We Need to Protect American Innovation in the Competition with China | Opinion – Newsweek

America's technology sector produces the world's most innovative and successful companies. Yet there's a near-bipartisan consensus in Washington that the days of "Big Tech"companies like Google, Facebook and Microsoft, which have made a number of high-profile acquisitionsmust come to an end.

Liberals seek to rein in the supposed excesses of technology companies when it comes to wages and workers' rights, while conservatives rant about censorship and deplatforming on Twitter. Meanwhile, America's adversaries in the Xi Jinping government in Chinaa rising superpower that cheats and steals its way to victorychuckle at our self-destructive response. Rather than enhancing our innovative technology industry, we risk undermining it through increased government intervention.

The United States is home to companies that make up substantially more than half of the market value of the top 100 global public companies. Technology makes up more than a third of America's contribution to that market value, at nearly $8 trillion. According to the World Bank, the innovation-based digital economy grew more than twice as fast as the overall GDP between 2004 and 2019. In the U.S., the digital economy has grown more than three times as fast as the overall U.S. economy since 2005. This torrid growth increases domestic employment and labor productivity. All of this redounds directly to U.S. national securityeconomic security is national security.

America's economic future depends not on big manufacturing, but on technology and innovation. Where steel plants and manufacturing plants once stood, we now see software development and chip design labs, cloud computing nodes and supply distribution centers. All this has happened specifically in the United States precisely because the government allowed resources to flow to their most productive uses and at times helped prime the pump with basic research funding.

The U.S., unlike some European nations, has avoided creating a vast web of bureaucracy and heavy-handed government regulation. While there are some pockets of innovation in Europe, the regulatory environments in France, Germany and Spain make them much less attractive to cutting-edge companies. Venture capital investment in the U.S. is more than three times larger than in the EU. For all of its foibles, America remains a good bet for innovative companies.

Our relatively laissez-faire economic policy has also created a robust startup community. It supports strong venture capital funding, like Andreessen Horowitz' investments in the burgeoning crypto industry and social media app Clubhouse. It also has helped the U.S. become the world leader in startup acquisitions.

Current U.S. economic policy has also created long-term growth opportunities in the public markets. American tech companies, for example, make up four of the five most valuable public companies based on market capitalization. Larger technology companies like Illumina may very well be able to fund smaller ones like Grail. They can identify opportunities to leverage economies of scale, make important innovations, such as new ways to screen for cancer, and bring new technology like multi-cancer early detection tests to market. This is a good thing.

Yet today we hear increased calls for government control. These calls are motivated by concerns about the political influence of a handful of tech firms. Conservatives who want to use antitrust to punish Big Tech believe that large technology platforms have too much control over speech and are censoring those who share their views. Liberals who favor breaking up these companies worry about Big Tech's power over democracy, small business and worker rights.

But as the economic evidence shows, when companies can operate free from fear of punishment, competition flourishes and consumers benefit. Those in favor of stringent antitrust enforcement often argue that it will strengthen the small-business sector by lowering prices and increasing wages. Small businesses, however, experience many benefits from the tech sector that allow them to operate efficiently. Computing power is more affordable than ever. In the majority of technology jobs, wages are drastically higher than in other areas.

A number of failed antitrust lawsuits have exposed the weakness of the "break 'em up" movement. Recent government and private cases against Qualcomm, Facebook and Apple have failed for lack of evidence to support claims of inappropriate use of monopoly power, even as the government tries again and again. This is not surprising; antitrust law is designed to stoke competition and stop anti-competitive behavior, not to solve political disputes or kneecap successful companies.

Transforming our core business laws, as a range of legislative proposals seek to do, would be dangerous. U.S. antitrust laws have kept competition vibrant and the economy humming. Modern competition law and the consumer-welfare standard have created a stable, predictable climate for firms to innovate.

China, meanwhile, has gone down this roadto no good end. Its "crackdown" on large companies has little if anything to do with creating competition or innovation. Rather, the government's goal appears to be to punish companies that refuse to consistently toe the party line.

For now, those who want to regulate American technology seem to have the upper hand. But their victory is likely to be short-lived. Americans are increasingly attuned to the threat that China poses to our future. They recognize that if we are going to remain competitiveeither economically or militarilywe need more American (and allied) innovation now.

The American people want and need real innovation driven by entrepreneurs, not bureaucrats in Washington. We ought to let them have it.

Jamil N. Jaffer is the former Chief Counsel and Senior Advisor to the U.S. Senate Foreign Relations Committee and currently serves as the Founder and Executive Director of the National Security Institute at George Mason University's Antonin Scalia Law School. Joshua D. Wright is a former Commissioner of the Federal Trade Commission (FTC) and currently serves as the Executive Director of the Global Antitrust Institute and University Professor at George Mason University's Antonin Scalia Law School.

The views expressed in this article are the writers' own.

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We Need to Protect American Innovation in the Competition with China | Opinion - Newsweek