By Tate Leleʻiohoku Castillo
Hele no ka ʻalā, hele no ka lima; The rock goes, the hand goes.
To make good poi, the free hand must work in unison with the poi pounder.
Members on both sides of the aisle in Congress are keeping an eye on regulating the tech sector.
Current proposals would give greater discretionary control to the federal government over routine business decisions, such as requiring government approval prior to mergers and acquisitions by private companies. This reverses the current presumption that such actions are lawful and economically beneficial. Other proposals seek to “structurally separate” companies into individual lines of business or abandon the long-respected Consumer Welfare Standard (which provides that actions like mergers or acquisitions are anti-competitive in violation of antitrust law if consumers ultimately pay higher prices).
However, Congress and regulators – the poi pounders – must work in unison with and listen to the needs of businesses – the hand that works the poi – to smooth the regulatory landscape and promote economic opportunity.
In Hawaiʻi, the tech sector employs more than 30,000 people and contributes an estimated $3.4 billion to the state’s economy. Moreover, nearly 70% of Hawaiʻi small businesses plan to use more digital tools as a result of COVID-19.
The proposals under consideration discourage the types of investment and innovation that America needs to maintain its economic edge. America’s tech sector leads the world, at least in part, because of the stability and predictability of our legal and regulatory regimes, which reward new ideas, allow easy access to capital, and enforce laws based on objective criteria.
Mergers and acquisitions, which are part of this dynamic economy, help to finance new companies and let larger companies develop new products more quickly. When mergers do raise antitrust concerns, they are reviewed for adverse economic impact on consumers.
Instead of stifling innovation, Washington should support the principles that have made America’s tech sector, and overall economy, the titan it is today. The current legal and regulatory framework for evaluating mergers and acquisitions should continue to be guided by the best interests of consumers. Since 1979, the tech sector has proliferated as a direct result of key mergers and acquisitions over the decades.
In 1996, Apple’s acquisition of NeXT brought the late Steve Jobs back to the helm – from whom we would get the very iPhone on which many of you are now reading this article. In 2002, eBay’s acquisition of PayPal would provide one of its founder “mafiosos” – Elon Musk – more capital to fund his next venture, SpaceX. More recently, deals like Microsoft + LinkedIn, Amazon + Whole Foods, and Salesforce + Slack have resulted in greater value to consumers by integrating innovation and strengthening synergies.
President Biden and Congress should reaffirm the strong bipartisan consensus that has governed antitrust law for the past 40 years – a consensus that has benefited the lives of everyday people and the economy.
Tate Leleʻiohoku Castillo is from Kāneʻohe, Oʻahu and is an alumnus of Kamehameha Schools Kapālama and earned both BBA and MBA degrees from Shidler College of Business, and a JD from William S. Richardson School of Law, at UH Mānoa. He is the CEO and founder of Kope Soap and Polū Energy.
Asheesh Agarwal, an advisor for the American Edge Project, contributed to portions of this article. Agarwal formerly served as assistant director in the FTC’s Office of Policy Planning.