Many on Capitol Hill are eager to rein in the power of the largest tech companies.
But some of their proposals could actually hurt the smaller companies they’re meant to protect, venture capitalists warn.
VCs are particularly concerned about efforts in Congress to restrict mergers and acquisitions by dominant platforms. Such proposals would work by shifting the burden of proof onto those firms in merger cases to show their deals would not harm competition.
Reform advocates have pointed to some acquisitions, like that of Instagram by Facebook, as examples of companies selling before they have the chance to grow organically and become standalone rivals to larger firms. But VCs say that’s often not the case.
“They all think they could be public companies one day, but the realities are, it’s not realistic for most of these companies to achieve the size and scale to survive the public markets as of today,” said Michael Brown, general partnerat Battery Ventures.
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