Over the past few weeks, there has been a growing concern regarding the potential impact of geo-political developments on EU regulations, notably regulations for digital markets. More recently, on 23 February 2025, the Committee on the Judiciary of the US House of Representatives sent a letter to EVP Ribera to (a) inform the European Commission that it is “conducting oversight of how and to what extent foreign laws are being used to discriminate against innovative American companies and insulate their European rivals from competition”, and (b) to request a briefing on the Commission’s approach to “DMA enforcement, ongoing DMA proceedings against American companies, and European plans to subsidize and build national champions.”
It is understandable why a super-power like the US wants to protect the interests of home-grown businesses that (a) offer services that have changed (and in many ways bettered) our daily lives, (b) create many jobs, and (c) contribute to the domestic and other economies. However, to ensure that an informed discussion about the intent and objectives of EU digital regulations takes place, it is important to resolve some misunderstandings that may have influenced the policy debate on the other side of the Atlantic, acknowledging that many of these misunderstandings may have been created by how tech giants present their side of the story.
In an effort to contribute to such informed discussion, this post analyses the Committee’s letter by (a) presenting the EU perspective and (b) setting out why the EU perspective is not necessarily different from American values that Congress has been trying to protect.
1. ‘The Committee on the Judiciary of the U.S. House of Representatives is conducting oversight of how and to what extent foreign laws are being used to discriminate against innovative American companies and insulate their European rivals from competition‘
The Committee’s letter is based on the premise that “foreign laws”, notably the DMA and the DSA, are protectionist instruments. However, the legislative history of these (and other) EU instruments may be offering a different perspective.
First, secondary pieces of legislation, such as the DMA and the DSA, cannot be adopted without serving the values enshrined in the Treaties and the Charter of Fundamental Rights of the EU. Notable examples of these values include the protection of minors, privacy/data protection, media pluralism, and freedom to conduct business. These values have always been important to the EU and its Member States and regulations protecting them have existed for a long time. Where secondary pieces of legislation undermine such values (or are enforced in a manner that undermines them), judicial review takes over. Indeed, many secondary pieces of legislation have been annulled because their legal basis and purported objective did not reflect the ideological premise on which they rested.
Second, most of the EU regulations that govern the digital economy, such as the P2B Regulation, the Unfair Commercial Practices Directive, the AI Act, the DSM Copyright Directive, and most of the obligations established in the DSA, apply irrespective of market/gatekeeping power (i.e., both small and big businesses must comply with them).
The DSA adopts a graduated approach whereby digital service providers are subject to stricter transparency and reporting requirements, depending on their size/reach. Certain obligations (Articles 33-43) are triggered depending on the size/reach of the covered platform, which may lead to a designation as a Very Large Online Platform (VLOP) or a Very Large Search Engine (VLOSE). If one takes a look at the list of VLOPs and VLOSEs that were designated under the DSA, one realises that said list includes several EU-based (and non-US) companies.
The DMA is the only piece of legislation that is entirely dependent on market/gatekeeping power and was enacted after several years of unsuccessful antitrust enforcement and after the completion of numerous studies and reports demonstrating that antitrust laws are simply insufficient to protect competition in digital markets. One of these reports is the report that sets out the results of the bipartisan investigation into competition in digital markets that was led by the Committee on the Judiciary. That same report focused on….Facebook, Google, Amazon, and Apple.
Therefore, to say that EU digital regulations are protectionist does not take account of (a) the checks and balances embedded in the EU legislative process and the judicial review system, (b) values that have always mattered to Europeans, and (c) the concerns arising from the monopolistic/abusive practices that have been found to affect EU and American markets.
2. ‘The Committee has previously expressed concerns about the European Union’s (EU) Digital Services Act (DSA), which seeks to censor political speech both in and outside the United States‘
Why should the DSA be treated as a means to censor political speech? Many of the obligations established in the DSA seek to ensure that harmful content does not reach end users, including minors/adolescents, with a view to creating a safe(r) online environment. As regards VLOPs and VLOSEs in particular, such obligations introduce requirements to assess any systemic risks stemming from the design or functioning of their service, including the dissemination of illegal content, and any negative effects on the rights of the child and gender-based violence.
Aren’t these some of the main concerns expressed in multiple hearings that took place in the US? As Senator Graham so eloquently put it during a hearing on child safety that took place a year ago:
“After years of working on this issue with you [tech giants] and others, I’ve come to conclude the following: social media companies -as they are currently designed and operate- are dangerous products. They’re destroying lives, threatening democracy itself. These companies must be reined in, or the worst is yet to come.”
