Point of View: Small Businesses are Collateral Damage in Pols’ Race to Punish Big Tech

For the second year in a row, a nationwide survey of business executives just ranked New York’s business climate second from last among all U.S. states. That’s a huge headwind, limiting our ability to attract more investment, jobs, and revenue.

But rather than working overtime to fix this toxic reputation, some lawmakers in Albany spent the recent legislative session pushing new laws that would have effectively cut off New York’s small businesses from the digital advertising tools many rely on to keep their doors open and earn a living.

Thankfully, these proposals – the so-called “New York Privacy Act” and “New York Data Protection Act” – fell short as the session ended in June.  But Congress is now gearing up to push for similar legislation at the national level.

Lawmakers pushing these anti-advertising bills seem eager to punish a few big Silicon Valley companies whose politics they don’t care for. Let’s hope they pause long enough to realize it’s mom-and-pop businesses right here in our state – from restaurants and retailers to tech startups and content creators – who’ll end up paying the price.

As a former state assemblyman myself, I can appreciate the pressure legislators feel to “do something” about online privacy. But from my current seat – working with business incubators across the state that collectively support more than 3,000 startups each year – I also understand the essential role digital advertising plays in allowing dorm room entrepreneurs and mom-and-pop family businesses to launch, compete, and grow.

Startups’ ability to carefully and narrowly target ads to the customers who are most interested and attracted to what they’re offering is one of the greatest equalizers allowing digital Davids to compete with global Goliaths.

But the bills proposed in Albany and Washington, D.C., would effectively tear down these data-driven foundations on which thousands of startups across the state are built. If enacted, they would threaten advertising platforms with huge fines for tailoring ads to make them more relevant and personalized to internet users.

Without the ability to carefully limit their ads to the customers most likely to find them interesting and enticing, small businesses will see the efficiency of their advertising budgets plummet. They’ll have to spend a lot more on “dumber,” less-targeted ads just to tread water – and if they can’t afford this de facto digital advertising tax, they’ll end up with fewer customers walking in the door or clicking “buy” online.

Big megabrands will weather these changes just fine; they have the massive advertising budgets required to flood the airwaves and saturate every medium. Small businesses won’t have that option. The law may be aimed at Silicon Valley, but it inflicts just as much pain on the small businesses across New York that rely on these digital advertising platforms to bring in customers and support their workforces.

That’s why sponsors’ arguments that these new bills will only impact Big Tech giants rings so hollow.  The law may be aimed at Silicon Valley, but it inflicts just as much pain on the small businesses across New York that rely on these digital advertising platforms to bring in customers and support their workforces.

A recent study found that 93% of small businesses nationwide use at least one technology platform to reach customers and run their business.  77% of small businesses say they would “struggle to survive” without access to these digital platforms; many of the startups housed in our state’s incubators and accelerators are certainly among them.

Personally, I agree with the need for strong, effective online privacy protections.  But lawmakers ought to be able to come up with a reasonable, balanced solution that doesn’t threaten the livelihood of every small business that counts on data-driven digital advertising to keep the lights on.

At a time when our state should be doing damage control to improve perceptions of our poor business climate, it’s frustrating to watch lawmakers threaten to throw massive new obstacles in front of hard-working small-business owners. Countless entrepreneurs have learned firsthand that digital advertising is an engine for opportunity and growth. The last thing we should do is power down that engine for good.

Marc Alessi is the Executive Director of the Business Incubator Association of New York State.