If imitation really is the sincerest form of flattery, then last week’s reintroduction of the American Innovation and Online Choice Act (“AIOCA”) would make it seem that the European economy is the envy of the United States!
Just last week, Senators Charles Grassley (R-IA) and Amy Klobuchar (D-MN) reintroduced the AIOCA. It was first offered up in 2021 but did not pass either house of Congress. The proposal seeks to apply more severe restraints on the activity of on-line platforms than current antitrust law provides.
A similar bill, the Digital Markets Act (“DMA”) became law in the European Union in 2023. Simply put, Senators Grassley and Klobuchar are attempting to emulate the DMA in America. Since the DMA’s enactment, the EU has brought two cases under the DMA, levying fines against Apple (500 million Euros) and Meta (200 million Euros).
Prompted by the scathing Draghi Report of 2024, the EU is currently undergoing an analysis of its inferior competitive performance compared with the United States and other world economies. An antitrust regime more constraining on business than is found in the U.S. might turn out to be a factor contributing to Europe’s comparative sluggish economic growth and investment.
Senators Grassley and Klobuchar perceive the same difference between European and American law, but have decided on the perverse solution of making U.S. antitrust law emulate Europe’s. They would level America down to Europe’s approach, from the point of view of creating a more business friendly environment.
Existing U.S. antitrust law analyzes whether companies with market power in any relevant line of commerce have harmed competition by specific acts. The actions of on-line platforms that have attracted antitrust challenge include using confidential customer data to target related services offered by the platform, requiring users of a platform to use these other services, and establishing a preference for the platform’s own goods or services over competitors’ goods or services offered on the platform.
U.S. law requires the Justice Department, the FTC, a state attorney general, or a private plaintiff to prove that a platform accused of such conduct has market power and that the practice under question has harmed competition. The accused platform can then offer good business reasons for the practice in question.
One such example would be the criticism that Amazon encourages merchants to use Amazon’s delivery services. Amazon’s reply has been that its consumers value the reliability, timeliness, and return policies that has given it a positive reputation.
Another example is Google’s, including a location map in response to a search for local stores, restaurants, hotels, or sites of interest. Google uses Google Maps to provide these pro-consumer benefits. MapQuest would prefer that Google provide no maps of its own, forcing consumers to cut and paste for a separate search for a map to the location of interest. The contesting merits of claims like these are tried out before a judge or a jury in American courts.
By contrast, under the European model, six companies have been designated as “gatekeepers” by the EU Commission’s own assessment of their systemic importance. Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft are the identified companies (all but ByteDance being American). They can be accused of several practices enumerated in the DMA (such as self-preferencing).
The fact that such a practice (like attaching a Google map to a Google search) might enhance the consumer experience is irrelevant. The EU Commission can find the company in violation and impose a fine. Eventually, a panel of judges is available to review the Commission’s actions.
Senators Grassley and Klobuchar conform American antitrust law to European practice by specifically identifying a catalogue of practices that are prohibited for “systemically important platforms.” These platforms are identified using market gross revenues and market shares to define companies in a manner very similar to the EU’s “gatekeepers.” Instead of requiring the proof of market power, the AIOCA presumes it, just like the EU.
There is one seeming difference: the AIOCA includes a provision allowing an accused company to prove that “the conduct has not materially harmed and would not materially harm competition.”
That would be an important safeguard against over-enforcement, were it not that the very next section of the AIOCA says a company can only use this defense if it “produces records, created in the ordinary course of business at or before the time the challenged conduct was undertaken, that . . . identify the material risks or harms the conduct was intended to address.”
Simply wanting to provide consumers with a better experience seems not to qualify as a “risk or harm” that the platform is attempting to address. Rather, the language suggests something like security against data breaches—an important consideration, but a much narrower set of reasons for taking the steps for which a platform can be accused of violating the law.
In practical terms, the AIOCA thus removes the proof of market power as a required element of proof, or the absence of market power as a defense, in dealing with on-line platforms. Since American constitutional law forbids drafting a law specifically applying to a named company, the AIOCA creates criteria that will sweep up the same big 6 that Europe did (and others), but without using their names.
European antitrust law will come to America if the AIOCA is adopted by Congress. Let us hope that Europe’s sluggish growth and depressed entrepreneurial activity won’t be imported along with it.
