One likely reason for this difference can be attributed to the cost of compliance in Europe. Eighty-eight percent of global companies say that General Data Protection Regulation (GDPR) compliance alone costs their organization more than a million dollars each year, with 40 percent responding that they invest more than ten million dollars per year. High costs of compliance deter entrants into the market and prevent sizable growth from occurring.

The Digital Markets Act and GDPR are not the origin of this story, but the latest iterations. In 1995, the European Union launched the Data Protection Directive for each member state to incorporate in their internal laws. It applied to any “controller” of data who processes EU data for their services, regardless of where they are located. The directive was broad in its scope, sweeping in application, and cumbersome in its processing and reporting requirements. Meanwhile, the United States around the same time passed the Telecommunications Act of 1996 and the Framework for Global Electronic Commerce in 1997, which are intended to deregulate the telecommunications industry and encourage the private sector to make appropriate choices that would benefit consumers in their services. It’s not surprising that those actions encouraged an acceleration in innovation.