Carveouts at Checkout: Small Savings, Large Costs, and the Payment-Card Settlement

Executive Summary

The proposed settlement of the longstanding multidistrict Visa and Mastercard antitrust litigation would reduce interchange fees and expand merchants’ options for card acceptance, surcharging, and steering. Meanwhile, various state legislative carveouts, led by Illinois’ Interchange Fee Prohibition Act, seek to eliminate interchange fees on taxes and/or gratuities. Both approaches aim to lower merchants’ acceptance costs, but the multidistrict litigation settlement would deliver broader relief with far lower merchant compliance costs—in addition to weakening the case for legislative carveouts.

The settlement’s average interchange reduction would equal roughly 0.1% of covered credit card sales, comparable to Illinois’ projected gross carveout savings. Merchants on interchange-plus pricing would receive the reduction directly, while savings under blended pricing would depend on processors’ adjustments. Carveouts would also require costly system upgrades or reimbursement claims, potentially consuming smaller merchants’ savings. Lower settlement rates would further shrink carveout benefits, concentrating gains among large retailers. Merchants recovering their acceptance costs through surcharges would have little additional benefit to gain.

The two interventions would also interact in costly ways. The settlement’s caps would constrain efforts to offset carveout losses through interchange adjustments, shifting costs toward cardholders through reduced rewards or higher fees. Federal preemption also appears likely to concentrate the remaining institutional losses on local banks and credit unions. Carveouts could count toward the settlement’s nationwide reduction, reducing relief elsewhere, while implementation would compete for engineering capacity. Both interventions might also shift transactions toward more expensive three-party cards, including American Express and Discover.

The settlement itself would likely impose net economic costs through reduced cardholder benefits and higher fees. State carveouts would add compliance burdens and distortions for increasingly narrow gains. Whether or not the settlement is ultimately approved, Illinois should repeal its carveout, and other states should abandon similar proposals. Capped compensation for electronic tax remittance offers a more direct way to address merchants’ tax-collection costs.

I. Introduction

Judge Brian Cogan of the U.S. District Court for the Eastern District of New York granted preliminary approval June 9, 2026, to the proposed settlement of In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, a multidistrict litigation proceeding. The 21-year-old antitrust action involves a mandatory class of more than 12 million U.S. merchants—who cannot opt out—suing Visa, Mastercard, and their member banks.^[1]

Court-appointed experts value the settlement at roughly $38 billion through 2031. It would reduce average credit interchange rates—the fees merchants’ banks pay card-issuing institutions—by 10 basis points, or 0.1% of transaction value, for five years. It would also freeze posted rates at March 2025 levels, cap standard consumer credit card rates at 1.25% for at least eight years, repeal the honor-all-cards rule requiring merchants to accept all cards within a network, and expand merchants’ rights to surcharge, discount, and negotiate collectively.^[2]

While negotiating the settlement, merchant groups pursued a parallel campaign in state legislatures to exclude specific portions of card transactions from interchange fees. Only Illinois has thus far enacted legislation, which remains in legal limbo, with implementation deferred until July 1, 2027.^[3] If implemented, the Illinois Interchange Fee Prohibition Act (IFPA) would prohibit retaining interchange fees on the portions of a card transaction attributable to state and local taxes and gratuities.^[4]

Similar bills were defeated 46 times in more than two dozen states in 2025 and 2026. None became law. Colorado’s version passed the legislature in May 2026 before Gov. Jared Polis vetoed it.^[5] Delaware has considered a bill directed at gratuities, Rhode Island has held hearings, Pennsylvania continues to advance carve-out measures, and Massachusetts has convened a special commission whose remit includes interchange regulation.^[6] These proposals rest on the premise that merchants pay too much to accept payment cards, particularly on amounts they collect for the state or pass on as gratuities.

This issue brief builds on my recent commentary on the settlement, earlier papers on state interchange-fee carveouts, and evidence on the effects of interchange regulation across jurisdictions.^[7] It examines the settlement’s likely effects in greater detail, summarizes the likely effects of the carveouts, and compares the two interventions and their interactions.

The settlement’s net economic effect is almost certainly negative, but its social cost would likely be significantly lower than that of the state carveouts. It also achieves much of what the carveouts purport to achieve, while making them less effective on their own terms and more expensive to implement.

The settlement would directly reduce the fees many merchants pay by 0.1% of transaction value, with few, if any, compliance requirements. It would also reduce interchange revenue for card-issuing banks and credit unions, which would likely respond by raising other fees, reducing card benefits such as rewards, or both. Some merchants would likely introduce surcharges and steer customers toward cards with lower fees. Evidence suggests that most merchants would retain the savings from lower fees, while those that pass savings on to consumers would share only a small fraction.^[8] Cardholders would thus face higher fees and fewer benefits, with largely unchanged prices.

The carveouts would allow merchants to reduce their fees, but most, if not all, would need to make substantial investments in payment-processing systems. For smaller merchants, the cost of systems that automatically exclude taxes and tips from interchange calculations may exceed the savings. Some might instead seek reimbursement by saving receipts and submitting them manually—a costly, error-prone process that would likely require additional auditing. Both approaches would add significant costs to payment processing, leading to higher fees, reduced investment elsewhere, or both.

The carveouts also assume that card issuers will process the exempt portion of each transaction for free. If issuers refuse, customers will have to pay taxes and tips by cash or check. As with the settlement, consumers would see little, if any, reduction in costs, while facing greater inconvenience. Smaller banks would also bear a disproportionate burden because of the high fixed costs of compliance.

The settlement would therefore deliver larger, guaranteed, and more evenly distributed fee reductions to merchants, with practically none of the merchant compliance costs associated with the carveouts. It would also allow merchants to surcharge up to 3% of transaction value, or their processing cost, whichever is lower. Merchants that surcharge could recover all their processing fees, including those attributable to sales taxes and tips.

Section II of this brief examines interchange fees’ role in the broader card-payments system. Section III describes the settlement’s core elements and implications for issuers and merchants. Section IV summarizes the state carveout laws’ aims, mechanics, and current legal status. Section V compares the settlement and carveouts, examines their interactions, and assesses their effects on three-party card systems, in which one company issues cards, serves merchants, and operates the network. Section VI concludes.

II. Interchange Fees and Merchant Payment Costs

Interchange fees help coordinate payment networks and balance participation by merchants and cardholders. This section explains how three- and four-party card systems perform those functions and how merchant pricing arrangements affect the pass-through of interchange reductions. These distinctions help explain why the settlement and state carveouts affect merchants differently and may shift transactions toward three-party systems, which fall outside both interventions

A. How Payment Card Systems Work

Payment cards in the United States operate under one of two architectures. In a three-party system, such as American Express or Discover, a single company performs all intermediary functions. It issues cards to consumers, acquires payments on merchants’ behalf, and operates the network that authorizes, clears, and settles transactions—approving payments, reconciling transaction details, and transferring funds.

FIGURE 1: Transactions in a Three-Party Card System

 SOURCE: Author’s illustration.

When a cardholder spends $100 at a merchant, the card company bills the cardholder, credits the merchant with $100 less a merchant discount fee, and retains that fee as compensation for its services (Figure 1). Because one firm serves both cardholders and merchants, it balances what cardholders receive against what merchants pay through its pricing on each side.^[9]

In a four-party system, separate financial institutions issue cards and acquire payments, connected by a network such as Visa or Mastercard (Figure 2). The cardholder’s bank (the issuer) bills the cardholder. The merchant’s bank (the acquirer) credits the merchant. The network carries the messages needed to authorize or decline, clear, and settle each transaction, charging fees to both banks.

FIGURE 2: Transactions in a Four-Party Card System

SOURCE: Author’s illustration.

When the issuer transfers funds to the acquirer, it withholds an interchange fee. With roughly 8,500 card-issuing institutions in the United States, bilateral negotiation of these fees would require millions of separate agreements. The networks instead set schedules of default interchange rates that apply unless the parties negotiate their own terms.^[10]

The interchange fee typically amounts to between 1% and 2% of a transaction’s value. Treating it simply as compensation for processing a payment dramatically understates its role. It originated as a way to reduce coordination costs and align independent issuers’ and acquirers’ incentives within an open four-party payment network, as I explained in my Truth on the Market post:

A common misconception treats interchange as little more than compensation for processing a transaction. Its role is much broader. Interchange arose as a practical solution to a coordination problem in the original BankAmericard system and later became a way to balance the interests of merchants and consumers.

When BankAmericard, the forerunner of Visa, launched in 1958, it operated as a three-party network. Bank of America issued the cards, signed up merchants, and processed the transactions.

That changed when Bank of America began licensing other banks to issue BankAmericard cards in 1966. At first, the amount an acquiring bank paid to the issuing bank depended on the merchant discount the acquirer charged, or claimed to charge, sometimes adjusted for processing costs. The arrangement proved difficult to administer and audit.

Merchant discounts varied across banks and merchants, which gave acquirers an incentive to understate them. The formula also left acquirers with little or no margin on transactions involving cards issued by other banks. Issuers could receive too little, acquirers had weaker incentives to recruit and serve merchants, and the system encouraged strategic misreporting.

In 1970, Bank of America and its licensees created National BankAmericard Inc., an independent company owned by participating banks. The new organization replaced the uncertain formula with a uniform interchange reimbursement fee.

Set at 1.95% in 1971, the standardized fee separated the issuer’s payment from the merchant discount negotiated by the acquirer. The acquirer could retain the difference between the merchant discount and the interchange fee to cover its own costs.

Interchange therefore began as a way to align the incentives of independent issuers and acquirers in an open payment network. The Interbank Card Association, which operated MasterCharge, the precursor to Mastercard, adopted a similar approach about a year later. Economists later developed a fuller account of why the mechanism worked.^[11]

Interchange continues to serve those functions. But arguably, its larger role today is to support subsidies between merchants and cardholders that encourage participation on both sides.

A card network creates value only if enough merchants and cardholders participate. As William F. Baxter showed in a seminal 1983 article, this often requires one side to subsidize the other.^[12] Jean-Charles Rochet and Jean Tirole subsequently showed that when the two sides differ in their responsiveness to price, the fee structure that maximizes value typically involves the less price-sensitive side (usually merchants) subsidizing the more price-sensitive side (usually consumers).^[13]

These analyses help explain why issuing banks use interchange revenue to fund cardholder benefits, including rewards, interest-free credit during the billing cycle, zero-liability fraud protection, and chargeback rights (the ability to dispute and reverse certain payments). That revenue also supports continuing investment in authorization, tokenization (the replacement of sensitive card details with secure identifiers), and fraud-detection infrastructure, all of which help secure card payments.

Three-party systems instead balance the two sides internally. They have no separate interchange fee because one institution performs all the functions. Instead, the merchant discount fee funds the subsidy. That fee is typically higher than the merchant discount rate acquirers charge in four-party networks.^[14]

B. What Merchants Pay

Merchants receive the transaction amount from their acquirer, less a merchant discount fee calculated using the merchant discount rate (MDR). That fee typically covers interchange, the acquirer’s network fees, and its margin for processing, underwriting, and servicing the transaction. Interchange is by far the largest component, particularly for larger merchants, whose scale reduces the acquirer’s per-transaction margin.

How merchants pay these fees depends on their acquiring arrangement. Larger merchants typically use “interchange-plus” pricing, which transparently passes through the interchange component. Changes in interchange rates therefore flow directly into what the merchant pays.^[15]

Smaller merchants often purchase card acceptance on a blended or flat-rate basis. The acquirer or payment processor charges the same all-in rate across multiple card types, despite differences in the interchange fees on individual transactions. Square, for example, lists a standard rate of 2.6% plus $0.15 for in-person card transactions across the major card brands. Square and Stripe also offer online payment products, for transactions in which the card is not physically present, at 2.9% plus $0.30.^[16]

Under these arrangements, a change in interchange does not necessarily reach the merchant immediately or proportionately. It initially changes the processor’s margin and affects the merchant’s MDR only if and when the processor revises its blended price.

Both interventions this brief examines target four-party interchange fees exclusively. The settlement binds only Visa, Mastercard, and their issuers. The state carveout statutes address “interchange fees,” which exist as distinct fees only in four-party systems. American Express and Discover’s merchant discount fees therefore fall outside both the settlement and the carveouts.

Section V examines the implications of this asymmetry. In essence, policies that make four-party cards less attractive tend to shift transaction volume toward three-party cards, which have historically cost merchants more to accept.

III. The Settlement and Its Likely Effects

The proposed settlement would reduce interchange fees and give merchants more flexibility over card acceptance, surcharging, and steering. This section examines those changes, issuers’ likely responses to lost revenue, and the resulting effects on cardholder benefits, payment choices, and merchant costs. The rate relief would require no merchant action, but its broader effects would depend on how issuers, merchants, and consumers respond.

A. Fee Reductions and Merchant Flexibility

The settlement would make the following changes to interchange fees and card-network rules:^[17]

1. Visa and Mastercard would each reduce their combined volume-weighted average effective interchange rate on domestic credit transactions by at least 10 basis points—equivalent to 0.1% of transaction value—from the average for the year ending March 31, 2025. This measure weights rates by transaction volume. The reduction would last five years, with annual verification by an independent auditor. Merchants paying individually negotiated rates would receive a proportional reduction.
2. The networks would cap all posted credit card interchange fees at their March 31, 2025 levels for five years.
3. The networks would cap posted interchange fees on standard consumer credit cards at 1.25% for at least eight years, a reduction of 62 basis points from those products’ current average posted rate.
4. The networks would replace the honor-all-cards rule with a rule allowing merchants to decline entire card categories—debit, standard consumer credit, premium consumer credit, and commercial.
5. Merchants could surcharge at the brand or product level, up to their cost of acceptance or 3% of transaction value, whichever is lower.
6. Merchants could expressly offer discounts and otherwise steer customers toward cards from particular issuers, supplementing existing brand- and product-level steering.
7. Merchants could form buying groups to negotiate rates collectively.^[18]

These provisions would take effect quickly. The surcharging changes would begin within 90 days of the Settlement Approval Date, and the rate reductions and caps within roughly four months, timed to the networks’ semiannual rule-release cycle.^[19] The Settlement Approval Date turns on the district court’s entry of final judgment. Relief would therefore begin while appeals remain pending unless a court grants a stay.

B. Issuer Revenue and Responses

The proposed changes could significantly reduce issuer revenue. Current card-purchase volume, projections based on recent growth rates, and the settlement’s 10-basis-point reduction provide a starting estimate. Assuming card-purchase volume grows 5% annually, issuers would lose roughly $29 billion over five years, as Figure 3 shows.

The actual revenue loss would depend on how four-party issuers respond to lower interchange fees, how three-party issuers react, and how consumers respond to both. These adjustments would, in turn, prompt further changes in pricing and card use.

Interchange revenue helps fund rewards, introductory offers, fraud protection, and the fixed costs of maintaining card accounts. Four-party issuers would therefore likely recoup at least some lost revenue by reducing rewards, tightening eligibility for richer benefits, raising annual or other account fees, or combining these approaches.

Where regulation has reduced interchange revenue, issuers have responded by cutting costs or recovering income elsewhere. When Regulation II roughly halved the debit interchange retained by covered U.S. banks in 2011, debit rewards programs largely disappeared, free checking at those banks contracted sharply, and monthly maintenance fees and minimum-balance requirements rose. Lower-income customers bore a disproportionate share of that burden. Australian issuers responded to the Reserve Bank of Australia’s interchange standards by cutting rewards and raising annual fees by around 50%. The European Union’s (EU) Interchange Fee Regulation prompted similar adjustments.^[20]

FIGURE 3: Effects of the Ten-Basis-Point Reduction on Interchange-Fee Revenue

If four-party issuers reduce benefits or raise annual fees, cardholders would likely use those cards somewhat less. That could alter competition with three-party networks such as American Express and Discover. Because the caps do not constrain three-party systems, they could preserve rewards and other benefits, or launch products with higher rewards. Cardholder demand could shift from Visa and Mastercard products toward three-party cards, even as merchants generally pay less to accept four-party cards.

Four-party issuers would anticipate these competitive effects. They might therefore absorb some losses or recover revenue through other charges, such as higher interest rates.

Their choices would ultimately depend on how sensitive different cardholders are to price. If cardholders who carry balances from month to month (revolvers) are less price-sensitive than those who pay in full (transactors), issuers would likely recover more of the loss from revolvers through higher interest charges. Similarly, less price-sensitive holders of ultrapremium cards might face disproportionately higher annual fees. The response would likely vary by card. Holders of airline co-branded cards, for example, might be less price-sensitive than holders of cashback cards, many of whom could switch to three-party cards offering higher rewards.

Merchants’ responses to the new acceptance, surcharging, and discounting rules would also affect issuer revenue, prompting further adjustments by networks and issuers. Merchants would likely surcharge where consumers would accept the added charge or switch to a payment method with lower processing costs. Surcharging would be less attractive where consumers would abandon the transaction or switch to a method that costs the merchant more to accept.

Australia’s experience broadly supports this expectation. After networks removed their no-surcharge rules, surcharging remained far from universal and concentrated among certain merchants and industries. The Reserve Bank of Australia identified airlines and taxis as sectors where unusually high surcharges persisted, and noted that higher surcharges were more common online, where customers generally could not pay cash.^[21] In these settings, switching payment methods or abandoning a transaction may impose substantial costs on consumers, giving merchants more room to surcharge.

C. Merchant Steering and Acceptance Costs

By allowing surcharges that vary by card category and substantially reducing interchange fees on standard consumer cards, the settlement could help merchants steer consumers toward cards with lower interchange fees. That, at least, is the intention.^[22]

But steering carries risks. Some consumers may switch to more expensive payment methods when merchants surcharge certain four-party cards. Uncertainty about surcharges may also prompt cardholders to use an alternative payment method preemptively.

If consumers choose lower-cost cards or other cheaper payment methods, merchants’ acceptance costs could fall. But consumers might instead choose more expensive three-party cards or cash, which also costs merchants more to accept.^[23] Declining particular card categories therefore has an uncertain effect on acceptance costs. Some customers would also likely abandon the transaction altogether, potentially reducing merchant income.

Two other features of the settlement deserve attention before turning to the state laws. First, as Judge Cogan observed when granting preliminary approval, no court could have ordered the rate relief after trial because courts lack the power to set rates or regulate prices.^[24] Merchants thus secured through settlement relief they could not have obtained at trial.

Second, merchants need take no action to receive the rate relief. The networks would implement the reductions and caps within their existing rate schedules, with an independent auditor verifying compliance at the defendants’ expense. Merchants would not need to buy equipment, alter checkout processes, or submit documentation.

IV. State Carveouts: Compliance Costs and Legal Limits

The IFPA prohibits issuers, networks, acquirers, and processors from receiving or charging interchange fees on the tax or gratuity portion of a transaction, provided the merchant transmits that information during authorization or settlement. Merchants that do not transmit the data in real time may instead submit tax documentation within 180 days and receive a credit from the issuer within 30 days. Financial institutions face a $1,000 civil penalty per transaction for violations. Merchants face no liability or penalty for inaccurate or fraudulent reimbursement requests.^[25]

As I have described in earlier work, neither point-of-sale terminals nor network messaging standards currently distinguish the tax or tip component of a consumer transaction, largely because they have had no reason to do so. Systems operating identically in every state have always calculated interchange on the total transaction amount.^[26] Implementing a carveout would therefore require one of three costly mechanisms:

• Dual authorizations. Merchants could split each sale into exempt and nonexempt transactions, dramatically slowing checkout.
• Additional transaction data. Merchants could transmit tax and tip data through Level 2 and Level 3 message fields, which carry more detailed transaction information. This would require terminal upgrades and reprogramming throughout the payment system. Single-message debit networks, which authorize and settle payments through one message, generally cannot process these fields.
• Retrospective rebates. Merchants, acquirers, and issuers could maintain linked records of encrypted transaction data for seven months or more to support reimbursement requests. This approach would invite error and fraud.^[27]

A significant share of these costs is fixed, placing a disproportionate burden on small and medium-sized merchants and small issuers. Evidence from comparable compliance regimes suggests that these costs can consume much or all of smaller firms’ gross savings. After South Dakota v. Wayfair, Inc. allowed states to require remote sellers to collect sales tax, the U.S. Government Accountability Office found that large businesses absorbed the change with minimal new setup costs, while smaller sellers faced a significant compliance burden. One small online seller spent about $2.25 on compliance for every $1 of tax collected.^[28]

Other recent state proposals follow the IFPA’s basic design but differ in ways that compound the problem. For example, while the IFPA covers taxes and gratuities and applies to all issuers, Colorado’s vetoed S.B. 26-134 covered only taxes and exempted issuers with $60 billion or less in assets. That exemption would have excluded more than a third of debit cards and perhaps a quarter of credit cards issued nationwide, along with every card issued by a Colorado-domiciled institution. Merchants would have had to determine, card by card, whether the exemption applied.^[29]

Delaware’s bill, meanwhile, addresses gratuities alone. If several such laws took effect, the payment system would face mutually inconsistent carveout standards, each requiring separate screening rules for every transaction processed nationwide.^[30]

The IFPA’s legality—and, by extension, that of similar state carveouts—remains contested and precarious. In February 2026, the federal district court hearing the banking industry’s challenge declined to enjoin the IFPA’s interchange-fee provision, reasoning that networks, rather than banks, set the fees.^[31]

In April, the Office of the Comptroller of the Currency issued an interim final order finding that federal law preempts the IFPA for national banks and federal savings associations. It also issued an interim final rule confirming that banks’ authority to charge fees extends to fees set by third parties. Following those actions, the 7th U.S. Circuit Court of Appeals vacated the district court’s judgment. On remand, the district court permanently enjoined the interchange-fee provision as applied to national banks, federal savings associations, out-of-state state banks, and payment-card networks.^[32]

The National Credit Union Administration then issued a similar rule for federal credit unions, and the district court recently expanded its injunction to cover them as well.^[33] Illinois subsequently deferred the IFPA’s effective date a second time, to July 1, 2027.^[34]

Unless courts overturn the federal regulators’ actions, the IFPA and similar laws will bind only institutions chartered by the enacting state, which issue a small fraction of cards in circulation. The analysis that follows assumes, for the sake of argument, that the carveouts could take effect at full scope, although that outcome appears unlikely.

V. Comparing the Settlement and State Carveouts

Both the settlement and state carveouts aim to lower merchants’ card-acceptance costs. This section compares their likely savings and compliance burdens, then examines how the settlement could further reduce carveout benefits, shift costs toward consumers and local issuers, and complicate implementation. It also considers how surcharging could make carveouts redundant for some merchants and how both interventions could shift transactions toward more expensive three-party cards.

A. Merchant Savings and Compliance Costs

The settlement would reduce merchant acceptance costs directly. The 10-basis-point reduction in average effective interchange equals 0.1% of covered credit card sales and applies automatically across merchants in every state, on the entire transaction amount. For merchants on interchange-plus pricing, the reduction would pass through to the MDR immediately. The settlement expressly provides a proportional reduction for merchants paying negotiated rates. Even many merchants on blended pricing could expect a share over time, as acquirers compete for their business and pass through a durable, independently verified reduction in their largest input cost.^[35]

The carveouts promise savings of a similar magnitude. In earlier work, I estimated the IFPA’s gross savings to merchants at roughly 0.1% of the sale amount, reflecting an average combined Illinois sales tax of about 8.86%, gratuities on some transactions, and prevailing interchange rates.^[36] The settlement’s average rate reduction is comparable, but merchants need no particular acquiring arrangement to qualify. They need not transmit tax data, buy new terminals or software, or submit rebate claims within a 180-day documentation window. The settlement also covers transactions on cards issued by institutions beyond the state statute’s reach.

The IFPA and similar carveouts would therefore deliver considerably smaller net fee reductions than the settlement. Moreover, once the settlement takes effect, lower interchange rates would further reduce the amounts available through carveouts.

Even at pre-settlement rates, most smaller merchants would see little, if any, net savings from a carveout. Fixed costs for upgraded terminals, software integration, and recordkeeping—or the administrative burden of rebate claims—would absorb much or all of the gross benefit. Merchants on blended pricing might receive no gross benefit at all.^[37]

Reducing the gross benefit by a third or more would further narrow the group of merchants for whom a carveout’s benefits exceed its costs. The remaining beneficiaries would principally be the largest retailers, which already spread compliance costs across a large volume of transactions and stood to gain the most from carveouts. Before the settlement, just 10 national chains would receive more than one-fifth of the IFPA’s projected savings.^[38] The settlement would intensify that concentration, making the carveout an even more pronounced subsidy to big-box retailers financed by consumers, smaller merchants, and local financial institutions.

The settlement would also give merchants concerned about high-fee cards more options. Under its terms, they could decline premium and commercial cards outright, surcharge them, or offer discounts to steer customers toward cheaper products. Indeed, merchants could surcharge their full processing cost, up to 3% of transaction value.

Merchants using that tool could recover far more than the IFPA or similar carveouts would offer, making the carveouts redundant for them. As discussed below, when a surcharge equals or exceeds the amount a merchant could recover under a state carveout, the merchant’s recovery weakens the rationale for that carveout.

B. Shifting Costs to Consumers and Local Issuers

National issuers could respond to a state carveout by seeking adjustments to interchange schedules that spread the loss across merchants nationwide. The settlement, however, largely forecloses that response. It freezes posted rates, caps standard consumer rates, and requires the average effective rate to remain 10 basis points below the benchmark, subject to annual audit.^[39] For at least five years, issuers or networks would therefore find it difficult, if not impossible, to lawfully offset carveout losses by adjusting interchange schedules.

Consumers would bear the carveout’s costs more directly through reduced rewards and higher fees. Those costs would reach consumers both inside and outside the enacting state because national issuers adjust terms nationally rather than maintain state-specific rewards schedules.^[40] Indeed, most affected consumers would live outside the state, making the effects predominantly extraterritorial.

Local banks and credit unions that remain within the statutes’ reach after the preemption rulings would face a different constraint. They could neither offset the lost revenue through the frozen interchange schedules nor spread it across a national portfolio. The loss would come on top of settlement-driven reductions in their card-program revenue.

The settlement therefore changes who bears a carveout’s costs, making the distribution of those costs worse. A state considering a carveout would still impose diffuse harms on consumers, while concentrating institutional losses on the banks and credit unions its charter system exists to serve.

C. How Carveouts Could Reduce Settlement Relief Elsewhere

The settlement measures the average effective interchange rate by dividing the network-set default interchange fees actually assessed on domestic credit transactions by the corresponding sales volume.^[41] A state carveout that eliminates interchange on taxes and tips reduces the fees assessed without reducing sales volume, lowering the measured national average.

Mechanically, that reduction would count toward the 10-basis-point reduction the networks owe the merchant class. The networks could then provide correspondingly less rate relief to merchants in the other 49 states. A state enacting a carveout would thus finance part of its local experiment through settlement relief owed to merchants elsewhere.

Whether the independent auditor would treat statutory exclusions this way remains an open question. The agreement addresses individually negotiated reductions but says nothing about state-mandated ones. Either approach creates problems. If statutory exclusions count, carveout states would draw on the class’s recovery to fund their own mandates. If they do not, the networks and auditor would need another layer of state-specific accounting to exclude them from the calculation.

D. Surcharging and the Case for Carveouts

The settlement permits merchants to surcharge at the brand or product level up to their cost of acceptance or 3% of transaction value, whichever is lower.^[42] A merchant that recovers its full acceptance cost through a surcharge also recovers interchange on the entire transaction, including taxes and gratuities. For that merchant, a carveout offers no further recovery. Full-cost surcharging therefore removes the basis for that merchant’s argument for a state carveout.

The same reasoning applies, to a lesser extent, to merchants that decline premium and commercial cards or offer discounts to steer customers toward standard cards. Those choices eliminate or reduce the fees from which a carveout would provide a partial exemption.

The remaining benefit of carveouts would therefore accrue principally to merchants that forgo the settlement’s self-help options. The principal reason to do so would be to preserve fast, efficient checkout with minimal risk that customers abandon transactions. That preference would appear to conflict with seeking a carveout that would make payment processing more cumbersome.

E. Competing Implementation Demands

After the settlement’s final approval, networks, acquirers, processors, and issuers will have to undertake substantial changes to their systems on a court-supervised schedule. These include identifying premium and commercial cards at checkout, implementing three-tier acceptance, building surcharge notification and reporting systems, and supplying the data the independent auditor requires.^[43]

This work would use the same messaging standards, processing systems, and semiannual release cycles needed to implement carveouts. The IFPA’s scheduled July 1, 2027, effective date falls squarely within the settlement’s rollout.^[44] Implementing a carveout during that period would compete for engineering capacity with obligations the industry must meet under a federal court order, potentially increasing costs, delays, and errors for both.

The industry would also need to check every acceptance category, surcharge configuration, and rate schedule introduced by the settlement against each state’s carveout rules, and vice versa. These interaction costs did not exist when lawmakers drafted the carveout bills, and none of the states’ fiscal notes—their estimates of legislation’s budgetary effects—accounts for them.

F. Shifting Transactions to Three-Party Systems

Neither the settlement nor the carveouts apply to three-party systems. American Express and Discover remain free to fund rewards and benefits at whatever level their internal pricing supports. As Visa and Mastercard issuers respond to lower interchange revenue by trimming rewards and raising fees, three-party companies could attract premium cardholders by offering benefits no longer available on four-party cards.

Australia’s experience is instructive. After the Reserve Bank of Australia’s price controls reduced four-party interchange in 2003, banks shifted premium customers toward American Express companion cards—that is, cards offered alongside their Visa or Mastercard products. American Express’s market share rose by about 25% before the regulator extended its standards to cover the arrangement.^[45]

Carveouts share this asymmetry and add further friction. The compliance mechanisms described in Section IV, including dual authorizations and expanded transaction messages, would apply only to four-party transactions, making them slower and more prone to checkout failures than unchanged three-party transactions. Merchants using dual authorizations, in particular, should expect greater use of American Express and Discover cards, alongside some shift back to cash.

These consequences undermine both interventions’ aims, especially those of the carveouts. First, migration toward three-party cards would erode merchant savings because those cards cost more to accept. Second, each transaction that shifts to a three-party card would fall outside the carveout, further reducing the law’s already-diminished benefits while leaving its fixed costs unchanged. Third, local banks and credit unions still subject to a carveout after the preemption rulings would lose card volume to three-party competitors, on top of the revenue the statute removes directly.

Consumers who qualify for three-party products could retain rewards, partially offsetting their losses. But that benefit would come with the costs and inconvenience of maintaining additional cards, and would reach only eligible customers. A law that steers transactions toward the most expensive card-acceptance channel would be a strange way to lower merchants’ acceptance costs.

VI. Conclusion

State interchange carveouts arose from merchants’ objection to paying fees on amounts they collect for the state or pass on as gratuities, with no relief in prospect from Congress or the courts. The proposed settlement substantially weakens that rationale. It would reduce interchange across covered transactions nationwide by roughly the same share of sales that carveouts promised in their best case, without imposing merchant compliance costs. Pass-through would depend on merchants’ pricing arrangements, but the settlement would also give them more ways to recover acceptance costs through surcharging and steering.

A carveout would add only a diminished exemption from an already-reduced fee. Merchants would need to incur fixed costs that the settlement makes harder to recover, and relief would reach only cards issued by the shrinking set of institutions left within the statutes’ scope after federal preemption.

The carveouts’ costs would remain and, in several respects, grow. If courts ultimately reject federal preemption, national issuers would spread much of the burden to out-of-state consumers through reduced rewards and changed account terms. Out-of-state merchants could also face lower demand and potentially less settlement relief. If preemption holds, losses would concentrate on local banks and credit unions and their customers.

In either case, small and medium-sized merchants in the enacting state would face compliance costs that could exceed their savings. Many would likely forgo the carveout, further weakening their position relative to larger competitors. Implementation would also compete with the settlement’s court-supervised rollout, while slower four-party transactions and reduced cardholder benefits could shift spending toward more expensive three-party cards.

The settlement itself would likely impose net economic costs, particularly through reduced cardholder benefits and higher fees. Its comparatively lower compliance burden nonetheless makes the case for additional state carveouts weaker.

States seeking to reduce merchants’ tax-collection costs have a more direct tool in the form of capped compensation for electronic remittance, of the kind most states already provide.^[46] Requiring a national payment system to administer a local subsidy would add costs and distortions while delivering increasingly narrow benefits. Illinois should repeal its carveout, and other states should abandon similar proposals, regardless of whether the settlement receives final approval.

[1] Memorandum Decision and Order, In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig., No. 05-md-1720 (BMC) (E.D.N.Y. June 9, 2026) [hereinafter Preliminary Approval Order].

[2] Id. at 6–10; Visa Inc., Current Report (Form 8-K) (Nov. 10, 2025) (attaching Superseding and Amended Definitive Class Settlement Agreement of the Rule 23(b)(2) Class Plaintiffs [hereinafter Settlement Agreement]); Nandita Krishnaswamy, In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation: Summary of the November 2025 Proposed Settlement, ABA Antitrust L. Sec. (Apr. 1, 2026), https://www.americanbar.org/groups/antitrust_law/resources/newsletters/in-re-payment-card-interchange-fee-merchant-discount-antitrust-litigation.

[3] See Ill. Bankers Ass’n v. Raoul, No. 1:24-cv-07307, slip op. at 2–4, 27–28 (N.D. Ill. June 1, 2026); see also 815 Ill. Comp. Stat. 151/150-1, 151/999-99 (2026) (effective July 1, 2027).

[4] Interchange Fee Prohibition Act, 815 Ill. Comp. Stat. 151/150-1 et seq. (2024).

[5] Colorado Bill To Cut Sales Tax from Interchange Calculation Vetoed, Digital Transactions (June 2026), https://www.digitaltransactions.net/colorado-bill-to-cut-sales-tax-from-interchange-calculation-vetoed; S.B. 26-134, 2026 Reg. Sess. (Colo. 2026).

[6] Patrick Cooley, State Interchange Fee Laws Progress, Payments Dive (Mar. 18, 2026), https://www.paymentsdive.com/news/state-interchange-fee-laws-progress/815072; Gail Cole, Can States Ban Swipe Fees on Taxes and Fees?, Avalara (May 2026), https://www.avalara.com/blog/en/north-america/2026/05/states-ban-swipe-fees-on-taxes-and-fees.html.

[7] Julian Morris, The Price of Peace in the Swipe-Fee Wars, Truth on the Mkt. (July 23, 2026), https://truthonthemarket.com/2026/07/23/the-price-of-peace-in-the-swipe-fee-wars [hereinafter Morris, Price of Peace]; Julian Morris, State Regulation of Interchange Fees (Int’l Ctr. L. & Econ., Nov. 15, 2024), https://laweconcenter.org/resources/state-regulation-of-interchange-fees [hereinafter Morris, State Regulation]; Julian Morris & Ben Sperry, Regulating State Interchange Fees: Evaluating the Likely Effects of the IFPA 8 (Int’l Ctr. L. & Econ., July 7, 2025), https://laweconcenter.org/wp-content/uploads/2025/07/IFPA-Paper-2025.pdf [hereinafter Morris & Sperry, IFPA].

[8] See Julian Morris, Todd J. Zywicki & Geoffrey A. Manne, The Effects of Price Controls on Payment-Card Interchange Fees: A Review and Update 24–27 (Int’l Ctr. L. & Econ., White Paper, Mar. 4, 2022), https://laweconcenter.org/wp-content/uploads/2022/03/Payments-2021-Lit-Review.pdf; Todd J. Zywicki, Ben Sperry & Julian Morris, Credit Cards and the Reverse Robin Hood Fallacy: Do Credit Card Rewards Really Steal from the Poor and Give to the Rich? 14–16 (Int’l Ctr. L. & Econ., Issue Brief, Nov. 4, 2021); Zhu Wang, Scarlett Schwartz & Neil Mitchell, The Impact of the Durbin Amendment on Merchants: A Survey Study, 100 Econ. Q. 183, 189, 198–200 (2014); Vladimir Mukharlyamov & Natasha Sarin, Price Regulation in Two-Sided Markets: Empirical Evidence from Debit Cards, 172 J. Fin. Econ. 104094, 10–11, 15–16 (2025), https://doi.org/10.1016/j.jfineco.2025.104094.

[9] Morris, State Regulation, supra note 7, at 6 (describing three-party networks, in which the card company acts as issuer, acquirer, and network operator, subsidizing cardholders directly through fees charged to merchants).

[10] Id. at 7–9. The number of bilateral agreements required among n institutions is n(n − 1)/2.

[11] Morris, Price of Peace, supra note 7.

[12] See William F. Baxter, Bank Interchange of Transactional Paper: Legal and Economic Perspectives, 26 J.L. & Econ. 541 (1983).

[13] Jean-Charles Rochet & Jean Tirole, Cooperation Among Competitors: Some Economics of Payment Card Associations, 33 RAND J. Econ. 549 (2002); Jean-Charles Rochet & Jean Tirole, Platform Competition in Two-Sided Markets, 1 J. Eur. Econ. Ass’n 990 (2003); Todd J. Zywicki, The Economics of Payment Card Interchange Fees and the Limits of Regulation (Int’l Ctr. L. & Econ., June 2, 2010), https://laweconcenter.org/images/articles/zywicki_interchange.pdf; Ohio v. Am. Express Co., 585 U.S. 529, 545 (2018).

[14] Jack Caporal, Average Credit Card Processing Fees and Costs in America, Motley Fool Money (updated June 23, 2026), https://www.fool.com/money/research/average-credit-card-processing-fees-costs-america (reporting Helcim’s 2026 weighted effective rates).

[15] Morris, State Regulation, supra note 7, at 9–10 (describing interchange-plus and blended acquirer pricing); Morris & Sperry, IFPA, supra note 7, at 14–18.

[16] Understanding Our Fees, Square, https://squareup.com/us/en/payments/our-fees (last visited Aug. 9, 2026) (listing standard processing fees of 2.6% plus $0.15 for card-present transactions and 2.9% plus $0.30 for online transactions using Square’s API); Pricing, Stripe, https://stripe.com/pricing (last visited Aug. 9, 2026) (listing standard U.S. pricing of 2.9% plus $0.30 per successful transaction for domestic cards).

[17] Settlement Agreement, supra note 2, ¶¶ 48–53; Preliminary Approval Order, supra note 1, at 9–10.

[18] Settlement Agreement, supra note 2, ¶¶ 39–47; Preliminary Approval Order, supra note 1, at 6–9. A group must include at least two merchants, incorporate as a U.S. nonprofit, and comply with applicable antitrust standards. Groups may submit proposals concerning interchange rates and rate categories, merchant rules and fees, acceptance, surcharging, and other network practices. Visa and Mastercard must consider qualifying proposals in good faith and engage in reasonable, bona fide negotiations when a proposal offers commercially reasonable benefits. They need not agree to the rates the group seeks.

[19] Settlement Agreement, supra note 2, ¶¶ 39, 48(a).

[20] Morris, Zywicki & Manne, supra note 8; Todd J. Zywicki, Geoffrey A. Manne & Julian Morris, Unreasonable and Disproportionate: How the Durbin Amendment Harms Poorer Americans and Small Businesses (Int’l Ctr. L. & Econ., Apr. 2017), https://laweconcenter.org/wp-content/uploads/2017/08/icle-durbin_update_2017_final-1.pdf.

[21] Reserve Bank of Austl., Regulatory Developments in Retail Payments, in Payments System Board Annual Report 2012 (2012) (reporting that approximately 36% of surveyed merchants imposed a surcharge on at least one accepted credit card and that very large merchants surcharged more often); Reserve Bank of Austl., The Payments System (Supplementary Submission to the Financial System Inquiry, Aug. 2014) (observing that market forces ordinarily constrain excessive surcharging because merchants consider its effect on the customer experience, while identifying the taxi and air-travel industries as exceptions); Cameron Dark, Chay Fisher, Kim McBey & Ed Tellez, Payment Surcharges: Economics, Regulation and Enforcement, Reserve Bank of Austl. Bull., Dec. 2018 (identifying airlines as a prominent source of excessive surcharging and noting reports of higher surcharges more often for online transactions, where customers generally could not pay cash); Reserve Bank of Austl., Excessive Surcharging, in Review of Card Payments Regulation: Conclusions Paper (May 2016) (discussing $7–$8 fixed-dollar airline surcharges and explaining why they could substantially exceed acceptance costs on low-value airfares).

[22] Preliminary Approval Order, supra note 1, at 9–10.

[23] Julian Morris & Ben Sperry, The Cost of Payments: A Review (Int’l Ctr. L. & Econ., Aug. 2024), https://laweconcenter.org/resources/the-cost-of-payments-a-review.

[24] Preliminary Approval Order, supra note 1, at 22 (citing Prentis v. Atl. Coast Line Co., 211 U.S. 210, 226 (1908)); Settlement Agreement, supra note 2, ¶¶ 48, 52–53 (Independent Auditor provisions).

[25] 815 Ill. Comp. Stat. 151/150-10, 151/150-15 (2024).

[26] Morris, State Regulation, supra note 7, at 16–21; Morris & Sperry, IFPA, supra note 7, at 14–18.

[27] Morris, State Regulation, supra note 7, at 17–21.

[28] Morris & Sperry, IFPA, supra note 7, at 16 (citing U.S. Gov’t Accountability Off., GAO-23-105359, Remote Sales Tax: Federal Legislation Could Resolve Some Uncertainties and Improve Overall System (2022)); South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018).

[29] S.B. 26-134, 2026 Reg. Sess. (Colo. 2026); Bd. of Governors of the Fed. Rsrv. Sys., 2023 Interchange Fee Revenue, Covered Issuer Costs, and Covered Issuer and Merchant Fraud Losses Related to Debit Card Transactions (2023).

[30] See Morris & Sperry, IFPA, supra note 7, at 20–21 (discussing how differing state mandates could fragment the multilateral interchange-fee system).

[31] Ill. Bankers Ass’n v. Raoul, No. 1:24-cv-07307 (N.D. Ill. Feb. 10, 2026).

[32] Ill. Bankers Ass’n v. Raoul, Nos. 26-1354, 26-1371, 26-1440 & 26-1441 (7th Cir. May 8, 2026) (order vacating and remanding); Illinois Interchange Fee Law Maxes Out After Permanent Injunction and Legislative Postponement, Glob. Fintech & Digit. Assets Blog (June 2026), https://www.fintechanddigitalassets.com/2026/06/illinois-interchange-fee-law-maxes-out-after-permanent-injunction-and-legislative-postponement [hereinafter Illinois Interchange Fee Law Maxes Out].

[33] Order Preempting the Illinois Interchange Fee Prohibition Act, 91 Fed. Reg. 23,150 (Apr. 29, 2026); Preemption—Federal Credit Union Non-Interest Charges and Fees, 91 Fed. Reg. 34,725 (June 9, 2026).

[34]  815 Ill. Comp. Stat. 151/999-99 (2026) (deferring the effective date to July 1, 2027); see also Illinois Interchange Fee Law Maxes Out, supra note 32.

[35] On acquirers’ pass-through of interchange reductions, see Morris, Zywicki & Manne, supra note 8, at 31–38.

[36] Morris & Sperry, IFPA, supra note 7, at 18 & n.65.

[37] Morris, State Regulation, supra note 7, at 9–10, 22–23; Morris & Sperry, IFPA, supra note 7, at 14–18.

[38] Elec. Payments Coal., New Illinois Law Creates Windfall for Largest Corporate Mega-Stores (2024), https://guardyourcard.com/wp-content/uploads/2024/10/Illinois-State-Sales-Tax-Interchange-Report-9.24.24.pdf.

[39] Settlement Agreement, supra note 2, ¶¶ 48, 51–52.

[40] Morris & Sperry, IFPA, supra note 7, at 19–21.

[41] Settlement Agreement, supra note 2 (defining “Effective Interchange Rate” as network-set default interchange fees assessed to acquirers, divided by the sales volume of the corresponding transactions).

[42] Id. ¶¶ 39–41.

[43] Id. ¶¶ 39–42, 48, 51–53; Preliminary Approval Order, supra note 1, at 7 & n.7.

[44] Illinois Interchange Fee Law Maxes Out, supra note 32.

[45] Morris, Zywicki & Manne, supra note 8 (reviewing the Australian evidence, including the companion-card episode).

[46] Morris, State Regulation, supra note 7, at 26–27.

Executive Summary

Smartphones and social media are now central to adolescent life, prompting understandable concern about teens’ mental health, sleep, school performance, and compulsive use. Policymakers have responded with enacted or proposed age bans, verification requirements, parental-consent mandates, time limits, school-phone restrictions, and warning labels. This white paper assesses the evidence behind these interventions, their unintended consequences, and their constitutional durability.

The evidence does not establish that social media broadly causes adolescent mental-health problems. Average associations are generally small, often explain less than 1% of the variation in well-being, and depend heavily on model and measurement choices. Outcomes also vary by user and context. Social media is associated with harm for some adolescents but provides others with friendship, belonging, creative expression, and access to support—benefits that may be especially important for LGBTQ+, neurodivergent, rural, and otherwise isolated young people.

Broad mandates have weaker support than the public rhetoric suggests. Australia’s social-media ban and China’s gaming curfews illustrate the tendency toward circumvention and displacement. School-phone restrictions produce mixed results, while parental-consent mandates and warning labels lack meaningful outcome evaluations. Age verification creates privacy risks and may drive adolescents toward unmonitored access. Broad restrictions can also isolate vulnerable young people, entrench large platforms, and burden constitutionally protected speech.

More promising approaches target specific harms while preserving choice and beneficial uses. Voluntary friction tools, family controls, social-media literacy, physical exercise, industry standards, and independent certification all can promote healthier habits and are able to adapt as evidence develops. Heavy device use may also partly fill a void left by declining opportunities for independent play and in-person socialization. Restoring those opportunities may improve adolescent well-being more than banning their digital substitutes.

Prologue

An eighth grader walks through his front door after school, eyes fixed on his phone. He heads down the hall to his room, shuts the door, flops onto his bed, and spends the next four hours scrolling through social media, messaging friends, and watching videos.

No public parks lie within walking distance of his home. Shopping malls bar unsupervised minors. Like 66% of children his age, he cannot leave his yard without an adult present, and his parents cannot accompany him until they finish working for the day.[1] His peers face the same circumstances. Thus, they spend their free time alone together on their phones—the only source of social connection and exploration available to them.

Introduction

In a relatively short amount of time, the use of smartphones and social media have become ubiquitous across age groups. In 2010, manufacturers shipped 300 million smartphones worldwide, and social media had about 1 billion users.[2] By April 2026, the numbers of unique mobile-phone users and active social-media user identities had each reached approximately 5.8 billion.[3]

Time spent on social media also grew dramatically. In August 2010, the average visitor worldwide spent approximately 4.5 hours per month—or roughly nine minutes per day—on social-networking sites.[4] By 2025, online adults spent more than 150 minutes per day, on average, consuming social and video feeds when the measure included platforms such as YouTube and TikTok.[5]

This rapid growth has raised concerns about the harms associated with phone use generally and social media in particular, especially among adolescents. Surveys suggest that average social-media use among U.S. adolescents ages 12–17 approximately doubled over the past decade, from 2.5 to three hours per day in 2015 to about five hours per day in 2025.[6]

Over roughly the same period, the Centers for Disease Control and Prevention’s Youth Risk Behavior Survey recorded a sharp rise in the share of adolescents who reported that they “felt sad or hopeless for two or more weeks in a row.” The steepest increase occurred from 2019 to 2021, followed by a modest decline, while other measures of mental health remained relatively stable (see Figure 1).

FIGURE 1: U.S. High School Students’ Mental Health Indicators, 1991-2023

SOURCE: CDC Youth Risk Behavior Survey[7]

The apparent association between greater access to smartphones and social media and rising mental-health problems—sometimes compounded by concerns about school performance—has prompted calls for sweeping restrictions. Policymakers in many jurisdictions have proposed or adopted minimum-age bans, parental-consent mandates, time-based curfews, and universal age verification.

Yet evidence that these interventions improve adolescent mental health, educational outcomes, or other measures of well-being remains weak at best. There is stronger evidence that they impose substantial costs, including lost privacy, harms to vulnerable populations, circumvention that can undermine voluntary controls, and violations of constitutional rights such as freedom of speech.

Treating social media and screen use as the villain in this story is understandable but, as we argue in this white paper, incomplete and overly simplistic. Jonathan Haidt, a leading proponent of the view that smartphones and social media have contributed to deteriorating adolescent mental health, also argues that a parallel trend has received too little attention: the steady erosion of children’s and adolescents’ freedom to play, explore, and socialize independently.[8]

Haidt argues that increasingly restrictive parenting and institutional practices, adopted largely in the name of child safety, have deprived young people of opportunities to develop autonomy, resilience, and social competence through independent exploration and unsupervised play. In his account, adults have systematically overprotected children in the physical world while underprotecting them in the digital one.

That overrestrictive parenting in the physical world may, in fact, be the broader problem. Indeed, adolescents may suffer from too little in-person social connection “in real life” and seek substitute forms through smartphones and social media. If so, restricting their access to phones and social media may do little to address the underlying problem and could even make it worse.

This white paper evaluates policies intended to address harms associated with smartphones and social media, drawing on research in psychology, economics, and law. It begins by assessing the empirical relationship among smartphone use, social-media use, and mental health. As we document, the evidence is weak and ambiguous. For most adolescents, smartphones and social media appear neither uniformly good nor uniformly bad for mental health. They seem to benefit a significant minority and harm a smaller minority. Their effects also depend heavily on context, suggesting that blanket rules are unlikely to offer an effective solution.

Section II evaluates existing and proposed laws through the lens of law & economics. It asks whether these policies can reduce the harms associated with social media while preserving its benefits, especially given the wide variation in individual experiences. The central finding is that the most politically popular interventions—minimum-age bans, universal age verification, and mandatory time caps—have the weakest evidence of effectiveness and the highest documented costs. Section III examines these interventions’ unintended consequences, and Section IV assesses their prospects under the First Amendment.

We then consider alternatives that could help adolescents derive greater net benefits from phones and social media while reducing harms more effectively. In particular, we examine how parents and other caregivers can encourage healthier use, including by loosening restrictions on activities such as independent travel that build autonomy, agency, and in-person peer interaction.

I.          Smartphones, Social Media, and Adolescent Mental Health

On several measures, American adolescents report worse mental health than they did two decades ago. In the Centers for Disease Control and Prevention’s (CDC) 2023 Youth Risk Behavior Survey, 40% of high school students reported persistent sadness or hopelessness, up from 30% in 2013. The share who had seriously considered suicide rose more modestly, from 17% to 20%, while the share who reported attempting suicide remained roughly constant at 9%.[9] Academic indicators also disappoint, with math and reading scores flat or declining.[10]

These changes coincide with the spread of smartphones and social media among adolescents, but the evidence of a causal relationship remains far less clear. International data reveal a more complicated picture. In England, for example, the share of young people reporting longstanding mental-health conditions rose sixfold, from 0.8% to 4.8%, between 1995 and 2014—a period of rapid growth in smartphone and social-media use. Yet measured psychological distress barely changed.[11]

Across 41 countries surveyed from 1994 to 2022, adolescent psychological complaints followed markedly different trajectories from one country to the next, even as smartphone and social-media use followed broadly similar paths.[12] Across 35 countries, complaints in 2022 also substantially exceeded projections based on pre-2020 trends, suggesting that the COVID-19 pandemic and related policies may help explain the recent increase.[13]

These findings suggest that the relationship among smartphones, social media, and mental health is more complex than the account presented by Jonathan Haidt and some other scholars and activists. As Candice Odgers of the University of California, Irvine, observes, “Hundreds of researchers, myself included, have searched for the kind of large effects suggested by Haidt. Our efforts have produced a mix of no, small and mixed associations.”[14] Policymakers have nevertheless often proceeded as though the causal evidence were much clearer.

Before Section II evaluates policies intended to address the alleged harms associated with phones and social media, this section offers a more balanced assessment of the nature and strength of those relationships, drawing on the best evidence available at the time of writing.

A.             Main Effects and Their Limits

We begin with “main-effect” studies, which examine the overall relationships among social-media use, device use, and mental-health outcomes. Most use cross-sectional designs that measure variables at a single point in time. They can therefore identify correlations but cannot establish causation.

Although public discussion often treats this research as settled, the available evidence has several important limitations. First, results vary with the analytical model. Researchers have found effects ranging from minuscule to moderate, but the studies collectively offer no consistent and compelling account of how social media or device use affects adolescent mental health.

Second, the large datasets used in some studies can produce statistically significant results that have little practical importance due to small effect sizes. Statistical significance indicates that an observed relationship is unlikely to result from chance. It does not establish that the effect is large or meaningful.

Third, research generally cannot prove that something is safe. It can only fail to detect harm. Yet journals are less likely to publish null findings—results showing no effect—than studies reporting even a small, statistically significant relationship. This publication bias may make the evidence of harm appear stronger and more consistent than it is.

1.               Model Choices Shape the Results

Deciding which variables to study, how to define and measure them, and which statistical controls to include is as much art as science. Researchers can reasonably disagree about whether to control for a variable—accounting for it statistically—or investigate it as a potential mechanism through which an effect operates. Some models also provide more conservative tests than others.

Observed correlations often hinge on these choices. Results can vary depending on how researchers measure “social-media use” or “device use,” which outcomes they examine, and which other variables they control for.

One way to test whether results are robust rather than dependent on a single model is to examine many similar models at once and identify overarching trends. Researchers call this technique specification-curve analysis. Amy Orben and Andrew Przybylski of the University of Oxford used it to test about 20,000 model specifications.[15] As they note, “for some of the datasets analyzed there were more than a trillion different ways to operationalize a simple regression.”[16] That range underscores the value of examining the overall pattern rather than selecting a few models from among a trillion possibilities.

Orben and Przybylski found a “negative but small” association that explained at most 0.4% of the variation in well-being. They concluded that the effect was “too small to warrant policy change.”[17] Many other factors had stronger associations. Being bullied was 4.3 times more strongly associated with reduced well-being than technology use. Wearing eyeglasses was 1.5 times more strongly associated.

In 2022, Jean Twenge, Haidt, and their coauthors used the same data and analytical method but chose different model specifications. They found that:

[I]n particular, social media use (as opposed to all screen time) for girls (as opposed to all teens) showed much larger relationships with poor mental health, particularly when we removed possible mediators (such as unhappiness at school) from the set of variables controlled for, and when we treated all of the mental health scales equally.[18]

Some of these adjustments seem reasonable, including separating the effects by sex and examining social-media use rather than overall screen time. But the larger estimates depend heavily on treating unhappiness at school as a mediator—a pathway through which social media might affect mental health—rather than as a control. Both choices have defensible rationales, which the two sets of authors discuss in their published work.

Public discussion, however, rarely reflects how much the results vary or how strongly researchers contest them. It tends to favor Haidt and Twenge’s conclusions over those of Orben and Przybylski and other researchers discussed below who question the relationship.

2.               Small Effects and Measurement Error

A second dispute between Haidt and Twenge, on one side, and Orben and Przybylski, on the other, concerns whether the observed effects are large enough to justify policy intervention. Large datasets—the datasets analyzed by Orben and Przybylski included more than 355,000 participants—give researchers substantial statistical power. But they can also produce statistically significant results with little practical importance. In other words, a relationship may be unlikely to result from sampling chance yet still be too small to matter.

If social-media use has a weaker association with well-being than bullying and even wearing eyeglasses, policymakers should ask whether regulation is warranted and, if so, whether the proposed response is proportionate to the effect.

Consider an analogy. Suppose an official wants to determine whether a bowling ball is suitable for use in an official game. A sufficiently powerful microscope will establish beyond doubt that the ball carries a speck of dust. The speck is real, but it reveals little about the ball’s suitability. It does not alter the ball’s weight or shape enough to disqualify it. Statistical significance measures the sensitivity of the instrument, not the magnitude of what it detects. Datasets containing hundreds of thousands of respondents resemble extremely powerful microscopes: They can detect associations that are unlikely to reflect sampling chance but may remain too small to matter in practice.

Orben and Przybylski are not alone in finding statistically significant but small effects. In a 2025 meta-analysis, Christopher Ferguson of Stetson University and his colleagues pooled 79 effect sizes from 46 studies. They found an association of 0.061, below the 0.10 threshold that they and other researchers treat as the minimum of evidentiary interest.[19]

A University of Cambridge team led by Luisa Fassi reached a similar result. Its review covered 143 studies involving nearly 1.1 million adolescents.[20] The pooled estimate for time spent on social media, based on 56 of those studies and 482,273 participants, showed a statistically significant but small association with internalizing symptoms, such as anxiety and depression (r = 0.12). That correlation means social-media use accounts for roughly 1.4% of the variation in the outcome, leaving 98.6% unexplained. A 2026 meta-analysis of 153 longitudinal studies found similar effect sizes. It also found that video gaming appeared to improve executive function by about the same magnitude.[21]

Statisticians have proposed standard effect-size benchmarks to reduce the risk that researchers’ prior beliefs will shape how they characterize results. Guidelines commonly distinguish among small, medium, large, and even huge effects.[22] Researchers define those categories in different ways, but the U.S. Department of Education and others recommend benchmarks that account for the seriousness of the outcome, research norms, and effect sizes typical of the field. Social-media and device-use researchers would benefit from field-specific benchmarks that reduce the risk of well-meaning scholars either downplaying or exaggerating effects based on their subjective views.

Even these estimates may be too generous because researchers often measure phone and social-media use poorly. A preregistered meta-analysis by Douglas Parry and his colleagues found that self-reported and device-logged media use correlated at only r = 0.38, implying roughly 14% shared variance. Self-reports also rarely matched logged use.[23] Studies that ask adolescents to recall their screen time may therefore measure something quite different from their actual use.

The measurement error also may not be random. Evidence suggests that the gap between actual and remembered screen time varies with respondents’ well-being. Unhappy adolescents may overestimate their screen time, creating a false correlation between screen time and mood.[24]

This problem extends beyond social-media research. Common-method bias can arise whenever participants report both the proposed cause and the outcome at the same time. Features of the reporting method or the respondent’s outlook may then make the two appear more closely related than they are. Researchers can reduce this bias through better study design and statistical analysis.[25]

3.               Publication Bias and the File-Drawer Problem

The studies described above must be interpreted in light of journals’ longstanding reluctance to publish null results—findings in which a hypothesized relationship does not appear. This “file-drawer problem,” together with low statistical power, flexible analytical practices, and incentives favoring novel and statistically significant findings, have contributed to the replication crisis in social psychology. For many years, when researchers failed to reproduce a published effect, they were more likely to assume that something had gone wrong with the replication than to question the original finding.

These incentives complicate efforts to understand social media’s effects. Studies reporting small negative associations between social-media use and adolescent well-being are generally more publishable and newsworthy than studies finding no meaningful relationship.

A null result does not, however, automatically establish safety. A study may fail to detect harm because its measures are imprecise or its sample is too small. But large, well-designed studies that consistently find effects close to zero do provide meaningful evidence that any average harm is likely to be limited.

Public discussion often misses this distinction. Statistically significant but practically small negative effects receive disproportionate attention. Publication bias, media incentives, and people’s greater attention to negative information can therefore create a more alarming impression than the literature as a whole supports.

B.             Mechanisms and Competing Explanations

Because main-effect studies cannot establish causation, evidence about the specific pathways through which phones and social media might cause harm can strengthen the empirical case. The four leading candidates are sleep loss, social comparison and body-image concerns, social exclusion and bullying, and intermittent reinforcement that encourages compulsive use. Each mechanism is plausible, but the supporting evidence remains generally weak and often contradictory.[26] Moreover, the association in each case attaches not to time spent on a device or social media but to a particular behavior or preexisting vulnerability—each with an offline analogue.

Another possibility is that the association is not causal at all. Adolescents who spend more time on their phones differ from those who spend less time on their phones in ways that have nothing to do with the phones themselves. Several potential alternative pathways have been identified, including displacement and reverse causation.

Under the displacement theory, phone use competes for time with sleep, exercise, and in-person socializing—activities that predict adolescent well-being far more strongly than screen use predicts its absence. In Orben and Przybylski’s 2019 analysis, getting enough sleep and eating breakfast had positive associations with well-being 1.7 to 44.2 times larger than technology use’s negative association. When phone use crowds out those activities, it may serve as a marker for the displaced activity rather than independently cause the harm. The appropriate response would be to protect the activity, not to prohibit the device.[27]

Reverse causation between device use and mental health is also highly plausible, as is a bidirectional relationship in which phone use and poor mental health affect each other. An adolescent who is anxious, isolated, or depressed may have strong reasons to spend more time on a phone and fewer attractive alternatives.[28] In two longitudinal studies—one involving 594 adolescents and the other 1,132 college students—Taylor Heffer and her colleagues found that “social-media use did not predict depressive symptoms over time for males or females. However, greater depressive symptoms predicted more frequent social-media use only among adolescent girls.”[29]

In a longitudinal sample of 17,409 young people, Orben and her colleagues likewise found that lower-than-expected life satisfaction predicted greater subsequent social-media use. The relationship was statistically significant and consistent across participants ages 10–21 and across both sexes. The authors concluded that the relationship was bidirectional.[30] As Odgers and Michaeline Jensen put it, adolescents “at higher risk for depressive symptoms may selectively use social media more, or differently.”[31]

Age-specific life events and hormonal changes associated with puberty may also interact with social-media and device use. In the same longitudinal study, Orben and her colleagues found evidence that adolescents were more sensitive to associations between social-media use and lower subsequent life satisfaction during particular developmental periods. The first developmental window differed by sex, appearing at approximately ages 11–13 for girls and 14–15 for boys. A second window appeared at age 19 for both groups.[32]

The literature also supports other possible explanations for changing adolescent mental health, including schoolwork pressure,[33] the COVID-19 pandemic,[34] and mental-health awareness efforts that may themselves inflate reported symptoms.[35]

C.             Social Media’s Benefits

Studies that measure what adolescents experience on social media, rather than simply how many hours they spend there, find more benefit than harm. Given the negative public discourse surrounding social media, that result may seem surprising. It shouldn’t be.

Social media can help adolescents maintain friendships, find a sense of belonging, share humor, express creativity, explore their identities, seek help, and connect with peers who share their experiences. Adolescents themselves often describe social media in mixed terms. The Pew Research Center reported in 2025 that many teens saw benefits for connection and friendship while also reporting costs to sleep, productivity, confidence, and mental health.[36] [37]

The American Academy of Pediatrics similarly notes that social media can help adolescents feel connected, especially during periods of social isolation.[38] LGBTQ+ youth offer the clearest example. Matthew Berger and his colleagues’ systematic review found that social media may support LGBTQ+ youths’ mental health and well-being by fostering peer connections, helping them explore and manage their identities, and providing social support. These benefits are clinically significant. For adolescents whose identities receive little affirmation in their immediate environment, online connections can provide a major source of belonging and resilience.[39]

These benefits do not erase the risks. But they do mean that a blanket prohibition would impose certain, widely distributed costs to address risks that remain concentrated and uncertain.

D.            What the Evidence Supports

Several tentative conclusions follow from the forgoing. First, the science is not settled. Effect sizes vary with model specifications but tend to be small. In main-effect studies, digital-technology use typically explains less than 1% of the variation in adolescent well-being.

Second, an effect may be statistically significant yet have little practical importance, particularly when compared with variables such as bullying or even wearing eyeglasses. Third, journals’ reluctance to publish null results, combined with people’s greater attention to negative information, likely draws disproportionate attention to small negative effects. The nature of scientific research also makes a definitive “social media is safe” paper unlikely.

Fourth, confounding factors and competing explanations, including reverse causation, further muddy the picture. Odgers and Jensen summarize the state of the evidence well:

While future research may identify clear or stronger linkages, at present the available evidence falls short of the standard of proof required to identify digital technology use as a putative environmental cause of adolescent mental health problems.[40]

Fifth, any assessment must account for social media’s general benefits and its particular importance to some vulnerable populations.

Parents and policymakers may want definitive research establishing that social-media and device use are entirely safe, but science cannot provide that assurance. It can show that researchers have not detected specific harms—or have ruled out effects above a meaningful threshold—under specified conditions. And while some studies find negative effects under certain conditions, others find much smaller effects that affect narrower groups.

Until the research converges on a consensus that social media causes serious harm, public discussion should accurately reflect the mixed evidence. Policymakers should also demand evidence that interventions work before adopting them widely. Section II turns to that question.

II.          Do the Proposed Policies Work?

Despite limited and mixed evidence that device and social-media use cause substantial harm, policymakers around the world are rushing to embrace solutions. The threshold question is what problem these measures aim to solve. This section evaluates whether they produce meaningful benefits, including whether they achieve their stated objectives. Section III considers their unintended consequences.

Some states have enacted laws that restrict constitutionally protected speech. Courts have already enjoined several of these laws, while challenges to others remain pending. Section IV examines those cases and the governing constitutional precedents in greater detail. Here, we identify policies likely to face constitutional challenges in the United States, while focusing primarily on evaluating their effectiveness.

