Earlier this month, California lawmakers declined to advance sweeping legislation that would likely adversely affect businesses and consumers nationwide. CA SB 1074, known as the BASED Act, is directly inspired by the European Union’s Digital Markets Act (DMA). The BASED Act would have imposed burdensome EU-style regulation that has already failed users in Europe, resulting in higher prices, degraded online experiences, and ultimately would have caused billions of dollars in losses for the state’s economy.
Supporters of the BASED Act have also pushed to reintroduce its federal-level predecessor, known as the American Innovation and Choice Online Act (AICOA). AICOA, which would have fundamentally shifted the U.S. away from market-oriented principles, failed to pass Congress in both 2022 and 2023. Lawmakers understood how EU-style regulations would impose significant costs on small businesses and consumers, risk user privacy and data, and stifle U.S. global tech leadership.
At the core of both AICOA and state-level counterparts like the BASED Act is a push to penalize what regulators call “self-preferencing.” This is simply a mandate to break apart the connected features that make modern digital services useful, fast, and affordable. If enacted, these bills would force e-commerce platforms to hide their fastest, most reliable shipping options just to artificially prop up unverified third-party logistics companies. Even smart home ecosystems could be restricted from seamlessly syncing devices right out of the box. Ultimately, this legislation outlaws convenience, forcing tech companies to deliver a deliberately clunky, degraded product to the end user.
The threat to consumer tech extends beyond search results and shopping carts. Federal legislative efforts packaged with AICOA, such as the Open App Markets Act (OAMA), would fundamentally undermine mobile device security nationwide. OAMA forces hardware makers to allow unvetted third-party app stores and software sideloading. This recklessly bypasses the central privacy reviews that keep malware, ransomware, financial scams, and predatory data brokers off consumer devices. People buy specific smartphones precisely because they trust the built-in safeguards. Stripping away those defenses to appease a few corporate complainers risks exposing Americans’ most sensitive personal information to bad actors.
Beyond frustrating consumers, dismantling these tech ecosystems creates massive headaches for the small businesses that depend on them. Thousands of local merchants rely on integrated digital marketplaces to process payments, handle fulfillment logistics, and securely reach a national audience. Forcing tech companies to untangle these seamless services under the guise of intrusive legislation raises overhead costs and dismantles tools that small businesses rely on. In fact, an economic study on the EU’s Digital Markets Act (DMA) – the foreign blueprint for AICOA – has shown that breaking these critical digital tools can cost retail businesses billions in lost revenue.
Importing heavy-handed, anti-tech regulations through state and federal mandates sends a dangerous message to the broader tech sector. If engineering a better, more unified product is automatically met with regulatory penalties, the incentive to invest in next-generation technologies vanishes. Handicapping successful U.S. businesses with restrictive legislation only slows domestic innovation at a time when American global technological leadership is more critical than ever.
Gutting the integrations and security protocols that make digital platforms reliable only shifts the costs, frustrations, and privacy risks directly onto the public’s shoulders. Lawmakers around the country must reject this renewed push for EU-style regulation at both the state and federal levels, and protect the reliability, innovation, and safety of the technologies Americans count on.