Panelists at the Hill briefing “The Case For and Against an American Digital Markets Act” on April 23, 2026
On April 23, the Association for Competitive Technology (ACT) hosted a Hill briefing to examine whether the European Union’s Digital Markets Act (DMA) offers a model the United States should follow or a warning worth taking seriously. The discussion centered on new research from Satya Marar, a research fellow at the Mercatus Center at George Mason University and AI and competition fellow at the Innovators Network. His working paper, The Case For and Against an American Digital Markets Act, provides a detailed analysis of the DMA’s effects on competition, innovation, and small businesses. Joining him on the panel were Joseph V. Coniglio of the Information Technology and Innovation Foundation, Jessica Melugin of the Competitive Enterprise Institute, and Scott Weiner of NeuEon, Inc., an ACT member company.
Weiner made a point during the panel worth repeating: if policymakers want to protect small businesses, they should start by not breaking the tools those businesses depend on.
The panel reached a clear conclusion: DMA’s preemptive prohibitions on broad categories of platform conduct without requiring any finding of harm are anti-consumer, anti-small business, and even anti-competitive. Marar’s paper documents how the DMA’s mandates around self-preferencing, interoperability, and data sharing produce mixed results at best, underscoring that a case-by-case assessment of the targeted conduct is a superior approach. Blanket rules applied to conduct that is generally procompetitive inevitably eliminate procompetitive results in the process of pursuing potential consumer harms. The results in Europe confirm this conclusion. Google Hotel Ads saw a 30 percent drop in European web traffic and a 36 percent reduction in direct bookings after the DMA took effect. Smaller businesses dependent on search-driven traffic absorbed the worst of the impact. Apple Intelligence, phone mirroring, and Google’s AI Overviews were all delayed in Europe by months due to compliance uncertainty, leaving European small businesses without access to the same tools their competitors elsewhere were already using. ACT’s own survey of more than 1,000 tech startups and micro, small, and medium enterprises highlights some of the measurable costs of these delays, with EU and UK tech firms losing hundreds of thousands of dollars annually per firm from delayed AI models, product launches, and forced feature downgrades.
The Competition Policy Question
Weiner reinforced this conclusion from the practitioner’s perspective. Trust, he stressed, is foundational for app developers and small businesses. Curated platform ecosystems give smaller developers a credibility that is often prohibitively expensive and time-consuming to build on their own. Users are more willing to try an unfamiliar app made by a firm they don’t recognize when they trust the platform’s security and privacy standards. Rules requiring platforms to open their ecosystems in ways that degrade those measures and their enforcement do not level the playing field. They tilt the field toward larger companies with the legal teams and compliance infrastructure to absorb the disruption. Smaller players lose the environment helping them compete in the first place.
Melugin brought the geopolitical dimension into focus. The DMA’s gatekeeper classification standards do not require any finding of market power in a defined market. They effectively exempt European competitors from regulations burdening their primarily American rivals. This reflects a broader pattern: European policymakers reaching for regulatory tools to address a stagnating digital economy rather than fostering conditions for homegrown innovation to compete on the merits.
Coniglio grounded the discussion in the consumer welfare standard guiding U.S. antitrust law for decades. He noted the United States is actively litigating major cases under existing law, including the Google Search case where Judge Mehta issued a detailed remedies decision. This contradicts the claim traditional enforcement has failed. He also warned proposals like the American Innovation and Choice Online Act (AICOA), while framed as preserving an ex-post model, meaning enforcement after a case-specific finding of unlawful conduct, would operate much like DMA. As he noted, AICOA’s prohibitions largely mirror DMA’s ex-ante model, which prohibits certain conduct upfront rather than after proof of harm. Whereas DMA’s prohibitions require years of regulatory interpretation and implementation, AICOA’s would involve years of interpretation by litigation. Against that backdrop, the ex-ante / ex-post distinction is more form than substance. Coniglio further noted that AICOA’s affirmative defenses are so narrow and difficult to prove that defendants trying to save procompetitive practices would be no better off than they are under DMA.
Competition between retail marketplaces. The discussion went on to highlight that self-preferencing bans and data usage restrictions pose a direct threat to the marketplace model small businesses depend on. Online marketplaces succeed because they invest in logistics, fast delivery, fulfillment standards, and quality controls. A platform investing in drone delivery to ship orders in two hours is not acting as a monopolist extracting rents. Treating integrated fulfillment services as illegal tying arrangements, or restricting quality badges sellers earn by meeting delivery benchmarks, triggers a feedback cycle: consumers stop receiving products at the speed and quality they expect, subscriptions decline, and the platform reduces benefits or raises costs, leaving small sellers worse off. Restricting platforms from using marketplace data to identify supply gaps and protect consumers from harmful sellers raises similar concerns. This is standard market intelligence used across the retail industry. Banning its use does not protect small sellers. If major retailers face liability for integrating their own services into their marketplaces, the rational response is to stop operating curated marketplaces altogether, eliminating the channels small businesses rely on most to reach millions of customers.
Eliminating competition between software platforms on security and privacy dimensions. The short-term consequences are concrete. DMA-style rules weaken the platform services developers and small businesses rely on, treat beneficial integration as suspect, reduce discoverability, and create new privacy, security, and IP-related risks. The DMA’s interoperability mandates under Article 6(7), which force gatekeepers to share open access to operating system (OS) hardware and software features with third parties, are a clear example. Small developers do not have dedicated security teams or threat intelligence operations. They rely on the platform’s monitored and consistently patched environment as a baseline safeguard for their apps and users. As Weiner pointed out, opening OS interfaces, background monitoring of sensors like a smartphone’s microphone and camera, and allowing alternative browser engines fragments this baseline, exposing consumers and small developers to malware, fraud, and exploits they lack the resources to detect or address. The risk extends to their own intellectual property. When the security perimeter around proprietary APIs loosens, every developer building on those APIs faces a higher risk of reverse engineering and competitive extraction of their innovations. A large company facing IP exposure has legal teams and patent portfolios to respond. A small developer or startup does not. The DMA’s sideloading mandates have compounded these risks by enabling alternative app stores serving as distribution hubs for pirated content, directly threatening the intellectual property of small developers and content creators.
The long-term consequences are equally serious. Eroding platform IP rights disincentivizes platforms from investing in the services and digital products small businesses depend on, degrading the long-term value the platform generates for its entire developer ecosystem. These approaches also remove the incentive for small businesses to grow. If scaling up triggers gatekeeper designation and onerous compliance obligations, the reward for success evaporates. These obligations also reduce competitive pressure on incumbents by mandating access and limiting the product differentiation through which challengers displace dominant firms. Just as developers welcomed the disruption of BlackBerry’s once-dominant mobile hegemony, they are unenthused by frameworks that would give today’s incumbents a regulatory moat keeping them artificially entrenched.
As U.S. policymakers continue debating AICOA, the BASED Act, and similar proposals, we recommend Marar’s paper as essential reading. The evidence from Europe’s own experience is instructive: broad condemnations of platform management in digital markets has delivered muted competition, slower innovation, and exacerbated unfairness. Policy choices preserving flexible, evidence-based enforcement are far more likely to protect the small businesses and consumers these rules claim to serve.