EU vs Big Tech: Leaked Enforcement Plans and the Dutch-French Counterproposal

At the end of September, multiple press outlets published leaked set of antimonopoly enforcement proposals proposed for the a new EU Digital Market Act , which EU officials say they will finalize this year.

The proposals confront the stark fact that the Internet has been thoroughly dominated by a handful of giant, U.S.-based firms, which compete on a global stage with a few giant Chinese counterparts and a handful of companies from Russia and elsewhere. The early promise of a vibrant, dynamic Internet, where giants were routinely toppled by upstarts helmed by outsiders seems to have died, strangled by a monopolistic moment in which the Internet has decayed into "a group of five websites, each consisting of screenshots of text from the other four."

Anti-Monopoly Laws Have Been Under-Enforced The tech sector is not exceptional in this regard: from professional wrestling to eyeglasses to movies to beer to beef and poultry, global markets have collapsed into oligarchies, with each sector dominated by a handful of companies (or just one).

Fatalistic explanations for the unchecked rise of today's monopolized markets—things like network effects and first-mover advantage—are not the whole story. If these factors completely accounted for tech's concentration, then how do we explain wrestling's concentration? Does professional wrestling enjoy network effects too?

A simpler, more parsimonious explanation for the rise of monopolies across the whole economy can be found in the enforcement of anti-monopoly law, or rather, the lack thereof, especially in the U.S. For about forty years, the U.S. and many other governments have embraced a Reagan-era theory of anti-monopoly called "the consumer welfare standard." This ideology, associated with Chicago School economic theorists, counsels governments to permit monopolistic behavior – mergers between large companies, "predatory acquisitions" of small companies that could pose future threats, and the creation of vertically integrated companies that control large parts of their supply chain – so long as there is no proof that this will lead to price-rises in the immediate aftermath of these actions.

For four decades, successive U.S. administrations from both parties, and many of their liberal and conservative counterparts around the world, have embraced this ideology and have sat by as firms have grown not by selling more products than their competitors, or by making better products than their competitors, but rather by ceasing to compete altogether by merging with one another to create a "kill zone" of products and services that no one can compete with.

After generations in ascendancy, the consumer welfare doctrine is finally facing a serious challenge, and not a moment too soon. In the U.S., both houses of Congressheld sweeping hearings on tech companies anticompetitive conduct, and the House's bold report on its lengthy, deep investigation into tech monopolism signaled a political establishment ready to go beyond consumer welfare and return to a more muscular, pre-Reagan form of competition enforcement anchored in the idea that monopolies are bad for society, and that we should prevent them because they hurt workers and consumers, and because they distort politics and smother innovation -- and not merely because they sometimes make prices go up.

A New Set of Anti-Monopoly Tools for the European Union These new EU leaks are part of this trend, and in them, we find a made-in-Europe suite of antimonopoly enforcement proposals that are, by and large, very welcome indeed. The EU defines a new, highly regulated sub-industry within tech called a "gatekeeper platform" -- a platform that exercises "market power" within its niche (the precise definition of this term is