The most popular government responses include blanket age restrictions on device or social-media access, other age-based limits on the duration or timing of use, parental-consent mandates, and labeling requirements. Meanwhile, nongovernmental tools to address the public concerns include apps that let parents or users impose time limits or add “friction”—such as pauses or prompts that interrupt automatic use.

Evaluating most of these policies and tools remains difficult because studies measuring their effects on adolescent health are sparse or nonexistent. Most interventions are too new, have faced legal barriers, or have been implemented too inconsistently to permit credible evaluation.[41] But even when measured against their own often-dubious premises, the evidence that government mandates work remains weak.

A.             Age Restrictions and Parental Consent

Some of the most vocal proponents to “do something” about the harms attributed to social media have settled on mandatory age restrictions. Haidt, for example, advocates banning smartphones for children under 14 and social media for children under 16.[42]

The most straightforward case for these restrictions rests on two arguments. First, using the specified technology before the age cutoff is so widely harmful that narrower restrictions would not suffice. Second, voluntary parental limits face a network-effects and free-rider problem. Children may argue that barring them from smartphones or social media will isolate them because all their friends use those technologies. A mandate, in theory, relieves that pressure by imposing the same rule on everyone.

But there are strong reasons to conclude that a broad mandate would be too blunt. As the longitudinal study by Orben and her colleagues suggests, adolescent life satisfaction may be more sensitive to social-media use during certain developmental periods that differ by sex.[43]

Even if age restrictions could provide some benefits in principle, mandatory restrictions would also impose substantial costs. Indeed, the evidence discussed below suggests that they can produce the opposite of their intended effect. Rather than helping parents work with their children to manage social-media use, age bans may encourage teenagers to seek access to the forbidden fruit.

These mandates also raise serious constitutional concerns in the United States. Federal district courts in Arkansas, Louisiana, and Ohio have permanently enjoined laws requiring social-media platforms to verify users’ ages and obtain parental consent before allowing minors to create accounts.[44] The laws at issue were Arkansas’ Social Media Safety Act, Louisiana’s Secure Online Child Interaction and Age Limitation Act, and Ohio’s Parental Notification by Social Media Operators Act.[45]

The district courts applied strict scrutiny, in part because the laws required parental consent before minors could access constitutionally protected, nonobscene content.[46] As Section IV discusses, the 6th U.S. Circuit Court of Appeals reversed the Ohio decision in June 2026. The Arkansas and Louisiana injunctions remain in effect.

1.               Australia’s Under-16 Ban

Australia’s Constitution protects an implied freedom of political communication that may ultimately limit or invalidate the country’s effort to restrict teenagers’ access to social media.[47] Nonetheless, on Dec. 10, 2025, Australia implemented the world’s first national minimum age of 16 for social-media accounts.[48]

Leaving aside the policy’s broader merits and drawbacks, implementation has proved difficult. During the first month, platforms deactivated nearly 5 million accounts held by Australian minors.[49] That scale of initial compliance appears impressive—until one examines what happened next and what had come before:

• Self-reported age had already proved unreliable as an enforcement mechanism. Despite platforms’ existing minimum age of 13, 84% of Australians ages 8–12 reported using social media.[50]
• Virtual-private-network (VPN) use surged 170% on the ban’s first day. A consistent after-school spike suggested that teenagers quickly found workarounds.[51] The Bloomsbury Intelligence and Security Institute documented teenagers retaining access through previously falsified birthdates, VPNs, and AI-generated facial images designed to defeat verification. Others migrated to less-regulated platforms outside the ban’s coverage.[52]
• Current age-estimation technology has a margin of error of two to three years. Many 14- and 15-year-olds can therefore pass as 16, while many 16- and 17-year-olds may wrongly lose access.
• A June 2026 report based on an observational study of 436 Australian adolescents found that 86% of participants under 16 had accessed social-media sites covered by the ban after it took effect.[53]

Most critically, preventing young people from holding social-media accounts does not necessarily prevent them from accessing social-media content. Major platforms allow extensive browsing without an account. But logged-out users cannot use the safety features, parental controls, or restricted modes available through registered accounts.

Algorithmic ranking still operates for anonymous visitors, but their default feeds rely on popularity signals and geolocation rather than personalized, age-appropriate settings. Platform safeguards for minors—including screen-time prompts, private-by-default settings, restricted direct messaging, and sensitive-content filters—do not attach to sessions with no identified user.

Regulatory attention has begun to shift toward this gap, with some jurisdictions considering limits on anonymous browsing for all users. For now, account-level bans risk moving teenage use to the least-supervised surface of a platform. The result may be perverse: A policy intended to protect teenagers could make some of them less safe by pushing them from monitored accounts to unmonitored browsing.[54]

B.             Time Limits and Digital Friction

Limits on time spent using smartphones, social media, and other online services have become popular among adults and adolescents alike. In response, entrepreneurs have developed an impressive array of friction-based tools that help users limit their overall phone use or time spent on particular apps. These tools appear effective among people who choose to use them. For example:

• The “one sec” app inserts a brief breathing exercise before opening a social-media app. In a six-week field study of 280 users, it reduced actual app openings by 57%.[55]
• So-called “nudge-based” interventions—including disabling nonessential notifications, switching phone displays to grayscale, and moving social-media apps off the home screen—significantly reduced problematic smartphone use, screen time, and depressive symptoms.[56] One study found that grayscale settings alone reduced daily screen time by approximately 20 minutes.[57]

These friction-based tools work by targeting the automatic, habitual dimension of app use. They do not restrict access or require identity verification. They simply make compulsive use less effortless. Some evidence suggests that voluntary tools can also help users experiencing mental-health challenges.[58]

But these findings cannot be generalized to all users, much less treated as evidence that mandatory time limits would work. Voluntary tools chosen by motivated users differ fundamentally from restrictions imposed on everyone.

1.               China’s Gaming Limits

Mandatory time limits, unlike voluntary ones, appear ineffective and may prove counterproductive. China has restricted minors’ online gaming since 2019, when it limited users under 18 to 1.5 hours per day and three hours on holidays. In 2021, China tightened the restriction to just three hours per week and limited to 8 to 9 p.m. on Fridays, Saturdays, Sundays, and public holidays.[59]

One study reported a 93.6% compliance rate under the stricter regime, which China enforced through real-name verification and facial-recognition technology.[60] Yet that figure masks a more complicated reality. A survey of 430 adolescents conducted three months after the stricter limits took effect found that 17% of heavy gamers circumvented them. Of those surveyed, 3% rented other people’s gaming accounts, and 14% used a family member’s identity. Meanwhile, 59% shifted to watching short videos, which the restrictions did not cover.[61]

An analysis published in Nature Human Behaviour examined 7 billion hours of Tencent telemetry data—records of users’ actual play—and found no credible evidence that either the 2019 or 2021 policy reduced the prevalence of minors’ “heavy playtime,” defined as at least four hours per day on at least six days per week.[62] What’s striking about this result is that even China’s authoritarian state, with its aggressive use of identity-verification and surveillance systems, could not measurably reduce heavy play in the market segment studied. Instead, the evidence suggests that some adolescents evaded the restrictions or shifted their attention to less-regulated, less-visible, and potentially more harmful activities.

China’s gaming curfews represent an extreme version of the device-use and social-media restrictions now under consideration elsewhere. They also illustrate why evidence about voluntary tools cannot establish that mandates will work. Self-selected users adopt voluntary limits because they want to change their behavior. A platform-enforced cap creates different incentives and may produce evasion, displacement, and compensatory use—the substitution of one digital activity for another.

In the United States, Virginia enacted Senate Bill 854, which imposed a default one-hour daily limit on social-media use by users under 16. A federal court preliminarily enjoined the law in February 2026.[63] New York[64] and Illinois[65] have also enacted laws restricting algorithmically curated feeds and nighttime notifications for minors. Both laws have drawn constitutional objections and may face legal challenges.[66]

C.             School Phone Restrictions

School phone-use restrictions enjoy broad support, whether adopted by individual schools or imposed by law. Among the policies reviewed in this white paper, they are also the only measures evaluated through multiple rigorous studies conducted over different periods and in different jurisdictions. Some studies find improvements in academic performance, well-being, or both. The effects, however, are generally modest and context-dependent. It should also be noted that school phone restrictions apply to many activities beyond social media.

A 2016 study by Louis-Philippe Beland and Richard Murphy found that English schools that banned classroom phone use experienced modest improvements in test scores, with larger gains among lower-achieving students.[67] A 2025 study by David Figlio and Umut Özek likewise found small improvements in test scores at Florida schools.[68] Neither study examined mental-health effects, but a 2024 review of five studies by Kristof De Witte and Joanna Maldonado did find stronger evidence of benefits to social well-being than to academic performance.[69]

A 2025 study by Victoria Goodyear and colleagues compared 20 English secondary schools that restricted daytime phone use with 10 that permitted it. The researchers found “no differences in adolescents’ self-reported mental wellbeing, anxiety, depression, problematic social media use, and their motives for using social media.”[70] The restrictions also did not improve sleep duration or efficiency, physical activity, academic attainment, or disruptive classroom behavior. The authors noted that “restrictive school phone policies did not lower the overall time adolescents spent on their phones/social media.”[71] Restrictive policies may nonetheless reduce the time teachers spend addressing phone-related incidents and thereby lower staff costs.[72]

A 2024 study by Sara Abrahamsson reached different conclusions. Using the staggered adoption of smartphone bans across Norwegian schools, Abrahamsson found that classroom bans reduced consultations for psychological symptoms by 60%, reduced visits to general practitioners for psychiatric conditions by 30%, and increased grade-point averages by 0.08 standard deviations among middle school girls after two years.[73] She found no significant effects from less restrictive policies and no significant effects among boys.

This mixed evidence does not support broad conclusions about the effectiveness of school phone restrictions. All that can be said is that their effects appear to be context-dependent. In some settings, they may improve the learning environment, produce modest academic gains, and reduce staff costs. The evidence is less clear that they are effective as mental-health interventions, particularly for boys or when students compensate for reduced in-school phone use by spending more time on their phones outside school.

D.            Parental Consent Mandates

Alongside phone bans and age restrictions, parental-consent mandates—which require a parent to authorize a minor’s social-media account—are among the most politically popular proposals.[74] Yet our review found no study assessing whether these requirements improve adolescent mental health, reduce cyberbullying, improve sleep, or produce any other measurable health benefit.

These mandates may impose their greatest costs on young people in unsupportive households. LGBTQ+ youth who have not disclosed their identities to their parents, for example, may lose access to vital social support, information, and community resources if a parent refuses consent. Section III examines these effects in greater detail.

E.              Warning Labels

California’s Assembly Bill 56, which is set to take effect in January 2027, will require black-box-style health warnings on social media unless a platform determines that a user is older than 17.[75] The statute requires platforms to display a warning for at least 10 seconds, covering at least one-quarter of the screen, when a user first opens the platform each day. After three hours of use in a day, the platform must display a warning that cannot be dismissed for at least 30 seconds and covers at least three-quarters of the screen. It must repeat that warning at least once each hour thereafter.

The prescribed warning states that “the Surgeon General has warned that while social media may have benefits for some young users, social media is associated with significant mental health harms and has not been proven safe for young users.” Then-U.S. Surgeon General Vivek Murthy similarly called for tobacco-style warning labels on social-media platforms in 2024.[76]

The evidence for this approach is essentially nonexistent in the social-media context. No study has evaluated whether social-media warnings improve adolescent mental-health outcomes. The analogy to tobacco is instructive, though perhaps not in the way advocates imagine. Tobacco warning labels accompanied a broader cultural shift in attitudes toward smoking, but little reliable evidence shows that the warnings alone changed behavior. At most, they played a minor role alongside the more substantial and observable effects of excise taxes, public-education campaigns, smoke-free workplace rules, and alternatives such as e-cigarettes and heated-tobacco products.[77]

Consumers generally pay attention to product labels when those labels provide information directly relevant to a goal they are pursuing.[78] A consumer with a gluten sensitivity, for example, may seek products labeled “gluten-free” and avoid those labeled “contains wheat” or “contains gluten.” But a consumer without such a sensitivity will likely ignore those labels and choose based on price, brand, size, familiarity, or other product characteristics. Adding a warning label does not itself create the concern needed to make consumers notice or act on it.

Research also documents several ways consumers resist or disregard warnings. They may decline to read them, look away, discount the source, or treat the warning as paternalism or legal boilerplate rather than evidence of genuine risk. Some even experience reactance—a desire to resist perceived efforts to control their choices.[79] These responses are strongest among heavy users, for whom repeated warnings provide the least new information.

The indirect evidence from digital disclosures offers even less reason for confidence. In one experiment, only 7.3% of users presented with an optional terms-of-service disclosure chose to view it. Those who did kept it open for an average of 22.9 seconds—enough time to read an estimated 2.5% of the document.[80] Cookie banners required by the European Union’s General Data Protection Regulation (GDPR) operate much like repeated regulatory warnings. They have produced substantial consent fatigue and habitual dismissal. Moreover, experiments show that users’ responses depend heavily on a prompt’s design and the effort required to respond, while audits have found widespread discrepancies between users’ apparent choices and websites’ actual tracking practices.[81]

A deeper problem is that much social-media use is habitual rather than deliberative. There are cues that often prompt users to open an app, while unpredictable social rewards reinforce repeated checking and continued engagement. As habits develop, behavior becomes more automatic and less dependent on conscious goals, leaving little room for the deliberative processing on which warning labels depend.[82] Research distinguishing reflective decision-making from automatic behavior predicts that warnings aimed at conscious thought will have limited effects on habitual conduct. The available evidence supports that prediction.[83]

The available evidence therefore provides little reason to expect mandatory warnings to meaningfully reduce harmful social-media use among adolescents.

F.              Voluntary Tools and Mandatory Rules

While direct evaluations remain sparse, the available evidence suggests that voluntary tools—including time limits, grayscale displays, and other forms of digital friction—can help some users manage their phone, app, and social-media use. Mandatory interventions, by contrast, show little evidence of effectiveness and may prove useless or counterproductive. As Section III explains, mandates can also produce unintended consequences that cause substantial net harm.

III.          The Unintended Costs of Mandatory Interventions

Even if policymakers could, in principle, justify an intervention as a way to reduce harms associated with adolescent social-media use, they must also account for its unintended but predictable consequences. Those consequences may diminish the intervention’s benefits or make it harmful on balance.

This section examines the principal unintended effects of the mandatory interventions discussed in Section II. It demonstrates that several popular measures already impose substantial, concrete harms. These include privacy and security risks from age-verification systems, circumvention and displacement, disproportionate burdens on vulnerable groups, and compliance costs.

A.             Privacy and Security Risks of Age Verification

Enforcing any age-based restriction requires some way to determine users’ ages. Unfortunately, most verification methods now in use create substantial privacy and security risks. In February 2025, the European Data Protection Board warned that age-assurance systems could threaten data protection and other fundamental rights.[84] In March 2026, 405 cybersecurity experts published an open letter warning that mandatory age verification “breaks the internet’s security model.”[85] A 2025 data breach illustrated that risk vividly by exposing government-identification documents belonging to 70,000 Discord users.[86]

Common age-verification methods include:

• Self-declaration, which users can easily circumvent by lying about their age.
• Age estimation, which infers age from a facial image or other traits. These methods have margins of error measured in years and may require platforms or third parties to process biometric information, raising concerns about the security of data storage.
• Document-based verification, which requires users to submit personally identifiable information from a driver’s license, passport, or similar document, sometimes combined with biometric authentication. Collecting and storing this information creates significant privacy and security risks.

These privacy costs fall on everyone, not just teenagers. Adults must also prove their age to access platforms covered by verification mandates. If platforms require users to establish their ages explicitly, laws intended to protect adolescents could create a universal identity-disclosure regime without any demonstrated benefit for the adolescents they seek to protect.

Privacy-preserving alternatives are possible and already exist. Zero-knowledge proofs (ZKPs), for example, can establish that a user exceeds a specified age without revealing the user’s identity, birth date, or underlying personal information. Properly designed systems can also make successive proofs unlinkable, preventing websites or credential issuers from connecting separate age checks and building a record of an individual’s online activity.

The European Commission has identified ZKPs as a way to provide age assurance without transmitting personal data and has incorporated them into its open-source age-verification architecture. Google has also developed ZKP technology for age assurance, initially in a partnership with Germany’s Sparkasse banking network. The company also open-sourced its ZKP libraries in July 2025 so that other digital-identity and age-assurance providers could implement them. Decentralized-identity services such as zkMe likewise offer ZKP-based credentials that allow users to prove they satisfy an age threshold without disclosing the underlying identity information to the service requesting verification.[87]

Major social-media platforms do not appear to have widely adopted these tools. That limited adoption may suggest that consumers have not demanded stronger privacy protections. It could also reflect implementation costs, interoperability barriers, or platforms’ limited incentives to minimize data collection. Nonadoption therefore provides little evidence about how much consumers value privacy.

B.             Circumvention and Displacement

Evidence from Australia’s age-based social-media restrictions, China’s online-gaming limits, and school phone-use policies shows a consistent pattern: Squeeze activity in one place and it bulges out somewhere else. Australia’s surge in virtual private network (VPN) use, China’s rental market for gaming accounts and 59% shift to short-form video, and the SMART Schools finding that school restrictions did not reduce overall phone use all illustrate this dynamic.

Displacement is especially concerning in the social-media context because logged-out browsing deprives users of safety features, parental controls, and restricted modes. The Brookings Institution identified displacement as a principal adverse consequence of age-based bans.[88] The Organisation for Economic Co-operation and Development (OECD) reached a similar conclusion, noting that restrictive policies may paradoxically increase exposure to harmful content rather than reduce it.[89]

Snapchat’s early growth illustrates how school restrictions can produce unintended consequences. Evan Spiegel and Bobby Murphy launched the disappearing-photo app in 2011, but it initially attracted little attention. Spiegel’s mother then told his cousin, a student at a high school in Southern California, about the app. The school had blocked established social networks, including Facebook, but had not yet discovered Snapchat. Students adopted it as a workaround—a way to exchange virtual notes, photos, and jokes during class without leaving a lasting trail for teachers or parents.[90]

The app then spread through other Southern California high schools. Its daily active users rose from about 3,000 to 30,000 in one month in early 2012.[91] By February 2013, users were sending more than 60 million messages through the app each day.[92]

C.             Disproportionate Burdens on Vulnerable Youth

Broad access restrictions impose their greatest burdens on those young people who benefit most from online social connection and support. Research consistently finds that social media provides important benefits to LGBTQ+ youth, although it can also expose some users to harm. In a 2024 survey of 406 people ages 14–18 who identified as LGBTQ+, Celia Fisher and colleagues found that social media served as both a vital resource and a source of risk. The benefits centered on identity exploration and community connection.[93] A 2025 review by Carolyn Bacaj and colleagues discussed studies showing that social media provides access to identity-affirming content, peer support, role models, and mental-health resources that may be unavailable in local communities.[94]

An earlier systematic review of 26 studies likewise found that social media supported LGBTQ+ youths’ mental health and well-being through peer connection and identity management.[95] The authors explained:

LGBTQ youths negotiated and explored identity and obtained support from peers on social media. Instagram, Tumblr, and Twitter were commonly used to access LGBTQ content owing to ease of anonymity. Identity management was the most studied social media affordance, important to LGBTQ youths for strategic disclosure. Key strategies for managing identities included being anonymous, censoring locations or content, restricting audiences, and using multiple accounts.[96]

These benefits can be substantial. For young people whose offline environments are unsupportive or openly hostile, online communities may provide the only reliable sources of accurate health information, crisis support, and peer recognition. They also offer civic infrastructure through which LGBTQ+ youth can find mentors, legal resources, and pathways to adulthood.

Parental-consent mandates pose a particular threat to LGBTQ+ youth who are not out to their families. Requiring parental authorization gives unsupportive parents effective veto power over a child’s access to community resources. The burden falls most heavily on young people with the fewest alternative sources of offline support. For this reason, LGBTQ+ advocacy organizations, including The Trevor Project and GLAAD, along with civil-liberties groups such as the American Civil Liberties Union, have opposed broad restrictions that threaten LGBTQ+ youths’ access to affirming online resources.[97]

Other vulnerable groups face similar risks. Young people in rural areas, those with disabilities or living in abusive households, and those in undocumented families may lose disproportionately from blunt access restrictions.[98] Research indicates that many neurodivergent adolescents and young adults—particularly those with autism and, to a lesser but growing extent, those with attention-deficit/hyperactivity disorder (ADHD)—use Discord, Reddit, and specialized forums for social connection, peer support, and interest-based communities.[99] These forums can also offer asynchronous communication, lower sensory demands, and greater control over social interactions that may be less available in offline peer settings.

Access regimes that treat all minors as uniformly at risk can impose especially steep costs on these users. The U.S. Surgeon General’s advisory acknowledges such benefits but offers no framework for preserving them within restrictive regulatory systems.

D.            Compliance Costs and Incumbent Advantage

Developing, enacting, implementing, and litigating laws governing phone and social-media access consumes legislative resources and public attention that could support policies with clearer net benefits. Even measures that courts later enjoin or invalidate force device makers and social-media platforms to devote resources to compliance and litigation. Those resources could instead support product improvements, including features that make phones and platforms safer for adolescents.

Implementation costs are also easy to underestimate. Platform-level compliance costs can be difficult to measure, but they can be substantial, particularly for smaller firms. The EU’s GDPR, for example, imposed fixed costs that fell disproportionately on businesses with fewer resources. After the GDPR took effect, hundreds of U.S. websites—including many news sites—blocked European visitors rather than incur those costs. Some remained unavailable in Europe for months or years.[100]

The OECD warns that disproportionate compliance burdens may weaken competition and entrench incumbent platforms.[101] The GDPR experience illustrates that risk. Using data from 1,084 online firms, Samuel Goldberg and colleagues estimated that EU page views and revenue each fell by approximately 12% after the regulation took effect. Smaller e-commerce sites experienced a 16.7% decline in recorded revenue, compared with 7.9% among larger sites.[102]

The political economy of social-media regulation presents a related concern. Supporters may form a modern “Baptists and bootleggers” coalition, in which groups with sincere public-interest motives align with actors that stand to benefit materially from the same restrictions. The “Baptists” include parents, pediatricians, educators, mental-health advocates, and child-safety organizations who argue that platforms expose minors to addictive design, harmful content, privacy intrusions, and developmental risks.

The “bootleggers,” in this analogy, are not necessarily illicit actors. They are parties whose private interests align with regulation for other less public-regarding reasons. They may include incumbent platforms that can absorb compliance costs more easily than smaller competitors, vendors that sell mandated age-verification and monitoring tools, legacy media companies and other businesses competing for users’ attention, and political actors seeking greater control over online-speech infrastructure.

This does not mean that social-media regulation is unjustified, nor does it imply that supporters of the proposed regulations act in bad faith. The point is to show how broad regulatory coalitions can combine genuine protective motives with private economic or institutional incentives. Policymakers should therefore examine not only a law’s stated purpose, but who gains power, revenue, or competitive advantage from its implementation.

E.              Reactance and the Forbidden-Fruit Effect

Human fascination with that which is forbidden goes back to the origin of the species, at least by some accounts. The notion of “forbidden fruit” comes from the biblical account of Adam and Eve, but modern researchers across disciplines have documented the same basic tendency. Restrictions can make the prohibited object or activity more appealing.

Psychologists call one version of this response reactance. Efforts to control people’s behavior by forcing or preventing an action can provoke resistance and strengthen the desire to do what has been forbidden.[103] Scarcity can likewise increase an object’s perceived value.[104]

Outside the psychology laboratory, these dynamics may help explain the so-called “Streisand effect.” The term arose after Barbra Streisand sued to suppress an aerial photograph of her Malibu home, causing public interest in the image to surge. Evidence from Australia and China reflects a similar pattern. When governments restrict access to social media or video games by age or time of day, adolescents find workarounds such as VPNs, borrowed credentials, or rented accounts.

These mechanisms suggest one reason age-based social-media restrictions could backfire. For some adolescents, making social media explicitly off-limits may increase its appeal and strengthen their motivation to circumvent the restriction.

People generally expect some control over their choices, including what to read and how to spend their free time. Parents spend much of the children’s youth helping their kids to develop the skills and judgment needed to govern themselves most effectively. Evidence on parental strategies for guiding social-media use suggests that guidance and support, combined with trust and progressively greater age-appropriate autonomy, tend to produce better outcomes for young users.

F.              The Costs of Broad Restrictions

Taken together, these unintended consequences weaken the case for broad restrictions on adolescents’ access to smartphones and social media. Age-verification mandates can impose privacy and security costs on all users. Restrictions may displace use rather than eliminate it and may deprive vulnerable young people of especially valuable connection and support. Fixed compliance costs can burden smaller competitors while entrenching incumbent platforms. Restrictions may also provoke circumvention and reactance, making prohibited technologies more attractive rather than less.

 IV.          First Amendment Limits on Social-Media Restrictions

Most of the mandates evaluated in Section II restrict access to speech. They condition a user’s ability to create a social-media account—and thus to speak, publish, and receive information—on age, parental consent, or the presentation of identifying documents. In the United States, such laws must survive review under the First Amendment, and many have not.

This section explains the constitutional framework that courts apply to these laws and that determines which laws survive. It also shapes how much legislative effort, litigation expense, and compliance cost go toward laws that courts ultimately invalidate.

When a law restricting speech is challenged, a court first determines the applicable “level of scrutiny,” meaning the strength of the justification the government must provide. That choice often drives the outcome. Courts apply three principal levels of scrutiny:

• Rational-basis review governs most economic and social regulations that do not burden speech or another fundamental right. A law survives if it bears a rational relationship to a legitimate government purpose. In practice, courts uphold nearly every law reviewed under this standard.[105]
• Intermediate scrutiny often applies to, among other things, regulations that do not target speech based on its content. The government must nonetheless show that the law advances an important interest and does not burden substantially more speech than necessary. It need not, however, adopt the least restrictive alternative.[106]
• Strict scrutiny applies to laws that restrict speech based on its content. The government must prove that the law advances a compelling interest and is narrowly tailored to that end, using the least restrictive means available.[107]

Constitutional scholar Gerald Gunther famously described strict scrutiny as “‘strict’ in theory and fatal in fact.”[108] That is an exaggeration, but not a large one. In a broad empirical study, Adam Winkler of the University of California, Los Angeles examined federal court decisions applying strict scrutiny from 1990 through 2003. He found that challenged laws survived about 30% of the time overall and about 22% of the time in free-speech cases.[109]

The Supreme Court recently made the point even more forcefully. “In the First Amendment context,” the Court explained, “we have held only once that a law triggered but satisfied strict scrutiny—to uphold a federal statute that prohibited knowingly providing material support to a foreign terrorist organization.”[110]

The central question in litigation over social-media restrictions is therefore which level of scrutiny applies. The answer depends on what speech the law reaches and whose access it burdens.

A.             The Government’s Interest and Minors’ Rights

Two well-established principles stand in tension. On one hand, the Supreme Court has repeatedly recognized the government’s compelling interest in protecting minors’ physical and psychological well-being.[111] On the other, minors have constitutional rights of their own. As the Court reiterated in Brown v. Entertainment Merchants Ass’n, “minors are entitled to a significant measure of First Amendment protection.” The government may bar the dissemination of protected material to them only in narrow, well-defined circumstances.[112]

The most important exception concerns sexual material that is obscene as to minors. Under Ginsberg v. New York, a state may prohibit the sale to minors of sexual material that remains protected for adults.[113]

The level of scrutiny applied to a particular law depends on how these principles interact. The Supreme Court’s 2025 decision in Free Speech Coalition, Inc. v. Paxton illustrates the distinction.[114] Texas required age verification on commercial websites where more than one-third of the content consisted of “sexual material harmful to minors.” Because the law restricted minors’ access only to material unprotected as to them and burdened adults’ access to protected speech only incidentally, the Court applied intermediate scrutiny and upheld the statute.[115]

Most of the social-media laws surveyed in Section II differ in critical respects. They restrict minors’ access to entire platforms, where the overwhelming majority of content is protected speech for minors and adults alike. They also typically require adults to verify their age or identity before speaking or receiving information.

Courts have generally subjected laws of this kind to strict scrutiny. The government must establish a compelling interest and show that the law is narrowly tailored, including that no less restrictive alternative would achieve its purpose. The precedents discussed below explain why courts often find both the evidentiary justification and the tailoring inadequate.

B.             Evidence and Less Restrictive Alternatives

In Brown, California defended its ban on selling violent video games to minors with psychological studies that purported to link violent games to aggression. The Court found the evidence insufficient to establish a compelling interest. The studies did “not prove that violent video games cause minors to act aggressively,” and the measured effects were “both small and indistinguishable from effects produced by other media,” including television cartoons that the law left untouched.[116]

The parallel to the evidence reviewed in Section I is difficult to miss. The main-effects literature on social media and adolescent mental health reports small, contested associations that typically explain less than 1% of the variation in well-being. The research also leaves plausible roles for reverse causation and confounding. A state defending a social-media restriction must do more than assert that platforms harm children. It must demonstrate causation with evidence of a kind that, so far, does not exist.

Even if a court accepts the state’s interest as compelling, the state must show that its law is narrowly tailored and uses the least speech-restrictive means available. In Ashcroft v. American Civil Liberties Union, [117] the Supreme Court affirmed a preliminary injunction against the federal Child Online Protection Act. The law required age verification for commercial websites carrying material harmful to minors. The Court found that blocking and filtering software, which parents could adopt voluntarily, was less restrictive and, on the record before it, likely more effective.[118]

That reasoning applies directly to social-media mandates. The parental controls, device-level settings, and friction-based tools described in Section II are precisely the kind of less restrictive alternatives that can prove fatal under strict scrutiny.

Brown identified another tailoring defect. California’s law was overinclusive because it restricted minors whose parents did not object to the material. It was also underinclusive because it ignored other media presenting similar content. A state may not abridge speech merely to enforce what it “thinks parents ought to want.”[119]

The 9^th U.S. Circuit Court of Appeals applied similar reasoning in 2024 to California’s Age-Appropriate Design Code Act. The court held that requiring covered businesses to assess and mitigate children’s exposure to “harmful” content effectively “deputizes covered businesses into serving as censors for the State.”[120]

1.               Diverging Lower-Court Decisions

Lower-court decisions have largely followed this framework. Federal district courts permanently enjoined social-media age-verification and parental-consent laws in Arkansas, Ohio, and Louisiana and preliminarily enjoined similar laws in Utah, Virginia, and Georgia. Those courts generally applied strict scrutiny and relied on Brown and Ashcroft in evaluating the laws’ evidentiary support and tailoring.[121] An appellate court later reversed the Ohio judgment.

In August 2025, the Supreme Court declined to block Mississippi’s age-verification law while litigation continued. That procedural decision did not resolve the merits. Justice Brett Kavanaugh nevertheless wrote separately that the challengers were “likely to succeed on the merits” because the law was “likely unconstitutional” under existing precedent.[122]

The appellate picture has since become less uniform. In November 2025, a divided panel of the 11th U.S. Circuit Court of Appeals stayed an injunction against Florida’s law restricting social-media accounts for children under 14 while the state appealed. At that preliminary stage, the majority treated the law as regulating addictive design features rather than speech based on its content, and therefore applied intermediate scrutiny. [123]

In June 2026, the 6th U.S. Circuit Court of Appeals reversed the permanent injunction against Ohio’s parental-consent requirement. The court did not categorically hold the requirement constitutional. Instead, a panel majority concluded that NetChoice could not assert minors’ First Amendment rights and had not carried the demanding burden required to establish that the law was facially invalid. Two months later, the same circuit vacated a decision denying a preliminary injunction against Tennessee’s social-media age-verification and parental-consent law. It remanded the case for consideration of NetChoice’s likelihood of success without deciding the merits.[124]

These decisions have produced divergent outcomes, but largely under different statutes and at different procedural stages. Courts have not yet settled when an age-verification or parental-consent law regulates protected speech based on its content. The Supreme Court may eventually need to clarify that question. For now, most laws restricting access to protected speech remain enjoined. The principal departures have arisen when courts characterized a law as regulating design features or resolved the case on standing or the demanding standard governing facial challenges.

For policymakers, the interventions with the weakest evidence of effectiveness—blanket age bans, universal verification requirements, and parental-consent mandates—also face the greatest constitutional risk. The connection is direct. Under strict scrutiny, a state must show that its law works and that less speech-restrictive alternatives wouldn’t work as well. Litigation also consumes legislative and judicial resources for years, while platforms incur compliance costs even if a court ultimately invalidates the law. Legally vulnerable mandates may also crowd out more effective and constitutionally sound approaches. Section V turns to those alternatives.

V.          Better Alternatives to Government Mandates

As Section I explained, social media is neither an unalloyed good nor uniformly harmful. For adolescents in particular, the challenge is to preserve its beneficial uses while limiting potential harms. This white paper has questioned many of the most politically popular interventions. Section II found little evidence that top-down mandates produce meaningful benefits. Section III showed that these interventions often cause unintended harms. Section IV examined one such harm in greater detail—the burden on constitutionally protected speech.

Broad mandates perform poorly, the consequences of other compulsory interventions are difficult to predict, and users’ experiences vary widely. These uncertainties call for epistemic humility—recognition of the limits of what policymakers can know in advance. They also support a decentralized approach that proceeds cautiously and adapts to evidence and feedback.

This section considers steps that users, parents, schools, platforms, and other organizations can take to help adolescents use smartphones and social media more safely and productively. Some measures address devices and apps directly. Others seek to restore opportunities for independent activity, in-person interaction, and other forms of socialization that have declined in recent decades.

A.             Clarifying the Risks and Benefits

Before turning to specific actions, it is worth considering the context in which they would operate. In recent years, a small number of highly visible researchers have focused public attention on the challenges associated with smartphones and social media. Their questions and concerns are important, and they deserve credit for raising them.

Some of these researchers have also become vocal proponents of the simplistic, one-size-fits-all policies discussed in Sections II and III—policies that often prove ineffective, counterproductive, or harmful. This advocacy has contributed to skewed reporting and public confusion about the nature and scale of the problems. The first step, then, is to describe the risks, benefits, and underlying causes more accurately.

With a clearer understanding of those tradeoffs, users, parents, educators, and other caregivers will be better equipped to decide how and in what contexts these technologies should be used—and which restrictions are most likely to work.

B.             Parent-Guided Tools and User Controls

Within this framework, parents can work with their children to modify how they use devices and social media. If particular features disproportionately reinforce habitual use, for example, parents can encourage adolescents to disable those features without abandoning the platform. This targeted approach can help adolescents regulate their use, reduce harmful experiences, and preserve beneficial ones.

Every major platform has introduced safety tools for teenage users, including Meta’s Family Center, TikTok’s private-by-default accounts for minors, YouTube’s supervised experience, and Snapchat’s Family Center. Platforms developed these features in response to pressure from parents, advocacy organizations, and the media, which made teenage safety a point of competition.

Third-party developers have also created tools designed to reduce harmful or excessive device use. The one sec app, for example, introduces friction by requiring users to pause before opening selected apps. Operating systems offer additional controls, including app-specific time limits, blue-light reduction, and grayscale displays. As Section II explained, substantial evidence indicates that friction-based tools such as one sec and grayscale settings can reduce app use.

More can still be done. The next subsection considers mechanisms that could encourage further innovation in tools that help adolescents and their parents manage technology use.

C.             Reputation, Standards, and Certification

New third-party apps and platform-design changes are promising, but several factors may inhibit the development of more and better apps and design changes. Ironically, one may be a consequence of public confusion driven by overstated claims from some proponents of government interventions. Parents who believe that denying adolescents access to devices is the only solution are less likely to help them develop healthier habits or to demand tools that support those habits.

A more fundamental obstacle is information. Most users lack the expertise needed to evaluate how particular devices, platforms, and design features affect attention, habits, and well-being. It is unrealistic to expect more than a small minority to acquire that expertise. The practical challenge is therefore to translate expert knowledge into signals that users can readily understand and trust.

Society has faced this problem before with other technologies that consumers didn’t fully understand. The established responses include brand reputation, industry standards, and independent standards and certification.

1.               Brand Reputation and Product Design

Brands communicate a range of product qualities to consumers. Because brands depend on reputation, their owners have strong incentives to protect users and preserve trust. For operating systems, social-media platforms, and third-party apps, that means designing products that users associate with well-being and control rather than manipulation or compulsive use.

If users, parents, schools, and employers come to view a “healthy digital experience” as an element of product quality, companies will have a reputational incentive to provide meaningful screen-time controls, friction before endless scrolling, clearer notification settings, age-appropriate defaults, more transparent recommendation systems, and tools that help users identify and limit harmful patterns.

This incentive may be especially strong for social-media platforms. A reputation for exploiting attention, amplifying harmful content, or mistreating vulnerable users can erode public trust, invite scrutiny, and weaken long-term loyalty. A reputation for respecting users’ time and well-being can, by contrast, become a competitive advantage.

2.               Industry Standards for Responsible Design

Industry standards could establish shared expectations for responsible digital design across operating systems, social-media platforms, and app ecosystems. Such standards might identify best practices for notification defaults, parental controls, transparency in recommendation systems, age-appropriate design, avoidance of dark patterns (interfaces that manipulate users into unwanted choices), app-store labeling, and tools that let users set and enforce personal usage goals across multiple apps.

Clear standards can reduce uncertainty for developers by defining good practices. They may also help smaller third-party developers by providing a design framework that makes their apps more acceptable to platforms, advertisers, schools, families, and enterprise customers.

3.               Independent Certification and Trust Marks

Independent organizations with relevant expertise could develop standards for evaluating device designs, social-media platforms, and third-party apps. Historically, trusted seals developed by organizations such as Underwriters Laboratories (UL) and Good Housekeeping have proven effective in helping consumers identify products that meet defined quality or safety standards.[125]

A similar certification system could independently signal that a digital product has satisfied established criteria for user well-being, safety, transparency, and control. For operating systems, certification could assess whether users have effective cross-app controls over notifications, usage limits, privacy, and age-appropriate settings. For social-media apps, it could evaluate recommendation systems, reporting tools, content controls, protections for teenagers, crisis-response pathways, and features that encourage repeated or prolonged use. For third-party apps, certification could recognize products that respect users’ attention, work with device-level controls, and disclose features designed to influence behavior.

Certification would make responsible design visible and marketable. Certified products could distinguish themselves from competitors, while users, parents, schools, employers, app stores, and regulators might scrutinize uncertified products more closely.

A consumer-facing seal would become valuable if users wanted a simple way to identify apps, platforms, and devices designed to support healthier digital experiences. Most users cannot realistically inspect a product’s recommendation system, notification architecture, privacy practices, or behavioral-design choices before adopting it. A trusted seal could reduce that burden. Parents selecting apps for children, adults seeking to curb compulsive use, schools choosing educational tools, and employers purchasing workplace software could favor products carrying a recognizable mark of quality and trust. As more buyers relied on the seal, developers and platforms would gain stronger incentives to earn it, advertise it, and maintain compliance.

Insurers could provide another source of demand. They might encourage or require certified digital products when certification reduces the risk of claims involving workplace harm, youth-safety incidents, data misuse, or other costly outcomes. Schools, employers, health systems, youth organizations, and app platforms might receive better insurance terms for using products that meet recognized safety and risk-management standards. Certification would also document due diligence by showing that an organization selected tools reviewed against accepted criteria rather than relying solely on vendor assurances. Over time, certification could become a practical market requirement in higher-risk settings, much as UL marks became important for products involving electrical risks.

This approach offers several advantages. Voluntary standards can adapt as the evidence develops, while statutes are difficult to amend. Certification also poses fewer constitutional concerns because it neither restricts speech nor mandates identity disclosure. Finally, market incentives may produce more valuable design improvements than a minimum-compliance regime. Platforms seeking certification would have reason to exceed baseline requirements rather than merely satisfy them.

D.            Collaborative Parental Guidance

Another promising alternative to legislative mandates is for parents to work with their children to implement solutions that respect both parental authority and adolescent development. Platforms would then have incentives to adapt their offerings to the expressed needs of parents and adolescents.

Platform-level parental controls already give parents meaningful authority over younger children’s experiences with smartphones and social media. Opt-in time limits, notification controls, usage dashboards, and content filters can also support constructive conversations with adolescents about healthier use. Meta’s Family Center, TikTok’s private-by-default accounts for minors, and various third-party apps represent steps in this direction. Still, adoption and effectiveness vary, and independent evaluation remains limited.

Highly restrictive parental mediation warrants caution. Restriction alone does not provide the education, social support, and emotional guidance associated with lower rates of habitual smartphone use. Evidence also associates highly restrictive approaches with problematic online behavior and suggests that they may sometimes contribute to it.[126]

E.              Building Skills and Resilience

Beyond platform design and family tools, several interventions show promise for reducing social-media harms by strengthening adolescents’ skills and resilience. A recent review concluded:

Programs that teach adolescents cognitive or behavioral strategies to engage with social media in a healthy manner appear to be more effective at improving long-term well-being than interventions that completely restrict social media use or warn adolescents of its negative effects. Tailoring interventions to the specific contextual factors salient to an individual or group may maximize the effectiveness and long-term impact of reducing [problematic social media use] and improving overall well-being.[127]

School-based media-literacy programs have produced modest improvements in adolescents’ ability to evaluate online content critically, particularly among girls and younger adolescents.[128] Regular, vigorous exercise may also reduce phone use while improving executive function—the skills involved in planning, focus, and impulse control.[129]

Researchers studying social-media use have not adequately answered a more basic question—why adolescents spend so much time on their phones generally and social media specifically. One possibility is that some adolescents lack the confidence, skills, or opportunities to interact in person and therefore default to social media, where interaction may feel less risky.

F.              Restoring In-Person Socialization

As discussed above, reduced attention spans and adolescent mental-health issues often correlate with device use. But that use may partly reflect a deeper problem—inadequate opportunities for in-person socialization. Children develop social competence by interacting with their peers. When they lack opportunities to learn how to behave with other children during crucial periods of neuro-cognitive development, they may enter adolescence less prepared for face-to-face interaction and more likely to default to device-based interactions.

Because screen-mediated interaction doesn’t provide all the rewards of in-person connection, this reliance can become self-reinforcing. Adolescents who feel uncomfortable interacting in person may retreat further into online communication, gaining still less experience with face-to-face relationships.

Many adolescents and young adults now spend less time socializing in person, in part because the environments in which children traditionally developed social competence have eroded. These environments include unstructured play, independent movement through neighborhoods, gathering in public places, and strong community institutions. Time-use data illustrate the shift. Among people ages 15–24, in-person time with friends fell by nearly 70% from 2003 to 2020. U.S. social engagement with friends, family, and others also declined during that period.[130]

Several factors may have contributed:

• The long decline of child-directed free play, through which young people practice making rules, resolving conflicts, regulating emotions, building friendships, and interacting as equals.[131]
• Greater pressure from school, homework, college admissions, and résumé building, which converts time with peers into performance time and is associated with adolescent depression and anxiety.[132]
• Parental and institutional anxiety about safety, which limits children’s independent mobility, especially unsupervised activity outside the home.[133]
• Car-dependent or heavily policed built environments with too few accessible “third places”—public spaces outside the home and school where people can gather. Research links walkable neighborhoods and third places to social capital, sociability, community belonging, and support for young people.[134]

On this account, screen and social-media use expands to fill a void. When adolescents lack freedom to play, physical autonomy, welcoming public spaces, and strong intergenerational community institutions, screen-mediated connection becomes a substitute for missing in-person opportunities rather than the root cause of isolation. Restricting or banning smartphones and social media without restoring the connections they replace could therefore leave adolescents even more isolated.

For the next generation of adolescents, the solution must include rebuilding the skills, culture, institutions, and physical environments that enable children and teenagers to form and sustain healthy human social connection.

VI.          Conclusion

Drawing the preceding analysis together, we assess each major approach against four criteria: evidence that it reduces the targeted harms, the probability and severity of adverse consequences, legal durability in the United States, and its likely net benefits. Table 1 summarizes that assessment.

The approaches with the strongest net-benefit case share three characteristics:

• They target specific mechanisms. They address particular features of devices or apps that may cause harm in particular circumstances rather than restricting access broadly.
• They preserve users’ rights. They require neither universal identity checks nor restrictions on protected speech or state-mandated surveillance of family relationships.
• They can be evaluated and adapted. They allow users and, in some cases, parents to monitor effectiveness and make adjustments. They also encourage app developers, device manufacturers, and platform operators to improve their tools over time.

The approaches with the weakest net-benefit case—minimum-age bans, parental-consent mandates, and mandatory warning labels—share the opposite characteristics. They apply generic rules to diverse users and circumstances. Access mandates intrude directly on privacy and speech, while warning mandates risk habituation and compelled speech. All three are difficult to adapt as evidence changes.

TABLE 1: Net-Benefit Assessment of Major Approaches to Adolescent Device and Social-Media Use

The evidence supports three broad conclusions.

First, the most politically popular interventions have the weakest evidentiary support and the greatest potential to impose costs far in excess of their benefits. Researchers have not shown that age bans, universal age verification, or mandatory time limits improve adolescent outcomes. Their documented or foreseeable costs include privacy risks, circumvention, displacement, disproportionate effects on vulnerable young people, and serious constitutional challenges in the United States.

Second, approaches that empower users, parents, schools, and other organizations are more likely to reduce harm. Independent certification, privacy protections, family tools, and optional friction-based design changes address how people experience platforms rather than determining who may use them. These approaches can adapt as the evidence develops and avoid many of the legal, privacy, and equity costs associated with top-down mandates. They may attract less political attention, but they are more likely to produce useful improvements.

Third, the limited evidence demands humility. Evaluations of most interventions rely on thin evidence of effectiveness. Every approach, whether legislative or market-driven, should include mechanisms for measuring outcomes and changing course as evidence accumulates. Legislative mandates warrant particular caution because they can entrench ineffective interventions, create new harms, and foreclose more promising alternatives. Australia’s social-media ban and China’s gaming curfews provide cautionary examples.

Finally, as noted in Section V, some of the most effective responses may not regulate smartphones or social media directly. They may instead remove barriers that prevent children and adolescents from engaging in unstructured play, independent travel, and in-person community life. If online life has expanded partly because offline life has contracted, restoring those opportunities may do more for adolescent well-being than restricting screens alone.

Epilogue: A Negotiated Design Framework

As this white paper was being completed, Meta and a bipartisan coalition of 51 attorneys general agreed to a proposed consent judgment in the social-media multidistrict litigation. The agreement, which remains subject to court approval, would operate for 10 years without requiring Meta to admit liability or wrongdoing.[135]

The agreement would establish a negotiated, court-enforced compliance framework rather than a generally applicable statutory mandate. It would require Meta to adopt an age-assurance system with quantified accuracy standards. Commercially available methods must keep the agreement-defined error rate at or below 10% for users ages 16–17 and 3% for those ages 13–15. Meta’s proprietary methods would initially face higher limits that tighten after two years.

The agreement would also impose a default two-hour cumulative daily-use limit and restrict access between midnight and 6 a.m. It would disable most nighttime and school-hour notifications, offer teenagers a nonpersonalized chronological feed, hide like and reaction counts by default, prohibit cosmetic-procedure filters, maintain age-appropriate privacy settings, and expand parental-supervision tools. Those tools would notify supervising parents when teenagers repeatedly search for terms related to suicide, self-harm, or eating disorders. An independent auditor would oversee compliance.[136]

It’s possible that these design changes will produce benefits. They are more targeted, adaptable, and open to evaluation than the blunt policies many governments have adopted or proposed. Their actual effects on adolescent behavior and well-being, age-assurance errors, privacy, and circumvention remain uncertain and should be independently evaluated. That uncertainty reinforces this white paper’s central lesson. Interventions should target specific mechanisms, measure real outcomes, and adapt as the evidence develops.

[1] Michael Toscano, Lyman Stone & Grant Bailey, More Screen Time, Less Play Time for America’s Kids (Inst. for Fam. Stud. May 5, 2026), https://ifstudies.org/blog/new-ifs-brief-more-screen-time-less-play-for-americas-kids.

[2] See Int’l Telecomm. Union, Impact of M2M Communications and Non-M2M Mobile Data Applications on Mobile Networks 6, ITU-T Technical Paper QSTP-M2MI (June 15, 2012), https://www.itu.int/dms_pub/itu-t/opb/tut/t-tut-iot-2012-m2m-pdf-e.pdf.

[3] Backlinko Team, Social Media Usage & Growth Statistics (Backlinko Apr. 27, 2026), https://backlinko.com/social-media-users; Simon Kemp, Digital 2026 Mid-Year Global Update Report (DataReportal Apr. 22, 2026), https://datareportal.com/reports/digital-2026-mid-year-global-update-report.

[4] Press Release, Comscore, Inc., Russia Has Most Engaged Social Networking Audience Worldwide (Oct. 20, 2010), https://www.comscore.com/Insights/Press-Releases/2010/10/Russia-Has-Most-Engaged-Social-Networking-Audience-Worldwide; The Nielsen Co., Social Networks/Blogs Now Account for One in Every Four and a Half Minutes Online (June 2010) (reporting that U.S. visitors spent an average of 6 hours, 35 minutes, and 2 seconds per person on social-networking and blog sites in April 2010).

[5] Simon Kemp, Digital 2025: The State of Social Media in 2025 (DataReportal Feb. 5, 2025), https://datareportal.com/reports/digital-2025-sub-section-state-of-social.

[6] Jonathan Rothwell, Teens Spend Average of 4.8 Hours on Social Media Per Day (Gallup Oct. 13, 2023), https://news.gallup.com/poll/512576/teens-spend-average-hours-social-media-per-day.aspx.

[7] Ctrs. for Disease Control & Prevention, Youth Risk Behavior Survey Data Explorer, 1991–2023 High School Youth Risk Behavior Survey Data, https://yrbs-explorer.services.cdc.gov (last visited Sept. 5, 2026) [hereinafter CDC Youth Risk Behavior Survey].

[8] Jonathan Haidt, The Anxious Generation: How the Great Rewiring of Childhood Is Causing an Epidemic of Mental Illness (2024).

[9] CDC Youth Risk Behavior Survey, supra note 7.

[10] Nat’l Ctr. for Educ. Statistics, NAEP Long-Term Trend Assessment Results: Reading and Mathematics (2023), https://www.nationsreportcard.gov/highlights/ltt/2023. Research on device and social-media use finds similarly small negative effects on educational outcomes, which accords with the mental-health literature. See Metin Kuş, A Meta-Analysis of the Impact of Technology-Related Factors on Students’ Academic Performance, 16 Frontiers Psych. 1524645, at 1, 7–8 (2025), https://doi.org/10.3389/fpsyg.2025.1524645. We focus primarily on mental-health effects because they dominate activist and policy concerns.

[11] Jacqueline Pitchforth et al., Mental Health and Well-Being Trends Among Children and Young People in the UK, 1995–2014: Analysis of Repeated Cross-Sectional National Health Surveys, 49 Psychol. Med. 1275, 1275 (2019), https://doi.org/10.1017/S0033291718001757 (analyzing 36 national surveys covering 140,830 respondents ages 4–24 and finding “relatively little change” in measures of psychological distress and emotional well-being). In Scotland, the comparable figure rose from 2.3% to 6.0% over 11 years.

[12] Karen Schrijvers et al., Three Decades of Adolescent Health: Unveiling Global Trends Across 41 Countries in Psychological and Somatic Complaints (1994–2022), 69 Int’l J. Pub. Health 1607774 (2024), https://doi.org/10.3389/ijph.2024.1607774. Among 470,797 15-year-olds, trends were linear in 25% of country-complaint-gender combinations, quadratic in 28.7%, and cubic in 28.7%.

[13] Alina Cosma et al., Cross-National Trends in Adolescents’ Psychological and Somatic Complaints Before and After the Onset of COVID-19 Pandemic, 76 J. Adolescent Health 254 (2025), https://doi.org/10.1016/j.jadohealth.2024.09.028 (studying 792,606 adolescents across 35 countries in four survey waves from 2010 to 2022). The underlying age gradient long predates smartphones. Across 43 countries between 2001 and 2014, adolescent life satisfaction fell by 0.61 standard deviations between ages 10 and 16. Michael Daly, Cross-National and Longitudinal Evidence for a Rapid Decline in Life Satisfaction in Adolescence, 94 J. Adolescence 422 (2022), https://doi.org/10.1002/jad.12037.

[14] Candice L. Odgers, The Great Rewiring: Is Social Media Really Behind an Epidemic of Teenage Mental Illness?, 628 Nature 29, 29 (2024), https://doi.org/10.1038/d41586-024-00902-2 (reviewing Haidt, supra note 8).

[15] Amy Orben & Andrew K. Przybylski, The Association Between Adolescent Well-Being and Digital Technology Use, 3 Nature Hum. Behav. 173, 173 (2019), https://doi.org/10.1038/s41562-018-0506-1 (analyzing data from the U.S. Youth Risk Behavior Survey, Monitoring the Future, and the U.K. Millennium Cohort Study).

[16] Id.

[17] Id.

[18] Jean M. Twenge et al., Specification Curve Analysis Shows That Social Media Use Is Linked to Poor Mental Health, Especially Among Girls, 224 Acta Psychologica 103512, at 8 (2022).

[19] Christopher J. Ferguson et al., There Is No Evidence That Time Spent on Social Media Is Correlated with Adolescent Mental Health Problems: Findings from a Meta-Analysis, 56 Prof. Psychol.: Rsch. & Prac. 73 (2025), https://doi.org/10.1037/pro0000589 (analyzing 79 effect sizes from 46 studies and finding β = .061, 95% CI [.047, .075], and β = .044 for the longitudinal subset). Egger’s regression (p = .021) and a trim-and-fill analysis that identified four missing studies suggested possible publication bias, but the authors provide no bias-adjusted estimate. An earlier meta-analysis by the same group found a pooled r of .052 for screen media generally and no evidence that screen media contributed to suicidal ideation. Christopher J. Ferguson et al., Like This Meta-Analysis: Screen Media and Mental Health, 53 Prof. Psychol.: Rsch. & Prac. 205 (2022), https://doi.org/10.1037/pro0000426.

[20] Luisa Fassi et al., Social Media Use and Internalizing Symptoms in Clinical and Community Adolescent Samples: A Systematic Review and Meta-Analysis, 178 JAMA Pediatrics 814 (2024), https://doi.org/10.1001/jamapediatrics.2024.2078. The review covered 886 effect sizes from 143 studies involving 1,094,890 adolescents. Across clinical and community samples, the pooled estimate for time spent on social media was r = 0.12 (95% CI [0.09, 0.14]) across 56 studies, 117 effect sizes, and 482,273 participants, with I² = 98.0%. Sample type did not significantly moderate the result. Following Jacob Cohen, the authors classify effect sizes below r = 0.10 as small. Jacob Cohen, Statistical Power Analysis for the Behavioral Sciences (2d ed. 1988).

[21] Samantha Teague et al., Digital Media Use and Child Health and Development: A Systematic Review and Meta-Analysis, 180 JAMA Pediatrics 510 (2026), https://doi.org/10.1001/jamapediatrics.2026.0085 (analyzing 1,072 effect sizes from 153 longitudinal studies covering 115 cohorts). For social-media use and depression, the pooled estimate was r = 0.09 (95% CI [0.06, 0.12]). Effects were stronger after one year or less (β = 0.12) than after one to three years (β = 0.04) or more than three years (β = 0.03). For internalizing behaviors, poor-quality studies yielded β = 0.21, significantly larger than the estimate from good-quality studies. Restricting the analysis to fair- and good-quality studies attenuated most associations and rendered the association with academic achievement nonsignificant. The authors nevertheless conclude that “digital media use was consistently associated with risks to child and adolescent health and development, particularly for social media.”

[22] David C. Funder & Daniel J. Ozer, Evaluating Effect Size in Psychological Research: Sense and Nonsense, 2 Advances Methods & Pracs. Psych. Sci. 156 (2019), https://doi.org/10.1177/2515245919847202.

[23] Douglas A. Parry et al., A Systematic Review and Meta-Analysis of Discrepancies Between Logged and Self-Reported Digital Media Use, 5 Nature Hum. Behav. 1535 (2021), https://doi.org/10.1038/s41562-021-01117-5. Across 66 effect sizes from 44 studies involving 52,007 participants, self-reported and logged use correlated at only r = 0.38 (95% CI [0.33, 0.42]). For self-reported problematic-use scales, the correlation fell to r = 0.25 across 40 effect sizes from 19 studies. Only three of 49 comparisons (6.12%) placed mean self-reported use within 5% of mean logged use. The authors caution against drawing broad knowledge claims or policy recommendations from studies that rely solely on self-reported media use.

[24] Id. (calling it “an important unanswered question” whether the discrepancy reflects random or systematic error and citing evidence that inaccuracy varied directly with respondents’ well-being); see Craig J.R. Sewall et al., Objectively Measured Digital Technology Use During the COVID-19 Pandemic, 8 Mobile Media & Commc’n 379 (2020), https://doi.org/10.1177/2050157920902830. On common-method variance, see Orben & Przybylski, supra note 15, at 178 (finding associations with caregiver-reported well-being an order of magnitude smaller than those with adolescent self-reported well-being). On the broader measurement problem, see Linda K. Kaye et al., The Conceptual and Methodological Mayhem of “Screen Time”, 17 Int’l J. Env’t Rsch. & Pub. Health 3661 (2020), https://doi.org/10.3390/ijerph17103661.

[25] Philip M. Podsakoff et al., Common Method Biases in Behavioral Research: A Critical Review of the Literature and Recommended Remedies, 88 J. Applied Psych. 879 (2003), https://doi.org/10.1037/0021-9010.88.5.879.

[26] See, e.g., Jacqueline Nesi & Mitchell J. Prinstein, Using Social Media for Social Comparison and Feedback-Seeking: Gender and Popularity Moderate Associations with Depressive Symptoms, 43 J. Abnormal Child Psychol. 1427 (2015), https://doi.org/10.1007/s10802-015-0020-0. Frequency of technology use was already nonsignificant at the model’s first step, which controlled for baseline depressive symptoms and offline excessive reassurance-seeking. Adding the social-comparison measure did not change that result. Sophia Choukas-Bradley, who develops the appearance-comparison account, likewise acknowledges that the cross-sectional designs dominating the literature “cannot rule out the possibility that adolescents who initially have higher social comparison tendencies are more likely to seek out appearance-related SM content.” Sophia Choukas-Bradley, Adolescents’ Social Media Use and Body Image (MIT Press Works in Progress July 17, 2024), https://wip.mitpress.mit.edu/pub/gik297kw. A recent meta-analysis reported estimates of r = −0.062 (95% CI [−0.163, 0.039]) for ordinary use and sleep duration, r = 0.079 (95% CI [−0.037, 0.194]) for ordinary use and sleep problems, r = 0.038 (95% CI [−0.010, 0.086]) for problematic use and sleep duration, and r = 0.189 for problematic use and sleep problems. Oli Ahmed et al., Social Media Use, Mental Health and Sleep: A Systematic Review with Meta-Analyses, 367 J. Affective Disorders 701 (2024), https://doi.org/10.1016/j.jad.2024.08.193. Heterogeneity was extreme in the ordinary-use analyses (I² = 92.68% and 97.93%), and excluding influential studies reversed the sleep-duration estimate’s sign. Another study found that unhappiness with one’s appearance was associated with 25.89 times the odds of low self-esteem, while at least five hours of daily social-media use was associated with 1.56 times the odds and no use with 1.75 times the odds. Russell M. Viner et al., Roles of Cyberbullying, Sleep, and Physical Activity in Mediating the Effects of Social Media Use on Mental Health and Wellbeing Among Young People in England: A Secondary Analysis of Longitudinal Data, 3 Lancet Child & Adolescent Health 685 (2019), https://doi.org/10.1016/S2352-4642(19)30186-5. Nonusers thus appeared to fare worse than the heaviest users, a result difficult to reconcile with a dose-response account and suggesting that both extremes may proxy for something other than exposure. Appearance dissatisfaction and low self-esteem also come from self-evaluative items in the same instrument, so the 25.89 figure does not offer a like-for-like comparison with behavioral exposure. Finally, the relationship between intense use—measured by time and modeled alongside problematic use—and well-being varied by country. It was negative where intense use was uncommon and positive where it was widespread. Maartje Boer et al., Adolescents’ Intense and Problematic Social Media Use and Their Well-Being in 29 Countries, 66 J. Adolescent Health S89 (2020), https://doi.org/10.1016/j.jadohealth.2020.02.014.

[27] Orben & Przybylski, supra note 15, at 178–79 & tbl.3 (reporting that getting enough sleep and eating breakfast had positive associations with well-being 1.7 to 44.2 times larger than technology use’s negative association); Viner et al., supra note 26, tbl.4 (reporting that physical activity mediated 13.4% of the association among girls in a single-mediator model and 9.0% in the combined model, while acting as a suppressor rather than a mediator among boys at −5.9%).

[28] On the reverse pathway in a second dataset, see Taylor Heffer et al., The Longitudinal Association Between Social-Media Use and Depressive Symptoms Among Adolescents and Young Adults: An Empirical Reply to Twenge et al. (2018), 7 Clinical Psychol. Sci. 462 (2019), https://doi.org/10.1177/2167702618812727.

[29] Heffer et al., supra note 28.

[30] Amy Orben et al., Windows of Developmental Sensitivity to Social Media, 13 Nature Commc’ns 1649 (2022), https://doi.org/10.1038/s41467-022-29296-3. The cross-sectional sample included 84,011 participants. The cross-lagged estimate cited here comes from a random-intercept cross-lagged panel model covering 17,409 Understanding Society participants ages 10–21 across 52,556 measurement occasions. The path from lower-than-expected life satisfaction to higher subsequent social-media use was b = −0.02, 95% CI [−0.03, −0.01], SE = 0.007, p = 0.004, and did not vary by age or sex. The authors characterize the relationship as “bidirectional in nature.” Cross-lagged paths in the other direction were predominantly nonsignificant, and the model’s largest standardized coefficient was −0.13.

[31] Candice L. Odgers & Michaeline R. Jensen, Annual Research Review: Adolescent Mental Health in the Digital Age: Facts, Fears, and Future Directions, 61 J. Child Psychol. & Psychiatry 336 (2020), https://doi.org/10.1111/jcpp.13190.

[32] Orben et al., supra note 30.

[33] Alina Cosma et al., Cross-National Time Trends in Adolescent Mental Well-Being from 2002 to 2018 and the Explanatory Role of Schoolwork Pressure, 66 J. Adolescent Health S50 (2020), https://doi.org/10.1016/j.jadohealth.2020.02.010 (analyzing 915,054 adolescents across 36 countries). The authors report a small linear increase in psychosomatic complaints, partly explained by rising schoolwork pressure in higher-income countries, and conclude that their findings “do not provide evidence for substantial declines in mental well-being.”

[34] Cosma et al., supra note 13.

[35] Isaac Winterburn et al., The Impact of Mental Health-Related Social Media Posts on Young Adults’ Mental Health Reporting: A Two-Study Experimental Investigation (PsyArXiv preprint, Mar. 12, 2026), https://doi.org/10.31234/osf.io/msf9k_v1. In the larger experiment, which included 611 U.K. adults ages 18–24, exposure raised State-Trait Anxiety Inventory scores by 3.17 points on an 80-point scale and broadened respondents’ concept of mental disorder by 0.59 points on a 10-point measure. It did not affect self-diagnosis, functional impairment, coping behavior, or total difficulties. All effect sizes ranged from f² = 0.01 to 0.04. On the underlying hypothesis, see Lucy Foulkes & Jack L. Andrews, Are Mental Health Awareness Efforts Contributing to the Rise in Reported Mental Health Problems? A Call to Test the Prevalence Inflation Hypothesis, 69 New Ideas Psych. 101010 (2023), https://doi.org/10.1016/j.newideapsych.2023.101010.

[36] See Michelle Faverio, Monica Anderson & Eugenie Park, Teens, Social Media and Mental Health (Pew Rsch. Ctr. Apr. 22, 2025), https://www.pewresearch.org/internet/2025/04/22/teens-social-media-and-mental-health.

