Returning Soon? A Home Front in the U.S. Fight Against Foreign Tech Regulations
As Congress reconvenes to tackle numerous issues, there are rumblings of a potential reintroduction of the American Innovation and Choice Online Act (AICOA). First introduced in 2021, AICOA would establish an ex-ante-style digital regulatory regime in the U.S. that draws directly from the EU’s Digital Markets Act (DMA). While its potential reintroduction remains uncertain, the timing coincides with the U.S. Administration expressing serious concerns regarding the foreign regulations upon which AICOA is based.
Under the EU’s DMA, seven digital companies have been designated as “gatekeepers,” six of which are American. AICOA adopts core DMA provisions, requiring U.S. authorities to treat certain U.S. digital companies akin to the DMA’s “gatekeepers,” which would face specific prohibitions and obligations based on a company’s market success. These include bans on common business practices such as self-preferencing, tying products and services, and preferred search ranking. AICOA also mandates that designated companies allow third-party access and data transfers while imposing interoperability requirements for third-party apps and stores.
Because these restrictions apply only to designated firms, AICOA has been criticized for shifting the focus of antitrust enforcement away from case-by-case adjudication aimed at preventing anticompetitive conduct, and instead towards an EU-style sector-specific regulation. Recent congressional hearings have also focused on these types of regulations, raising concerns over what members of Congress have coined as “anti-American antitrust.” The U.S. Administration has pushed back against foreign ex-ante style regulations, concerned that provisions and designation criteria seem to primarily target U.S. companies. This has included President Trump threatening additional tariffs on countries for the implementation of discriminatory digital regulations abroad.
Members of Congress and stakeholders have also raised concerns regarding the underlying consequences of these regulations. Foreign digital regulations have resulted in significantly higher compliance costs, fines, and revenue losses of designated American companies of up to $97.6 billion, with annual compliance costs reaching up to $430 million per firm. Importantly, the DMA’s data-sharing obligations also risk companies’ cybersecurity and intellectual property, likely increasing consumers’ exposure to fraud and malware.
The DMA’s interoperability obligations have led to mandated incorporation of alternative app stores, some of which provide pornographic or otherwise obscene content, circumventing leading app stores where this content is prohibited. In addition, consumers have expressed reservations, noting that the DMA leads to higher costs and worse online experiences. A recent survey showed that a majority of Europeans would like to restore pre-DMA services, with many even willing to pay a premium to do so. With rumors that AICOA may soon be reintroduced, its parallels to the DMA and the Administration’s disdain for disproportionate impacts on American businesses are particularly concerning. Indeed, similar proposals in other jurisdictions have already raised alarms over their potential to undermine U.S. economic growth and technological leadership. These concerns have led U.S. officials to consider a wide range of options to push back against these foreign regulations, including sanctions, tariffs, reciprocal fines, and renegotiating trade deals. As the U.S. Administration continues to challenge these regulations abroad, a scenario may emerge where Congress is considering the very style of legislation its own Administration is fighting against.
