The Digital Markets Debate
Serious concerns about competition in digital markets date back to the mid-1990s, when competition agencies around the world began to investigate and take action against large tech firms. The U.S. agencies were leaders in enforcement at the time, taking action against Microsoft and debit network and credit card companies that operated on platform business models. As litigation continued and platforms spread more widely, economists began to explore multisided platforms in greater depth in the early 2000s, and their work provided an intellectual and analytical framework for understanding the competition issues presented by platforms. A few years later, international organizations such as the OECD began to consider the implications of this academic work for competition law and policy. In the late 2000s and early 2010s, many national competition agencies (NCAs) began to study, investigate, and take action against global multisided platforms.
By the start of the first Trump administration in 2017, the international digital markets debate was in full swing. Three important studies of digital markets were under way. The first was a sweeping study by the Australian Consumer and Competition Commission (ACCC), which published a draft report in December 2018 that concluded that large online platforms such as Google and Facebook held durable market power in a number of areas. Because it was the first report out of the gate, it generated extensive commentary and influenced two studies that followed. In March 2019, the United Kingdom published an expert panel report that considered the implications of the rise of digital markets for competition policy. The UK report proposed a “procompetitive” regulatory regime that would take a more interventionist approach to large platforms. In April 2019, an expert panel commissioned by the European Commission published a report on competition policy in digital markets. These reports, published within months of one another, were broadly similar in their conclusions: digital platforms seemed susceptible to dominance by one or two large platforms, and traditional competition law approaches were not sufficient to protect competition.
The U.S. agencies were well aware of these developments. Like their international counterparts, they too were gathering information about the competitive consequences of the rise of platforms. The FTC, for example, conducted hearings in 2018 on multisided platforms that explored, among other things, the analysis of platform competition. The DOJ also conducted a workshop on advertising in 2019 concerning online advertising markets, and a workshop on venture capital and antitrust that focused, in part, on identifying nascent competitors in platform markets. In early 2020, the FTC began a study that yielded a 2021 report on acquisitions by large platforms. Unlike their overseas counterparts, however, the U.S. agencies did not produce any substantial reports on platforms and competition.
In the United States, the most important report on digital markets was published by a university think tank, not a government agency. In September 2019—several months after the EU, UK, and Australian studies—the Stigler Center at the University of Chicago published a substantial study of digital markets. Like the others before it, the Stigler report expressed concern about the ability of traditional law enforcement approaches to address competition in digital markets, and considered whether a new approach to competition in digital markets might be appropriate. The Stigler report and the three others preceding it—whose authors included some of the most prominent and knowledgeable competition analysts in the world—led jurisdictions around the world to consider a more regulatory approach to platforms and competition.
The Rise of Gatekeeper Legislation
The more regulatory approach to platforms began to gain serious traction only a few months after publication of the Australian, UK, EU, and Stigler reports. In June 2020, the European Parliament (EP) began to consider creating a “New Competition Tool” (NCT), which would complement existing competition law. The NCT would have applied to all industries that appeared to have structural problems that inhibited competition. The scope of the proposal, however, prompted concerns among policymakers. Instead of continuing down that road, the EP decided to focus its efforts on dominant platforms—which happened to be operated primarily by U.S.-based companies. Thus, the NCT proposal eventually evolved into the Digital Markets Act, which focused more narrowly on gatekeeper platforms, and which ultimately was enacted in 2022.
The proclaimed purpose of the DMA was to foster fairness and contestability in digital markets. It targeted certain core services provided by dominant platforms, which included app stores, online marketplaces, search engines, social networks, and advertising services, among others. Motivated by a belief that existing competition law tools moved too slowly and were insufficiently flexible to deal with services that might quickly tip to provision by a dominant platform, the DMA imposed a list of prohibitions and obligations on gatekeeper platforms. Prohibitions included bans on self-preferencing, combining data without consent, and blocking businesses from offering competing services on the gatekeeper’s platform. Obligations included interoperability, data portability, access to data, and non-discriminatory rankings.
Around the time of the discussion of the DMA in the EP, other jurisdictions began to consider gatekeeper legislation. In 2021, Germany amended its law to give its competition authority the power to impose ex ante prohibitions on gatekeepers for certain identified practices. Similarly, the United Kingdom considered a digital markets competition regime in 2020 (enacted in 2024) that allowed its competition authority to designate gatekeepers that would be subject to conduct requirements. In the following years, other jurisdictions, including Japan, South Korea, Australia, India, Brazil, and South Africa, began to consider or implement similar gatekeeper legislation.
