DMA for the USA? Congress Has Better Priorities Than Overhauling Antitrust Law

With Congress now back at work with a full schedule of important policy items to address, overhauling U.S. antitrust law in the digital space should not be on the agenda. And yet this could be exactly what is coming. Earlier this year, Representative Kat Cammack introduced the App Store Freedom Act (AFSA), which would impose a number of interoperability requirements and conduct bans on mobile platforms like Google and Apple. Meanwhile, responding to Judge Mehta’s correct decision not to break up Google, Senator Amy Klobuchar claimed that “the limited remedies ordered by the court demonstrate why we need additional rules of the road for Big Tech,” particularly the American Innovation and Choice Online Act (AICOA)—a bill that would chill numerous procompetitive business practices and harm consumers and innovation.

Sweeping antitrust reforms such as these are justified only in response to a real market failure, typically exhibited by persistently high prices, reduced output, or diminished innovation. But it’s not hard to see that the evidence is strongly to the contrary: As courts found in the Epic v. Google saga, the mobile app space has witnessed “expansive market growth caused by innovation in the field,” with key verticals like “mobile game transactions” having “grown dramatically over recent years due to growth in gaming generally, smartphone ownership, and digital transactions as a whole.” Indeed, rather than stagnate, the digital ecosystem as a whole is currently being disrupted by the next wave of procompetitive creative destruction in the form of artificial intelligence—in large part as a result of the investments and innovations of the “Big Tech” firms that are supposedly aiding and abetting digital market failure.

To give but one example, consider Google—a leading AI innovator—and its search product, long considered one of the most powerful and entrenched of the so-called digital monopolies. While finding that AI was not a constraint on Google’s alleged search monopoly power in the backward-looking analysis of whether the company acted anticompetitively, even Judge Mehta, in his forward-looking remedies opinion, was forced to admit that the “emergence of GenAI changed the course of this case.” As OpenAI’s CFO stated over the summer, in six months the company’s share of search doubled from 6 percent to 12 percent, which she clarified was even an underestimate given the nature of conversational searches. In fact, GenAI has become such a competitive threat to search that Judge Mehta imposed behavioral restrictions on Google in the very AI markets that he had previously dismissed as not posing a meaningful competitive constraint on search.

Even if there were real digital market failures, that would not be sufficient to support broad new bills like AFSA or AICOA. Rather, there would have to be grounds for thinking that existing antitrust law enforcement was insufficient to correct them. Indeed, this was a central argument made by the European Union in advocating for its now active Digital Markets Act (DMA) regime, an antitrust regulation targeting America’s largest firms with heavy-handed conduct restrictions and obligations. In Europe’s view, the DMA was justified after over two decades of lengthy, cumbersome antitrust investigations against U.S. tech companies, ultimately encompassing dozens of cases at both the European Commission and member state levels, which were seen as failing to achieve the EU’s (still highly flawed) competition policy goals.

The situation across the pond in the United States, of course, could not be more different. All of the numerous high-profile federal lawsuits against Amazon, Apple, Google, and Meta are without final resolution, with several far from trial. What’s more, the government is batting two-for-three, with courts finding that Google acted anticompetitively in search and in two key ad tech markets, even though it lost its recent case against Meta. And despite not obtaining the extreme remedy it had sought, namely a breakup of Google, the DOJ still proclaims that it “won significant remedies” in Judge Mehta’s search decision. Taken together, this record shows that the government is enforcing existing antitrust tools effectively. There is simply no reason for Congress to jump to new legislation under the claim that current antitrust laws in digital markets are insufficient.

Finally, even if a real market failure exists that cannot be addressed through the enforcement of existing antitrust tools, more regulatory measures are only justified if they will improve—rather than harm—the status quo. Unfortunately, that’s hardly what legislation like AFSA or AICOA are likely to do. As Professor Hovenkamp has explained, “AICOA was a bill that deserved to die,” as “[m]any of its consequences are uncertain, but others are just plain bad.” Specifically, not only does AICOA unfairly target innovative markets and firms based on size rather than market power, but its substantive rules would “condemn competitively harmless conduct by firms defined as gatekeepers.” The same is true with AFSA, which would principally ban the app distribution restrictions, in-app payment rules, and anti-steering practices that U.S. courts concluded in Epic v. Apple were procompetitive and lawful under the Sherman Act.

The rollout of the DMA in Europe has only confirmed the risks that such legislation would bring. As ITIF has highlighted, AICOA-like bans on self-preferencing have not only led to consumers complaining about a worse user experience for products like Google search and maps, but search traffic has as a result been redirected to Google’s large intermediary competitors, often at the expense of the small businesses (e.g., restaurants and hotels) that the DMA was ostensibly designed to protect—potentially resulting in as much as a 50 percent reduction in their online traffic and millions of euros in lost revenues. Moreover, the increased privacy and security risks created by the DMA’s interoperability requirements have led to reduced innovation, forcing Apple to delay the rollout of Apple Intelligence and withhold the release of new features for AirPods Pro 3 in Europe.

Amidst a tumultuous political climate, persistent economic anxieties, rapid technological changes, and an existential techno-economic competition with China, rehauling American antitrust law with new digital rules is attention better spent elsewhere. America’s existing antitrust laws are time-tested tools that have weathered the many gales of creative destruction for over a century and helped make the United States the global techno-economic leader it is today, a position that the nation must work diligently to maintain going forward.