Setting the Record Straight on American Innovation

Regulatory moves shouldn’t punish tech firms for their success
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Since its founding, America has valued free speech and equal access to business opportunity. U.S. policies, along with sources of capital, have encouraged innovation and a culture that enables the next startup. One not-so-secret ingredient is disruption. The U.S. has thrived with a vibrant mix of successful companies and startups that eventually disrupt incumbents, like AT&T and IBM, and replace everyday items that were once cutting-edge, like dial-up telephones and fax machines.

Ed Black of CCIA

Ed Black

In a recent op-ed in The Wall Street Journal, Sen. Josh Hawley (R-Mo.) expressed his disappointment at the pace of U.S. innovation, saying the “modern smartphone, the search engine and the digital social network were invented more than a decade ago.”

The senator mentions these American innovations as if they were the only major recent advances, ignoring innovations that have sprung from these noteworthy technical developments.

Consumers increasingly search for information not on desktop computers, but with mobile devices and voice-activated assistants like Siri or Alexa to navigate both the questions and answers. They are connecting on a wider range of social networks than a decade ago, and those platforms offer competing privacy options. Chat features adapted from social networks are now making the workplace more efficient and collaborative.

More affordable smartphones, connected to high-speed internet, have made it possible for more people around the world to access information, make their voices heard, connect to friends and grow businesses. The expanded features on smartphones have replaced other separate devices consumers used to buy to take pictures, get directions or listen to music.

Everything Gets Smarter

What’s more, innovations developed for smartphones have expanded into sensors and devices that are enabling smart cities and precision agriculture, improving everything from how we use parking meters to how farmers monitor crops. Parents of children with diabetes can monitor blood sugar levels on their phones, get alerted to dangers and even remotely deliver insulin through ports connected to these wireless devices.

And smartphones and digital services are hardly the latest American innovation. Ever-smaller electronic components and chips that cost less and are more efficient are fueling next-generation technology like artificial intelligence and techniques such as deep learning. This technology will power developments on the horizon like self-driving cars, robots and drones. Senator Hawley’s initial premise — that there haven’t been amazing innovations since the smartphone and search engine — completely ignores the tech sector’s recent advances in AI and machine learning, quantum computing and microprocessors.

Senator Hawley would have you believe that the battery on U.S. innovation is half empty, but as someone who has advocated for competition in the tech industry for more than 30 years, I would assert that the battery is fully charged. More than ever, technology is fueling innovation that benefits consumers and the economy.

Internet services account for the fastest-growing export in the U.S. services sector. According to the latest numbers from the U.S. Department of Commerce, the digital economy accounted for 5.9 million jobs of the overall 150.3 million jobs, and worker compensation was nearly double that of other sectors at $114,275. Tech investment in research and development is higher than any other industry, with the top 10 tech companies spending $163 billion on R&D last year. Policymakers should not disregard this evidence when considering how the digital revolution has transformed our society.

At the core of America’s innovative mindset has been our open-minded, free-speech culture that respects the honesty inherent in the scientific method. Respect for facts, demonstrable truth and clear-thinking analysis is central to innovative thinking. Evidence-based enforcement of the law is also crucial not to stifle innovation. That’s why it is disappointing when politicians offer extreme remedies ahead of evidence.

Misinformation about the tech sector’s dynamics, and failure to acknowledge the importance of having a robust U.S. tech industry, only endangers our economic security. While I look forward to this election, politicians seem to be running on a platform of how to break up America’s most successful companies, rather than offering a proactive plan to increase jobs and encourage businesses to grow and start here.

No Free Passes

This doesn’t mean any company should get a free pass. My association has a 45-year history of supporting government action against companies that have violated competition laws. But dismantling companies because they are successful and resigning our strategic position in technological innovation to competitors overseas is not a plan for the economy.

In fact, tech companies themselves are publicly recognizing that we need new policies in certain areas. Companies are also providing more tools for internet users to manage data and offering more options for privacy.

Senator Hawley suggests the government should block features like scrolling to limit time on electronic devices, when those can often already be controlled by device settings — or by parents.

The senator also too easily dismisses the threat China poses as a competitor. Countries like China would like nothing better than to displace U.S. tech companies, and to dismantle these companies for political purposes would hand China that opportunity.

This is worrisome for reasons beyond economics. China and other internet-restricting countries have different ideas about everything from freedom of speech and online privacy to capitalism and democracy. To export these values around the world requires companies that support democratic principles to lead. To this end, we need honest conversations based on facts, rather than incorrect assumptions about competition dynamics in the tech sector.

Ed Black is president and CEO of the Computer & Communications Industry Association in Washington, D.C.

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