[37] International studies show similar heterogeneity. See Patti M. Valkenburg et al., Adolescents’ Social Media Experiences and Their Self-Esteem: A Person-Specific Susceptibility Perspective, 2 Tech. Mind & Behav. (2021), https://doi.org/10.1037/tmb0000037. The study collected 21,970 assessments from 300 Dutch adolescents ages 13–16 over three weeks and used dynamic structural-equation modeling to estimate a separate within-person effect for each participant. Across the 15,708 observations reporting valence, 78% of adolescents showed a positive effect of social-media experiences on self-esteem (β ≥ +.05), 19% showed no or a very small effect, and 3% showed a negative effect. For time spent, 56% showed no or a very small effect, 27% showed a negative effect, and 18% showed a positive effect, with person-specific coefficients ranging from β = −.31 to +.27. These were the same adolescents over the same three weeks. The sign turned on which variable researchers measured. In a smaller companion study, 46% of adolescents felt better after browsing, 10% felt worse, and 44% felt no different. Ine Beyens et al., The Effect of Social Media on Well-Being Differs from Adolescent to Adolescent, 10 Sci. Reps. 10763 (2020), https://doi.org/10.1038/s41598-020-67727-7. Those figures cover passive use in a sample of 63 adolescents over one week. Adolescents themselves describe mixed tradeoffs, reporting greater connection and stronger friendships alongside costs to sleep and productivity. See Faverio, Anderson & Park, supra note 36; Am. Acad. of Pediatrics, Social Media and Adolescent Mental Health: Pediatric Mental Health Minute, https://www.aap.org/en/patient-care/mental-health-minute/social-media-and-adolescent-mental-health.

[38] Am. Acad. of Pediatrics, supra note 37.

[39] See Matthew N. Berger et al., Social Media Use and Health and Well-Being of Lesbian, Gay, Bisexual, Transgender, and Queer Youth: Systematic Review, 24 J. Med. Internet Rsch. e38449 (2022), https://doi.org/10.2196/38449.

[40] Odgers & Jensen, supra note 31, at 342. The review also notes that “[a]t present, narrative reviews and meta-analytic work do not support causal claims, or even strong and consistent correlational patterns, linking adolescents’ digital technology usage with mental health problems.” Id. at 339.

[41] Nat’l Telecomm. & Info. Admin., Kids Online Health and Safety Task Force Research Agenda (2024) (identifying this evidence gap and calling for longitudinal and experimental studies to evaluate regulatory effectiveness).

[42] Jonathan Haidt, How the Great Rewiring of Childhood Impacted Everything—and What We Can Do About It, The Anxious Generation, https://www.anxiousgeneration.com/parent-teacher-talk (last visited Aug. 31, 2026).

[43] Orben et al., supra note 30.

[44] NetChoice, LLC v. Griffin, No. 5:23-CV-05105, 2025 WL 978607, at *8 (W.D. Ark. Mar. 31, 2025); NetChoice, LLC v. Murrill, 812 F. Supp. 3d 594, 646 (M.D. La. 2025); NetChoice, LLC v. Yost, 778 F. Supp. 3d 923, 955 (S.D. Ohio 2025), rev’d, 180 F.4th 268 (6th Cir. 2026).

[45] See Ark. Code Ann. § 4-88-1402; La. Stat. Ann. §§ 51:1751–1759; Ohio Rev. Code Ann. § 1349.09.

[46] Griffin, 2025 WL 978607, at *8; Yost, 778 F. Supp. 3d at 955.

[47] Writ of Summons, The Digital Freedom Project Inc. v. Commonwealth, No. S163/2025 (High Ct. Austl. filed Nov. 27, 2025), https://cdn.prod.website-files.com/68d2334bf5fe4689986391b0/6927e145e148f5a16dfc018e_SEALED%20Writ%20of%20Summons%20-%20DFP%20v%20Commonwealth%20of%20Australia.pdf. The challenge invokes Australia’s implied freedom of political communication. The High Court referred the stated questions to the Full Court on July 29, 2026, and the case remains pending. High Ct. of Austl., Case No. S163/2025, https://www.hcourt.gov.au/cases-and-judgments/cases/current/case-no-s1632025 (last visited Sept. 13, 2026).

[48] Online Safety Amendment (Social Media Minimum Age) Act 2024 (Cth) (Austl.).

[49] Reuters, Australia Social Media Ban Hits 4.7 Million Teen Accounts in First Month (NBC News Jan. 16, 2026), https://www.nbcnews.com/world/asia/australia-social-media-ban-hits-47-million-teen-accounts-first-month-rcna254352 (reporting the eSafety Commissioner’s figure). Australian platforms generally use layered age-assurance systems rather than a single uniform check. They infer age from existing account signals, deactivate, freeze, or sign out suspected under-16 accounts, and send disputed cases through more formal verification. The eSafety Commissioner maintains that platforms must take “reasonable steps” to prevent children under 16 from holding accounts. eSafety Comm’r, Social Media Age Restrictions (updated Apr. 2, 2026), https://www.esafety.gov.au/about-us/industry-regulation/social-media-age-restrictions.

[50] eSafety Comm’r, Behind the Screen: The Reality of Age Assurance and Social Media Access for Young Australians (Feb. 2025), https://www.esafety.gov.au/sites/default/files/2025-02/Behind-the-screen-transparency-report-Feb2025.pdf; see also Jasmine Fardouly, Potential Effects of the Social Media Age Ban in Australia for Children Younger Than 16 Years, 7 Lancet Digital Health e235 (2025), https://doi.org/10.1016/j.landig.2025.01.016.

[51] VPN Super, Australia Social Media Ban: VPN Usage Surges 170% on Day One (VPN Observatory Dec. 2025), https://vpnsuper.com/vpn-observatory/australia-social-media-ban-under-16-december-2025 (reporting the provider’s connection data for Australian users connecting to servers in Singapore and the United States).

[52] Aryamehr Fattahi, Australia’s Social Media Ban: A Test for Global Digital Governance (Bloomsbury Intel. & Sec. Inst. Dec. 15, 2025), https://bisi.org.uk/reports/australias-world-first-social-media-ban-a-test-for-global-digital-governance.

[53] Courtney Barnes et al., Assessing Early Effects of Australia’s Social Media Minimum Age Act on Adolescents’ Social Media Use: Observational Study, 393 BMJ e363695 (2026), https://doi.org/10.1136/bmj-2026-363695 (enrolling 436 adolescents ages 12–17 before the Act took effect and following up with 408 three months later).

[54] Shin Ling Wu, Implications of Australia’s Under-16 Social Media Ban, 10 Nature Hum. Behav. 204 (2026), https://doi.org/10.1038/s41562-025-02378-0.

[55] David J. Grüning, Frederik Riedel & Philipp Lorenz-Spreen, Directing Smartphone Use Through the Self-Nudge App One Sec, 120 Proc. Nat’l Acad. Scis. e2213114120 (2023), https://doi.org/10.1073/pnas.2213114120 (reporting a six-week field study of 280 users in which participants abandoned 36% of attempts to open a target app after the pause, attempts fell 37% by week six, and actual app openings fell 57%).

[56] Jay A. Olson et al., A Nudge-Based Intervention to Reduce Problematic Smartphone Use: Randomised Controlled Trial, 21 Int’l J. Mental Health & Addiction 3842 (2023), https://doi.org/10.1007/s11469-022-00826-w.

[57] Cynthia A. Dekker & Susanne E. Baumgartner, Is Life Brighter When Your Phone Is Not? The Efficacy of a Grayscale Smartphone Intervention Addressing Digital Well-Being, 12 Mobile Media & Commc’n 688 (2024), https://doi.org/10.1177/20501579231212062.

[58] Melissa G. Hunt et al., No More FOMO: Limiting Social Media Decreases Loneliness and Depression, 37 J. Soc. & Clinical Psychol. 751 (2018); Christoph Pieh et al., Smartphone Screen Time Reduction Improves Mental Health: A Randomized Controlled Trial, 23 BMC Med. 107 (2025).

[59] Stricter Limits on Minors’ Online Gaming (State Council of the People’s Republic of China Aug. 31, 2021), https://english.www.gov.cn/statecouncil/ministries/202108/31/content_WS612da2a2c6d0df57f98df6bd.html.

[60] Xinyu Zhou et al., High Compliance and Reduced Online Gaming Time Among Chinese Adolescents After the 2021 Gaming Policy: Effects Across All Gamers, Not Just Heavy Users, 14 J. Behav. Addictions 1119 (2025).

[61] Xinyu Zhou et al., Compliance and Alternative Behaviors of Heavy Gamers in Adolescents to Chinese Online Gaming Restriction Policy, 13 J. Behav. Addictions 687 (2024).

[62] David Zendle et al., No Evidence That Chinese Playtime Mandates Reduced Heavy Gaming in One Segment of the Video Games Industry, 7 Nature Hum. Behav. 1753 (2023).

[63] Va. Code Ann. § 59.1-577.1(A)–(B) (2026); NetChoice, LLC v. Jones, 822 F. Supp. 3d 656 (E.D. Va. 2026) (granting a preliminary injunction).

[64] Stop Addictive Feeds Exploitation (SAFE) for Kids Act, N.Y. Gen. Bus. Law §§ 1500–1508 (McKinney 2024); N.Y. Comp. Codes R. & Regs. tit. 13, pt. 700 (2026) (final rules published July 28, 2026, and effective Jan. 25, 2027).

[65] Children’s Social Media Safety Act, H.B. 5511, 104th Gen. Assemb. (Ill. 2026) (signed July 31, 2026).

[66] See Robert Winterton, New York’s Final SAFE for Kids Rules Cement an Unconstitutional Censorship Regime (NetChoice July 29, 2026), https://netchoice.org/new-yorks-final-safe-for-kids-rules-cement-an-unconstitutional-censorship-regime; Amy Bos, NetChoice Veto Request Letter to Gov. Pritzker on Illinois HB 5511, the Children’s Social Media Safety Act (NetChoice June 5, 2026), https://netchoice.org/netchoice-veto-request-letter-to-gov-pritzker-on-illinois-hb-5511-the-childrens-social-media-safety-act.

[67] Louis-Philippe Beland & Richard Murphy, Ill Communication: Technology, Distraction & Student Performance, 41 Labour Econ. 61 (2016) (finding that average test scores rose by 0.07 standard deviations, the equivalent of adding one hour of study per week, with gains twice as large among lower-achieving students).

[68] David Figlio & Umut Özek, The Impact of Cellphone Bans in Schools on Student Outcomes: Evidence from Florida (Annenberg Inst., EdWorkingPaper No. 25-1315, 2025), https://doi.org/10.26300/9y5r-yx11.

[69] Kristof De Witte & Joanna Maldonado, To Ban or Not to Ban? A Rapid Review on the Impact of Smartphone Bans in Schools on Social Well-Being and Academic Performance, 14 Educ. Scis. 906 (2024), https://doi.org/10.3390/educsci14080906.

[70] Victoria A. Goodyear et al., School Phone Policies and Their Association with Mental Wellbeing, Phone Use, and Social Media Use (SMART Schools): A Cross-Sectional Observational Study, 51 Lancet Reg’l Health Eur. 101211 (2025), https://doi.org/10.1016/j.lanepe.2025.101211.

[71] Id.

[72] Samuel J. Perry et al., Health Economics Analysis of Restrictive School Smartphone Policies in Secondary Schools in England (SMART Schools), 29 BMJ Mental Health e301892 (2026), https://doi.org/10.1136/bmjment-2025-301892.

[73] Sara Abrahamsson, Smartphone Bans, Student Outcomes and Mental Health (Norwegian Sch. of Econ., Discussion Paper Series in Economics No. 1/2024, 2024), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4735240.

[74] In a May 26–June 1, 2026, Pew survey, 85% of U.S. adults supported requiring parental consent before minors could create social-media accounts, compared with 78% who supported age verification and 56% who supported an under-16 social-media ban. Jeffrey Gottfried & Monica Anderson, Majority of Americans Support Banning Social Media for Kids Under 16 (Pew Rsch. Ctr. July 1, 2026), https://www.pewresearch.org/short-reads/2026/07/01/majority-of-americans-support-banning-social-media-for-kids-under-16. As discussed above, federal district courts enjoined parental-consent mandates in Arkansas and Ohio on First Amendment grounds. See supra note 46. The 6th Circuit has since reversed the Ohio ruling. See infra note 124 and accompanying text.

[75] Cal. Health & Safety Code § 28000 et seq. (added by A.B. 56, 2025 Cal. Stat. ch. 671).

[76] Vivek H. Murthy, Opinion, Surgeon General: Why I’m Calling for a Warning Label on Social Media Platforms, N.Y. Times (June 17, 2024), https://www.nytimes.com/2024/06/17/opinion/social-media-health-warning.html; see also Off. of the U.S. Surgeon Gen., Social Media and Youth Mental Health: The U.S. Surgeon General’s Advisory (2023), https://www.hhs.gov/sites/default/files/sg-youth-mental-health-social-media-advisory.pdf.

[77] James L. Hamilton, The Demand for Cigarettes: Advertising, the Health Scare, and the Cigarette Advertising Ban, 54 Rev. Econ. & Stat. 401 (1972); Kenneth E. Warner, The Effects of the Anti-Smoking Campaign on Cigarette Consumption, 67 Am. J. Pub. Health 645 (1977); Kenneth E. Warner, Effects of the Antismoking Campaign: An Update, 79 Am. J. Pub. Health 144 (1989); Eugene M. Lewit, Douglas Coate & Michael Grossman, The Effects of Government Regulation on Teenage Smoking, 24 J.L. & Econ. 545 (1981); Badi H. Baltagi & Dan Levin, Estimating Dynamic Demand for Cigarettes Using Panel Data: The Effects of Bootlegging, Taxation and Advertising Reconsidered, 68 Rev. Econ. & Stat. 148 (1986); Badi H. Baltagi & Dan Levin, Cigarette Taxation: Raising Revenues and Reducing Consumption, 3 Structural Change & Econ. Dynamics 321 (1992); John A. Tauras, Smoke-Free Air Laws, Cigarette Prices, and Adult Cigarette Demand, 44 Econ. Inquiry 333 (2006); Matthew C. Farrelly et al., The Impact of Tobacco Control Programs on Adult Smoking, 98 Am. J. Pub. Health 304 (2008); Melanie A. Wakefield et al., Impact of Tobacco Control Policies and Mass Media Campaigns on Monthly Adult Smoking Prevalence, 98 Am. J. Pub. Health 1443 (2008); Melanie A. Wakefield et al., Time Series Analysis of the Impact of Tobacco Control Policies on Smoking Prevalence Among Australian Adults, 2001–2011, 92 Bull. World Health Org. 413 (2014); Matthew C. Farrelly et al., Are Tobacco Control Policies Effective in Reducing Young Adult Smoking?, 54 J. Adolescent Health 481 (2014); Henry Saffer et al., E-Cigarettes and Adult Smoking: Evidence from Minnesota, 60 J. Risk & Uncertainty 207 (2020); Michael F. Pesko, Charles J. Courtemanche & Joanna Catherine Maclean, The Effects of Traditional Cigarette and E-Cigarette Tax Rates on Adult Tobacco Product Use, 60 J. Risk & Uncertainty 229 (2020); Chad Cotti et al., The Effects of E-Cigarette Taxes on E-Cigarette Prices and Tobacco Product Sales: Evidence from Retail Panel Data, 86 J. Health Econ. 102676 (2022).

[78] S. Ratneshwar et al., Benefit Salience and Consumers’ Selective Attention to Product Features, 14 Int’l J. Rsch. Mktg. 245 (1997); Klaus G. Grunert & Josephine M. Wills, A Review of European Research on Consumer Response to Nutrition Information on Food Labels, 15 J. Pub. Health 385 (2007).

[79] See, e.g., Seth M. Noar et al., Effects of Strengthening Cigarette Pack Warnings on Attention and Message Processing: A Systematic Review, 94 Journalism & Mass Commc’n Q. 416, 416–42 (2017); Claudia Sillero-Rejon et al., Avoidance of Tobacco Health Warnings? An Eye-Tracking Approach, 116 Addiction 1263, 1263–74 (2021); Noel T. Brewer et al., Reactance to Health Warnings Scale: Development and Validation, 50 Annals Behav. Med. 736, 736–50 (2016); Yoo Jin Cho et al., Does Reactance Against Cigarette Warning Labels Matter? Warning Label Responses and Downstream Smoking Cessation Amongst Adult Smokers in Australia, Canada, Mexico and the United States, 11 PLOS ONE e0159245 (2016).

[80] Robert Epstein & Vanessa R. Zankich, The Surprising Power of a Click Requirement: How Click Requirements and Warnings Affect Users’ Willingness to Disclose Personal Information, 17 PLOS ONE e0263097, at 11 (2022).

[81] See Christine Utz et al., (Un)informed Consent: Studying GDPR Consent Notices in the Field, 2019 ACM SIGSAC Conference on Computer & Communications Security 973, 973–90 (2019); Célestin Matte, Nataliia Bielova & Cristiana Santos, Do Cookie Banners Respect My Choice? Measuring Legal Compliance of Banners from IAB Europe’s Transparency and Consent Framework, 2020 IEEE Symposium on Security & Privacy 791, 791–809 (2020); Frank Papenmeier, Josephine Halama & Carl Reichert, Accepting Cookies: Nudging, Deceptive Patterns and Personal Preference, 168 Computers Hum. Behav. 108641 (2025).

[82] See Ian A. Anderson & Wendy Wood, Overestimates of Social Media Addiction Are Common but Costly, 15 Sci. Reps. 39388 (2025); Maria T. Maza et al., Association of Habitual Checking Behaviors on Social Media with Longitudinal Functional Brain Development, 177 JAMA Pediatrics 160, 160–67 (2023); Björn Lindström et al., A Computational Reward Learning Account of Social Media Engagement, 12 Nature Commc’ns 1311 (2021); Katharina Lorenz-Spreen et al., Habitual Social Media and Smartphone Use Are Linked to Task Delay for Some, but Not All, Adolescents, 28 J. Computer-Mediated Commc’n zmad008 (2023).

[83] See Theresa M. Marteau, Gareth J. Hollands & Paul C. Fletcher, Changing Human Behavior to Prevent Disease: The Importance of Targeting Automatic Processes, 337 Science 1492, 1492–95 (2012); Fritz Strack & Roland Deutsch, Reflective and Impulsive Determinants of Social Behavior, 8 Personality & Soc. Psych. Rev. 220, 220–47 (2004); Wendy Wood & David T. Neal, Healthy Through Habit: Interventions for Initiating & Maintaining Health Behavior Change, 2 Behav. Sci. & Pol’y 71, 71–83 (2016).

[84] Eur. Data Prot. Bd., Statement 1/2025 on Age Assurance (Feb. 11, 2025), https://www.edpb.europa.eu/our-work-tools/our-documents/statements/statement-12025-age-assurance_en.

[85] Joint Statement of Security and Privacy Scientists and Researchers on Age Assurance (Mar. 2, 2026), https://csa-scientist-open-letter.org/ageverif-Feb2026.

[86] Lena Cohen, Discord Voluntarily Pushes Mandatory Age Verification Despite Recent Data Breach (Elec. Frontier Found. Feb. 19, 2026), https://www.eff.org/deeplinks/2026/02/discord-voluntarily-pushes-mandatory-age-verification-despite-recent-data-breach (discussing the privacy, security, and anonymity risks posed by age-verification systems).

[87] See Eur. Comm’n, Guidelines on Measures to Ensure a High Level of Privacy, Safety and Security for Minors Online, Pursuant to Article 28(4) of Regulation (EU) 2022/2065, 2025 O.J. (C/5519) ¶¶ 41–42, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:C_202505519; Eur. Comm’n, Annex B—Zero Knowledge Proofs for the Age Verification Solution, EU Age Verification Blueprint (2026).

[88] Nicol Turner Lee, Josie Stewart & Carolina Oxenstierna, How Will Bans on Social Media Affect Children? (Brookings Inst. Dec. 9, 2025), https://www.brookings.edu/articles/how-will-bans-on-social-media-affect-children.

[89] Org. for Econ. Coop. & Dev., Too Young to Scroll? Why Governments Are Cracking Down on Social Media Age Limits (June 2025), https://www.oecd.org/en/blogs/2025/06/too-young-to-scroll-why-governments-are-cracking-down-on-social-media-age-limits.html [hereinafter OECD].

[90] Paresh Dave & David Pierson, There’s One Part of Snapchat That Facebook Can’t Copy: CEO Evan Spiegel, L.A. Times (Mar. 1, 2017), https://www.latimes.com/business/technology/la-fi-tn-evan-spiegel-20170228-htmlstory.html.

[91] Jenna Wortham, A Growing App Lets You See It, Then You Don’t, N.Y. Times (Feb. 8, 2013), https://www.nytimes.com/2013/02/09/technology/snapchat-a-growing-app-lets-you-see-it-then-you-dont.html.

[92] Id.

[93] Celia B. Fisher, Xiangyu Tao & Madeline Ford, Social Media: A Double-Edged Sword for LGBTQ+ Youth, 156 Computers Hum. Behav. 108194 (2024).

[94] Carolyn Bacaj et al., Review of Current Trends in LGBTQ+ Youth and Social Media: Implications for Mental Health, Identity Development, and Civic Engagement, 13 Current Pediatrics Reps. 3 (2025), https://doi.org/10.1007/s40124-024-00338-2.

[95] Berger et al., supra note 39 (reviewing 26 studies).

[96] Id.

[97] LGBT Tech, Coalition Statement in Opposition to Age-Minimum Social Media Bans (Mar. 24, 2026), https://www.lgbttech.org/post/lgbt-tech-leads-coalition-statement-in-opposition-to-age-minimum-social-media-bans.

[98] See Turner Lee, Stewart & Oxenstierna, supra note 88 (documenting the disproportionate burdens that age-based social-media bans impose on LGBTQ+, low-income, and other marginalized young people).

[99] Elizabeth McGhee Hassrick et al., Benefits and Risks: A Systematic Review of Information and Communication Technology Use by Autistic People, 3 Autism Adulthood 72, 72–84 (2021); Michal Alon-Tirosh & Naama Meir, Use of Social Network Sites Among Adolescents with Autism Spectrum Disorder: A Qualitative Study, 14 Frontiers Psychol. 1192475 (2023); Mitzi J. Ritzman & Roma Subramanian, Voices from a Pandemic: Understanding How Young Adults on the Autism Spectrum Use Computer-Mediated Communication, 28 Autism 381, 381–89 (2024); Catherine J. Crompton et al., Autistic Peer-to-Peer Information Transfer Is Highly Effective, 24 Autism 1704, 1704–12 (2020); Callie M. Ginapp et al., The Experiences of Adults with ADHD in Interpersonal Relationships and Online Communities: A Qualitative Study, 3 SSM—Qualitative Rsch. Health 100223 (2023); Sihan Jian, Saptarshi Bhowmik & Bret Staudt Willet, Coping with ADHD in College: Topic Modeling and Sentiment Analysis of Online Peer Discussions on Reddit (Int’l Educ. Data Mining Soc’y, Poster Paper No. 267, 2025).

[100] Neil Thurman et al., Forbidden Fruit or Soured Grapes? Long-Term Effects of the Temporary Unavailability and Rationing of US News Websites on Their Consumption from the European Union, 84 Int’l Commc’n Gazette 698 (2022), https://doi.org/10.1177/17480485221111312.

[101] See OECD, supra note 89 (noting that disproportionate compliance burdens may entrench incumbent platforms).

[102] Samuel G. Goldberg, Garrett A. Johnson & Scott K. Shriver, Regulating Privacy Online: An Economic Evaluation of the GDPR, 16 Am. Econ. J.: Econ. Pol’y 325, 327–28, 354 (2024).

[103] Jack W. Brehm, A Theory of Psychological Reactance (1966); Brad J. Bushman & Angela D. Stack, Forbidden Fruit Versus Tainted Fruit: Effects of Warning Labels on Attraction to Television Violence, 2 J. Experimental Psych.: Applied 207 (1996), https://doi.org/10.1037/1076-898X.2.3.207; Kate A. Varava & Brian L. Quick, Adolescents and Movie Ratings: Is Psychological Reactance a Theoretical Explanation for the Forbidden Fruit Effect?, 59 J. Broad. & Elec. Media 149 (2015), https://doi.org/10.1080/08838151.2014.998224.

[104] Stephen Worchel, Jerry Lee & Akanbi Adewole, Effects of Supply and Demand on Ratings of Object Value, 32 J. Personality & Soc. Psych. 906 (1975), https://doi.org/10.1037/0022-3514.32.5.906.

[105] See, e.g., Williamson v. Lee Optical Co., 348 U.S. 483, 487–88 (1955); FCC v. Beach Commc’ns, Inc., 508 U.S. 307, 313–15 (1993) (explaining that a classification subject to rational-basis review “must be upheld . . . if there is any reasonably conceivable state of facts that could provide a rational basis” for it).

[106] See United States v. O’Brien, 391 U.S. 367, 377 (1968); Ward v. Rock Against Racism, 491 U.S. 781, 798–99 (1989) (explaining that intermediate scrutiny does not require “the least restrictive or least intrusive means” of advancing the government’s interest).

[107] See Reed v. Town of Gilbert, 576 U.S. 155, 163 (2015) (holding that content-based laws are “presumptively unconstitutional”); United States v. Playboy Ent. Grp., Inc., 529 U.S. 803, 813 (2000) (“If a less restrictive alternative would serve the Government’s purpose, the legislature must use that alternative.”).

[108] Gerald Gunther, The Supreme Court, 1971 Term—Foreword: In Search of Evolving Doctrine on a Changing Court: A Model for a Newer Equal Protection, 86 Harv. L. Rev. 1, 8 (1972).

[109] Adam Winkler, Fatal in Theory and Strict in Fact: An Empirical Analysis of Strict Scrutiny in the Federal Courts, 59 Vand. L. Rev. 793 (2006) (finding that laws subject to strict scrutiny in published federal decisions from 1990 through 2003 survived about 30% of applications overall and 22% of free-speech challenges).

[110] Free Speech Coal., Inc. v. Paxton, 606 U.S. 461, 484 (2025).

[111] Sable Commc’ns of Cal., Inc. v. FCC, 492 U.S. 115, 126 (1989) (“[T]here is a compelling interest in protecting the physical and psychological well-being of minors.”); see also Free Speech Coalition, 606 U.S. at 496 (“Texas’s interest in shielding children from sexual content is important, even ‘compelling.’”).

[112] Brown v. Ent. Merchs. Ass’n, 564 U.S. 786, 794–95 (2011) (quoting Erznoznik v. City of Jacksonville, 422 U.S. 205, 212–13 (1975)).

[113] Ginsberg v. New York, 390 U.S. 629 (1968).

[114] Free Speech Coalition, 606 U.S. at 461.

[115] See id. at 478 (holding that Texas H.B. 1181 “is an exercise of Texas’s traditional power to prevent minors from accessing speech that is obscene from their perspective” and only incidentally affects speech protected for adults, so intermediate scrutiny applies).

[116] Brown, 564 U.S. at 800–01.

[117] Ashcroft v. ACLU, 542 U.S. 656 (2004).

[118] See id. at 666–70.

[119] Brown, 564 U.S. at 804 (emphasis in original).

[120] NetChoice, LLC v. Bonta, 113 F.4th 1101, 1118 (9th Cir. 2024) (preliminarily enjoining the California Age-Appropriate Design Code Act’s data-protection-impact-assessment provisions).

[121] Griffin, 2025 WL 978607 (permanently enjoining Arkansas’ Social Media Safety Act); Yost, 778 F. Supp. 3d 923, rev’d, 180 F.4th 268 (6th Cir. 2026); Murrill, 812 F. Supp. 3d 594 (permanently enjoining Louisiana Act 456); NetChoice, LLC v. Reyes, 748 F. Supp. 3d 1105 (D. Utah 2024) (preliminarily enjoining Utah’s law requiring platforms to disable certain social-media functions for minors); Jones, 822 F. Supp. 3d 656 (preliminarily enjoining Virginia’s social-media-time-limit law); NetChoice, LLC v. Carr, 789 F. Supp. 3d 1200 (N.D. Ga. 2025) (preliminarily enjoining Georgia’s social-media age-verification and parental-consent law).

[122] NetChoice, LLC v. Fitch, 145 S. Ct. 2658, 2658 (2025) (Kavanaugh, J., concurring in the denial of an application to vacate a stay) (noting that seven federal district courts had enjoined similar laws and that Mississippi’s statute is “likely unconstitutional” under the Court’s precedents).

[123] Comput. & Commc’ns Indus. Ass’n v. Uthmeier, No. 25-11881, 2025 WL 3458571 (11th Cir. Nov. 25, 2025) (staying the preliminary injunction against Florida H.B. 3 pending appeal).

[124] Yost, 180 F.4th 268 (holding that NetChoice lacked third-party standing to assert minors’ First Amendment rights and that the parental-consent requirement survived a facial challenge); but see NetChoice, LLC v. Skrmetti, No. 25-5660, 2026 WL 2546423 (6th Cir. Aug. 28, 2026) (vacating the denial of a preliminary injunction against Tennessee’s social-media age-verification and parental-consent law and remanding for consideration of NetChoice’s likelihood of success on the merits).

[125] Julian Morris, Consumer Protection in the 21st Century (Int’l Ctr. for L. & Econ. Feb. 24, 2023), https://laweconcenter.org/resources/consumer-protection-in-the-21st-century.

[126]  Hagit Sasson & Gustavo Mesch, Parental Mediation, Peer Norms and Risky Online Behavior Among Adolescents, 33 Comput. Hum. Behav. 32, 32–38 (2014), https://doi.org/10.1016/j.chb.2013.12.025.

[127] Jason M. Nagata et al., Problematic Social Media Use Interventions for Mental Health Outcomes in Adolescents, 27 Current Psychiatry Reps. 491 (2025), https://doi.org/10.1007/s11920-025-01619-3.

[128] Chloe S. Gordon et al., Outcomes of a Cluster Randomized Controlled Trial of the SoMe Social Media Literacy Program for Improving Body Image-Related Outcomes in Adolescent Boys and Girls, 13 Nutrients 3825 (2021), https://doi.org/10.3390/nu13113825.

[129] Amanda C.Y. Tang, C.P. Wong & Louisa H.T. Louie, Effectiveness of Exercise in Reducing Mobile Phone Addiction in Adolescents: A Systematic Review and Meta-Analysis, 14 Frontiers Psychol. 1294116 (2023); Yun Li et al., Intervention Measures for Mobile Phone Addiction in Teenagers: A Network Meta-Analysis, 16 Frontiers Psychiatry 1629251 (2025).

[130] Off. of the U.S. Surgeon Gen., Our Epidemic of Loneliness and Isolation: The U.S. Surgeon General’s Advisory on the Healing Effects of Social Connection and Community 13 (2023); Viji Diane Kannan & Peter J. Veazie, U.S. Trends in Social Isolation, Social Engagement, and Companionship—Nationally and by Age, Sex, Race/Ethnicity, Family Income, and Work Hours, 2003–2020, 21 SSM—Population Health 101331 (2023).

[131] Peter Gray, The Decline of Play and the Rise of Psychopathology in Children and Adolescents, 3 Am. J. Play 443, 443–44, 458–59 (2011).

[132] Thomas Steare et al., The Association Between Academic Pressure and Adolescent Mental Health Problems: A Systematic Review, 339 J. Affective Disorders 302, 302–17 (2023).

[133] Sarah Foster et al., The Impact of Parents’ Fear of Strangers and Perceptions of Informal Social Control on Children’s Independent Mobility, 26 Health & Place 60, 60–68 (2014).

[134] Kevin M. Leyden, Social Capital and the Built Environment: The Importance of Walkable Neighborhoods, 93 Am. J. Pub. Health 1546, 1546–51 (2003); Danielle M. Littman, Third Places, Social Capital, and Sense of Community as Mechanisms of Adaptive Responding for Young People Who Experience Social Marginalization, 69 Am. J. Community Psych. 436, 436–50 (2022).

[135] In re Social Media Adolescent Addiction/Personal Injury Prods. Liab. Litig., MDL No. 3047, No. 4:22-md-03047-YGR (N.D. Cal.).

[136] Id.

Executive Summary

Canada has a competition problem — but it isn’t what you think.

The challenge isn’t that too many large companies dominate their markets. It is that Canadian competition policy is moving toward treating market concentration as evidence of harm, even when concentration may be the result of firms competing successfully.

That distinction matters because scale can create real economic benefits. Large firms can spread enormous fixed costs across millions of customers, finance research that takes decades to pay off, carry spare capacity during a crisis, and build networks that become more valuable as they grow.

In many industries, the most productive firms win market share while less productive firms lose it. The result is a more concentrated market — but also a more productive one.

This matters for Canada because Parliament has recently moved competition law in a more structural direction. Since 2022, amendments to the Competition Act have strengthened the role of market concentration in merger review, while Bill C-56 repealed the long-standing efficiencies defence. Bill C-59 went further, removing the previous statutory protection against finding a merger anti-competitive based on market share or concentration alone.

The end result? Policymakers are more and more likely to equate “bigness” with harm without considering the benefits of market concentration or how firms achieved larger scale. This trend is especially risky in an economy already struggling with weak productivity and a shortage of firms capable of scaling globally.

For instance, in cloud computing, a handful of hyperscale providers dominate because data centres require enormous up-front investments. Spreading those costs across millions of customers lowers the cost of computing for everyone. In pharmaceuticals, new drugs can take decades and billions of dollars to develop. Large and profitable pharmaceutical companies can use today’s revenues to finance tomorrow’s breakthroughs, even when the payoff is uncertain. The same logic applies to advanced semiconductors, where building a leading-edge fabrication plant can cost $10 billion or more.

It’s important to note that concentration is not automatically a virtue. None of this gives large companies a licence to misbehave. Dominant firms can exclude competitors. Employers can collude to hold down wages. Companies can use contracts or other tactics to shut rivals out. Those are genuine competition problems that should be investigated and punished because of the harm they cause — not because the offending company happens to be large.

The better approach is to treat concentration as a starting point for investigation, not a presumption of guilt. Regulators should determine whether a company gained market share by offering better products at lower cost — or by blocking rivals and exploiting customers.

And when regulators weigh the potential harm of concentration, they should also consider the benefits just as seriously. Lower costs, greater resilience, and future innovation can result in cheaper services, better medicines, stronger supply chains, and more productive Canadian businesses.

The goal should not be fewer large companies. It is to improve competition. And the first step is to recognize that in business, sometimes bigger is better.

Executive Summary

AI and other next-generation technologies require more than data centers, computing power, and electricity. They also depend on communications networks installed underground, strung across utility poles, and built through corridors controlled by federal, state, local, and private gatekeepers.

Broadband networks require large upfront investments that providers may never recover if demand, technology, or regulation changes. They also create social benefits that providers cannot fully capture. Search, negotiation, permitting, and enforcement costs can therefore make valuable projects uneconomic, especially in rural and underserved communities.

Permitting compounds these risks. A single route may require federal reviews, state highway approvals, local permits or franchises, private crossing agreements, and access to thousands of poles. Each gatekeeper controls part of the project, but none bears its cumulative cost. Uncertain delays can matter more than fees because they postpone revenue, shorten an asset’s useful life, and create opportunities for hold-up.

Reform should make approvals faster and more predictable while preserving legitimate environmental, cultural, public-safety, and land-management interests. Policymakers should streamline federal reviews, impose firm shot clocks with deemed-granted remedies, limit fees to reasonable government costs, modernize cable franchising, and strengthen pole-access and cost-allocation rules. One-touch make-ready and dig-once policies can further reduce construction costs.

Recent agency actions and court decisions advance many of these goals, but future officials or courts could reverse them. Congress should codify their durable core. Stable rules would reduce investment risk across all projects and deliver the greatest gains where deployment remains hardest to finance.

I.               Introduction

Previous papers in this series have argued that technological leadership depends less on who invents the next breakthrough than on which jurisdictions build the full, low-friction infrastructure stack—spectrum, broadband, fiber, satellite, edge computing, data centers, and AI accelerators—that allows innovation ecosystems to form, cluster, and endure.[1] At its foundation, AI still relies on physical communications networks buried underground and strung along utility poles. But before providers can bury cable or mount an antenna, they must secure a web of permits and regulatory approvals.[2]

Broadband networks must cross land controlled by federal, state, and local authorities. Deployment typically requires zoning approvals, construction permits, and permission to occupy public rights-of-way.[3] When permitting is slow, inconsistent, or costly—or access to rights-of-way is delayed or priced unpredictably—deployment becomes more expensive and risky. Those barriers also postpone the point at which providers can begin recovering their investments.[4]

Access barriers can constrain new construction as much as a lack of funding. Even a provider ready to invest cannot build without timely, reasonably priced access to the corridors its network must follow.[5] Streamlined permitting and fair, predictable access to public rights-of-way will therefore help determine where—and how quickly—the infrastructure needed for next-generation applications gets built.

II.             The Broadband Investment Challenge

Debate over the infrastructure needed for artificial intelligence (AI) has focused largely on the data centers where models are trained and run and the electricity required to power them.[6] That focus is understandable. The scale of modern computing has strained electrical grids, renewed interest in additional generating capacity, and made data-center siting a major political issue.

Compute and electricity are, however, only part of the infrastructure these technologies require. AI and the immersive applications built on it cannot operate in isolation inside server farms.[7] They must exchange data with users and devices in real time, wherever those users happen to be. That requires high-capacity, low-latency communications networks capable of carrying large volumes of data with minimal delay. AI, augmented reality (AR), and virtual reality (VR) will therefore require substantial investment in broadband and related communications infrastructure.[8]

Broadband investment is not assured. Networks require large upfront expenditures that providers cannot recover once committed to a particular route or technology. Providers also capture only part of the social value their networks create. Search, negotiation, permitting, and enforcement costs can therefore make socially valuable projects uneconomic, while control over a single segment can give one gatekeeper the power to hold up an entire build.

Providers must invest amid uncertain demand, technological change, and regulatory risk. The prospect of obsolescence or new rules that reduce returns raises financing costs and discourages marginal projects, especially in rural and low-income communities. The following subsections examine these constraints and explain why predictable rules and well-designed incentives are essential to broadband deployment.

A.             The Economics of Broadband Investment

Broadband providers face significant barriers to entering and expanding within a market.[9] Chief among them are the high fixed costs that providers must incur before serving a single customer.[10] Recovering those costs depends on attracting enough subscribers, an uncertain prospect in a competitive market.[11]

Much of that investment also becomes a sunk cost—an expense that cannot be recovered if the project fails. Providers cannot easily remove fiber from an unsuccessful build and redeploy it elsewhere. They cannot recover the labor and regulatory costs at all. If subscriptions fall short, providers have few ways to limit their losses.

Economies of scale can offset these risks.[12] A provider can spread a network’s fixed costs across a larger customer base, while customers with a greater willingness and ability to pay can support higher revenue. Projects serving large or relatively affluent populations therefore tend to carry less risk than projects in rural or low-income communities.

Competition across different kinds of technologies, often called intermodal competition, adds another layer of uncertainty. Broadband markets once allowed one or two providers to capture large shares because consumers had few alternatives. Today, providers using different technologies compete across price, speed, reliability, coverage, and other dimensions.[13]

Home broadband may reach consumers through coaxial cable, fiber optics, fixed wireless service delivered over mobile networks, or low-Earth-orbit (LEO) satellites. Mobile broadband can offer enough capacity and performance for some consumers to forgo a fixed home connection altogether. At the same time, traditionally fixed providers have added mobile services so customers can remain connected outside the home. Because these technologies have different costs and infrastructure needs, multiple competing networks may prove more efficient than a single set of pipes.[14]

Competition and deployment both depend on continued network investment. In a competitive capital market, investment flows toward projects whose expected return, adjusted for risk, exceeds their cost.[15] Broadband providers calculate that return primarily from monthly subscription fees, supplemented by advertising and ancillary services.[16]

Broadband also creates substantial value that providers cannot capture through those revenue streams.[17] These spillover benefits—known as positive externalities—reach millions of people and many sectors, while providers bear the concentrated cost of deployment. A project is socially worthwhile when its private revenue and broader social benefits together exceed its cost.[18] Yet a rational provider will not build if its own expected revenue cannot cover that cost. It cannot charge for every increase in a farmhouse’s value, improvement in a student’s grades, or savings in a rural hospital’s budget.

Communities lose those benefits when broadband investment falls short. Real-estate prices can help measure broadband’s value because they incorporate local access to education, health care, employment, and other amenities.

Students without reliable home internet perform worse on standardized tests than their connected peers, which can reduce college enrollment and degree attainment.^[19] Telemedicine can lower patients’ costs and make rural living practical for more people. It also helps rural health care facilities reach more patients and connect with specialists at major medical centers without employing them full time. Patients, in turn, can obtain care without traveling to a facility. Broadband also allows higher-earning remote workers to move to lower-cost rural areas, bringing income and spending into those communities.

These positive externalities create an underinvestment problem. Because providers cannot capture broadband’s full social value, expected private returns may not justify deployment even when a project would benefit society overall.[20]

AI, AR, and VR will intensify that problem. These technologies require high-capacity connections with minimal delay, reliable fiber links connecting local networks to the broader internet, processing located closer to users, and access to large-scale computing resources. Many applications must run AI models and exchange data continuously in real time, placing simultaneous demands on communications networks.

The benefits of these applications will extend far beyond what any one provider can monetize. Without policies that encourage investment, the communities least likely to attract private capital may also lack the infrastructure that AI, AR, and VR require. That outcome would widen the gap between served and unserved regions just as advanced connectivity becomes more important to economic competitiveness. Policymakers seeking broadband’s broader benefits must therefore give providers stronger incentives to invest in unserved and underserved areas.

B.             Transaction Costs and the Broadband Holdout Problem

In a world without transaction costs, parties would bargain toward an efficient allocation of resources regardless of who initially held the relevant property rights.^[21] Applied to broadband, this principle suggests that a fiber provider will secure access to a utility pole, strip of land, or railroad crossing whenever it values that access more than the owner values excluding it. The parties will strike a deal, and the network will get built.

In practice, transaction costs—the costs of identifying the right parties, negotiating an agreement, and enforcing it—can make broadband deployment prohibitively expensive. These costs generally take three forms:

• Search and information costs. Providers must identify who owns or controls each asset along a proposed route. That may require researching the ownership of thousands of utility poles divided among electric utilities and legacy telephone companies, tracing easements across private land, or determining which government agency controls a particular right-of-way.
• Bargaining and decision costs. Providers incur legal fees, administrative expenses, and delays while negotiating access. A single project may require agreements with municipalities, private landowners, homeowners associations, and railroads, each subject to different legal requirements and each able to demand payment for its consent.
• Policing and enforcement costs. Providers must monitor compliance and enforce their contractual and legal rights. These costs include policing pole-attachment agreements, protecting easement boundaries against encroachment, and litigating disputes over “fair and reasonable” rates.

Asset specificity can magnify each of these costs. The term describes investments tailored to a particular project that cannot easily be redirected elsewhere. Suppose a provider plans a 10-mile fiber route and obtains every approval except the one needed for the final mile. The owner controlling that segment can threaten the entire project and demand a payment far above the value of the access itself. The provider must either pay, redesign the route, or abandon investments already made along the other 9 miles.

For communications networks, transaction costs can exceed the price of the equipment itself. A mile of fiber-optic cable containing 144 strands costs roughly $5,000 to $8,000.[22] Make-ready work—the work needed to prepare a utility pole for a new attachment—can cost $600 to $6,000 per pole. Replacing a pole that cannot accommodate another attachment can cost $5,000 to $15,000.[23] Permitting and access to public rights-of-way can add $20,000 to $40,000 per mile, while railroad-crossing fees can make an otherwise viable project uneconomic.[24] Major projects also require substantial spending on construction crews, traffic control, and coordination among the parties working in public rights-of-way.

Costs accumulate when many parties hold vetoes over a single linear project and each seeks the greatest possible payment for its approval. Each gatekeeper considers the value of its own permission, not the cumulative burden on the network. The result resembles a linear anticommons—a project that requires consent from a long chain of independent parties, any one of which can block it.

These pressures can also push providers toward technologies that are less suitable for a particular community but easier to deploy. A fixed wireless project, for example, may require one tower-site approval, while a fiber build may require permission to attach equipment to 5,000 poles. Avoiding that chain of approvals can determine the technology a provider chooses, even if another option would deliver better service to consumers.

Government policy can raise or lower these transaction costs. When regulators can change rules abruptly or apply them subjectively, providers must account for the risk of an unfavorable policy shift.[25] That uncertainty weighs especially heavily on broadband projects because they require large upfront investments, take years to repay, and consist largely of sunk costs.[26]

A decision by the Federal Communications Commission (FCC) to subject broadband to common-carrier, utility-style regulation could reduce the expected return on an existing investment. So could changes by the National Telecommunications and Information Administration (NTIA) that tighten performance benchmarks under the Broadband Equity, Access, and Deployment (BEAD) Program. Providers must price these risks into a project even if the rules never change. Regulatory uncertainty can therefore sharply increase deployment costs and deter investments that would otherwise proceed.

C.             Demand, Obsolescence, and Regulatory Risk

Alongside high deployment costs, broadband providers face uncertainty about future demand. The FCC currently uses download speeds of 100 megabits per second and upload speeds of 20 megabits per second as its benchmark for fixed broadband.[27] That benchmark supports many current applications, but individual needs vary widely. A household with three children streaming separate programs requires more capacity than a single occupant who uses the internet mainly for email. Providers must design networks around expected use across their customer base, not the needs of any one household.

That task becomes harder as technology and consumer behavior change. AI, AR, and VR could sharply alter usage patterns and increase demand for network capacity. Providers can draw on lessons from the deployment of fourth-generation (4G) wireless networks and other technological shifts, but historical data cannot eliminate uncertainty about future demand.

Providers must also choose among technologies whose relative costs and capabilities will continue to change. Advances in LEO satellite service, sixth-generation (6G) wireless networks, or other technologies could undermine the economics of infrastructure built today. Physical assets could then become stranded, meaning they would no longer generate enough revenue to repay the debt used to finance them.

Investors account for this risk of obsolescence. If they cannot be confident that an asset will remain commercially useful for 10 years, they will demand a faster return of capital. That shorter recovery period can lead to higher prices, delayed construction, or no deployment in marginal markets. Regulation can compound the problem. Rules that calculate returns from historical costs over long recovery periods may fail to account for infrastructure that becomes obsolete before investors recover their capital.

Providers also face the risk of regulatory hold-up.[28] Before construction begins, providers retain leverage because capital is mobile. If one jurisdiction imposes excessive burdens, they can invest elsewhere. Governments may seek to attract investment by offering subsidies, regulatory stability, forbearance, or favorable franchise terms.

Once a provider has built the network, the balance of power shifts. The provider cannot move its fiber, recover most of its costs, or credibly threaten to leave. Regulators can then change the terms governing the investment by imposing rate controls, requiring competitors to receive access to the infrastructure, or adopting other rules that reduce the provider’s expected return.

This mismatch between regulatory assumptions and investment realities can produce underinvestment. Regulators may view broadband as a mature monopoly utility. In competitive markets, though, broadband deployment often carries risks closer to those of a technology startup than a traditional water or telephone company. Policy that ignores those risks will discourage investment precisely where uncertain demand already makes deployment hardest to justify.

III.           The Costs and Risks of Permitting

Broadband deployment requires costly, long-term investments that providers cannot easily recover or redirect. Regulators seeking to encourage deployment should therefore reduce avoidable costs and risks. Permitting offers a prime opportunity for reform.

A permit is more than a line item in a project budget. An outside party with discretion—and often an effective veto—controls both its price and its timing. Providers must identify the relevant authorities, navigate overlapping review processes, negotiate access and conditions, and comply with ongoing obligations. Each step adds transaction costs. Uncertain timelines, subjective standards, and litigation also delay revenue, shorten an asset’s useful economic life, and raise the return investors require. When a route needs approval from multiple gatekeepers, any one of them can hold up the entire build. Permitting can therefore become both one of a broadband project’s largest transaction costs and one of its greatest sources of investment risk.

A.             How Permitting Raises Transaction Costs

Permitting maps closely onto the three categories of transaction costs identified in Section II.B: finding the relevant decision-makers, securing their approval, and complying with or enforcing the resulting agreements.

The first category consists of search and information costs.[29] A rural broadband route may cross federal land administered by the Bureau of Land Management (BLM) or the U.S. Forest Service. That can trigger a right-of-way grant, environmental review under the National Environmental Policy Act (NEPA), historic-preservation review under Section 106 of the National Historic Preservation Act (NHPA), and tribal consultation.

The same route may follow or cross a state highway right-of-way, then pass through a patchwork of county and municipal permitting regimes as it approaches consumers. It may also require access to a railroad crossing controlled by a private carrier or to easements across private land. Before applying for approval, the provider must identify who controls each segment, which law governs, and which overlapping review processes apply. In areas where the federal government owns much of the land, a rural route may remain within the federal permitting system for most of its length.

The second category consists of bargaining and decision costs. Once a provider identifies the relevant authority or landowner, it must secure the right to enter the right-of-way and build. Each entity may impose its own applications, fees, engineering studies, surveys, and substantive standards. The provider must satisfy each one separately.

Many of these decisions involve discretion rather than a ministerial review based on an objective checklist. Providers must therefore do more than pay a posted fee. They may need to negotiate terms, commission studies, redesign routes, and accept project-specific conditions.[30] Multiplied across every jurisdiction along a route, these requirements create a substantial administrative burden before workers install a single strand of fiber.

The third category consists of policing and enforcement costs. After securing a permit, providers must comply with restoration requirements, seasonal work windows, inspection regimes, and other conditions. They must monitor those obligations and may need to challenge denials or disputed conditions through administrative proceedings or litigation.

Each authority and landowner along a route controls an independent point at which the project can stall. Each may seek to maximize the value of its own permission without accounting for the cumulative burden on the deployment.[31] A railroad may charge far more for a perpendicular crossing than the cost of the materials disturbed. A single county may withhold a right-of-way permit. Either can stop a project that has secured every other approval.

This dynamic helps explain why providers sometimes choose technologies that require a single approval over those that require thousands. Yet even that single approval may trigger NEPA and Section 106 review when a project crosses federal land. The holdout risk also grows as construction progresses. The last party controlling an unapproved segment gains bargaining power because the provider cannot readily redeploy the capital already sunk into the rest of the route.

On many routes, obtaining permission costs more than the hardware that permission allows the provider to install. The process meant to authorize construction can become costlier than construction itself.

B.             Delay, Discretion, and Litigation Risk

Permit fees account for only part of the risk that broadband providers must consider when investing in infrastructure. Delays, discretionary standards, and litigation can impose even greater costs.

Delay matters because broadband projects require large upfront investments in assets that providers cannot readily redeploy. Project economics depend heavily on when revenue begins relative to when costs accrue. Permitting pushes revenue further into the future, while financing and development costs begin accumulating before construction starts.

Providers must carry those costs through a review process of uncertain length. Each month of delay also consumes part of an asset’s useful economic life while the risk of technological obsolescence continues to grow. A 10-year asset that spends three years in review and litigation must repay its debt from seven years of revenue rather than 10. If a disruptive technology emerges in year five, the delay will have consumed much of the period during which the asset remained competitive. Permitting delays thus compress the recovery period on which the investment depends.

Discretion adds another layer of risk. Permitting standards often turn on open-ended questions: What constitutes a “reasonable period of time”? Does a denial rest on “substantial evidence”? Does a project qualify for a categorical exclusion from full environmental review?[32] A provider can incorporate a fixed fee into its budget. It cannot price a discretionary decision with the same confidence. Instead, it must estimate a range of possible outcomes and require a higher expected return to compensate for that uncertainty.

Completing agency review does not eliminate the risk. NEPA is the most frequently litigated federal environmental statute.[33] Research indicates that national advocacy organizations, rather than directly affected local parties, have filed most NEPA suits in recent years.[34] Litigants can challenge a categorical exclusion or a finding of no significant impact, adding years to a project that has already cleared agency review.

The Supreme Court narrowed that exposure last year in Seven County Infrastructure Coalition v. Eagle County.[35] The Court directed lower courts to give agencies substantial deference when reviewing the scope of their environmental analyses. It also held that NEPA generally does not require agencies to analyze attenuated upstream or downstream effects tied to separate projects in different places or at different times. The decision should narrow both the required analysis and the available grounds for litigation. But it did not eliminate NEPA review, its associated delays, or the possibility that a court could enjoin a project after an agency approves it. Investors must still account for those risks before committing capital.

Taken together, permitting adds fragmented veto points to projects that already require large, sunk investments exposed to technological obsolescence. It then makes both the duration and outcome of the process uncertain. Providers price that risk into every project, even when no delay or denial ultimately occurs. A project that proceeds on schedule still costs more ex ante because investors had to account for the possibility that it would not.

These burdens do not fall evenly. Delay and denial risk raise the hurdle rate—the minimum expected return needed to justify an investment—and eliminate marginal projects first. The effects therefore fall hardest in communities where deployment promises substantial social value but weak private returns. Streamlining permitting can help close that gap by allowing more of broadband’s diffuse social benefits to support actual investment.

IV.          The Broadband Permitting Stack

Section III explained how permitting operates as both a transaction cost and a source of investment risk. This section maps those burdens across federal, state, and local governments, as well as the separate regime governing pole attachments.

Although the requirements differ, their costs recur in familiar forms: application fees, recurring rents, in-kind obligations, consultant expenses, bonding and insurance requirements, compliance costs, and, above all, the carrying cost of delay. Federal environmental, historic-preservation, tribal, water, habitat, and land-use reviews may overlap with state highway-access and environmental rules. Local franchising, right-of-way, siting, street-cut, and inspection requirements add further approvals. Aerial deployments must also navigate pole-access, make-ready, and replacement processes controlled by utilities and existing attachers.

These layers compound rather than merely accumulate. Independent decision-makers control sequential veto points without bearing the project’s total cost. The resulting delays and uncertainty raise the return needed to justify investment and threaten marginal projects first—especially rural and underserved builds with limited private returns but substantial social value.

A.             Federal Environmental and Land-Use Permitting

A broadband project may require federal approval because it receives federal funding or because a federal agency must authorize part of it. The most consequential federal process is often review under NEPA, which requires agencies to assess the environmental effects of major federal actions.[36] For broadband projects, that duty may arise when a build receives federal support, including a BEAD subgrant, or when the FCC’s licensing authority makes a wireless deployment a federal action.[37]

The required analysis varies with the project’s likely effects. Agencies may apply a categorical exclusion to routine work requiring minimal documentation, prepare an environmental assessment to determine whether significant effects are likely, or require a full environmental-impact statement. Providers may need to hire consultants and wait for agency review, but uncertainty and litigation often impose the larger costs.[38]

Congress imposed deadlines and document-length limits in 2023, and the Supreme Court further narrowed NEPA exposure in Seven County Infrastructure Coalition v. Eagle County.[39] The Court directed lower courts to defer substantially to agencies and rejected demands that they analyze attenuated upstream and downstream effects tied to separate projects. These changes should limit the scope of review and the grounds for litigation. Neither eliminated NEPA’s underlying requirements or the delays they can create.

Section 106 of the NHPA adds a separate historic-preservation review. It requires agencies to assess a project’s effects on properties listed in, or eligible for, the National Register of Historic Places and to consult the relevant state or tribal historic preservation officer.[40] A single consultation can take six months or longer. In areas rich in historic or cultural resources, that review can determine the schedule for the entire build.[41]

Projects affecting tribal lands or cultural resources may require broader consultation. Section 106 reaches beyond tribes whose present-day lands contain the project. Agencies must also consult any tribe that attaches religious or cultural significance to an affected property, including ancestral sites far from current reservation boundaries.^[42] For wireless facilities, the FCC’s notification process may require consultation with many tribes over one site.

This process serves genuine interests in tribal sovereignty and cultural preservation. It also adds per-site fees and another uncertain scheduling variable. Providers and some policymakers contend that some tribes have used review fees partly to generate revenue rather than solely to fund oversight, allowing revenue to rise with the pace of deployment.[43] Whatever the purpose of a particular charge, providers must include both its amount and its timing in the cost of a build.

Routes crossing wetlands, streams, or navigable waters face another layer of federal review, administered primarily by the U.S. Army Corps of Engineers (Corps).[44] The Corps offers nationwide permits for routine linear crossings that remain within defined limits on the area and degree of disturbance.[45] This streamlined process can keep the burden modest.

Costs and delays rise sharply when a crossing exceeds those limits and requires an individual permit. That process may demand a formal wetland delineation, public notice, and a review lasting more than a year. Section 7 of the Endangered Species Act can add consultation with the U.S. Fish and Wildlife Service, biological surveys, and seasonal work restrictions.[46] Those restrictions may affect a project’s schedule more than its budget by halting construction during breeding or migration periods.

As with NEPA review, uncertainty often costs more than the permit fee itself. Providers must account for the possibility of an individual permit, extended consultation, or a seasonal restriction at every crossing, including those that ultimately qualify for streamlined treatment.

Projects crossing federal land face a separate right-of-way process. This is especially common in the western United States, where the federal government owns large expanses of land. The Federal Land Policy and Management Act authorizes the BLM to grant rights-of-way across public lands.[47] The Forest Service, National Park Service, and Department of Defense administer separate regimes for their holdings.

These approvals can generate two fee streams: cost-recovery charges that reimburse agencies for processing and monitoring, and rental fees based partly on the population a facility serves. A 2024 BLM rule streamlined the communications-use program, required electronic filing, and established a 270-day deadline for decisions.[48] Those reforms implicitly acknowledged that the earlier process imposed delays substantial enough to deter deployment.

B.             State Permitting and Regulatory Fragmentation

The most common state-level requirement is permission to occupy or cross state highway rights-of-way, typically through an encroachment or utility-accommodation permit.[49] Because each state establishes its own regime, a provider operating across several states must navigate distinct fee schedules, technical standards, applications, and review timelines. This fragmentation raises search and bargaining costs before the provider pays a permit fee.

Many states also require a carrier to obtain a certificate of public convenience and necessity, or to register with the utility commission, before operating or occupying the right-of-way. A related designation, eligible-telecommunications-carrier status, is a precondition for most subsidy programs and carries obligations of its own.[50]

State law may duplicate or displace federal requirements. Roughly 16 states have enacted their own environmental-review statutes, often called “little NEPAs.”[51] California’s Environmental Quality Act is the best-known example.[52] These laws can add a parallel track of environmental study and litigation to projects already subject to NEPA.

In roughly 20 states, Section 224’s reverse-preemption provision displaces the federal pole-attachment regime. State rules therefore govern one of the largest infrastructure-access costs across much of the country. Many states have also replaced local cable franchises with statewide video-franchise systems.[53]

Other state requirements include dig-once policies that coordinate conduit installation, one-call rules requiring excavators to locate buried utilities, and pavement-restoration standards. These measures add procedural steps, but thoughtful design can reduce overall costs by coordinating construction, preventing damage, and avoiding repeated excavation.

C.             Local Franchising and Siting Controls

At the municipal level, cable operators must obtain a local franchise under Title VI of the Communications Act. Federal law caps the franchise fee at 5% of gross revenue.[54] Localities have also required in-kind contributions, including public-access channels, capacity on institutional networks serving public facilities, free service to public buildings, and buildout commitments. The FCC’s 2019 order counts many of these contributions toward the 5% ceiling, but disputes over additional obligations persist.[55]

Negotiating and renewing franchises can itself delay deployment. Reform proposals have therefore paired franchising requirements with a shot clock—a deadline for government action—and a deemed-granted remedy that automatically approves an application when the locality misses that deadline.[56]

Noncable providers generally use permits rather than franchises to access local rights-of-way.[57] Section 253 bars state and local requirements that prohibit or effectively prohibit telecommunications service. It also preserves local authority to manage public rights-of-way and require fair and reasonable compensation.[58] The FCC has generally treated fees closely tied to a locality’s actual costs as the most appropriate measure under that framework. Enforcement remains uneven, and some localities continue to impose above-cost or gross-revenue fees.

Above-ground facilities—including cabinets, equipment huts, small-cell antennas, and towers—may require conditional-use permits, variances, site-plan and aesthetic review, public hearings, and compliance with height and spacing limits. Some jurisdictions also require providers to place facilities underground. Section 332(c)(7) preserves substantial local authority over wireless siting while prohibiting decisions that ban or effectively ban wireless service.[59] FCC shot clocks limit the time for review, but the process can still take months or years.

Providers must obtain additional public-works approvals before trenching or boring. These may cover street cuts, lane closures, traffic control, and pavement restoration. Rules addressing pavement damage and moratoria on cutting newly paved streets can add large and highly variable costs.[60] Building and electrical permits and inspections may apply as well. Some localities also impose temporary siting moratoria that consume much or all of the applicable shot-clock period.[61]

Wireless facilities operate under a more developed federal timing framework. Under Section 332(c)(7), localities presumptively have 90 days to act on collocation applications (which seek to place equipment on existing structures) and 150 days to review new sites.[62] Missing those deadlines constitutes a “failure to act,” but it does not automatically approve the application. The provider must seek relief in court.

The FCC’s 2018 Small Cell Order shortened the review periods to 60 days for collocations and 90 days for new small wireless facilities. It also established presumptively reasonable fee levels.[63] Section 6409(a) requires localities to approve eligible modifications that do not substantially change the physical dimensions of an existing tower or base station. FCC rules apply a 60-day shot clock and a self-executing deemed-granted remedy to those requests.[64]

These provisions are among the strongest timing protections in the current permitting system. Their existence highlights how little comparable discipline governs many other approvals. Even here, localities can pause or restart the clocks by declaring applications incomplete or requiring supplemental studies.[65]

D.            Pole Attachments and Make-Ready Costs

To deploy aerial fiber, a provider must attach its lines to utility poles it usually does not own. Federal law, rather than private bargaining alone, largely governs the terms of that access. Section 224 of the Communications Act requires pole-attachment rates, terms, and conditions to be “just and reasonable.” The FCC administers that standard through formula-based rates in states that have not certified their own regulatory regimes.[66]

This framework aims to promote investment and facilitate deployment, but it does not cover poles owned by municipalities or rural electric cooperatives.[67] Providers seeking to use those poles must negotiate without a federal regulatory backstop.

The permit or rental rate represents only part of the cost. The larger and less predictable expense often comes from make-ready work: the rearrangement, relocation, or reinforcement of existing equipment needed to create space for a new line.[68] This work can cost several hundred to several thousand dollars per pole. It may also take months, because each company with equipment already on the pole must move its facilities in sequence.[69]

When a pole is too short or weak to support another attachment, make-ready work may require replacing it at a cost of roughly $5,000 to $15,000.[70] Utilities have historically charged the entire replacement cost to the new attacher, even when the pole had deteriorated, neared the end of its useful life, or otherwise required replacement.[71]

The FCC has found that a utility may not impose the full cost on a new attacher that did not solely cause the replacement. Instead, the pole owner must bear costs attributable to preexisting violations or a replacement it already had an obligation to make.[72] This approach prevents utilities from using a new attachment request to shift the cost of overdue maintenance onto the requesting provider.

The FCC has also adopted one-touch make-ready (OTMR) rules for simpler work. OTMR allows one qualified contractor to move existing equipment in a single pass rather than waiting for a succession of incumbent contractors.[73] The process can reduce delays that might otherwise consume much of a year.[74]

E.              How Permitting Burdens Compound

Each permitting layer can impede deployment on its own. Together, they impose a much larger burden. Independent authorities and landowners control separate veto points, yet none has an incentive to account for the project’s total cost. The provider therefore faces more than the price a single, coordinated decision-maker might charge. It must bear the cumulative demands of many actors, each seeking value for its own approval.

Each layer also adds more than a fee. It introduces a delay of uncertain length. Because broadband projects require large, sunk investments in assets exposed to obsolescence, those delays raise financing costs, shorten the period available to recover capital, and increase the project’s risk premium.

These burdens fall unevenly. Each additional cost or delay raises the hurdle rate, so the marginal project fails first. That project is disproportionately likely to serve a rural or underserved community where expected private returns are thin but the broader social benefits are substantial. Permitting barriers thus inflict their greatest harm where deployment may create the most social value. That mismatch supplies the central case for reform, to which the next section turns.

V.             A Reform Agenda for Faster, More Predictable Deployment

Effective reform must address more than posted fees. Uncertain delays, fragmented approvals, and the risk of regulatory reversal often do more damage because providers must price those risks into every project. These burdens fall hardest on marginal builds, especially networks serving rural and underserved areas.

Since mid-2025, the FCC’s “Build America” agenda has targeted many of these barriers. The agency has opened proceedings on wireless siting and wireline rights-of-way, revised its pole-attachment rules, and proposed changes to its environmental and historic-preservation reviews.[75] Further reforms should streamline federal reviews, constrain state and local fees and timelines, modernize cable franchising, expand pole-access protections, resolve pole-replacement disputes, coordinate fiber installation with roadwork, and codify durable rules that investors can rely on. Together, these changes would reduce the cost and uncertainty of building the communications networks that AI and other next-generation applications require.

A.             Streamlining Federal Reviews

Federal review regimes impose their greatest costs through delay, uncertainty, and litigation rather than permit fees. Reform should therefore limit full review to projects likely to cause significant effects, accelerate the reviews that remain, and give approved projects greater finality.

