Digital Economy

Senators Should Avoid Making the Digital Economy More European

By Arthur Sidney, Project DisCo

With the Senate Judiciary Committee set to markup S. 2992, the American Innovation and Choice Online Act (AICOA), this week, it’s worth taking a closer look at the bill’s European origins, and how it would harm U.S. consumers, small businesses, and the U.S.’ global technological leadership. 

The EU’s Digital Ambitions

After years of calls from European leaders to introduce more industrial policy into competition enforcement, to promote the creation of national champions, and to assert European “digital sovereignty” (i.e. protectionism and increased barriers to trade), the European Commission introduced the Digital Markets Act (DMA) in December of 2020. The legislation is designed to create “contestability” for European digital rivals, and “fairness” for European business users of platform services, by imposing a series of obligations on companies designated as “gatekeepers”.

European lawmakers have been quite explicit in their desire to target only U.S. platforms with the law’s obligations. These one-size-fits-all obligations are designed to make the designated “gatekeepers” less competitive, to open up their technology and infrastructure to rivals (sometimes for free), to share user data, and to redesign their products and services in ways that will make it easier for European businesses to compete. The DMA would prohibit a range of behaviour that is known to be pro-competitive and to create value for platform users, effectively giving rivals a leg-up competitively at gatekeepers’ expense. The allegedly pro-competitive effects of the DMA are built on questionable assumptions, at best.

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