Cato Institute warns US policymakers against adopting EU Digital Markets Act model
The Cato Institute has published a critique of the European Union's Digital Markets Act, warning that US policymakers should avoid adopting the DMA's regulatory framework for app stores. The report argues that forcing platforms to allow third-party app stores risks compromising security, privacy, and innovation in the digital ecosystem.
Key Takeaways
- The DMA mandates that "gatekeepers" allow third-party app stores and alternative payment systems on their platforms.
- Integrated "walled garden" ecosystems like Apple's are cited as essential for user security against malware and fraud.
- Regulatory rigidity in the EU is being framed as a threat to developer incentives and product quality.
- The report advocates for U.S. antitrust enforcement to remain focused on evidence of consumer harm rather than platform size.
Why It Matters
The pushback reflects a widening divide between European and American regulatory philosophies as jurisdictions define the next decade of platform gatekeeping. For the streaming industry, which relies on consistent app store billing and distribution, any fragmented adoption of EU-style rules in the U.S. could rewrite the economics of subscription revenue sharing and content discovery. If the U.S. rejects the DMA model, developers will likely face a bifurcated global compliance environment that increases operational overhead. Watch for whether U.S. courts cite European market outcomes as cautionary tales in ongoing domestic antitrust litigation against major mobile platforms.
Additional Context
The debate over European digital dominance has intensified as the U.S. House Judiciary Committee recently escalated its scrutiny of the European Commission's enforcement protocols. Per Politico in March 2026, Chairman Jim Jordan (R-OH) issued subpoenas to 10 major technology firms, including Apple and Meta, demanding all communications with EU officials regarding the Digital Markets Act (DMA) and Digital Services Act (DSA). This oversight follows allegations that European regulators utilized encrypted messaging to bypass transparency during the implementation of these rules.
Domestically, the App Store Fairness Act (ASFA) has re-emerged in Congress as a potential U.S. counterpart to the DMA. Per the Cato Institute in December 2025, the ASFA mirrors earlier legislation aimed at mandating open app distribution and alternative payment processing. However, the American regulatory landscape remains volatile; per Bloomberg in July 2026, the Department of Justice is reportedly in active settlement discussions with Apple regarding its landmark 2024 antitrust lawsuit. Apple has already implemented several concessions, including adopting the RCS messaging protocol and launching a Mini Apps Partner Program, to mitigate legal exposure before reaching a potential out-of-court agreement.
Transatlantic tensions are also being fueled by the financial impact of EU enforcement. Per Tech Policy Press in April 2025, the European Commission issued its first formal non-compliance decisions under the DMA, fining Apple and Meta €700 million combined for restricting developer steering and failing to provide adequate advertising alternatives. These actions prompted a sharp response from the U.S. government, which argued that extraterritorial regulations act as trade barriers. Per Broadway Breakfast in October 2025, analysts warn that the resulting compliance costs are creating a "Brussels effect," where companies inadvertently globalize European standards to simplify operations, potentially stifling decentralized innovation across American sectors.
Read full article at cato.org
Enjoy our coverage?
Add StreamingMeme as a preferred source on Google to see more of our streaming news at the top of your Search results.
Add as preferred source