Some American policymakers have sought to adopt and adapt aspects and principles of the European Union’s Digital Markets Act in an effort to regulate Big Tech giants. In new research, Giovanna Massarotto writes that the principle ideologies driving American and European antitrust, and the broader political economy, renders the DMA and its principles too foreign for American adoption.
United States antitrust law is at a crossroads. Technology is disrupting every aspect of our economy and society. Digital platforms have transformed how we shop, search, interact, and pay, to name a few. The spotlight is now on artificial intelligence, where large digital platforms, including Google, Amazon, Microsoft, Apple, and Meta, have a unique advantage. For decades these companies have collected data that fuel large-scale AI algorithms, creating databases that are hard, if not impossible, to replicate.
For many years, the antitrust debate focused on reigning in tech titans, but the current AI wave underscores the urgent need for the U.S. to address the concentration of power in digital markets. Tech titans are predominantly American companies; thus, it is felt that they are primarily the responsibility of U.S. policymakers. Are the present antitrust proceedings in the U.S., including those against Google and Amazon, sufficient to reign in tech titans? Or does antitrust policy need to adapt to the digital economy?
Looking for insights in the other major antitrust jurisdiction of Europe, my new working paper, “Regulating Tech Titans: What American Antitrust Can Learn from Europe,” explores the European solution to regulating large digital platforms and its applicability to the U.S. regulatory regime. In 2022, Europe adopted the Digital Markets Act (DMA) to govern tech titans. The DMA implements a new ex-ante regulatory framework that targets digital companies because they are big. Companies active in core digital services, such as internet search, that meet specific thresholds based on size are defined as “gatekeepers” and are subject to a set of prohibitions and obligations.
To date, gatekeepers subject to the DMA prohibitions and obligations include Amazon, Apple, Google, Meta, Microsoft, ByteDance and Booking. Obligations include interoperability, which typically requires a company to share information about its products to enable rivals to create compatible products, and data portability, meaning that gatekeepers must enable users to transfer their data easily between services. An example of a DMA prohibition is self-preferencing, requiring platforms like Amazon and Google Search to not favor their own products over competitors. Traditionally, these prohibitions and obligations are evaluated on a case-by-case basis, requiring an assessment of market power and competitive harm. Under the DMA in Europe, these obligations and prohibitions are imposed by default on gatekeepers. The DMA complements antitrust law in Europe to address competition concerns in digital markets (the DMA framework).
The U.S has considered the European solution by introducing a set of antitrust bills into Congress in 2021 and 2022 that would implement an ex ante regulatory framework similar to the DMA to rein in tech titans. Remedies defined in these bills look very similar, if not identical, to the DMA obligations and prohibitions, including self-preferencing prohibitions and remedial data portability and interoperability. So far, none of these antitrust bills have passed or are likely to anytime soon. Still, a trend toward a more formalistic DMA-like legislation to enforce competition has emerged in the U.S., with rulemaking at the antitrust agencies identified as a valid mechanism for advancing the U.S. antitrust law. Additionally, previous European regulations in digital markets, such as the General Data Protection Regulation (GDPR), are affecting American companies due to their extra-territorial scope. The influence of the DMA and other European laws on the American regulatory landscape raises the question of how viable a DMA-type approach is for the U.S. in its effort to rein in tech titans.
My study addresses this question by mapping out the roots of the DMA in the European intellectual framework. First, I identified four DMA core features in: 1. the DMA approach; 2. the DMA legal framework; 3. the DMA scope; 4. the DMA purpose. The DMA approach means the government’s increasing power and interest to intervene in the economy by introducing a new legal framework (DMA legal framework) to regulate large companies (DMA scope) to pursue fairness and contestability (DMA purpose).
