Tech

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America Must Avoid Europe’s Tech Regulation Disaster

Last month, at the General Court in Luxembourg, a European Commission lawyer attacked Apple’s “absolute control” over who gains access to its technology. He meant the phrase as an indictment of the company’s “walled garden,” but the Commission was inadvertently drawing attention to the error at the heart of its Digital Markets Act (DMA).

The DMA is antitrust gone rogue. It is a guide to what not to do when regulating the technology industry. Brussels is treating ecosystem integration as market abuse, targeting the product differences that give consumers real choice, with ruinous consequences. America must not make the same mistake.

Some people want a phone where security is consistent, and everything works together seamlessly. Others want a device they can customize and tinker with freely, at the cost of a less coherent and less private experience. Before the DMA, European consumers could choose between Android and iOS, depending on their priorities. Now the Act’s interoperability requirement is forcing the first group to accept the second group’s preferences.

Apple has built its brand on a platform where security, privacy, and tight integration are paramount. “What happens on iPhone stays on iPhone,” as the company loves to say. Users who value this approach pay a premium for its products. Many of its European customers are now left with the very free-for-all they were trying to avoid.

Companies do not compete by being identical. Quite the opposite: they compete by offering distinct innovations with different trade-offs, inviting consumers to choose among them. Removing differentiation eliminates much of the incentive to innovate in the first place.

Europe is already seeing the results. Apple has been unable to bring hotly anticipated new features, such as iPhone Mirroring and Live Translation, to the continent after the Commission rejected the firm’s proposals for implementing them securely.

The damage goes beyond blocking innovations. The DMA is actively undermining what consumers already value. Apple has been forced to allow the sideloading of unapproved software, alternative app stores, and third-party payment systems onto its devices. Europeans are left with fewer security protections and a less curated experience. And this does not just apply to Apple and Android. Any tech firm large enough—or, in other words, successful enough—to earn the EU’s “gatekeeper” label could end up the next victim of forced convergence.

Meanwhile, investment is fleeing Europe. Over the past decade, European startups raised nearly $800 billion less than American firms. Almost a third of European unicorns have relocated abroad for funding. This is what happens when you treat success as abuse. You cannot build the next great tech company in a market where differentiation is functionally illegal.

In Washington, there are a disturbing number of politicians on both sides of the aisle who want American tech policy to look much more like the experiment unfolding in Europe. Senators from the right and left have lined up behind bills like the Open App Markets Act and the App Store Freedom Act, which would mandate rules similar to the DMA. They risk stripping away the very differentiation that has kept U.S. tech firms dynamic, in stark contrast to those in Europe.

There is an alternative. The U.S. market has always thrived when regulators focus on true anticompetitive conduct rather than imposing a single vision of what technology should be. The current FTC chair, Andrew Ferguson, has made it clear that weakening privacy or security in the name of regulatory compliance is not an acceptable trade-off. It is only right that regulators go after real abuses, such as when manufacturers block developers from even telling users about alternative payment options. But this is very different from mandating the architecture of entire platforms.

For all the talk of opening up, Europe’s experiment is a lesson in what to avoid. It has led to declining investment and slower innovation, leaving consumers with fewer meaningful choices. The American approach ought to respect the value of difference. True competition happens when companies can pursue distinct philosophies, and consumers can choose what works for them.

The DMA cannot be reformed because it is built on a fundamental error: confusing consumer choice with monopolistic practice. Congress should ignore those who want America to repeat Europe’s mistakes. When you attack differentiation in the name of competition, you end up with neither. European consumers are learning this the hard way. American consumers should not have to.