Spain’s antitrust regulator, the CNMC, has launched an investigation into Apple’s App Store for potentially anti-competitive behaviour. The investigation focuses on Apple’s alleged imposition of unequal commercial conditions on developers of mobile applications sold through its platform.
The CNMC has suggested that these practices could constitute a serious violation of competition law. If Apple is found guilty, it could face a substantial fine of up to 10% of its global revenues. The following investigation in Spain highlights ongoing concerns about Apple’s dominance in the app store market and its impact on competition and developers.
Chinese companies have access to the much coveted Nvidia AI chips through their access to online cloud services owned by Google and Microsoft. The two American tech giants and other international companies rent to Chinese firms operating off-shore Nvidia-powered servers to power their data centres.
These and several other cloud service providers, including several AI startups, offer such services to companies across the globe. However, cloud service providers are based in more than just the US. Many operate out of Asia and Europe.
China’s access to these advanced AI semiconductors is noteworthy as the industry continues to benefit from an upswing, and the Biden administration continues to pressure local companies to ensure they uphold export regulations in place, targeting the ban on China.
The US Department of Commerce Secretary, Gina Raimondo, lamented the security risk China’s access to these chips poses to national security and promised to do more to prevent companies from skirting the legislation.
The French competition authority has officially launched an investigation into chipmaker Nvidia for suspected anti-competitive behaviour, confirming ongoing scrutiny of the company’s practices. Benoit Coeure, the agency’s president, affirmed during a press briefing that Nvidia could face charges pending the outcome of the investigation.
Earlier reports, based on insider information, indicated that Nvidia was likely to be formally charged by the antitrust regulator in France. The investigation focuses on allegations of practices that may hinder competition within the market.
Nvidia, a prominent player in the semiconductor industry, faces increasing regulatory scrutiny globally amid concerns over its market dominance and business practices. The outcome of the investigation by the French authority could have significant implications for Nvidia’s operations and market strategy moving forward.
India’s antitrust body, the Competition Commission of India (CCI), has concluded its investigation into Apple’s practices within the Indian app market, finding the tech giant engaged in abusive conduct. According to a confidential report viewed by Reuters, the CCI alleges Apple exploited its dominant position in the iOS app ecosystem by mandating developers to use its proprietary in-app purchase system. This requirement, the CCI asserts, limits competition and imposes unfair terms on developers who rely on Apple’s platform to reach consumers.
The 142-page report highlights Apple’s significant influence over digital products and services distribution through its App Store on iOS devices. It describes the App Store as a crucial channel for app developers, who must comply with Apple’s terms, including its billing and payment system. Both Apple and the CCI declined to comment on the report’s findings.
The CCI report marks a pivotal phase in India’s investigation, pending review by senior officials. It could result in fines and directives for Apple to revise its business practices. The case originated from complaints by a non-profit group and Indian startups, alleging Apple’s practices stifle competition and inflate costs for developers and consumers.
Why does this matter?
The investigation mirrors the heightened scrutiny Apple faces globally. In June, the EU regulators accused Apple of breaching antitrust laws, potentially leading to substantial fines. Apple is also under investigation for new fees imposed on developers, responding with plans to allow alternative app distribution in the EU under the Digital Markets Act.
The report underscores the regulatory pressure tech giants face worldwide, with similar antitrust actions targeting Google in India over its in-app payment policies. As the CCI deliberates its next steps, Apple’s market practices remain a focal point amid broader concerns over fair competition in the digital economy.
The EU Commission has announced that Apple will open its near-field-communication (NFC) technology to third party developers, including competitors. Rival mobile wallet providers will now be able to use this technology as well, giving them access to a new market of users. Companies other than Apple will also be able to access tap-and-go services which use NFC technology. This means they will have access to technologies for things like digital wallets, house and car keys, security badges, loyalty cards, and event tickets.
“We have offered commitments to provide third-party developers in the European Economic Area with an option that will enable their users to make NFC contactless payments from within their iOS apps, separate from Apple Pay and Apple Wallet,” Apple said in an emailed statement to Reuters. EU antitrust chief Margrethe Vestager noted that ‘consumers will have a wider range of safe and innovative mobile wallets to choose from.’
After the EU shared its concerns on Apple’s market dominance in May 2022, Apple decided it would settle the case and determined a first set of commitments. Commission market-tested these commitments between 19 January 2024 and 19 February 2024, consulting all interested third parties to verify whether they would remove its competition concerns. After this process, Apple came up with a second round of commitments which the EU turned into law. This way, Apple avoided a violation of the EU’s antitrust laws and a fine.
Apple’s decision to settle the EU antitrust probe stands out given the company has pushed back against the EU competition watchdog on other occasions. Besides this case, it is currently facing a number of investigations under the Digital Markets Act (DMA) over its business practices. It recently received a €1.8 billion fine, which it is currently appealing.
Baidu’s driverless taxi service, Apollo Go, has quickly become popular in Wuhan, China, since its launch in August 2022, despite complaints from locals and taxi drivers. The service, operated by Baidu’s autonomous driving unit, has amassed a fleet of over 500 vehicles in the city of 13.7 million people. However, its success has prompted local taxi drivers to petition the municipal transport authority to restrict its use, citing job losses and declining income.