3. ‘Proposed alongside the DSA, the Digital Markets Act (DMA) prohibits potentially pro-consumer behavior by certain companies that the Commission designates as “gatekeepers”‘
It is hard to imagine what would qualify as “potentially pro-consumer” behaviour prohibited by the DMA. The obligations established in the DMA reflect the outcome of antitrust investigations. In the context of these investigations, ample evidence was gathered and assessed to reach an informed conclusion on how the practices under consideration harm consumers, competition and innovation.
It is worth repeating that the DMA is asymmetric regulation (i.e., it only applies to companies with “gatekeeping” power); the companies that have been designated as gatekeepers have been under the antitrust microscope in the EU (and in many other parts of the world) for the conduct that is prohibited by the DMA. Relatedly, many antitrust decisions that concern the same practices as those prohibited by the DMA have been (a) subject to judicial review and (b) upheld by the EU and other courts.
4. ‘Gatekeepers that violate the DMA potentially face punishment from the Commission, including fines equalling 10 percent of the company’s annual revenue and, in instances of repeat violations, fines reaching 20 percent of annual revenue or even forced divestiture of assets. These severe fines appear to have two goals: to compel businesses to follow European standards worldwide, and as a European tax on American companies‘
This statement does not seem to take account of the initiatives preceding the adoption of the DMA. One of the main reasons the DMA was proposed was because ex post antitrust enforcement, which led to hefty fines (including record-breaking fines), failed to produce a deterrent effect. Indeed, companies with deep pockets (irrespective of whether they operate in digital markets or in the brick-and-mortar world) may treat fines as a manageable business expense. One way of addressing this problem was to impose ex ante rules of conduct.
More importantly, why does a fine (that results from a non-compliance decision) compel American businesses to follow European standards worldwide? There is no evidence of a “Brussels effect” taking place as a result of the adoption of the DMA. For example, it is unlikely that gatekeepers share with business users outside the EU the data they are required to share under Article 6(10) of the DMA.
From a legal standpoint, the geographic scope of the DMA is delineated in Article 1(2), which lays down that it applies “to core platform services provided or offered by gatekeepers to business users established in the Union or end users established or located in the Union, irrespective of the place of establishment or residence of the gatekeepers and irrespective of the law otherwise applicable to the provision of service”.
5. ‘European regulations like the DMA will hurt consumers and stifle innovation‘
When discussing innovation in the context of the DMA, we cannot focus solely on the ability of gatekeepers to innovate. Indeed, the DMA was adopted to enable other businesses to innovate. In EU law, freedom to conduct business is protected by primary rules, notably Article 16 of the Charter of Fundamental Rights. This right is not absolute. In the case of gatekeepers, it must be balanced against the others’ right to conduct business (and, by extension, to innovate). By “others” we do not refer only to EU-based companies, but also to the thousands of American corporations that (a) do business in the EU, and (b) have vocally supported the DMA, including the Commission’s non-compliance investigations.
In support of the argument that the DMA harms innovation, the letter notes that “[c]ertain innovative products and services offered by American companies will not be released in the EU or are being restricted because of the DMA and other European laws and regulations”. To corroborate this, it cites blogs published by… Google and an article published in the Verge that concerned Apple’s “potential delays to EU rollouts of new features like iPhone mirroring and Apple Intelligence”. This article mentions the following:
“Apple says upcoming features like its Apple Intelligence generative AI tools, iPhone Mirroring, and SharePlay screen sharing may not be available in the European Union this year, as reported previously by Bloomberg.
Why? The Digital Markets Act (DMA) says Apple, citing the EU law that puts strict requirements on the “gatekeepers” that control massive online platforms to block anticompetitive behavior. […]
Here is the statement sent to The Verge by Apple spokesperson […]:
Two weeks ago, Apple unveiled hundreds of new features that we are excited to bring to our users around the world. We are highly motivated to make these technologies accessible to all users. However, due to the regulatory uncertainties brought about by the Digital Markets Act (DMA), we do not believe that we will be able to roll out three of these features — iPhone Mirroring, SharePlay Screen Sharing enhancements, and Apple Intelligence — to our EU users this year.
Specifically, we are concerned that the interoperability requirements of the DMA could force us to compromise the integrity of our products in ways that risk user privacy and data security. We are committed to collaborating with the European Commission in an attempt to find a solution that would enable us to deliver these features to our EU customers without compromising their safety.”
The journalist then notes: “What specifically causes the concerns is unclear.” Indeed.
