The digital economy has put antitrust regulation in the spotlight, with increasingly dominant technology companies – such as Amazon, Google, Facebook (Meta), Apple, and Microsoft – reviving concerns about private monopolies reminiscent of Standard Oil and AT&T. Yet the enforcement of antitrust principles in the digital world are far more complex than in traditional, non-digital markets. Regulating tech titans has become a primary worldwide, especially in light of the emergence of artificial intelligence (AI). But, as these companies are largely American, the responsibility for oversight is often perceived as falling short in the United States.
The problem is that antitrust intervention typically comes after the fact, requiring the identification of both a monopoly within a clearly defined market and anticompetitive conduct that harms consumers. However, fast moving digital markets can be difficult to define and tend to concentrate without necessarily involving explicit anticompetitive conduct. Additionally, tech titans often offer services free of charge or increasingly advanced products, making it difficult to show harm to consumers.
Europe has addressed this issue with the Digital Markets Act (DMA), a new law that imposes obligations and prohibitions on companies that reach certain thresholds based on companies’ size, such as turnover and number of users. These companies are identified as “gatekeepers” of critical digital services and, to date, gatekeepers under the DMA include Amazon, Google, Facebook (Meta), Microsoft, Apple, ByteDance, and Booking. Prohibitions on gatekeepers include “self-preferencing,” which refers to the practice of platforms like Amazon and Google Search to give preference to their products over those of competitors. While DMA obligations range from interoperability to data portability, these remedies are typically imposed on companies only after an antitrust investigation and a finding of monopolistic conduct. The DMA complements competition law in Europe (the DMA framework) to ensure contestability and fairness in digital markets.
Since 2021, the United States has considered introducing a version of the DMA through a set of antitrust bills that would have adopted a similar regulatory framework. In a new paper, I assess the feasibility of this proposal, by conducting an historical, comparative analysis, examining the ideological roots and framework of the DMA.
My analysis begins with the definition of the DMA’s core features, which I have identified as:
- the DMA approach, reflecting the government’s increasing power in regulating the economy;
- the DMA legal framework, characterized by formalism;
- the DMA scope of regulating large firms;
- the DMA purpose, aimed at ensuring fairness and contestability.
Next, I investigate the origins of the DMA core features by examining three major European schools of economic policy: the Historical School, the Austrian School of Economics and Ordoliberalism. My analysis reveals how all DMA core features can be found in ordoliberalism. Ordoliberalism originated in Germany in the 1930s and is more a philosophical concept than merely a school of thought. Its name stems from the Latin word “ordo,” meaning order, reflecting a way of thinking centered on economic order. Ordoliberals developed the concept of rules of the game that the state had to guarantee through a legal framework (DMA legal framework and approach) to ensure economic order. Ordoliberalism developed as a dynamic philosophical concept, evolving though different strands and across at least three generations of scholars.
Ordoliberals shared the belief that monopolies should be prevented, including through strict regulation (DMA scope of regulated companies) to ensure competition as a foundation of economic freedom. Competition was a necessary means for disempowering big businesses and preserving human and economic freedom. An ordoliberal strand, which gained significant influence after the Second World War by influencing both the German and European competition laws, introduced the concept of a social market economy. This concept is particularly relevant in defining the DMA purpose of ensuring fairness and contestability in markets.
I then search for the DMA core features and ordoliberal ideology in the U.S. intellectual framework. My historical analysis of the United States reveals a way of thinking about competition and market regulation deeply rooted in neoclassical economics, which differs significantly from ordoliberalism. At the end of the 19th century, neoclassical economists, including Alfred Marshall and John B. Clark, addressed the abstraction of the deductive theories of classical economists, such as Ricardo, by using more robust mathematics. Neoclassical economists emphasized the concept of utility and consumer-based decision making by influencing the major U.S. antitrust schools – Harvard and even more the Chicago and post-Chicago antitrust schools. These schools developed analytical tools to assess competition, such as market definition, structuralism and the consumer welfare standard, which are still valid today. In other words, in the U.S. competition is assessed primarily in economic terms rather than ethical or philosophical terms such as thinking in economic order. The U.S. Supreme Court specifically rejected an ethical interpretation of competition, and the United States is based on a common law system that contrasts with a civil-based European system. In other words, different ways of thinking about competition and regulating large companies stem from different legal and economic traditions. As a consequence, a European DMA-type legislation is poorly suited to the U.S. framework and would lack support from a similar ordoliberal ideology.
Even when considering Justice Louis Brandeis’ Big is Bad concept – which significantly influenced U.S. antitrust enforcement during the Progressive Era in the early 20th century and more recently inspired the Neo-Brandeis movement – we do not find the ordoliberal principles that underpin the DMA. Both Brandeis and Neo-Brandeisians did not develop the ordoliberal idea of thinking of economic order or a similar scheme to explain different economic systems and market forms, including monopolies and partial monopolies. Additionally, while Neo-Brandeisians generally reject the idea that consumers should drive competition law enforcement, ordoliberals developed the concept of a market order designed to make companies responsive to consumer interests. In other words, the ordoliberal concept of rules of the game aimed to serve consumer preferences, and it is enforced formalistically.
Therefore, the United States lacks the same approach to economic order and formalism in enforcing competition that are deeply rooted in the European intellectual and legal tradition and underpin the DMA. As a result, a DMA-type approach to regulating tech titans is inconsistent with the U.S. legal and economic tradition. However, the United States can draw important lessons from different European approaches and experience. Just as Europe has advanced its competition law enforcement consistent with its framework, so too must the United States. I propose that the United States modernize its economic analytical tools for assessing competition in a computer-driven economy by integrating insights from computer science and advanced algorithms.
This post comes to us from Giovanna Massarotto at the University of Pennsylvania’s Center for Technology, Innovation & Competition (CTIC). It is based on her recent article, “Regulating Tech Titans: What American Antitrust Can Learn from Europe,” available here.