The Cost of Fragmentation: How Divergent State Antitrust Laws Could Reshape Tech

The report evaluates how the fragmentation of antitrust enforcement could affect economies, communities, and markets. Drawing on evidence from the economic literature, policy case studies, and business survey analysis, we document that efforts to expand state antitrust authority pose a central trade-off. While state-level policy experimentation may offer some benefits, there are economic costs associated with regulatory fragmentation. This fragmentation can lead to greater legal complexity, uncertainty, and coordination challenges, with broader effects on investment, hiring, and merger activity.

Our research finds that regulatory fragmentation can impose significant costs on businesses by creating duplicative compliance obligations and inconsistent requirements across agencies and jurisdictions. These differences increase complexity, raise compliance expenses, and create uncertainty for firms operating across multiple states.

Evidence suggests that regulatory fragmentation is associated with uncertainty, which in turn can slow investment and hiring decisions, while more active antitrust enforcement may deter merger and acquisition activity.

In addition, survey responses from businesses in California and New York indicate that proposed state antitrust laws could increase legal burdens, delay workforce expansion, and negatively affect M&A plans.

Although large multistate firms are often the most exposed to inconsistent regulatory requirements, smaller businesses can also be disproportionately affected, as fixed compliance costs typically represent a larger share of their overall operating expenses.