Categorical exclusions offer the most efficient tool for routine deployments. When experience shows that a defined class of projects does not ordinarily cause significant environmental effects, an exclusion can avoid repetitive case-by-case assessments while narrowing both direct costs and the grounds for litigation.[76] Programmatic agreements can serve the same function under Section 106. Rather than reconsidering recurring issues site by site, agencies, preservation officials, and tribes can establish one framework governing an entire category of deployments.[77]

Recent Supreme Court decisions have narrowed the governing federal obligations. In Seven County Infrastructure Coalition v. Eagle County, the Court reinforced agency discretion under NEPA and limited demands to analyze attenuated effects tied to separate upstream or downstream projects.[78] In Sackett v. EPA, the Court narrowed federal wetlands jurisdiction under the Clean Water Act.[79] These decisions provide meaningful limits, but their practical effect still depends on how agencies implement them and how courts apply them in later cases.

Congress and agencies should translate those boundaries into clear, durable rules. Agencies should adopt categorical exclusions for well-defined classes of communications facilities that reliably produce no significant effects. Firm review deadlines should govern the projects that remain, with automatic approval when an agency fails to act on time.

Reform must also respect the limits courts have already imposed. In United Keetoowah Band of Cherokee Indians v. FCC, the D.C. Circuit vacated the FCC’s attempt to exempt small wireless facilities from NEPA and Section 106 review.[80] The court found that the FCC had not adequately justified its public-interest determination or addressed potential effects on historic and tribal resources. The decision shows that streamlining measures need a well-developed record that squarely addresses environmental, historic-preservation, and tribal interests.

The same principles apply to projects crossing federal land. Agencies should use master right-of-way agreements, standardized applications, cost-based rather than value-based charges, and firm decision deadlines. The BLM’s 2024 communications-use rule offers a useful model for making federal approvals faster and more predictable without abandoning substantive review.

B.             Cost-Based Fees and Self-Enforcing Deadlines

For facilities outside the FCC’s small wireless framework, state and local reform should focus on two issues: fees and review deadlines. In both cases, the rule matters only if providers can enforce it effectively.

Fees for construction permits and access to public rights-of-way should recover the government’s actual costs. They should not capture the value of the provider’s investment or exploit the government’s monopoly control over the corridor. Value-based and gross-revenue fees operate as taxes on deployment. They fall hardest on thin-margin rural projects that policy should encourage.

Presumptively reasonable benchmarks can give providers and localities a clear reference point. The FCC’s small-cell safe harbors—$500 for certain applications and $270 per site each year—illustrate the approach. A locality could impose a higher fee, but it would bear the burden of showing why its actual costs justify the increase. Governments should not be able to evade fee caps by demanding in-kind contributions instead of money.

Deadlines require equally strong enforcement. A shot clock that merely allows a provider to sue after time expires preserves much of the delay and uncertainty it aims to eliminate. The provider must still account for the expense, duration, and risk of litigation.

A self-executing “deemed granted” remedy works differently. Under Section 6409(a), an eligible application receives automatic approval when the locality fails to act within the prescribed period. The provider therefore knows it will receive an answer by a date certain, regardless of the locality’s diligence. Extending this model to ordinary siting, right-of-way, and construction permits would provide the strongest available protection against permitting delay.

The American Broadband Deployment Act of 2025 and the BROADBAND Leadership Act reflect this approach by pairing deadlines across multiple permitting layers with cost-based fee limits.[81] The FCC is pursuing similar goals under its Section 253 and Spectrum Act authority, including a proposed “rocket docket”—an expedited process for resolving preemption disputes.[82]

Reform should still preserve local authority over legitimate concerns such as public safety, traffic management, and aesthetics. The aim should be to discipline fees and timing while allowing reasonable, evenhandedly applied substantive conditions.

C.             Reforming Local Franchising

Title VI’s local cable-franchising regime predates modern competition among fiber providers building their own networks. Today, it can operate as both a toll and a source of delay for video-capable broadband entrants. Moreover, the 5% gross-revenue franchise-fee cap cannot serve as a meaningful ceiling if localities may extract additional value through in-kind demands.

The FCC’s 2019 order, which counts many in-kind obligations toward the cap, was a sound response. Congress should codify that approach so it does not depend on changing FCC majorities. Governments should not be able to evade a monetary cap by demanding services, facilities, or other contributions instead.

The broader reform is to subject franchising to the same timing rules as other permits. The American Broadband Deployment Act of 2025, for example, would establish a 120-day deadline so localities cannot use a process negotiated with an incumbent to delay a second provider.[83] States that have replaced separate local regimes with a single statewide video franchise offer a model that other jurisdictions could expand.

Franchising can also obstruct providers that do not offer cable service. Some localities have conditioned ordinary right-of-way permits on a noncable provider first obtaining a cable franchise. This practice erases the distinction between permits and franchises and imports a slower, more demanding process into routine right-of-way access.

Gateway Fiber encountered this problem in Minnesota. After the company sought permits to build fiber in several cities, Maple Grove said it would defer action until Gateway completed the cable-franchising process. Gateway is not a cable operator, yet the city effectively refused to issue the right-of-way permits without a cable-franchise agreement.[84]

Gateway petitioned the FCC in June 2025 for a declaratory ruling preempting the requirement under Section 253(d). The company argued that Maple Grove’s refusal to act “has the effect of prohibiting” telecommunications service in violation of Section 253(a). According to Gateway, the city’s position prevents the company from operating its existing network and blocks expansion into new areas.[85]

The Wireline Competition Bureau placed the petition on public notice in July 2026 and situated the dispute within the FCC’s broader Section 253 wireline-deployment inquiry.[86] Whatever the Commission decides, the episode exposes a broader vulnerability. The line between a permit and a franchise can turn on disputed questions about a provider’s regulatory classification and a locality’s authority under state law. A locality can exploit that uncertainty to repurpose a legacy franchising process as a gatekeeping tool against a new fiber entrant—the kind of last-mile chokepoint that Section 253 is meant to police.[87]

D.             Closing the Pole-Attachment Gap

Because access to existing poles often represents one of the largest costs of a wireline build, policymakers should extend Section 224’s guarantee of just, reasonable, and timely access more broadly. Recent FCC orders have improved the federal regime. OTMR allows one approved crew to complete simple work rather than waiting for multiple attachers to act in sequence. The FCC’s July 2025 order also established access timelines for large and bulk applications, required parties to meet and confer, expanded self-help when utilities miss deadlines, and accelerated approval of qualified contractors.[88]

These reforms reach only part of the problem. Section 224 exempts poles owned by municipalities and cooperatively organized utilities, placing them outside the FCC’s jurisdiction.[89] Municipal utilities and rural electric cooperatives own a substantial share of the distribution poles in rural America—the same unserved and underserved areas targeted by federal broadband programs and where deployment economics are already most difficult.[90]

Providers seeking access to municipal or cooperative poles therefore face rates and timelines unconstrained by federal rules. In many states, no comparable state protections apply. Congress should extend Section 224—or an equivalent set of federally enforceable deadlines and cost-allocation rules—to these poles. Doing so would narrow the gap between the places where connectivity is most needed and those where access rules make deployment feasible.

Any extension should still allow pole owners to recover legitimate costs. Municipal and cooperative utilities are nonprofit entities owned by citizens or members, so ratepayers ultimately bear the cost of below-cost attachment rates. Reform should prevent monopoly pricing and unreasonable delay without forcing those ratepayers to subsidize broadband attachers.

E.              Enforcing Pole-Replacement Cost Sharing

Broadband providers and pole owners increasingly dispute who should pay when a pole must be replaced to accommodate a new attachment. The FCC’s December 2023 declaratory ruling clarified that an attachment does not “solely” necessitate replacement when the utility has already red-tagged the pole (marked it for replacement) or when a change in the utility’s construction standards requires the upgrade. In those circumstances, the new attacher should not bear the full cost.[91]

The central challenge is now enforcement. The rule helps providers only if they can invoke it quickly and at reasonable cost. Otherwise, the utility’s initial allocation governs while the dispute proceeds, and the FCC’s cost-sharing principle may have little practical effect.

Three complementary reforms could close that gap. First, the FCC should resolve these disputes through an expedited complaint process or “rocket docket” governed by firm deadlines.[92] Where authorized, fee shifting could further reduce the cost of asserting a valid claim. Faster and less expensive adjudication would make the proper allocation—not the utility’s opening demand—the operative result.

Second, Congress should codify the cost-allocation principle. Codification would protect it from reconsideration petitions and changes in FCC leadership, giving providers a more stable basis for investments expected to last 20 years.

Third, targeted public reimbursement funds could help resolve cases in which genuine cost sharing is warranted. Limited support for qualifying pole replacements could break deployment impasses without requiring the parties to litigate responsibility pole by pole.

F.              Coordinating Broadband with Roadwork

Excavation accounts for much of the cost of underground fiber, making coordination with planned roadwork one of the highest-return deployment reforms. A 2021 Federal Highway Administration rule requires state transportation departments receiving federal-aid highway funds to designate a broadband utility coordinator and establish processes for registration, notification, and coordination. A January 2026 Government Accountability Office review found that most states had made progress implementing those requirements, although their effects on deployment remain difficult to measure.[93]

Weak “dig-once” policies merely notify providers of planned roadwork and give them an opportunity to install conduit. That approach helps only providers whose construction plans happen to align with a particular project. Middle-mile and backhaul routes, which connect local networks to the broader internet, frequently will not align.

Stronger policies require road sponsors to install spare conduit whenever a federally funded project opens the ground. The sponsoring agency can then own and lease that conduit to broadband providers. This approach preserves far more of the roadwork’s future value by allowing providers to install fiber later without excavating again. Proponents estimate that installing conduit during planned construction adds only a few percentage points to the road project’s cost.

G.            Making Reform Durable

As outlined above, many of the most consequential recent reforms rest on agency orders or judicial interpretations. But both can change. Investors will hesitate to commit capital for 10 years based on a rule that a new FCC majority, a reconsideration petition, or a later court decision could undo in five.

That uncertainty limits the value of agency streamlining. Even a sound reform will attract less investment if providers must account for the risk that it will disappear before they recover their costs. Congress should therefore codify the durable core of these reforms.

Codification would do more than settle individual policy disputes. By reducing uncertainty across every project, it would lower the return investors require to commit capital. That reduction would matter most for marginal projects, especially in rural and other hard-to-reach areas where modest changes in cost or risk can determine whether a network gets built.

VI.          Conclusion

Debate over the infrastructure needed for next-generation applications often focuses on data centers and electricity. Yet AI, AR, and VR can reach users only through communications networks built across public land, local rights-of-way, railroad crossings, and utility poles—one approval at a time.

Broadband investment already carries high fixed costs, uncertain demand, obsolescence risk, and long recovery periods. Fragmented permitting compounds those risks. Each additional gatekeeper can impose fees, delay construction, or block a route, while no single authority bears the project’s cumulative cost. Providers must price that uncertainty into every build, even when approvals ultimately arrive on time. The resulting burden falls hardest on rural and underserved projects whose social value may be high but whose expected private returns are thin.

Reform should preserve legitimate environmental, historic-preservation, public-safety, and land-management interests while making approvals faster, more predictable, and more proportionate. Firm shot clocks, self-executing deemed-granted remedies, cost-based fee caps, streamlined federal reviews, modernized franchising, broader pole-access protections, and rapid resolution of pole-replacement disputes would directly reduce deployment barriers. OTMR and dig-once policies can lower construction costs by reducing repeated work. Codifying the durable core of these reforms in federal legislation would further reduce the risk that future regulators will reverse them before investors recover their capital.

The jurisdictions that succeed in the next technology race will need more than computing power and electricity. They will need rules that allow the networks connecting those resources to people and businesses to get built.

[1] Kristian Stout, Infrastructure Is Destiny: The Geography of the Next Technology Race (Int’l Ctr. for L. & Econ. May 26, 2026), https://laweconcenter.org/resources/infrastructure-is-destiny-the-geography-of-the-next-technology-race; Jeffrey Westling, The Invisible Infrastructure: Spectrum Policy for the AI Era (Int’l Ctr. for L. & Econ. July 24, 2026), https://laweconcenter.org/resources/the-invisible-infrastructure-spectrum-policy-for-the-ai-era.

[2] See Intelligent Networks: Powering Artificial Intelligence and Transforming Communications: Hearing Before the Subcomm. on Telecomm. & Media of the S. Comm. on Com., Sci., & Transp., 119th Cong. (2026) (statement of Jonathan Spalter, President & CEO, USTelecom—The Broadband Ass’n), https://www.commerce.senate.gov/wp-content/uploads/meetings/379d9950-dc84-b1bf-2c6a-ee1ebb42fbe2/Spalter_Written_Testimony_7eddc348-33d3-4f43-b974-3023b1205597.pdf.

[3] Jeffrey Westling, 2020 Broadband Scorecard Report (R St. Inst. Feb. 10, 2021), https://www.rstreet.org/research/2020-broadband-scorecard-report.

[4] See, e.g., Comments of the International Center for Law & Economics, The State of Competition in the Communications Marketplace, GN Docket No. 26-78, at 11 (2026), https://laweconcenter.org/resources/icle-comments-to-the-fcc-on-the-state-of-competition-in-the-communications-marketplace [hereinafter ICLE Competition Comments]; Stout, supra note 1, at 18; Jeffrey Westling, The Last Mile Is a Paper Trail: Why Broadband Gets Stuck, Truth on the Mkt. (Apr. 22, 2026), https://truthonthemarket.com/2026/04/22/the-last-mile-is-a-paper-trail-why-broadband-gets-stuck.

[5] See Ben Sperry & Kristian Stout, Issue Brief: Pole Attachments and Broadband Build-Out, at 1 (Int’l Ctr. for L. & Econ. 2021), https://laweconcenter.org/resources/issue-brief-pole-attachments-and-broadband-build-out; Kristian Stout & Ben Sperry, Guiding Principles & Legislative Checklist for Broadband Subsidies (Int’l Ctr. for L. & Econ. 2022), https://laweconcenter.org/resources/guiding-principles-legislative-checklist-for-broadband-subsidies; Jeffrey Westling, The Cost of Holding Up Broadband, Truth on the Mkt. (July 14, 2026), https://truthonthemarket.com/2026/07/14/the-cost-of-holding-up-broadband.

[6] Int’l Energy Agency, Key Questions on Energy and AI (2026), https://www.iea.org/reports/key-questions-on-energy-and-ai; Int’l Energy Agency, Energy and AI (2025), https://www.iea.org/reports/energy-and-ai.

[7] Stout, supra note 1, at 13; Westling, The Invisible Infrastructure, supra note 1, at 17; Jeffrey Westling & Kristian Stout, The AI Boom Still Runs on Old-Fashioned Airwaves, Truth on the Mkt. (July 29, 2026), https://truthonthemarket.com/2026/07/29/the-ai-boom-still-runs-on-old-fashioned-airwaves.

[8] ICLE Competition Comments, supra note 4, at 2; Westling, The Last Mile Is a Paper Trail, supra note 4.

[9] See Comments of the International Center for Law & Economics, Implementing the Infrastructure Investment and Jobs Act: Prevention and Elimination of Digital Discrimination, GN Docket No. 22-69, at 6 (May 16, 2022), https://laweconcenter.org/resources/icle-comments-to-the-fcc-on-prevention-and-elimination-of-digital-discrimination [hereinafter Digital Discrimination Comments]; Geoffrey A. Manne, Kristian Stout & Ben Sperry, A Dynamic Analysis of Broadband Competition: What Concentration Numbers Fail to Capture, at 30 (Int’l Ctr. for L. & Econ. 2021), https://laweconcenter.org/resources/a-dynamic-analysis-of-broadband-competition-what-concentration-numbers-fail-to-capture; ICLE Competition Comments, supra note 4, at 8.

[10] ICLE Competition Comments, supra note 4, at 8; see also Westling, The Last Mile Is a Paper Trail, supra note 4.

[11] ICLE Competition Comments, supra note 4, at 8; Joe Kane, Ben Sperry & Kristian Stout, Brief of ICLE and ITIF to the Eighth Circuit in Minnesota Telecom Alliance v. FCC, at 21 (Int’l Ctr. for L. & Econ. 2024), https://laweconcenter.org/resources/brief-of-icle-and-itif-to-8th-circuit-in-minnesota-telecom-alliance-v-fcc.

[12] ICLE Competition Comments, supra note 4, at 8.

[13] Manne et al., supra note 9, at 10.

[14] See Digital Discrimination Comments, supra note 9, at 4–5; Eric Fruits, Ben Sperry & Kristian Stout, The Competitive Effects of the Proposed Charter/Cox Transaction, at 4–6 (Int’l Ctr. for L. & Econ. 2025), https://laweconcenter.org/resources/the-competitive-effects-of-the-proposed-charter-cox-transaction.

[15] ee Jeffrey Westling & Kristian Stout, ICLE Reply Comments to FCC on Eliminating Barriers to Wireless Deployments, at 12 (Int’l Ctr. for L. & Econ. 2026), https://laweconcenter.org/resources/icle-reply-comments-to-fcc-on-eliminating-barriers-to-wireless-deployments; Eric Fruits & Geoffrey A. Manne, Quack Attack: De Facto Rate Regulation in Telecommunications, at 16 (Int’l Ctr. for L. & Econ. 2023), https://laweconcenter.org/resources/quack-attack-de-facto-rate-regulation-in-telecommunications.

[16] See generally ICLE Competition Comments, supra note 4; see also Comments of the International Center for Law & Economics and Scholars of Law & Economics, Protecting the Privacy of Customers of Broadband and Other Telecommunications Services, WC Docket No. 16-106 (May 27, 2016), https://laweconcenter.org/resources/comments-icle-scholars-law-economics-matter-protecting-privacy-customers-broadband-telecommunications-services.

[17] ICLE Competition Comments, supra note 4, at 10; Westling, The Last Mile Is a Paper Trail, supra note 4.

[18] Westling, The Last Mile Is a Paper Trail, supra note 4.

[19] Chandler Dempsey et al., The Economic Impact of the Rural Digital Opportunity Fund, at 61 (Fla. State Univ. Dep’t of Econ. 2021), https://cosspp.fsu.edu/economics/wp-content/uploads/sites/10/2021/10/TheEconomicImpactoftheRuralDigitalOpportunityFund.pdf.

[20] Eric Fruits et al., Dynamic Competition in Broadband Markets: A 2024 Update, at 42 (Int’l Ctr. for L. & Econ. 2024), https://laweconcenter.org/wp-content/uploads/2024/06/Broadband-Competition-2024-Update.pdf.

[21] R.H. Coase, The Problem of Social Cost, 3 J.L. & Econ. 1 (1960).

[22] Westling, The Last Mile Is a Paper Trail, supra note 4.

[23] Id.

[24] Id.; see also Drew Clark, Railroad Crossing Killing Rural Broadband Deployment, Broadband Breakfast (Nov. 18, 2025), https://broadbandbreakfast.com/railroad-crossing-killing-rural-broadband-deployment-says-virginia-telecom-official.

[25] Ben Sperry et al., ICLE and CEI Amicus to the 6th Circuit on Safeguarding and Securing the Open Internet Order, at 4 (Int’l Ctr. for L. & Econ. 2024), https://laweconcenter.org/resources/icle-and-cei-amicus-to-the-6th-circuit-on-safeguarding-and-securing-the-open-internet-order.

[26] ICLE Competition Comments, supra note 4, at 8.

[27] Inquiry Concerning Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, 2024 Section 706 Report, GN Docket No. 22-270, FCC 24-27 (rel. Mar. 18, 2024), https://docs.fcc.gov/public/attachments/DOC-401205A1.pdf.

[28] Lazar Radic, Geoffrey A. Manne & Dirk Auer, Regulate for What? A Closer Look at the Rationale and Goals of Digital Competition Regulations, 22 Berkeley Bus. L.J. 73 (2025), https://laweconcenter.org/resources/regulate-for-what-a-closer-look-at-the-rationale-and-goals-of-digital-competition-regulations.

[29] Stout, supra note 1, at 18–19.

[30] Id.

[31] Robert D. Cooter & Michael D. Gilbert, Public Law and Economics 42 (Oxford Univ. Press 2022), https://laweconcenter.org/resources/public-law-and-economics (illustrating the unanimity holdout problem through a road crossing multiple parcels, where any owner can block the entire project); see also Comments of the International Center for Law & Economics, Implementation of Section 621(a)(1) of the Cable Communications Policy Act of 1984, as Amended by the Cable Television Consumer Protection and Competition Act of 1992, MB Docket No. 05-311, at 5 (July 18, 2019), https://laweconcenter.org/resources/icle-comments-on-implementation-of-section-621a1-of-the-cable-communications-policy-act-of-1984 (applying Klein-style hold-up theory to show how gatekeepers can extract rents after providers make relationship-specific sunk investments and explaining why the 1984 Act capped franchise fees).

[32] 47 U.S.C. § 332(c)(7)(B)(ii) (requiring state and local governments to act on siting requests “within a reasonable period of time”); id. § 332(c)(7)(B)(iii) (requiring written denials “supported by substantial evidence contained in a written record”).

[33] See Kristen Hite, Cong. Rsch. Serv., IF11932, National Environmental Policy Act: Judicial Review and Remedies (2024), https://www.congress.gov/crs-product/IF11932.

[34] Nikki Chiappa et al., Understanding NEPA Litigation (Breakthrough Inst. 2025), https://thebreakthrough.org/issues/energy/understanding-nepa-litigation.

[35] Seven County Infrastructure Coalition v. Eagle County, 605 U.S. 168 (2025); Kristian Stout, Testimony Before the House Judiciary Subcommittee on the Administrative State, Regulatory Reform, and Antitrust: The 30,000-Foot View: Competition and Regulation in the U.S. Airline Industry 12 (June 24, 2026), https://laweconcenter.org/resources/testimony-of-kristian-stout-to-the-house-judiciary-antitrust-subcommittee-on-competition-in-the-airline-industry.

[36] National Environmental Policy Act of 1969 § 102(2)(C), 42 U.S.C. § 4332(2)(C) (requiring federal agencies to prepare detailed environmental-impact statements for recommendations or reports on “major Federal actions significantly affecting the quality of the human environment”).

[37] Westling, The Last Mile Is a Paper Trail, supra note 4.

[38] Stout, The 30,000-Foot View, supra note 35, at 12.

[39] Seven County, 605 U.S. at 168.

[40] National Historic Preservation Act § 106, 54 U.S.C. § 306108.

[41] Westling, The Last Mile Is a Paper Trail, supra note 4; Geoffrey A. Manne, Gus Hurwitz & Kristian Stout, Putting Politics over Policy at the FCC, Truth on the Mkt. (Oct. 4, 2018), https://truthonthemarket.com/2018/10/04/putting-politics-over-policy-at-the-fcc.

[42] 54 U.S.C. § 302706(b) (requiring agencies to consult with Indian tribes that attach religious and cultural significance to affected historic properties).

[43] Statement of Commissioner Michael O’Rielly, Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment, Second Report and Order, WT Docket No. 17-79, FCC 18-30 (2018), https://docs.fcc.gov/public/attachments/FCC-18-30A4.pdf.

[44] Clean Water Act § 404, 33 U.S.C. § 1344 (authorizing Army Corps of Engineers permits for discharges of dredged or fill material into “waters of the United States,” including wetlands); 33 C.F.R. pts. 320–332; see U.S. Env’t Prot. Agency, Section 404 of the Clean Water Act, https://www.epa.gov/cwa-404; Rivers and Harbors Act of 1899 § 10, 33 U.S.C. § 403; U.S. Army Corps of Eng’rs, Section 10/Section 404 Permitting Reference Guide, https://www.spk.usace.army.mil/Portals/12/documents/regulatory/Reg_workshop/2015-11-06/RPW-Sec10-404.pdf.

[45] Clean Water Act § 404(e), 33 U.S.C. § 1344(e) (authorizing the Corps’ general and nationwide permit program); 33 C.F.R. pt. 330 (implementing the program).

[46] Endangered Species Act § 7(a)(2), 16 U.S.C. § 1536(a)(2) (requiring federal agencies, in consultation with the secretary, to ensure that their actions neither jeopardize listed species nor destroy or adversely modify designated critical habitat); 50 C.F.R. pt. 402 (implementing Section 7); U.S. Fish & Wildlife Serv., Section 7 Consultation, https://www.fws.gov/services/consultation-and-technical-assistance/esa-section-7-consultation (explaining that the Fish and Wildlife Service handles terrestrial and freshwater species, while NOAA’s National Marine Fisheries Service handles most marine and anadromous species).

[47] Federal Land Policy and Management Act of 1976 tit. V, 43 U.S.C. §§ 1761–1771 (authorizing the Bureau of Land Management to grant rights-of-way over public lands for communications sites and facilities, among other uses).

[48] Update of the Communications Uses Program, Cost Recovery Fee Schedules, and Section 512 of FLPMA for Rights-of-Way, 89 Fed. Reg. 25,916 (Apr. 12, 2024) (effective May 13, 2024), https://www.federalregister.gov/documents/2024/04/12/2024-06997/update-of-the-communications-uses-program-cost-recovery-fee-schedules-and-section-512-of-flpma-for.

[49] 23 C.F.R. § 645.211 (requiring each state transportation department to adopt an approved utility-accommodation policy governing utilities’ use and occupancy of highway rights-of-way); Fed. Highway Admin., Guidance on Longitudinal Telecommunications Installations on Limited Access Highway Right-of-Way, https://www.fhwa.dot.gov/utilities/001222.cfm (explaining that states allow fiber-optic installation along freeway rights-of-way under utility-accommodation policies, subject to reasonable permitting conditions governing time, place, and manner).

[50] 47 U.S.C. § 254(e) (limiting federal universal-service support to eligible telecommunications carriers designated under § 214(e) and requiring recipients to use that support only for its intended facilities and services); id. § 214(e) (authorizing state commissions—and, in specified circumstances, the FCC—to designate eligible telecommunications carriers).

[51] See Mass. Exec. Off. of Energy & Env’t Affs., MEPA Regulatory Review (2021), https://www.mass.gov/doc/mepa-regulatory-review-presentation/download (reporting that “[a]bout 16 states have ‘little NEPA’ programs”).

[52] Cal. Pub. Res. Code §§ 21000–21189.70 (2026).

[53] See Dana A. Scherer, Cong. Rsch. Serv., R46077, Potential Effect of FCC Rules on State and Local Video Franchising Authorities (2020), https://www.congress.gov/crs-product/R46077.

[54] Cable Communications Policy Act of 1984, Pub. L. No. 98-549, 98 Stat. 2779 (codified as amended at 47 U.S.C. §§ 521–573).

[55] Implementation of Section 621(a)(1) of the Cable Communications Policy Act of 1984, as Amended by the Cable Television Consumer Protection and Competition Act of 1992, Third Report and Order, MB Docket No. 05-311, FCC 19-80 (2019), https://docs.fcc.gov/public/attachments/FCC-19-80A1.pdf.

[56] See American Broadband Deployment Act of 2025, H.R. 2289, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/house-bill/2289.

[57] Title VI requires cable operators to obtain franchises before providing cable service. 47 U.S.C. § 541(b)(1). Noncable telecommunications and broadband providers instead access local rights-of-way under Section 253, which preserves local authority only to “manage the public rights-of-way” and require “fair and reasonable compensation.” Id. § 253(c). Some local codes therefore distinguish cable-television franchises from the permits and use authorizations that telecommunications providers obtain for rights-of-way access. See, e.g., Wash. Rev. Code § 35.99.040.

[58] 47 U.S.C. § 253(a), (c).

[59] 47 U.S.C. § 332(c)(7)(A), (B)(i)(II).

[60] Fed. Highway Admin., U.S. Dep’t of Transp., Pavement Utility Cuts: Controlling Pavement Cuts by Implementing Policy (2018), https://www.fhwa.dot.gov/utilities/utilitycuts/man03.cfm.

[61] Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment, Declaratory Ruling and Third Report and Order, WC Docket No. 17-84, ¶¶ 149–150, FCC 18-111 (2018), https://docs.fcc.gov/public/attachments/FCC-18-111A1.pdf.

[62] Petition for Declaratory Ruling to Clarify Provisions of Section 332(c)(7)(B) to Ensure Timely Siting Review and to Preempt Under Section 253 State and Local Ordinances That Classify All Wireless Siting Proposals as Requiring a Variance, Declaratory Ruling, WT Docket No. 08-165, ¶ 32, FCC 09-99 (2009), https://docs.fcc.gov/public/attachments/FCC-09-99A1.pdf.

[63] Accelerating Wireline Broadband Deployment by Removing Barriers to Infrastructure Investment et al., Declaratory Ruling and Third Report and Order, WT Docket No. 17-79 & WC Docket No. 17-84, ¶¶ 40–46, 104–110, FCC 18-133 (2018), https://docs.fcc.gov/public/attachments/FCC-18-133A1.pdf.

[64] 47 U.S.C. § 1455(a) (providing that state and local governments “may not deny, and shall approve” eligible requests to modify existing wireless towers or base stations when the modification does not substantially change their physical dimensions); Acceleration of Broadband Deployment by Improving Wireless Facilities Siting Policies et al., Report and Order, WT Docket No. 13-238 et al., ¶¶ 205–215, FCC 14-153 (2014), https://docs.fcc.gov/public/attachments/FCC-14-153A1.pdf (adopting a 60-day shot clock and a self-executing “deemed granted” remedy when a locality fails to act within 60 days after receiving the applicant’s notice).

[65] Accelerating Wireline Broadband Deployment, supra note 63, ¶¶ 84–90 (governing how incompleteness determinations affect the shot clocks).

[66] 47 U.S.C. § 224(b)(1).

[67] 47 U.S.C. § 224(a)(1).

[68] 47 C.F.R. § 1.1402(o).

[69] Westling, The Last Mile Is a Paper Trail, supra note 4.

[70] Id.

[71] Accelerating Wireline Broadband Deployment by Removing Barriers to Infrastructure Investment, Declaratory Ruling, WC Docket No. 17-84, ¶¶ 8–22, DA 21-78 (WCB 2021), https://docs.fcc.gov/public/attachments/DA-21-78A1.pdf (finding that utilities often charged new attachers the full cost of replacing poles already near the end of their useful lives or otherwise due for replacement and clarifying that new attachers need not pay to correct preexisting violations or replace “red-tagged” poles that utilities must replace).

[72] Id. ¶¶ 8–26.

[73] Accelerating Wireline Broadband Deployment, supra note 61, ¶¶ 33–86.

[74] For recent enforcement, see Fed. Commc’ns Comm’n, FCC Issues Precedent-Setting Order Under Expedited Review Process for Pole Attachment Complaints (Feb. 5, 2026), https://docs.fcc.gov/public/attachments/DOC-418491A1.pdf.

[75] Brendan Carr, Chairman, Fed. Commc’ns Comm’n, A Build Agenda for America (July 2, 2025), https://docs.fcc.gov/public/attachments/DOC-412663A1.pdf; see also Fed. Commc’ns Comm’n, Chairman Carr’s Build America Agenda, https://www.fcc.gov/build-america.

[76] 40 C.F.R. § 1501.4; 42 U.S.C. § 4336(a)(2).

[77] 36 C.F.R. § 800.14(b); see also 54 U.S.C. § 306108.

[78] Seven County, 605 U.S. at 168.

[79] Sackett v. EPA, 598 U.S. 651 (2023) (holding that the Clean Water Act covers only wetlands with a continuous surface connection to bodies that constitute “waters of the United States” in their own right, making the wetlands indistinguishable from those waters).

[80] United Keetoowah Band of Cherokee Indians v. FCC, 933 F.3d 728 (D.C. Cir. 2019) (vacating the FCC’s 2018 order insofar as it excluded small wireless-facility deployments from NEPA and National Historic Preservation Act Section 106 review because the FCC failed to justify that deregulation served the public interest or adequately address potential effects on historic and tribal resources).

[81] American Broadband Deployment Act of 2025, supra note 56; BROADBAND Leadership Act, H.R. 278, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/house-bill/278/text.

[82] Build America: Eliminating Barriers to Wireless Deployments, Notice of Proposed Rulemaking, WT Docket No. 25-276 (Sept. 2025), https://docs.fcc.gov/public/attachments/DOC-414414A1.pdf.

[83] American Broadband Deployment Act of 2025, supra note 56.

[84] Petition of Gateway Infrastructure, LLC d/b/a Gateway Fiber for Preemption and Declaratory Ruling Pursuant to Section 253(d) of the Communications Act of 1934, WC Docket No. 26-166 (filed June 17, 2025), https://www.fcc.gov/ecfs/search/search-filings/filing/26109834869 [hereinafter Gateway Fiber Petition]; see Wireline Competition Bureau Seeks Comment on Petitions for Preemption and Declaratory Ruling, Public Notice, DA 26-689 (WCB July 8, 2026), https://docs.fcc.gov/public/attachments/DA-26-689A1.pdf.

[85] Gateway Fiber Petition, supra note 84; see 47 U.S.C. § 253(a), (d).

[86] Wireline Competition Bureau Seeks Comment on Petitions for Preemption and Declaratory Ruling, supra note 84.

[87] Jeffrey Westling, Fiber Freeze: How Maple Grove Made a Cable Franchise the Price of Broadband, Truth on the Mkt. (Aug. 20, 2026), https://truthonthemarket.com/2026/08/20/fiber-freeze-how-maple-grove-made-a-cable-franchise-the-price-of-broadband.

[88] Accelerating Wireline Broadband Deployment by Removing Barriers to Infrastructure Investment, Fifth Report and Order, Fourth Further Notice of Proposed Rulemaking, and Orders on Reconsideration, WC Docket No. 17-84, FCC 25-38 (July 24, 2025), https://docs.fcc.gov/public/attachments/FCC-25-38A1.pdf.

[89] Ben Sperry, Geoffrey A. Manne & Kristian Stout, The Role of Antitrust and Pole-Attachment Oversight in TVA Broadband Deployment, 29 J. Tech. L. & Pol’y 73 (2025), https://scholarship.law.ufl.edu/cgi/viewcontent.cgi?article=1243&context=jtlp.

[90] Ben Sperry, Broadband Deployment, Pole Attachments, & the Competition Economics of Rural-Electric Co-ops, Truth on the Mkt. (Aug. 16, 2023), https://truthonthemarket.com/2023/08/16/broadband-deployment-pole-attachments-the-competition-economics-of-rural-electric-co-ops.

[91] Accelerating Wireline Broadband Deployment by Removing Barriers to Infrastructure Investment, Fourth Report and Order, Declaratory Ruling, and Third Further Notice of Proposed Rulemaking, WC Docket No. 17-84, FCC 23-109 (rel. Dec. 15, 2023), https://docs.fcc.gov/public/attachments/FCC-23-109A1.pdf; see also Westling, The Cost of Holding Up Broadband, supra note 5.

[92] Westling, The Cost of Holding Up Broadband, supra note 5.

[93] Broadband Infrastructure Deployment, 86 Fed. Reg. 68,553 (Dec. 3, 2021), https://www.federalregister.gov/documents/2021/12/03/2021-26231/broadband-infrastructure-deployment; see also 23 C.F.R. § 645.307(a); MOBILE NOW Act § 607, Pub. L. No. 115-141, div. P, tit. VI, 132 Stat. 1097, 1104 (2018); U.S. Gov’t Accountability Off., GAO-26-107734, Broadband Infrastructure: States’ Reported Progress Implementing Requirements to Facilitate Deployment Along Federal-Aid Highways (2026), https://www.gao.gov/products/gao-26-107734.

Executive Summary

The Digital Markets Act (DMA) directs its regulatory machinery toward “fairness” and “contestability,” yet defines neither goal clearly. Critics argue that this ambiguity gives the European Commission broad discretion, while defenders note that terse competition laws have gained meaning through enforcement and adjudication. This white paper asks whether two years of DMA enforcement have begun to fill those gaps. It reconstructs the Act’s implicit theory from its text, then tests that theory against the Commission’s impact assessment, designation and infringement decisions, specification proceedings, statutory review, and DMA–GDPR guidance.

The record reveals that the DMA’s goals are coherent but redistributive. Fairness means correcting a structural imbalance the Act conclusively presumes between gatekeepers and those who depend on their core platform services. Contestability supplies the remedy by transferring competitive opportunity, resources, and market share toward rivals and business users. User choice serves both goals, but the Act values it primarily when users move away from gatekeepers.

Four concepts explain this logic. The Structural Unfairness Axiom presumes that gatekeeper markets are inherently unfair. The Bidirectional Unfairness Inference allows structural asymmetries and disappointing outcomes to confirm each other as evidence of unfairness. The Scale–Unfairness Paradox treats the same growth that improves a platform as evidence of deeper entrenchment. Dialectical Fairness seeks to level up business users while leveling down gatekeepers. The enforcement record reflects these ideas by treating gatekeeper growth as weak contestability, defining fairness through prohibited conduct, elevating parity without effects analysis, and measuring success through third-party access and uptake rather than price, quality, or innovation.

What the record still lacks is calibration. The DMA identifies who should gain and who should lose without specifying how much, for how long, or against what benchmark. Because its logic assumes that covered markets were never fair, it supplies no baseline or endpoint. Compliance may therefore remain unverifiable and intervention potentially endless. That problem matters for gatekeepers, reviewing courts, consumers, and jurisdictions importing DMA-style rules without fully understanding the program they embody.

I. Introduction

The Digital Markets Act (DMA or Act)[1] has drawn persistent criticism because its twin goals—fairness and contestability—remain ambiguous.[2] Critics raise a familiar objection: Broad objectives allow the European Commission to shift the goalposts and exercise considerable discretion over enforcement and interpretation, weakening the system’s predictability and legal certainty.[3]

Yet the DMA is hardly unique in this respect. Landmark competition laws—the Sherman Act in the United States, most famously, and Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) to a lesser extent—are famously terse. Their underlying logic took shape gradually through litigation and enforcement.[4] Such openness may reflect a deliberate legislative choice to let enforcers, regulated parties, and courts fill the gaps.[5] It may instead, however, reveal poor drafting or a legislature that lacked a clear vision of what it sought to achieve.

Against this backdrop, this white paper asks a simple question: Have two years of enforcement clarified the DMA’s goals and, if so, how?

The question matters to both scholarship and policy. Scholars remain divided over two related issues: whether the DMA’s goals can be meaningfully defined and what those goals require. The literature has debated whether fairness and contestability are coherent, compatible, or even legally cognizable objectives. Few studies, though, have examined how concrete enforcement decisions, interpretive communications, and early institutional practice have given those concepts meaning.

Greater clarity would also provide practical guidance. It would help gatekeepers and firms seeking access to understand what compliance requires and why. It would also help jurisdictions considering DMA-style regulation—including the United Kingdom, Japan, and Brazil[6] —understand the rules they may be importing, including their logic, principles, underlying aims, likely results, and shortcomings.[7]

This white paper argues that the DMA does contain a coherent conception of fairness and contestability, but the Act never states it clearly. That conception emerges only by reading the law alongside the European Commission’s enforcement decisions. Properly reconstructed, fairness and contestability are not free-standing values in tension, as much of the literature assumes. They are, instead, two sides of a single redistributive program.

Fairness supplies a conclusive diagnosis: Gatekeepers and the businesses that depend on them suffer from a structural imbalance that designation conclusively presumes. Contestability supplies the remedy: a continuing transfer of competitive opportunity away from gatekeepers and toward actual or potential rivals. User choice serves both goals, but the DMA only values that choice when (and because) users exercise it away from gatekeepers. This structure explains why the Act can treat “fair and contestable” as a hendiadys—two terms expressing a single idea.

That coherence comes at a price. The DMA’s goals are directional but uncalibrated. The Act identifies who should lose and who should gain, but not how much, for how long, or against what benchmark. Because it presumes that markets for core platform services were never fair, it supplies no earlier equilibrium to restore and no baseline against which to measure progress. Any improvement may therefore prove insufficient, making compliance impossible to verify.

Two years of enforcement have brought us closer to understanding what fairness and contestability mean under the DMA. They have brought us no closer to knowing when, if ever, the Act’s goals will have been achieved.

The remainder of this white paper proceeds as follows. Section II situates the inquiry within the scholarly debate. It explains why the DMA’s goals require an abstract definition, why the Act fails to provide one, and how commentators have divided over what those goals entail. Section III reconstructs the DMA’s implicit theory of fairness and contestability from its recitals and operative provisions. It introduces four analytical constructs that organize the analysis: the Structural Unfairness Axiom, the Bidirectional Unfairness Inference, the Scale–Unfairness Paradox, and Dialectical Fairness.

Section IV tests that reconstruction against the enforcement record, including the impact assessment, designation and infringement decisions, specification proceedings, the Commission’s first statutory review, and joint guidelines governing the interplay between the DMA and the General Data Protection Regulation (GDPR). Section V distills the findings into an explicit reformulation of the DMA’s twin goals. Section VI examines the implications of what remains unknown. Section VII concludes.

II. The Debate Over the DMA’s Undefined Goals

Scholars agree that fairness and contestability must guide the DMA’s interpretation, but the Act defines neither goal nor clearly connects them to its obligations. This ambiguity has produced competing accounts of the DMA’s legal character, aims, and criteria for success.

A. Why the DMA’s Goals Require Definition

The early literature on the DMA’s goals converges on three related conclusions. First, the Act requires an abstract account of fairness and contestability. Their meaning cannot simply be inferred “by doing”—that is, from the prohibitions and obligations in Articles 5 through 7.

Giorgio Monti argues that conceptual clarity would guide courts and help stakeholders understand the Act’s policy objectives.[8] Richard Feasey and Monti likewise treat a clear statement of the DMA’s goals as essential to assessing both compliance and the Regulation’s success. In their account, the DMA creates an “obligation to provide a result on the market,” not merely a set of formal duties.[9] Jacques Crémer et al. similarly argue that courts and regulators need a working definition of fairness and contestability to interpret Articles 5, 6, and 7. The goals express policy aspirations, but they also guide the European Commission’s compliance assessments and any resulting judicial review.[10]

The DMA’s institutional design reinforces this point. The Act allows the Commission to specify what certain obligations require, reopen proceedings when compliance measures prove ineffective, and adapt the rules to new forms of unfairness or weak contestability. Each power presupposes a standard for deciding whether a compliance measure advances the Act’s goals. A list of practices labeled unfair cannot, by itself, supply that overarching standard.[11]

Second, the DMA does not provide one. Friso Bostoen observes that the Act seeks to ensure that markets in which gatekeepers operate “are and remain contestable and fair,” yet defines neither term.[12] Its closest approximation to a general definition of fairness appears in recital 33, which states that unfairness “should relate to an imbalance between the rights and obligations of business users where the gatekeeper obtains a disproportionate advantage.”

As Pinar Akman notes, that formulation leaves basic questions unanswered, including how fairness and contestability apply in markets that have already tipped toward a dominant platform.[13] Nicolas Petit argues that the vague terminology provides little reason to believe the legislature had a clear theory of competition or coherent economic policy in mind. The Act’s structure obscures both its primary objectives and the reasons the legislature selected some obligations over others, raising broader questions about its legitimacy.[14] Giuseppe Colangelo goes further, portraying fairness as a mantra that grants enforcers broad discretion rather than a meaningful legal standard. As he writes, “the endemic uncertainty surrounding the notion of fairness has traditionally made it unsuitable to operate as a stand-alone legal standard.”[15]

Third, the relationship between the DMA’s goals and obligations remains unclear, perhaps because the boundary between fairness and contestability is itself blurred. Monti argues that the Act does not identify which provisions advance which objective. Grouping obligations by policy objective, he suggests, would clarify the Act’s approach and aid judicial interpretation.[16]

Petit similarly finds that “the structure of the DMA makes it very hard to unpack the primary objective of each obligation.” Fairness and contestability do not necessarily reinforce one another. Conduct deemed unfair could, in some circumstances, encourage entry and thereby improve contestability.[17] Akman draws a related distinction: Contestability largely concerns market structure, while fairness primarily concerns conduct. She doubts that this “two-headed” design can deliver greater contestability in markets where gatekeepers already hold entrenched positions.[18]

B. Competing Accounts of the DMA’s Goals

A third conclusion follows from the first two: If the DMA does not adequately define the objectives that guide its interpretation, competing accounts will fill the gap. The literature offers several.

One dispute concerns whether the DMA extends competition law or creates a separate regulatory regime. This may appear to be a formal distinction, but it determines how far established competition-law concepts, benchmarks, and safeguards should constrain enforcement. Some scholars find the DMA’s effort to distance itself from competition law unconvincing because the Act’s recitals connect its intended improvements to traditional competition parameters, including innovation and consumer benefits.[19] Others view the DMA as more than streamlined enforcement of Article 102 TFEU. On this account, the Act looks forward and seeks to shape—and perhaps constrain—the conditions under which gatekeepers exercise power.[20] Still others cast it as a democratic reassertion of rulemaking authority over platforms that competition-law standards should not govern.[21]

Geoffrey A. Manne, Lazar Radic, and Dirk Auer classify the DMA as “digital competition regulation.” In their account, the Act departs from antitrust’s consumer-welfare standard and revives structural concerns and presumptions associated with neo-Brandeisianism and ordoliberalism—traditions the antitrust mainstream has largely rejected. The DMA places conduct that might otherwise fall under Article 102 within a separate framework whose goals, evidentiary standards, and presumptions more closely reflect the regulator’s policy preferences.[22]

Even sympathetic observers acknowledge uncertainty about the Act’s character. Pierre Larouche and Alexandre de Streel describe the DMA as occupying a “difficult and perhaps ominous epistemological position.”[23] Comparative analysis deepens the ambiguity because other jurisdictions have incorporated provisions identical to the DMA’s directly into their national competition laws. The result resembles a “Schrödinger’s regulation” in which the same substantive rules simultaneously are and are not competition law.[24]

A second dispute concerns the relationship between fairness and contestability. Crémer and his coauthors treat them as mutually reinforcing. They describe a “dual-action dial” under which a practice cannot qualify as fair if it undermines contestability.[25] By contrast, de Streel and his coauthors treat the goals as distinct but connected: Contestability lowers entry barriers and enables competitive pressure, while fairness balances rights and obligations within the platform ecosystem.[26] Petit rejects the premise that the two goals necessarily move together.[27] Akman likewise questions whether the same tools can achieve objectives that may pull in different directions.[28]

This disagreement extends to whether the DMA addresses the causes or merely the symptoms of weak competition. A regime focused on preserving contestability would logically target markets before they tip toward a dominant platform. The DMA instead regulates markets in which gatekeepers already exist. That choice leaves the Act’s underlying ambition unclear: Does it accept gatekeepers while regulating their conduct, or does it seek to reshape market structure and ultimately erode their positions?[29]

Because the DMA supplies no clear definitions, scholars have also reconstructed its broader purposes. Manne, Radic, and Auer identify three objectives shared by the DMA and similar regimes: leveling down gatekeepers, assisting rivals, and redistributing economic rents—returns above competitive levels—from gatekeepers to business users. They connect these objectives to the European Union’s broader pursuit of digital sovereignty and strategic autonomy.[30]

After reviewing gatekeepers’ compliance reports, Colangelo and Alba Ribera Martínez connect fairness and contestability to long-term goals of market modeling, ecosystem openness, neutralizing competitive advantages, and transparency. They characterize the fairness-related goals as expressly redistributive.[31] Oles Andriychuk offers a more direct assessment, characterizing the Act as “punitive.”[32]

C. Why Articles 5–7 Are Not Enough

One response is that the DMA needs no overarching definition because Articles 5 through 7 give fairness and contestability their full content. On this view, the two goals begin and end with the obligations themselves. But that account fails both functionally and on the Act’s own terms.

Recital 79 directs the European Commission to “apply a predefined standard” when identifying practices that are unfair or limit contestability. Such a standard would promote predictability and enable the Commission to exercise its other statutory powers. Article 12, for example, allows the Commission to extend the DMA through delegated acts to cover practices that the Act does not enumerate but that nonetheless qualify as unfair or contestability-limiting.

Other provisions likewise require the Commission to look beyond the obligations’ text. Article 18 authorizes remedies when gatekeepers have failed to achieve “fairness and contestability.” Article 19 permits market investigations to identify additional practices that are unfair or restrict contestability. Article 53 requires the Commission to assess every three years whether the DMA has achieved its objective of contestable and fair markets.

Article 8(1) makes the need for an overarching standard clearest. It requires a gatekeeper’s compliance measures to be “effective in achieving the objectives of this Regulation and of the relevant obligation.” This distinction implies that compliance depends on both the specific purpose of an individual obligation and the Act’s broader goals.[33]

Taken together, these provisions presuppose three things: a coherent meaning of fairness and contestability, a benchmark for measuring them, and an endpoint at which the Commission can declare them achieved. The Act supplies none. The question, then, is whether the DMA’s text and enforcement record allow those missing elements to be reconstructed.

III. Reconstructing the DMA’s Goals

Although the DMA never defines fairness or contestability, its recitals and operative provisions reveal a coherent direction. The Act treats gatekeeper scale and user dependence as sources of structural unfairness, seeks to improve business users’ position, and promotes rival entry and expansion by reducing gatekeepers’ competitive advantages.

Four analytical constructs organize this reconstruction. Together, they show that the DMA treats user choice as a tool for shifting activity toward rivals and contestability as market restructuring. The Act’s direction is clear, but it supplies no benchmark for measuring success or determining when intervention should end.

A. The DMA’s Implicit Theory of Fairness

The DMA defines fairness only indirectly, through its opposite. Recital 33 states that “[u]nfairness . . . should relate to an imbalance between the rights and obligations of business users where the gatekeeper obtains a disproportionate advantage.”[34] Recital 62 expands on that definition, holding that pricing or other general access conditions:

. . . should be considered unfair if they lead to an imbalance of rights and obligations imposed on business users or confer an advantage on the gatekeeper which is disproportionate to the service provided by the gatekeeper to the business users or lead to a disadvantage for business users in providing the same or similar services as the gatekeeper.[35]

The Act therefore treats digital markets dominated by gatekeepers as unfair because they distribute rights and obligations unequally across the supply chain. It attributes that inequality to persistent differences in bargaining power that allow gatekeepers to capture a disproportionate share of the value created on their platforms while business users receive inadequate returns on their contributions.[36]

This theory rests on the assumption that users, especially business users, depend on gatekeepers’ core platform services (CPSs). The Act does not distinguish between business users that depend on a gatekeeper and those that do not. Nor does it distinguish firms whose dependence results from their own choices from those that could not reasonably avoid it.[37] This omission implies that the Act treats dependence as an inherent structural feature of CPSs. Bargaining asymmetries increase dependence, which further entrenches those asymmetries and weakens business users’ position.

A closer reading reveals four related themes. First, the DMA treats gatekeeper scale and other structural market features as sources of unfairness that both produce and confirm unfair outcomes. Second, it conceives fairness as a relative redistribution that improves business users’ position while curtailing gatekeepers’ advantages. Third, it values user choice primarily as a means of encouraging switching away from gatekeepers. Fourth, it invokes fair prices, innovation, quality, and other desirable outcomes without providing benchmarks for measuring them. Together, these themes supply the DMA’s implicit theory of fairness.

1. The Structural Unfairness Axiom

The DMA begins with the premise that markets for core platform services (CPSs)—and gatekeepers in particular—are structurally unfair. This white paper calls that conclusive presumption the DMA’s Structural Unfairness Axiom (DSUA). The Act attributes the unequal distribution of rights and obligations between gatekeepers and their business and end users to market features such as network effects, data-driven economies of scale, tipping, and lock-in.[38] On this reading, those features are inherently unfair and create imbalances that only regulation can correct. Unfair inputs necessarily produce unfair outcomes.

The logic is deliberately circular. If an outcome appears unfair, the market characteristics that produced it are presumed unfair. If the market is structurally unfair, its outcomes are necessarily tainted. Competition law disciplines such reasoning through external benchmarks such as consumer welfare and efficiency. The DMA offers no comparable yardstick.

The Act instead asks whether allegedly unfair structural features have been neutralized and whether the resulting distribution is fair. Each inquiry depends on the other. This white paper calls that feedback loop the Bidirectional Unfairness Inference (BUI): Structural features are deemed unfair and therefore presumed to produce unfair outcomes, while outcomes perceived as unfair confirm the structural features’ inherent unfairness.

The DSUA also assumes that the potential for unfairness scales with the size of a CPS. Within the Act’s logic, a larger user base increases the risk that the platform’s structural features will produce unfair outcomes. Network effects and data accumulation can improve a platform’s quality while deepening users’ dependence on it. As the platform becomes more attractive, users become less likely to switch. The same features that make a CPS work well thus make it, in the DMA’s view, inequitable and prone to unfairness.

This white paper calls that dynamic the Scale–Unfairness Paradox (SUP): Greater scale can simultaneously improve the quality and attractiveness of a CPS and heighten the risk of structural unfairness. The result is a partially inverse relationship between DMA-style fairness and service quality. The dynamics that improve the service are the same dynamics that, under the DMA’s theory, undermine fairness.

The DMA’s designation criteria make this logic especially visible. The Act’s use of market capitalization, turnover, and user numbers[39] treat a company’s scale as the ultimate source of unfairness. High turnover might ordinarily suggest that a firm creates substantial value for consumers. The DMA instead reads it as evidence of leveraging potential, market tipping, and latent unfairness.

Once a firm crosses the Article 3 thresholds and becomes a gatekeeper, the Act prohibits specified conduct that would otherwise remain lawful and commonplace. A company does not become a gatekeeper because it acted unfairly. The Act treats its conduct as unfair because the company is a gatekeeper. The recitals extend this logic beyond the quantitative thresholds. They treat the ability to monetize a service, “superior access” to financial markets, and high relative growth as indicators of gatekeeper status and entrenchment—and therefore of unfairness or its potential.[40]

If this structural account is correct, the DMA does not restore fairness so much as construct it. Markets for CPSs are unfair under the Act because of their inherent characteristics, which means they were never fair in the sense the DMA now uses that term. The Act has no prior equilibrium to restore and no historical benchmark against which to measure future success.

This account also yields an implicit operational test. Conduct that increases user numbers, turnover, market capitalization, monetization potential, scale, or access to capital strengthens the structural conditions associated with gatekeeper status. By reinforcing the conditions the Act treats as unfair, such conduct becomes evidence of unfairness itself.

2. Dialectical Fairness: Leveling Up and Down

If the current distribution of rights and obligations is unfair, fairness requires a different allocation. Because the DMA identifies business users as the disadvantaged group, the new allocation must leave them better off relative to gatekeepers. Recital 62 illustrates this logic: Unfairness arises from both a “disadvantage for business users” and an advantage “disproportionate” to the gatekeeper.

Fairness under the DMA is therefore relative and dialectical. It measures each group’s position against the other and seeks movement in both directions: leveling up business users while leveling down gatekeepers. The goal is a new allocation that narrows the gap between them. Fairness must leave business users better off or gatekeepers worse off—and preferably do both.

The Act’s operative provisions reveal how this redistribution works. Article 5(2) restricts a gatekeeper’s ability to process, combine, or cross-use personal data without consent. The provision might appear to address privacy. Recital 36 frames it differently: Cross-use is problematic because it gives gatekeepers an advantage over competitors, allowing them to combine data sources, improve their services, and undermine contestability.[41]

The provision targets gatekeepers’ competitive data advantages rather than data collection itself. By contrast, other provisions—including Article 6(9)’s data-portability mandate—encourage data sharing and movement. The DMA instead treats gatekeepers’ data advantages as a source of unfairness precisely because those advantages have competitive value. On this view, gatekeepers should not compete using resources their rivals lack.

Recital 72 applies the same logic to consumer profiling. It states that greater transparency should discourage gatekeepers from making intensive profiling the industry standard, “given that potential entrants or start-ups cannot access data to the same extent and depth, and at a similar scale.”[42] The DMA thus de facto favors privacy-intensive models over data-driven ones. It both advantages firms without comparable data access and defines the terms on which the Act expects them to challenge incumbents.

Recital 46 and Article 6(2) follow the same pattern. Accumulating business-user data is not unfair per se. Unfairness arises when a gatekeeper uses that data in competition with the business users that generated it.[43] The provision prohibits such use in any market, even when the resulting competition might benefit end users.

Here, “unfair” means that business users could receive more. All else equal, they would benefit if gatekeepers exerted less competitive pressure against them. Fairness therefore operates as a mandate to relax the competition business users face by preventing gatekeepers from deploying competitively valuable resources against them.

Article 6(5)’s self-preferencing prohibition offers the clearest example. Gatekeepers may not favor their own products, but the Act does not prevent them from favoring third-party offerings. Article 6(7)’s interoperability mandate and Article 6(10)’s real-time data-access requirement likewise compel gatekeepers to share the products of their investments with third parties and competitors. These obligations reduce gatekeepers’ advantages and place the two sides on more equal footing.[44]

The underlying premise is that a gatekeeper should share its competitive advantages because its exclusive possession of them is inherently unfair. More generous access terms and lower prices for business users qualify as fair because they move the parties’ positions in both directions. They improve business users’ position, curtail the gatekeeper’s “disproportionate advantages,” and narrow the imbalance the DMA seeks to correct.

3. Choice as Directed Switching

Several DMA recitals suggest that practices become unfair when they restrict user choice. Recital 70, for example, instructs gatekeepers not to “subvert or impair user autonomy, decision-making, or choice.”[45] That language might suggest that choice is an independent value under the Act. A closer reading reveals a directional preference: The DMA encourages users to choose away from gatekeepers’ products and core platform services and toward rival offerings.

The Act’s asymmetries are systematic. Article 6(3) requires gatekeepers to make changing default settings easy, but only when those defaults direct users toward the gatekeeper’s own services. The Act does not prohibit defaults that steer users toward third-party products, even though such steering could also “subvert” user autonomy within the meaning of recital 70.[46]

Article 6(4) likewise requires gatekeepers to permit third-party apps and app stores and allows those third parties to prompt users to make their products the default. EU law imposes no corresponding obligation on other firms to open their systems to gatekeepers or anyone else. Defaults that might otherwise lock in users become unobjectionable—and perhaps desirable—when they benefit a firm other than a gatekeeper.

Article 5(3) prohibits parity clauses, which prevent business users from offering better terms through other channels, because they “unfairly” restrict business users’ freedom. The gatekeeper’s freedom to adopt such clauses receives no comparable weight, even when the clauses prevent businesses from free-riding on the platform.[47] Articles 5(4), 5(7), and 5(8) follow the same pattern by reducing reliance on gatekeepers and easing users’ path to alternative products and services. In each case, the Act promotes choices that move users away from gatekeepers.

If user choice were an overarching objective, the Act would express it as a general rule. All firms would have to make software easy to uninstall, and no firm could steer users toward its preferred channels. The DMA instead values choice only when it advances the Act’s other goals. It seeks to level down gatekeepers by directing users toward rivals and creating room for those rivals to challenge the gatekeeper’s position. The Act may even subordinate convenience to that goal, most visibly through mandatory choice screens that require users to take additional steps.

The DMA therefore values switching more than choice itself. Switching demonstrates contestability because it suggests that users have overcome entry barriers. It advances fairness by redirecting users and traffic away from gatekeepers. Under this logic, regulators may measure the effectiveness of choice mechanisms through observed switching rates and treat low switching as evidence of inadequate implementation. Choice becomes “meaningful” only when it leads away from the gatekeeper.

Taken to its logical conclusion, the Structural Unfairness Axiom implies that choices made before the DMA took effect were not genuinely meaningful. Structural unfairness tainted those choices, making them normatively suspect and unworthy of acceptance at face value.

4. Outcomes Without Benchmarks

Some commentators argue that the DMA seeks to create rights and opportunities rather than particular market outcomes.[48] Yet the Act does contain several outcome-oriented goals. Recital 5 refers to “ensuring fair economic outcomes” when market processes cannot do so. Recital 107 connects the Act’s objectives to “promoting innovation, high quality of digital products and services, fair and competitive prices, as well as a high quality and choice for end users.” Recital 45 asserts that advertising costs are “likely to be higher than they would be in a fairer, more transparent and contestable platform environment.”[49]

The Act provides no benchmark for these outcomes. It does not explain what constitutes a fair price, adequate innovation, or fair product quality. Competition law, the closest neighboring framework, relies on market power and the competitive counterfactual—a comparison with conditions absent the challenged conduct—to identify suboptimal outcomes.

The DMA expressly separates its analysis from those tools. Recital 23 makes market definition and efficiencies irrelevant to designation. Recital 11 states that the DMA pursues goals distinct from those of competition law and operates “without prejudice” to anticompetitive effects, objective justifications, and efficiency considerations.[50]

By excluding those considerations, the Act discards competition law’s principal method for determining when prices, output, or innovation are inadequate. Competition law asks whether market power distorts competition and harms consumers. The DMA supplies no equivalent test. Competition-law principles therefore cannot define “fair” outcomes under the Act, except perhaps at the margins.

B. The DMA’s Implicit Theory of Contestability

The DMA treats contestability as rivals’ ability to enter, scale, and take market share from gatekeepers. Although some provisions recognize competition on the merits, the Act primarily seeks to restructure markets by reducing gatekeeper advantages and promoting third-party growth.

1. Contestability as Market Restructuring

The DMA also leaves contestability undefined. Mirroring its negative account of fairness, recital 3 suggests that contestability is lacking when a gatekeeper’s position remains difficult to challenge “even by more innovative or efficient market operators.” It attributes that difficulty to high barriers to entry or exit and limited access to key inputs such as data.[51] Recital 5 adds that certain platform markets are “prone to tipping” and that gatekeepers hold entrenched and durable positions.

Two features of this account stand out. First, contestability extends beyond the formal freedom to enter a market. It asks whether rivals can attract users, achieve scale, and exert meaningful pressure on gatekeepers. The emphasis on effectiveness matters. Without observable entry, expansion, or shifts in market structure toward challengers, it becomes difficult to say that rivals can contest the market effectively. The DMA thus appears to infer inadequate contestability from rivals’ failure to gain a meaningful foothold. As with the Bidirectional Unfairness Inference, the absence of the desired outcome becomes evidence of a structural defect.

Second, contestability entails reducing entry barriers to induce actual entry and expansion by third parties, regardless of the barriers’ source. This includes advantages produced by otherwise legitimate business conduct, such as data accumulation. Recital 44, for example, objects to tying because it gives gatekeepers “a potential advantage in terms of accumulation of data” that “is liable to raise barriers to entry.”[52]

The treatment of online search follows the same logic. The DMA links contestability to gatekeepers’ data-driven quality advantages, then requires them to share query data with rivals. The premise is that access to those data will help rivals improve their services, attract users, and gain market share.[53]

Under this account, contestability requires reducing a critical advantage on one side so that the other can compete more effectively and take market share from incumbents. The Act treats access to data—and, by extension, scale and a large user base—as an illegitimate advantage when concentrated in gatekeepers, yet affirmatively provides that access to their rivals. That asymmetry reflects a broader objective of restructuring markets by dispersing market share among more firms.

2. Gatekeeper Growth as Evidence of Weak Contestability

If contestability requires entry and expansion by third parties, continued gatekeeper growth points in the opposite direction. The DMA operationalizes this implication of the Scale–Unfairness Paradox through Article 18.

In deciding whether to impose additional behavioral or structural remedies, Article 18 asks whether a gatekeeper has “maintained, extended or further strengthened its impact in the internal market.”[54] The inquiry does not consider whether that increased impact resulted from superior performance or a better product, even though growth in turnover and user numbers may reflect precisely those advantages.

Recital 75 confirms this approach. A gatekeeper “should be deemed to have maintained, extended or strengthened its gatekeeper position where, despite the enforcement actions taken by the Commission, that gatekeeper still holds or has further consolidated or entrenched its importance as a gateway for business users to reach end users.”[55]

The Act likewise presumes an “entrenched and durable position” when a core platform service reaches a very high number of users across several Member States for three years. By the same logic, contestability improves when a gatekeeper’s user numbers decline. If network effects, scale, and data advantages restrict contestability, reducing those advantages should enhance it.

Gatekeeper growth therefore cuts against the Act’s objectives even when it results from success on the merits. Taken to its logical conclusion, the DMA could treat a gatekeeper’s loss of market share as evidence that its compliance measures are working.

3. Limits of the Restructuring Account

Not every DMA provision fits the market-restructuring account. Article 6(5) permits a gatekeeper’s products to rank first when that result follows from transparent, fair, and nondiscriminatory criteria. This provision therefore supports an efficiency-based reading: A gatekeeper may prevail on the merits but may not leverage its position to distort competition in adjacent markets.

Other passages point in the same direction. Recital 53 states that offering better services or lower prices does not create a prohibited barrier to switching. Recitals 55 and 57 frame interoperability as a way to ensure that rival hardware competes on its merits.[56] These provisions support a consumer-oriented conception of contestability.

