Federal Trade Commission Chair Lina Khan has continuously pushed policies that threaten free markets and American prosperity. One of her most troubling actions is using taxpayer dollars to assist the European Union in implementing its Digital Markets Act (DMA), a regulatory scheme that targets U.S. tech companies like Amazon, Apple, Google, and Meta. Not only does the DMA hinder innovation, but it also forces companies to share their intellectual property and limits how they collect and use data—crippling their business models.
In the following excerpt from a new article by Market Institute President Charles Sauer, he explores how Khan’s collaboration with the EU harms American tech, taxpayers, and consumers, and why Congress must act to limit her agency’s overreach.
“Federal Trade Commission (FTC) Chair Lina Khan has done so much to undermine the free market and American prosperity that it is hard to name her most outrageous action. However, a top contender would have to be her spending taxpayer money to send FTC staffers to Brussels to assist their European Union counterparts in implementing the Digital Markets Act (DMA). This act forces large tech companies (designated as “gatekeepers”) to share their intellectual property and even grant access to their operating systems to their smaller competitors. The bill also limits the gatekeepers’ ability to collect and use their users’ data.
Using taxpayer resources to help a foreign government implement a regulatory scheme would be troubling under any circumstances. However, there are two things that make Lina Khan’s use of the FTC’s resources to support the DMA particularly infuriating. One is that Khan continually complains that her agency is underfunded and understaffed. Secondly, most of the gatekeepers targeted by the act are successful U.S. tech companies like Amazon, Apple, Alphabet (parent company of Google and YouTube) and Meta (parent company of Facebook, Instagram and WhatsApp).
The DMA’s data privacy provisions are particularly harmful to American social media companies because they upend those companies’ business models. Instead of charging a fee to use their platforms, Meta and other big tech companies use their users’ data to allow advisers to target their ads to those that, based on their history on the platform, are most likely to be interested in the product. This obviously attracts advertisers to the platforms.
This practice is not without criticism from users of those platforms. However, the fact that many people continue to use these “free” services suggest the use of their data is not that much of an inconvenience. In fact, there are likely many consumers like me who appreciate social media efforts to ensure that I only see ads for products I might actually wish to purchase.
Meta has already been fined $1.3 billion by the EU for violating the DMA. In response, it changed its policies—at least for residents of EU countries—to allow customers to choose between a free version with personalized ads or to pay a fee of up to 12.99 Euros ($14.13) a month for an ad-free Facebook and Instagram. The EU’s executive arm rejected Meta’s solution because they claim it does not give users the ability to “freely consent” to having their data collected, stored, and combined with other Meta platforms—even though individuals did agree to allow their data to be used in exchange for not paying a monthly fee. The Commission also said that it needed to offer users less personalized versions of their platforms that do not collect data.https://2e2cfe67039f319fcb794c5b7fdfabe6.safeframe.googlesyndication.com/safeframe/1-0-40/html/container.html
So, the EU expects Meta and other social media companies to divert time and resources away from developing new ways to improve their customers’ social media experience to developing “less personalized” versions of their platforms. This would be logical if there was any evidence of a real demand for a “less personalized” social media site. In fact, a “less personalized” Facebook and Instagram may lack some of the features that users find most valuable—such as the news feeds that contain posts, news stories, and recommendations that, based on the user’s data, the company thinks the user will find interesting or useful.
The result of enforcement of the data privacy and other provisions of the DMA could cause American big tech firms to lose money. This could cause serious harm to the American tech industry. The Digital Markets Act gives EU bureaucrats power to seriously harm some of American’s most successful and innovative companies.”
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