Y Combinator Calls for U.S. Support of Europe’s Digital Markets Act
On a recent Wednesday, Y Combinator (YC), a leading startup accelerator, sent a letter to the Trump Administration advocating for support of the Digital Markets Act (DMA) in Europe. This legislation, aimed at reducing the market power of major technology firms, has significant implications for both European and American tech ecosystems.
The Digital Markets Act Explained
The DMA identifies six major tech companies—Alphabet (Google), Amazon, Apple, ByteDance, Meta (Facebook), and Microsoft—as “gatekeepers” of the internet. The act, which took effect in May 2023, restricts these influential companies from employing anticompetitive practices on their platforms. Instead, it promotes interoperability, thereby facilitating fair competition among smaller tech firms.
YC’s Letter to the White House
In a letter made public on social media platform X by Luther Lowe, YC’s Head of Public Policy, the organization emphasized that the DMA should not be mistake as overly restrictive regulation, a common critique of other European tech laws. YC argues that the DMA aligns with values that actually encourage innovation in the American tech landscape.
“We respectfully urge the White House to recalibrate its stance toward Europe’s digital regulation, drawing a clear line between measures that hamper innovation and those that foster it,” stated YC in the letter, which received endorsements from various startups, independent tech firms, and industry associations.
Implications for American Startups
YC’s backing of the DMA is significant, as the accelerator positions itself as an advocate for what it terms “Little Tech,” referring to smaller venture-backed startups that could benefit from a more even playing field. The organization contends that the DMA opens opportunities for U.S. startups in areas such as artificial intelligence, search, and consumer applications. Additionally, the act aims to prevent larger firms from marginalizing smaller competitors.
Specific Concerns
One notable concern raised by YC pertains to Apple’s delays in launching its large language model (LLM)-powered version of Siri, which is expected to be released only in 2027. This delay highlights a lack of competitive pressure, caused in part by restrictions preventing third-party developers from interfacing their AI voice assistant services with Apple’s operating systems.
The Landscape of Tech Advocacy
YC isn’t the only organization advocating for the interests of smaller tech firms. Andreessen Horowitz (a16z), another major venture capital entity, has been influential in Washington D.C., spending significant resources to shape tech policy. During the 2024 election cycle alone, a16z contributed approximately $89 million to various political causes, while YC’s contributions reached about $2 million.
Future Reactions from the Trump Administration
The response of the Trump Administration to the DMA and YC’s endorsement remains uncertain. While Trump previously indicated that he would protect American tech firms from excessive European regulatory measures, he has also taken a hard stance against major tech companies like Apple and Google.
Vice President J.D. Vance’s comments during the Paris AI Action Summit in February highlighted a broader discontent with some EU tech regulations, but the DMA, focusing specifically on competition, was notably absent from his criticisms.
Lowe of YC remarked at a StrictlyVC event that while the DMA is “not perfect,” it represents a constructive attempt to address self-preferencing practices among large firms.
As discussions continue, the long-term implications of the DMA and the support from U.S. entities like Y Combinator could reshape how tech regulation evolves on both sides of the Atlantic.
