The rise of technological giants like Amazon, Apple, Google, and Facebook motivated the House Judiciary Committee to pass a slew of new antitrust legislation bills to curb these companies’ considerable market power. The Platform Competition and Opportunity Act proposes to significantly cut a dominant online platform’s ability to continue growing by deeming certain acquisitions presumptively unlawful. The Act shifts the burden to the acquiring company to prove the proposed transaction would not be anticompetitive by eliminating a potential competitor. In an effort to protect competition, the Act has good intentions to protect start-up companies that are fearful of being acquired by big tech companies. However, severely limiting transactions in the tech industry could have significant ramifications for both the start-up companies and the consumers it seeks to protect. Venture capital firms play a crucial role in developing a start-up company by providing considerable capital at the onset. Part of the evaluation process for start-up companies involves valuing the exit opportunities, like acquisitions. Eliminating this option will decrease the value of start-up companies and cause a domino effect detrimental to innovative development. Venture capital firms will be even more selective in their investing, entrepreneurs will be hesitant to enter the market, and, with less ideas funded, innovation will freeze.
Freezing Innovation: How the Platform Competition and Opportunity Act Will Freeze Funds in the Tech Start-Up Market,
50 Pepp. L. Rev.
Available at: https://digitalcommons.pepperdine.edu/plr/vol50/iss2/4