One more of the "regulations" that even though they hurt big companies, they can shoulder the cost but small companies/startups can't do the big companies will support it in order to reduce competition.
That's lip service so the big players can have their regulatory burden reduced. High startup costs and anticompetitive practices are the most significant mechanisms preventing new market entrants.
This seems like a good reason to strongly regulate big companies in general. If that discourages there from being big companies then that seems like it might be a good thing.
Sure, it's a huge cost to big companies (and smart big companies who are actually innovative and passionate see that as a bad thing). But it's a cost that big companies are capable of shouldering. Whereas these costs can be existential risks for smaller companies. That gives bigger companies a competitive advantage.
It’s the opposite. Large companies love regulation as it creates extra costs and hurdles for smaller startups that might out-compete them otherwise. Regulation secures incumbent power.
Regulations like this are great and I applaud them. But they do harm innovation, because often the cost to become compliant with such new regulations is fixed. So the cost for a large corporation to be compliant is roughly similar to the cost of a startup to be compliant. This makes it comparatively harder for startups to get going and thereby gives large companies an unfair advantage. This stifles competition and innovation.
We are seeing this first-hand with our startup in the EU investment space. The costs to be compliant with the various regulations (MiFID, AML, etc...) are mostly fixed, so they're a lot harder for small firms to implement such as ourselves than for large firms. That's also why a lot of smaller firms are merging into larger firms.
As a solution, there should be relaxed regulations for startups. They would have to be fully compliant only once they reach a certain scale.
It does benefits bigger organizations that have more of an ability to absorb higher costs than small businesses and startups, just like any other regulatory burden.
How is this going to diminish monopolies? Big tech is (a) going to have a voice in these regulations and (b) will easily afford the cost of compliance. Small competitors will have no voice and will struggle to comply. This is almost certainly going to entrench the big players and widen their moats.
Thinking on the run here, but: the reason big companies have an advantage here is that they grew big before regulations, and their current size can deal with the regulations easily; while small companies don't have the resources to deal with the regulations. So how about a levy on these larger companies that goes straight to small companies to help with the regulatory burden of such regulations?
Except no. That's where the regulators fundamentally agree with the regulated company.
This is a different but also common phenomenon. Well established companies tend to favor strict compliance requirements with harsh penalties and difficult targets. The big companies can hit those targets because they can afford to sink time and money into activities that don't make money. Small companies can't.
It isn't necessarily about being anti-competitive. The requirements may be the right thing to do, and better for everyone. Except startups generally can't afford it. In fact, startups are usually absolutely crap at privacy, security, and other elements of social responsibility.
Big Corporations helped introduce/fuel more Rules & Regulations to impede smaller rivals who could less afford them.
The Government comes out with some new Rules and Regulations that become Law and will cost you a substantial amount of money year after year creating a more difficult business environment and directly affecting your profitability. In most cases Big Corp will actually support and help implement these new Rules and Regulations knowing full well they can shoulder the additional expense and you can't. Eventually driving you out of the market. This happens with a lot of small businesses. The cost of entry is prohibitive.
Isn't it much worse to have big companies in a heavily-regulated industry where those big companies largely control the regulations? Surely they will influence the regulations to increase barriers of entry into their industry.
The startup now has to spend $X more implementing handling those regulations rather than building an MVP and finding PMF. This might be the difference between success and failure. Thus there will be fewer successful startups than in the world without the regulation.
Conversely a big corporation will lose some % of profit to dealing with the regulation (or perhaps it will just raise prices if it’s not competitive). But it’s not an existential concern.
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