Illustration: Sarah Grillo/Axios

Silicon Valley investors downplayed concerns that big tech companies inhibit startups, during a recent workshop hosted by the U.S. Justice Department and Stanford University's law school.

Why it matters: Antitrust regulators are paying increased attention to Silicon Valley's M&A culture.

What they’re saying: “I think [government regulation] is the greatest impediment to the creation of smaller companies and to moving fast,” said Sequoia Capital’s Michael Moritz, echoing a familiar anti-government refrain from Silicon Valley.

  • He later pointed the finger at "the school classrooms of America" for lagging behind China's educational achievements. "We're killing the future technologists of the United States."

VCs also argued that because they tend to invest in “the next thing," big tech incumbents aren’t a deterrent for their business.

  • “Would you invest in PC operating systems today? Would you invest in microprocessors today? Would you invest in combustion automobiles today? No, you wouldn't if you’re a good investor,” said Ram Shriram, an early investor in Google and one of its current directors.
  • Similarly, Moritz pointed out that companies like Google and Nvidia didn’t set out to take on incumbents like Microsoft and Intel.

But, but, but: Some disagreed.

  • “I’ve seen dozens of startups wanting to do something to compete with Linkedin but that’s so hard to do — incredibly strong network effects to overcome,” said Switch Ventures partner Paul Arnold.
  • Early Facebook backer Roger McNamee argued that “the business models of Google, Facebook, Amazon, and Microsoft and of the venture firms… may not be optimal for the economy as a whole.”

Between the lines: Many worried about the impact that increased M&A regulation could have on incentives for everyone involved.

  • “If I’m a founder or I’m an investor, and I’m thinking about starting a company in a core market of an incumbent…. what if Plan B (M&A) is not an option—that changes things,” said Trinity Ventures' Patricia Nakache.

The bottom line: While Silicon Valley's investors and entrepreneurs love market competition, they also value the rewards of winning a competition—being a big and powerful company.

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