Other parts of the Act are difficult to reconcile with that conception. Article 5(2) restricts data combination without asking whether integration improves service quality. Article 6(11) requires search gatekeepers to share query and click data with rivals because the competitive advantage generated by legitimate scale and user engagement creates a structural obstacle. Article 6(2) bars gatekeepers from using business-user data even when doing so would produce a genuinely superior product. Recital 64 similarly treats the integration of communication services into an ecosystem as an entry barrier regardless of whether users actually multihome.[57]

This broad conception makes many consumer-facing integrations suspect. It also casts doubt on claims that the Act primarily seeks to benefit end users or increase innovation overall, rather than promote innovation by firms other than gatekeepers. If consumer welfare and innovation were controlling objectives, the DMA would distinguish efficient from inefficient entry and efficient from inefficient exclusion, as competition law does. It makes neither distinction.

The Act retains a residue of consumer-oriented contestability, but its broader structure subordinates consumer welfare to effective third-party entry and market restructuring.

C. The DMA’s Known Unknowns

A close reading reveals a more coherent account of fairness and contestability than the DMA expressly provides. Fairness rests on the Structural Unfairness Axiom (DSUA): Markets for core platform services are presumed structurally unfair because of their inherent characteristics. That presumption eliminates the need to prove anticompetitive conduct or harm.

The Bidirectional Unfairness Inference (BUI) reinforces the premise. Market structure is presumed to produce unfair outcomes, while outcomes deemed inadequate confirm that structural defects persist. The Scale–Unfairness Paradox (SUP) follows because growth and scale heighten the risk of unfairness even when gatekeepers earn them through competition on the merits. Dialectical Fairness supplies the remedy by leveling up business users while leveling down gatekeepers. The Act treats user choice as an instrument of that redistribution and directs it away from gatekeeper ecosystems.

The DMA’s conception of contestability likewise departs from the standard economic concept. Conventional contestability relies on the credible threat of entry to discipline incumbents. The DMA seeks to induce actual entry and expansion by transferring gatekeepers’ competitive advantages—including access to data, distribution, and interoperability—to rivals. It also treats continued gatekeeper growth as evidence of inadequate contestability regardless of the growth’s cause.

Taken together, these elements define fair and contestable markets as markets in which competitive advantages and market share move away from gatekeepers and toward rivals and business users. Consumer welfare remains an expected downstream benefit rather than the Act’s primary objective.

The Act nevertheless leaves five questions crucial to interpretation and enforcement unresolved. These are its “known unknowns.”

First, the DMA provides no benchmark for deciding when fairness or contestability has been sufficiently achieved. Article 8(8) presupposes an equilibrium without defining it. Article 18 authorizes remedies when the goals “have not been achieved” but supplies no standard of achievement. Articles 12, 19, and 53 assume that the goals can be measured without providing a yardstick. The “predefined standard” contemplated by recital 79 appears nowhere in the Act.

This measurement problem compounds the missing-baseline problem. If markets for core platform services were never fair, the DMA has no prior state against which to measure progress. Without a baseline, the Commission can always deem any improvement insufficient.

Second, the operative terms governing enforcement remain undefined. The Act does not explain what constitutes “equally effective interoperability,” “effective provision,” “effective use,” or “effective implementation.” Regulators cannot apply those terms consistently without first clarifying the goals that give them meaning.

Third, the Act does not identify which business or end users its obligations should benefit or how the Commission should manage tradeoffs among them. Neither group is monolithic. Small and large business users may have different interests, as may developers that use
“freemium” and paid models. A compliance measure may benefit one group at another’s expense, but the DMA supplies no principle for choosing among them.

Fourth, the DMA does not establish whether compliance turns on structural inputs, such as access, switching mechanisms, and data sharing, or distributional outputs, such as prices, market shares, quality, and switching rates. Under the BUI, disappointing outcomes after full structural compliance support an inference that structural defects remain. Structural compliance can therefore never guarantee protection from further intervention.

Fifth, the Act leaves consumers in an ambiguous position. Article 9(4) distinguishes the interests of third parties, including consumers, from “the objectives of this Regulation.” That distinction suggests that consumer interests do not themselves constitute an objective. Consumers instead appear to be indirect beneficiaries whose welfare the DMA expects to improve as a byproduct of market restructuring.[58]

The text therefore establishes a clear direction but no method of calibration. Section IV asks whether the enforcement record supplies what the text lacks.

IV. Testing the DMA’s Goals Against the Record

This section tests the preceding reconstruction against the DMA’s institutional and enforcement record, including the impact assessment, designation and infringement decisions, specification proceedings, first statutory review, and joint DMA–GDPR guidance. Across these sources, the Commission consistently treats gatekeeper advantages as structural problems and rival access, growth, and uptake as evidence of success, while supplying no benchmark for measuring achievement or resolving tradeoffs. Pinpoint references to institutional documents appear parenthetically in the text.

A. The Impact Assessment’s Built-In Conclusions

The Commission’s impact assessment is among the most revealing sources on the DMA’s goals.[59] It exposes the Regulation’s underlying chain of reasoning: assumptions about how digital markets work, harms inferred from those assumptions, and rules designed to remedy them.

That chain begins with a selective reading of the literature. The impact assessment cited almost no studies counseling against prescriptive platform regulation. It instead prioritized work supporting intervention, creating the appearance of consensus about both the harms of the digital economy and the urgency of addressing them.[60]

The Commission’s Regulatory Scrutiny Board (RSB) identified this weakness even after the Commission had “substantially redrafted” the assessment in response to an earlier rejection. The RSB concluded that the assessment:

. . . does not appropriately describe the shortcomings the initiative intends to address and does not provide a proper evidence base for them.

It also asked the Commission to:

. . . consider the negative consequences of curtailing the size advantages following from network economies and economies of scale for consumers [and] . . . more convincingly demonstrate for each of the selected core platform services that the identified weak contestability has negative effects in terms of higher mark-ups, lower quality of service, or reduced innovation (pp. 3–4).[61]

The Commission’s own quality-control body thus identified two central gaps before the DMA’s adoption: The assessment assumed harms rather than demonstrating them, and it discounted tradeoffs involving innovation.

The analysis also reflects what economist Harold Demsetz called the Nirvana fallacy—the mistake of comparing real institutions with idealized alternatives while ignoring the alternative’s imperfections and costs.[62] Echoing the mission letter’s promise to make markets “work better for consumers, business and society” (para. 8), the impact assessment seeks to make digital markets “better” without identifying either a baseline or an endpoint. Any market could conceivably perform better.

The assessment “fully recognise[s] the benefits that online platforms bring to the economy and society” (para. 21). It nevertheless argues that digital markets would perform even better if policymakers addressed “the most salient incidences of unfair practices and weak contestability” (para. 6). The assessment does not base its conclusion that markets function poorly on an observed decline in output, innovation, or economic performance. It instead infers poor performance from its starting assumptions. Because some ecosystems are “essentially impossible to contest . . . irrespective of how innovative and efficient [competitors] may be” (para. 27), “the likelihood increases that these markets do not function well—or may soon fail to function well” (para. 27).

Theoretical premises thus establish the imperfection of digital markets, while contrary views receive little consideration. The command to make markets work “better” supplies no stopping point. Identifying harm becomes both impossible, because no counterfactual exists against which to measure it, and unnecessary, because the theory presumes it. The DMA carries that method forward by dispensing with effects analysis and an efficiency defense.

The assessment draws an equally direct link between unfairness and size. It identifies gatekeepers’ “incomparable economic strength” (para. 88) through revenue, markups “amongst the highest in the world” (paras. 56, 129), profits that outperform the market (para. 96), and pandemic-era stock valuations (para. 95). Paragraph 88’s principal evidence for unfairness consists of app-store and social-network revenue figures.

The assessment then treats economic strength as de facto conclusive evidence of unequal bargaining power, which transforms ordinary business conduct into a potentially unfair practice (para. 41). Yet it never measures bargaining power or compares gatekeepers’ size with that of supposedly dependent business users. Some of those users rank among the world’s largest companies and include other gatekeepers. The assessment also fails to ask whether platforms depend on their business users or to identify a comparative benchmark.

A survey supplies the principal corroboration. It found that 88% of businesses reported “unfavourable trading conditions on large platforms,” which respondents attributed mostly to “a perceived imbalance of bargaining power” (para. 61). The assessment substantiates that perception only through proxies.

Its logic is straightforward. Gatekeepers’ size and economic success produce power. That power creates a bargaining imbalance, and the imbalance produces unfair outcomes. Curbing the growth, profitability, and revenue that provide gatekeepers with “economic strength” therefore becomes one of the Act’s principal objectives, if not the principal one. This reasoning supplies the foundation for the Structural Unfairness Axiom and Dialectical Fairness.

The impact assessment also portrays fairness and contestability as projects for redistributing wealth and restructuring digital markets. It measures anticipated improvements through a projected decline in the Herfindahl-Hirschman Index (HHI), a standard measure of market concentration (RSB Opinion, Annex I, Table 1.1). The stated aim is to make it easier for third parties to dislodge gatekeepers (para. 74). The assessment would achieve that aim by reducing competitive advantages it recasts as entry barriers, including data access, ecosystems, vertical integration, and zero prices (paras. 75–76).

Those measures would enable rivals to “[steal] market shares from” gatekeepers (para. 77) and reduce their “supra-normal profits” (para. 302). According to the assessment, more effective regulation produces a “more optimal . . . redistribution of profits” (para. 355).

Its treatment of scale is expressly asymmetric. The assessment acknowledges that the rules “would lead to curtailing the size of network effects and economies of scale thus reducing associated advantages for consumers” (para. 318). It does not deny that cost. Instead, it seeks to extend those advantages to “also non gatekeeper platforms benefitting from such advantages” (para. 318). Scale is desirable when challengers obtain it (paras. 29, 69, 308) and problematic when gatekeepers retain it.

The same logic governs innovation. The assessment treats the concentration of research and development (R&D) among a few firms as a “gap” for regulation to close rather than evidence of those firms’ contribution (para. 282). It accepts the possibility of reduced gatekeeper innovation on the premise that greater aggregate innovation, especially “amongst smaller businesses” (para. 104), will more than offset the loss (paras. 283–285). Yet the observable evidence available at the time showed higher R&D investment and greater innovation—the opposite of the predicted harm.

Finally, the impact assessment presumes the effects of the practices it regulates and writes those presumptions into law. It states that gatekeepers “monopolise data” (para. 38) without addressing data’s nonrivalrous character, meaning one firm’s use does not prevent another’s. It treats high markups as uniform evidence of inadequate competition across all core platform services (para. 56). It infers business-user “dependence” from revenue-share figures without explaining what would demonstrate independence (para. 58). It also assumes that gatekeepers will not pass on compliance costs (paras. 301–302) and excludes consumer-side costs from its calculations (para. 350).

The exercise was also quantitative. The assessment projected €13 billion in consumer surplus, €12 billion to €23 billion in income gains from increased R&D, and a 0.25-point decline in the HHI (Part 2, pp. 59–61). The DMA is therefore effects-based in a distinctive sense. The Commission calculated its effects once, across the entire regulatory scheme, and converted those estimates into statutory premises exempt from case-by-case verification. The benefits later invoked in the preamble and enforcement decisions were assumed before enforcement began, and subsequent decisions need not establish them again.

B. Designation Decisions: Contestability as Status

The DMA’s first enforcement acts designated gatekeepers under Article 3.[63] On their face, the seven decisions reveal little about the Act’s goals. Designation turns almost entirely on Article 3(2)’s quantitative presumptions, while fairness and contestability appear mostly in boilerplate. The decisions’ omissions and exclusions nevertheless reveal how the Commission understands those goals.

The principal omission concerns fairness. None of the seven decisions defines or applies the term. Four mention it only in titles and citations. The Apple decision mentions neither fairness nor contestability.

Fairness makes its sole substantive appearance in the Meta decision, paired with its statutory twin. The Commission states that multihoming across WhatsApp and Messenger “reinforce[s], rather than mitigate[s], the contestability and fairness issues” that led the legislature to include messaging services in the Act (Meta designation, para. 230). Fairness therefore does not function as an independent standard at the designation stage. Designation establishes whatever unfairness gatekeepers embody through classification alone.

The Commission gives contestability more content, but only by identifying what does not demonstrate a contestable market. Multihoming does not. As the ByteDance decision explains, “the fact that there is (some degree of) multi-homing does not preclude the possibility of weak contestability and unfair practices” (ByteDance, para. 136).

The presence of several large competitors also does not suffice. Contestability “can also be limited if there is more than one gatekeeper for a core platform service” (Meta designation, fn. 287, citing recital 32). The Commission also excludes conventional economic evidence. Rebuttal arguments “should relate directly to the quantitative criteria,” while “any justification on economic grounds such as those related to market definition or to efficiencies should be discarded, because it is not relevant to the designation as a gatekeeper” (Apple designation, para. 23, applying recital 23).

The ByteDance decision goes further by converting classic evidence of contestability into evidence of its absence. ByteDance argued that TikTok was “a recent entrant and challenger of several established ecosystems” and therefore could not hold an entrenched and durable position (para. 111). The Commission responded that Article 3(1)(c) “does not refer to an ‘unassailable’ position, but to an ‘entrenched and durable position’” (para. 156). It then presumed limited contestability from three years of high user numbers (para. 157) and concluded that “TikTok’s significant scale and growth . . . with an upward trajectory further supports the finding” of entrenchment (para. 158).

TikTok is the only successful large-scale entrant into a core platform market in the past decade. Its entry and growth would ordinarily provide strong evidence that the market remains contestable. The Commission treated them as evidence of the opposite based on the DMA’s formal, irrebuttable assumptions about core platform-service markets. The decision illustrates the Scale–Unfairness Paradox—the same entry and growth that gave TikTok scale also made it a gatekeeper.

Under the DMA, contestability operates as a status attached to firms rather than as a property of markets. The Commission infers that status from scale and duration, and firms cannot rebut it by pointing to entry, growth, switching, or multihoming—the very conduct that demonstrates contestability in its ordinary economic sense.

This approach reverses William J. Baumol’s conception of contestability, under which the threat of potential entry disciplines incumbents because incumbency offers no protection from competition.[64] Under the DMA, successful entry leads to incumbency, and incumbency triggers regulation.

C. Infringement Decisions: Prohibitions Without Endpoints

The Commission issued its first DMA infringement decisions against Apple’s anti-steering rules and Meta’s “consent or pay” model on April 23, 2025. These decisions provide the first applications of fairness and contestability to specific conduct. Both follow the same structure: They define the goals negatively through the elimination of practices labeled unfair or contestability-limiting, without identifying when a market becomes fair or contestable.

In the Apple decision, the Commission found that the App Store’s terms unlawfully restricted developers’ rights under Article 5(4) to communicate with users, promote offers, and conclude contracts outside the App Store.[65] Two findings stand out.

First, the Commission found that a disclosure sheet shown when users attempted to leave the App Store was “not neutral and objective” and could “deter end users from exercising their right under Article 5(4)” (para. 103). The sheet warned that Apple “is not responsible for the privacy or security of purchases made on the web.” According to the Commission, that warning implied that transactions outside Apple’s ecosystem were unsafe and therefore “unfairly reinforce[d] Apple as a gatekeeper” (para. 103).

Second, the decision prevents Apple from charging for “gatekeeper value,” defined as “the value of the core platform service provided by a gatekeeper, on top of its market value, because of its position as an important gateway” (para. 197). Apple may charge for facilitating a developer’s initial acquisition of a new user. It may not monetize the positional advantage associated with its gatekeeper status. The decision offers no criteria for determining when a fee crosses the line between legitimate compensation and payment for gatekeeper value.

The Commission adds that fairness may justify structural changes to a gatekeeper’s business and charging models when those restrictions are lawful, proportionate, and necessary to achieve “objectives of general interest recognised by the Union” (para. 212). Yet it does not specify how far those changes must go before the market becomes fair. Fairness remains an open-ended standard. A gatekeeper can eliminate conduct the Commission has labeled unfair without knowing whether it has reached the required endpoint.

The decision treats contestability in much the same way. Allowing Apple to charge fees on contracts concluded after steering would “reinforce developers’ dependence” and reduce contestability (para. 160). Contestability therefore means reducing dependence and increasing openness. The decision provides no criteria for determining when dependence has fallen far enough. Its enforcement analysis verifies that Apple removed the restrictions (para. 312). It does not ask whether developers can reach users in practice or whether alternative distribution channels have grown.

The Meta decision follows the same architecture.[66] Meta’s “consent or pay” model required users either to permit the combination of personal data across Meta services or to pay a subscription for an alternative. The Commission found that model inconsistent with Article 5(2).

The decision approaches fairness through imbalance and coercion. Designation, it states, “is a strong indication of the data controller’s power to impinge on the freedom of choice of the data subject.” Recital 4 links that power to “a serious imbalance in bargaining power and, consequently, unfair practices and conditions” (para. 183). The binary choice prevented users from withholding consent “without suffering a detriment” (para. 189), particularly given Meta’s “strong lock-in and network effects” (para. 190).

Contestability again turns on data as an input. The restriction on combining data seeks to prevent gatekeepers from exploiting “potential advantages in terms of accumulation of data” that “raise barriers to entry and hinder contestability” (para. 32). Article 5(2)’s choice mechanism therefore serves as a means of limiting gatekeeper data accumulation rather than as an independent end.

The decision does not explain what equivalence between paying with money and paying with data would eliminate coercion. Nor does it specify how much user control or data separation would make the market sufficiently open. A gatekeeper can identify what the Commission has prohibited yet cannot determine when its practices have become fair or contestable enough.

The Commission added a third data point on July 23, 2026, when it fined Google €890 million in two noncompliance decisions. It imposed a €460 million fine for favoring Google’s services in Google Search in violation of Article 6(5) and a €430 million fine for restricting steering from Google Play in violation of Article 5(4). The Commission gave Google 60 days to comply and backed that deadline with potential periodic penalty payments.[67]

The Commission had not published the full decisions at the time of writing. Based on its announcement, they appear to follow the Apple and Meta template: conduct-specific prohibitions, reduced dependence as the operative theory, and no articulated endpoint.

D. Specification Proceedings: Parity Without Effects Analysis

If the infringement decisions show what fairness and contestability prohibit, the specification proceedings show what they require. The DMA’s redistributive logic is clearest here.

In its preliminary findings on Alphabet’s search-data-sharing obligation under Article 6(11), the Commission introduced a “principle of parity.”[68] Under that principle, Alphabet may retain no advantage from data it collects unless eligible third-party search providers receive the same data. The Commission defines eligible providers to include chatbots with search functions (paras. 2–3).

Alphabet must therefore share all query, view, click, and ranking data that it collects to optimize its services. It must provide those data as frequently as it accesses them itself (para. 15). This parity principle goes beyond Article 6(11)’s text, which requires access only on “fair, reasonable and non-discriminatory” (FRAND) terms.

The broader standard follows from Section III’s reconstruction. If collecting and “hoarding” data is inherently unfair, forcing a gatekeeper to share those data on equivalent terms corrects the imbalance. A narrower interpretation could have required meaningful access without equalizing inputs. That approach might have helped rivals challenge Google Search while preserving some of Alphabet’s advantage. The Commission’s conception of fairness instead demands parity.

The preliminary findings extend that parity in three ways. First, Alphabet must anonymize the shared data, monitor third parties’ compliance with privacy restrictions, and enforce retention and encryption requirements (paras. 35–50). The gatekeeper thus bears the cost and risk of policing the rivals the obligation seeks to empower.

Second, Alphabet may charge only the incremental costs of preparing, storing, and distributing the dataset, plus a return capped at its weighted average cost of capital. It cannot recover the costs of collecting the data. Small and medium-sized access seekers must receive the data below cost even when Alphabet demonstrates that it cannot otherwise cover its costs efficiently (paras. 71–78).

Third, the post-FRAND standard requires prices that allow beneficiaries to optimize their services “without Alphabet maintaining or obtaining an unfair advantage.” That test does not explain whether a rival’s inefficiency may account for a continuing performance gap or whether any remaining Alphabet advantage is presumptively unfair. The latter interpretation would make the obligation perpetual and impossible to satisfy conclusively.

The Apple interoperability decision under Article 6(7) separates contestability even more clearly from competitive effects.[69] The Commission repeatedly states:

[It] is not required to demonstrate that each of the measures are necessary to enable contestability, i.e. that (some) third parties are able to provide a “competitive offering” or an “alternative solution” which is enough for achieving contestability.

Such an inquiry, the Commission concludes, “would re-import the effects analysis, which the legislator explicitly rejected” (paras. 77, 330).

The Commission neither measures contestability before intervening nor tests it afterward. Contestability instead operates as a legal category that follows from the Act’s assumptions. The decision then translates that category into strict parity. Article 6(7) requires access to the “same,” rather than merely “similar,” features Apple uses (para. 61). Parity extends across the user experience, including ease of use, setup, data-transmission speed, and energy consumption.

Rivals’ mere ability to compete does not suffice. They must compete using identical inputs. The reason a third party cannot offer a competitive product is irrelevant, whether the obstacle arises from connectivity limitations or the product’s inferior quality.

Interoperability is a “results-based concept” for which the gatekeeper bears sole responsibility (para. 92). “Allowing” interoperability means proactively enabling it. Apple may have to develop application programming interfaces (APIs), which allow software systems to communicate, test for bugs, and provide third parties with “adequate and timely assistance” (para. 80). Its solution may impose no “undue costs—including development costs” on beneficiaries (para. 81). Apple must provide all of this without charge.

Apple must also build interoperability into new and updated features from inception—that is, by design—and release it to third parties at launch. This obligation applies even when third parties do not know that Apple is developing the feature (paras. 71, 146, fn. 208).

Two aspects of the decision are especially revealing. First, although the Commission rejects effects analysis, it repeatedly asserts beneficial effects. Equal access “fosters contestability and fairness,” which “in turn, improve[s] the innovation potential of the wider online platform economy.” The Commission also asserts that “more contestability for complementary or supporting services or hardware will bring more contestability for operating systems” and that mandated sharing “will also indirectly increase Apple’s incentives to innovate within iOS itself” (paras. 95–98).

The decision offers no evidence for those propositions. The Act’s preamble already assumes the benefits, so the Commission sees no need to demonstrate them. Those assumed effects then exclude contrary evidence. Examining whether forced sharing might weaken Apple’s incentives to innovate “would introduce the requirement to investigate on a case-by-case basis the effects on competition of gatekeepers’ given conduct, which the legislator explicitly rejected” (para. 66).

The decision simultaneously declares that “[a] main goal of Article 6(7) . . . is to enable innovation by third parties” (para. 95). The source of innovation therefore matters more than its substance.

Second, the Commission concedes that full compliance cannot eliminate Apple’s advantage. Apple will retain an “intrinsic advantage” because “only Apple decides which iOS features are being prioritized, planned and developed” (para. 74). A fully level playing field is therefore unattainable. Apple will always manage its own operating system, and that unavoidable advantage can justify continuing intervention.

The gatekeeper ultimately becomes both a competitor and the custodian of its rivals’ competitiveness. The DMA preserves the platform’s “dual role”—owner and participant, platform operator and commercial actor—but repurposes it. Recast as a quasi-public utility, the gatekeeper must exercise control over its platform for third parties’ benefit and at its own expense.

E. The First DMA Review: Redistribution as Success

The Commission’s first statutory report offers its own assessment of what two years of DMA enforcement have achieved.[70] It also provides a revealing account of how the Commission applies fairness and contestability. Three themes stand out.

First, the report defines “competition on the merits” in a way that discounts gatekeepers’ competitive advantages. It states that Article 6(5) will “curb gatekeepers’ power from vertical integration, promoting merit-based competition and innovation” (p. 24). The implication is that vertical integration represents a source of exclusion rather than competition on the merits.

The report applies the same logic to data. Article 6(2) allows market participants “to compete on the merits” by preventing gatekeepers from using business-user data to compete against those users (p. 11). The provision targets that use precisely because the data can improve gatekeepers’ offerings and increase competitive pressure. Competition by gatekeepers becomes unmeritorious “exploitation.”

This reasoning extends to artificial intelligence (AI). The report recounts trade associations’ requests that the Commission apply Article 6(5) to Google’s AI Overviews because their integration into search may entrench Alphabet’s position and reduce traffic to third parties (p. 26). It also notes that Article 6(2) “may apply to the provision of AI services if gatekeepers rely on non-public data of business users to compete with them” (p. 12).

The report’s conception of competition and innovation is therefore source-specific. It favors competitive pressure from third parties while discounting pressure from gatekeepers. This approach echoes the Apple specification proceeding, which described a principal goal of Article 6(7) as enabling innovation by third parties.

Contestability likewise means “strengthen[ing] the ability of alternative search engines to compete” (p. 15) by improving their position relative to gatekeepers. That relative improvement counts as progress even if it worsens gatekeepers’ products or reduces the overall quality of available offerings. The report accordingly treats greater uptake of services offered by firms other than gatekeepers as evidence of success (pp. 6, 14). Greater uptake of gatekeeper services implies failure.

The report identifies products such as Firefox, Aloha, Opera, and Vivaldi as beneficiaries because they are “smaller,” without defining smallness beyond their size relative to a gatekeeper (p. 14). It even counts Alphabet’s decision to permit account registration without an email address as progress because it “further reduc[es] user dependency on Gmail” (p. 23). That change does not create competition with Gmail as an email service. It simply reduces the number of Gmail users.

Third-party access, uptake, and presence also substitute for evidence of market outcomes. The availability of third-party alarm-clock apps on iOS is presumed to increase innovation without examining their quality or consumer demand (p. 17). The report similarly treats the launch of interoperable messaging services as confirmation of demand for interoperability without supplying usage figures. At the time of writing, one of the two cited services had not launched in the European Union. The other had few downloads and an average App Store rating of 3 out of 5 stars.

The report thus resolves Section III’s input-output ambiguity in favor of inputs. It assumes that favorable outcomes will follow from access, interoperability, and third-party presence because the Act defines those inputs ex lege as fair and contestability-enhancing.

Second, the report exposes a tension among user choice, contestability, and consumer welfare. It describes Article 5(2) as “giving users back control over their data” through a “real and unbiased choice” (pp. 6, 8). It also presents the provision as a means of “limiting gatekeepers’ accumulation of personal data” (p. 7). The first objective can be satisfied regardless of what users choose. The second can be satisfied only if users choose against data combination.

The report correctly states that “Art 5(2) of the DMA does not require any target threshold of how users exercise their choice” (p. 8). That assurance sits uneasily with the report’s framing and the Act’s broader effort to reduce gatekeepers’ accumulation of a crucial competitive resource. The asymmetry remains: Data accumulation is desirable when Articles 6(9) and 6(10) facilitate it for third parties and undesirable when gatekeepers undertake it.

Third, the report casts gatekeepers as financiers of the DMA’s redistributive project. Article 6(10) requires them to provide commercially valuable data free of charge, even though Amazon charges for portability solutions outside the European Union (p. 10). Steering beyond initial customer acquisition must be free (p. 15). Gatekeepers must also fund alternative dispute-resolution mechanisms (p. 29).

The report applies the same approach to consumer profiling. Gatekeepers must disclose their profiling techniques to facilitate contestability by allowing rival platforms to distinguish themselves through stronger privacy guarantees (p. 39). The obligation requires gatekeepers to reveal information resembling business secrets without imposing a comparable duty on third parties.

The Commission goes further when compliance creates conflicts among business users. Suppliers—including hotels, airlines, and merchants—complained that Alphabet’s Article 6(5) compliance measures reduced their visibility in Google Search. The Commission responded that any solution must “consider the interests of all participants in the market, including merchants, train operators, hotels, airlines, as well as vertical search services and content creators” (pp. 25–26).

The DMA thus makes gatekeepers responsible for managing tradeoffs among the groups the Act seeks to benefit. Yet neither the Act nor the report provides a principle for resolving those conflicts.[71]

F. Joint DMA–GDPR Guidance: Choice as Data Redistribution

The final source is the draft joint guidance from the Commission and the European Data Protection Board (EDPB) on the relationship between the DMA and the General Data Protection Regulation (GDPR).[72] It offers the first joint institutional account of how the DMA’s goals interact with a neighboring and potentially competing regulatory regime.[73]

The Guidelines present the two regimes as harmonious. They describe them as “complementary in terms of goals and in terms of the protections provided.” They also posit a reinforcing cycle in which “[g]reater fairness in and contestability of digital markets lead to more choice for individuals, which in turn should increase incentives for gatekeepers and their business users to develop and implement data protection and privacy features.”

The Guidelines offer no evidence for that relationship or explain why greater contestability should improve privacy. More firms might instead have stronger incentives to monetize data to compensate for their lack of scale. The Guidelines then devote substantial attention to managing frictions that their harmony narrative obscures, including consent requirements for business-user data access under Article 6(10), anonymization under Article 6(11), and security exceptions under Article 7.

The Guidelines make the instrumental role of choice explicit. Article 5(2)’s specific-choice requirement “seeks to address the enhanced access to personal data that provides gatekeepers with potential advantages in terms of data accumulation, which in turn raises entry barriers and hinders contestability.” Offering that choice “is a means to address the accumulation of personal data by gatekeepers and the correlated erosion of market contestability.” Choice is therefore a mechanism for reducing gatekeepers’ data holdings.

The treatment of data portability reveals the same asymmetry. The Guidelines criticize data accumulation by gatekeepers while praising continuous portability under Article 6(9) for “addressing data accumulation by gatekeepers and providing a stable source of data for the improvement and creation of new services.” Data accumulation creates a structural harm when data remain with a gatekeeper and an innovation input when third parties receive them. The gatekeeper becomes, in the Guidelines’ words, a “stable source of data” for its rivals. This is Dialectical Fairness in practice.

The Guidelines also make an important concession. Under Article 5(2), gatekeepers must offer users who withhold consent a “less personalised but equivalent alternative” that is “not . . . different or of degraded quality.” The Guidelines do, however, permit degraded quality when “a degradation of quality is a direct consequence of the gatekeeper not being able to process such personal data.”

That exception recognizes that personal data can improve product quality and that restricting their use can make a service worse. This tension runs throughout the enforcement record. The DMA seeks to reduce gatekeepers’ data-driven advantages even though those same advantages may support product improvements.

The Guidelines complicate the analysis in one respect. They frame choice as protecting end users’ informational self-determination, meaning their control over personal data. That framing gives consumers’ interests independent weight that the First DMA Report rarely affords them. The redistributive flows are also conditional. Article 6(10) requires user consent before business users receive personal data, while Article 6(11) requires anonymization before search data may be shared.

Yet if end-user self-determination controlled the analysis, the direction of users’ choices would not matter. The Guidelines’ own account of Article 5(2) shows that it does. The choice mechanism aims specifically to reduce gatekeepers’ data accumulation and the competitive advantages it creates.

The Guidelines therefore reinforce the pattern developed across the enforcement record. Fairness operates as a structural presumption against gatekeepers, while contestability calls for redistributing advantages toward their rivals. The official rhetoric assumes harmony among privacy, competition, and innovation even as the detailed rules must manage tradeoffs among them. Theoretical premises, rather than demonstrated effects, continue to determine the expected outcomes.

V. Reformulating Fairness and Contestability

Reading the Act alongside its enforcement record permits a clearer account of its twin goals. Fairness emerges as gatekeeper-financed structural redistribution, while contestability directs competitive opportunity toward rivals and business users. Both rest on unrebuttable premises, assume broad benefits despite unresolved tradeoffs, and use consumer choice to advance a single redistributive program.

A. Unrebuttable Premises and Assumed Benefits

The DMA rests heavily on theory, but the law insulates that theory from contradictory evidence in two ways.

First, the Act converts its assumptions into statutory premises that enforcement cannot revisit. As the Commission repeatedly explains, contestability is a legal category rather than an empirical condition open to dispute. It follows from the definition of a gatekeeper, the list of core platform services, and the recitals. If market developments disprove those assumptions, a gatekeeper cannot rebut them during enforcement. Only legislative change can correct them.

Second, the DMA assumes that achieving fairness and contestability benefits everyone except gatekeepers. It does not account for tradeoffs among different business users or between business users and consumers. Nor does it assign weight to gatekeepers’ compliance costs, which the Act treats as effectively limitless.

B. Fairness as Structural Redistribution

Fairness under the DMA means correcting a presumed structural imbalance between gatekeepers and those who depend on their core platform services. Properly reformulated, it has four features:

It is axiomatic. The Structural Unfairness Axiom presumes unfairness from gatekeeper status and establishes it conclusively at designation. The Commission does not infer unfairness from specific conduct, and gatekeepers cannot rebut it with evidence of superior products, consumer benefits, or economic efficiency. The designation decisions expressly exclude such evidence.

It is dialectical. Fairness operates by leveling down gatekeepers while leveling up business users and rivals. It does not seek to restore a neutral baseline or prevent discrete harms.

It is distributive rather than commutative. It redistributes value and opportunity among groups rather than policing the fairness of particular exchanges. Advantages rooted in scale, integration, or data accumulation may therefore be neutralized or reassigned even when they improve products and services.

It is gatekeeper-financed. Gatekeepers bear the costs of correction, including free access, free portability, compliance systems, and reconciling data utility with privacy. The Act implicitly assumes that this redistribution leaves everyone else no worse off.

C. Contestability as Competitive Redistribution

Contestability under the DMA means transferring competitive opportunity from gatekeepers to actual or potential rivals. It also has four features:

It is status-based. The Commission infers limited contestability from a gatekeeper’s scale and duration. Contestability attaches to firms rather than markets, and evidence of entry, growth, switching, or multihoming cannot rebut it. Those same facts would demonstrate contestability in its ordinary economic sense.

It is source-dependent. Competition, innovation, and data accumulation support contestability when they come from firms other than gatekeepers and undermine it when they come from gatekeepers. Under the Scale–Unfairness Paradox, gatekeeper innovation and growth reinforce rather than rebut concerns about weak contestability.

It is produced rather than diagnosed. Legal obligations seek to create contestability rather than identify an existing market condition. This reverses Baumol’s conception, under which the credible threat of entry makes a market contestable by disciplining incumbents.

It is input-measured. The Commission measures success through third-party access, uptake, and presence. It assumes rather than demonstrates the resulting effects on price, quality, and innovation.

D. One Redistributive Program

Under this reformulation, fairness and contestability form a single program. Fairness supplies the diagnosis—a structural imbalance presumed at designation. Contestability supplies the remedy—an ongoing redistribution of competitive opportunity toward rivals and business users. User choice serves both goals and gains value when it moves activity away from gatekeepers.

This relationship explains why the DMA can treat “fair and contestable” as a hendiadys, or two terms expressing one idea. Fairness and contestability represent distinct stages of the same redistributive logic.

VI. Implications of the DMA’s Unresolved Goals

Three implications follow from the gaps that remain. The DMA supplies no benchmark or endpoint for compliance, lacks an internal mechanism for detecting and correcting regulatory error, and risks exporting these features to jurisdictions that adopt its language without fully embracing its redistributive aims.

A. No Benchmark or Endpoint

The most fundamental gap is the absence of any benchmark for determining when fairness or contestability has gone far enough. The Structural Unfairness Axiom treats core platform-service markets as structurally distinct and presumes they were never fair. The DMA therefore has no prior equilibrium to restore and no historical baseline against which to measure progress.

The enforcement record supplies no substitute. Infringement decisions define both goals negatively through the elimination of prohibited practices, without identifying an endpoint. Specification proceedings elevate parity into the governing standard while conceding that full parity is unattainable because only the gatekeeper decides which features of its platform to develop. The First DMA Report measures success through third-party presence, which can always increase, rather than through any outcome-based metric.

The Bidirectional Unfairness Inference compounds the problem. Unsatisfactory outcomes after full structural compliance support an automatic inference that structural defects remain. Compliance therefore cannot protect a gatekeeper from further intervention, and the gatekeeper can never demonstrate conclusively that it has done enough.

That indeterminacy undercuts defenders’ claim that the DMA offers greater predictability than case-by-case antitrust enforcement.[74]

B. No Mechanism for Detecting or Correcting Error

The DMA’s architecture forecloses the usual mechanisms for detecting and correcting regulatory error. It excludes effects analysis and efficiency defenses by design. The legislature quantified the Act’s projected benefits once and converted them into statutory premises that enforcement need not verify.

The enforcement record shows the result. Claims about innovation move from the impact assessment to the preamble and then into individual decisions without gaining evidentiary support. The Act excludes by law the possibility that compliance could reduce product quality or weaken innovation incentives. A regime that treats incumbent growth as failure and discounts quality improvements by gatekeepers cannot distinguish successful regulation from harmful regulation. Both appear as a reduction in gatekeeper advantage.[75]

The framework can distinguish them only if reducing gatekeeper advantage is itself the objective, regardless of cost. Yet the tradeoffs the Act refuses to consider do not disappear. It resolves them silently and in advance against gatekeepers and, potentially, against consumers who value the integrated products and data-driven quality the Act targets.

C. Implications for DMA Importers

The reconstruction also matters beyond the European Union. The United Kingdom, Japan, Thailand, Vietnam, Türkiye, and Brazil have adopted or are considering DMA-style regimes, often copying the EU law’s operative language and twin goals.[76]

These jurisdictions would import an internally coherent redistributive program rather than a neutral toolkit for creating fair and contestable digital markets. That program includes a conclusive presumption of structural unfairness, a remedial strategy that levels down incumbents and levels up rivals, an instrumental conception of user choice, and a source-dependent, input-measured account of contestability with no defined endpoint.

Legislatures that want this program should adopt it knowingly. Those seeking consumer-oriented contestability or greater innovation regardless of its source should not assume the DMA will deliver those outcomes. The Act was not designed to do so.

VII. Conclusion: A Direction Without a Destination

This white paper argues that the DMA contains a coherent but unstated conception of fairness and contestability. Fairness seeks to correct a presumed structural imbalance. It is axiomatic, dialectical, distributive, and gatekeeper-financed. Contestability transfers competitive opportunity toward rivals. It is status-based, source-dependent, legally produced, and measured through inputs rather than market outcomes. User choice serves both goals by directing activity away from gatekeepers.

The enforcement record confirms this redistributive logic. The impact assessment embedded its predicted harms and benefits in the Act’s premises. Designation decisions treat contestability as a status inferred from scale. Infringement decisions identify prohibited conduct without defining an endpoint. Specification proceedings elevate parity while excluding effects analysis. The First DMA Report and joint DMA–GDPR guidance treat rival access, uptake, and data accumulation as progress, largely without testing effects on price, quality, innovation, or consumer welfare.

Two years of enforcement have therefore clarified the DMA’s direction but not its calibration. The Act identifies who should gain and who should lose without saying how much, for how long, or against what benchmark. It assumes away tradeoffs among business users, gives consumer welfare no controlling weight, and offers no internal mechanism for distinguishing beneficial intervention from harmful intervention. Full compliance cannot guarantee finality because disappointing outcomes can always support an inference that structural defects remain.

These omissions matter within the European Union and wherever lawmakers borrow the DMA’s language. Jurisdictions seeking consumer-oriented contestability or greater innovation from any source should recognize that the Act embodies a more specific redistributive program.

We now understand more clearly what fairness and contestability mean under the DMA. The Act tells markets which direction to move, but it still cannot say when they have arrived.

VIII. Glossary of Terms

This white paper uses several original terms to describe recurring patterns in the DMA’s text and enforcement. These terms are analytical tools rather than statutory categories. The following glossary defines each and explains its role in reconstructing the Act’s goals.

A. BUI (Bidirectional Unfairness Inference)

The Bidirectional Unfairness Inference (BUI) describes reasoning used without objective or agreed benchmarks for market performance. Under the BUI, outcomes that depart from a regulator’s preferred state support an inference that the market is structurally unfair. Conversely, asymmetries in rights, obligations, or constraints imply that the resulting prices, economic rents, market structure, or distribution must also be unfair. Market structure and outcomes thus serve as mutual evidence of unfairness.

The BUI is autopoietic, meaning self-generating, and it is self-referential. Neither unfairness nor the relevant counterfactual—the outcome expected under alternative conditions—has an independent definition. Structural asymmetries and deviations from regulatory expectations therefore validate each other. Structure explains the outcomes, while the outcomes confirm the diagnosis of an unfair structure.

Consider Apple’s 30% commission on in-app purchases. The fee is presumed excessive because Apple controls the in-app payment system and restricts steering, practices characterized as unfair. Its perceived excessiveness then serves as evidence that the market itself is structurally unfair. The diagnosis rests on reciprocal inferences from market design and observed outcomes rather than an external benchmark.

B. Dialectical Fairness

Dialectical Fairness describes fairness as a relational and directional process that simultaneously reduces gatekeepers’ advantages and improves the position of rivals or business users. Gatekeepers are made worse off so that others may be made better off. Fairness lies in the relative shift between those positions rather than in reaching a fixed equilibrium.

Constraining gatekeepers and empowering rivals are therefore linked. Any persistent gatekeeper advantage remains a potential target for correction.

Dialectical Fairness is dynamic and nonterminal, with no built-in endpoint. It supports continuing, asymmetric intervention to limit the renewal or expansion of gatekeeper advantages and rebalance competitive positions, rather than restoring a neutral baseline or remedying discrete harms.

C. DSUA (DMA Structural Unfairness Axiom)

The DMA Structural Unfairness Axiom (DSUA) is the Act’s foundational assumption that digital markets suffer from endemic unfairness and weak contestability. The premise is axiomatic because evidence cannot rebut it during enforcement. Changing it would require legislative amendment or repeal. The DMA’s obligations and interventions flow from—and find justification in—this axiom.

D. Source-Dependent Competition and Innovation

Source-Dependent Competition and Innovation describes a view of competitive activity whose value depends on its source. Conventional competition law protects the competitive process without favoring which firm succeeds. The DMA instead credits competition and innovation from rivals and entrants while discounting the same activity from gatekeepers, regardless of their respective effects on consumers.

Gatekeeper competition and innovation may therefore count against fairness and contestability. Under the Scale–Unfairness Paradox, no gatekeeper can innovate or grow its way out of the presumption of unfairness.

E. SUP (Scale–Unfairness Paradox)

The Scale–Unfairness Paradox (SUP) arises because greater scale can simultaneously improve a core platform service’s quality and attractiveness while increasing the risk of structural unfairness. The DMA treats the same features that make gatekeepers successful—network effects, data, and user growth—as sources of bottleneck power and weak contestability.

The SUP produces a second paradox. By constraining gatekeeper scale while helping rivals grow, the DMA may eventually turn successful rivals into gatekeepers subject to the same restrictions.

Paragraph 84 of the Impact Assessment illustrates this logic:

The bigger the platform, the stronger the indirect network effects, the larger the amount of data and the higher its quality. This leads to increased insight into user profiles and preferences, allowing gatekeepers to offer them more personalized services and advertisements, thus attracting even more users and reinforcing consumer lock-in, single-homing and rendering switching to alternative platforms more difficult.

[1] Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on Contestable and Fair Markets in the Digital Sector (Digital Markets Act), 2022 O.J. (L 265) 1 [hereinafter DMA].

[2] See, e.g., Giuseppe Colangelo, In Fairness We (Should Not) Trust: The Duplicity of the EU Competition Policy Mantra in Digital Markets, 68 Antitrust Bull. 618 (2023).

[3] See Nicolas Petit, The Proposed Digital Markets Act (DMA): A Legal and Policy Review, 12 J. Eur. Competition L. & Prac. 529 (2021).

[4] On the Sherman Act as a “common-law statute” whose content courts developed through adjudication, see Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877, 899 (2007). On the incremental development of Articles 101 and 102 of the Treaty on the Functioning of the European Union, see Pablo Ibáñez Colomo, The Shaping of EU Competition Law (Cambridge Univ. Press 2018).

[5] See, e.g., Belle Beems, The DMA in the Broader Regulatory Landscape of the EU: An Institutional Perspective, 19 Eur. Competition J. 1, 27 (2023); Geoffrey A. Manne, Lazar Radic & Dirk Auer, Regulate for What? A Closer Look at the Rationale and Goals of Digital Competition Regulations, 22 Berkeley Bus. L.J. 201 (2025).

[6] See Digital Markets, Competition and Consumers Act 2024, c. 13 (UK); Act on Promotion of Competition for Specified Smartphone Software, Act No. 58 of 2024 (Japan); Projeto de Lei No. 4675/2025, Câmara dos Deputados (Braz.).

[7] See Manne, Radic & Auer, supra note 5 (arguing that the stated goals of DMA-style regulations diverge from their actual objectives).

[8] Giorgio Monti, The Digital Markets Act: Improving Its Institutional Design, 5 Eur. Competition & Regul. L. Rev. 90, 91–92 (2021).

[9] Richard Feasey & Giorgio Monti, DMA Process and Compliance, in Implementing the DMA: Substantive and Procedural Principles 94, 120 (Alexandre de Streel coord., Ctr. on Regul. in Eur. 2024) [hereinafter CERRE].

[10] Jacques Crémer et al., Fairness and Contestability in the Digital Markets Act, 40 Yale J. on Regul. 973, 975–77 (2023).

[11] Id. at 975–76; see also DMA, supra note 1, arts. 12, 18–19, recital 65.

[12] Friso Bostoen, Understanding the Digital Markets Act, 68 Antitrust Bull. 263 (2023).

[13] Pinar Akman, Regulating Competition in Digital Platform Markets: A Critical Assessment of the Framework and Approach of the EU Digital Markets Act, 47 Eur. L. Rev. 85 (2022).

[14] Petit, supra note 3.

[15] Colangelo, supra note 2, at 620.

[16] Monti, supra note 8, at 91–92.

[17] Petit, supra note 3.

[18] Akman, supra note 13.

[19] See Bostoen, supra note 12 (noting that the DMA’s recitals connect its anticipated improvements to innovation and consumer benefits, reinforcing the regime’s proximity to competition-policy benchmarks despite its ex ante structure).

[20] Monti, supra note 8.

[21] Rupprecht Podszun, Philipp Bongartz & Sarah Langenstein, Proposals on How to Improve the Digital Markets Act (working paper, Feb. 18, 2021), https://ssrn.com/abstract=3788571.

[22] Manne, Radic & Auer, supra note 5.

[23] Pierre Larouche & Alexandre de Streel, The European Digital Markets Act: A Revolution Grounded on Traditions, 12 J. Eur. Competition L. & Prac. 542 (2021).

[24] Manne, Radic & Auer, supra note 5, at 217 (describing a “Schrödinger’s [digital competition regulation]” scenario in which “the same substantive rules simultaneously are and are not competition law”).

[25] Crémer et al., supra note 10, at 1006–08.

[26] CERRE, supra note 9, at 14.

[27] Petit, supra note 3.

[28] Akman, supra note 13.

[29] Id.

[30] Manne, Radic & Auer, supra note 5.

[31] Giuseppe Colangelo & Alba Ribera Martínez, The Metrics of the DMA’s Success, 16 Eur. J. Risk Regul. 1017 (2025).

[32] Oles Andriychuk, Do DMA Obligations for Gatekeepers Create Entitlements for Business Users?, 11 J. Antitrust Enf’t 123, 123–32 (2023) (characterizing the DMA as “punitive”).

[33] DMA, supra note 1, recital 79 & arts. 8(1), 12, 18–19 & 53.

[34] DMA, supra note 1, recital 33.

[35] Id. recital 62.

[36] See id. recitals 2, 13, 20 & 32–33.

[37] The Act likewise does not distinguish companies whose dependence on a CPS resulted from a lack of foresight or diversification from those whose dependence was not self-inflicted.

[38] See DMA, supra note 1, recitals 2–5, 13 & 32–33 (attributing imbalances to features such as extreme economies of scale, strong network effects, data-driven advantages, lock-in, and a lack of multihoming).

[39] Id. art. 3(2).

[40] See id. recitals 15 & 17 (identifying monetization potential and access to capital markets as indicia of gatekeeper status); id. recital 25 (identifying high relative growth as an indicator of entrenchment).

[41] Id. recital 36.

[42] Id. recital 72 (emphasis added).

[43] Id. recital 46 (asserting further that it is unfair for a gatekeeper to benefit from its “dual role” as both provider and user of a core platform service).

[44] Id. arts. 6(5), (7) & (10).

[45] Id. recital 70; see also id. recital 37.

[46] Id. art. 6(3) & recitals 49 & 63.

[47] Id. art. 5(3) & recital 39.

[48] See, e.g., Christophe Carugati, The Digital Markets Act Is About Enabling Rights, Not Obliging Changes in Market Conditions, Bruegel (Sept. 6, 2023), https://www.bruegel.org/analysis/digital-markets-act-about-enabling-rights-not-obliging-changes-market-conditions.

[49] DMA, supra note 1, recitals 5, 45 & 107; see also id. recitals 6–7 (linking unfair practices to “negative societal and economic implications” and the “proper functioning of the internal market”).

[50] Id. recitals 11 & 23; see also id. recital 5 (stating that the DMA does not address the forms of market power covered by Articles 101 and 102 TFEU).

[51] Id. recital 3.

[52] Id. recital 44.

[53] Id. recital 61 & art. 6(11).

[54] Id. art. 18(3).

[55] Id. recital 75.

[56] Id. recitals 53, 55 & 57; see also id. art. 6(5) (permitting rankings based on transparent, fair, and nondiscriminatory conditions).

[57] Id. recital 64.

[58] See id. recital 79 & arts. 8(8), 9(4), 12(2)(b), 18–19 & 53.

[59] Eur. Comm’n, Commission Staff Working Document: Impact Assessment Report Accompanying the Proposal for a Regulation of the European Parliament and of the Council on Contestable and Fair Markets in the Digital Sector (Digital Markets Act), SWD(2020) 363 final (Dec. 15, 2020). Parenthetical paragraph references in this subsection refer to this document unless otherwise indicated.

[60] See Manne, Radic & Auer, supra note 5; Lazar Radic & Dirk Auer, A Europe Fit for the Age of Startups: Rhetoric and Reality in the EU’s Digital Package (Int’l Ctr. for L. & Econ. 2025), https://laweconcenter.org/wp-content/uploads/2025/07/Is-a-Europe-fit-For-the-Digital-Age-also-Fit-for-the-Start-up-Age.pdf.

[61] Eur. Comm’n Regul. Scrutiny Bd., Opinion on the Proposal for a Regulation of the European Parliament and of the Council on Contestable and Fair Markets in the Digital Sector (Digital Markets Act), SEC(2020) 437 (Dec. 10, 2020).

[62] Harold Demsetz, Information and Efficiency: Another Viewpoint, 12 J.L. & Econ. 1 (1969).

[63] Eur. Comm’n Decisions of Sept. 5, 2023, designating Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft as gatekeepers under Article 3 of Regulation (EU) 2022/1925; Eur. Comm’n Decision of May 13, 2024, designating Booking.com as a gatekeeper under Article 3 of Regulation (EU) 2022/1925. Parenthetical references in this subsection refer to the respective designation decisions.

[64] See William J. Baumol, Contestable Markets: An Uprising in the Theory of Industry Structure, 72 Am. Econ. Rev. 1 (1982); William J. Baumol, John C. Panzar & Robert D. Willig, Contestable Markets and the Theory of Industry Structure (Harcourt Brace Jovanovich 1982).

[65] Eur. Comm’n Decision of Apr. 23, 2025, Case DMA.100109—Apple (noncompliance with Article 5(4) of Regulation (EU) 2022/1925) [hereinafter Apple Anti-Steering Decision].

[66] Eur. Comm’n Decision of Apr. 23, 2025, Case DMA.100055—Meta (noncompliance with Article 5(2) of Regulation (EU) 2022/1925); see also Regulation (EU) 2016/679 of the European Parliament and of the Council of Apr. 27, 2016 (General Data Protection Regulation), 2016 O.J. (L 119) 1 [hereinafter GDPR] (providing the consent standard incorporated into Article 5(2) of the DMA).

[67] Press Release, Eur. Comm’n, Commission Fines Google €890 Million for Breaches of the Digital Markets Act (July 23, 2026), https://digital-markets-act.ec.europa.eu/commission-fines-google-eur890-million-breaches-digital-markets-act-2026-07-23_en.

[68] Eur. Comm’n Preliminary Findings of Apr. 16, 2026, Case DMA.100209—Alphabet (specification proceedings under Article 6(11) of Regulation (EU) 2022/1925), https://ec.europa.eu/competition/digital_markets_act/cases/202616/DMA_100209_1986.pdf.

[69] Eur. Comm’n Decision of Mar. 19, 2025, Specifying the Measures to Be Adopted by Apple Pursuant to Article 6(7) of Regulation (EU) 2022/1925 (interoperability with connected physical devices).

[70] Eur. Comm’n, Report on the Review of Regulation (EU) 2022/1925 (Digital Markets Act), COM(2026) 178 final (Apr. 28, 2026). Parenthetical page references in this subsection refer to this document.

[71] The report does not address whether a compliance solution must leave every affected business user no worse off—a Pareto improvement—or may trade some users’ interests against others’ and, if so, under what principle. See also id. at 48 (acknowledging “the concerns raised by the media industry, including in relation to traffic losses”).

[72] Eur. Comm’n & Eur. Data Prot. Bd., Joint Guidelines on the Interplay Between the Digital Markets Act and the General Data Protection Regulation (version for public consultation, Oct. 9, 2025), https://www.edpb.europa.eu/public-consultations/joint-guidelines-on-the-interplay-between-the-digital-markets-act-and-the_en. Quotations in this subsection are from this document.

[73] See GDPR, supra note 66.

[74] See DMA, supra note 1, recital 79 (invoking predictability as the rationale for a “predefined standard”).

[75] On error-cost analysis in this setting, see Manne, Radic & Auer, supra note 5; Colangelo & Ribera Martínez, supra note 31 (arguing that identifying the DMA’s goals is a prerequisite to measuring its success).

[76] See supra note 6. On the incorporation of DMA-style provisions directly into national competition laws, see Manne, Radic & Auer, supra note 5.

Executive Summary

The European Commission responded very differently to two sets of courtroom defeats. After the General Court annulled the merger prohibitions in Airtours, Schneider, and Tetra Laval in 2002, the Commission launched sweeping institutional, procedural, and substantive reforms. Its response to the later annulments of infringement decisions under Article 102 of the Treaty on the Functioning of the European Union (TFEU), which prohibits abuse of a dominant position, has been far narrower.

The 2002 merger judgments exposed weak internal checks, procedural defects, insufficient evidence, and economic analysis too dependent on market structure. The Commission responded by reorganizing merger review, strengthening the Hearing Officer, creating independent economic and peer review, expanding parties’ access to evidence, and adopting a broader effects-based legal framework. These reforms improved the Commission’s ability to test its theories before acting and produce decisions capable of surviving judicial review.

Intel, Qualcomm, and Bulgarian Energy Holding revealed similar weaknesses in Article 102 enforcement. The courts found failures to document and disclose relevant third-party evidence, consider exculpatory material, and connect theories of harm to realistic exclusionary effects. The judgments confirm that the Commission retains discretion to pursue legitimate theories of abuse. It must, however, support those theories with coherent evidence, respect the rights of defense, and show that the challenged conduct could exclude competitors under actual market conditions.

These decisions warrant a targeted review of the safeguards governing Article 102 investigations. The revision of Regulation 1/2003 should strengthen interview records, case-file completeness, access to evidence, independent economic review, and internal challenges to case teams’ conclusions. The Commission’s draft Article 102 guidelines should also reflect the courts’ effects-based jurisprudence rather than rely on presumptions that substitute conduct categories for competitive analysis. Strong internal checks will conserve enforcement resources, improve legal certainty, and reinforce the legitimacy of Commission decisions as competition policy faces greater political and industrial-policy pressures.

Introduction

The European Commission has responded very differently to two sets of courtroom defeats. In 2002, the Court of First Instance—now the General Court—annulled three merger prohibitions in quick succession: Airtours, Schneider, and Tetra Laval.[1] The reversals became the Commission’s “Airtours moment.” It quickly launched major institutional, procedural, and substantive reforms. That reform project continues in its April 2026 draft merger guidelines.

More recently, European Union courts overturned Commission infringement decisions under Article 102 of the Treaty on the Functioning of the European Union (TFEU), which prohibits abuse of a dominant market position. The principal cases were Intel, Qualcomm, and Bulgarian Energy Holding.[2] These decisions echoed the 2002 merger cases. Across both groups, the courts stressed the rights of defense and to be heard, including access to a complete evidentiary file and exculpatory material; analysis of competitive effects grounded in actual market conditions; and evidence strong enough to support the Commission’s theory of harm.

Yet the Commission’s responses diverged. It answered the 2002 judgments with broad merger reforms. Its response to the Article 102 judgments has been narrower and, in one important respect, counterintuitive. The Commission’s 2024 draft Article 102 guidelines rely more heavily on conduct categories and presumptions, even as the case law demands evidence that conduct can exclude competitors.

Merger review and unilateral-conduct enforcement differ in important ways. Merger analysis asks what a proposed transaction is likely to do, usually under tight statutory deadlines. Article 102 cases examine past conduct and often unfold over years. Yet the same institutional principle links both fields: Sound internal checks and strong due-process protections improve accuracy and produce decisions more likely to survive judicial review. That premise matters as European competition enforcement faces heightened public and political scrutiny.

Section 1 of this issue brief examines the merger annulments in Airtours, Schneider, and Tetra Laval. Section 2 considers the institutional, procedural, and substantive reforms that followed. Section 3 turns to the Article 102 annulments in Intel, Qualcomm, and Bulgarian Energy Holding. Section 4 draws together the broader implications, and Section 5 concludes.

I. The Airtours Moment: Three Merger Annulments

European merger control reached what contemporary observers called its “high watermark” between 1999 and 2001. The European Commission prohibited an unprecedented five transactions in 2001 alone, drawing the attention of business leaders and investors worldwide to its merger-review process.[3]

That record of aggressive enforcement met a sharp judicial response in 2002. Within five months, the General Court annulled the Commission’s merger prohibitions in Airtours, Schneider, and Tetra Laval. No European Union court had previously annulled a Commission merger prohibition. The three judgments therefore challenged both the outcomes of these cases and the methods that produced them.

The judgments exposed three related weaknesses. The Commission’s institutional structure lacked effective internal checks and procedural safeguards. Its evidence did not meet the required legal standard. And its analysis relied too heavily on formal indicators such as market shares and concentration, without adequately establishing the likely competitive effects. By scrutinizing the Commission’s evidence and economic reasoning more closely, the court established principles that reshaped European merger control and drove reforms that continue to influence it today.

A. Weak Internal Checks and Procedural Safeguards

One contemporary account described the Airtours, Schneider, and Tetra Laval judgments as exposing a “poorly organized merger review process” in which the Commission failed to compile evidence carefully or ground its decisions in sufficient facts.[4]

The criticism centered on the Commission’s institutional structure for merger review. Within the Directorate-General for Competition (DG Competition), the Merger Task Force assessed the evidence, developed a theory of harm—an explanation of how a merger could harm competition—decided whether the evidence established that theory, and recommended either approval, approval subject to conditions, or prohibition.[5]  Effective internal safeguards did not adequately counterbalance this concentration of responsibilities. In Airtours, Schneider, and Tetra Laval, the General Court ultimately found that the evidence did not support the Commission’s decisions.

In Schneider, the General Court found that the Commission’s Statement of Objections—the formal document setting out its competition concerns—“did not permit Schneider to assess the full extent of the competition problems” alleged by the Commission.[6] That omission denied Schneider an opportunity to propose, “properly and in good time,” remedies broad enough to address those concerns.[7] Because remedies offered the only practical means of avoiding prohibition, the court considered this defect especially serious. It held that the Commission had violated Schneider’s rights of defense in several respects, invalidating the decision.[8]

The reasoning in Airtours was similar. The Commission’s manifest errors deprived Airtours of a meaningful opportunity to propose effective remedies. The Commission neither articulated its theory of harm clearly nor disclosed it early enough, then rejected Airtours’ final commitments because they came too late in the process.

In Tetra Laval, the General Court restated the principles governing access to the Commission’s case file.[9] Access allows parties to exercise their rights of defense effectively, particularly when they face an adverse decision, fine, or penalty. Although denying adequate access can justify annulment, the court found no such violation in Tetra Laval.[10]

More broadly, the three cases exposed the costs of weak internal checks. Without an effective mechanism for identifying evidentiary and analytical flaws early, judicial review became even more important. The reforms discussed below targeted these weaknesses.

B. The Commission’s Evidentiary Burden

The second strand of the merger judgments concerned the evidence needed to justify prohibition. In Airtours, the General Court held that the Commission must produce “convincing evidence” of its theory of harm[11] and “prove conclusively” that the merger would create an anticompetitive market structure.[12] The alleged harm was collective dominance—a situation in which several firms can coordinate their conduct without an express agreement.

The Commission fell short. The court found that, “far from basing its prospective analysis on cogent evidence,” the Commission had made fundamental errors in assessing whether the merger would create collective dominance. [13]  It therefore had not proved to the required legal standard that the merger would impede effective competition.

The General Court identified similar defects in Schneider. It called some of the Commission’s findings “abstract,”[14] found that the supporting evidence was sometimes insufficient,[15] and criticized other findings as lacking evidence or precision.[16] Taken together, these errors deprived the Commission’s economic assessment of probative value—the capacity to prove the proposition for which it was offered.[17]

In Tetra Laval, the Commission likewise failed to meet its burden. It had not shown convincingly that Tetra Laval could leverage its dominant position—use market power in one market to gain dominance in another—or that eliminating Sidel as a potential competitor would strengthen the merged company’s position.[18] The court found “no cogent evidence” supporting the latter claim.[19]

Because merger review requires predictions about future market conditions, the court required “sufficiently convincing” evidence and a “particularly plausible” forecast.[20] It found neither.[21]

C. From Market Structure to Competitive Effects

The General Court did not reject the theories of harm themselves: collective dominance in Airtours and conglomerate leveraging in Tetra Laval. Instead, it demanded rigorous economic analysis showing that the predicted anticompetitive effects were likely. In Schneider, the court found that the Commission had not met its burden of proof. Its analysis lacked a coherent economic foundation because it did not properly evaluate countervailing evidence and relied on inconsistent or unclear market definitions.[22] The judgment shifted the inquiry away from formal indicators such as market structure, market shares, and concentration measures and toward likely competitive effects.

In Airtours, the Commission relied heavily on a reduction from four major competitors to three. It argued that the remaining firms would have strong incentives to coordinate tacitly—that is, align their conduct without an express agreement. The General Court held that this structural change alone could not establish collective dominance. The required prospective analysis “calls for close examination in particular of the circumstances which are relevant for assessing the effects of the concentration on competition,” supported by convincing evidence.[23]

The court then identified conditions relevant to whether tacit coordination could endure. Consumers might defeat it by switching to smaller competitors. Coordination might also unravel if the three large firms lacked an effective way to punish a member that departed from their shared course of conduct.[24] By requiring evidence on these mechanisms, the court aligned the legal concept of collective dominance with the economic concept of tacit coordination and supplied a framework for future cases.[25]

In Tetra Laval, the General Court recognized that the Merger Regulation can reach conglomerate mergers—transactions involving firms in neighboring or complementary markets.[26] But the Commission had to establish the alleged conglomerate effects through cogent evidence, not speculation about future conduct.[27] It needed “sufficiently convincing evidence” of both the likelihood and the consequences of leveraging and could consider only conduct that probably would be lawful.[28] Although the Commission retained some discretion, its prediction of the merged company’s conduct had to be “particularly plausible.”[29]

Nicholas Levy summarized the resulting standard: The Commission must show more than the mere possibility of leveraging. It must establish that the merger would, in all likelihood and in the relatively near future, create or strengthen a dominant position based on close examination of the relevant circumstances.[30] Together, these cases largely cemented an effects-based approach to European merger control.

II. From Judicial Defeat to Merger Reform

The three annulments arrived at a pivotal point in the Commission’s modernization of European merger control. The Commission had submitted a report to the Council in 2000, published a Green Paper reviewing the existing Merger Regulation in December 2001, and opened a public consultation.[31] Airtours, Schneider, and Tetra Laval transformed that planned modernization into a broader and more urgent overhaul. As Nicholas Levy observed, “the judicial defeats of 2002 provided the catalyst for a series of reforms” intended to make merger review “more structured, firmly grounded in sound economics, and consistently based on an objective assessment of quantitative evidence.”[32]

European Competition Commissioner Mario Monti acknowledged in November 2002 that the judgments, “no matter how painful, came at a right moment.” He urged the Commission to turn those setbacks into “an opportunity for even deeper reform than originally envisaged” and announced what he called “the most far-reaching reform” of European merger control since the first Merger Regulation took effect in 1989.[33]

The Commission approved the core reform package in December 2002 and implemented its principal elements through 2004. The package combined institutional, procedural, and substantive changes: stronger internal checks and independent economic review; earlier access to evidence and greater engagement with merging parties; and a revised Merger Regulation, new horizontal-merger guidelines, and a more effects-based analytical framework. Together, these reforms addressed the central weaknesses identified in the three judgments and reshaped how the Commission investigated, analyzed, and decided merger cases.