I then examined three major European schools of political economy—the Historical School, the Austrian School of Economics, and Ordoliberalism—to trace the origins of the DMA’s core features. My analysis underscores how all DMA core features are rooted in Ordoliberalism. The ordoliberal ideology advances the state’s role in regulating the economy. It supports reining in powerful firms to achieve a range of goals, including fairness and contestability in markets (the DMA core features). Ordoliberalism advocates that competition is necessary to secure economic order and human freedom, and a legal framework is required to ensure the competition process—the so-called rules of the game. Rather than a single school of thought, Ordoliberalism is best understood as a framework for thinking about order in the economy, inspired by Immanuel Kant’s categorical imperatives. It is far from a monolithic concept; Ordoliberalism developed through different strands, including the Freiburg and non-Freiburg Schools, and at least three generations of scholars. While the Freiburg School focused on the concept of a legal framework (formalism) for competition to ensure economic order through a strong state (DMA approach and legal framework), ordoliberals of the non-Freiburg School developed the concept of a social market economy, which emphasizes the moral and ethical dimension of markets and competition (DMA purpose) and the fight against the “the cult of the colossal” (DMA scope).
Next, I examined whether the DMA core features and ordoliberal ideology exist in the U.S. to support a DMA-like legislation to regulate tech titans. My historical comparative analysis reveals that the DMA approach to regulating tech titans is inconsistent with the U.S. legal and economic structures rooted in the common law and economic neoclassical traditions representing the antithesis of the DMA. The U.S. common law tradition is characterized by a flexible, case-by-case approach to legal decision-making, in contrast to a rigid ex-ante legal framework. Neoclassical economics set the tone for enforcing competition in the U.S., shaping the major antitrust schools, including the Harvard school, and even more so the Chicago and Post-Chicago schools. These schools reject the idea that competition should have an ethical dimension (no DMA purpose) by developing economic analytical tools to assist antitrust enforcers in assessing competition on a case-by-case basis consistent with a common law tradition (no DMA legal framework and approach). Because large companies can leverage economies of scale and reduce the price of goods and services for consumers, large corporations are not necessarily bad and do not need to be regulated by default (no DMA scope).
In the U.S., the Neo-Brandeis movement embraces a formalistic, ordoliberal-inspired approach to competition, emphasizing principles that extend beyond neoclassical economic efficiency evaluations. However, this movement is not supported by the different American legal and economic structures.
Furthermore, Neo-Brandeisians and ordoliberals diverge on several important fronts. Ordoliberals developed a morphological framework to analyze market structures and the economic order theory in response to the failure of centrally planned and total laissez fair economies that are absent in the Neo-Brandeisian movement. While many Neo-Brandeisians reject consumer welfare as a driving antitrust goal, ordoliberals developed the notion of consumer welfare within a performance-based (Leistungswettbewerb) approach to competition, which is enforced formalistically. This concept refers to a market order governed by rules designed to align producers with consumer interests. In other words, despite some similarities, ordoliberals and Neo-Brandesians diverge in their foundations.
In conclusion, the U.S. does not possess a similar ordoliberal tradition and way of thinking about competition that can support a DMA-type solution to regulating tech titans, as found in Europe. In Europe, competition law represented a pillar in the creation of the European single market, a goal foreign to the U.S., and Europe is based on a civil rather than a common law system. The U.S. Supreme Court rejected an ethical (moral) interpretation of competition, while fair competition is rooted in the treaty that founded what we now call Europe.
However, the U.S. can derive valuable lessons from the European experience. Similar to Europe, the U.S. should adapt its enforcement action consistent with its core values and tradition by updating its analytical tools to assess competition within a digital framework, rather than falling into the fallacy of a legal transplant. My scholarship draws on insights from computer science to modernize U.S. antitrust analytical tools, enhancing their ability to interpret competition in a computer-driven digital economy. Second, both the U.S. and Europe recognize competition as fundamental to economic freedom. Ordoliberals provide a theoretical foundation that positions competition as a constitutional principle guiding competition policy, which supports U.S. courts and scholars who view antitrust law as crucial for safeguarding economic freedom.
The U.S. stands at a pivotal moment to advance its antitrust law for the digital economy. It must do so while remaining true to its core values and traditions.
Author Disclosure: the author reports no conflicts of interest. You can read our disclosure policy here.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
