Competition regulation

TikTok removes Universal Music songs amidst licensing dispute

TikTok initiated removal of Universal Music Publishing Group’s (UMPG) songs due to unsuccessful license renewal negotiations. Following the expiration of their licensing agreement on 31 January, TikTok, while retaining the videos, has begun silencing videos featuring songs from artists associated with UMPG.

The new policy implies that TikTok will need to exclude any music where UMPG songwriters have contributed, irrespective of the main label. This expands the impact beyond UMG-associated artists, affecting others as well—if a UMPG-affiliated songwriter contributed to a song by another label, even minimally, TikTok will be obliged to remove it from its platform.

Despite UMPG’s claim of negligible impact on its revenue, the new changes will adversely impact artists and songwriters who will lose promotion opportunities as the platform is known for enabling music discovery. Artists also stand to potentially lose out on royalty earnings on the platform. UMG recognizes these consequences but maintains its commitment to securing a new deal that justly compensates its artists.

EU Commission plans to fine Apple €500 million for breaches of the competition law

The European Commission is reportedly planning to fine Apple approximately €500 million ($539 million) for alleged breaches of EU competition law. The investigation was initiated after music streaming company Spotify filed a complaint back in 2019, accusing Apple of hindering third-party music services and unfairly favoring its own Apple Music service. Apple’s App Store rules and practices are under scrutiny as they prohibit companies like Spotify from directly billing users, instead requiring them to use Apple’s billing service and giving Apple a cut of up to 30%.

The scope of the investigation was narrowed last year, focusing on whether Apple restricted apps from informing users about cheaper subscription alternatives available outside of the App Store and therefore violating EU competition laws. The latest findings of the investigation are expected to accuse Apple of abusing its market power and imposing unfair trading conditions. If Commission decides to fine Apple, it would be one of the largest financial penalties the EU has ever imposed on a major technology company.

This would be the first time that Apple faces a fine from the European Commission, although it has previously faced fines for anti-competitive behavior in France. The upcoming enactment of the EU’s Digital Markets Act in March aims to address such practices from tech giants like Apple, Amazon, and Google. Under this act, Apple will be required to allow third-party developers to distribute apps outside of the iOS Store and enable those apps to bill their customers directly.

Apple has already taken steps to comply with EU regulations, including announcing changes to its iOS, Safari, and the App Store in the EU. Furthermore, the company has revealed plans to allow software developers to distribute their apps to Apple devices through alternative stores.

Apple declined to comment on the report, instead referring to a previous statement in which it expressed its satisfaction with regulators narrowing the focus of the probe.

Regulators raise concerns over tech giants’ market power in AI sector.

Andreas Mundt, the head of Germany’s antitrust authority, has expressed his concerns about the potential for AI to increase the market power of major tech companies. He stressed the need for vigilant regulatory oversight to prevent anti-competitive behaviour within the AI domain. This highlights ongoing concerns among regulators regarding tech giants, who have significant repositories of user data and the potential to gain an unfair advantage in emerging AI applications across various sectors.

Alphabet’s Google and Microsoft have emerged as competitors in the AI arena, making substantial investments in AI initiatives. Microsoft has focused its resources on OpenAI, while Google has embarked on projects like the Bard AI chatbot.

Governments worldwide are taking action by formulating rules and regulations governing the use of AI. The EU is particularly racing against time to enact its landmark AI regulations by the end of the year. This regulatory approach aims to ensure responsible and ethical AI development and use.

Mundt highlighted the danger in the prerequisites for AI success, which include robust servers and vast volumes of data, both of which big internet corporations possess in abundance. He acknowledged that competition still exists in the AI landscape but urged regulators to take measures to preserve this competition. He also noted the potential for AI solutions from smaller providers to gain popularity and disrupt the current tech hierarchy.

Germany’s regulatory stance is not isolated, as the UK’s Competition & Markets Authority (CMA) has also recently expressed concerns about the monopolization and potential harm to consumers within the AI industry. The CMA’s report emphasised the possible barriers to entry due to the growing computational power and data requirements for training AI models, potentially reducing competition in the sector.

Mundt’s cautionary statement serves as a pertinent reminder of the complexities and possibilities presented by the rise of AI in the tech industry. It underscores the urgency for proactive oversight to prevent the consolidation of power in the hands of a few dominant players. Regulators need to tread cautiously, ensuring that the framework they establish fosters innovation while effectively guarding against any anti-competitive behaviour.

Source: Reuters

G7 digital and tech ministers discuss AI, data flows, digital infrastructure, standards, and more

On 29-30 April 2023, G7 digital and tech ministers met in Takasaki, Japan, to discuss a wide range of digital policy topics, from data governance and artificial intelligence (AI), to digital infrastructure and competition. The outcomes of the meeting – which was also attended by representatives of India, Indonesia, Ukraine, the Economic Research Institute for ASEAN and East Asia, the International Telecommunication Union, the Organisation for Economic Co-operation and Development, UN, and the World Bank Group – include a ministerial declaration and several action plans and commitments to be endorsed at the upcoming G7 Hiroshima Summit.

