Excessive Regulation May Hinder Buffalo Tech Startups

A congressional bill, the American Innovation and Choice Online Act, is a priority for populist antitrust crusaders seeking to rein in the power of big tech companies. But antitrust populists and their “big is bad” rallying cry ignore the reality that large-scale digital platforms mean consumers, creators, app developers and small businesses all have more choice and a wider audience, making the platforms more valuable for all parties. In a recent white paper, my co-author and I explain how this well-intentioned legislation could harm those it seeks to protect and disrupt the tech startup ecosystem, including here in Buffalo. This will have a disincentive effect on private investment and limit mergers and acquisitions, thereby reducing the exit valuations of innovative startup founders.

State lawmakers, including New York, are also considering bills of concern. Replacing the legal framework of competition policy with the obscure criterion of “abuse of dominant position” would discourage local investments due to vague and complex rules. These proposals would also harm the startup environment and lead to more government challenges to beneficial trade deals, making cities like Buffalo less attractive to entrepreneurs and investors.

Amid these regulatory threats, Governor Kathy Hochul’s Empire AI initiative is a breath of fresh air. By injecting public and private investment into artificial intelligence research, New York aims to become the next Silicon Valley. “We are currently experiencing our Erie Canal moment,” Hochul remarked recently, highlighting the proposal’s transformative potential to maintain New York and the United States’ lead in global innovation.especially as the United States competes with China for leadership in emerging technologies.

However, if Albany and Washington continue to model themselves on European-style regulations that suppress innovation, the bright future envisioned by Governor Hochul could be seriously compromised. As the American Edge report highlights, Europe’s tech ecosystem is hampered by strict regulations and pales in comparison to the United States in terms of the size and dynamism of our innovation economy. Overly restrictive policies could shift investments overseas and incentivize founders to seek greener pastures in less regulated markets.

Given the broad benefits that a vibrant tech community brings, lawmakers should focus on developing thriving innovation ecosystems like Buffalo’s. The growth of our local economic startups – and America’s leadership on the global stage – depends on how our policymakers choose to approach the technologies of the future.

Cameron D. Miller, Ph.D., is an associate professor at the Whitman School of Management at Syracuse University. And co-author of “How Populist Antitrust Legislation Would Hurt America’s Tech Startup Ecosystem.”