The more regulatory approach of gatekeeper legislation represented a substantial departure from traditional competition law. The European Union claimed that the DMA was distinct from competition law and should be viewed as regulation. While the DMA generally aimed to achieve some of the same ends as traditional competition law (and might, in certain circumstances, be a substitute for competition law), the legislation nonetheless included relatively strict rules that applied across the board to the gatekeepers covered. The traditional case-by-case approach of law enforcement was giving way to an outright ban on certain behaviors by gatekeepers, such as self-preferencing, tying, and bundling. Under traditional competition law principles, such behaviors typically are not deemed illegal absent an inquiry into their effect on competition in a specific case. In essence, the DMA turned these behaviors into per se offenses for covered gatekeepers. Such per se rules usually apply only when courts or agencies have extensive experience with a practice and are convinced that the practice rarely, if ever, promotes competition. The European Union appears to have believed that was the case concerning the behaviors addressed by the DMA. Although proposals in other countries took a more flexible approach than the DMA, they seemed to be grounded in a belief that practices like those banned by the DMA should, at a minimum, be subject to greater scrutiny than they were under traditional competition law.
Reasons for Concern About Gatekeeper Legislation
There were many reasons for the FTC and DOJ to be concerned about the rise of gatekeeper legislation during the first Trump administration, including serious questions about its efficacy, its design, its aims, and the motives of the EP.
First, it was far from clear that gatekeeper legislation would advance competition and not inhibit innovation. Although the DMA purported to be grounded in competition law enforcement experience, that experience was not particularly deep in this area. It was not clear, for example, that the European Commission’s experience with platforms was sufficient to justify the DMA’s detailed ex ante rules for a broad range of services and platform types. Indeed, certain terms of the DMA, seemingly developed in response to an investigation of particular platforms, applied to all gatekeepers—despite the fact that the platforms use a variety business models. That is, the DMA arguably painted with too broad a brush. Moreover, the dynamism of platform businesses and their strategies cast further doubt on the efficacy of the detailed provisions of the DMA and also raised questions about the DMA’s effect on innovation. Legislation in other jurisdictions adopted a more flexible approach that might relieve a gatekeeper of unjustified obligations, and might permit a competition authority to continually assess the effect of gatekeeper legislation on competition and innovation. The DMA, however, was the leading example at the time, and, as discussed below, was highly influential around the world.
Second, even if one believed that some form of gatekeeper legislation was appropriate, it was not clear that the DMA’s institutional and procedural framework was optimal. The DMA imposed oversight burdens on the EC and procedural burdens on covered gatekeepers, all of which entail considerable cost. And it was far from clear that the institutional design of the DMA would keep administrative costs to a minimum while meeting its goals. There also were concerns about regulatory capture. These issues were debated when the draft DMA was first published, but once the DMA was enacted, the ability to make changes to its administrative framework became limited.
Third, it was not clear that gatekeeper legislation was aimed at competition only. Other concerns about the rise of platforms included consumer protection and unfair practices, privacy and data protection, disinformation and democracy, cybersecurity and national security, among others. Separate legislation in some jurisdictions attempted to address these concerns. In the European Union, for example, the General Data Protection Regulation and the Digital Services Act attempted to address privacy and consumer protection issues, among others. However, such non-competition concerns may have encouraged the EU (and others) to take a more aggressive approach with the DMA because of potential spillover benefits in other areas.
Fourth, it was not clear that the motives behind the DMA were pure. The DMA purported to promote contestability and fairness in digital markets. Given that the DMA was a creation of the European Union that imposed obligations on U.S. platforms, however, the DMA may have been at least partially intended to benefit EU-based platforms at the expense of U.S.-based platforms. This need not have been a conscious effort on the part of EU legislators. The DMA imposed costs on U.S. platforms, while potentially benefitting non-U.S. platforms. The incentives at play may have made it politically easier for the European Union to impose obligations on gatekeepers that were almost exclusively based in the United States.
Finally, all of the above concerns should have been magnified in the eyes of the U.S. agencies because gatekeeper legislation—particularly the DMA—was likely to have effects well beyond the enacting jurisdiction. Because the DMA was the first concrete gatekeeper proposal, the U.S. agencies should have predicted that other countries would turn to the DMA as a template for their own laws. Moreover, even if other countries did not adopt the DMA, its mandates might have spillover effects in other jurisdictions by forcing covered platforms to change their business practices worldwide, not just in the European Union. During the first Trump administration, the U.S. competition agencies seemed to be unconcerned about the possibility of such a “Brussels effect”; during the following Biden administration, the Brussels effect seemed to be welcomed as a beneficial development. Neither administration, however, took the spillover effects of the DMA seriously.
