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Antitrust Fuels Trade Tensions

President Donald Trump’s tariff threats target “discrimination against American innovation,” and US legislators point to the EU’s Digital Markets Act as evidence – even as the US pursues its own tech antitrust cases.

The tensions underline a troubling reality: antitrust enforcement has become politicized, and as the Paris-based OECD club of advanced democracies has long recognized, the politicization of antitrust enforcement makes markets less dynamic, less competitive, and less efficient, ultimately harming consumers. This outcome can be avoided if both European and American leaders depoliticize and focus enforcement on making markets work for consumers.

It is no secret that Europe’s DMA targets a handful of large US tech companies. The law gives the European Commission the power to “break open” their ecosystems and make digital markets more profitable for their rivals. The DMA goes further, stripping away legal protections that are afforded under existing competition laws.

The European Commission opened DMA investigations last year into Google, Apple, and Meta. Non-compliance decisions are expected in the coming month and fines could reach billions of dollars.

US officials are complaining. During his recent trip to Europe, Vice-President JD Vance called out European overregulation, and US lawmakers have sent letters requesting answers from European officials. In response, the European Commission replied that the “criteria for gatekeeper designation are based on objectively identified and transparent quantitative thresholds. They do not allow the Commission to discriminate against any company based on the location of its headquarters.”

What’s surprising isn’t that the US now objects, but that the previous US administration of President Joseph Biden did not. While the first Trump administration, followed by Biden, launched a handful of tech antitrust actions, these were subject to existing standards of proof. Some were shot down in court. What they didn’t do was rewrite the law to make it illegal for these companies to engage in pro-competitive conduct, like the DMA does.

Some European policymakers warned of the trade implications of the DMA, recognizing it as protectionist. Their objections were shot down. Emboldened by the hands-off Biden administration, European lawmakers adopted the legislation in record time.

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The DMA’s adoption marked the high point of a period where regulators lobbied their governments to receive a wide range of sweeping new powers to intervene in markets. The political calculation was clear: cracking down on “Big Tech” would prove popular and win votes. That political calculation didn’t work for the Democrats, or for politicians elsewhere. Voters cast ballots about the economy, not about anger over tech.

In Europe, a growing backlash now targets burdensome regulations. The truth is the best way to secure democracy is to ensure a growing economy where everyone has an equal opportunity and gains are fairly distributed.

That doesn’t seem how the DMA is being enforced. Under the rules against self-preferencing, Google Search no longer can link directly to Google Maps. Apple is required to enable pornography apps on the iPhone. Meta has been unable to launch new AI innovations. How do these actions protect democracy?

Antitrust cannot substitute for industrial policy. Director General of the European Commission Olivier Guersent is right when he says antitrust is “a side-dish.” It cannot substitute for industrial policy. Competition enforcers should not impose their judgment on who should be the winners of market competition. That’s not competition on the merits. Decades of jurisprudence cement this point. Using it to achieve other policy objectives is a mistake.

It’s equally troubling to see competition enforcement in the US now used to achieve political objectives, like restricting corporate diversity, equity and inclusion initiatives, or to gift connected companies a competitive advantage. When Republicans talk about censorship and threaten enforcement, that’s politicizing antitrust. Competition enforcement that prioritizes politics or competitors, instead of consumers, ceases to be competition enforcement. Judged by that standard, DMA enforcement is failing.

If DMA enforcement continues to harm consumers it will lose its legitimacy as a tool of fair and competitive markets. It tips into protectionism. Instead of promoting competition, it becomes an attempt to dictate market outcomes. While some Europeans advocate for industrial policy to play a bigger role in competition enforcement, the threat of trade retaliation is the natural consequence.

The DMA is ambiguous, and its targets have been forced to rapidly and drastically change their services. Massive fines in these circumstances would only show that the way the law is being enforced has nothing to do with its legitimate objectives. It would prove that punishing US tech companies is the goal.

Enforcers on both sides of the Atlantic should take decisions that make markets work better for consumers, justify these decisions with evidence, and punish any non-compliance proportionately. A truce is needed. Antitrust once again must be objective, consumer focused, and designed to protect the benefits of competition. It should not be a political weapon.

Kayvan Hazemi-Jebelli (Kay) is Senior Director for Europe at the Chamber of Progress, a technology industry association based in the US. Kay has over four years’ experience in digital policy and a decade of experience as a competition lawyer in private practice, in the European Commission Directorate-General for Competition, in academia, and as Senior Legal Counsel at a leading UK media and communications company.

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.

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