During the meeting, G7 digital and tech ministers committed to strengthening cooperation on cross-border data flows, and operationalising Data Free Flow with Trust (DFFT) through an Institutional Arrangement for Partnership (IAP). IAP, expected to be launched in the coming months, is dedicated to ‘bringing governments and stakeholders together to operationalise DFFT through principles-based, solutions-oriented, evidence-based, multistakeholder, and cross-sectoral cooperation’. According to the ministers, focus areas for IAP should include data location, regulatory cooperation, trusted government access to data, and data sharing.

The ministers further noted the importance of enhancing the security and resilience of digital infrastructures. In this regard, they have committed to strengthening cooperation – within G7 and with like-minded partners – to support and enhance network resilience through measures such as ensuring and extending secure and resilient routes of submarine cables. Moreover, the group endorsed the G7 Vision of the future network in the Beyond 5G/6G era, and is committed to enhancing cooperation on research, development, and international standards setting towards building digital infrastructure for the 2030s and beyond. These commitments are also reflected in a G7 Action Plan for building a secure and resilient digital infrastructure. 

In addition to expressing a commitment to promoting an open, free, global, interoperable, reliable, and secure internet, G7 ministers condemned government-imposed internet shutdowns and network restrictions. When it comes to global digital governance processes, the ministers expressed support for the UN Internet Governance Forum (IGF) as the ‘leading multistakeholder forum for Internet policy discussions’ and have proposed that the upcoming Global Digital Compact reinforce, build on, and contribute to the success of the IGF and World Summit on the Information Society (WSIS) process. Also included in the internet governance section is a commitment to protecting democratic institutions and values from foreign threats, including foreign information manipulation and interference, disinformation and other forms of foreign malign activity. These issues are further detailed in an accompanying G7 Action Plan for open, free, global, interoperable, reliable, and secure internet. 

On matters related to emerging and disruptive technologies, the ministers acknowledged the need for ‘agile, more distributed, and multistakeholder governance and legal frameworks, designed for operationalising the principles of the rule of law, due process, democracy, and respect for human rights, while harnessing the opportunities for innovation’. They also called for the development of sustainable supply chains and agreed to continue discussions on developing collective approaches to immersive technologies such as the metaverse. 

With AI high on the meeting agenda, the ministers have stressed the importance of international discussions on AI governance and interoperability between AI governance frameworks, and expressed support for the development of tools for trustworthy AI (e.g. (non)regulatory frameworks, technical standards, assurance techniques) through multistakeholder international organisations. The role of technical standards in building trustworthy AI and in fostering interoperability across AI governance frameworks was highlighted both in the ministerial declaration and in the G7 Action Plan for promoting global interoperability between tools for trustworthy AI. 

When it comes to AI policies and regulations, the ministers noted that these should be human-centric, based on democratic values, risk-based, and forward-looking. The opportunities and challenges of generative AI technologies were also tackled, as ministers announced plans to convene future discussions on issues such as governance, safeguarding intellectual property rights, promoting transparency, and addressing disinformation. 

On matters of digital competition, the declaration highlights the importance of both using existing competition enforcement tools and developing and implementing new or updated competition policy or regulatory frameworks ‘to address issues caused by entrenched market power, promote competition, and stimulate innovation’. A summit related to digital competition for competition authorities and policymakers is planned for the fall of 2023.

UK Competition watchdog blocks Microsoft’s purchase of Activision Blizzard

The UK’s competition watchdog, the Competition and Markets Authority (CMA) has blocked Microsoft’s $68.7 bn acquisition of Activision Blizzard, citing concerns about the impact on the nascent field of cloud gaming.

According to CMA, the acquisition would have given Microsoft undue power to shape the cloud gaming industry. Microsoft holds an estimated 60-70% share of global cloud gaming services. Additionally, Microsoft has significant strengths in cloud gaming, owning the leading PC operating system (Windows), Xbox, and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming). With this deal, it would acquire important gaming content such as Call of Duty, Overwatch, and World of Warcraft, thus further solidifying its position in the market.

The Guardian reported that the decision is unusual as vertical mergers (between companies that are at different stages in the production process) are generally considered safer than horizontal ones (companies that sell similar products merge, as in this case).

For Microsoft to be able to finalise the acquisition of Activision Blizzard, regulatory bodies in the UK, the US, and the EU needed to give their approval. Currently, US and EU regulators have not yet decided whether or not they will approve the agreement. Meanwhile, both Microsoft and Activision intend to appeal the CMA’s decision. Activision Blizzard and Microsoft have further warned that the decision will discourage technology innovation and investment in the UK.

Australian Competition and Consumer Commission releases new report about competition and consumer laws for digital platforms

On 11 November 2022, the Australian Competition and Consumer Commission (ACCC) published the fifth report of its Digital Platform Services Inquiry.

Regarding consumer issues, the report recommends the submission of digital platforms to mandatory dispute resolution processes and more substantial requirements to fight against scams, harmful apps, and fake reviews, among others. There is also a recommendation for new laws that would require digital platforms to, among other issues, provide processes for reporting scams, harmful apps, and fake reviews, publish review verification processes, and ensure that consumers and small businesses can access appropriate dispute resolution.

The report also proposes mandatory codes of conduct for some digital platforms and services to address competition issues. Besides the consumer and competition recommendations, the report further highlights the ACCC’s support for prohibiting economy-wide unfair trading practices.