The internet gives small business a fighting chance

A call for a federal data privacy law

That was quick. In less than a generation, the internet has transformed how we connect, learn, and entertain ourselves as well as how we do business. This rapid shift in consumer behavior, buying patterns, and digital expectations has ignited a new entrepreneurial spirit fueled by the democratization of ownership and the creation of new markets and services enabled by the internet. An economic sea change of this scale naturally necessitates new internet policies. Washington must design and adopt new rules that ensure the responsible use of data without sacrificing innovation. It’s a balancing act, one only Congress can tackle.

Unfortunately, at a time when digital adoption is redefining what it means to be a business, data policy continues to miss the mark. At the state and local levels, newly framed legislative efforts are inadvertently closing the door on opportunities for entrepreneurs across America. In 2021 alone, 23 states introduced 34 data privacy bills. While well-intentioned, this growing patchwork of confusing and often conflicting state data privacy rules raises compliance issues and increases costs. It makes it harder for small businesses and creators – who want to earn and keep the trust of the communities they are building – to navigate this complex web of regulations.

At the federal level, where data policy is needed most, recent proposals like the “Banning Surveillance Advertising Act” would criminalize the digital technologies, media platforms, and advertising practices that have fueled a surge of innovation and the success of millions of small businesses. America needs pragmatic policies that strengthen the small business economy, not dampen ingenuity and weaken local competition.

As the U.S. economy continues to evolve, U.S. policymakers must enact forward-thinking policies that inspire innovation, protect consumers, and ensure our country’s continued global competitiveness. Congress can only achieve this balancing act if lawmakers listen to the small businesses that rely on data-driven digital advertising to break down geographic barriers and reach customers. Punitive laws, such as the ones being proposed today, are designed to eradicate the most efficient and effective forms of digital advertising and threaten nearly 17 million internet-related jobs, the majority of which are at small- and medium-sized businesses.

The economic importance of American entrepreneurship and creativity should not be taken for granted. Ingenuity is the backbone of our nation’s competitiveness and uninformed policy proposals could inadvertently destroy this core differentiator that drives our innovation economy. The perspectives of creators, innovators and founders must be brought to bear as the impact they deliver is unmatched. Small firms and self-employed individuals created more internet jobs – 38 percent – than the largest internet companies created during the same time frame. The ability of small businesses to generate internet jobs is powering nationwide economic growth. In fact, over the last four years, the internet economy has grown 22 percent per year, more than seven times faster than the total U.S. economy.

Moreover, the internet was and still is essential to the United States’ economic resilience through the pandemic, empowering businesses of all sizes to adapt and, in some instances, redefine the notion of “open for business.” Nearly 70 percent of employees worked from home during the height of the pandemic, and 4.4 million new businesses were created in 2020, an increase of 24 percent when compared to 2019.

Thanks to the internet, it is now easier for almost anyone to become a successful entrepreneur. Gone are the days when launching a new business meant thousands of dollars in startup costs, brick-and-mortar storefronts, and large advertising budgets. Now, with minimal investment, online entrepreneurs can build their brand on social media, set up e-commerce websites, and connect with customers anywhere in the world.

In 2021, according to the Small Business Administration (SBA), even amidst an uncertain and uneven economic recovery, over 5 million new small businesses were created—a record number.

For America’s small businesses to continue flourishing, the federal government must empower Main Street to succeed in a digital economy. Unfortunately, existing and proposed regulations fail to support innovation. Worse, they hinder economic growth by raising costs and destroying the speed, accuracy and convenience users now expect from their online experience. We need new policies that protect small business from archaic solutions that return us to last century’s status quo of limited choices, increased costs, and slower services.

Let’s work together to catapult the creators behind America’s small business economy. It’s time Congress establish a brave federal data privacy framework that strengthens privacy while embracing the next generation of American ingenuity.

— Brendan Thomas is the Executive Director for Internet for Growth

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The internet levels the playing field, lowering barriers for entry, and democratizing ownership, enabling even the smallest storefronts to drive economic results in every state across the U.S. Subscribe to stay up to date with the latest news and stories from Internet for Growth.