A. Building Internal Checks and Economic Expertise

European European Competition Commissioner Mario Monti responded to the merger annulments by strengthening the Directorate-General for Competition’s internal checks and balances.[34] He treated the quality of the decision-making process as central to the reform:

We will adopt changes, as radical as needed, to ensure that our merger investigations are conducted in a manner which is more thorough and more firmly grounded in economic reasoning and to further strengthen the due process guarantees built into our merger proceedings.[35]

Monti first reorganized merger review. He disbanded the centralized Merger Task Force and placed merger units within the agency’s sector-specific directorates. He also created the position of chief economist, who reported directly to the director-general and led a team charged with providing independent economic analysis and advising decision-makers at every level of an investigation.

Monti further established peer review panels composed of experienced Directorate-General officials who had not worked on the case. The panels reviewed case teams’ preliminary conclusions and challenged their assumptions. Monti explained that this independent scrutiny would counter investigators’ natural tendency to become convinced by their own arguments. A dedicated support unit helped make the panels an effective check on the soundness of preliminary findings.[36]

The reforms also expanded the Hearing Officer’s mandate, emphasizing the independence and integrity needed to preserve objective, transparent, and efficient proceedings.[37] The Hearing Officer reported to the competition commissioner rather than the Directorate-General, strengthening the office’s ability to protect merging parties’ rights of defense and oversee the fair conduct of proceedings.[38]

Pablo Ibáñez Colomo later connected these reforms to the broader value of judicial review:

One can think of a number of reasons why more robust checks on administrative action might lead to better outcomes, both from a legal and a non-legal standpoint. This conclusion is, if anything, confirmed by the very history of EU merger control, which shows that efforts to improve enforcement may be prompted by judicial review.[39]

The reforms following Airtours, Schneider, and Tetra Laval illustrate that principle. More extensive judicial review prompted the Commission to build stronger internal safeguards, deepen its economic expertise, and improve the quality of merger decisions.

B. Earlier Access and Procedural Engagement

The Commission answered criticism of its fact-finding on two fronts. Internally, the new checks and balances allowed officials outside the case team to test its preliminary findings before the Commission reached a formal decision. Greater management oversight also helped ensure that investigations received adequate resources. Monti instructed managers to “see to it that due attention is paid to the quality of evidence, and to ensuring that decisions reference such evidence clearly and comprehensively.”[40]

The Commission also gave notifying parties—the companies seeking merger approval—earlier access to the evidentiary record and the case team. Once the Commission opened an in-depth, or Phase II, investigation through an Article 6(1)(c) decision, the parties could review the file and receive ad hoc access to important third-party submissions that contradicted their position. This earlier disclosure allowed them to challenge those submissions before the Commission issued its statement of objections, rather than waiting until the Commission had formally set out its concerns.

The reforms created additional opportunities for direct engagement. Before issuing a statement of objections, the Commission could hold “triangular” meetings among the case team, the notifying parties, and third-party complainants. It also introduced state-of-play meetings at decisive stages of an investigation, giving the parties opportunities to discuss the case with senior Directorate-General for Competition officials. [41]

The Commission formalized these changes in its Best Practices on the Conduct of EC Merger Control Proceedings, adopted Jan. 20, 2004.[42] The Merger Best Practices provide that, immediately after the Commission opens an in-depth investigation, notifying parties should receive key documents, including “substantiated submissions of third parties running counter to the notifying parties’ own contentions.”[43] The Directorate-General also committed to “use its best endeavours” to provide timely access to those documents and to make further disclosures on an ad hoc basis as the investigation developed.[44]

Together, these measures moved evidentiary testing earlier in the process, when merging parties could still correct the factual record, answer third-party allegations, and address the Commission’s concerns before its position hardened.

C. Embedding Effects-Based Merger Analysis

Monti also announced guidelines that would provide a “sound economic framework” for assessing horizontal mergers—transactions between actual or potential competitors. The guidelines would explain how the Commission assesses a merger’s likely competitive effects and applies the concept of collective dominance. They would also address factors that could counter an initial finding of likely harm, including buyer power, ease of entry, and efficiencies.[45]  The Commission adopted its Horizontal Merger Guidelines in 2004.[46]

The Commission gave this economic framework institutional support by creating the position of chief competition economist and recruiting more economists who specialized in how firms compete and markets operate.[47] These changes helped translate the guidelines’ effects-based principles into case investigations and decisions.

The reforms also changed the law governing merger review. The revised European Community Merger Regulation (ECMR), Regulation 139/2004, took effect May 1, 2004. It replaced the former dominance test with a broader inquiry into whether a transaction would “significantly impede effective competition in the common market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position.” The new test retained dominance as a central concern but allowed the Commission to reach mergers that could substantially harm competition without creating or strengthening a dominant firm. Without the General Court’s judgments in Airtours, Schneider, and Tetra Laval, the substantive test likely would have remained largely unchanged.[48]

Two decades later, Guillaume Loriot, deputy director-general for mergers at the Directorate-General for Competition, credited the judgments with forcing the Commission into “deeper retrospection.” That process, he said, enabled “more rigorous, and all-encompassing reforms” that changed European Union merger control “for the better.”[49]

The Commission extended that reform trajectory when it published draft revised merger guidelines April 30, 2026, combining its horizontal and nonhorizontal guidelines into a single framework.[50] Executive Vice President Teresa Ribera had previewed the draft’s “more robust treatment of dynamic effects”—effects on innovation, investment, and competition over time—including both dynamic harms and efficiencies.[51]

That emphasis carries forward the central lesson of Airtours, Schneider, and Tetra Laval: The Commission must ground predictions of competitive harm in rigorous economic analysis and convincing evidence.

III. Article 102 Meets Closer Judicial Scrutiny

The Commission entered the Intel litigation with a formidable record in Article 102 appeals. Thibault Schrepel and Janneke Parrish identify Intel as its only Article 102 loss before the Court of Justice during Margrethe Vestager’s decade as competition commissioner.^[52] Pinar Akman accordingly describes the 2017 ruling as “a clear turning point in the evolution of the law on the abuse of dominance.[53]

The Intel litigation ultimately produced three principal judgments: Intel 2017, which set aside the General Court’s 2014 judgment; Intel Renvoi, which annulled the Commission’s findings concerning Intel’s rebates and the resulting fine; and Intel 2024, which upheld the remand judgment.[54] The General Court later annulled Commission infringement decisions in Qualcomm and Bulgarian Energy Holding. Those judgments form part of a broader line of Article 102 cases demanding careful treatment of evidence and rigorous analysis of exclusionary effects.[55]

The cases echo the 2002 merger judgments in three respects. First, they require the Commission to document and disclose relevant third-party evidence, while distinguishing procedural lapses that materially impair a company’s defense from those that do not. Second, they require the Commission to consider evidence supporting and undermining its theory and to meet its burden with a coherent factual record. Third, they test theories of exclusion against actual market conditions, requiring evidence that the challenged conduct was capable of producing more than hypothetical anticompetitive effects. The courts did not deny the Commission discretion to pursue particular theories of harm. They instead required the Commission to prove that those theories fit the facts.

A. Access to the File and Rights of Defense

The three Article 102 judgments returned to a central theme of the merger cases: The Commission must give investigated companies a meaningful opportunity to test the evidence against them and present a full defense. That obligation covers evidence supporting the alleged infringement and potentially exculpatory material—evidence that could help disprove it—obtained through interviews with third parties. In Qualcomm and Bulgarian Energy Holding, failures to record and disclose such evidence materially impaired the companies’ ability to defend themselves. Intel involved a similar recordkeeping failure, but the courts found that it did not justify annulment.

Intel argued that the Commission had withheld potentially exculpatory information from a third-party interview, refused access to other third-party documents, and improperly denied a second oral hearing. The internal note that the Commission eventually disclosed contained no meaningful account of the interview, including “any indication of the content of the discussions” or “the nature of the information” that the interviewee had provided.[56] The Court of Justice nevertheless concluded that Intel had not shown that access to a fuller record during the administrative proceeding could have improved its defense.[57]

The Intel litigation clarified the Commission’s obligation to document third-party interviews.[58] The Commission must make an adequate record of every interview conducted to collect information about an investigation, including the substance of the information provided. This procedural duty complements the broader requirement that competition authorities meaningfully examine evidence submitted by an investigated company to show that its conduct could not restrict competition.[59] A failure to document an interview does not automatically invalidate a decision, but it may do so when the missing information could have materially assisted the company’s defense.

Qualcomm illustrates that distinction. The Commission’s 2018 decision found that Qualcomm had abused its dominant position by paying Apple to obtain its baseband chipsets exclusively from Qualcomm.[60] The General Court annulled the decision in full, relying on procedural defects that impaired Qualcomm’s rights of defense and flaws in the Commission’s analysis of competitive effects. It found that “the administrative procedure which led to the adoption of the contested decision is vitiated by a number of procedural errors which affected the applicant’s rights of defence.”[61] Alfonso Lamadrid described the court’s willingness to annul an Article 102 decision in full after finding such procedural errors as extraordinary.[62]

The Commission had failed to record properly or disclose fully several meetings and interviews with Qualcomm’s competitors and customers.[63] The General Court examined the withheld information’s probative value to determine whether the omissions had impaired Qualcomm’s defense. Some of that information went to a central issue: whether Intel had a viable competing chipset that Qualcomm’s payments could have excluded from the market.[64] Lamadrid argued that the judgment did not create new law but “simply requires the Commission to fulfill its (post-Intel) obligations regarding both procedure and substance” through a “clear, logical and thorough application of the law.”[65]

The General Court applied the same principles in Bulgarian Energy Holding. The Commission’s 2018 BEH Gas decision found that the Bulgarian Energy Holding (BEH) Group had restricted competitors’ access to essential gas infrastructure.[66] he court annulled that decision Oct. 25, 2023, on both substantive and procedural grounds. Although it upheld one isolated instance of exclusionary conduct, that conduct could not support the Commission’s finding of a single and continuous infringement.[67] The Commission appealed, and the case remained pending as of Aug. 31, 2026.[68]

The General Court also found that the Commission had infringed the BEH Group’s rights of defense by failing to document certain third-party interviews and disclose potentially exculpatory evidence. The omitted information proved important to BEH’s defense and contributed to the Commission’s decision. The court rejected any “supposed discretion” to exclude relevant evidence from the file. Such discretion would impair the undertaking’s defense and prevent the court from verifying the Commission’s compliance with Regulation 1/2003.[69]

Drawing on Intel and Qualcomm, the court reiterated that the Commission must record third-party meetings and interviews and give the investigated undertaking access to every document that might assist its defense. The principal exceptions cover other companies’ business secrets, internal Commission documents, and other confidential information.[70] Access to the file promotes equality of arms—the principle that each side must have a fair opportunity to present its case—and remains “integral” to the rights of defense.[71]

These cases establish a materiality standard rather than a rule of automatic annulment. In Intel, the inadequate record concerned one meeting with one third party, and Intel had received at least limited information about its contents. The General Court was therefore not persuaded that the omission materially impaired Intel’s defense.[72] Qualcomm involved an “exceptional number of procedural violations”: seven improperly recorded meetings with six third parties, including one meeting central to the Commission’s analysis and another involving a source who claimed anonymity.[73] BEH likewise involved omitted evidence that bore directly on the company’s defense and the Commission’s conclusions.

The parallel with the 2002 merger cases is direct. Airtours, Schneider, and Tetra Laval exposed investigative and decision-making powers insufficiently constrained by procedures capable of identifying unsupported conclusions before the Commission acted. Intel, Qualcomm, and Bulgarian Energy Holding reveal similar weaknesses in Article 102 enforcement. The later judgments therefore reinforce Monti’s earlier recognition that third parties can influence Commission investigations and that investigated companies need timely, meaningful opportunities to test their allegations and defend themselves.[74]

B. Evidence of Exclusionary Effects

The three Article 102 cases echoed the evidentiary concerns in Airtours, Schneider, and Tetra Laval. In each case, the court found that the Commission’s analysis had disregarded relevant evidence, including information that undermined its theory of harm. Merger review and Article 102 enforcement ask different legal questions: Merger review predicts a transaction’s likely effects, while Article 102 generally examines whether past conduct was capable of excluding competitors. Both inquiries nevertheless require concrete evidence grounded in actual market conditions, not abstract or hypothetical conclusions.

In Intel Renvoi, the General Court found that the Commission had not established to the required legal standard that Intel’s rebates were capable of foreclosing competitors.[75] The Commission had to examine all relevant circumstances and support its conclusion with a “precise and consistent body of evidence” that left “no residual doubt.” That obligation carried particular weight because Intel had offered a plausible alternative explanation for its conduct—one under which the rebates could not restrict competition or produce the alleged foreclosure effects.[76]

Jacques Buhart et al. identified three related defects in the Commission’s effects analysis in Qualcomm. First, the evidence was inconsistent or contradictory. Second, the Commission failed to consider “all the relevant factors,” including evidence that undercut its theory. Third, the remaining evidence “did not make it possible to support the Commission’s findings.” The analysis therefore could not substantiate the Commission’s conclusions to the required legal standard.[77]

The General Court applied the same evidentiary discipline in Bulgarian Energy Holding. The case involved an alleged refusal to grant access to an essential facility—infrastructure that competitors needed to operate in the related market. The Commission bore the burden of proving that the refusal was capable of producing exclusionary effects. More specifically, it had “to prove that that refusal was liable to eliminate all competition, on the part of the person requesting that service, on the related market.”[78] The Commission also had to establish that the complainant was an actual or potential competitor with a “sufficiently advanced project to enter the market.”[79]

The Commission failed to make that showing. In both Qualcomm and Bulgarian Energy Holding, the evidence did not establish that the firms allegedly excluded were viable actual or potential competitors. Without that connection between the challenged conduct and a realistic prospect of entry or expansion, the alleged exclusionary effects remained hypothetical.

These judgments do not require proof of actual anticompetitive effects in every Article 102 case. They do require the Commission to demonstrate, through coherent evidence and a complete assessment of market conditions, that the conduct was capable of producing those effects. That requirement reflects the same principle that shaped the merger judgments: A legally plausible theory of harm cannot substitute for proof that the theory fits the facts.

C. Testing Theories Against Market Reality

As w in the merger cases, the courts did not prevent the Commission from pursuing particular theories of harm in Intel, Qualcomm, or Bulgarian Energy Holding. They instead required rigorous economic analysis showing that the alleged exclusionary effects were plausible under actual market conditions.

The Court of Justice began that shift in its 2017 Intel decision.[80] When a dominant undertaking submits evidence that its loyalty rebates could not restrict competition, the Commission must examine all relevant circumstances. The court identified five factors: the practice’s market coverage, the conditions governing the rebates, their duration, their amount, and evidence of a strategy to exclude competitors as efficient as the dominant undertaking.[81]

On remand, the General Court examined the Commission’s application of the as-efficient-competitor (AEC) test. That test asks whether the challenged conduct could exclude a hypothetical competitor that operates as efficiently as the dominant firm. The court found errors in the Commission’s analysis and held that it had not adequately established the rebates’ capacity to foreclose such a competitor. It therefore annulled the relevant portions of the 2009 decision and the fine.[82]

The Commission appealed, but the Court of Justice upheld the Intel Renvoi judgment in October 2024.[83] It confirmed that the General Court must examine any argument capable of undermining the Commission’s AEC analysis, including challenges to the governing methodology and the probative value of the evidence. The resulting framework looks beyond structural indicators. It requires the Commission to assess the alleged exclusionary effect in light of all relevant facts, including market coverage, the terms and duration of the rebates, their amount, and any strategy to exclude as-efficient competitors.[84]

The General Court applied the same approach in Qualcomm. Although the procedural violations independently justified annulment, the court also reviewed the substance of the Commission’s decision in the interests of the administration of justice.[85] The Commission had failed to account for evidence that competing chipsets could not satisfy most of Apple’s technical requirements. Because Apple could not have switched those purchases to Qualcomm’s rivals even without the challenged payments, the payments could not have excluded competition for that demand.[86]

The court rejected an analysis based on a presumption that Qualcomm’s exclusivity payments were unlawful. It required the Commission to consider all relevant factual circumstances and establish effects that were more than hypothetical.[87] As the court explained:

[N]ot every exclusionary effect is necessarily detrimental to competition. Competition on the merits may, by definition, lead to the departure from the market or the marginalisation of competitors that are less efficient and so less attractive to consumers from the point of view of, among other things, price, choice, quality or innovation.[88]

Once Qualcomm challenged the Commission’s analysis, the Commission had to assess both the payments’ capacity to produce anticompetitive effects and their ability to foreclose at least as-efficient competitors.[89]

Bulgarian Energy Holding applied the same principle to a refusal-to-supply theory. The General Court emphasized that conduct restricting another company’s options does not necessarily restrict competition within the meaning of Article 102.[90] The Commission had to prove that the refusal to grant access to essential infrastructure was “liable to eliminate all competition, on the part of the person requesting that service, on the related market.”[91] The alleged exclusionary effects could not remain purely hypothetical.[92]

That inquiry required evidence that the party seeking access was an actual or potential competitor with a “sufficiently advanced project to enter the market.”[93] The complainant’s plans remained imprecise, and it had made no tangible access request that could support a credible refusal-to-supply claim.[94] The Commission therefore failed to show that the BEH Group’s conduct was capable of restricting competition in the Bulgarian gas market.[95]

Together, these cases move Article 102 analysis away from conclusions based principally on market structure, the form of the conduct, or presumptions of harm. The relevant question is how the conduct operates under actual market conditions, including whether a credible rival could enter, expand, or compete effectively. Ibáñez Colomo has similarly linked stronger judicial review to improvements in Commission enforcement and greater checks on administrative action.[96]

Akman argues that the shift toward economic, effects-based analysis emerged “through not wins but losses for the Commission and/or the Legal Service on appeals.” In her account, “[i]t is the CJEU which has actively—and perhaps despite the Commission and/or the Legal Service—reformed its jurisprudence to adopt an effects-based approach.”[97] As in the merger cases, judicial reversal supplied the pressure for doctrinal reform.

IV. Judicial Defeat and Institutional Learning

Successful challenges to Commission merger prohibitions were so rare before Airtours, Schneider, and Tetra Laval that an appeal could appear futile. The three annulments changed that perception by demonstrating that merger decisions faced meaningful judicial oversight. Commisioner Monti acknowledged that the judgments proved “beyond any doubt” that European Union courts conducted “meticulous and stringent” review of the Commission’s substantive analysis. He also recognized the practical consequence: “[I]t is clear that the [General Court] is now holding us to a very high standard of proof, and this has clear implications for the way in which we conduct our investigations and draft our decisions.”[98] Werner Berg summarized the lesson: The Commission had to strengthen its substantive review and economic analysis to produce decisions capable of surviving “in-depth juridical review.”[99]

The Commission had compiled a similarly strong record defending its Article 102 decisions before Intel, Qualcomm, and Bulgarian Energy Holding. Yet those judgments did not prompt a comparable public reckoning. The Commission’s responses to Qualcomm and Bulgarian Energy Holding largely stated that it would study the judgments and consider its next steps.[100] Its appeals in Intel and Bulgarian Energy Holding may suggest that it viewed the General Court’s judgments primarily as legal errors requiring appellate correction rather than evidence of broader institutional problems. The appeals cannot, however, substitute for a clear account of what lessons the Commission accepted or rejected.

This section examines that gap from two perspectives. First, it asks whether the revision of the European Union’s antitrust procedural rules should strengthen internal review, recordkeeping, access to evidence, and other safeguards implicated by the Article 102 judgments. Second, it considers whether the Commission’s draft Article 102 guidelines reflect the courts’ effects-based jurisprudence or retreat toward conduct categories and presumptions. The central question is whether the Commission has absorbed the judgments’ lessons internally—or missed an opportunity for a second Airtours moment.

A. Reform Without a Second Airtours Moment?

The cases examined above show how procedural failures can affect both the reliability of Commission decisions and the depth of judicial scrutiny. The 2004 merger reforms stand out because the Commission did more than address the specific due-process defects identified by the General Court. It changed the institutional structure of merger review. Independent economic analysis, peer review, greater management oversight, and earlier access to evidence allowed the Commission to test case teams’ conclusions before adopting a decision. These safeguards could expose weaknesses in the evidentiary record and reduce the risk of decisions unsupported by facts or plausible real-world effects. Many of the most consequential changes required no new legislation because the Commission could adopt them internally.

The resulting checks and balances were not confined to merger review. Many applied across the Commission’s competition-enforcement system, including Article 102 investigations.[101] Yet Intel, Qualcomm, and Bulgarian Energy Holding raise a difficult question: Do those safeguards operate effectively in abuse-of-dominance cases? The Commission has said little about the procedural implications of these defeats, despite judicial criticism at times comparable to that in the 2002 merger judgments.

European Commission President Ursula von der Leyen directed Executive Vice President Teresa Ribera to “strengthen and speed up enforcement of competition rules” and align that enforcement with the European Union’s industrial and sustainability goals.[102] The Commission then opened a public consultation July 10, 2025, on revising Regulation 1/2003 and its implementing regulation, Regulation 773/2004—the principal procedural rules governing EU antitrust investigations.[103] That revision offers a natural opportunity to examine the Commission’s internal investigative and decision-making processes, including how it records interviews, maintains complete case files, discloses exculpatory material, tests case teams’ conclusions, and ensures meaningful access to evidence.

Stakeholders have already argued that Intel and Qualcomm warrant tighter internal procedures, particularly rules ensuring complete investigatory files and effective access to relevant evidence.[104] Stronger and faster enforcement remains a legitimate goal, but speed can strain the rights of defense when internal safeguards fail. Procedural protections do not merely constrain enforcement. They improve its accuracy, strengthen its legitimacy, and make Commission decisions more likely to survive judicial review. The revision of Regulation 1/2003 should confront that relationship directly.

B. Effects in Principle, Presumptions in Practice

Intel, Qualcomm, and Bulgarian Energy Holding show that European Union courts can engage closely with complex economic questions. The courts examined the Commission’s evidentiary record, tested the probative value of its evidence, and scrutinized its economic models. This review does not reflect hostility toward Article 102 enforcement. Google Shopping illustrates the other side of the principle: The General Court accepted the Commission’s extensive factual and economic record, and the Court of Justice upheld that judgment and the €2.42 billion fine.[105] The Commission may therefore have absorbed some practical lessons by developing more detailed foreclosure theories, counterfactual analyses, and economic evidence in its cases.

The Commission has not publicly explained how Intel, Qualcomm, and Bulgarian Energy Holding affected its approach. Its August 2024 draft guidelines on exclusionary abuses do not resolve the question, and the guidelines remained in draft form as of Aug. 31, 2026.[106] The Commission has said the guidelines will reflect its enforcement experience and codify the courts’ Article 102 jurisprudence since its 2008 guidance on enforcement priorities.

A March 2023 policy brief from the Directorate-General for Competition described that jurisprudence in strongly effects-based terms. It stated that “[t]he effects-based approach promoted by the Commission is clearly reflected in these developments and is now firmly enshrined in the Union Courts’ case law.” The brief added that recent judgments had “confirmed and endorsed the main elements of an effects-based approach to exclusionary conduct by dominant undertakings.”[107]

The draft guidelines have nevertheless drawn criticism for selectively presenting the case law and reviving a more form-based approach. An effects-based approach asks how conduct is likely to operate under actual market conditions. A form-based approach relies more heavily on the category into which the conduct falls and presumptions attached to that category. The draft guidelines identify some conduct as presumptively capable of producing exclusionary effects, potentially shifting the evidentiary burden away from the Commission’s affirmative demonstration of competitive harm.

Pinar Akman, Chiara Fumagalli, and Massimo Motta argue that the draft uses the case law selectively, particularly the judgments beginning with Intel.[108] Dirk Auer and Lazar Radic characterize its reliance on conduct categories and presumptions as a repudiation of the courts’ effects-based analysis.[109] Akman, Fumagalli, and Motta identify the central tension:

[The draft guidelines] do not embrace aspects of the case law that are effects-orientated and either overemphasise the operational value of certain concepts (e.g. “competition on the merits”) from the formalistic era of the case law or disregard statements from the case law that evidence an effects-based approach.[110]

The Article 102 jurisprudence is complex and does not always yield a single, coherent narrative.[111] The cases examined here are nonetheless clear on three points. The Commission must respect procedural rights, consider evidence that supports and undermines its theory, and establish through cogent evidence that the conduct was capable of producing nonhypothetical exclusionary effects. Guidelines intended to codify that jurisprudence should make those requirements more transparent, not dilute them through presumptions that substitute the form of conduct for its likely competitive effect.

V. Conclusions

Judicial victories and defeats both clarify the law. Because Article 102 annulments remain rare, Intel, Qualcomm, and Bulgarian Energy Holding carry particular weight. Together, they clarify the Commission’s duties to maintain and disclose a complete evidentiary record, protect the rights of defense, satisfy the applicable standard of proof, and ground findings of exclusionary effects in actual market conditions. They also confirm that European Union courts can scrutinize complex economic evidence without displacing the Commission’s authority to select and pursue legitimate theories of harm.

The Commission need not redesign its procedures after every annulment. Targeted judicial corrections form part of any mature enforcement system. These cases do, however, raise broader concerns. Qualcomm and Bulgarian Energy Holding exposed material failures to record interviews, disclose relevant evidence, and preserve equality of arms. Intel, Qualcomm, and Bulgarian Energy Holding also revealed substantive analyses that did not adequately connect the challenged conduct to realistic exclusionary effects. The recurrence of these problems warrants closer examination of whether safeguards introduced after the 2002 merger judgments work as intended in Article 102 investigations.

That review should focus on practical mechanisms. The Commission should ensure that case files contain complete records of third-party interviews and all relevant inculpatory and exculpatory evidence. It should give investigated companies timely access to that material and meaningful opportunities to answer it. A better-resourced Hearing Officer, independent economic review, stronger management oversight, and peer review by officials outside the case team could also test preliminary conclusions before they harden. These safeguards would help counter investigators’ tendency to favor their initial theory, conserve limited enforcement resources, and produce decisions more likely to withstand judicial review.

The Commission’s current reform projects provide two opportunities to act. The revision of Regulation 1/2003 can strengthen investigative procedures, access to the file, and internal review. The Article 102 guidelines can provide substantive clarity by faithfully reflecting the courts’ effects-based jurisprudence. Presumptions may simplify analysis in appropriate cases, but they should not replace evidence that the conduct was capable of excluding competition under the relevant market conditions. Nor should they deprive investigated companies of a genuine opportunity to rebut the Commission’s theory.

These protections will matter even more as competition enforcement becomes intertwined with industrial-policy goals such as resilience and strategic autonomy. Those priorities may intensify political pressure on individual investigations and sharpen public scrutiny of the Commission’s decisions. Transparent standards, rigorous economics, and credible internal checks help preserve the independence and legitimacy of enforcement under those conditions.

The Article 102 judgments may not demand a replica of the post-Airtours reform package. But they do call for the same institutional willingness to learn from defeat.

[1] See Case T-342/99, Airtours plc v. Comm’n, 2002 E.C.R. II-2585; Case T-310/01, Schneider Electric SA v. Comm’n, 2002 E.C.R. II-4071; Case T-5/02, Tetra Laval BV v. Comm’n, 2002 E.C.R. II-4381.

[2] See Case C-413/14 P, Intel Corp. v. Comm’n, ECLI:EU:C:2017:632 [hereinafter Intel 2017]; Case T-286/09 RENV, Intel Corp. v. Comm’n, ECLI:EU:T:2022:19 [hereinafter Intel Renvoi]; Case C-240/22 P, Comm’n v. Intel Corp., ECLI:EU:C:2024:915 [hereinafter Intel 2024]; Case T-235/18, Qualcomm, Inc. v. Comm’n, ECLI:EU:T:2022:358; Case T-136/19, Bulgarian Energy Holding EAD v. Comm’n, ECLI:EU:T:2023:669.

[3] See, e.g., Airtours/First Choice, Schneider/Legrand, Tetra Laval/Sidel, and General Electric/Honeywell, as well as other transactions the Commission prohibited between 1999 and 2001, including Volvo/Scania, WorldCom/Sprint, SCA/Metsä Tissue, and CVC/Lenzing. See Nicholas Levy, EU Merger Control: A Brief History, Cleary Gottlieb (Feb. 3, 2004), https://www.clearygottlieb.com/-/media/organize-archive/cgsh/files/publication-pdfs/eu-merger-control—a-brief-history.pdf. Parties also withdrew several high-profile notifications when faced with likely prohibition, including Skandinaviska Enskilda Bank/FöreningsSparbanken and EMI/Time Warner.

[4] WilmerHale, After Three Losses, Super Mario Strikes Back (Jan. 1, 2003), https://www.wilmerhale.com/en/insights/publications/after-three-losses-super-mario-strikes-back-winter-2003.

[5] Werner Berg, New EC Merger Regulation: A First Assessment of Its Practical Impact, 24 Nw. J. Int’l L. & Bus. 683 (2004), https://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article=1586&context=njilb (citing Christian Ahlborn, Airtours/First Choice, In Competition (June 2002)); Nicholas Levy, Mario Monti’s Legacy in EC Merger Control, 1 Competition Pol’y Int’l 99 (2005), https://www.clearygottlieb.com/-/media/organize-archive/cgsh/files/publication-pdfs/mario-monti-s-legacy-in-ec-merger-control.pdf; Herwig Hofmann, Good Governance in European Merger Control: Due Process and Checks and Balances Under Review, 24 Eur. Competition L. Rev. 114 (2003); Mathew Heim, Problems and Process: European Merger Control and How to Use It, 4 J. Pub. Affs. 73 (2004); Damien J. Neven & Lars-Hendrik Röller, Discrepancies Between Markets and Regulators: An Analysis of the First Ten Years of EU Merger Control, in The Pros and Cons of Merger Control 13 (Swedish Competition Authority ed., 2002), https://www.konkurrensverket.se/globalassets/dokument/informationsmaterial/rapporter-och-broschyrer/pros-and-cons/rapport_pros-and-cons_2002_the-pros-and-cons-of-merger-control.pdf.

[6] Schneider Electric, 2002 E.C.R. II-4071, ¶ 453.

[7] Id. ¶¶ 458, 460.

[8] Id. ¶¶ 454, 462.

[9] The Commission appealed the General Court’s Tetra Laval judgment, arguing that the court had interfered excessively and imposed an unduly high standard of proof for conglomerate effects. The CJEU dismissed the appeal, holding that the General Court acted within the proper scope of judicial review when it examined whether the Commission’s evidence was accurate, reliable, consistent, and sufficient to support its conclusions. See Case C-12/03 P, Comm’n v. Tetra Laval BV, ECLI:EU:C:2005:87, 2005 E.C.R. I-987.

[10] Tetra Laval, ECLI:EU:T:2002:264, ¶¶ 89, 92, 117.

[11] Airtours, 2002 E.C.R. II-2585, ¶ 63.

[12] Id. ¶ 210.

[13] Id. ¶ 294.

[14] Schneider Electric, 2002 E.C.R. II-4071, ¶ 409.

[15] Id. ¶¶ 349, 409.

[16] Id. ¶¶ 336, 398.

[17] Id. ¶ 411.

[18] See Mario Monti, European Comm’r for Competition, EU Competition Policy, Address at the Fordham Annual Conference on International Antitrust Law & Policy (Oct. 31, 2002), https://ec.europa.eu/commission/presscorner/api/files/document/print/en/speech_02_533/SPEECH_02_533_EN.pdf.

[19] Tetra Laval, 2002 E.C.R. II-4381, ¶ 137.

[20] Id. ¶ 162.

[21] Id. ¶ 246.

[22] Schneider Electric, 2002 E.C.R. II-4071, ¶ 437.

[23] Airtours, 2002 E.C.R. II-2585, ¶ 63.

[24] Id.

[25] Pablo Ibáñez Colomo, Law, Policy, Expertise: Hallmarks of Effective Judicial Review in EU Competition Law, 24 Cambridge Y.B. Eur. Legal Stud. 143 (2022), https://doi.org/10.1017/cel.2022.7.

[26] Mario Monti, European Comm’r for Competition, Merger Control in the European Union: A Radical Reform, Speech/02/545 (Nov. 7, 2002), https://ec.europa.eu/commission/presscorner/api/files/document/print/en/speech_02_545/SPEECH_02_545_EN.pdf.

[27] Tetra Laval, 2002 E.C.R. II-4381, ¶ 137.

[28] Id. ¶ 162.

[29] Id.

[30] Levy, supra note 3.

[31] European Commission, Green Paper on the Review of Council Regulation (EEC) No. 4064/89, COM (2001) 745 final (Dec. 11, 2001).

[32] Levy, supra note 3.

[33] Monti, supra note 26.

[34] Neither the General Court nor Commissioner Mario Monti used the term “checks and balances.” They instead discussed evidence, burdens of proof, Commission errors, judicial-review standards, and modernization. Commentators later used “checks and balances” to describe the actors who safeguard due process, procedural fairness, and objectivity in Commission decision-making. The Commission eventually adopted the term. In Merck/Sigma-Aldrich, the hearing officer identified the commissioner for competition and cabinet, senior Directorate-General for Competition officials, the relevant horizontal-coordination unit, the Chief Economist’s Team, the Legal Service, associated Commission services, the hearing officer, the Advisory Committee on Concentrations, and possible peer review. See Final Report of the Hearing Officer ¶ 32 & n.39, Case M.8181, Merck/Sigma-Aldrich (Apr. 30, 2021), https://ec.europa.eu/competition/mergers/cases1/202212/M_8181_8229078_2374_3.pdf; see also Directorate-General for Competition, European Commission, Proceedings for the Application of Articles 101 and 102 TFEU: Key Actors and Checks and Balances, https://competition-policy.ec.europa.eu/system/files/2021-04/key_actors_checks_balances_art_101_102_factsheet.pdf.

[35] Monti, supra note 26.

[36] Id.

[37] Pieter Van Cleynenbreugel, The Hearing Officer’s Extended Mandate: Whose Special Friend in the Conduct of EU Competition Proceedings?, 33 Eur. Competition L. Rev. 286 (2012).

[38] See Commission Decision 2001/462/EC, ECSC of 23 May 2001 on the Terms of Reference of Hearing Officers in Certain Competition Proceedings, 2001 O.J. (L 162) 21, superseded by Decision of the President of the European Commission 2011/695/EU of 13 October 2011 on the Function and Terms of Reference of the Hearing Officer in Certain Competition Proceedings, 2011 O.J. (L 275) 29.

[39] Pablo Ibáñez Colomo, Judicial Review in EU Merger Control: Towards Deference on Issues of Law?, 4 Eur. L. Open 441 (2025), https://doi.org/10.1017/elo.2025.10016.

[40] Monti, supra note 26.

[41] Commissioner Monti acknowledged criticism that the Commission was too susceptible to influence from merging parties’ competitors. He argued that merging parties should have ample opportunity to defend their positions and confront third-party concerns early in the investigation. Id. at 7.

[42] Directorate-General for Competition, European Commission, Best Practices on the Conduct of EC Merger Control Proceedings (Jan. 20, 2004), https://competition-policy.ec.europa.eu/document/download/a288a6d8-3962-4072-b6a1-93e2ba08d12e_en?filename=proceedings.pdf [hereinafter Merger Best Practices].

[43] Id. ¶ 45.

[44] Id. ¶ 46.

[45] Monti, supra note 26.

[46] Guidelines on the Assessment of Horizontal Mergers Under the Council Regulation on the Control of Concentrations Between Undertakings, 2004 O.J. (C 31) 5.

[47] Monti, the first economist appointed competition commissioner, emphasized economic analysis and the recruitment of industrial-organization economists to DG Competition. Director-General Philip Lowe, also an economist, supported that effort. Monti described it as a central goal: “I should like to underline that an increased economic approach in the interpretation of our rules was, indeed, one of my main objectives when I took on my new responsibilities as Competition Commissioner.” Monti, supra note 18, at 7.

[48] See Berg, supra note 5.

[49] Guillaume Loriot, Reflecting on 20 Years of the EU Merger Regulation, Keynote Address at Modern EU and UK Merger Control: 20th Anniversary—Two Decades of Regulation 139/04 and the Enterprise Act Regime (Feb. 27, 2024), https://competition-policy.ec.europa.eu/document/download/ca447d8a-b2b7-4583-b983-753b3385ac86_en?filename=20240227_Kings_College_Latham_Merger_Conference_London_Guillaume-Loriot_keynote_speech.pdf.

[50] See European Commission, Review of the Merger Guidelines, https://competition-policy.ec.europa.eu/mergers/review-merger-guidelines_en (last visited Aug. 30, 2026).

[51] Teresa Ribera, Executive Vice President of the European Commission, Keynote Speech at the 23rd International Conference on Competition (IKK) (Mar. 12, 2026), https://ec.europa.eu/commission/presscorner/detail/en/speech_26_602.

^[52] Thibault Schrepel and Janneke Parrish examined the Commission’s record in competition cases before the Court of Justice, excluding the General Court, from Nov. 1, 2014, through Nov. 30, 2024—Margrethe Vestager’s tenure as competition commissioner. They identify Intel as the Commission’s only Article 102 loss during that period and report no Article 102 defeats involving novel theories of harm or procedural issues. See Thibault Schrepel & Janneke Parrish, Mapping Reversals: An Empirical Account of Margrethe Vestager’s Track Record Before the Court of Justice of the European Union, 22 Eur. Competition J. 63 (2026), https://doi.org/10.1080/17441056.2025.2511425.

[53] Pinar Akman, A Critical Inquiry into ‘Abuse’ in EU Competition Law, 44 Oxford J. Legal Stud. 405 (2024), https://doi.org/10.1093/ojls/gqae008.

[54] For purposes of this paper, the principal Intel decisions are Intel 2017, which set aside the General Court’s 2014 judgment; Intel Renvoi, which annulled the Commission’s findings concerning Intel’s rebates and the resulting fine; and Intel 2024, which upheld Intel Renvoi. See supra note 2.

[55] This section does not exhaust the European courts’ jurisprudence. It focuses on decisions whose holdings and broader statements echo Airtours, Schneider Electric, and Tetra Laval. Other Article 102 judgments reinforce the reasoning in Intel, Qualcomm, and Bulgarian Energy Holding, including Case T-612/17, Google LLC v. Commission, ECLI:EU:T:2021:763; Case C-377/20, Servizio Elettrico Nazionale SpA v. Autorità Garante della Concorrenza e del Mercato, ECLI:EU:C:2022:379; and Case C-680/20, Unilever Italia Mkt. Operations Srl v. Autorità Garante della Concorrenza e del Mercato, ECLI:EU:C:2023:33. In Google (Shopping), the General Court largely upheld the Commission’s decision but articulated demanding standards for its treatment of evidence. Servizio Elettrico Nazionale and Unilever Italia, both preliminary-reference cases, extended Intel’s evidentiary logic beyond exclusivity rebates. They required competition authorities to assess exclusionary capability in light of all relevant circumstances and treated evidence of actual market performance as relevant, though not dispositive. The Court of Justice also held that when a dominant undertaking presents evidence that its conduct could not produce anticompetitive effects, competition authorities must examine that evidence carefully and impartially. Although these cases did not review the Commission’s procedural framework, the Court grounded that obligation in the right to be heard. See Servizio Elettrico Nazionale, ECLI:EU:C:2022:379, ¶¶ 50–54; Unilever Italia, ECLI:EU:C:2023:33, ¶¶ 47–62.

[56] Intel Renvoi, ECLI:EU:T:2022:19, ¶ 102.

[57] Intel 2017, ECLI:EU:C:2017:632, ¶¶ 94–102.

[58] Intel Renvoi, ECLI:EU:T:2022:19, ¶ 93.

[59] See Ibáñez Colomo, supra note 25; see also Servizio Elettrico Nazionale, ECLI:EU:C:2022:379, ¶ 51 (holding that, when a dominant undertaking submits supporting evidence, the competition authority must determine whether the challenged conduct was capable of restricting competition under the particular circumstances).

[60] Commission Decision C(2018) 240 final of 24 January 2018 Relating to a Proceeding Under Article 102 TFEU and Article 54 of the EEA Agreement, Case AT.40220, Qualcomm (Exclusivity Payments).

[61] Qualcomm, ECLI:EU:T:2022:358, ¶ 344.

[62] Alfonso Lamadrid, Case T-235/18, Qualcomm v. European Commission (Part I: Procedure), Chillin’Competition (June 27, 2022), https://chillingcompetition.com/2022/06/27/case-t-235-18-qualcomm-v-european-commission-part-i-procedure.

[63] The Commission also failed to maintain proper records of these meetings or include them in the case file. Qualcomm, ECLI:EU:T:2022:358, ¶¶ 207–09, 256–59, 291–94. See also Council Regulation 1/2003, art. 19, 2003 O.J. (L 1) 1, which governs Commission interviews conducted to collect information related to an investigation.

[64] Qualcomm, ECLI:EU:T:2022:358, ¶ 279. The General Court also found serious due-process defects that infringed Qualcomm’s rights of defense. Material differences between the Commission’s statement of objections and final decision rendered irrelevant the data and economic arguments on which Qualcomm had relied. The court explained that this defense “is of no practical effect if the scope of the conduct concerned is modified by the Commission after the [statement of objections].” Id. ¶¶ 328, 333–352.

[65] Lamadrid, supra note 62.

[66] Commission Decision C(2018) 8806 final of 17 December 2018 Relating to a Proceeding Under Article 102 TFEU and Article 54 of the EEA Agreement, Case AT.39849, BEH Gas.

[67] See European Commission, Commission Staff Working Document Accompanying the Report from the Commission on Competition Policy 2023, SWD (2024) 53 final (Mar. 6, 2024), https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52024SC0053. The General Court upheld one isolated instance of exclusionary conduct during part of the infringement period. It nonetheless annulled the Commission’s decision in full because that conduct alone could not establish the alleged single and continuous infringement, given the factual and legal defects in the remaining elements.

[68] The Commission appealed the General Court’s judgment on Jan. 10, 2024. As of Aug. 31, 2026, the appeal remained pending. Case C-14/24 P, Comm’n v. Bulgarian Energy Holding EAD. Advocate General Medina issued her opinion on April 23, 2026. Opinion of Advocate General Medina, Case C-14/24 P, Comm’n v. Bulgarian Energy Holding EAD, ECLI:EU:C:2026:347.

[69] Bulgarian Energy Holding, ECLI:EU:T:2023:669, ¶¶ 1170–1172; Qualcomm, ECLI:EU:T:2022:358, ¶ 344.

[70] Bulgarian Energy Holding, ECLI:EU:T:2023:669, ¶ 1154.

[71] Id. ¶¶ 1152, 1155. See also Council Regulation (EC) No. 1/2003, art. 27(2), 2003 O.J. (L 1) 1, 13; Commission Regulation (EC) No. 773/2004 of 7 April 2004 Relating to the Conduct of Proceedings by the Commission Pursuant to Articles 81 and 82 of the EC Treaty, art. 15(1)–(2), 2004 O.J. (L 123) 18, 22.

[72] Intel Renvoi, ECLI:EU:T:2022:19, ¶¶ 50–51.

[73] Assimakis Komninos & James Killick, The EU General Court Quashes Dominant Chip Manufacturer’s Antitrust Fine for “Exclusivity Payments” and Censures the European Commission for Multiple Due-Process and Substantive Errors (Qualcomm), e-Competitions, June 2022, Art. No. 107095 (June 15, 2022).

[74] Monti, supra note 26.

[75] Intel Renvoi, ECLI:EU:T:2022:19, ¶¶ 168–335.

[76] Id. ¶¶ 163, 255, 522.

[77] Jacques Buhart et al., The EU General Court Annuls the Commission’s Decision Regarding a Dominant Chip Manufacturer as a Result of Insufficient Analysis of Anticompetitive Effects and on Procedural Grounds (Qualcomm), e-Competitions, June 2022, Art. No. 112054 (June 15, 2022).

[78] Bulgarian Energy Holding, ECLI:EU:T:2023:669, ¶ 279.

[79] Id. ¶ 281.

[80] Intel 2017, ECLI:EU:C:2017:632.

[81] The five factors are the practice’s market coverage; the conditions governing the rebates; their duration; their amount; and evidence of a strategy to exclude competitors as efficient as the dominant undertaking. See id. ¶ 139.

[82] Intel Renvoi, ECLI:EU:T:2022:19, ¶ 499.

[83] Intel 2024, ECLI:EU:C:2024:915.

[84] Org. for Econ. Coop. & Dev. [OECD], The Standard and the Burden of Proof in Competition Law Cases, OECD Roundtables on Competition Policy Papers No. 318 (2024), https://doi.org/10.1787/0199f63f-en.

[85] Qualcomm, ECLI:EU:T:2022:358, ¶ 346.

[86] Id. ¶¶ 409–24. Lamadrid argues that the judgment applied counterfactual logic without using the term. Because Apple could not have switched to rivals absent Qualcomm’s payments, those payments could not have restricted competition. Alfonso Lamadrid, Case T-235/18, Qualcomm v. European Commission (Part II: Substance), Chillin’Competition (July 11, 2022), https://chillingcompetition.com/2022/07/11/case-t-235-18-qualcomm-v-european-commission-part-ii-substance.

[87] Qualcomm, ECLI:EU:T:2022:358, ¶¶ 355, 396–97; see also Ibáñez Colomo, supra note 25.

[88] Qualcomm, ECLI:EU:T:2022:358, ¶ 351.

[89] Id. ¶ 424.

[90] See Bulgarian Energy Holding, ECLI:EU:T:2023:669, ¶¶ 945–49; see also Kristi Georgieva & Niamh Martyn, Bulgarian Energy Holding v. Commission (Case T-136/19): Revamped Energy to Overturn Abuse of Dominance Decisions on Account of Errors of Fact and Assessment, Cleary Antitrust Watch (Oct. 25, 2023), https://www.clearyantitrustwatch.com/2023/10/bulgarian-energy-holding-v-commission-case-t-136-19-revamped-energy-to-overturn-abuse-of-dominance-decisions-on-account-of-errors-of-fact-and-assessment.

[91] Bulgarian Energy Holding, ECLI:EU:T:2023:669, ¶ 279.

[92] Id. ¶ 282.

[93] Id. ¶ 281.

[94] Id. ¶¶ 280–81.

[95] Bas Braeken et al., The EU General Court Annuls a €77M Fine Imposed on a Bulgarian Gas Company Due to a Lack of Evidence and Procedural Flaws (Bulgarian Energy Holding), e-Competitions, Oct. 2023, Art. No. 121154 (Oct. 25, 2023).

[96] Ibáñez Colomo, supra note 39.

[97] Akman, supra note 53.

[98] Monti, supra note 26.

[99] Berg, supra note 5.

[100] After the Qualcomm judgment, the Commission said it would study the ruling and consider its next steps. Foo Yun Chee, Qualcomm Wins Fight Against $1 Billion EU Antitrust Fine, Reuters (June 15, 2022), https://www.reuters.com/technology/eu-court-rejects-1-bln-eu-antitrust-fine-against-qualcomm-2022-06-15. The Commission gave a similar response after the BEH judgment. Directorate-General for Competition, Weekly e-News, No. 37/2023 (Oct. 27, 2023).

[101] See, e.g., Monti, supra note 26; see also Ibáñez Colomo, supra note 39.

[102] Letter from Ursula von der Leyen, President, European Commission, to Teresa Ribera Rodríguez, Executive Vice-President-Designate for a Clean, Just and Competitive Transition (Sept. 17, 2024), https://commission.europa.eu/document/download/5b1aaee5-681f-470b-9fd5-aee14e106196_en?filename=Mission%20letter%20-%20RIBERA.pdf.

[103] Council Regulation 1/2003 of Dec. 16, 2002, on the Implementation of the Rules on Competition Laid Down in Articles 81 and 82 of the Treaty, 2003 O.J. (L 1) 1; Commission Regulation 773/2004 of Apr. 7, 2004, Relating to the Conduct of Proceedings by the Commission Pursuant to Articles 81 and 82 of the EC Treaty, 2004 O.J. (L 123) 18 [hereinafter Regulation 773/2004]; see also European Commission, Commission Staff Working Document: Evaluation of Regulations 1/2003 and 773/2004, SWD(2024) 216 final (Sept. 5, 2024), https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13431-EU-antitrust-procedural-rules-evaluation_en.

[104] The European Competition Lawyers Forum argued that Intel and Qualcomm raised evidentiary-quality concerns that the review of Regulation 1/2003 should address. European Competition Lawyers Forum, Contribution to the Public Consultation: Reforms to Regulation 1/2003 (Oct. 24, 2022). Participants in the Commission’s evaluation likewise questioned whether the Commission maintained complete case files containing all relevant evidence, including exculpatory material. European Commission, supra note 103, at 144.

[105] The CJEU dismissed Google and Alphabet’s appeal, leaving in place the General Court’s judgment and the €2.42 billion fine. Case C-48/22 P, Google LLC & Alphabet Inc. v. Comm’n (Google Shopping), ECLI:EU:C:2024:726.

[106] European Commission, Press Release IP/24/3623, Commission Seeks Feedback on Draft Antitrust Guidelines on Exclusionary Abuses (Aug. 1, 2024), https://ec.europa.eu/commission/presscorner/detail/en/ip_24_3623.

[107] Linsey McCallum et al., A Dynamic and Workable Effects-Based Approach to Abuse of Dominance, Competition Policy Brief No. 1/2023 (Eur. Comm’n, Directorate-Gen. for Competition Mar. 2023), https://doi.org/10.2763/731952.

[108] Pinar Akman, Chiara Fumagalli & Massimo Motta, The European Commission’s Draft Guidelines on Exclusionary Abuses: A Law and Economics Critique and Recommendations, 16 J. Eur. Competition L. & Prac. 234 (2025), https://doi.org/10.1093/jeclap/lpaf020.

[109] Dirk Auer & Lazar Radic, The Commission’s Article 102 TFEU Guidelines: Consolidation or Creation?, SSRN Scholarly Paper No. 5134897 (2025), https://doi.org/10.2139/ssrn.5134897.

[110] Akman et al., supra note 108.

[111] See, e.g., Fernando Castillo de la Torre, The Dwindling Law in Article 102 TFEU, in Article 102 TFEU: Past, Present and Future ch. 6 (Assimakis Komninos & Ekaterina Rousseva eds., 2025).

Abstract

Self-preferencing is often described as a ubiquitous feature of digital markets. The emergence of artificial intelligence (AI) services is expected to further intensify attention and concerns regarding the strategies that large online platforms may adopt to grant preferential treatment to their own products and services. As a result, policymakers and competition authorities worldwide have embarked on a hunt for this perceived new menace, launching an ever-growing array of regulatory measures and antitrust probes. Yet, at this stage, no one has been able to draw a clear profile of the wanted, as a wide range of distinct practices seem to fit the description. Like a perfect Zelig, self-preferencing appears everywhere because it resembles everything. Against this background, the paper argues that the significance of self-preferencing has been largely overstated. First, self-preferencing does not exist as a distinct legal or economic concept: it is merely a catch-all label describing a mild form of vertical integration that encompasses a variety of practices already addressed under existing competition law provisions. Second, the notion is far from novel as similar conduct and strategies have long been standard practice among traditional brick-and-mortar retailers. Finally, the economic literature provides evidence that such practices are not necessarily detrimental to consumer welfare, suggesting that blanket prohibitions would be unjustified.

Executive Summary

The Federal Trade Commission’s (FTC) advance notice of proposed rulemaking for online food-delivery services considers requiring platforms to display, itemize, explain, and repeatedly disclose fees throughout an order. This review examines two potential costs. Disclosure overload occurs when excessive information impairs comprehension. Crowding out occurs when mandated content consumes limited attention and screen space, displacing information consumers value more.

Research supports clear, timely disclosure of known mandatory fees. Studies of drip pricing show that concealing such fees behind low headline prices distorts choices. The evidence offers less support for early estimates of charges that depend on a customer’s cart, address, or delivery window. It also does not establish the value of separate narratives for every fee, prescribed prominence, or repetition across screens.

Additional disclosure does not always improve decisions. Consumers struggled with overlapping federal mortgage forms, while a later consolidation that cut word count by 65% improved comparison shopping and borrowing terms. Other studies find that clutter reduces compliance, numerical complexity impairs understanding, and repeated warnings lose their effect. On food-delivery screens, extensive fee displays could displace menu prices, delivery estimates, comparison tools, and allergen or nutrition information. Direct evidence from mobile ordering interfaces remains limited.

Section 18 of the Federal Trade Commission Act requires the FTC to assess a rule’s effects on consumers and small businesses. The Commission should prohibit concealed mandatory fees and false fee representations while testing more prescriptive requirements before adopting them. Tests in actual mobile ordering interfaces should compare alternative formats, measure displacement, distinguish first-time users from repeat customers, and give field results greater weight than laboratory estimates.

I.         Introduction: The Limits of Mandated Disclosure

The Federal Trade Commission (FTC) is considering rules that could require online food-delivery platforms to display extensive pricing and fee information. A platform might have to show the total price, itemize each fee, explain its purpose and refundability, estimate charges that vary by order, and repeat these disclosures throughout the ordering process. This literature review examines whether disclosures of that breadth would help consumers make better decisions.

The FTC’s advance notice of proposed rulemaking (ANPRM) asks 65 questions.1F1F[1] Many concern the content, timing, and presentation of possible disclosures. The Commission asks whether platforms should prominently display a total price, identify and explain fees excluded from that price, estimate variable charges, disclose who receives each fee, and explain how promotions, memberships, in-store prices, and personalized pricing affect what consumers pay. It also considers requiring disclosures before consumers begin an order and everywhere a platform displays a price (Questions 35, 37–38, 41–42, 44–46, 48–52, 59, and 63; Federal Trade Commission 2026a, 20,388–91).

Taken together, these questions contemplate a substantial block of required text and numbers. Much of that information would appear on a smartphone, where most food-delivery transactions occur and screen space remains scarce. A single disclosure may inform an attentive consumer. The relevant question is whether combining and repeating many disclosures would inform consumers better than a leaner design.

The International Center for Law & Economics (ICLE) reached six broader conclusions in its May 18, 2026, comments on the ANPRM (Albrecht et al. 2026):

1. The current record does not satisfy the prevalence, consumer-expectation, and benefit-cost showings that Section 18 of the Federal Trade Commission Act requires before the FTC issues a proposed rule.
2. Existing Section 5 enforcement already reaches hidden mandatory fees and false representations about fees. The enforcement record alone does not justify a sectorwide rule.
3. Any rule should distinguish drip pricing—the strategic withholding of known mandatory fees—from later disclosure of charges that cannot be calculated until the customer selects items and provides a delivery location.
4. Cost-of-service requirements would regulate fee levels, exceed disclosure regulation, and fall outside the Commission’s Section 18 authority.
5. Any rule should apply neutrally to third-party platforms and merchants operating their own delivery services, with safe harbors or model templates for small operators.
6. Requiring platforms to compress variable fees into a single figure could create a de facto price cap and reduce service in rural, low-density, and late-night markets where consumers have few alternatives.

This review addresses a narrower question that arises only if the Commission moves toward a proposed rule: Which disclosure requirements does the evidence support, and which risk repeating documented failures in other markets?

Two issues guide the review. The first is disclosure overload. Beyond some point, additional required information may reduce comprehension and decision quality. Several mechanisms can produce this result. Important information may lose salience, meaning it no longer stands out enough to attract attention. Consumers may become habituated to repeated messages or disengage and stop reading altogether.

The second issue is crowding out. Consumer attention and screen space are finite. Requiring one disclosure may divert attention from another or displace information that consumers value more, such as delivery times, allergens, or nutrition facts. This concern becomes particularly acute on mobile screens.

The literature draws an important distinction between transparent pricing and exhaustive disclosure. Evidence strongly supports requiring platforms to reveal known mandatory fees before consumers invest substantial time in an order. Research on drip pricing shows that withholding such fees until checkout distorts choices and leads consumers to spend more than they intended. Timely disclosure of known mandatory charges promotes honest comparison shopping.

That evidence does not establish that platforms should display every possible detail at every stage. Nor does it justify treating a fee that cannot be calculated until the consumer completes a cart and supplies an address as equivalent to a known fee deliberately withheld until checkout.

Research from other markets also cautions against excessive or poorly designed disclosures. Borrowers understood mortgage terms better after regulators consolidated and shortened the required forms. Visual clutter reduces compliance, repeated warnings lose effectiveness as consumers tune them out, and long lists of variable charges may confuse more than they clarify. Recognizing these limits, the Consumer Financial Protection Bureau, Federal Communications Commission, and U.S. Department of Transportation have used or endorsed layered disclosures, links, and limits on required information instead of placing every detail in a single display.

The case for crowding out has strong theoretical support, and regulators have acknowledged the problem. Empirical research has rarely measured how competing disclosures affect consumers on an actual ordering screen, though. Section 18 requires the Commission to assess a rule’s costs. The Commission therefore should not assume away the costs of overload and crowding out. It should test competing disclosure designs with real consumers before imposing a uniform mandate.

II.      Disclosure Overload: Evidence and Limits

Disclosure overload occurs when the volume, complexity, or repetition of mandated information exceeds consumers’ processing capacity and reduces decision quality. This section examines the scarcity of attention, the evidence supporting targeted disclosure of known fees, the risks posed by accumulation and clutter, and the importance of design, context, and field testing.

A.      Attention Is a Scarce Resource

The economics of attention starts with a basic constraint. Christopher Sims models decision-makers as information-processing channels with finite capacity. Greater attention to one signal leaves less capacity to track others (Sims 2003). Xavier Gabaix’s review of empirical estimates finds that consumers, on average, operate about halfway between full attention and complete inattention (Gabaix 2019). Economic research therefore treats attention as a scarce resource that consumers must allocate among competing demands.

Regulation cannot eliminate that scarcity. Omri Ben-Shahar and Carl Schneider describe the resulting “accumulation problem.” Regulators adopt each disclosure mandate in isolation, while consumers confront the combined demands of every mandate and everything else competing for their time (Ben-Shahar and Schneider 2011). Their review documents the consequences. One clickstream study, which tracked users’ online activity, found that only about one in 1,000 customers opened the terms of a software contract before purchasing. Among those who opened the terms, the median customer spent 29 seconds reading them.

Firms can exploit these limits. Petra Persson models a firm that complies with a disclosure mandate by surrounding the required fact with accurate but irrelevant information. The additional material consumes the customer’s attention and obscures the relevant fact (Persson 2018). If regulators prescribe a simpler format, the firm can complicate the product itself so the relevant information again exceeds the customer’s processing capacity. Persson calls this response “complexification.” Questions 37, 38, and 42 contemplate prominence requirements and separate explanations for each fee. Such mandates could prompt the strategic responses Persson’s model predicts.

B.       Drip-Pricing Research Supports Targeted Disclosure

The advance notice of proposed rulemaking cites two experiments showing that drip pricing harms consumers. Both concern fixed, knowable fees withheld until late in a transaction. Neither examines variable fees that depend on an address, cart, or delivery window. The studies therefore address fee concealment rather than the required timing or format for charges that cannot yet be calculated.

Alexander Rasch, Miriam Thöne, and Tobias Wenzel constructed laboratory markets in which comparing dripped fees imposed a small search cost. Sellers responded by setting the dripped component near the maximum allowed and competing on the base price. Total prices averaged 16.96 experimental units under drip pricing and 15.37 under transparent pricing. In addition, 21% of buyers mistakenly chose the more expensive option (Rasch, Thöne, and Wenzel 2020).

Shelle Santana, Steven Dallas, and Vicki Morwitz found similar effects. Consumers shown dripped add-on fees selected the lower base-price option 54.5% of the time, compared with 11.7% among consumers who saw the fees upfront. Even after seeing the final total, 24.5% of participants in the drip-pricing condition chose the more expensive option, compared with 7.8% in the upfront condition (Santana, Dallas, and Morwitz 2020).

Field evidence also supports a targeted policy against concealment. Tom Blake, Sarah Moshary, Kane Sweeney, and Steve Tadelis conducted a large randomized experiment on StubHub. Delaying mandatory fees until checkout increased revenue by roughly 21%, made buyers 14.1% more likely to complete a purchase, and shifted purchases toward more expensive tickets (Blake et al. 2021). The experiment involved a single fixed fee on a standardized ticket. Food and grocery orders present a different problem because they involve multi-item carts, variable delivery conditions, and comparisons across products and retailers.

Xavier Gabaix and David Laibson explain why competition may fail to correct concealed fees. Their theoretical model shows that firms profit from shrouding add-on charges when enough consumers overlook them. A firm gains little by educating consumers who would then purchase the discounted base product and avoid the profitable add-on (Gabaix and Laibson 2006).

Other research confirms that timely, salient disclosures can change behavior. Raj Chetty, Adam Looney, and Kory Kroft found that posting tax-inclusive prices on grocery shelves reduced demand for treated products by roughly 8%. Survey evidence showed that most consumers already knew the tax applied. Displaying it at the moment of choice made it salient (Chetty, Looney, and Kroft 2009).

Behaviorally designed disclosures have produced similar results in payday lending. Marianne Bertrand and Adair Morse found that showing borrowers the cumulative dollar cost of repeated loan rollovers reduced borrowing by 11% over the next four months (Bertrand and Morse 2011). Jialan Wang and Kathleen Burke found that a Texas mandate requiring a similar disclosure before each payday loan produced a persistent 12% decline in loan volume, with no observable increase in prices or defaults (Wang and Burke 2022).

This evidence supports preventing platforms from concealing known, mandatory fees behind misleading headline prices. It does not establish that the Federal Trade Commission should require every fee to appear at the beginning of a transaction or prescribe a single presentation format. The studies show that concealment distorts choices. They do not compare alternative formats for clearly disclosing known fees.

That distinction tracks ICLE’s comments. Fixed mandatory fees are known in advance, and delaying them can exploit the time a consumer has spent assembling an order. Contingent variable fees cannot be calculated until the consumer supplies an address, cart, or delivery window (Albrecht et al. 2026, 10–11). The evidence supports treating these two categories differently.

C.      Excessive Disclosure Can Reduce Comprehension

For decades, mortgage borrowers received overlapping disclosures under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The Federal Trade Commission’s Bureau of Economics tested those forms on 819 borrowers. Roughly 20% could not identify the annual percentage rate, cash due at closing, or monthly payment, and nearly nine in 10 could not identify the loan’s total upfront cost (Lacko and Pappalardo 2007; Lacko and Pappalardo 2010). The FTC economists warned that disclosures containing “too much, irrelevant, or unnecessary information” can cause consumers to ignore the material altogether (Lacko and Pappalardo 2007, 128).

In 2015, the Consumer Financial Protection Bureau consolidated the overlapping forms into two documents under the TILA-RESPA Integrated Disclosure rule, commonly called TRID. The change reduced the disclosures’ word count by 65%. Patrick Kielty, K. Philip Wang, and Diana Weng found that first-time homebuyers subsequently paid significantly lower interest rates than repeat buyers, with no offsetting increase in upfront points or fees. The effects were largest in areas with greater lender competition. The authors concluded that “less disclosure makes borrowers better off” when regulators eliminate duplication and complexity (Kielty, Wang, and Weng 2023, 193).

Allison Nicoletti and Christina Zhu likewise found that simplification reduced consumers’ information-processing costs and increased comparison shopping. After the rule took effect, significantly more consumers withdrew applications, apparently because they found better terms elsewhere (Nicoletti and Zhu 2023).

Questions 38 and 42 contemplate requiring platforms to disclose the nature, purpose, amount, refundability, and recipient of every fee, along with a separate explanation for each. The mortgage evidence suggests that such detail can become self-defeating. Food-delivery customers also make low-stakes purchases in minutes and repeat them frequently. Any comprehension cost would recur with each order, rather than arise once during an infrequent, high-stakes transaction.

The Commission has already rejected a similar requirement. In its January 2025 Trade Regulation Rule on Unfair or Deceptive Fees, which covers live-event ticketing and short-term lodging, the Commission declined to require affirmative disclosure of each fee’s refundability. It found that the requirement could prove impractical for businesses and confusing for consumers (Federal Trade Commission 2025, 90 Fed. Reg. 2,066, 2,102). Question 38 considers that same requirement for food delivery. The Commission should require evidence that food delivery warrants a different result.

Questions 48, 59, and 63 consider requiring fee disclosures wherever a price appears. A food-delivery app may display prices on the restaurant list, menu, item page, cart, and checkout screen. Platforms that allow searches across retailers also display prices in comparison results designed to help customers evaluate competing products. Adding a fee module could consume much of a phone screen and impair that function.

Repeating the same disclosure at each point also creates habituation, the declining neurological and behavioral response to repeated stimuli. Bonnie Brinton Anderson and her coauthors used eye tracking to show that users look at warnings less with each successive viewing (Anderson et al. 2016). Anthony Vance and his coauthors combined functional magnetic resonance imaging, eye tracking, and a three-week field experiment. Adherence to mobile security warnings fell from 87% to 64% with repeated exposure, and brain imaging showed a corresponding decline in response. Changing a warning’s appearance preserved much of its effect (Vance et al. 2018). In a field study of more than 25 million browser warnings, Devdatta Akhawe and Adrienne Porter Felt found that half of users dismissed Chrome’s most common security warning within 1.7 seconds (Akhawe and Felt 2013).

