For the past couple years, we’ve been sending up flares about the problems with the European Union’s (EU’s) onslaught of digital market regulation. We focused in particular on the Digital Markets Act (DMA), because of how thoroughly it restricts the curated online marketplace (COM) services small app companies leverage to reach global markets. Near the end of the last Administration, our advocacy yielded negative results. Not only did the United States Trade Representative (USTR) remove DMA from the list of non-tariff trade barriers in its annual National Trade Estimate (NTE), but they also stepped back from the broader range of digital trade priorities protecting American access to global digital markets. The wait to see whether the second Trump Administration would continue to let other countries set digital trade norms ended abruptly last Friday. In a memo to the Department of Commerce and USTR, the President noted that “foreign governments have increasingly exerted extraterritorial authority over American companies, particularly in the technology sector, hindering these companies’ success . . ..” The fact sheet accompanying the memo specifically mentions DMA, noting that “[r]egulations that dictate how American companies interact with consumers in the European Union, like the [DMA] and Digital Services Act, will face scrutiny from the Administration.” While aimed primarily at the EU, the message is for all of the governments considering DMA-style interventions as a means of bolstering domestic competitors: the executive branch, for one, is going to notice.
Congressional leaders quickly followed suit as House Judiciary Committee (HJC) Chairman Jim Jordan and Administrative State, Regulatory Reform, and Antitrust Subcommittee Chairman Scott Fitzgerald sent a letter to the European Commission’s (EC) new Executive Vice-President (EVP) for a Clean, Just, and Competitive Transition, Teresa Ribera. The letter singles out DMA in particular, noting that “regulations like DMA will hurt consumers and stifle innovation,” and expressing concerns that it “may target American companies . . ..” The letter requests a briefing from EVP Ribera regarding her “approach to DMA enforcement, ongoing DMA proceedings against American companies, and European plans to subsidize and build national champions.”
The memo from the President and the letter from HJC reflect some of the same consternation we have voiced for several months about DMA. For example, the HJC letter highlighted a concern we share with DMA’s mandate for designated gatekeepers to provide virtually unfettered access to personal data. In describing DMA as dictating “how American companies interact with consumers,” the memo similarly reflects our view of DMA as the EC taking away consumers’ ability to select a COM over an unmanaged marketplace. As we argued last year in a blog header, “DMA Prioritizes Bureaucrat Preferences over Those of Consumers and Compliance Over Innovation.” The good news is, the Administration and Congress are hearing the cries for help and taking steps to protect small app companies’ ability to compete globally. Will countries around the world considering DMA-style interventions hear the message that the United States clearly sees the threats they pose? That is the question, and we will see if it falls on deaf ears.