The American Innovation and Choice Online Act (AICOA) may be emerging for another round of debate — and it’s still a very bad idea.
In 2022, the Progressive Policy Institute issued reports showing that the original version of AICOA — a piece of legislation aimed to hobble America’s most successful tech companies — was bad for consumers, bad for innovation, and bad for the economy.
Happily, the legislation did not become law back then, despite the impassioned warnings of its supporters. Meanwhile, the European Union did pass its version of anti-American-tech legislation, the Digital Markets Act (DMA), setting up a type of natural experiment.
Since then, digital competition in the U.S. has only intensified. New AI companies have been sprouting left and right, led by startups such as OpenAI, Anthropic, Databricks, xAI, Anysphere (owner of Cursor), and Perplexity AI.
Moreover, the U.S. info/tech sector continues to outperform the rest of the economy.
- The U.S.info/tech sector has grown at a 7.5% rate over the past two years, roughly triple the pace of the rest of the U.S. economy. (This includes NAICS 51 AND NAICS 5415).
- Prices in the U.S. info/tech sector have fallen over the past two years, while continuing to rise in the rest of the economy.
- Even with the latest rounds of tech layoffs, employment in the info/tech sector, including ecommerce industries, is up almost 900,000 since 2019. That’s an 11.6% gain — more than double the rest of the U.S. private sector.
And what about Europe and its strict regulatory regime? There’s widespread agreement that Europe is lagging in AI and in innovation more generally. European firms account for only 6 out of the top 50 AI startups. The EU information and communication sector is growing at only a 1% annual rate, with no sign of any positive benefits from the DMA.
To be sure, some form of AI regulation is appropriate. But a slightly retooled version of AICOA will only hurt consumers and slow growth, without serving any useful purpose at all.