Indiscriminate repetition can also make warnings less informative. Lisa Robinson, W. Kip Viscusi, and Richard Zeckhauser report that 69% of surveyed consumers equated California’s generic Proposition 65 cancer warning on breakfast cereal with the risk of cigarette smoking. They argue that warning systems fail when they attach identical language to risks of vastly different severity, leaving consumers unable to separate the “wolf or puppy” (Robinson, Viscusi, and Zeckhauser 2019). The same evidence suggests that consumers will devote less attention to a fee notice that appears identically on every screen of every order.

Clutter and numerical density create related problems, especially on small smartphone screens. Peter Hancock and his coauthors synthesized 272 effect sizes from 30 warning studies. They found that integrating a warning into the user’s task and including text increased compliance, while visual clutter reduced it (Hancock et al. 2020).

Research involving food choices reports similar effects. Julie Downs, Jessica Wisdom, and George Loewenstein found that raw numerical calorie information had almost no effect on snack choices. Combining calorie information with a separate choice-architecture intervention sometimes reversed that intervention’s effect, showing that stacked policies can interfere with one another (Downs, Wisdom, and Loewenstein 2015). Sarah Campos, Juliana Doxey, and David Hammond’s systematic review found that labels requiring arithmetic confused consumers, while simplified interpretive formats improved their ability to identify healthier options (Campos, Doxey, and Hammond 2011). The U.S. Food and Drug Administration’s 2023 review similarly found that consumers often understood simple summary or interpretive labels better than detailed numerical systems, although results varied by design and outcome (Verrill et al. 2023).

Questions 41 and 42 implicate these findings. Itemization at checkout can provide useful information. A customer who sees a small-order fee learns that adding items may avoid it. A customer who sees a distance-based delivery fee learns that ordering from a closer restaurant may cost less. ICLE’s comments defended itemized disclosure on that ground (Albrecht et al. 2026, 12). The overload risk depends on the required level of detail and on mandates to estimate fees that cannot yet be calculated.

The Federal Communications Commission took that concern seriously when it adopted its 2022 broadband consumer label. The agency confined the label to core price terms and directed consumers to hyperlinks for additional detail. It found that expansive on-label disclosures would overwhelm consumers without helping them (Federal Communications Commission 2022, 87 Fed. Reg. 76,959, 76,966). In 2025, the agency proposed trimming the label further because itemizing location-variable fees confused consumers without improving their decisions (Federal Communications Commission 2025, 90 Fed. Reg. 55,713). ICLE’s comments in that proceeding cited behavioral research showing that decision quality declines when disclosure volume exceeds consumers’ processing capacity (Fruits and Westling 2026).

Food-delivery fees that vary by distance, time, traffic, and demand resemble location-variable broadband fees. Requiring platforms to disclose amounts or ranges before a customer provides an address forces platforms to offer either worst-case figures that overstate most customers’ costs or ranges too broad to inform a decision. Both approaches could teach consumers to disregard the disclosure, replicating the disengagement that James Lacko and Janis Pappalardo documented.

D.      Disclosure Effects Depend on Design and Context

Bryan Bollinger, Phillip Leslie, and Alan Sorensen found that mandatory calorie posting at Starbucks reduced average calories per transaction by 6% without harming profits (Bollinger, Leslie, and Sorensen 2011). Pasquale Rummo and his coauthors, analyzing nine years of Taco Bell transactions, associated menu labeling with a 24.7-calorie reduction per transaction (Rummo et al. 2023). In consumer finance, Victor Stango and Jonathan Zinman found that simply surveying consumers about overdraft fees reduced their likelihood of incurring one by 3.7 percentage points from a 26% baseline (Stango and Zinman 2014).

These studies show that a single, salient disclosure of a material fact can improve decisions. They also identify a potential crowding-out cost. A dense fee display could displace calorie and nutrition information that consumers value on the same screen. Yet these studies do not test multiple simultaneous disclosures, prominence requirements, or repetition across screens.

Even the strongest field evidence warrants modest expectations. Michael Long and his coauthors conducted a meta-analysis of menu labeling. When they limited the analysis to the six highest-quality controlled studies in actual restaurants, they found a statistically insignificant reduction of only 7.63 calories per meal (Long et al. 2015).

Several prominent disclosure failures arose from causes other than overload. Sumit Agarwal and his coauthors found that a payment disclosure required by the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) had little effect because consumers who paid online rarely saw the monthly statements containing it. The failure concerned delivery rather than consumers’ ability to process the disclosure (Agarwal et al. 2015). The same study found that the CARD Act’s substantive fee limits saved consumers an annualized 1.6% of balances, or roughly $11.9 billion a year. Choosing the right remedy therefore requires identifying why a disclosure failed.

The dysfunction of European cookie-consent banners likewise reflects deliberate manipulation as much as cognitive limits. Dino Bollinger and his coauthors found potential violations on 94.7% of roughly 30,000 websites (Bollinger et al. 2022). Ahmed Bouhoula and his coauthors found that 65.4% of sites offering an opt-out continued collecting data after users refused consent (Bouhoula et al. 2024). Such conduct calls for enforcement against noncompliance and deceptive design.

Research methods also warrant caution. Stefano DellaVigna and Elizabeth Linos compared 126 government nudge trials covering 23.5 million people with results published in academic journals. The published effect sizes were roughly six times larger, and selective publication (also known as publication bias) accounted for about 70% of the gap (DellaVigna and Linos 2022). Their findings counsel caution when extrapolating from the laboratory drip-pricing experiments cited in the advance notice of proposed rulemaking.

The Commission should build its record with field evidence and consumer testing that reflect actual food-delivery interfaces. These platforms present several important categories of information at once. Evidence that a narrow disclosure improved decisions in another market does not establish that additional fee narratives, estimates, and repetition will help food-delivery customers.

The research supports truthful, timely disclosure of known mandatory fees without misleading headline prices. It provides no comparable support for granular explanations of every fee, estimates of charges that cannot yet be calculated, prescribed prominence hierarchies, or repetition on every screen. Those requirements can turn useful disclosure into clutter with measurable costs.

III.    Crowding Out: Theory, Regulatory Experience, and Evidence

Crowding out occurs when mandated content consumes finite attention and display space, displacing information consumers may value more. On food-delivery apps, the disclosures contemplated in Questions 35 through 52 would compete on smartphone screens with menu items, prices, delivery estimates, restaurant ratings, and required allergen and nutrition information. Question 23 asks what could impede disclosure of all mandatory fees before ordering begins and wherever a price appears (Federal Trade Commission 2026a, 20,389). On a mobile interface, the screen itself imposes a practical limit.

The economics of limited attention provides the theoretical basis for this concern. Federal agencies and a state supreme court have treated screen-space displacement as a genuine design constraint, and related studies show that clutter, placement, and screen size affect attention and comprehension. Direct evidence from food-delivery transaction screens remains scarce. This section reviews the theory, regulatory experience, and limits of the empirical record.

A.      Limited Attention Creates Crowding Out

Crowding out applies the same finite-capacity framework to information presented within a limited display. Christopher Sims’s model implies that adding signals reduces a consumer’s capacity to process those already present (Sims 2003). Geoffroy de Clippel, Kfir Eliaz, and Kareen Rozen likewise model consumers who can inspect only a limited number of options. Examining one option necessarily leaves less attention for another (de Clippel, Eliaz, and Rozen 2014).

Petra Persson shows how firms can exploit this constraint. A firm can surround a material disclosure with accurate but irrelevant cues, consuming the attention needed to process the important information (Persson 2018). The Organisation for Economic Co-operation and Development’s (OECD) consumer-policy committee incorporated these findings into its guidance. It advises regulators to limit the scope and prescriptiveness of disclosure mandates and expressly identifies the accumulation problem in online settings (OECD 2022, 33).

B.       Regulators Recognize Screen-Space Constraints

Three federal agencies and one state supreme court have treated limited screen space and attention as material design constraints. Each authority informs the placement and prominence requirements under consideration here.

The U.S. Department of Transportation’s 2024 airline-fee rule required upfront, passenger-specific disclosure of baggage and change fees on the first page of search results. The agency nevertheless allowed pop-ups and expandable text because rigid on-page requirements could “overcrowd web pages” and impair the presentation of fare information on small screens (U.S. Department of Transportation 2024, 89 Fed. Reg. 34,620, 34,646).

The 5th U.S. Circuit Court of Appeals later vacated the rule on Administrative Procedure Act grounds, and the Department reinstated the prior standard effective July 2, 2026 (U.S. Department of Transportation 2026, 91 Fed. Reg. 40,368). The court’s decision neither endorsed nor rejected the agency’s behavioral judgment. This brief cites the 2024 rule only for that judgment. After a full rulemaking, an agency requiring upfront fee disclosure concluded that flexible presentation was necessary to avoid crowding. Its approach also shows why rigid mandates can impede improvements as technology and consumer behavior change.

The Federal Communications Commission made a similar design choice for its broadband label. It required a compact, standardized display and placed additional detail behind hyperlinks because expansive on-label content would overwhelm consumers (Federal Communications Commission 2022).

The Federal Trade Commission’s 2013 digital-advertising guidance likewise instructs businesses to place required disclosures as close as possible to the claims they qualify. It warns that scrolling makes disclosures easier to miss and specifically addresses the constraints of mobile screens (Federal Trade Commission 2013). The Commission cannot treat mobile screen space as a binding constraint when judging disclosure placement and as costless when considering the number of required disclosures.

The California Supreme Court addressed the same concern in Dowhal v. SmithKline Beecham Consumer Healthcare. The court held that federal law preempted a state warning requirement, relying in part on the U.S. Food and Drug Administration’s concern about overwarning and the danger of “less meaningful warnings crowding out necessary warnings” (Dowhal v. SmithKline Beecham Consumer Healthcare 2004).

C.      Direct Evidence of Screen-Space Crowding Is Limited

Few studies directly measure how mandated information displaces other content on transaction screens. Related evidence nonetheless indicates that display constraints affect attention and comprehension. Peter Hancock and his coauthors found that clutter within a display reduces compliance with warnings (Hancock et al. 2020). Christine Utz and her coauthors, in field experiments involving more than 80,000 website visitors, found that a consent banner’s placement substantially affected whether users engaged with it (Utz et al. 2019). Christopher Sanchez and James Goolsbee found that small displays impair reading retention unless designers adjust the text size to fit the screen (Sanchez and Goolsbee 2010). The U.S. Food and Drug Administration’s review of front-of-package labels found that, under time pressure, labels competing with other package elements can distort consumers’ perceptions of healthfulness (Verrill et al. 2023).

These studies do not answer the precise question before the Commission. No study cited here measures whether a mandated fee module on a menu or cart screen reduces attention to delivery times, allergen information, or price comparisons across platforms. Nor does the literature quantify the resulting consumer harm. Economic theory supports the crowding-out concern, and regulators confronting similar design problems have recognized it. Direct evidence from smartphone transaction screens remains scarce. The Commission should fill that gap through consumer testing before imposing prescriptive requirements.

IV.    Applying the Evidence to the ANPRM

What the evidence supports:

• Prohibiting platforms from concealing fixed mandatory fees behind misleading headline prices would respond to Questions 15a and 48 and accord with the drip-pricing evidence.
• The same principle applies to contingent and variable fees under Questions 16, 41b, and 41c. Platforms should not advertise a price that omits fees they know will apply, even when the exact amount depends on the customer’s address, cart, or delivery window.
• False statements about fees constitute deception under settled Section 5 doctrine.

Provisions that the current record does not support:

• Requiring a total-price display that includes variable components under Questions 35, 36, and 41a forces platforms to provide either estimates or broad ranges. The Commission’s existing Fees Rule excludes analogous shipping charges from the total price because of this practical difficulty (16 C.F.R. § 464.1; Albrecht et al. 2026, 13–14). A shipping-charge exception would not fully address food delivery because the relevant fees can vary with the cart, address, and delivery window.
• Requiring the total price to dominate every other element under Question 37 imposes a prominence hierarchy. Persson’s model shows how firms can respond strategically to such format mandates, while the Federal Communications Commission’s experience demonstrates the risks of prescribing detailed label designs.
• Requiring separate narratives about each fee’s nature, purpose, refundability, and recipient under Question 38 would impose a requirement the Commission rejected in January 2025.
• Repeating disclosures wherever a price appears under Questions 48, 59, and 63 conflicts with the evidence on habituation.
• Adding in-store price-comparison and personalized-pricing disclosures under Questions 51 and 52 would compound the accumulation problem on small screens.

V.      Test Disclosure Mandates Before Adopting Them

Section 18 of the Federal Trade Commission Act requires findings on the prevalence of the targeted practices and an economic analysis of a final rule’s effects on consumers and small businesses (15 U.S.C. § 57a(b), (d)). The evidence on disclosure overload and crowding out identifies three research tasks within the Commission’s demonstrated capacity.

Format testing should precede format mandates. The Bureau of Economics’ mortgage-disclosure project provides a useful model. Researchers first conducted qualitative interviews and then ran controlled experiments comparing existing and prototype disclosures with actual consumers (Lacko and Pappalardo 2007). Here, the Commission should test proposed fee displays within mobile ordering interfaces. It should test first-time and repeat users separately because the advance notice of proposed rulemaking indicates that many customers order repeatedly and may have different baseline expectations (Federal Trade Commission 2026a, 20,381; Albrecht et al. 2026, 8). This research would respond directly to Question 63’s request for evidence that the proposed disclosures improve decision-making.

The Commission should also measure displacement. Researchers can test whether a mandated fee module on menu and cart screens reduces attention to delivery times, allergen information, or comparison tools. Eye tracking, as used by Bonnie Brinton Anderson and Anthony Vance, combined with A/B testing that compares alternative display designs, as used by Christine Utz, could answer the question at modest cost.

The Commission should give field evidence greater weight than laboratory results. Stefano DellaVigna and Elizabeth Linos found that published academic studies reported effects roughly six times larger than government trials conducted under real-world conditions (DellaVigna and Linos 2022). Michael Long and his coauthors likewise found that menu-labeling effects became statistically insignificant when they limited their meta-analysis to the highest-quality controlled studies in actual restaurants (Long et al. 2015).

VI.    Conclusion

The evidence supports a targeted response to deceptive pricing. Platforms should disclose known mandatory fees clearly and before purchase rather than use low headline prices that rise later. Fees that depend on a customer’s cart, address, or delivery window require different treatment because platforms cannot calculate them at the start of an order. The drip-pricing research supports preventing concealment. It does not establish the value of a prescribed format, estimates of unknown charges, or repetition on every screen.

The broader literature cautions against treating more disclosure as inherently better. Consumer attention is finite. Accumulated detail, visual clutter, numerical complexity, and repeated warnings can reduce comprehension and cause disengagement. The Federal Trade Commission’s own mortgage research documented those effects. The Consumer Financial Protection Bureau later cut overlapping mortgage disclosures by 65%, and borrowers received better terms. A food-delivery app offers less room and demands faster decisions than a mortgage form.

Crowding out presents a related cost. A mandated fee module can displace delivery estimates, allergen and nutrition information, restaurant ratings, and comparison tools. Economic theory supports that concern, and federal agencies and a state supreme court have recognized it. Direct evidence from food-delivery screens remains limited, which makes consumer testing necessary before the Commission adopts prescriptive requirements.

Section 18 requires the Commission to examine a rule’s effects on consumers and small businesses. The Commission should test competing designs in actual mobile ordering interfaces, measure what information they displace, distinguish first-time users from repeat customers, and give field results greater weight than laboratory estimates. That work can support rules that secure the benefits of honest pricing while avoiding the disclosure failures federal regulators have spent decades documenting and correcting.

Works Cited

• Agarwal, Sumit, Souphala Chomsisengphet, Neale Mahoney, and Johannes Stroebel. “Regulating Consumer Financial Products: Evidence from Credit Cards.” The Quarterly Journal of Economics 130, no. 1 (2015): 111–164. https://doi.org/10.1093/qje/qju037.

Approach: Peer-reviewed natural experiment using panel data.

Findings: The Credit Card Accountability Responsibility and Disclosure Act’s limits on credit card fees reduced annual borrowing costs by 1.6% of average daily balances, saving consumers $11.9 billion annually, with no offsetting increase in interest rates. By contrast, a required disclosure showing the savings from repaying balances over 36 months produced only a tiny increase in the share of accounts paying that amount. The authors found “no evidence of a change in overall payments.”

Authors’ Conclusions: Structural fee regulations reduce costs because imperfect competition and non-salient pricing prevent issuers from fully recovering lost fee revenue. The authors attribute the payoff disclosure’s negligible effect to poor delivery: Consumers who pay online rarely view their monthly statements.

Relevance to Disclosure Overload: Counterevidence. The disclosure failed because consumers rarely saw it during the payment process, rather than because excessive information overwhelmed them.

Relevance to Crowding Out: None. The study examines the delivery of credit card disclosures but does not analyze whether disclosures compete for limited screen space.

• Akhawe, Devdatta, and Adrienne Porter Felt. “Alice in Warningland: A Large-Scale Field Study of Browser Security Warning Effectiveness.” In Proceedings of the 22nd USENIX Security Symposium, 257–272. 2013.

Approach: Peer-reviewed, large-scale field study using browser telemetry data.

Findings: Across more than 25 million browser security warnings, users bypassed 33% of Mozilla Firefox’s Secure Sockets Layer (SSL) warnings and 70.2% of Google Chrome’s. They bypassed about 10% of Firefox’s malware and phishing warnings, compared with 25% of Chrome’s. Users dismissed the most common SSL errors fastest. Half bypassed Chrome’s most common SSL warning in less than 1.7 seconds, a result “consistent with the theory of warning fatigue.”

Authors’ Conclusions: Security warnings can work well when designed effectively, contrary to the assumption that users routinely ignore them. Frequent alerts can nevertheless cause warning fatigue, leading users to dismiss familiar messages without reading them.

Relevance to Disclosure Overload: Supporting. The evidence of warning fatigue suggests that repeated warnings can prompt rapid dismissal. By extrapolation, a high volume of required disclosures may produce similar overload.

Relevance to Crowding Out: None. The study examines the frequency of warnings over time, rather than whether simultaneously displayed disclosures displace other information on a screen.

• Albrecht, Brian, Eric Fruits, Daniel J. Gilman, and Geoffrey A. Manne. Comments of the International Center for Law & Economics: Rule on Unfair or Deceptive Fees in Online Food Delivery Services ANPRM, FTC Project No. P267101. International Center for Law & Economics, May 18, 2026. https://laweconcenter.org/wp-content/uploads/2026/05/FTC-Delivery-Fees-2026.pdf.

Approach: Non-peer-reviewed policy analysis and commentary.

Findings: A single “all-in” pricing rule poses different problems for food-delivery platforms than for hotels or ticket sellers because delivery fees vary with each order. Requiring platforms to disclose every potential variable upfront could force them to display hypothetical estimates or adopt inefficient pricing structures. Yet collapsing all fees into one figure would prevent consumers from identifying charges, such as small-order fees, that they could avoid by changing their carts.

Authors’ Conclusions: The Federal Trade Commission should not adopt a sectorwide food-delivery rule based on its current enforcement record. If the Commission adopts a rule, it should distinguish mandatory fixed fees from contingent variable fees. Excessive detail forces consumers to “[sort] the important points from the minor detail.”

Relevance to Disclosure Overload: Direct. The authors cite federal findings that overly detailed disclosures frustrate consumers and cause them to ignore the information altogether.

Relevance to Crowding Out: None. The comment examines the timing and level of detail of variable-fee disclosures, rather than whether disclosures compete for limited screen space or consumer attention.

• Anderson, Bonnie Brinton, Anthony Vance, C. Brock Kirwan, David Eargle, and Jeffrey L. Jenkins. “How Users Perceive and Respond to Security Messages: A NeuroIS Research Agenda and Empirical Study.” European Journal of Information Systems 25, no. 4 (2016): 364–390. https://doi.org/10.1057/ejis.2015.21.

Approach: Peer-reviewed theoretical research agenda and laboratory experiment using eye tracking.

Findings: In an eye-tracking study of 62 participants, attention to security warnings declined significantly with each successive viewing. This decline was significantly smaller for polymorphic warnings, which change their appearance between viewings.

Authors’ Conclusions: People habituate to repeated security messages and unconsciously devote less visual attention to them over time. Changing a warning’s visual presentation can substantially reduce habituation driven by “hidden (automatic or unconscious) mental processes.”

Relevance to Disclosure Overload: Supporting. The study shows that repeated warnings lose users’ attention as users become habituated and begin to ignore them unconsciously. By extrapolation, repeated disclosures may produce a similar form of overload.

Relevance to Crowding Out: None. The study measures habituation across successive warnings, rather than whether concurrently displayed information competes for limited screen space or attention.

• Ben-Shahar, Omri, and Carl E. Schneider. “The Failure of Mandated Disclosure.” University of Pennsylvania Law Review 159, no. 3 (2011): 647–749. https://home.uchicago.edu/omri/pdf/articles/Mandated_Disclosure.pdf.

Approach: Peer-reviewed literature review and policy analysis.

Findings: The authors document widespread failures of mandated disclosure in consumer credit, online contracts, and other fields. Consumers miscalculated finance charges by 200% because they misunderstood credit terms, suggesting that disclosure had no effect or made decisions worse. In one study of online boilerplate agreements, only about one in 1,000 consumers opened the pre-purchase disclosure, and those who did spent a median of 29 seconds reading it. The authors attribute these failures to cognitive overload and the accumulation of competing mandates: “[T]he accumulation problem arises because so many disclosures assail disclosees.”

Authors’ Conclusions: Mandated disclosure rests on faulty assumptions about human cognition and decision-making. The authors recommend abandoning it as a regulatory technique, rather than trying to improve it through simplification.

Relevance to Disclosure Overload: Direct. The article explains how cognitive overload impairs consumers’ comprehension of complex disclosures.

Relevance to Crowding Out: Direct. The article identifies an accumulation problem in which each additional disclosure competes for consumers’ finite attention with other disclosures and daily activities.

• Bertrand, Marianne, and Adair Morse. “Information Disclosure, Cognitive Biases, and Payday Borrowing.” The Journal of Finance 66, no. 6 (2011): 1865–1893. https://doi.org/10.1111/j.1540-6261.2011.01698.x.

Approach: Peer-reviewed randomized field experiment.

Findings: Disclosures showing payday borrowers the cumulative dollar cost of repeatedly renewing a loan reduced borrowing by 11% over the next four months. A savings-planner treatment designed to encourage self-control had no effect, either alone or combined with the information treatments. By contrast, disclosures designed around borrowers’ cognitive biases “significantly reduce[d] the frequency and amount” of borrowing.

Authors’ Conclusions: Standard mandated disclosures assume that consumers act rationally. Reframing costs to address specific cognitive biases can change behavior. These biases include narrow bracketing, or viewing each loan in isolation, and the “peanuts effect,” or treating small recurring charges as inconsequential. The authors do not claim that targeted disclosures can solve the problems associated with payday borrowing, but they stress their low implementation cost.

Relevance to Disclosure Overload: Boundary condition. The study shows that simple, behaviorally designed disclosures can improve decisions without causing cognitive overload, even when more complex disclosures might fail.

Relevance to Crowding Out: None. The study tests disclosures delivered in physical envelopes and does not examine whether information competes for limited space in a crowded visual display.

• Blake, Tom, Sarah Moshary, Kane Sweeney, and Steve Tadelis. “Price Salience and Product Choice.” Marketing Science 40, no. 4 (2021): 619–636. https://doi.org/10.1287/mksc.2020.1261.

Approach: Peer-reviewed, large-scale field experiment.

Findings: On StubHub, hiding mandatory fees until checkout increased revenue by about 21%. Buyers who saw fees only at checkout were 14.1% more likely to complete a purchase and spent 5.42% more, on average. Users who saw fees upfront often left the platform earlier, while those who encountered fees later “differentially exit[ed] at checkout.”

Authors’ Conclusions: Obscuring fees creates search friction that distorts how much consumers buy and which products they choose, steering them toward more expensive tickets. Delayed fees affect even experienced users, likely because calculating final prices imposes additional mental costs.

Relevance to Disclosure Overload: Counterevidence. Prominent upfront disclosure of mandatory fees improved consumer decision-making, undercutting the claim that additional disclosure necessarily impairs comprehension.

Relevance to Crowding Out: None. The study examines sequential price disclosure and search friction, rather than whether disclosures displace other information within a limited visual space.

• Bollinger, Bryan, Phillip Leslie, and Alan Sorensen. “Calorie Posting in Chain Restaurants.” American Economic Journal: Economic Policy 3, no. 1 (2011): 91–128. https://doi.org/10.1257/pol.3.1.91.

Approach: Peer-reviewed natural experiment using transaction data.

Findings: Mandatory calorie posting at Starbucks reduced average calories per transaction by 6%. Changes in food purchases accounted for nearly the entire reduction, while beverage choices changed little. Calories per food item fell by about 14 to 52 calories as consumers bought fewer food items and chose lower-calorie options. The policy did not reduce Starbucks’ average revenue and increased revenue at stores near competitors.

Authors’ Conclusions: Calorie posting changes consumer behavior by increasing knowledge and making calorie information more salient. The study could not directly measure the policy’s long-term effects on obesity or body mass index.

Relevance to Disclosure Overload: Counterevidence. Adding a required numerical disclosure changed consumer behavior without evidence that the additional information impaired decision-making.

Relevance to Crowding Out: None. The study measures behavioral responses to calorie posting but does not examine whether disclosures compete for limited visual space or attention.

• Bollinger, Dino, Karel Kubicek, Carlos Cotrini, and David Basin. “Automating Cookie Consent and GDPR Violation Detection.” In 31st USENIX Security Symposium (USENIX Security 22), 2893–2910. USENIX Association, 2022. https://www.usenix.org/system/files/sec22summer_bollinger.pdf.

Approach: Peer-reviewed, large-scale automated web measurement.

Findings: A scan of about 30,000 websites identified potential violations of the General Data Protection Regulation (GDPR) on 94.7% of them. Nearly 70% assumed consent before users made a choice, and 21.3% created cookies after users explicitly withheld consent. The researchers also developed a machine-learning browser extension that automatically filtered about “90% of the privacy-invasive cookies.”

Authors’ Conclusions: GDPR consent mechanisms often fail because website administrators use deceptive practices or disregard users’ choices. Client-side automation can help protect users because regulatory agencies cannot monitor the volume of potential noncompliance.

Relevance to Disclosure Overload: Context. The prevalence of defective cookie banners shows how mandated consent mechanisms can fail in practice. Attributing those failures to cognitive overload, rather than deceptive design or noncompliance, requires extrapolation.

Relevance to Crowding Out: None. The study examines compliance failures and evasion tactics, rather than spatial or attentional competition among disclosures.

• Bouhoula, Ahmed, Karel Kubicek, Amit Zac, Carlos Cotrini, and David Basin. “Automated Large-Scale Analysis of Cookie Notice Compliance.” In 33rd USENIX Security Symposium (USENIX Security 24), 1723–1740. USENIX Association, 2024. https://www.usenix.org/conference/usenixsecurity24/presentation/bouhoula.

Approach: Peer-reviewed, large-scale automated web measurement.

Findings: The researchers evaluated 97,000 websites subject to the General Data Protection Regulation (GDPR). Among sites offering an opt-out option, 65.4% still collected user data after users explicitly withheld consent. Another 73.4% set analytics or advertising cookies before users interacted with the cookie notice. The researchers also found forced-action dark patterns on 46.4% of websites with notices.

Authors’ Conclusions: Widespread noncompliance has rendered the current notice-and-consent framework ineffective. Popular websites were especially likely to display apparently compliant notices while disregarding users’ choices and continuing to collect data. Regulators need automated tools to detect deceptive designs and enforce privacy rules at scale.

Relevance to Disclosure Overload: Context. The study documents widespread failure within a mandated notice-and-consent system. It attributes that failure to deceptive design and noncompliance, rather than cognitive overload among users.

Relevance to Crowding Out: None. The study examines consent evasion and compliance failures, rather than whether disclosures displace other valuable information or compete for users’ attention.

• Campos, Sarah, Juliana Doxey, and David Hammond. “Nutrition Labels on Pre-Packaged Foods: A Systematic Review.” Public Health Nutrition 14, no. 8 (2011): 1496–1506. https://doi.org/10.1017/S1368980010003290.

Approach: Peer-reviewed systematic review.

Findings: The review examined 120 articles. Although more than 50% of consumers typically reported using nutrition labels, many struggled to apply quantitative nutrition information. Labels that required calculations involving serving sizes caused particular confusion, especially among consumers with less education. Simplified formats, such as front-of-package traffic-light labels, significantly increased “consumer ability to identify healthier food options.”

Authors’ Conclusions: Mandatory nutrition labels offer a cost-effective population-level intervention, but complex numerical formats remain inaccessible to many consumers. Regulators should simplify label content and test new formats that consumers with varying literacy levels can understand.

Relevance to Disclosure Overload: Supporting. The review finds that dense, calculation-heavy disclosures confuse consumers and impair comprehension.

Relevance to Crowding Out: None. The review examines the format and comprehensibility of individual package labels, rather than spatial competition among multiple disclosures.

• Chetty, Raj, Adam Looney, and Kory Kroft. “Salience and Taxation: Theory and Evidence.” American Economic Review 99, no. 4 (2009): 1145–1177. https://doi.org/10.1257/aer.99.4.1145.

Approach: Peer-reviewed field experiment and natural experiment.

Findings: In a grocery-store experiment, displaying tax-inclusive shelf prices reduced demand for treated products by about 8% relative to the control groups. State-level data likewise showed that increases in salient excise taxes reduced alcohol consumption substantially more than equivalent increases in less salient sales taxes. Survey data showed that the median consumer understood the tax status of most goods, indicating that “salience effects,” rather than a lack of knowledge, drove the weaker response to sales taxes.

Authors’ Conclusions: Consumers systematically underreact to less salient taxes because they focus on posted prices while shopping, contrary to the neoclassical assumption that consumers fully account for all costs. Policymakers therefore need both tax-demand and price-demand curves to estimate taxation’s welfare effects accurately.

Relevance to Disclosure Overload: Counterevidence. Making tax information salient at the point of purchase changed consumers’ choices in the expected direction, indicating that an additional upfront disclosure can improve price comprehension.

Relevance to Crowding Out: Context. The study shows that consumers often overlook less salient price information, consistent with finite attention. It does not directly examine whether disclosures physically displace one another.

• de Clippel, Geoffroy, Kfir Eliaz, and Kareen Rozen. “Competing for Consumer Inattention.” Journal of Political Economy 122, no. 6 (2014): 1203–1234. https://doi.org/10.1086/676931.

Approach: Peer-reviewed theoretical model.

Findings: The authors model consumers with limited capacity to inspect goods across multiple markets. Consumers use market leaders’ prices to decide which markets merit closer examination. This creates “cross-market competition for their inattention,” prompting market leaders to lower prices to avoid scrutiny. As a result, reducing average consumer attention—while holding constant the share of fully inattentive consumers—can increase consumer welfare by lowering average prices.

Authors’ Conclusions: Limited attention creates competition among firms in otherwise independent markets. Partially inattentive consumers may miss the best individual deals, but firms’ efforts to avoid attracting scrutiny can exert downward pressure on prices and benefit consumers overall.

Relevance to Disclosure Overload: Context. The model assumes that consumers have limited cognitive capacity. Applying that mechanism to comprehension failures caused by mandated disclosures requires extrapolation.

Relevance to Crowding Out: Direct. The model shows how multiple markets compete for finite consumer attention: Investigating one product or market leaves less capacity to examine another.

• DellaVigna, Stefano, and Elizabeth Linos. “RCTs to Scale: Comprehensive Evidence from Two Nudge Units.” Econometrica 90, no. 1 (2022): 81–116. https://doi.org/10.3982/ECTA18709.

Approach: Peer-reviewed meta-analysis and review of administrative randomized controlled trials (RCTs).

Findings: Across 126 trials involving 23.5 million people, behavioral nudges implemented at scale, such as simplified communications and reminders, increased target behaviors by an average of 1.4 percentage points. This represented an 8% improvement over the control groups. A meta-analysis of 26 published academic studies found a much larger average effect of 8.7 percentage points. Statistical modeling indicated that publication bias accounted for about 70% of the difference.

Authors’ Conclusions: Behavioral nudges in government settings produce meaningful, statistically significant improvements at low marginal cost. Their effects at scale are much smaller than the published academic literature suggests because journals disproportionately publish large, statistically significant results.

Relevance to Disclosure Overload: Context. The study finds that simplifying administrative communications can improve take-up, suggesting that reducing informational complexity aids decision-making. This provides indirect evidence for the inverse of disclosure overload.

Relevance to Crowding Out: None. The study compares the effectiveness of large-scale behavioral nudges with published academic findings but does not examine competition among simultaneous disclosures.

• Downs, Julie S., Jessica Wisdom, and George Loewenstein. “Helping Consumers Use Nutrition Information: Effects of Format and Presentation.” American Journal of Health Economics 1, no. 3 (2015): 326–344. https://doi.org/10.1162/ajhe_a_00020.

Approach: Peer-reviewed field and laboratory experiments.

Findings: Providing raw numerical calorie information had almost no effect on midday snack choices compared with providing no information. Combining calorie information with a choice-architecture nudge that placed lower-calorie items earlier in a sequence helped consumers use the information. Poorly combined interventions could backfire. In one experiment, a simple primacy nudge “is completely reversed when calorie information is posted.”

Authors’ Conclusions: Raw information produces little behavioral benefit when consumers find it difficult to process. Simpler heuristic cues, such as traffic-light labels and sequenced choices, show greater promise. Policymakers should test interventions in combination because they can trigger different psychological processes, produce nonadditive effects, or backfire.

Relevance to Disclosure Overload: Direct. Raw numerical calorie disclosures failed to improve decisions because consumers struggled to process them, while simpler formats proved more effective.

Relevance to Crowding Out: Context. The study shows that multiple interventions can interact and interfere with one another, suggesting that an added disclosure may weaken another nudge. Applying this finding to competition for visual space requires extrapolation.

• Dowhal v. SmithKline Beecham Consumer Healthcare, 32 Cal. 4th 910 (2004). https://scocal.stanford.edu/opinion/dowhal-v-smithkline-beecham-33399.

Approach: Primary legal authority from the California Supreme Court.

Provisions/Holding: The California Supreme Court held that the Federal Food, Drug, and Cosmetic Act preempted California’s Proposition 65 requirement that nicotine-replacement therapy products carry a reproductive-toxicity warning. The U.S. Food and Drug Administration (FDA) had adopted a uniform, carefully tailored warning about the products’ risks during pregnancy. The agency sought to inform pregnant women without discouraging them from using the products to stop smoking. The FDA rejected the Proposition 65 warning because it “would have the effect of misleading consumers.” The court also cited the “dangers of overwarning and of less meaningful warnings crowding out necessary warnings.”

Procedural Status: The California Supreme Court reversed the judgment of the Court of Appeal.

Relevance to Disclosure Overload: Direct. The court relied on the FDA’s determination that excessive warnings about remote risks could mislead consumers and prompt medically harmful choices, such as continuing to smoke.

Relevance to Crowding Out: Context. The court expressly recognized that less meaningful warnings can crowd out necessary ones, supporting the concept of attentional displacement.

• Federal Communications Commission. “Empowering Broadband Consumers Through Transparency.” Final rule. Federal Register 87 (December 16, 2022): 76,959–76,980. https://www.federalregister.gov/documents/2022/12/16/2022-26854/empowering-broadband-consumers-through-transparency.

Approach: Primary legal authority from an agency rulemaking.

Provisions/Holding: Acting under the Infrastructure Investment and Jobs Act, the Federal Communications Commission requires broadband internet service providers to display a uniform consumer label at the point of sale. The label must disclose prices, introductory rates, data allowances, and performance metrics. To limit information overload, the Commission requires links to detailed network-management practices and privacy policies instead of placing that information on the label. It concluded that detailed privacy information “would likely overwhelm consumers and not benefit them at the point of sale.”

Procedural Status: The final rule took effect January 17, 2023.

Relevance to Disclosure Overload: Direct. The Commission excluded detailed network-management and privacy information because complex disclosures could overwhelm consumers, make the label unwieldy, and impede comparison shopping.

Relevance to Crowding Out: Supporting. The Commission recognized that a label has limited space and that excessive detail could obscure more important purchasing information. Applying that conclusion to a broader theory of crowding out requires some extrapolation.

• Federal Communications Commission. “Empowering Broadband Consumers Through Transparency; Delete, Delete, Delete.” Proposed rule. Federal Register 90 (December 3, 2025): 55,713–55,716. https://www.federalregister.gov/documents/2025/12/03/2025-21807/empowering-broadband-consumers-through-transparency-delete-delete-delete.

Approach: Primary legal authority from an agency rulemaking.

Provisions/Holding: The Federal Communications Commission proposed eliminating several broadband-label requirements, including verbatim telephone readings, itemization of location-dependent fees, and machine-readable data. The Commission reasoned that these mandates may impose “unnecessary costs and burdens on providers” without making the labels more useful to consumers. It explained that a visual label does not translate easily into a telephone conversation and that itemizing fees that vary by location may require numerous labels for the same service.

Procedural Status: The comment period closed January 2, 2026, and the reply-comment period closed February 2, 2026. The Commission adopted a final rule on July 22, 2026. The final rule permits conversational telephone summaries and aggregated presentation of location-dependent fees, eliminates the machine-readable-data requirement, and makes other changes. Most provisions take effect September 14, 2026.

Relevance to Disclosure Overload: Direct. The proposal identifies potential confusion from requiring representatives to recite a visual label verbatim over the telephone, where consumers cannot review the information at their own pace.

Relevance to Crowding Out: Supporting. The proposal treats detailed itemization of variable fees as a potential source of consumer confusion. This concern supports the premise of competition for finite attention, though the connection remains inferential.

• Federal Trade Commission. .com Disclosures: How to Make Effective Disclosures in Digital Advertising. FTC Staff Guidance. March 2013. https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-staff-revises-online-advertising-disclosure-guidelines/130312dotcomdisclosures.pdf.

Approach: Non-peer-reviewed agency guidance and policy analysis.

Provisions/Holding: The Federal Trade Commission states that disclosures must remain clear and conspicuous across digital platforms, including mobile devices with limited screen space. Information needed to prevent deception should appear as close as possible to the claim it qualifies because scrolling increases the likelihood that consumers will miss it. The FTC also cautions that essential disclosures do not become effective merely because they appear in lengthy terms-of-use agreements. Such disclosures “should not be relegated to them.”

Procedural Status: FTC staff guidance rather than a binding regulation.

Relevance to Disclosure Overload: Direct. The guidance recognizes that burying important information in lengthy text prevents consumers from finding and understanding it.

Relevance to Crowding Out: Direct. The guidance explains how limited screen space and competing visual elements can reduce a disclosure’s prominence and divert consumers’ attention.

• Federal Trade Commission. “Trade Regulation Rule on Unfair or Deceptive Fees.” Final rule. Federal Register 90 (January 10, 2025): 2,066. https://www.federalregister.gov/documents/2025/01/10/2024-30293/trade-regulation-rule-on-unfair-or-deceptive-fees.

Approach: Primary legal authority from an agency rulemaking.

Provisions/Holding: Acting under 15 U.S.C. § 57a, the Federal Trade Commission declared it unfair and deceptive for live-event ticketing and short-term lodging businesses to advertise prices that omit mandatory fees. The rule requires businesses to display the total price more prominently than other pricing information, except the final payment amount. Before consumers consent to pay, businesses must disclose the nature, purpose, and amount of excluded charges, such as government and shipping fees. The Commission declined to require affirmative disclosure of each fee’s refundability because extensive qualifications could make such disclosures “impractical for businesses and confusing to consumers.”

Procedural Status: Final rule in effect since May 12, 2025.

Relevance to Disclosure Overload: Boundary condition. The Commission declined to require businesses to list the refundability conditions for every fee because extensive, itemized disclosures could confuse consumers and impede clear price communication.

Relevance to Crowding Out: None. The rule addresses the prominence and timing of total-price disclosures. The Commission rejected objections that upfront total-price disclosure would unduly constrain other price presentations, but it did not analyze attentional displacement among disclosures.

• Federal Trade Commission. “Rule on Unfair or Deceptive Fees in Online Food Delivery Services.” Advance notice of proposed rulemaking. Federal Register 91 (April 16, 2026): 20,381. https://www.federalregister.gov/documents/2026/04/16/2026-07473/rule-on-unfair-or-deceptive-fees-in-online-food-delivery-services.

Approach: Primary legal authority from an agency rulemaking.

Provisions/Holding: Acting under Section 18 of the Federal Trade Commission Act, the FTC requested comments on a potential rule addressing unfair or deceptive fees on online food-delivery platforms. The agency describes platforms advertising free or low-cost delivery before adding mandatory service, small-order, or other fees at checkout. Consumers may underestimate the total cost and decline to restart their search because of the “perceived futility of doing so.” The FTC asked whether a rule should require disclosure of the total price or mandatory fees earlier in the transaction.

Procedural Status: The comment period closed May 18, 2026. The proceeding remains at the advance-notice stage.

Relevance to Disclosure Overload: Context. The notice considers whether platforms should disclose variable fees upfront, which raises potential overload concerns. The document itself focuses on deception caused by drip pricing, rather than excessive disclosure.

Relevance to Crowding Out: None. The notice examines the timing of fee disclosures and deceptive pricing, rather than whether disclosures spatially displace other information.

• Fruits, Eric, and Jeffrey Westling. Comments of the International Center for Law & Economics: FCC CG Docket No. 22-2 and GN Docket No. 25-133. International Center for Law & Economics, January 2, 2026. https://laweconcenter.org/wp-content/uploads/2026/01/Broadband-Labels-Comments-2025.pdf.

Approach: Non-peer-reviewed policy analysis and commentary.

Findings: The authors support the Federal Communications Commission’s proposal to eliminate several broadband-label requirements. They cite behavioral research showing that excessive itemization imposes cognitive burdens and reduces consumer welfare. Requiring telephone representatives to read visual labels verbatim also creates a burdensome and confusing interaction. Post-sale labels in customer portals provide little value when they contain static, outdated information rather than current plan terms.

Authors’ Conclusions: Disclosures work only when they help consumers make decisions. Removing location-dependent fee itemization and verbatim telephone-reading requirements would improve the signal-to-noise ratio. Once disclosures exceed consumers’ processing capacity, “decision quality deteriorates, rather than improves.”

Relevance to Disclosure Overload: Direct. Drawing on behavioral economics, the authors argue that disclosure volumes exceeding consumers’ cognitive capacity impair decision quality.

Relevance to Crowding Out: Direct. The authors argue that itemized lists of location-dependent fees create clutter that diverts attention from the total monthly price.

• Gabaix, Xavier. “Behavioral Inattention.” In Handbook of Behavioral Economics, vol. 2, edited by B. Douglas Bernheim, Stefano DellaVigna, and David Laibson, 261–343. Elsevier, 2019. https://doi.org/10.1016/bs.hesbe.2018.11.001.

Approach: Peer-reviewed literature review and theoretical framework.

Findings: Across empirical studies, the mean attention parameter is 0.44, placing consumers roughly midway between full attention and complete inattention. The author develops a sparsity-based model in which people weigh the benefits of greater attention against its cognitive costs. They therefore systematically underweight or ignore variables they consider less important. This bounded rationality produces asymmetric Slutsky matrices and excess price volatility.

Authors’ Conclusions: Behavioral inattention is widespread and can be modeled tractably. People anchor on simplified default models and adjust only partially toward more accurate assessments. Incorporating limited attention into microeconomic theory can overturn standard results, including the symmetry of the Slutsky matrix and the efficiency of competitive equilibria.

Relevance to Disclosure Overload: Supporting. The framework explains why consumers cannot process every available piece of information and may disregard secondary attributes, causing additional disclosures to fail.

Relevance to Crowding Out: Context. The review examines how people allocate a finite attention budget among competing attributes. Applying that framework specifically to mandated disclosures requires extrapolation.

• Gabaix, Xavier, and David Laibson. “Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets.” The Quarterly Journal of Economics 121, no. 2 (2006): 505–540. https://doi.org/10.1162/qjec.2006.121.2.505.

Approach: Peer-reviewed theoretical model.

Findings: When the share of myopic consumers is sufficiently large, a “Shrouded Prices Equilibrium” can arise. Competitive firms conceal add-on prices, sell base products below marginal cost, and charge high markups for add-ons. Firms have no incentive to educate myopic consumers because informed consumers will buy the loss-leading base product and avoid the expensive add-ons. Debiasing consumers therefore makes them unprofitable customers.

Authors’ Conclusions: High add-on markups can persist even in highly competitive markets with costless advertising because of a “curse of debiasing.” Firms lose money by educating myopic consumers, so competition alone will not eliminate inefficient information shrouding.

Relevance to Disclosure Overload: Context. The model explains why consumers overlook hidden add-on costs. Applying that mechanism to overload caused by mandated disclosures requires extrapolation.

Relevance to Crowding Out: Context. The article examines firms’ incentives to suppress information and exploit limited attention. This relates to the supply of salient information but does not address the displacement of mandatory disclosures.

• Hancock, P. A., A. D. Kaplan, K. R. MacArthur, and J. L. Szalma. “How Effective Are Warnings? A Meta-Analysis.” Safety Science 130 (2020): 104876. https://doi.org/10.1016/j.ssci.2020.104876.

Approach: Peer-reviewed meta-analysis.

Findings: The authors synthesized 272 effect sizes from 30 studies. Integrating a warning directly into a task substantially increased compliance. Warnings containing words also produced greater compliance than pictures alone. By contrast, “an increase in clutter on the warning induced a lower level of behavioral compliance.”

Authors’ Conclusions: Uncluttered warnings integrated into the task produce the highest compliance. Warnings should nevertheless serve as a last line of defense because their overall ability to change behavior remains limited.

Relevance to Disclosure Overload: Supporting. The finding that visual clutter reduces compliance directly supports the premise that excessive information impairs processing and decision-making.

Relevance to Crowding Out: Context. Integrating warnings into the primary task improves compliance, suggesting that competing information can reduce their effectiveness. Applying this finding specifically to competition for screen space requires extrapolation.

• Kielty, Patrick D., K. Philip Wang, and Diana L. Weng. “Simplifying Complex Disclosures: Evidence from Disclosure Regulation in the Mortgage Markets.” The Accounting Review 98, no. 4 (2023): 191–216. https://doi.org/10.2308/TAR-2021-0269.

Approach: Peer-reviewed difference-in-differences analysis using loan-level data.

Findings: The TILA-RESPA Integrated Disclosure (TRID) rule reduced mortgage-disclosure word counts by 65%. After its implementation, inexperienced first-time homebuyers obtained significantly lower interest rates relative to experienced repeat buyers. Higher points or upfront fees did not offset these savings, and the effect was strongest in areas with greater lender density. The simplified disclosures did not improve delinquency rates.

Authors’ Conclusions: Simplifying complex, duplicative disclosures lowers consumers’ processing costs, helping them comparison shop and avoid predatory lenders. By reducing information overload, “less disclosure makes borrowers better off.”

Relevance to Disclosure Overload: Direct. The study provides empirical evidence that reducing the volume and complexity of mandated disclosures improves consumer understanding and financial outcomes.

Relevance to Crowding Out: None. The study measures the effects of reducing disclosure text but does not examine whether information spatially displaces competing content.

• Lacko, James M., and Janis K. Pappalardo. Improving Consumer Mortgage Disclosures: An Empirical Assessment of Current and Prototype Disclosure Forms. Bureau of Economics Staff Report. Federal Trade Commission, June 2007. https://www.ftc.gov/sites/default/files/documents/reports/improving-consumer-mortgage-disclosures-empirical-assessment-current-and-prototype-disclosure-forms/p025505mortgagedisclosurereport.pdf.

Approach: Non-peer-reviewed agency report based on 36 qualitative interviews and quantitative testing with more than 800 mortgage customers.

Findings: Existing Truth in Lending Act (TILA) and Good Faith Estimate (GFE) forms failed to communicate essential mortgage costs. About 20% of respondents could not correctly identify the annual percentage rate, cash due at closing, or monthly payment. The authors’ prototype forms “significantly improved consumer recognition of mortgage costs” among prime and subprime borrowers, with the largest gains for complex loans.

Authors’ Conclusions: Poorly designed disclosures confuse consumers and may cause them to stop processing the information altogether. Agencies should conduct extensive consumer testing to ensure that disclosures help consumers rather than hinder them.

Relevance to Disclosure Overload: Supporting. The report shows that confusing, voluminous disclosures can cause consumers to abandon information processing, consistent with overload theories.

Relevance to Crowding Out: None. The report evaluates form design and comprehension but does not examine competition among multiple disclosures for space or attention.

• Lacko, James M., and Janis K. Pappalardo. “The Failure and Promise of Mandated Consumer Mortgage Disclosures.” American Economic Review 100, no. 2 (2010): 516–521. https://doi.org/10.1257/aer.100.2.516.

Approach: Peer-reviewed qualitative interviews and randomized controlled experiment.

Findings: In a controlled experiment with 819 borrowers, mandated mortgage forms failed to communicate key loan terms. Nearly “nine-tenths could not identify the total amount” of upfront charges. A prototype disclosure significantly improved comprehension of costs and terms, though consumers continued to struggle with highly complex loan structures.

Authors’ Conclusions: Mandated disclosures fail because of confusing, ineffective design, rather than inherent consumer irrationality or the unavoidable complexity of modern mortgages. Policymakers should consolidate duplicative forms into a single, well-tested document. This approach could strengthen consumer protection without limiting product availability.

Relevance to Disclosure Overload: Supporting. The study shows that dense, uncoordinated disclosure mandates confuse consumers and impair comprehension, though it attributes these effects primarily to poor design.

Relevance to Crowding Out: None. The experiment measures document comprehension, rather than competition for limited screen space or attention.

• Long, Michael W., Deirdre K. Tobias, Angie L. Cradock, Holly Batchelder, and Steven L. Gortmaker. “Systematic Review and Meta-Analysis of the Impact of Restaurant Menu Calorie Labeling.” American Journal of Public Health 105, no. 5 (2015): e11–e24. https://doi.org/10.2105/AJPH.2015.302570.

Approach: Peer-reviewed systematic review and meta-analysis.

Findings: Across 19 studies, menu calorie labels were associated with an average reduction of 18.13 kilocalories ordered per meal. Among the six highest-quality controlled studies conducted in restaurants, the estimated reduction fell to a statistically insignificant 7.63 kilocalories. Daily-calorie reference statements produced mixed results. One study found an additional reduction of 38 kilocalories, while another found no effect.

Authors’ Conclusions: The evidence provides “minimal evidence to support menu calorie labeling as a strategy” for substantially reducing calories purchased in restaurants. Findings from laboratory and other nonrestaurant settings may overstate the effects of disclosure policies in real-world settings.

Relevance to Disclosure Overload: Counterevidence. The restaurant studies found a null effect, rather than evidence that calorie disclosures worsened choices. The labels may fail to improve decisions substantially, but they do not appear to degrade them.

Relevance to Crowding Out: None. The meta-analysis estimates the isolated effect of menu labels and does not examine whether competing disclosures displace information or attention.

• Nicoletti, Allison, and Christina Zhu. “Economic Consequences of Transparency Regulation: Evidence from Bank Mortgage Lending.” Journal of Accounting Research 61, no. 5 (2023): 1827–1871. https://doi.org/10.1111/1475-679X.12498.

Approach: Peer-reviewed difference-in-differences analysis using administrative data.

Findings: After implementation of the TILA-RESPA Integrated Disclosure (TRID) rule, approval rates fell for covered closed-end loans relative to exempt open-end loans. The simplified disclosures appeared to facilitate comparison shopping because consumers were significantly more likely to withdraw covered applications or leave them incomplete. Covered loans also became less likely to sell on the secondary market.

Authors’ Conclusions: Simplified disclosures reduce consumers’ information-processing costs, improve comparison shopping, and constrain high bank fees. The same regulation imposes compliance costs and creates secondary-market frictions for banks, which can reduce credit availability.

Relevance to Disclosure Overload: Direct. The study shows that reducing the complexity and volume of mandated disclosures lowers processing costs and improves consumer decision-making.

Relevance to Crowding Out: None. The study examines the consumer and lender consequences of simplified disclosures, rather than spatial competition among disclosures.

• Organisation for Economic Co-operation and Development. Enhancing Online Disclosure Effectiveness. OECD Digital Economy Papers, no. 335. Paris: OECD Publishing, 2022. https://www.oecd.org/content/dam/oecd/en/publications/reports/2022/10/enhancing-online-disclosure-effectiveness_e8b230aa/6d7ea79c-en.pdf.

Approach: Non-peer-reviewed policy analysis and literature review by an intergovernmental organization.

Provisions/Holding: The Organisation for Economic Co-operation and Development advises policymakers to “limit the prescriptiveness and extensiveness” of mandated disclosures to the minimum necessary to avoid worsening information overload. The report identifies an accumulation problem in which individually defensible disclosure mandates become overwhelming when combined. Disclosures should remain clear, accessible, and conspicuous so consumers can use them effectively.

Procedural Status: Report of the OECD Committee on Consumer Policy.

Relevance to Disclosure Overload: Direct. The report identifies information overload as a major barrier that causes consumers to disregard online disclosures.

Relevance to Crowding Out: Direct. The report recognizes an accumulation problem in which concurrent disclosures compete for consumers’ finite time and attention.

• Persson, Petra. “Attention Manipulation and Information Overload.” Behavioural Public Policy 2, no. 1 (2018): 78–106. https://doi.org/10.1017/bpp.2017.10.

Approach: Peer-reviewed theoretical model.

Findings: In a model where experts compete for a decision-maker’s limited attention, lowering entry costs increases the number of experts. Beyond a certain point, the decision-maker tunes out and experiences lower expected utility. Under a mandatory disclosure rule, a single expert can strategically create “information overload” by adding irrelevant cues that conceal unfavorable required information. If regulators mandate a simple disclosure format, the expert may pursue “complexification” by disaggregating the product’s payoff structure until relevant information exceeds the consumer’s attention limit.

Authors’ Conclusions: Limited attention permits firms to manipulate consumers’ focus, making simple disclosure rules ineffective or counterproductive. Because format requirements may prompt firms to increase product complexity, policymakers may need to regulate product design directly.

Relevance to Disclosure Overload: Direct. The article models how excessive information, produced by either competition or strategic firm behavior, causes consumers to tune out and make worse decisions.

Relevance to Crowding Out: Direct. The model shows how irrelevant cues exhaust consumers’ limited attention and displace valuable mandated information.

• Rasch, Alexander, Miriam Thöne, and Tobias Wenzel. “Drip Pricing and Its Regulation: Experimental Evidence.” Journal of Economic Behavior & Organization 176 (2020): 353–370. https://doi.org/10.1016/j.jebo.2020.04.007.

Approach: Peer-reviewed theoretical analysis and laboratory experiment.

Findings: In simulated markets where comparing drip prices imposed a small search cost, sellers set drip prices near the permitted maximum and competed primarily on base prices. Relative to transparent pricing, drip pricing raised average total prices from 15.37 to 16.96, increased seller profits, and reduced buyer surplus. When the experiment randomized the maximum possible drip price, 21% of buyers mistakenly chose the more expensive option.

Authors’ Conclusions: Drip pricing discourages comparison shopping and harms consumers by causing them to underestimate final prices. Banning drip pricing promotes competition and increases consumer welfare.

Relevance to Disclosure Overload: Counterevidence. Requiring comprehensive upfront price disclosure improved decision-making, rather than impairing it.

Relevance to Crowding Out: None. The study examines sequential price disclosure and search costs, rather than concurrent competition among disclosures for space or attention.

• Robinson, Lisa A., W. Kip Viscusi, and Richard Zeckhauser. “Efficient Warnings, Not ‘Wolf or Puppy’ Warnings.” In The Future of Risk Management, edited by Howard Kunreuther, Robert J. Meyer, and Erwann O. Michel-Kerjan, 227–248. Philadelphia: University of Pennsylvania Press, 2019. https://rzeckhauser.scholars.harvard.edu/resource/efficientwarningspdf.

Approach: Peer-reviewed book chapter combining policy analysis and economic theory.

Findings: Required trans-fat labels coincided with a 78% reduction in trans-fat consumption between 2003 and 2012, though producer reformulation drove much of the decline. In the authors’ analysis of California’s Proposition 65, 69% of consumers mistakenly associated the generic cancer warning on cereal with the much greater risks of cigarette smoking. An abundance of undifferentiated warnings may cause consumers to ignore them because they cannot “separate puppies from wolves from dragons.”

Authors’ Conclusions: Warning systems fail when they use the same “wolf or puppy” language for risks of vastly different severity. Policymakers should use benefit-cost analysis to distinguish serious hazards from minor ones and prevent consumers from becoming complacent about critical warnings.

Relevance to Disclosure Overload: Direct. The chapter explains how an excess of indiscriminate warnings impairs consumer judgment and promotes complacency.

Relevance to Crowding Out: Supporting. The authors argue that proliferating low-value warnings divert attention from serious hazards, displacing more valuable information.

• Rummo, Pasquale E., Tod Mijanovich, Erilia Wu, Lloyd Heng, Emil Hafeez, Marie A. Bragg, Simon A. Jones, Beth C. Weitzman, and Brian Elbel. “Menu Labeling and Calories Purchased in Restaurants in a US National Fast Food Chain.” JAMA Network Open 6, no. 12 (2023): e2346851. https://doi.org/10.1001/jamanetworkopen.2023.46851.

Approach: Peer-reviewed quasi-experimental cohort study using difference-in-differences analysis.

Findings: Using nine years of transaction data from 2,329 Taco Bell restaurants, the researchers found that menu calorie labels were associated with 24.7 fewer calories purchased per transaction relative to control locations. Consumers bought fewer items, particularly tacos, and the decline was greatest during breakfast. Outside California, labeling was associated with an increase of 25.2 calories per in-store transaction but a decrease in calories purchased through drive-through orders.

Authors’ Conclusions: Consumers respond to calorie information on menu boards, producing small but sustained reductions in calories purchased over two years. Regional differences in consumer attitudes and ordering settings, including in-store and drive-through purchases, shape responses to the disclosures.

Relevance to Disclosure Overload: Counterevidence. Mandatory numerical disclosures modestly reduced calories purchased, rather than impairing consumer decision-making.

Relevance to Crowding Out: None. The study analyzes transaction data but does not examine how disclosure layout or competition among disclosures affects attention.

• Sanchez, Christopher A., and James Z. Goolsbee. “Character Size and Reading to Remember from Small Displays.” Computers & Education 55, no. 3 (2010): 1056–1062. https://eric.ed.gov/?id=EJ892494.

Approach: Peer-reviewed laboratory experiment.

Findings: Participants reading 12-point text on a small screen recalled substantially less information than those reading the same text on a full-size display. When the font shrank to 8 points, recall on the small screen matched recall on the full-size display. Larger characters required more scrolling and fragmented the text, reducing factual recall.

Authors’ Conclusions: Character size interacts with display size. On small screens, designers must balance legibility against the scrolling and fragmentation caused by larger text. More compact text can improve recall by keeping related information together.

Relevance to Disclosure Overload: Context. The study suggests that fragmentation and scrolling impair information processing on small screens. Connecting this effect to disclosure overload requires extrapolation.

Relevance to Crowding Out: None. The study examines text size, scrolling, and recall but does not test competition among multiple disclosures.

• Santana, Shelle, Steven K. Dallas, and Vicki G. Morwitz. “Consumer Reactions to Drip Pricing.” Marketing Science 39, no. 1 (2020): 1–23. https://doi.org/10.1287/mksc.2019.1207.

Approach: Peer-reviewed laboratory and field experiments.

Findings: Consumers exposed to drip pricing for optional add-ons initially selected the lower-base-price option at a much higher rate than consumers who saw fees upfront, 54.5% compared with 11.7%. Even after seeing the total price and receiving an opportunity to restart their search, 24.5% of consumers in the drip-pricing group stayed with the more expensive option. Only 7.8% of the upfront-pricing group made the same mistake. Consumers exposed to drip pricing also reported significantly less satisfaction with their final choices.

Authors’ Conclusions: Drip pricing makes initial choices sticky. Consumers overestimate the time needed to restart their search and mistakenly assume that competitors charge the same fees. The use of stylized online tasks and inexperienced participants limits the findings’ generalizability to experienced consumers in real markets.

Relevance to Disclosure Overload: Counterevidence. Upfront disclosure of optional fees improved price comprehension and reduced costly mistakes.

Relevance to Crowding Out: Context. The study shows that late disclosures often fail to correct consumers’ initial choices. Applying this finding to attentional or spatial crowding requires extrapolation.

• Sims, Christopher A. “Implications of Rational Inattention.” Journal of Monetary Economics 50, no. 3 (2003): 665–690. https://doi.org/10.1016/S0304-3932(03)00029-1.

Approach: Peer-reviewed theoretical model.

Findings: Applying Shannon’s information theory, the author models decision-makers as processing information through a channel with finite capacity. Under this constraint, they respond to aggregate economic variables gradually and with delay, while their individual behavior contains high-frequency noise.

Authors’ Conclusions: Replacing the assumption of unconstrained optimization with limited information-processing capacity better explains macroeconomic fluctuations and sluggish adjustment. Treating attention as a finite resource provides a common explanation for departures from classical rational expectations.

Relevance to Disclosure Overload: Context. The model establishes a finite capacity for processing information. Applying that constraint specifically to comprehension of mandated disclosures requires extrapolation.

Relevance to Crowding Out: Context. The model imposes a strict limit on processing new information but does not examine how particular disclosures compete for that capacity.

• Stango, Victor, and Jonathan Zinman. “Limited and Varying Consumer Attention: Evidence from Shocks to the Salience of Bank Overdraft Fees.” The Review of Financial Studies 27, no. 4 (2014): 990–1030. https://doi.org/10.1093/rfs/hhu008.

Approach: Peer-reviewed natural experiment using survey data.

Findings: Among 7,448 bank-account panelists, answering a survey with overdraft-related questions reduced the probability of incurring an overdraft fee that month by 3.7 percentage points, from a baseline rate of 26%. Repeated surveys built a “stock” of attention. Each additional survey completed over two years reduced the probability of an overdraft by 1.7 percentage points. Panelists avoided overdrafts primarily by making fewer debit-card and automatic-debit transactions, rather than by maintaining higher balances.

Authors’ Conclusions: Consumers possess a “limited, time-varying, associative, and malleable stock of attention” concerning household finance. Even uninformative prompts can focus attention and improve financial decisions, especially among consumers with less education and lower financial literacy.

Relevance to Disclosure Overload: Counterevidence. Making fee information more salient, even indirectly through surveys, reduced costly mistakes. The finding undercuts the claim that additional information necessarily impairs decision-making.

Relevance to Crowding Out: None. The study measures how attention prompts affect behavior but does not examine competition for limited screen space or displacement among disclosures.

• S. Department of Transportation. “Enhancing Transparency of Airline Ancillary Service Fees.” Final rule. Federal Register 89 (April 30, 2024): 34,620. https://www.federalregister.gov/documents/2024/04/30/2024-08609/enhancing-transparency-of-airline-ancillary-service-fees.

Approach: Primary legal authority from an agency rulemaking.

Provisions/Holding: Acting under 49 U.S.C. § 41712, the U.S. Department of Transportation required air carriers and ticket agents to disclose passenger-specific fees for checked bags, carry-on bags, and ticket changes or cancellations on the first page displaying fare and schedule information. The Department found that delayed fee disclosure causes substantial consumer injury. It permitted pop-ups, expandable text, and similar formats to avoid “overcrowd[ing] web pages.”

Procedural Status: The rule carried an effective date of July 1, 2024, but the 5th Circuit stayed it on July 29, 2024. The court vacated the rule on February 3, 2026, because the Department failed to provide an opportunity for public comment on a study used in the rulemaking. On July 2, 2026, the Department formally restored the disclosure rules that preceded the 2024 rule.

Relevance to Disclosure Overload: Boundary condition. The Department permitted flexible disclosure methods because rigid textual requirements could overcrowd webpages and make information harder to use.

Relevance to Crowding Out: Direct. The rule expressly addressed screen clutter and the displacement of flight options on space-constrained mobile displays.

• S. Department of Transportation. “Enhancing Transparency of Airline Ancillary Service Fees.” Final rule. Federal Register 91 (July 2, 2026): 40,368. https://www.federalregister.gov/documents/full_text/html/2026/07/02/2026-13450.html.

Approach: Primary legal authority from an agency rulemaking.

