There is something almost sitcom worthy about Congress trying to micromanage the internet.
Picture a committee room full of officials who still treat “reply all” as a national security incident, confidently announcing they have cracked the code on digital competition. The children of these elderly lawmakers are probably not worried about monopoly power when they see their parents online; they are worried about them clicking a fake “your package is delayed” text or posting a Facebook status that begins, “Dear Google.”
Yet here we are again, with Washington attempting to redesign the digital economy through the American Innovation and Choice Online Act.
The legislation is best understood by looking at it like the European Digital Markets Act, imported and rebranded for the United States. Its supporters describe it as a competition bill aimed at the biggest technology platforms. But from a market efficiency perspective, the bill does not liberate markets. It substitutes political judgment for consumer choice, regulatory permission for entrepreneurial experimentation, and bureaucratic design mandates for the decentralized discovery process that makes markets work.
The European experiment should be a warning, not a model. The EU’s Digital Markets Act was sold as a way to restrain large platforms and create more room for competitors. Instead, it has produced predictable regulatory drag. The European Commission’s own implementation updates show an expanding web of proceedings, investigations, gatekeeper obligations and compliance disputes. Outside analyses have warned that businesses relying on digital platforms could face substantial revenue losses because of reduced reach, less personalization, higher transaction costs and the weakening of integrated services. That is not creative destruction (Joseph Schumpeter’s term for the economic displacement caused by innovation). It is destruction by committee.
Europe’s broader digital record should make American lawmakers cautious. The continent’s “regulate first and asking questions later” approach has not made it into a global center of consumer technology, artificial intelligence or platform innovation. It has struggled to produce companies that can compete at the scale of America’s most successful digital firms. The lesson is not that Europe needs an even heavier hand, but that regulatory regimes that treat scale itself as suspicious often end up protecting the status quo, raising compliance costs and discouraging the very innovation they claim to promote.
The Trump administration has been pushing back against the spread of DMA-style rules around the world, recognizing that these laws often target American technology leaders while empowering foreign regulators to shape U.S. products. Passing an American version of the same approach would undercut that position. It is hard to tell Europe, Japan or any other jurisdiction not to copy the DMA while Congress is busy photocopying it at home.
The biggest problem with the legislation in Congress is it mistakes integration for abuse. Consumers enjoy services such as Amazon Prime, Google Maps, app stores, search results, built-in payment tools, fraud protection, reviews, recommendations and one-click logistics because they reduce friction. Small businesses use these services for the same reason. A local retailer does not want to build its own global advertising system, payment infrastructure, cybersecurity operation, delivery network, mapping platform or discovery engine. It wants to reach customers cheaply and reliably.
The issues aren’t limited to the market, though. They also extend to the relationship between government and business. Large incumbents can hire compliance teams, litigators, lobbyists and product lawyers. New entrants cannot. A bill advertised as a strike against Big Tech can easily become a moat around Big Tech by making the cost of operating at scale even higher. The more complicated the rules, the more valuable it becomes to already have the lawyers, engineers and government-affairs staff needed to navigate them. That is how barriers to entry are built: not by monopoly conduct, but by well-intentioned statutes that turn competition into a permission slip.
The right public policy answer to market power is not to freeze today’s internet via statute or invite regulators to referee product design. It is to preserve low barriers to entry, protect property rights, enforce existing antitrust laws where actual consumer harm is proven and allow entrepreneurs to challenge incumbents with better products.
Markets discipline firms through exit, entry, innovation and consumer choice. Government micromanagement disciplines them through paperwork, hearings and fear of punishment.
Charles Sauer is the president of the Market Institute and the author of “Profit Motive” Contact at charles@marketinstitute.org.
