Amidst a national push by some lawmakers and government regulators to bring back “big is bad” and begin “reining in Big Tech,” a new report provides fresh evidence that far from harming other businesses, large companies like Meta — the parent company of Facebook — frequently help them. Specifically, the report provides evidence that most American businesses benefit financially from using Meta’s advertising platforms to “connect with their customers and reach new audiences.” The report also examines Meta’s economic contributions to the U.S. economy and to the economies of all 50 states.
Several findings from the report stand out.
Meta’s advertising technologies generate $415 billion in economic activity annually for the U.S. and support 3.1 million jobs according to 2022 data. That is more money than the Total Gross State Product (GSP) of 30 states and represents almost two percent of all American jobs.
These numbers are also consistent with the economic contributions of other major tech companies. In 2022, Google services, which include Google Cloud, Google Play, Google Search, YouTube and other tools, provided $701 billion in economic activity to the American economy, with over 18 million American businesses regularly using Google’s free digital tools.
Even the staunchest critics of Big Tech must admit that businesses like Meta serve as a critical engine of economic growth, that would not be easily be replaced if broken up, as some lawmakers have proposed.
Meta’s economic activity also tends to help small and medium-sized businesses (SMBs), defined as having 250 or fewer employees. Ironically, it is these businesses that critics frequently argue are harmed by Big Tech. Yet, 96 percent of SMBs use Facebook, which remains the world’s most popular social media website. SMBs would be foolish not to advertise on such a large platform. Indeed, 57 percent report communicating directly with customers through digital tools.
Businesses of all sizes benefit from large platform digital tools. As the Connected Commerce Council noted in a 2021 study, companies that integrate digital tools — such as platforms, services, marketplaces, and other software — into their business models generate 50 percent more revenue than businesses that do not. They also develop stronger customer bases and hire two times more employees on average. Similarly, a 2022 Uber Eats study found that more than 85 percent SMBs that partner with the company have reported an increase in revenue.
The use of platform advertising also generates more money than it costs. In 2022 alone, U.S. businesses spent $48.9 billion advertising on Meta digital platforms. Research from the University of California Berkley found that businesses earn $3.21 in revenue for every dollar they spend on advertising. Using this, Meta was able to determine that U.S. advertisers earn $162 billion annually from Meta digital ads, suggesting that, on average, any company that spends money on Meta digital ads makes more than enough to recoup its costs.
Meta’s digital tools also aid businesses led by historically marginalized people. According to the report, 46 percent of SMBs that use Facebook are women-owned and 38 percent are minority-owned. In contrast, a recent business survey found that just 21.4 percent of businesses in the U.S. are owned by women, and only 19.9 percent are owned by minorities. While not a perfect comparison, Meta digital tools also serve as a valuable platform for people that have historically lacked representation.
Big Tech companies like Meta can and do help other businesses. Rather than squashing competition, they provide other businesses, specifically SMBs, with the tools necessary to survive in the modern digital economy. That is something that all lawmakers, regardless of politics, should recognize is worth celebrating.
Published in the Medium