KELLY: Congress’s flawed legislation threatens North Carolina’s tech leadership & small businesses

In this Feb. 22, 2021, file photo, a woman wearing a face mask sits near a screen showing China and U.S. flags as she listens to a speech by Chinese Foreign Minister Wang Yi at the Lanting Forum on bringing China-U.S. relations back to the right track, at the Ministry of Foreign Affairs office in Beijing. (AP Photo/Andy Wong, File)

By any measure, North Carolina is one of the top technology and innovation leaders in America. The Research Triangle — home to three research universities, as well as hundreds of technology companies — concentrates talent, research, and resources into one of the most vibrant and successful innovation ecosystems in the United States. Additionally, in just the past five years, 1,125 North Carolina-based startups have raised $12.5 billion to fund their innovative ideas and grow their businesses. Few states can match this powerhouse performance.  

But short-sighted legislation being considered in Washington not only threatens North Carolina’s innovation capabilities, it would also hurt the state’s small business community and hand China — America’s toughest technology competitor — a decades-long advantage in global technology leadership. While these bills purport to target America’s largest technology companies, in reality, their onerous effects would hamper the entire tech industry in the United States. 

What Congress fails to understand is that technology isn’t just another sector— it’s the essential backbone of our national security, our economic prosperity, and our values. Technology protects us from foreign cyberattacks, deters our adversaries, powers our businesses, and provides the free flow of information across borders, allowing for greater expression, idea exchanges, and innovation.  

Among the biggest users of American technology tools are North Carolina’s 964,000 small businesses. These businesses, which employ 45 percent of all employees in the state, utilize cloud computing to store and manage their data, social media and marketing automation to affordably reach new customers, and e-commerce platforms to tap broader global markets.  

These technology tools help North Carolina small businesses remain competitive in an increasingly digital world. These tools were also a lifeline that helped many survive the toughest times during the pandemic. In fact, without the digital safety net that U.S. tech companies provides, 11.1 million small business nationally (37.1 percent) would have closed all or part of their business.  

How bad would Congress’s proposed new bills be for small businesses? One study found that if these anti-innovation bills passed, small and medium-sized retail businesses would lose roughly $500 billion in sales in just the first five years after passage, amounting to an informal “regulatory tax” on small businesses of 5.2% of their sales, or an average of $1,712 per seller. That’s a painful hit that few small businesses in North Carolina could survive, especially on top of two years of COVID revenue loses and 40-year high inflation over the past year. These short-sighted bills would also make small businesses more reliant on China-controlled technology, putting critical financial and customer data at greater risk.  

North Carolina’s businesses and universities are also top targets for China-based hackers. In fact, Chinese theft of American intellectual property (IP) currently costs between $225 billion and $600 billion annually, and a 2019 survey found that 1 in 5 corporations say China has stolen their IP within the last year. It’s one thing for a country to boost its capabilities by investing; it’s another story when they steal key technologies outright.  

The ability of North Carolina to remain a leader in technology and research innovation is critical to its economic success. In order to ensure that the state remains competitive, it is important for Congress to pass legislation that promotes and accelerates innovation, rather than hindering it. Such legislation should focus on the development of new technologies, the expansion of existing ones, the removal of any barriers to innovation, as well as checking China’s tech ambitions and property theft. Ultimately, this approach — not harsh legislation— will help to ensure that North Carolina remains at the forefront of technology and research innovation. 

Doug Kelly is CEO of the American Edge Project (AEP), a coalition of nearly two dozen organizations committed to advancing and protecting American innovation and technology.