Responding to Elizabeth Warren’s In order to regulate and dissolve some of the nation’s largest tech companies, venture capitalists investing in tech companies are advising the presidential presidency to move slowly and break nothing.
Warren’s plan was to appoint regulators to oversee the development of several acquisitions that were critical to the development of the core technology that makes Google Alphabet and the profitable social media giant Facebook… and Zappos.
Warren also wanted regulation that would prevent companies making more than $ 25 billion that operate as social media or search platforms or marketplaces from owning companies that also sell services in those markets.
In general, venture capitalists who viewed the policy were disappointed.
“As they say on Broadway, ‘you have to have a gimmick’ and this is clearly from Warren,” says Ben Narasin, an investor in one of the nation’s largest investment firms, “New Enterprise Associates, which has $ 18 billion in assets under management and has invested in consumer companies such as Jet, an online and mobile retailer that competed with Amazon and it was sold to Walmart for $ 3.3 billion.
“Decades ago, at the height of Japanese growth as a technology competitor on the world stage, the United States government tried to separate IBM . This is not a new model, and it doesn’t make sense, ”says Narasin. “We slow down our country, our economy and our ability to innovate when the government becomes overly aggressive in efforts to break up technology companies, because they see them through a lens of previous decades, when they are operating in a reality of the decade. future. This too shall pass “.
Balaji Sirinivasan, the CTO of Coinbase, He took to Twitter to offer his thoughts on Warren’s plan. “If big companies like Google, Facebook and Amazon cannot acquire new companies, that reduces competition,” writes Sirinivasan.
If big companies like Google, Facebook, and Amazon cannot acquire new companies, which actually reduces competition. The reason is that if there is less M&A due to legal uncertainty, there is a reduced incentive for the angels and VCs to fund those startups in the first place.
– Balaji S. Srinivasan (@balajis) March 8, 2019
A regulation that seeks to reduce the power of a large company often ends up increasing it, by erecting entry barriers for new companies. Often times that barrier is licensing. In this case the barrier would reduce access to capital.
– Balaji S. Srinivasan (@balajis) March 8, 2019
“There are two separate themes here that are being combined. One problem is whether we need regulation in full-platform companies. And the answer is absolutely, “says Venky Ganesan, The Managing Director of Menlo Ventures. “These platforms have a great impact on society in general and they have a great influence.”
But while platforms need to be regulated, Ganesan says, Senator Warren’s approach is an overreaching exercise.
“That plan is like bringing a bazooka to a knife fight. It’s overwhelming and it’s not commensurate with the issues, “says Ganesan.” I don’t think venture capital is concerned at the end of the day about competition from these big platform companies. [And] since the proposal is composed, it would create more obstacles rather than fewer. “
Using Warren’s own example from the antitrust cases that were brought against companies like AT&T and Microsoft It’s a good model for how to proceed, says Ganesan. “We want the technocrats in the FTC to figure out the right way to strike the balance.”
Kara Nortman, A partner at Los Angeles-based firm Upfront Ventures is also concerned about the potential unintended consequences of Warren’s proposals.
“The specifics of the policy as presented seem to me to have potentially negative consequences for innovation. These companies are financing massive innovation initiatives in our country. “They are creating jobs and taking risks in areas of technology development where we could potentially fall behind other countries and end up reducing our quality of life,” says Nortman. “We are not seeing innovation or initiative coming from the government, or that support to encourage immigration and, by extension, embrace talented foreign entrepreneurs who could develop new technologies and businesses.”
Nortman sees Warren’s announcement as an attempt to start a dialogue between government regulators and big tech companies.
“My hope is that this is the beginning of a dialogue that is constructive,” says Nortman. “And given that Elizabeth Warren is a politician, this is probably the first salvo toward a commitment with the tech community to work collaboratively on the problems we all want to solve and that some of us are dedicating our career as a venture company to help. to solve. “