TJ Walker argues that Paul Atkins' SEC proposals to revive IPOs by cutting disclosure rules miss the real problem: tech giants like Meta and Amazon have bought up potential public companies. The number of U.S. public companies has fallen from 8,090 in 1996 to 4,010 in 2024. Stronger antitrust enforcement, not deregulation, is what's needed.
Can Paul Adkins make IPOs great again? The New York Times Dealbook reports that SEC chair Paul Atkins wants to revive listings by trimming disclosure, limiting some shareholder proposals, and allowing arbitration for investor disputes. He argues disclosure isn't meant to be a torture, it's meant to provide information. Critics counter the IPO drought isn't just red tape, it's merger and acquisition gravity. Over the last 15 years, Big Tech bought many would be public companies. Meta picked up Instagram, WhatsApp and Oculus. Amazon bought Twitch, Ring and Pillback. Alphabet acquired Waves, Nest, and Looker. A Dartmouth analysis attributes much of the listings declines to acquisitions, while World bank data shows U.S. public companies fell from roughly 8,090 way back in 1996 to only about 4,010 in 2024. Harvard Research ties rising mergers and acquisition activity to winner take all Dynamics. Even if the SEC speeds filings, startups may still prefer fast certain takeover. Reforming IPOs without addressing mega buyer dominance risks losing the pipeline before it reaches Wall Street. What's the real message here? The idea that you're going to make ipos great again by reducing bureaucracy or making things opaque, not requiring disclosure, is an absolute fantasy. If you want more IPOs, we need strong antitrust enforcement so that Facebook and Medicare gobble up every single company in the world. Let's dig a little bit deeper here. I too would like to see more companies go public. Again, I'm a capitalist here. I'm a sane, sensible centrist. I'm assuming most of you in this audience can consider yourself some version of that or you wouldn't be watching this show. I believe in capital. I want most of the market, most of our economy in the United States and around the world in the hands of free enterprise, in the hands of non government entities. So this is not a socialism versus antisocialism free market type of debate here. The issue is how do you create an environment? The whole concept of free markets is competition. The the whole concept of competition is there are rules. We can't have a boxing match and I come out with my boxing gloves and you just take a laser gun, zap me, and I fall over dead. That's not a competition. If you're going to have competition in an economy, there have to be rules that will follow. Now, unfortunately, in recent decades in the United States, the antitrust laws have been interpreted as as long as prices don't go up, companies can get bigger and bigger and bigger. And we've seen from that Amazon gobbling up everything in its wake. We've seen Facebook gobbling up every competitor, Google gobbling up everything. And it just makes it virtually impossible for new companies, especially new technology, to really grow to the point of becoming public. Now again, why should anyone care if a company is public? Because that's the only opportunity. Someone who isn't really connected and fabulously wealthy and have close ties to, to major hedge funds and major banks in New York City can own pieces of companies. If you're not an insider, typically you're going to not get a part of any insider deal. And that's how private companies work. They have the, they have the right to do that. But when a company goes public that anyone in the world who has enough money to buy one share can own a piece of that company, it's essentially democratizing Our capitalistic system, which is a good thing, diffuses risk, it allows more people to have an ownership state in our free market system to build wealth. We want that. And that's what's been really a huge problem. Going from 8,000 publicly traded companies 30 years ago, less than 30 years ago, to half of that. So it's been cut in half, 50% loss. Companies are getting bigger and bigger. They have more marketing power and they're able to just crush dissent. Imagine yourself trying to start a competitor to Amazon right now. You would be laughed out of every venture capitalist office in the country today if you did that. They'd be like, you can't compete, they're going to smush you like a bug. Whereas imagine 30 years ago or 40 years ago, you wanted to perhaps raise capital from people in your community and say, look, we got this huge new development on the east northeast part of town, relatively affluent, there's no grocery stores there within a 10 minute drive of the people who live there. I want to start a grocery store. You could probably raise money to start a grocery store 40 years ago, but the equivalent is not true today with any kind of big company and any kind of tech company. And this administration is correctly identifying the problem. I give them credit for that. But what they're not doing is putting their finger on what the real solution is. It's not telling publicly traded companies, oh, you don't have to fill out forms on how you did the last quarter. The other theory that Paul Adkins is pointing out is we want to make it easier for companies to do things the same way they do when they are a private company. Private company. You can just say, anyone who deals with us, you agree not to ever file a lawsuit against us. Court of law, you have to come to arbitration. Yeah, that's better for the company, but that's not how things work in the real world. When you're a publicly traded company wants to get rid of that provision, wants to make it easier for companies to hide information. That's really not the problem. The problem is companies cannot grow to the point of going public because these biggest, the biggest tech companies, the Googles, the Metas, the Facebook, the Amazon, are so big, once they see you doing well, they can actually use their market power to put you out of business. Amazon did it to diapers.com Facebook essentially did it to Instagram. You're so big, we want you now. The Instagram people were happy to sell. A part of their theory was we're not going to be able to get big enough to go public. So yeah, we'll make a lot of money. It's not really our first choice, but we got to do it. You could make the case that other companies like Waze would have loved to have been their own publicly traded company, perfectly independent. But the intersection, the so called synergy of Google already controlling all the data in the world kind of force their hands. It doesn't have to be that way. You could have a football field that is 100 yards long, you could have 1 that's 40 yards long, you could have 1that's 200 yards. These are rules that rule makers make. It would in no way be against the concept of capitalism to simply change the rules. Have antitrust regulators say, okay, Facebook, you can't keep buying up companies. We want competition, we want competition for advertising. If you think there's competition for advertising today, you are deluding yourself. You basically have to deal with Facebook and Google and they can kind of charge whatever they want and they can also give you a lot of garbage and clickbait and fraud and not really deliver. What are you going to do? You want to call up customers? Guess what? There is no customer service. It's just send me your money because we're so big and powerful. If you don't like it, stop it. I mean that is the attitude of these big, big companies and they can get away with it. You know what? It's our fault. It's our fault for supporting legislators. And this is cross both parties here, folks. Let's be honest. The Democrats and the Republicans in the United States for too long have taken the attitude of as long as the customer doesn't see a monopoly making the prices skyrocket, then it's okay. And Amazon did not take their monopoly power and all of a sudden start charging 4, 500, 600% premium to be more profitable. For the short run, they played the long game. And Jeff Bezos said, you know what? I'm just going to keep cutting costs, keep cutting cost and really make that attractive. For one thing, it keeps the regulators off of me. For the other, it shows so much growth, I'm going to make all my money. With my stock price going up, I don't have to gouge. But at some point when they have no competition, guess what? They they can charge anything they want for those batteries delivered for the Kleenex you want the next day. And you're like, man, you're too lazy to go to the store. You're out of ink for your pen, and you want to press that button, and instead of it coming to you for 80 cents, maybe it's $49 and you don't even realize it. So that's the problem with our current state of affairs when it comes to big companies being able to buy up small ones and the fact that it's virtually impossible to have an independent or an initial public offer today, and gimmicks suggested by the current head of the SEC are not going to solve the problem.
