requirements to encourage more entrepreneurial development (76%).
At the time, although stricter regulations and government policies could help, the solution is more complex, according to Erensmeier. Since anti-competitive practices tend to vary from one sector to another, it is difficult to enact effective legislation that can help all small businesses. “There is no policy that can deal with this common phenomenon in the economy as a whole,” he said.
Recently there have been some legal and regulatory efforts to address the problem. In January, a bipartisan panel of Judiciary Committee senators passed the American Innovation and Choice Online Act. The bill, sponsored by Senate Judiciary Committee antitrust subcommittee chair Sen. Amy Cloboucher (D-MN) and full committee ranking member Sen. Chuck Grassley (R-IA), would allow federal antitrust agencies to file civil fines and bans against large online platforms. And last summer, President Biden issued an executive order with multiple initiatives aimed at resolving competition issues that the administration has identified as hurting small businesses, among others.
The study also found that small businesses are still struggling to recover from the epidemic. About 4 out of 10 small businesses (38%) say their revenue has declined since this time last year, and only half think their business will survive indefinitely without additional funding or market changes.