The Price of Peace in the Swipe-Fee Wars

After 21 years, two failed settlements, and enough economic testimony to qualify as its own industry, the great interchange-fee war may finally be nearing a cease-fire. The terms are imperfect, and the case never had much economic merit. Even so, the proposed settlement may offer the best available escape from a dispute whose legislative sequels could do considerably more damage.

Last month, Judge Brian Cogan of the U.S. District Court for the Eastern District of New York gave preliminary approval to the third attempted settlement in the two-decade antitrust fight between merchants and payment networks. In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, the sprawling multidistrict case filed in 2005, has already produced two rejected settlements, one 2nd U.S. Circuit Court of Appeals vacatur, a $5.54 billion damages fund, and perhaps more economist hours than any private antitrust case in American history.

The latest agreement, announced in November and valued by court-appointed experts at roughly $38 billion through 2031, would cut average credit-card interchange fees by 10 basis points for five years. A basis point is one-hundredth of a percentage point. The deal also would cap fees on standard consumer credit cards at 1.25% for eight years, a reduction of more than 25%, and freeze posted fees at their March 2025 levels.

The most consequential change concerns the “honor-all-cards” rule, which generally requires merchants that accept a network’s cards to accept all cards in that category. The settlement would divide acceptance into three groups—commercial, premium consumer, and standard consumer—and allow merchants to accept or reject each group separately. It also would expand merchants’ ability to impose surcharges on credit-card transactions.

Big-box retailers remain unimpressed. The National Retail Federation and the Merchants Payments Coalition oppose the deal, arguing that merchants would still pay too much, especially on rewards cards. Some analysts expect appeals that could delay final resolution until 2029.

That would be a pity. The settlement would distort the economics of card payments, and the litigation beneath it remains highly dubious. Still, it would end a case that has consumed more than two decades. It also compares favorably with the legislative “solutions” promoted by large retailers, including state efforts to exempt taxes and tips from interchange fees and the preposterously named federal Credit Card Competition Act.

Read the full piece here.

When rents rise, blaming the algorithm is easier than building apartments. New Jersey has chosen the easier target.

On July 20, Gov. Mikie Sherrill signed the Forbidding the Algorithmic Inflation of Rent Act, or FAIR Act, declaring that landlords who use shared pricing tools are engaging in “collusion by algorithm.” The phrase is built for a press release. As an antitrust standard, it sweeps far too broadly.

Antitrust law already has a clear target. A software vendor can serve as the hub of a cartel by collecting competitively sensitive information, relaying rivals’ plans, pressuring users to accept common prices, restricting discounts, or helping participants detect and punish defections. If landlords use software to carry out an agreement that would be illegal around a conference table, the software offers no immunity. The U.S. Justice Department’s (DOJ) RealPage case and proposed settlements show the kind of conduct that warrants close scrutiny.

But shared pricing software, common data, and even some use of nonpublic information do not, by themselves, establish collusion. New Jersey has replaced a difficult, fact-intensive inquiry with a sweeping ban. The law may suppress tools that improve pricing accuracy, reduce costly errors, increase capacity use, and help firms respond to changing conditions.

The state has targeted a technology because it can facilitate unlawful coordination. Antitrust law should target the agreements and practices that suppress independent rivalry.

The rule is simple enough. Prosecute collusive agreements and the mechanisms that sustain them. Do not ban computation, common code, or nonpublic data merely because several firms use them.

Read the full piece here.

Brussels has developed a curious theory of digital privacy. Anonymous search queries need audits, screening, and a security cordon. Your messages, microphone, and screen can make do with a checkbox.

That is the logic running through two decisions the European Commission adopted last week involving the same company, under the same law, on the same day. Yet read side by side, they seem to come from different legal universes.

The first measure, issued under Article 6(11) of the Digital Markets Act (DMA), requires Google to share anonymized search data with rival search engines and AI chatbots. The Commission surrounded that dataset with an elaborate system of safeguards. Identifiers must be removed. Access is delayed by at least a week. Rare or revealing queries are excluded. Eligible firms must pass screening, undergo an independent audit before receiving any data, and submit to annual audits thereafter. They must also use ring-fenced processing environments, comply with purpose and retention limits, and clear checks for sanctions and control by high-risk third countries.

The second decision, issued under Article 6(7), requires Google to give rival AI assistants the same deep access to Android that Gemini receives. That includes ambient sensors, on-device app data, screen contents, and the ability to control other applications. The data concern identified users, include content, and arrive in real time. The main safeguard is a consent prompt.

One dataset gets an armed escort. The other gets a checkbox. The DMA’s internal logic can explain the difference. A consequentialist analysis has a harder time doing so.

Read the full piece here.

Some in Congress want to make online search more competitive by deciding in advance how search competition should work.

Sens. Amy Klobuchar (D-Minn.) and Eric Schmitt (R-Mo.) introduced the Securing Enforcement of Americans’ Right to Competition at Home (SEARCH) Act earlier this month. Billed as a bipartisan effort to protect consumers and curb Big Tech’s power over online search, the proposal would write into federal law many of the sweeping remedies sought in recent monopolization cases against Google.