In a letter sent in late June, Wuhan Jianshe Automotive Passenger Transportation, a local taxi operator, reported that four of its 159 taxis had quit since April due to competition from the robotaxis. The company accused the autonomous vehicles of taking jobs away from grassroots drivers. Baidu did not respond to a request for comment, but the company mentioned in May that it had reported misinformation about Apollo Go on social media to the police, resulting in the arrest of more than ten suspects.
Despite years of financial losses, Baidu’s autonomous driving project is now aiming for profitability. Wang Yunpeng, head of Baidu’s Intelligent Driving Group, expressed confidence in an internal letter in April. The company plans to expand Apollo Go’s fleet in Wuhan to 1,000 vehicles and aims to break even locally by the end of the year, according to Chen Zhuo, general manager of Baidu’s self-driving unit.
The Australian Competition and Consumer Commission (ACCC) has reached agreements with Telstra and Optus regarding Google’s search services following an investigation into potential anticompetitive practices. The ACCC found that Google had arrangements with Telstra and Optus since at least 2017, ensuring its search services were pre-installed as the default on Android devices supplied by these telecom companies. These agreements restrict competition by limiting the visibility of rival search engines.
Telstra and Optus have cooperated with the ACCC and agreed that, as of 30 June 2024, they will not renew or enter into any new agreements with Google that mandate its search services as the exclusive default option on devices they distribute. These undertakings aim to promote competition and consumer choice in Australia’s digital market.
ACCC Commissioner Liza Carver emphasised the importance of these undertakings in enhancing consumer choice and fostering competition in digital platforms. She noted that practices such as exclusivity agreements can stifle innovation and limit options for consumers, highlighting the need for digital platforms to adhere to Australia’s competition laws.
The ACCC’s broader investigation into Google’s practices continues, focusing on potential competition concerns raised by these agreements and their impact on the digital economy. The commission plans to submit further reports on its findings, including recommendations for regulatory reforms aimed at promoting fair competition among digital platforms in Australia.
Two companies that benefited the most from AI average, Nvidia and Microsoft, are the most exposed to antitrust investigations for AI monopolies. Regulatory authorities have shifted their approach, acting quickly against potential monopolistic practices instead of taking years to intervene.
Notable investigations include the US Department of Justice examining Nvidia’s alleged anticompetitive behaviour in the GPU market and the Federal Trade Commission (FTC) probing Microsoft’s $13 billion investment in OpenAI and strategic staff acquisitions from Inflection. The UK’s Competition and Markets Authority (CMA) is also investigating, particularly concerned about the over 90 partnerships tech giants have formed with large language model developers since 2019, potentially stifling competition.
Politically, there’s a risk that excessive intervention could be seen as stifling innovation, particularly in the face of global competitors like China. Regulators must balance fostering competition with enabling innovation, ensuring that the rise of generative AI, which promises significant technological upheaval, does not result in a market dominated by a few powerful players.
EU antitrust regulators scrutinise Microsoft’s partnership with OpenAI and Google’s AI deal with Samsung due to concerns over exclusivity clauses. Competition chief Margrethe Vestager plans to gather more third-party views. This development comes amid global unease about Big Tech’s dominance in new technologies.
After sending questionnaires to tech firms regarding their AI partnerships, Vestager now seeks additional information about Microsoft’s $13 billion investment in OpenAI’s for-profit subsidiary, which would result in a 49% stake, to determine if it harms competitors.
📢 For now, we conclude that @Microsoft has not acquired control of @OpenAI under 🇪🇺 Merger Regulation.
We will keep monitoring the relationships between all key players in the AI sector, incl. Microsoft & OpenAI.
While Microsoft’s deal isn’t subject to EU merger rules, Vestager also investigates if Big Tech is blocking smaller AI developers from accessing users and businesses. Similar concerns apply to Google’s agreement to pre-install its Gemini Nano model on Samsung devices.
Vestager also examines ‘acqui-hires,’ where companies acquire others primarily for their talent, such as Microsoft’s $650-million acquisition of Inflection, to ensure these practices don’t bypass merger control rules and lead to market concentration.
Why does it matter?
Reuters reported in April that the EU regulators were building a case that could lead to an antitrust investigation into Microsoft’s $13 billion investment in OpenAI. Partnerships involving Alphabet, Amazon, and Anthropic are also under scrutiny from antitrust enforcers on both sides of the Atlantic.
Microsoft has stated it will keep providing eligible customers in Hong Kong with access to OpenAI’s AI models, like ChatGPT, via its Azure cloud platform. The decision stands despite OpenAI’s recent move to restrict API access from unsupported areas, including mainland China and Hong Kong.
OpenAI, with Microsoft as its biggest investor, notified developers in unsupported regions that it would begin blocking API access on 9 July. That step aligns with the US government’s efforts to curb China’s access to advanced AI technology due to national security concerns.
Microsoft’s local branch assured there will be no changes to their Azure OpenAI service offerings in Hong Kong. Although OpenAI’s services are not officially available in mainland China and Hong Kong, users in these regions often circumvent restrictions using virtual private networks or proxies.
Why does this matter?
The restriction by OpenAI aligns with broader US efforts to limit China’s access to advanced technology, reflecting ongoing tensions and strategic competition between the US and China. Microsoft’s decision to maintain services in Hong Kong contrasts with OpenAI’s broader restrictions, potentially pushing Chinese developers toward local AI platforms such as Zhipu AI, Baichuan, and those from major tech companies like Alibaba and Baidu. These local alternatives offer incentives to attract users impacted by OpenAI’s new policies.