6. ‘DMA advertising and data rules have limited the ability of small businesses to reach consumers in a cost-effective manner‘
There is arguably a misunderstanding of what the DMA rules do to protect advertisers.
The DMA’s advertising rules (Article 5(9) and (10) and Article 6(8)) impose on gatekeepers certain transparency obligations so that advertisers and publishers know how effectively they spend their money on the gatekeepers’ advertising services. As a result, they do not limit (but rather strengthen) the ability of small businesses to reach consumers in a cost-effective manner. Indeed, ad fraud is a major issue in digital advertising markets; according to a recent study, ad fraud is likely to represent more than USD 50 billion by the end of this year.
As regards the DMA’s data rules, the letter states that “[t]hese data restrictions limit small advertisers’ ability to reach target audiences with advertisement” because “[a]dvertisers wishing to reach customers across multiple services offered by a company (for example, across Google Search and Maps) will now need to collect additional, specific user consent on top of when users already provide consents to access various services… This in turn may increase brands’ customer acquisition costs and impact small brands in particular, with limited budgets and high reliance on large platforms to reach their audiences”.
This does not reflect what the DMA really does. First, the DMA applies to gatekeepers and not small businesses. Pursuant to Article 5(2), gatekeepers (and not small businesses) must ensure that they get the users’ GDPR-compliant consent to combine data sourced from the different services they offer.
Moreover, Article 6(10) of the DMA establishes that gatekeepers must share personal data with other businesses only if end users opt in to such sharing. This mandated data sharing mechanism benefits (and does not restrict) advertisers and other businesses because data is a valuable input in advertising markets (the letter concedes this point). Under Article 6(10), gatekeepers may share personal data only if end users opt in to such sharing. The DMA establishes safeguards to ensure that the burden is on gatekeepers (and not on third parties) to extract consent. Pursuant to Article 13(5):
“Where consent for collecting, processing, cross-using and sharing of personal data is required to ensure compliance with this Regulation, a gatekeeper shall take the necessary steps either to enable business users to directly obtain the required consent to their processing, where that consent is required under Regulation (EU) 2016/679 or Directive 2002/58/EC, or to comply with Union data protection and privacy rules and principles in other ways, including by providing business users with duly anonymised data where appropriate. The gatekeeper shall not make the obtaining of that consent by the business user more burdensome than for its own services.”
Somewhat paradoxically, the letter then criticises the rules that force gatekeepers to share data with others (even though these are the same rules that enable advertisers and other small businesses to target audiences through advertisements).
Conclusions
The following weeks and months will be telling of how this matter will evolve. What is important to acknowledge is that American ideals and values are not that different from what European regulations seek to achieve.
A good example illustrating this point is one of the main conclusions reached by the report of the US Committee on the Judiciary on competition in digital platforms:
“The antitrust laws that Congress enacted in 1890 and 1914—the Sherman Act, the Clayton Act, and the Federal Trade Commission Act—reflected a recognition that unchecked monopoly power poses a threat to our economy as well as to our democracy. Congress reasserted this vision through subsequent antitrust laws, including the Robinson-Patman Act of 1936, the Celler-Kefauver Act of 1950, and the Hart-Scott-Rodino Act of 1976. In the decades since Congress enacted these foundational statutes, the courts have significantly weakened these laws and made it increasingly difficult for federal antitrust enforcers and private plaintiffs to successfully challenge anticompetitive conduct and mergers. By adopting a narrow construction of ‘‘consumer welfare’’ as the sole goal of the antitrust laws, the Supreme Court has limited the analysis of competitive harm to focus primarily on price and output rather than the competitive process—contravening legislative history and legislative intent. Simultaneously, courts have adopted the view that underenforcement of the antitrust laws is preferable to overenforcement, a position at odds with the clear legislative intent of the antitrust laws, as well as the view of Congress that private monopolies are a ‘menace to republican institutions.’ In recent decades, the Justice Department and the FTC have contributed to this problem by taking a narrow view of their legal authorities and issuing guidelines that are highly permissive of market power and its abuse. The overall result is an approach to antitrust that has significantly diverged from the laws that Congress enacted.
In part due to this narrowing, some of the anticompetitive business practices that the Subcommittee’s investigation uncovered could be difficult to challenge under current law. In response to this concern, this [report] identifies specific legislative reforms that would help renew and rehabilitate the antitrust laws in the context of digital markets. [It] recommends that Congress consider reasserting the original intent and broad goals of the antitrust laws by clarifying that they are designed to protect not just consumers, but also workers, entrepreneurs, independent businesses, open markets, a fair economy, and democratic ideals”.
And this is exactly what the DMA and the DSA are about.