The SEARCH Act would bar Google and other search engines from paying browsers and operating-system providers for default placement. It would require browsers and devices to present users with a “choice screen,” force search engines to provide rivals with data and search results at marginal cost, and restrict technology acquisitions and joint ventures more aggressively than current antitrust law does.

Protecting competition is a worthy goal. The bill’s economics are much shakier. By replacing the United States’ traditional focus on consumer welfare with European-style ex ante market design, the SEARCH Act would likely raise costs, weaken incentives to innovate, and give federal enforcers broad power to favor some firms over others.

Read the full piece here.

Everyone agrees competition enforcement should be fair. Agreement gets shakier once fairness starts costing agencies time, discretion, or victories.

Competition authorities often warn that procedure should not become an obstacle to enforcement. Fair enough. Antitrust investigations can be slow, document-heavy, and vulnerable to delay tactics. A firm with deep pockets may try to turn “process” into attrition.

But that is only half the institutional problem. An agency with broad discretion, weak disclosure duties, and limited independent review can turn enforcement into regulation by accusation.

That concern is economic as well as legal.

Due process helps competition authorities separate harmful conduct from vigorous competition. Notice, access to evidence, a meaningful chance to respond, protection for privileged and confidential information, reasoned decisions, and independent review all improve the quality of enforcement. When those safeguards are weak, agencies make more errors, firms face greater uncertainty, and interest groups gain more opportunities to seek favorable treatment.

The costs do not stay inside the hearing room. They appear in lower investment, less experimentation, and fewer innovations.

My recent Antitrust Chronicle article on the “next step forward” examined the substantial international framework already in place. It includes the Organisation for Economic Co-operation and Development’s (OECD) recommendation on procedural fairness, the International Competition Network’s (ICN) Framework for Competition Agency Procedures, and the growing use of due-process commitments in trade agreements.

The problem is no longer a shortage of principles. It is the gap between stated commitments and actual practice.

That gap reflects institutional incentives. Competition agencies do not operate as detached maximizers of social welfare. Like other institutions, they respond to political pressure, resource limits, internal priorities, and organizational self-interest.

A serious reform program must therefore do more than urge agencies to be fair. It must make sound procedure visible, reward compliance, and impose some cost when authorities ignore it.

Read the full piece here.

Europe wants its own technology champions. It just seems less comfortable with what champions look like once they arrive.

The European Commission’s latest Digital Markets Act (DMA) decisions capture that tension. Europe wants more innovation, investment, and globally competitive digital platforms. Yet when a company assembles the data, technology, distribution, and complementary services needed to compete worldwide, Brussels increasingly treats those advantages as inputs to be shared with rivals.

On July 16, the Commission adopted binding measures requiring Google to give eligible search engines, including AI chatbots with search functions, access to anonymized Google Search data. A parallel decision requires Google to open 11 categories of Android functionality to competing AI assistants. These include sensor inputs, app data, operating-system controls, screen automation, on-device computing resources, background execution, and hotword activation.

The Commission says these mandates will promote contestability, consumer choice, and innovation. The immediate gains are easy to see. Rivals receive valuable inputs, developers gain access to Android features, and consumers may encounter more services competing within Google’s platform.

The costs are harder to spot and easier to ignore. Forced access may weaken incentives to build proprietary datasets, reduce returns on risky platform investments, increase cybersecurity risks, and push competing systems toward the same design. It may also lead companies to delay, degrade, or withhold future products in Europe.

These decisions therefore deserve scrutiny as more than access mandates. They alter the rules governing who bears the cost of innovation and who receives the reward.

Read the full piece here.

Brazil may soon become the first country in the Americas to regulate digital platforms before they do anything wrong. Bill 4,675/2025 would let the Administrative Council for Economic Defense (CADE) designate large technology companies as having “systemic relevance” and impose special obligations without first proving anticompetitive conduct or consumer harm.

That is a substantial change in how competition law works. The bill would allow CADE to regulate self-preferencing, default settings, interoperability, and data use in advance rather than through ordinary case-by-case enforcement.

By the government’s estimate, five to 10 companies would be designated, most of them likely American. The stakes therefore extend beyond competition policy. Foreign regulation of U.S. technology firms has become a trade and foreign-policy flashpoint, and Brazil’s proposal could add another point of friction.

The bill also tests a broader claim now shaping digital regulation around the world. Can traditional antitrust enforcement police dominant platforms, or should governments supplement it with pre-emptive rules modeled on the European Union’s Digital Markets Act (DMA)?

Brazil offers a revealing test. Its competition authority has recently shown what existing law can accomplish. Settlements with Apple and Google produced DMA-style outcomes, including greater openness in Apple’s iOS operating system, through ordinary case-by-case enforcement. Early evidence from Europe, meanwhile, increasingly points to consumer harm and weaker incentives to innovate rather than the promised surge in competition.

