US Proposed Antitrust Bills and EU´s Digital Markets Act Have Clear Differences

Digital platforms are under scrutiny in many jurisdictions. In the U.S. and the EU, there are significant bill projects that will regulate how platforms interact with their competitors. In the EU, the Digital Markets Act (DMA) is moving toward final approval, while in the U.S. the bill projects that are being considered are still far from becoming law. Two of the most relevant ones are the American Innovation and Choice Online Act and the Open App Markets Act. Given the common goals that these bills share, the two U.S. legislative projects and the DMA have similar provisions. However, there are also critical differences among the European and the American laws.

To begin with, the DMA has a much wider focus. This is evident when comparing the length of each bill. The DMA has almost 10,000 words while the Open App Markets Act has little more than 2,000 words and the American Innovation and Choice Online Act a little less than 4,000 words. Article 5 of the DMA sets forth prohibited conduct. Much of the conduct listed there relates to self-preferencing. However, the very first prohibition has nothing to do with impairing rivalry between competitors. In fact, it is a data privacy provision: [gatekeepers shall] “(a)refrain from combining personal data sourced from these core platform services with personal data from any other services offered by the gatekeeper or with personal data from third-party services.” Probably the German Facebook case, which focused on privacy and antitrust, had a great influence in the original draft.

Formally, the DMA applies to “gatekeepers.” And this law regulates in detail which companies should be deemed gatekeepers. The Open App Markets Act would apply to “covered companies” while the American Innovation and Choice Online Act would apply to “covered platforms.” The three concepts, however, are remarkably similar. The three laws consider the number of users as one of the main elements to define which companies are regulated by the law. Nonetheless, the DMA imposes a larger burden on gatekeepers, which must notify the authority if they meet the legal requirements to be considered a gatekeeper. Moreover, the gatekeepers must hire an independent auditor who will assess the gatekeepers’ compliance efforts and notify the authority before acquiring any competitor. The American bills do not consider these administrative burdens.

Perhaps the most remarkable difference between the DMA and the American bills is that the latter consider several defenses the firms may bring to justify their behavior, while the DMA sets a very narrow scope for defenses. The American Innovation and Choice Online Act includes, among others, two notable defenses (Section 3, part b): (I) “protect safety, user privacy, the security of nonpublic data, or the security of the covered platform” and (ii) “maintain or substantially enhance the core functionality of the covered platform.” The Open App Markets Act (Section 4) refers to similar defenses: “a covered company shall not be in violation … for an action that is (A) necessary to achieve user privacy, security, or digital safety; (B) taken to prevent spam or fraud; (C) necessary to prevent unlawful infringement of preexisting intellectual property; or (D) taken to prevent a violation of, or comply with, Federal or State law.” The DMA (Article 9) is much more restrictive, by stating that “an exemption … may only be granted on grounds of: (a)public morality; (b)public health; (c) public security.”

The last point is critical when anticipating how the firms affected by these bills could react and how much of a difference the laws can make. Both, the American and the European bills will probably need to rely on judicial rulings to determine the scope of these exceptions. However, if Apple claims that in order to protect people’s privacy apps should not be acquired outside of its App Store, as the company has publicly argued, this argument may be treated differently in Europe than in the U.S., given the narrow scope of the defenses in the DMA.

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