Return of the “Big Tech” Bill that Hits Small Business? Why it Should Stay Buried

By SBE Council at 21 January, 2026, 4:51 pm

by Raymond J. Keating -

In the world of public policy, bad ideas never really seem to die. "Dead and buried" can never be confidently declared. Instead, bad ideas go into hibernation for various lengths of time - ready to emerge from a dark cave to wreak havoc due to the latest misguided whims of politicians.

Apparently, that's the case, once again, with the American Innovation and Choice Online Act (AICOA), which has been a pet project of U.S. Senators Amy Klobuchar (D-MN) and Chuck Grassley (R-IA), along with some supporting Members of Congress. Just as it was in the recent past, AICOA would not boost innovation and choice, but instead, undermine it.

While targeted at, as Klobuchar has put it, "a monopoly problem," no such problem exists in today's dynamic, ever-changing technology marketplace. Meanwhile, the fallout from such legislation not only would undermine U.S. firms that are leaders in the global marketplace, but also small businesses that rely on and benefit from the technology tools offered from such leading companies as Amazon, Google, Facebook, Apple, Microsoft, and so on.

If the objective is to undermine U.S. businesses and entrepreneurs with European Union-style regulations that have helped stagnate EU innovation and growth, and hampered U.S. firms doing business there, then implementing AICOA would be the right path to take. But if, instead, one understands that no monopolies exist in technology markets (large businesses have to stay on the cutting edge as they are faced by current, emerging and, yes, future competitors and innovations); that firms thrive or suffer based on how well they serve fellow businesses and consumers; and that entrepreneurs and small businesses suffer most under expanded regulation, then AICOA must be stopped, again.

Let's consider 10 assessments and analyses that have delved into the ugly realities of AICOA and make clear the misguided nature of this legislation:

1.) Inflames the Pain Points - Such As Inflation and High Costs - for Small Businesses: As SBE Council President and CEO Karen Kerrigan explained, "American Innovation and Choice Online Act" in the U.S. Senate and a House version aim "to regulate and break up certain big U.S. technology companies" and have "raised the concerns of the small business community, consumer groups, national security and cybersecurity experts, and a broad swath of the U.S. business community. The bills would vastly change how several large U.S. technology companies are allowed to operate, and would gut or add new costs to some of the free or low-cost tech services and tools that small business owners use on a daily basis."

2.) Broad AICOA Measures Create Uncertainty for Investors, Innovation and Consumers: A Congressional Research Service (CRS) report provided an overview of versions of the AICOA in the Senate. Most striking was the recognition that the vague, overly broad language of the legislation presents significant uncertainty for businesses and investors. The CRS concluded that the AICOA "implicates difficult questions involving innovation, privacy, data security, and online speech." This points to the danger of no one really knowing how the AICOA would be used in the hands of regulators and the courts.

3.) Downstream Impact on Small Businesses Creates Harm and Unintended Consequences: The small business fallout must be a central issue when looking at this kind of regulatory initiative. America is a vastly interconnected, small business economy. The costs of regulations supposedly targeting only so-called "big business" are never confined to just these firms, but rather are always more significant and widespread than assumed by those proposing such legislation. Once again, we see the law of unintended consequences at work. When business, market and economic realities are ignored, it's very easy to dream up regulations that supposedly will only affect a few large businesses, in this case, so-called "Big Tech." After all, when pushing a political agenda, considering the full consequences of legislation can be very inconvenient to that agenda. In the end, the costs of regulation always are real and significant, and more severe for smaller businesses, as assorted studies over the decades have made clear.

4.) Small Business Owners Share Valid Concerns about "Big Tech" Legislation and Regulation: One SBE Council survey of small business owners found that 61percent of respondents were "very" or "somewhat" concerned that government regulations against America's largest technology companies would negatively affect their businesses, with 58 percent saying these actions would make it more expensive to access and retain customers; 58 percent saying that the outcome of government actions would likely lead to making them pay for the services they currently use for free; 49 percent were concerned about the disruption of communications with current and potential customers; and 47 percent said it would be harder for customers to find their business.

5.) Higher Costs for Startups and Small Businesses: An analysis of AICOA from the Disruptive Competition Project noted:

"Startups and small businesses are purportedly the intended beneficiaries of these bills, but would face the loss of a key part of the ecosystem in which they thrive: a wide array of free and low-cost services provided directly or indirectly by the five targeted firms that allow startups and small businesses to reach up to millions of customers at minimal cost. Many of these services are offered at free or discounted rates for startups and small businesses…

"In the simplest model, where startups were forced to shift to current market alternatives, startups could incur costs of up to $3,000 per employee each year. For a startup with 10 employees, an increase in operating costs of up to $30,000 per year could dramatically shorten their funding runway and force them to make difficult decisions."