Brazil’s choice could influence other emerging economies weighing similar regimes. That gives the debate in Brasília significance well beyond Brazil.

In “Digital Overreach: A Premature Turn to Ex Ante Regulation in Brazil,” Geoffrey Manne, Dirk Auer, and I argued that Brazil neither needs nor would benefit from a new ex ante regime for digital markets. The narrower question here is whether the substitute text now before the Chamber of Deputies improves on the government’s original proposal and how seriously it addresses the criticisms advanced by the International Center for Law & Economics (ICLE) and others.

The substitute adopts many of the procedural and institutional safeguards we recommended. It leaves the proposal’s doctrinal core intact. That core remains the strongest argument against enacting the bill.

Read the full piece here.

The standard AI competition story has plenty of supposed villains. It just keeps leaving out one of the biggest.

Regulators and academics warn that a small group of firms—including Amazon, Anthropic, Google, and OpenAI, with Microsoft and Meta sometimes added—will dominate generative artificial intelligence. Their advantages in computing power, capital, data, and distribution will harden into market power, shut out challengers, and concentrate control over a technology reshaping the economy.

Public agencies have embraced this account. The U.S. Federal Trade Commission (FTC), U.S. Department of Justice (DOJ), U.K. Competition and Markets Authority (DMA), and European Commission advanced it in their Joint Statement on Competition in Generative AI, which I have discussed before.

Academics have raised similar concerns, even as the sector continues to grow quickly. Much of their attention centers on “GAMMA”—Google, Amazon, Microsoft, Meta, and Apple—and those firms’ control over critical inputs such as data and computing capacity. The fear is that these advantages could produce an “AI oligopoly.”

That theory has given regulators a reason to act early. In the European Union, it has shaped Digital Markets Act (DMA) specification proceedings, Article 102 investigations, and emergency interim measures. In Brazil, it has pushed merger review beyond mandatory notification thresholds to reach AI partnerships. In Italy, it has prompted proceedings over Meta’s integration of AI into WhatsApp before regulators established any consumer harm.

As I argued in an earlier post, these interventions follow the same logic. Regulators treat a plausible theory of harm as enough to justify immediate action, while giving limited weight to the safeguards that ordinarily discipline competition enforcement. That approach risks suppressing the very practices through which AI firms compete, including integration, partnerships, and the use of existing distribution networks.

Yet the larger flaw appears even earlier in the analysis. The story remains almost entirely Western. Regulators cast GAMMA, OpenAI, and Anthropic as the firms to contain, then focus on their relationships with one another and with U.S. and European complementors, meaning companies whose products or services increase the value of another firm’s offering.

Meanwhile, one of the fastest-growing sources of competitive pressure in global AI barely appears in market-definition exercises, foreclosure theories, or claims that power in older markets will carry over into AI.

China is missing from the case file.

Read the full piece here.

Ablood test now helps doctors decide, in about 15 minutes, whether a patient with a suspected brain injury needs a CT scan. It took about 20 years to get there.

That gap between scientific promise and clinical use tells us more about American innovation policy than most congressional hearings ever will.

At one such hearing earlier this week, members of the Senate Judiciary Committee returned to one of the most consequential and least understood questions in innovation policy. Which inventions qualify for patent protection? The hearing focused on S. 1546, the Patent Eligibility Restoration Act (PERA), Congress’ latest attempt to resolve more than a decade of confusion over Section 101 of the Patent Act.

The debate turned on statutory text, Supreme Court precedent, and competing theories of patent policy. Senators heard about abstract ideas, laws of nature, diagnostic methods, and judicial exceptions to patent eligibility. Those questions matter, but they can quickly drift away from the inventions and patients affected by them.

To see the stakes, the committee need look no further than a trauma bay at UPMC Presbyterian Hospital in Pittsburgh.

Physicians there can now use a blood test to help determine whether an adult with a suspected traumatic brain injury needs a CT scan. Instead of relying only on visible symptoms or sending every patient for costly imaging, doctors can measure two proteins released into the bloodstream after brain injury. Those proteins are glial fibrillary acidic protein (GFAP) and ubiquitin carboxyl-terminal hydrolase L1 (UCH-L1).

The test gives physicians objective biological evidence in one of emergency medicine’s most difficult diagnostic settings. Until recently, it remained a scientific aspiration.

Its 20-year path to patients captures both the strengths of the American life-sciences system and the institutional burdens that can slow it down. Abbott’s i-STAT TBI test emerged through university research, federal funding, patents, startups, venture capital, technology transfer, clinical trials, strategic acquisitions, Food and Drug Administration (FDA) review, and entrepreneurial judgment. It also encountered the uncertainty created by judicial decisions that narrowed patent eligibility for diagnostic inventions.

The history of the test reaches well beyond diagnostics. It shows how people and institutions make costly decisions under profound uncertainty to create knowledge that did not exist before. It also shows why innovation policy should be judged by whether it helps today’s discoveries become tomorrow’s treatments.

Read the full piece here.