Small businesses piggybacked on large Web enterprises help stimulate the U.S. economy, a U.S. House committee hears.Small businesses, especially entrepreneurial Internet ventures, are crucial to stimulating the economy, said industry heavy-hitters today at the U.S. House of Representatives’ Committee on Small Business hearing.
The hearing, chaired by the committee’s chairwoman, Rep. Nydia Velázquez (D-N.Y.), featured comments from several prominent organizations including Google, Amazon and CompTIA.
Paul Misener, Amazon.com’s vice president of global public policy, noted that Amazon, Google and other industry heavyweights such as Yahoo and eBay were once small businesses that possessed the skills to take a technically complex foundation like the Internet and turn it into something useful to nontechnical people.
These companies paved the way, Misener said, for today’s small businesses, which can be successful without understanding much about the underlying Internet technology.
Today, Misener said, the sales generated by small businesses via e-commerce accounts for as much as one-fourth of all consumer e-commerce in the United States, although surveys, including the U.S. Census, tend to greatly underestimate that number.
“Amazon.com is first on the Internet Retailer’s 2007 Top 500 list, which cites our nearly $11 billion in 2006 revenue,” he said. “Yet not all of that revenue is from sales by Amazon’s retail business. An important and growing part of our business is from service fees on sales made with our help by smaller sales. Only these fees are included in the revenue total, not the actual value of sales.”
What’s more, pure platform and search service providers such as eBay and Google didn’t even make the list, as well as billions of dollars transacted by small businesses online with the help of service providers like Google, Yahoo, Microsoft and AOL, he added.
Another area where small businesses are stimulating e-commerce is in online advertising, which allows them to connect efficiently and cost-effectively with their customers while stimulating the economy, said David Fischer, vice president of global online sales and operations at Google. Online advertising accounts for nearly all of Google’s revenue, Fischer said.
The majority of Google’s advertising customers and partners are small companies creating niche products for specific audiences, he added.
“There are millions of small businesses, millions of Web site publishers, and billions of people interacting on the ‘long tail’ around products and services catering to individual tastes and personalities,” he said. “And the economic potential in this long tail is driving some of the most successful and innovative businesses online today.”
Marc Steiger, CEO of DLP Technologies, a small reseller that has 11 employees and is a member of CompTIA, provided a different perspective to the importance and needs of small technology businesses.
DLP, which provides IT support services for small businesses and works on a project basis for midmarket companies, has the same concerns and aspirations as other small technology businesses.
Chief among those concerns is health care. Today, Steiger said he pays $68,000 in premiums for his company’s 11 employees, which amounts to 10 percent of the company’s total employee costs. But one large claim could bring the system down. Clearly, the system must be fixed, he said.
These concerns have prompted CompTIA to call for the establishment of a Small Business Health Care Coverage Task Force to study these issues. CompTIA also supports the adoption of health information technology as a means of providing more efficient and less costly health care, he said.
Steiger also called for making the $200,000 small-business expense limit permanent and an end to “needless” regulation of the Internet. He also expressed concern about possible taxing of interstate transactions, as well as the impending implementation of a 3 percent federal income tax withholding on government payments to contractors, which he said would negatively impact small businesses.