6.) AICOA Ignores the Benefits of Scale and Market Forces: In a studytitled "A New Economic Lens For Exploring the Negative Effects of Digital Platform Antitrust Legislation on American Small Businesses," the authors offered a lesson regarding online platforms. First, they explained that antitrust activists in government look at so-called "Big Tech" through the wrong lens. That is, the perspective of these activists "discounts the role of market forces, presumes that 'big is bad,' and frames the actions of digital platforms as anticompetitive and harmful to consumer welfare." Second, the authors correctly pointed out: "From the platform governance perspective, platforms grow rapidly in order to create more value for participants on both sides of the platform (e.g., small business sellers and consumers, app publishers and app downloaders, etc.), and not to reduce competition on their platform. Once they become large, the platforms may not benefit much by restricting access and raising prices, but rather by enlarging the size of the overall market so that value increases for the ecosystem as a whole, which results in increasing value (or profits) for the vast majority of participating consumers, business users (e.g., small business sellers, small app publishers, etc.) and the platform owner itself."

7.) AICOA Imposes a $500 Billion Regulatory Tax on Small Businesses: In another study, titled "Estimates of Potential Harm to U.S. Small and Medium Sized Businesses from Proposed Antitrust Legislation Aimed at Large Digital Platforms," John T. Scott, emeritus professor of economics at Dartmouth College, looked at the impact of passing the AICOA on small and medium-sized businesses (SMBs). He found that SMBs would lose $500 billion in the first five years after the legislation was passed. And he called that a "conservative" estimate. Scott summarized: "AICOA (if passed) would informally amount to a 'regulatory tax' on SMB Sellers of 5.2% of their sales, or an average of $1,712 per SMB Seller per month. These losses would be secondary effects of the legislative proposals' direct impacts on, primarily, Amazon, Alphabet (Google), and Meta (Facebook, Instagram), as these firms provide fundamental advertising, marketing, and commerce services to several million SMB Sellers."

8.) AICOA Would Lead to the Loss of Free or Low-Cost Services for Small Businesses: The U.S. Chamber of Progress provided a rundown on lost or diminished services for small businesses as a result of AICOA, including:

"Amazon Prime Free Shipping: By requiring equal treatment of all products and marketplace sellers, the bills would make it impossible for Amazon to offer its Prime free shipping service for certain products."

"Google Maps appearing in Google search results: The bills would prohibit Google from showing its maps in main search results when you search for a local business."

"Facebook and Instagram Cross-Posting: The bills would make it impossible for Facebook to show your friends' Instagram stories at the top of the news feed - and ban users' one-touch cross-posting between Facebook and Instagram."

"Apple apps pre-installed on iPhones: The iPhone wouldn't be able to come with any Apple apps pre-installed - making it harder for the novice user to quickly get started with Safari, Note, or Apple Podcasts."

"Google recommending the top-rated florist: Because the bills would impose an 'equal treatment' principle, Google wouldn't be able to show you the top-rated pizza place in town."

9.) Erosion of Prime Means the Erosion of Revenue Opportunities and Sales for Small Businesses: As Amazon reports, "More than 60% of sales in Amazon's store are from independent sellers-most of which are small- and medium-sized businesses. In the U.S., independent sellers in Amazon's store employed 2 million people." That's right, small business is big business for Amazon. Regarding AICOA, Amazon has noted: "Were this legislation to become law, it would substantially degrade the value and quality of Prime, as many of the products sold in our store today with Prime's one- to two-day delivery promise would be undeliverable in that time frame. This degradation of the Prime experience would materially hurt not just Amazon (which is what we believe to be the real, unstated goal of the legislation), but, more importantly, every American consumer and small business that currently relies on the Prime service." 10.) Bigger Players - Not Small Businesses - Ultimately Benefit from the Effects of Government Regulation: Regarding the costs of regulatory measures targeted at "big business," coupled with the reality of increased costs tied to such regulation, is the fact that large businesses, while not pleased with new regulations, are better able to handle the costs of such measures compared to small businesses. Many small business owners understand this, as revealed, for example, in an SBE Council survey. When asked about the impact of government regulation on competitiveness, 45 percent of small business owners said that larger or more established competitors would benefit. (See the following chart.)

So, such regulation can serve to actually limit entrepreneurial activity and therefore the competition faced by larger businesses. If that's not irony when it comes to how a measure like AICOA has been peddled, than I don't know what is.

By the way, the 10 points noted above are merely the tip of the iceberg when it comes to the ill effects of AICOA for the U.S. economy, small businesses and their workers, and American competitiveness. Of course, there are many more.

For the well-being of U.S. technology firms competing in the international marketplace, the entrepreneurs and small businesses operating within tech sectors, the tens of millions of small businesses using and benefiting from the services being provided from assorted large technology businesses, and consumers, the American Innovation and Choice Online Act must stay dead and buried.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. He is the author of " The Weekly Economist " book series, and 10 Points from Walt Disney on Entrepreneurship .