Provisions/Holding: The rule implements the 5th U.S. Circuit Court of Appeals’ vacatur of the Department’s 2024 ancillary-fee rule. The court found that the Department violated the Administrative Procedure Act by relying on a study without allowing public comment on it. The 2026 rule removes the requirement to display critical ancillary fees at the first point in an itinerary search, “reinstating the rules previously in force.” Under the restored 2011 framework, airlines and ticket agents must notify consumers on the first screen displaying a fare that baggage fees may apply and explain where consumers can find those fees. Airlines must also list ancillary fees in a central location on their websites.

Procedural Status: Final rule effective July 2, 2026, under 49 U.S.C. §§ 40113 and 41712.

Relevance to Disclosure Overload: Context. Restoring the 2011 framework reduces the information displayed during initial searches. Any reduction in cognitive burden is incidental because the rule implements a judicial vacatur based on procedural defects, rather than behavioral findings.

Relevance to Crowding Out: None. The Department issued the rule to implement the court’s procedural ruling and did not evaluate spatial or attentional competition among disclosures.

• Utz, Christine, Martin Degeling, Sascha Fahl, Florian Schaub, and Thorsten Holz. “(Un)informed Consent: Studying GDPR Consent Notices in the Field.” In Proceedings of the 2019 ACM SIGSAC Conference on Computer and Communications Security, 973–990. New York: Association for Computing Machinery, 2019. https://doi.org/10.1145/3319535.3354212.

Approach: Peer-reviewed, large-scale field experiments and online survey.

Findings: In field experiments involving more than 80,000 website visitors, a neutral binary notice offering accept-or-decline options produced significantly more active responses than complex vendor lists. When category or vendor options were not selected by default, fewer than 0.2% of users actively accepted all tracking. Banner placement also mattered. Bottom-left banners generated the most interaction, while users often ignored top-bar banners.

Authors’ Conclusions: Consent-notice design strongly affects whether users make an active choice or accept tracking because of fatigue or defaults. Opt-out banners are “unlikely to produce intentional/meaningful consent expression,” supporting a shift toward privacy by default.

Relevance to Disclosure Overload: Boundary condition. Complex vendor lists reduced engagement relative to a simple binary choice, showing how excessive detail can discourage active decision-making.

Relevance to Crowding Out: Context. Banner placement affected engagement, and banners occupied space that otherwise displayed website content. Applying these findings to broader theories of spatial crowding requires extrapolation.

• Vance, Anthony, Jeffrey L. Jenkins, Bonnie Brinton Anderson, Daniel K. Bjornn, and C. Brock Kirwan. “Tuning Out Security Warnings: A Longitudinal Examination of Habituation Through fMRI, Eye Tracking, and Field Experiments.” MIS Quarterly 42, no. 2 (2018): 355–380. https://doi.org/10.25300/MISQ/2018/14124.

Approach: Peer-reviewed laboratory studies using functional magnetic resonance imaging (fMRI) and eye tracking, combined with a field experiment.

Findings: During a three-week field experiment with 102 participants, adherence to repeated mobile-security warnings fell from 87% to 64%. Participants who saw polymorphic warnings, which changed appearance over time, rejected risky apps more accurately than those who saw static warnings, 76% compared with 55%. The fMRI results also showed declining responses in the right and left insula over successive days.

Authors’ Conclusions: Habituation is a neurobiological response marked by a “decreased response to repeated stimulation.” Repeated static warnings lose effectiveness as users unconsciously tune them out. Polymorphic warnings can sustain attention and improve adherence by changing their visual appearance.

Relevance to Disclosure Overload: Supporting. The study shows that repeated warnings produce habituation and progressively reduce attention and decision quality. Extending this finding to disclosure overload requires treating repetition as a source of overload.

Relevance to Crowding Out: None. The study measures habituation to warnings over time, rather than concurrent spatial displacement on a screen.

• Verrill, Linda, Fanfan Wu, David Weingaertner, Taiye Oladipo, Lisa Lubin, Roshni Devchand, Laura Koehler, Lauren Prowse, Caroline P. Martin, and Thea Zimmerman. Front of Package Labeling Literature Review. U.S. Food and Drug Administration, April 2023. https://www.fda.gov/media/175617/download?attachment.

Approach: Non-peer-reviewed agency report and systematic literature review.

Findings: Consumers generally prefer simple front-of-package (FOP) labels, and summary systems are often easier to understand than nutrient-specific formats such as Guideline Daily Amounts. Warning labels attract attention, require less processing time, and may discourage unhealthy purchases. The evidence on actual purchasing, diets, and health outcomes remains mixed. Some studies also found that warning labels can mitigate health halos created by nutrient-content marketing claims.

Authors’ Conclusions: Simple summary symbols and interpretive labels can help consumers identify healthier foods. Government endorsement may increase confidence in these labels. The report stresses that more research is needed to determine whether FOP labels produce healthier diets and better health outcomes.

Relevance to Disclosure Overload: Supporting. The review finds that consumers generally understand simplified summary labels more easily than detailed numerical formats. This supports overload theory, though the report does not expressly attribute the difference to information overload.

Relevance to Crowding Out: Context. The review discusses interactions among FOP labels, other package marketing, and time pressure. Applying those findings to spatial or attentional crowding requires extrapolation.

• Wang, Jialan, and Kathleen Burke. “The Effects of Disclosure and Enforcement on Payday Lending in Texas.” Journal of Financial Economics 145, no. 2 (2022): 489–507. https://doi.org/10.1016/j.jfineco.2021.09.024.

Approach: Peer-reviewed difference-in-differences analysis and event study.

Findings: A Texas mandate requiring behaviorally informed disclosures before each payday loan produced a persistent 12% decline in loan volume during its first six months. The decline occurred entirely through fewer loans, rather than smaller loan amounts. The researchers found no offsetting increase in prices, delinquencies, or defaults.

Authors’ Conclusions: Behaviorally designed disclosures can substantially affect equilibrium loan quantities and lender revenue, even for simple financial products. The targeted disclosures discouraged consumers from beginning new sequences of costly debt.

Relevance to Disclosure Overload: Counterevidence. An additional mandated disclosure reduced payday borrowing without evidence that it overwhelmed consumers, undercutting the claim that added disclosure necessarily impairs decision-making.

Relevance to Crowding Out: None. The study examines the effects of a physical disclosure sheet but does not measure competition for screen space or consumer attention.

• Weyl, E. Glen, and Michal Fabinger. “Pass-Through as an Economic Tool: Principles of Incidence Under Imperfect Competition.” Journal of Political Economy 121, no. 3 (2013): 528–583. https://doi.org/10.1086/670401.

Approach: Peer-reviewed theoretical economic modeling.

Findings: The authors extend standard tax-incidence principles to imperfectly competitive markets. Pass-through rates depend on the curvature of demand as well as the relative elasticities of supply and demand. Under monopoly, consumers and producers together bear more than the amount of the tax because the tax further reduces an already inefficiently low quantity. In symmetric imperfect competition, firms bear more of the tax relative to consumers as pricing conduct becomes less competitive, assuming a fixed pass-through rate.

Authors’ Conclusions: Tax incidence and pass-through provide a common framework for analyzing welfare and comparative statics across imperfectly competitive markets, connecting industrial organization with public finance. A principal limitation is the model’s partial-equilibrium assumption that outside alternatives are supplied competitively with no markups.

Relevance to Disclosure Overload: None. The article models tax incidence, cost pass-through, and market competition without addressing disclosure mandates, consumer comprehension, or cognitive limits.

Relevance to Crowding Out: None. The model does not examine finite attention, interface constraints, or the displacement of competing information.

[1] Rule on Unfair or Deceptive Fees in Online Food Delivery Services, 91 Fed. Reg. 20,381 (Apr. 16, 2026) (advance notice of proposed rulemaking) [hereinafter ANPRM].

Executive Summary

The International Telecommunication Union’s (ITU) equivalent power-flux density (EPFD) limits govern how much signal power non-geostationary orbit (NGSO) systems may direct toward geostationary orbit (GSO) receivers. Adopted in 2000, those limits rest on outdated reference links, antenna patterns, propagation models, and worst-case assumptions. They also treat NGSO systems as functionally subordinate even though NGSO and GSO systems generally hold co-primary rights in the relevant spectrum bands. The result is an overly conservative regime that restricts coverage, power, and spectrum reuse while leaving valuable capacity idle.

A modern framework should replace theoretical masks with performance-based standards tied to actual network effects. Existing rules for nearby frequency bands, U.S. sharing frameworks, and the interference GSO systems already tolerate from one another all point toward similar benchmarks. For systems using adaptive coding and modulation (ACM), long-term protection should focus on throughput degradation, while short-term protection should measure absolute increases in link unavailability. For systems that do not use ACM, an interference-to-noise ratio (I/N) can provide a more appropriate measure. Field tests in Romania, Colombia, Nigeria, Botswana, and Jordan show that these standards can permit far more intensive NGSO operations without materially degrading GSO service.

Reform would yield benefits well beyond the satellite industry. More efficient spectrum use would increase capacity, lower deployment costs, strengthen competition, and expand broadband access in rural and remote areas. The United States has already begun implementing performance-based rules domestically, creating a practical model for international reform. Administrations should use that operational record to build consensus before the 2027 World Radiocommunication Conference (WRC-27), reject cosmetic changes that preserve the current regime’s core defects, and modernize Article 22 around verifiable performance rather than obsolete precaution.

I. Introduction

In the final minutes of the 11th plenary meeting concluding the International Telecommunication Union’s (ITU) 2023 World Radiocommunication Conference (WRC-23), delegates issued a clear directive:

[T]o ensure the rational, equitable, efficient and economical use of the radio-frequency spectrum and associated orbit resources, with a focus on non-GSO satellite systems including compatibility among systems. . . . WRC-23 invites ITU-R to conduct technical studies on the EPFD limits in Article 22 . . . in order to ensure the continued protection of GSO FSS and BSS networks, and to inform WRC-27 of the results of the studies[.][1]

That directive followed mounting evidence before both the ITU and national regulators that critical spectrum resources remain underused and inefficiently allocated. The equivalent power-flux density (EPFD) limits exemplify the problem. These limits govern how much signal power a non-geostationary orbit (NGSO) satellite system may deliver to the receiving antennas of a geostationary orbit (GSO) system. They have remained largely unchanged since their adoption in 2000.

The limits originally sought to provide GSO operators with stable expectations about interference protection. Over time, however, they have become perhaps the largest regulatory constraint on next-generation satellite broadband. Launching, operating, and maintaining communications infrastructure hundreds of kilometers above Earth already presents formidable technical and commercial challenges. Outdated EPFD limits add an avoidable one.

Satellite technology has advanced considerably since 2000. The rules have not. The task now is to preserve appropriate protection for GSO infrastructure without unnecessarily constraining newer NGSO systems.

Some national administrations have begun that work. The United States, for example, recently adopted new interference-protection criteria for certain satellite communications within its jurisdiction. At the same time, the ITU Radiocommunication Sector’s Working Party 4A is conducting technical studies and developing recommendations for the 2027 World Radiocommunication Conference (WRC-27).

The immediate question for policymakers, regulators, and satellite operators is what to expect as the ITU completes those studies and prepares for WRC-27. The broader questions are more consequential: How should the EPFD regime change? What level of protection should GSO systems receive? And do special protections designed for an earlier satellite market remain justified as communications increasingly shift toward low-Earth orbit (LEO)?

This issue brief addresses both the immediate process and the longer-term policy stakes. Section II explains how the ITU developed the EPFD limits more than 25 years ago, including the assumptions and methods that shaped them. Section III identifies potential areas for reform, drawing on recently adopted sharing regimes in nearby frequency bands and analogous rules governing NGSO and GSO systems within national jurisdictions. Section IV examines the first real-world tests of modernized protection limits on operating satellite infrastructure and shows that updated limits can protect GSO systems while giving NGSO operators greater flexibility. Section V assesses the economic and social benefits of technically sound interference protections in core satellite bands. Section VI then maps the path to reform, from action by national administrations to the adoption of updated international limits through the ITU.

II. An EPFD Regime Built for a Vanished Satellite Market

Nearly 30 years ago, the international community adopted EPFD limits to restrict how much signal power NGSO systems could impose on GSO networks.[2] Because satellite operators share spectrum, some interference safeguards were necessary. The limits aimed to protect incumbent GSO networks in heavily used fixed-satellite service (FSS) bands from NGSO systems that, at the time, remained largely theoretical.

But the rules did more than manage interference. They created a hierarchy. Although NGSO and GSO systems generally hold co-primary status in the relevant bands, the EPFD regime effectively made NGSO operations subordinate to any GSO system using the same frequencies. No express allocation rule required that result. The methodology simply built second-class treatment into the interference limits.

That imbalance has aged poorly. Much of the satellite industry’s recent growth has occurred in LEO. NGSO systems now account for more than 90% of new satellite-broadband capacity, a share that has tripled in five years.[3] Nearly all active satellites launched in 2025 entered LEO,[4] and commercial subscriptions to NGSO broadband services now substantially exceed those to GSO services.[5]

Whatever rationale once supported treating NGSO systems as secondary no longer fits the market.[6] As the United States has observed, EPFD limits “represent the most constraining regulatory restrictions imposed on non-GSO systems” and rest on assumptions that “significantly differ from the modern satellite systems in operation and under development today.”[7]

Three features explain the disconnect. First, the regime relies on obsolete GSO reference links, antenna patterns, propagation models, and worst-case geometries that exaggerate interference risk. Second, its aggregate and single-entry limits emerged from incomplete technical analysis, arbitrary assumptions, and political compromise. Third, those flaws force NGSO operators to avoid large portions of the GSO arc, reduce transmission power, and limit the number of satellite beams that simultaneously serve a location on the same frequencies—sacrificing coverage, capacity, and service quality even where harmful interference is unlikely.

A. Outdated Assumptions Embedded in the EPFD Limits

The EPFD limits rest on a set of reference links, antenna patterns, and operating assumptions intended to approximate GSO systems at the time. More than 25 years later, many of those inputs no longer reflect how modern satellite networks operate. The result is a methodology that often overstates likely interference and unnecessarily constrains NGSO systems.

1. GSO Reference Links

Developing the EPFD limits first required selecting representative GSO links against which to simulate the aggregate interference from NGSO systems.[8] The ITU supplied those reference links through Circular Letter 116.

Subsequent analyses have identified several problems with both the reference links and their use in developing the limits. Most notably, many of the assumed power levels, noise temperatures, and other technical parameters have been obsolete for years. The links reflect an era before modern signal-filtering techniques, when GSO receivers were more vulnerable to interference.

Modern GSO systems operate under different conditions. Operators often use power levels above those assumed in the reference links and deploy advanced filtering and signal-processing tools, including adaptive coding and modulation (ACM),[9] which adjusts a signal in response to changing link conditions. The propagation models used in the current EPFD methodology are also more than 10 generations old.[10] The calculation therefore rests on a baseline that no longer resembles modern GSO operations.

2. Antenna Patterns

The EPFD methodology also relies on theoretical receive-antenna patterns developed for the parabolic antennas common at the time.[11] Those patterns assume greater sensitivity to off-axis interference than modern equipment typically exhibits.

In particular, the average sidelobes of modern antennas—the areas outside the main communications beam where unwanted signal reception may occur—are substantially lower than the theoretical patterns used in the EPFD calculations. The methodology therefore exaggerates the interference that NGSO systems are likely to cause. One estimate finds that the current antenna assumptions overstate the EPFD reaching GSO receivers by 7.7 decibels.[12]

3. Worst-Case Geometry

The ITU methodology further assumes a worst-case geometry in which a GSO system shares a frequency with the NGSO satellite nearest the GSO arc. That approach effectively presumes that an NGSO operator with several satellites in view will select the one most likely to cause harmful interference. The EPFD limits thus treat the least favorable possible alignment as though it were typical. For links that do not present this worst-case geometry, received signal power may be as much as 30 decibels—or 1,000 times—below the current short-term EPFD limits.[13]

B. Arbitrary Aggregate and Single-Entry Limits

After settling on the design assumptions described above, ITU working groups conducted studies from 1997 to 1999 to determine how much interference protection the EPFD regime should provide.[14] The resulting framework never fully resolved the underlying technical questions. Its weaknesses become clearer when the limits are separated into their aggregate and single-entry components.

1. Aggregate Interference Metrics

Interference-protection frameworks for FSS systems traditionally rely on two measures. A short-term criterion addresses sporadic, high-intensity interference that may temporarily make a communications link unavailable. A long-term criterion addresses persistent interference that raises the background noise floor and reduces data-transmission rates.[15]

Put more simply, the short-term measure limits how often a link may fall below the minimum performance needed to carry data. The long-term measure limits how much continuing interference a bandwidth-constrained communications channel must tolerate.

When the ITU developed the EPFD limits, it reached consensus only on the short-term criterion. Recommendation S.1323 had recently assigned interference from NGSO systems 10% of the aggregate unavailability allowance for FSS networks operating below 30 gigahertz.[16] The EPFD regime adopted the same figure, concluding that “[i]nterference from Non-GSO systems to GSO networks should be responsible for 10% (aggregate) of the unavailability time in a GSO network.”[17]

Later analysis has shown that the 10% relative measure—and relative interference measures more generally—lacks a sound technical basis.[18] Current ITU studies acknowledge that the record does not explain why delegates selected 10% or how they derived it.

The long-term criterion presented an even greater problem. Existing recommendations offered no benchmark, and administrations could not agree on an appropriate protection level. Yet some long-term limit was necessary to permit co-frequency operations while giving GSO operators predictable protection. Without a uniform, technically validated standard, administrations attempted to extrapolate long-term limits from the agreed short-term criterion.

That approach conflated two distinct forms of interference. Short-term and long-term criteria address different phenomena, which is precisely why both exist. Deriving one from the other required administrations to construct operating limits without a reliable technical foundation.

The resulting proposals varied dramatically. For Ku-band downlinks, the United States proposed a long-term EPFD limit 20 times more restrictive than France’s proposal.[19] In the Ka-band, France proposed a limit 30 times more restrictive than the U.S. proposal.[20] These disparities reflected the arbitrary method used to derive the limits, not meaningful differences in interference risk.

The international community nevertheless adopted both short-term and long-term EPFD limits at WRC-2000. With little technical evidence to guide the long-term standard, political bargaining filled the void. The Radio Regulations imposed different EPFD masks across frequency bands, but those distinctions did not consistently track propagation characteristics or other technical conditions. They instead reflected which GSO operators occupied each band and how much influence their administrations wielded at the ITU.

In parts of the Ku-band, delegates adopted a compromise near the median of the competing long-term proposals.[21] In the upper Ka-band, they selected the most restrictive proposal on the table.[22] Those aggregate limits remain in force. Because they emerged from uncertain calculations and political compromise, they often provide GSO networks with more protection than technical conditions warrant. The result is an overly conservative regime that constrains NGSO operations and leaves valuable satellite spectrum underused.[23]

2. Single-Entry Metrics

Aggregate limits define the total interference that a GSO system must tolerate, but they do not tell an individual NGSO operator how much interference its system may generate. The ITU therefore had to divide the aggregate allowance into single-entry limits for each constellation.

Here again, the final measure emerged from negotiations among administrations rather than a clearly demonstrated technical standard.[24] The ITU drew from Recommendation S.1323 and assumed that 3.5 homogeneous NGSO systems would operate simultaneously.[25] It then apportioned the aggregate allowance among those systems, producing an individual long-term interference-to-noise ratio (I/N) of roughly -20 decibels for 80% of the time. That threshold would be considered conservative for most secondary uses of a spectrum band.

The calculation also assumed that every NGSO system would resemble SkyBridge, the proposed constellation used as the reference model.[26] SkyBridge never became commercially viable and never launched a commercial satellite. Today’s EPFD limits therefore rest partly on the architecture of a system that never operated.

These assumptions have not aged gracefully. Combined with the framework’s broader methodological flaws, they produce limits that are excessively conservative, waste spectrum capacity, and impose unnecessary constraints on modern LEO constellations.

C. How the EPFD Limits Constrain NGSO Operations

Flawed design assumptions and an unreliable calculation methodology have produced EPFD limits that are far more conservative than modern operating conditions require. To comply, NGSO operators generally must rely on some combination of three responses: avoiding the GSO arc, reducing transmission power, and limiting the number of co-frequency beams.

1. Arc-Avoidance Angles

GSO satellites typically operate with 2 to 3 degrees of separation along the GSO arc. Yet NGSO systems may have to avoid that arc by as much as 18 degrees.

These wide exclusion zones can reduce NGSO coverage by more than 30%, particularly near the equator and at midlatitudes. Operators must then launch additional satellites to compensate for coverage that the rules, rather than any demonstrated interference risk, have taken away.[27]

2. Power Limits

NGSO operators must also reduce transmission power to limit the signal reaching GSO receivers. These restrictions can apply even when an NGSO transmission falls well outside the required arc-avoidance angle.

Lower power means lower data rates and weaker signal performance for NGSO users. The regime thus sacrifices service quality even where the risk of harmful interference may be slight.

3. Number of Co-Frequency Beams

NGSO operators may also limit the number of satellite beams that simultaneously serve a location on the same frequencies, a measure known as “Nco.” This constraint sharply reduces spectrum reuse and system capacity.

Under the current EPFD limits, operators may have to disable beams from satellites that sit well outside the GSO arc but still exceed the prescribed protection criteria. As a result, substantial portions of an NGSO constellation may remain unavailable to serve consumers even when they pose no realistic risk of harmful interference.

Taken together, these constraints underscore the EPFD regime’s growing disconnect from modern satellite operations. The limits rested on questionable assumptions when adopted and have become still less defensible as technology has advanced.

Reform should stop treating each NGSO system as though it holds secondary status in shared satellite bands. It should instead rely on verifiable metrics grounded in measured signal performance, not theoretical worst cases or arbitrary thresholds. The next section outlines a methodology for building that more modern sharing framework.

 III. Building a Modern Performance-Based Framework

Since the ITU adopted the EPFD limits in 2000, technological innovation has transformed both the economics and operation of satellite communications. The existing rules belong to an earlier era. A modern framework should reflect today’s multi-orbit satellite market and focus on measurable effects on system performance and consumers.

Reform should begin with metrics grounded in real-world evidence and modern satellite capabilities, including ACM. Three existing benchmarks offer a practical foundation: the Q- and V-band sharing regime, the FCC’s NGSO-NGSO framework, and the interference levels GSO systems already accept from one another. Together, they point toward performance-based standards for both long-term throughput degradation and short-term link unavailability.

The framework must also account for GSO systems that do not use ACM, using I/N thresholds where throughput-based metrics do not fit. And any revised standard must rest on updated reference links, antenna patterns, and simulation methods that reflect how modern constellations actually operate.

This section focuses on single-entry limits, which remain the principal concern of national administrations and the ITU. Aggregate limits raise separate questions that require further study. For now, the more urgent task is to define clear, enforceable rights and obligations for individual constellations so operators can invest and deploy with predictable expectations.

A. Performance-Based Interference Benchmarks

Modernizing the EPFD regime does not require inventing a new framework from scratch. Regulators already use performance-based sharing rules in nearby frequency bands and in analogous NGSO-NGSO and GSO-GSO settings. Each offers a practical benchmark for replacing abstract worst-case assumptions with limits tied to actual system performance.

1. Q- and V-band Sharing Regime

The shortcomings of the existing EPFD limits have been widely discussed in international forums. By 2019, the international community had identified many of the regime’s inefficiencies and counterintuitive results.[28] When the ITU turned to previously undefined FSS frequencies between 37.5 and 51.4 gigahertz, commonly known as the Q- and V-bands, it faced a basic choice: repeat the EPFD model or adopt a framework better suited to modern satellite systems.

The ITU chose the latter. It approved two resolutions that rejected the existing EPFD limits in favor of an NGSO-GSO sharing methodology tied to actual system performance.[29]

That approach reflected the widespread use of ACM, which allows a satellite link to remain connected as signal conditions deteriorate by reducing its data rate. Rather than treating any degradation as a binary loss of service, the new methodology measures how interference affects throughput over time.

More specifically, the framework calculates the time-weighted average amount of data transmitted per hertz of spectrum, using the carrier-to-noise ratio measured across GSO reference links under ITU Recommendation S.2131.[30] That process produced a consensus long-term, single-entry protection criterion of 3% degraded throughput.[31] If interference from an NGSO system reduces a GSO system’s throughput by more than 3%, the NGSO operator must adjust its operations.[32]

The growing use of ACM along the GSO arc strengthens the case for applying a similar throughput-based methodology elsewhere. Although propagation conditions differ somewhat between the Q- and V-bands and the more heavily used Ku- and Ka-bands, the newer framework provides a technically grounded benchmark for reform.

2. NGSO-NGSO Analogy

A second benchmark comes from sharing rules already used within the same Ku- and Ka-band frequencies now governed by EPFD limits.[33] In the United States, the Federal Communications Commission (FCC) has adopted a framework for sharing among NGSO systems with different access priorities based on the order in which their applications were processed.[34]

The FCC’s rules for protecting earlier-round NGSO systems from later entrants draw directly from the ITU’s Q- and V-band methodology.[35] The principal difference concerns short-term interference. After reviewing hundreds of simulations, the FCC concluded that relative short-term metrics perform poorly for ACM-enabled systems. It instead adopted an absolute increase in link unavailability of 0.4%.[36] For long-term interference, it retained the same 3% degraded-throughput threshold.

Using NGSO-NGSO sharing rules as a reference point for GSO protection rests on a straightforward premise: NGSO systems no longer warrant secondary treatment. If a performance threshold allows NGSO systems to share spectrum with one another, it offers a natural starting point for NGSO-GSO sharing as well. Receivers, after all, do not care where interference originates. A signal remains interference whether it comes from a satellite at 1,400 kilometers or 35,786 kilometers. A performance-based threshold therefore should not vary merely because the interfering system occupies a different orbit.

Nearly all satellite operators participating in the FCC proceeding agreed that the Ku- and Ka-bands should at least use the same 3% long-term throughput-degradation criterion.[37] Unless GSO receivers are materially more sensitive than NGSO receivers, the NGSO-NGSO standard offers a reasonable baseline. If GSO equipment does require exceptional protection, GSO operators should bear the burden of justifying that exception rather than shifting its cost across the NGSO ecosystem.[38]

3. GSO-GSO Analogy

The NGSO-NGSO comparison is not exact. GSO systems often use relatively static spot beams with large coverage areas, while NGSO systems use dynamic beams over much smaller footprints.[39] A third approach therefore looks to how GSO systems share spectrum with one another.

GSO systems typically account for interference from their first- and second-order neighbors, extending roughly 6 degrees in each direction along the GSO arc. Beyond that range, interference is generally considered negligible, and operators usually need not coordinate.

If satellite systems sharing the same bands should face comparable obligations, those accepted GSO-GSO conditions can help define when interference protection is no longer necessary. They can also serve as a basis for deriving appropriate NGSO obligations.

Recent studies in the ITU’s Working Party 4A have taken this approach.[40] The studies model a hypothetical GSO satellite 6.5 degrees from a victim GSO link and estimate the interference produced when both systems use the same frequency at a common terrestrial location. They then calculate the resulting short-term unavailability and long-term throughput degradation.

Those values provide de facto benchmarks for acceptable interference because GSO operators generally do not consider coordination necessary at that separation.[41] Put differently, if GSO systems routinely tolerate a given level of interference from one another, they should be able to tolerate the same level from NGSO systems using the same spectrum.

The contrast with the current EPFD regime is stark. As the studies explain, “non-GSO systems must protect GSO networks to a level nearly 30 dB more stringent than what GSO networks require from each other. This disparity becomes even more striking when we consider that both thresholds are meant to define similar regulatory concepts—the point at which interference becomes unacceptable[.]”[42] A more equitable regime would extend to all satellite systems the “interference environments that GSO networks regularly accept from other GSO networks,” regardless of orbital altitude.[43]

B. Selecting Modern Protection Metrics

The available benchmarks point toward a modern interference regime built around two performance measures for ACM-enabled systems: a long-term limit based on degraded throughput and a short-term limit based on increased link unavailability. The United States recently adopted a 3% threshold for time-weighted average throughput degradation and a 0.1% absolute increase in link unavailability.[44]

The precise values remain open to debate. But the FCC’s choices deserve close attention because they reflect technical work across the world’s largest satellite market and align closely with the benchmarks discussed above.

1. Long-Term Degraded Throughput

The long-term EPFD limits offer an obvious starting point for reform because they lack a sound technical foundation. For links using ACM, degraded throughput provides a well-established measure of persistent interference. The remaining question is where to set the threshold for unreasonable degradation.

Across the leading benchmarks, the same answer emerges: 3%.

The Q- and V-band rules now incorporated into Article 22 use a 3% long-term throughput-degradation criterion. Technical studies within Working Party 4A concluded that this threshold would preserve adequate data rates and long-term system performance in those bands.[45]

The same measure appears in the Ku- and Ka-bands. In its NGSO-NGSO proceeding, the FCC adopted a 3% threshold after reviewing technical studies of modern systems and operating conditions.[46] Those studies included 123 dynamic interference simulations.[47] In 91% of all cases—and 100% of downlink cases—long-term degradation measured 3.12% or less.[48] The FCC ultimately selected a 3% limit.[49] Working Party 4A studies applying the GSO-GSO analogy also identify 3% as a reasonable long-term threshold.[50] That convergence supports the FCC’s choice and suggests that the same measure could work beyond U.S. operations.

2. Short-Term Link Unavailability

The appropriate short-term threshold commands less consensus. Resolution 770,[51] later incorporated into Article 22 of the ITU Radio Regulations,[52] uses a 3% relative increase in instances when a link cannot meet its minimum performance requirement.

That metric performs poorly for modern ACM-enabled systems. As the FCC explained in both its NGSO-NGSO proceeding[53] and its recent NGSO-GSO order,[54] relative measures produce distorted results and invite strategic manipulation. Modern satellite systems often maintain link availability above 99%. When a link already fails less than 1% of the time under natural conditions, even a trivial increase in downtime can produce a large percentage increase relative to that small baseline. The apparent change looks dramatic even when the practical effect is negligible. The FCC therefore adopted an absolute increase in link unavailability of 0.4% for NGSO-NGSO sharing.[55] It derived that figure from hundreds of simulated operating scenarios.[56]

Studies applying the GSO-GSO analogy reach a similar result.[57] Depending on the assumed received power level, simulations of a GSO interferer operating 6.5 degrees away have produced an absolute increase in link unavailability of 0.11% or less.[58] Because GSO systems generally do not require coordination at that separation, the resulting performance offers a practical benchmark for NGSO operations.

The FCC recently adopted an even more conservative threshold for NGSO-GSO sharing: a 0.1% absolute increase in link unavailability.[59] The agency explained that this value approximates “the maximum short-term interference a GSO satellite operator in Ku-band would expect from another GSO satellite operating 6.5 degrees away on the GSO arc, a distance at which no coordination between the GSO operators would be required under the ITU Radio Regulations.”[60] Applying the same threshold to NGSO systems would “maintain a [GSO] link availability near 99.9% in the presence of an operational NGSO system.”[61]

The requirement also applies to every link in a GSO network. The most sensitive link therefore determines the NGSO operator’s system parameters and mitigation measures. Most other links will experience substantially less than a 0.1% increase in unavailability.[62]

Recent ITU studies support that conclusion. One U.S. study modeled interference from a 30,000-satellite NGSO constellation across 230 GSO reference links operating over the United States.[63] None of the customer-terminal links reached the 0.1% threshold, and 90% experienced an increase of 0.00125% or less.[64] The effects on gateway links were smaller still. The median gateway experienced an increase in unavailability of 0.0000003%, while 90% experienced an increase of 0.0000178% or less.[65]

C. Protection Metrics for Non-ACM Systems

Some GSO systems still do not use ACM for their communications. This is especially common in the Ku-band, where point-to-multipoint video services, including broadcast-satellite service (BSS) systems, remain in operation. For those links, degraded throughput is the wrong measure because the system cannot lower its data rate to preserve the connection.

Here, the GSO-GSO analogy offers a better benchmark. A single NGSO system produces roughly the same interference as two GSO satellites operating 6.5 degrees away along the GSO arc when measured against an I/N threshold of -10.5 decibels for 80% of the time. ITU coordination rules generally treat interference between GSO satellites separated by more than 6 degrees as negligible and do not require formal coordination. The same logic should apply to NGSO systems. If an I/N threshold of -10.5 decibels produces effects comparable to those already accepted among GSO operators, NGSO networks should receive the same allowance. That threshold has already been tested in several settings, including studies involving international mobile telecommunications (IMT) networks in the Ka-band.[66] More recent real-world measurement campaigns and technical studies submitted to Working Party 4A provide further support,[67] as discussed below.

D. Implementing and Updating the New Framework

Any protection metric must be practical to implement. New operators need a reliable way to demonstrate compliance, and regulators need a credible basis for enforcement. That requires simulation parameters that reflect modern satellite operations as closely as possible.

A revised NGSO-GSO sharing framework should therefore correct the flawed assumptions identified in Section II. In particular, it should:

• Update the GSO reference links to account for ACM.
• Revise GSO receive-antenna patterns to reflect the equipment used in common operating scenarios.
• Adopt simulation methods that capture how modern constellations operate, including dynamic traffic shifting that avoids worst-case geometries.

The framework should also include a process for periodically reviewing and, when warranted, updating these inputs as technologies, network architectures, and operating conditions evolve.

IV. Real-World Validation

The central flaw in the current EPFD regime is its reliance on theoretical assumptions that became obsolete decades ago—or never reflected operating systems in the first place. Reform should not repeat that mistake. Any new protection framework must account for modern conditions and demonstrate that its metrics work outside simulations and laboratory settings.

SpaceX has led several field-testing campaigns with GSO operators around the world. Taken together, these tests show that degraded throughput can serve as a workable interference metric for modern satellite systems. They also suggest that protection levels near those adopted by the FCC can expand NGSO spectrum use without materially degrading GSO service.

A. Romania

The first measurement campaign began in Romania in 2024 and examined interference to active FSS links using the Intelsat 39 satellite.[68] The tests measured desensitization caused by NGSO beams and converted those results into long-term throughput degradation under Recommendation S.2131.[69]

The campaign found that NGSO satellites could operate within 2 degrees of the GSO arc—an 89% reduction from the existing EPFD requirement—while using eight co-frequency spot beams, a 700% increase over current Nco restrictions. Even under those conditions, peak long-term spectral-efficiency loss reached only 0.7%, while the average loss was about 0.25%.[70]

B. Colombia

In Colombia, SpaceX worked with DirecTV Colombia to measure interference to a consumer dish receiving FSS signals from Intelsat 30.[71]

The tests found that an NGSO system operating with a 4-degree arc-avoidance angle—a 78% reduction from current EPFD requirements—and eight simultaneous co-frequency spot beams caused negligible long-term throughput degradation. The absolute increase in short-term link unavailability was about 0.05%.[72]

C. Nigeria

Field tests overseen by Nigeria’s telecommunications regulator examined NGSO interference to a consumer dish receiving BSS signals from Eutelsat 36.[73]

The results showed that a 7,500-satellite NGSO system could satisfy the -10.5 decibel long-term I/N threshold for non-ACM systems while using eight co-frequency spot beams and operating within 3 degrees of the GSO arc.[74] The same configuration also met a 0.1% short-term unavailability threshold.[75]

The study also considered aggregate interference. It found that a constellation with twice as many satellites operating about 2.75 degrees from the GSO arc would still remain below the NGSO-NGSO unavailability threshold and satisfy a -6 decibel long-term protection criterion.[76]

D. Botswana

Testing in Botswana similarly examined expanded NGSO operations near BSS links using Intelsat 20.[77]

The results showed that NGSO satellites operating within 4.5 degrees of the GSO arc and using eight co-frequency spot beams remained well below the -10.5 decibel long-term I/N threshold for non-ACM systems.[78] The resulting short-term link unavailability was about 0.0005%.[79]

E. Jordan

The Jordan campaign differed from the others by testing interference across four GSO satellites providing BSS coverage rather than a single GSO link.[80]

The results showed that a 7,500-satellite NGSO system could satisfy both a 0.1% short-term increase in link unavailability and the -10.5 decibel long-term I/N threshold for non-ACM systems.[81] It met those criteria under either of two configurations: a 3-degree arc-avoidance angle with six co-frequency spot beams, or a 4-degree angle with eight beams.[82]

V. The Economic and Social Gains from EPFD Reform

Modernizing the EPFD limits would correct decades of inefficient spectrum allocation. Real-world testing shows that NGSO systems can use substantially more capacity while preserving GSO service quality. Reform would therefore unlock valuable spectrum, lower the cost of satellite broadband, and reduce the infrastructure needed to compete.

Those gains would extend well beyond the satellite industry. Greater capacity and lower deployment costs would strengthen competition across satellite and terrestrial broadband markets. They would also make high-speed service more viable in rural and remote communities that conventional networks have struggled to reach.

Better connectivity, in turn, expands access to employment, education, health care, information, and civic life. EPFD reform is therefore not merely a technical adjustment. It is an opportunity to replace idle spectrum and regulatory scarcity with broader economic participation and social connection.

A. The Economic Case for EPFD Reform

The costs of the current EPFD regime extend beyond reduced NGSO coverage and capacity. By leaving usable spectrum idle and raising the infrastructure needed to compete, the rules suppress output, increase costs, and reinforce barriers to entry. Modernized limits would unlock substantial spectrum capacity while imposing little measurable harm on GSO systems.

1. Opportunity Costs

The full cost of the EPFD rules includes not only their direct constraints on NGSO operations, but also the opportunity costs—the benefits forgone under an inefficient spectrum regime.[83] Those costs are clearest in the large GSO-arc avoidance angles that NGSO systems must observe. If, as nearly every relevant technical study suggests, double-digit avoidance angles are unnecessary to protect GSO receivers, then the rules leave large portions of usable spectrum capacity dormant.

This problem is neither new nor unique to satellites. Early wireless regulation treated interference as a contaminant to eliminate[84] rather than an unavoidable feature of shared spectrum that can be managed.[85] That same instinct migrated from broadcasting and other terrestrial services to satellite communications.

When the ITU developed rules for co-frequency NGSO-GSO operations, it adopted an exceptionally cautious approach. The resulting protection masks sought to prevent even low-power NGSO signals from reaching GSO receivers.[86] That gave then-dominant GSO networks predictable protection, but it did so through blunt and technically inefficient limits that ignored the costs of foreclosing productive spectrum use.

The proper objective is not to eliminate interference, but to maximize joint efficiency. Nobel laureate Ronald Coase once made the point about pollution: “I am sure that pollution exists, I know that much; what I do not know is whether we have enough of it.”[87]

Radio interference presents the same basic tradeoff. It is a byproduct of socially valuable activity—in this case, satellite communications. Sound policy should not eliminate productive activity merely because it creates some interference. It should compare the costs of that interference with the benefits generated by greater spectrum use.[88]

Technical simulations and real-world measurement campaigns show that GSO-arc avoidance angles can fall by more than 80%, to as little as 3 to 4 degrees, without compromising reasonable protection. That change would open frequencies at geometries where NGSO transmissions are now barred.[89]

Economic studies estimate that this additional use could increase total spectrum capacity by 74% to 180%, depending on the band.[90] The average cost per unit of capacity could fall by 43% to 64%.[91] By expanding broadband access, increasing capacity, and lowering prices, reform could generate between $10 billion and $100 billion in economic gains.[92] The corresponding reduction in GSO spectral efficiency would remain below 2%.[93]

The Coasean trade is lopsided. Modernized limits would allow a rapidly growing NGSO sector to improve performance, lower prices, and generate billions of dollars in economic value. The resulting effects on GSO systems would remain largely de minimis.

2. Enhancing Competition

Lower launch and operating costs have fueled a second revolution in LEO, allowing NGSO systems to challenge established broadband providers and drive broader technological progress. EPFD reform could accelerate that competition.

Consider Nco. Under the modernized criteria examined in technical studies, the current limit of one active co-frequency satellite over a location could rise to as many as eight—a 700% increase in system capacity.[94] Other research finds that a hypothetical NGSO constellation requiring 462 satellites to provide global coverage under current EPFD rules could deliver the same performance with 360 satellites under updated limits, reducing required infrastructure by 28%.[95]

Those savings matter because satellite communications require enormous upfront investment and present formidable barriers to entry.[96] Reducing the number of satellites needed for global service lowers launch costs, eases the capital demands of large-scale manufacturing, and weakens the economies of scale that favor established operators.

Smaller constellations could then enter more readily and compete on their merits. They could target specialized markets, offer differentiated services, and compete through quality, features, and price rather than sheer fleet size. Satellite competition would become less of a contest in volume and more of a contest in value.

The gains would extend beyond competition among NGSO systems. Broadband markets are converging.[97]  A single constellation can offer fixed and mobile services to consumers and businesses while also providing backhaul between local networks and the broader internet.

As those functions converge, traditional market boundaries become less meaningful. New satellite systems can compete not only with other constellations, but also with GSO providers and terrestrial broadband networks. Stronger competition across technologies could generate billions of dollars in additional economic value and consumer benefits.

B. Closing the Digital Divide

Modernizing the EPFD rules would produce benefits far beyond existing satellite markets. Most notably, expanded NGSO deployment offers one of the most powerful tools for closing the digital divide.

For millions of Americans—and billions of people worldwide—who lack meaningful broadband choice, satellite service may be the most viable option. That is especially true in rural areas, where rugged terrain, sparse populations, and weak commercial returns make extensive terrestrial infrastructure prohibitively expensive. Satellite networks face no comparable last-mile construction problem. Once deployed, a constellation can serve remote and densely populated areas through much of the same infrastructure.

EPFD reform would make that access easier to deliver by removing outdated constraints that limit satellite coverage and capacity. In some areas, those constraints do not merely raise costs. They can prevent viable markets from emerging at all.

The United States’ long-running efforts to connect unserved communities illustrate the problem. Across several versions of the FCC’s high-cost subsidy programs, the government has struggled to persuade providers to accept available funding and build infrastructure. High deployment costs and low expected revenues often made participation uneconomical.[98]

Phase I of the Connect America Fund awarded only $115 million of the $300 million available.[99] Phase II awarded $1.49 billion of $2.15 billion.[100] The Tribal Mobility Fund distributed just $16.6 million of its $50 million allocation,[101] while the Rural Digital Opportunity Fund awarded $9.2 billion of the $16 billion initially set aside.[102] Provider demand repeatedly fell short of available subsidies because the economics of deployment remained forbidding.[103]

Satellite broadband has since reached a level of quality that makes it a credible alternative to terrestrial service and, in many places, the only practical broadband option. Modernizing NGSO-GSO sharing rules would remove technical barriers just as reusable launch systems, vertically integrated manufacturing, and falling input costs are reducing the physical and financial barriers to deployment.

Greater spectrum efficiency would allow operators to expand capacity, increase speeds, and improve reliability. The federal government has begun to recognize that shift by revising its policies for the $45 billion Broadband Equity, Access, and Deployment program to treat NGSO service as a potential source of high-speed connectivity in unserved areas.[104] The next step is to ensure that outdated interference rules do not prevent those systems from delivering the promised service. The United States’ domestic EPFD reforms move in that direction.

The welfare gains extend well beyond faster internet access. Broadband can connect workers in isolated communities to national labor markets through remote work. It can bring specialist care to areas with few medical providers through telehealth. It can expand the resources available through schools, libraries, and community institutions. On-demand instruction can make educational opportunities less dependent on geography, while online communities can give dispersed minority groups new avenues for association and expression.

Each of these gains reflects the same basic point: better connectivity creates opportunities for economic, intellectual, and social exchange that distance once foreclosed. Modernizing the NGSO-GSO sharing framework would help turn those possibilities into practical options for communities that terrestrial networks have struggled to reach.

VI. From Technical Consensus to International Reform

WRC-23 directed the ITU Radiocommunication Sector (ITU-R) to study the EPFD limits in Article 22 and report its findings to WRC-27.[105] Since then, technical studies and field tests have produced a substantial record showing that modernized protections can preserve GSO service while allowing far more efficient NGSO operations.

The United States has already acted on that evidence through domestic reform. The next task is to convert successful implementation into broader international support.[106]

That will require two things. First, the United States and other administrations should use real-world operations to demonstrate that the new framework works, then carry that evidence into WRC-27 rather than wait for another study cycle. Second, policymakers should reject narrow compromises that smooth out a few limits while leaving the EPFD regime’s obsolete assumptions and built-in hierarchy intact.

A. Prove the Model, Then Build Consensus

Procedure and politics now appear to be the main barriers to what should be a straightforward technical improvement. Critics argue that the United States has inverted the usual ITU process by testing reforms through domestic rules and real-world operations before securing international agreement.

There is little precedent for amending the Radio Regulations without a formal WRC agenda item. The closest analogue may be the late addition of global flight tracking to the WRC-15 agenda after the Malaysia Airlines disaster.[107] But that objection says more about the ITU’s process than about the merits of reform.

The ITU’s combination of preliminary studies, regional preparations, conference cycles, and implementation periods can stretch to eight years before a new rule takes effect. In a fast-moving satellite market, that timetable is less a deliberative process than a pause button.

Other areas of internet and space governance offer a more practical model: demonstrate that a system works, then formalize it.

Google followed that path with QUIC, a low-latency internet-transport protocol designed to combine the speed of the User Datagram Protocol (UDP) with reliability features traditionally associated with the slower Transmission Control Protocol (TCP).[108] Google deployed QUIC across Chrome, Search, and YouTube and studied its performance for years before submitting it to the Internet Engineering Task Force (IETF).[109]

By the time the IETF took up the proposal, QUIC’s technical viability had already been established. Commercial adoption followed quickly.[110] The protocol carried a majority of internet traffic before the IETF published its first formal Requests for Comments.[111]

International space governance has followed a similar pattern. Rather than wait for a comprehensive multilateral treaty, the United States and its partners have increasingly relied on nonbinding political commitments and state practice. The Artemis Accords, led by the National Aeronautics and Space Administration, now include 68 signatory states and seek to establish norms that may eventually harden into customary international law.[112]

These examples offer both a precedent and a playbook. Technical studies and operational experience since WRC-23 already provide substantial evidence for reform at WRC-27. Waiting for another study cycle and WRC-31 would add four years of delay without a clear technical justification.

Over the next year, the United States should encourage commercial operations under its new domestic framework. It should also press other administrations to adopt similar rules, building a record of successful implementation and a broader coalition before WRC-27 in Shanghai.

B. Reject Cosmetic Reform

As administrations debate the future of EPFD, incumbent GSO operators developing NGSO capabilities of their own have advanced a narrower proposal. It would modestly relax the most restrictive limits, particularly in the upper Ka-band, and bring greater consistency across frequency bands.[113] That is a worthwhile objective.

The problem lies in what the proposal leaves untouched. It would preserve the outdated reference links, propagation models, antenna assumptions, and improvised long-term protection criteria embedded in the current regime. It also would retain the mistaken premise that NGSO systems should receive secondary treatment in bands where they hold co-primary status.

The proposal would therefore adjust the margins while preserving the framework’s central defects. Satellite technology is moving quickly. Regulation should keep pace rather than remain tethered to assumptions made 25 years ago.

VII. Conclusion

The evidence now points in one direction. The current EPFD limits rest on obsolete design assumptions, an incomplete methodology, and political compromises that no longer reflect the satellite market. Since WRC-23, technical studies, domestic proceedings, and real-world measurement campaigns have reached the same conclusion: modern satellite systems can share spectrum far more efficiently without compromising GSO service.

The question is no longer whether reform is technically feasible. It is whether regulators will continue imposing unnecessary costs on one of the world’s fastest-growing communications technologies. The current regime leaves valuable spectrum capacity idle, raises NGSO deployment costs, weakens competition, and limits broadband access in communities that terrestrial networks struggle to reach.

Administrations should therefore pursue comprehensive reform of Article 22 rather than modest adjustments to legacy EPFD masks. Updated rules should use performance-based criteria tied to actual network effects, including degraded-throughput measures for ACM-enabled systems and validated I/N thresholds for non-ACM services. They should also update reference links, antenna patterns, and simulation methods—and establish a process for revisiting those inputs as technology evolves.

Just as important, future rules should reflect the co-primary status of NGSO and GSO systems. The goal should not be to preserve a hierarchy built for the satellite industry of 2000. It should be to define reasonable interference obligations that protect service while allowing all operators to make productive use of scarce spectrum.

Over the coming year, administrations should expand domestic implementation, continue coordinated field testing, and use that operational record to build consensus before WRC-27. The ITU need not choose between protecting incumbent networks and enabling the next generation of satellite broadband. The evidence shows it can do both. WRC-27 should replace precautionary guesswork with demonstrated performance—and turn Article 22 from a brake on innovation into a workable foundation for a multi-orbit future.

[1] See Int’l Telecomm. Union, Minutes of the Eleventh Plenary Meeting for WRC-23, Doc. 526-E, at 4–5 (Jan. 15, 2024).

[2] See Int’l Telecomm. Union, Radio Regulations No. 22.2. National regulators later incorporated these limits into domestic rules. See, e.g., 47 C.F.R. §§ 25.146, 25.289 (2025).

[3] Press Release, Euroconsult, Non-Geostationary Orbit Constellations Redefining the High Throughput Satellites Market Landscape (Apr. 25, 2024).

[4] Jonathan McDowell, Space Activities in 2025, Version 1.4, Jonathan’s Space Report (Feb. 4, 2026), https://planet4589.org/space/papers/space25.pdf.

[5] See, e.g., Mike Dano, 2025 Global Satellite Broadband Performance Report, Ookla (Feb. 4, 2026), https://www.ookla.com/articles/2025-global-satellite-broadband-performance-report; Sue Marek, Latency Is the Achilles’ Heel for HughesNet, Viasat, Ookla (July 15, 2025), https://www.ookla.com/articles/hughesnet-viasat-performance-2025.

[6] The simulations and assumptions underlying the equivalent power flux-density limits date to 1997–1999. See United States of America Contribution to Chairman’s Report, SkyBridge System Parameters Needed for Simulations of Interference Between NGSO and GSO Systems, Doc. 4-9-11/192-E (June 29, 1998).

[7] United States of America Contribution to Working Party 4A, Working Document Towards a Preliminary Draft New Report [Article 22 EPFD Limit Studies], Doc. 4A/84-E, at 1–2 (Apr. 19, 2024) [hereinafter U.S. WP 4A Proposal].

[8] Int’l Telecomm. Union Radiocommunication Bureau Contribution to Working Party 4A, GSO FSS/BSS Reference Links Used in ITU-R Studies in 1995–2000 to Derive the Existing RR Article 22 EPFD Limits, Doc. 4A/251-E (Oct. 9, 2024).

[9] For an overview of these shortcomings, see U.S. WP 4A Proposal, supra note 7, at 3–4.

[10] United States of America Contribution to Working Party 4A, Proposed Updates to Technical Studies in Response to WRC-23 Minutes on Article 22 EPFD Limits, Doc. 4A/789-E, at 13–14 (Oct. 17, 2025).

[11] United States of America Contribution to Working Party 4A, Working Document Containing Technical Work Relating to the GSO Earth Station Gain Patterns Used by Recommendation ITU-R S.1503, Doc. 4A/792-E, at 1–2 (Oct. 20, 2025).

[12] See Comments of Kuiper Systems LLC, SB Docket No. 25-157, at 6–7 (filed July 28, 2025).

[13] Id.; see also Reply Comments of Kuiper Systems LLC, SB Docket No. 25-157, at 9 (filed Aug. 27, 2025).

[14] Int’l Telecomm. Union Radiocommunication Sector, Resolution 76, Protection of GSO FSS and GSO BSS Networks from Maximum Equivalent Power Flux Density Produced by Multiple Non-GSO FSS Systems in Frequency Bands Where EPFD Limits Have Been Adopted (WRC-2000).

[15] See Claude E. Shannon, Communication in the Presence of Noise, 37 Proc. Inst. Radio Eng’rs 10, 16–18 (1949) (demonstrating how background noise affects signal strength).

[16] Int’l Telecomm. Union Radiocommunication Sector, Recommendation S.1323-0 (1997), superseded by Recommendation S.1323-2 (approved Sept. 2002).

[17] Chairman, Joint Task Group 4-9-11, Report of the Third Meeting of JTG 4-9-11, Doc. 4-9-11/367-E, at 16 (Feb. 5, 1999).

[18] See, e.g., Revising Spectrum Sharing Rules for Non-Geostationary Orbit, Fixed-Satellite Service Systems, Second Report and Order and Order on Reconsideration, FCC 24-117, IB Docket No. 21-456 (rel. Nov. 15, 2024) [hereinafter NGSO-NGSO Order].

[19] Id. ¶¶ 40–47.

[20] Id.

[21] Id.

[22] See Contribution of Tonga (Kingdom of) and Ecuador, Working Document Towards a Draft New Report on Radio Regulation Article 22 EPFD Limits Issues, Doc. 4A/971-E (June 21, 2023).

[23] Id. at 5 fig. 4.

[24] Although ITU participants know this compromise well, no formal record explains why the parties selected that figure. The record also fails to explain what real-world operations would constitute a “0.5” system or how to assess departures from that assumption.

[25] See Int’l Telecomm. Union Radiocommunication Sector, Recommendation S.1323-0, supra note 16.

[26] See United States of America, SkyBridge System Parameters Needed for Simulations, supra note 6.

[27] See U.S. WP 4A Proposal, supra note 7, at 9–10.

[28] Int’l Telecomm. Union Radiocommunication Sector, Report S.2462-0, Sharing Between 50/40 GHz Geostationary Networks and Non-Geostationary Systems (July 2019).

[29] Int’l Telecomm. Union Radiocommunication Sector, Resolution 769 (WRC-19); id., Resolution 770 (rev. WRC-23).

[30] Int’l Telecomm. Union Radiocommunication Sector, Recommendation S.2131-1, Method for the Determination of Performance Objectives for Satellite Hypothetical Reference Digital Paths Using Adaptive Coding and Modulation (Jan. 2022).

[31] The long-term protection criterion measures the annual reduction in time-weighted average spectral efficiency for generic GSO reference links using adaptive coding and modulation. Int’l Telecomm. Union, Radio Regulations, supra note 2, art. 22, Nos. 22.5L, 22.5M.

[32] Int’l Telecomm. Union, Radio Regulations, supra note 2, art. 22, No. 22.5L.

[33] NGSO-NGSO Order, supra note 18.

[34] See 47 C.F.R. § 25.261.

[35] NGSO-NGSO Order, supra note 18.

[36] Because baseline availability for systems using adaptive coding and modulation often exceeds 99%, even a slight change in link conditions can produce a large relative increase in unavailability—and, in turn, in the derived carrier-to-noise ratio. See NGSO-NGSO Order, supra note 18, ¶ 28; Letter from Jayson L. Cohen to Marlene H. Dortch, IB Docket No. 21-456, at 2, S-6–S-9 (July 25, 2024) [hereinafter Cohen Letter].

[37] NGSO-NGSO Order, supra note 18, ¶¶ 11–16.

[38] See Principles for Promoting Efficient Use of Spectrum and Opportunities for New Services, Policy Statement, FCC 23-27, ET Docket No. 23-122, ¶¶ 20–22, 33–35 (rel. Apr. 21, 2023) (recognizing that transmitting and receiving systems share responsibility for adapting to a changing RF environment and that operators should develop error-tolerant systems where technically feasible).

[39] Many modern GSO satellites nevertheless use steerable or configurable beams that largely replicate dynamic beamforming techniques.

[40] United States of America, Proposed Updates to Technical Studies, supra note 10, at 19–22; see also Contribution of Tonga (Kingdom of) and Ecuador, supra note 22.

[41] United States of America Contribution to Working Party 4A, supra note 10, at 15–18.

[42] Id. at 21.

[43] Id.

[44] See Modernizing Spectrum Sharing for Satellite Broadband, Report and Order, FCC 26-26, SB Docket No. 25-157 (rel. May 1, 2026) [hereinafter NGSO-GSO Order].

[45] Int’l Telecomm. Union Radiocommunication Sector, Resolution 770, supra note 29.

[46] NGSO-NGSO Order, supra note 18, ¶ 19.

[47] Id. ¶ 12.

[48] Cohen Letter, supra note 36, at 2, S-6–S-9.

[49] 47 C.F.R. § 25.261.

[50] United States of America, Proposed Updates to Technical Studies, supra note 10, at 15–18.

[51] Int’l Telecomm. Union Radiocommunication Sector, Resolution 770, supra note 29. WRC-23 made minor changes to the methodology for calculating interference. See Int’l Telecomm. Union Radiocommunication Sector, Recommendation S.2157-0 (WRC-23). For an assessment of those changes, see John Pahl, Resolution 770 After WRC-23, Transfinite Sys. (Apr. 26, 2024), https://www.transfinite.com/content/Resolution_770_After_WRC_23.

[52] Int’l Telecomm. Union, Radio Regulations, supra note 2, art. 22, No. 22.5L.

[53] NGSO-NGSO Order, supra note 18, ¶¶ 19–21.

[54] NGSO-GSO Order, supra note 44, ¶¶ 54–56.

[55] Id. ¶ 28.

[56] Cohen Letter, supra note 36, at 2, S-6–S-9.

[57] United States of America, Proposed Updates to Technical Studies, supra note 10, at 19–22.

[58] Id. at 20.

[59] NGSO-GSO Order, supra note 44, ¶ 54.

[60] Id. ¶ 55.

[61] Id. ¶ 56.

[62] Id. ¶ 55.

[63] See United States of America Contribution to Working Party 4A, Proposed Updates to Technical Studies in Response to WRC-23 Minutes on Article 22 EPFD Limits, Doc. 4A/1030-E, at 2–4 (Apr. 24, 2026).

[64] Id. at 4.

[65] Id.

[66] See Reply Liaison Statement from Working Party 4A to Task Group 5/1, WRC-19 Agenda Item 1.13 (IMT), Doc. TG 5/1-411 (WRC-19).

[67] See United States of America Contribution, Proposed Updates to Technical Studies, supra note 63, at 15–23.

[68] See SpaceX Contribution to Working Party 4A, Real-World Interference Measurements in Support of Studies on EPFD Limits, Doc. 4A/542-E (Apr. 23, 2025).

[69] Int’l Telecomm. Union Radiocommunication Sector, Recommendation S.2131-1, supra note 30.

[70] Id. at 11-13.

[71] See Interference Measurement Campaign on EPFD Limits in Colombia, 46th Meeting of Permanent Consultative Committee II, Inter-Am. Telecomm. Comm’n, Doc. No. 6309/25 (Aug. 21, 2025), attached to Reply Comments of Space Exploration Holdings, SB Docket No. 25-157 (Aug. 27, 2025). During the five-month campaign, researchers first measured the signal received by the GSO terminal under free-space conditions. They then measured the effects of NGSO test beams activated at 15-minute intervals under various configurations.

[72] Id.

[73] See Article 22 EPFD Studies, Info. Doc. 16 to APM27-2 (Aug. 8, 2025), attached to Reply Comments of Space Exploration Holdings, SB Docket No. 25-157 (Aug. 27, 2025).

[74] Id.

[75] Id.

[76] Id. at 9-11.

[77] See SpaceX Contribution to Working Party 4A, Interference Measurement Campaign on EPFD Limits in Botswana, Doc. 4A/624-E (Oct. 7, 2025).

[78] Id. at 13.

[79] Id.

[80] See SpaceX Contribution to Working Party 4A, Interference Measurement Campaign on EPFD Limits in Jordan, Doc. 4A/604-E (Oct. 3, 2025).

[81] Id.

[82] Id. at 12.

[83] Eric Fruits & Kristian Stout, Comments of the International Center for Law & Economics Regarding Modernizing Spectrum Sharing for Satellite Broadband, SB Docket No. 25-157, at 7–8 (July 28, 2025), https://laweconcenter.org/resources/icle-comments-re-modernizing-spectrum-sharing-for-satellite-broadband [hereinafter ICLE Comments].

[84] See Henry E. Smith, Property as the Law of Things, 125 Harv. L. Rev. 1691, 1711 (2012).

[85] See Philip J. Weiser & Dale N. Hatfield, Spectrum Policy Reform and the Next Frontier of Property Rights, 15 Geo. Mason L. Rev. 549, 558–62 (2008).

[86] U.S. WP 4A Proposal, supra note 7, at 1–2.

[87] Bruce Lehman attributed this statement to Ronald H. Coase during an April 2003 presentation at the Federal Reserve Bank of Atlanta’s Business Method Patents and Financial Services Conference. See Federal Reserve Bank of Atlanta, Business Method Patents and Financial Services Conference Program, http://www.frbatlanta.org/invoke.cfm?objectid=A6BDAC9C-384A-4C59-9096A079D324A9B7&method=display.

[88] See Ronald H. Coase, The Federal Communications Commission, 2 J.L. & Econ. 1, 28–29 (1959).

[89] See supra Section IV.

[90] See Harold Furchtgott-Roth, The Economic Benefits of Updating Regulations That Unnecessarily Limit Non-Geostationary Satellite Orbit Systems 7 (Furchtgott-Roth Econ. Enters. Aug. 11, 2023).

[91] Id. at 8 app. A.

[92] Id.

[93] Id. at 7 app. B.

[94] See supra Section IV.

[95] Furchtgott-Roth, supra note 90, at 8.

[96] See LEO Policy Working Group, Low Earth Orbit Satellites: Policies to Promote Spectrum Sharing, Foster Competition, and Close Digital Divides (Oct. 30, 2025).

[97] Id.

[98] Low expected revenue often reflected both a limited customer base and implicit rate regulation through soft price caps. See Daniel A. Lyons, Narrowing the Digital Divide: A Better Broadband Universal Service Program, 52 U.C. Davis L. Rev. 803, 834–38 (2018).

[99] See, e.g., John Pender et al., Three USDA Rural Broadband Programs: Areas and Populations Served 3–5 (U.S. Dep’t of Agric. Econ. Rsch. Serv. Oct. 2023), https://www.ers.usda.gov/media/9071/eib-258.pdf?v=78922.

[100] Id.

[101] See Lennard G. Kruger, Tribal Broadband: Status of Deployment and Federal Funding Programs 7–8 (Cong. Rsch. Serv., updated July 17, 2018), https://www.congress.gov/crs_external_products/R/PDF/R44416/R44416.10.pdf.

[102] See Rural Digital Opportunity Fund, Universal Serv. Admin. Co., https://www.usac.org/high-cost/funds/rural-digital-opportunity-fund (last visited Aug. 10, 2026).

[103] See Gregory L. Rosston & Scott Wallsten, Overhauling the Universal Service Fund: Aligning Policy with Economic Reality, Tech. Pol’y Inst. (Aug. 28, 2024), https://techpolicyinstitute.org/publications/broadband/overhauling-the-universal-service-fund-aligning-policy-with-economic-reality.

[104] U.S. Dep’t of Com., Broadband Equity, Access, and Deployment (BEAD) Program: BEAD Restructuring Policy Notice 8–11 (June 6, 2025), https://www.ntia.gov/sites/default/files/2025-06/bead-restructuring-policy-notice.pdf.

[105] Int’l Telecomm. Union, Minutes of the Eleventh Plenary Meeting for WRC-23, supra note 1, at 4–5.

[106] Modernizing Spectrum Sharing for Satellite Broadband, Notice of Proposed Rulemaking, FCC 25-23, SB Docket No. 25-157, ¶ 41 (rel. Apr. 29, 2025).

[107] See, e.g., Peter B. de Selding, In Busan, Regulators Put Global Flight Tracking on WRC-15 Agenda, SpaceNews (Oct. 31, 2014), https://spacenews.com/42385in-busan-regulators-put-global-flight-tracking-on-wrc-15-agenda.

[108] See Frederic Lardinois, Google Wants to Speed Up the Web with Its QUIC Protocol, TechCrunch (Apr. 18, 2015), https://techcrunch.com/2015/04/18/google-wants-to-speed-up-the-web-with-its-quic-protocol.

[109] See Mark Nottingham, What’s Happening with QUIC, Internet Eng’g Task Force (Oct. 29, 2018), https://www.ietf.org/blog/whats-happening-quic.

[110] See F5, QUIC Will Eat the Internet (Feb. 22, 2021), https://www.f5.com/company/blog/quic-will-eat-the-internet.

[111] See, e.g., Matt Joras & Yang Chi, How Facebook Is Bringing QUIC to Billions, Meta (Oct. 21, 2020), https://engineering.fb.com/2020/10/21/networking-traffic/how-facebook-is-bringing-quic-to-billions.

[112] See NASA, The Artemis Accords (last updated June 25, 2026), https://www.nasa.gov/artemis-accords.

[113] See, e.g., Letter from George V. John to Marlene Dortch, Modernizing Spectrum Sharing for Satellite Broadband, SB Docket No. 25-157 (filed Mar. 2, 2026).