The Response of the U.S. Agencies
Given the various concerns about gatekeeper legislation—and the DMA in particular—one might have expected the DOJ and FTC to engage fully with their international counterparts during 2017—2021. The global competition community was entering uncharted territory, and the stakes were high. Indeed, one might have expected the agencies to undertake their own studies of the consequences of the rise of digital platforms, its effect on competition, and whether traditional competition law approaches were sufficient. But they did not. At a minimum, one might have expected agencies to have engaged in a robust discussion with their international counterparts about the wisdom of gatekeeper legislation, if for no other reason than to understand its implications for competition in the United States. But that does not seem to have been the case.
The U.S. agencies’ response to the rise of gatekeeper legislation was torpid, at best. While the European Union and other jurisdictions quickly marshalled evidence and arguments for gatekeeper legislation, the United States did not act with any urgency. The reasons for this are not obvious. There are, however, some plausible explanations.
The U.S. agencies typically have the mindset of law enforcers. During the debate leading up to the development of gatekeeper legislation in the early 2020s, the U.S. agencies tended to fall back on the traditional view that ex post law enforcement, focused on consumer welfare, was sufficient to police the improper exercise of market power in digital markets. The Assistant Attorney General for Antitrust during the first Trump administration seemed to be content with the antitrust status quo. For example, in 2018, AAG Makan Delrahim defended “the bipartisan antitrust consensus,” which he believed to be grounded in an “‘evidence-based’ approach to antitrust law enforcement” and the consumer welfare standard, both of which, he asserted, were flexible enough deal with digital markets. Even if there was a domestic consensus regarding the efficacy of traditional law enforcement, that plainly was not true internationally. A key element of the international debate concerned the purported failure of traditional law enforcement and the need for new approach. The agencies failed to fully engage on this fundamental element of the debate.
The success of the DOJ and FTC in litigating digital markets cases such as the Microsoft case no doubt helped advance the international debate on digital markets. The agencies’ successes suggested that the traditional tools of investigation and litigation were not dead yet and could successfully address some of the key competition concerns raised by digital markets. However, the DOJ and FTC cases also demonstrated that investigation and litigation moved slowly, and success was never assured. The FTC, for example, closed its investigation of Facebook’s acquisition of Instagram in 2012; eight years later, however, it filed a lawsuit alleging that the acquisition in fact resulted in violations of the U.S. antitrust laws (the case is ongoing). Moreover, the anticompetitive business strategies of the dominant platforms seemed to evolve quickly, but U.S. antitrust law and policy seemed stuck in legal and economic theories that were not completely up to the challenges that platforms presented. In short, while the DOJ and FTC enforcement efforts suggested that traditional law enforcement remained a useful tool, they also suggested that there may be important limits to it.
Another possible explanation for the agencies’ apparent listlessness is that they may have decided that the game was not worth the candle. To fully engage would have required resources that the agencies may not have had or may have wished to allocate elsewhere. Neither agency had a group of economists dedicated to analyzing international digital markets issues. Although the agencies have offices devoted to international relations, the offices typically are not staffed with lawyers or economists steeped in platform issues. The agencies’ deep expertise on digital markets tends to reside within litigating sections devoted to investigation and enforcement. To interact knowledgeably with other countries on gatekeeper legislation would have required staffing up the international sections with skilled legal and economic analysts. And to put together a report on digital markets, as did other major jurisdictions, would have required even more resources and effort, neither of which the agencies seemed to be willing to expend.
Conclusion
The U.S. competition agencies mostly were passive participants in the international digital market debate during the first Trump administration (and the following Biden administration). As of Spring 2025, it appears as though the prevailing international view that a more regulatory approach to platforms is necessary has become more entrenched. Indeed, several jurisdictions are considering gatekeeper legislation. Despite their light engagement in the past, the U.S. agencies still may be able to influence the shape of global competition policy in digital markets going forward.
It is grinding work to parse and analyze proposed legislation, consider its pros and cons, and engage meaningfully with international counterparts. However, the U.S. competition agencies must do so if they wish to influence future developments. This will require more resources, including staffing international sections with analytically capable lawyers and economists devoted to platform competition issues. It also will require developing closer ties with international counterparts, and engaging in an open, honest conversation about the design and efficacy of gatekeeper legislation. Whether the second Trump administration will take this path is far from clear. Early indications are that it will use trade policy—and the threat of tariffs or other punitive actions—as a lever to encourage other jurisdictions to change regulations that it believes improperly affect U.S. platforms. It is not inconceivable that such an approach would entail constructive discussions among U.S. and foreign competition agencies about the more regulatory approach to gatekeepers. Regardless of the approach taken, however, it would be a mistake for the DOJ and FTC to continue to be passive. The stakes for competition and innovation in the U.S. and abroad are too high. Full engagement with the international competition community is necessary.
