Competition regulation

Urgent need for AI regulation highlighted at global conference

Governments around the world are scrambling to establish protections surrounding AI development and use, according to Doreen Bogdan-Martin, Secretary-General of the International Telecommunication Union (ITU). Speaking at a regulatory conference, she noted that only 15% of ITU’s 194 member states have begun developing policies in this area, leaving the vast majority without regulatory frameworks for AI.

Martin pointed out that many countries are eager to join discussions and learn from others that have advanced in AI regulation. She highlighted India‘s success in building a digital public infrastructure, particularly its unified payments interface and Aadhaar digital identity system, calling the country a global leader in this space. India’s fast 5G network has also positioned it as a key player in the digital economy.

Reflecting on past regulatory efforts to improve internet access, Martin explained that regulators today face a more complex landscape. AI’s integration with telecoms is a particular area of focus, as policymakers consider how to regulate in a world where digital infrastructure is increasingly interconnected.

Martin also stressed the growing challenges posed by cyberattacks, which are rising 80% year on year, and the risks posed by AI-driven deepfakes and disinformation. Strengthening network resilience and ensuring global participation in the digital economy remain critical concerns.

EU member states face cybersecurity directive deadline challenges

Many EU member states are set to miss the October 17 deadline to implement the Network and Information Security Directive (NIS 2), aimed at enhancing cybersecurity for critical sectors. Only Belgium, Croatia, Italy, and Lithuania have made partial progress, while others like Germany and the Netherlands have pending legislation, and countries such as Ireland and Spain lag further behind. The directive, approved in 2022, expands protections for sectors like energy, transport, banking, and water, and replaces the previous NIS1 directive, which failed to boost cyber resilience.

Businesses are concerned about the fragmented implementation and compliance challenges, particularly for companies operating across multiple markets. The European Federation of National Associations of Water Services (EurEau) warned that delays create uncertainty for water operators, who may need financial support to meet cybersecurity requirements. Similarly, the software lobby group BSA criticised the lack of guidance on incident reporting, a key aspect of NIS 2.

The European DIGITAL SME Alliance expressed worries for small and medium enterprises that might be impacted if they are part of larger companies’ supply chains under NIS 2. The directive mandates penalties for non-compliance, including fines of up to €10 million or 2% of global revenue, and holds senior management accountable for security breaches, signaling a shift in responsibility beyond IT departments.

DOJ issues warning on trade association Information exchanges

The US Department of Justice (DOJ) has released a significant Statement of Interest, urging scrutiny of surveys and information exchanges managed by trade associations. The DOJ expressed concerns that such exchanges may create unique risks to competition, particularly when competitors share sensitive information exclusively among themselves.

According to the DOJ, antitrust laws will evaluate the context of any information exchange to determine its potential impact on competition. Sharing competitively sensitive information could disproportionately benefit participating companies at the expense of consumers, workers, and other stakeholders. The department noted that advancements in AI technology have intensified these concerns, allowing large amounts of detailed information to be exchanged quickly, potentially heightening the risk of anticompetitive behaviour.

This guidance follows the DOJ’s withdrawal of long-standing rules that established “safety zones” for information exchanges, which previously indicated that certain types of sharing were presumed lawful. By retracting this guidance, the DOJ signals a shift toward a more cautious, case-by-case approach, urging businesses to prioritise proactive risk management.

The DOJ’s statement, made in relation to an antitrust case in the pork industry, has wider implications for various sectors, including real estate. It highlights the need for organisations, such as Multiple Listing Services (MLS) and trade associations, to evaluate their practices and avoid environments that could lead to price-fixing or other anticompetitive behaviours. The DOJ encourages trade association executives to review their information-sharing protocols, educate members on legal risks, and monitor practices to ensure compliance with antitrust laws.

Export controls for Nvidia AI chips under US review

US officials are considering restricting the sale of advanced AI chips from Nvidia and other American firms to certain countries, focusing on the Persian Gulf region. These deliberations aim to limit exports based on national security concerns, Bloomberg News has reported, citing sources familiar with the discussions.

The idea has gained traction in recent weeks, although plans remain in early stages and may change. Neither the US Commerce Department nor Nvidia commented on the matter. Intel and AMD also did not immediately respond to inquiries from Reuters.

Recent regulatory updates from the Commerce Department could simplify the export process. Data centres in the Middle East may apply for Validated End User status, enabling them to obtain AI chips through a general authorisation, bypassing the need for individual export licences.

In 2023, the Biden administration expanded licensing rules to tighten AI chip exports to over 40 countries, including some Middle Eastern nations, amid concerns that exports might be diverted to China or used in ways conflicting with US security interests.

India investigates WhatsApp’s privacy policy

WhatsApp is facing potential sanctions from India’s Competition Commission (CCI) over its controversial 2021 privacy policy update, which has raised significant privacy concerns. The CCI is reportedly preparing to take action against the messaging platform, owned by Meta, for allegedly breaching antitrust laws related to user data handling. The policy, which allows WhatsApp to share certain user data with Meta, has faced widespread criticism from regulators and users who view it as intrusive and unfair.

The CCI’s investigation suggests that WhatsApp’s data-sharing practices, particularly involving business transaction data, may give Meta an unfair competitive advantage, violating provisions against the abuse of dominance. A draft order has been prepared to penalise both WhatsApp and Meta, as the CCI’s director general has submitted findings indicating these violations.

In response, WhatsApp stated that the case is still under judicial review and defended its privacy policy by noting that users had the choice to accept the update without losing access to their accounts. If sanctions are imposed, this could represent a pivotal moment in India’s efforts to regulate major tech firms and establish precedents for the intersection of privacy and competition laws in the digital age.

Google seeks delay on Play Store competition ruling

Google is pushing back against a federal judge’s recent order that would force it to allow more competition in its Play Store. In a court filing, the tech giant requested that US District Judge James Donato’s injunction, set to take effect on 1 November, be paused. Google argues that the ruling could introduce significant security, privacy, and safety risks to the Android ecosystem and is seeking time to pursue an appeal.

The injunction stems from a lawsuit initiated by Epic Games, the creator of ‘Fortnite,’ which argued that Google monopolised app distribution and in-app payment processes on Android devices. A jury sided with Epic, and the judge’s order now requires Google to allow users to download apps from third-party platforms and use alternative payment methods for in-app purchases.

In addition, the ruling prevents Google from paying manufacturers to preinstall its Play Store on devices and from sharing revenue generated through the Play Store with other distributors. These measures aim to reduce Google’s control over the app marketplace, opening up more space for competitors.

If Judge Donato denies Google’s request to delay the order, the company can take its case to the 9th US Circuit Court of Appeals, based in San Francisco. Google has already filed its notice of appeal and is preparing to challenge the injunction and the antitrust verdict that underpins it.

As the appeal process unfolds, the court will ultimately decide whether Google must comply with the ruling or if the tech giant can maintain its current app store policies while reviewing the case.

The legal battle has significant implications for app distribution on Android devices.

Temu faces deadline from EU over illegal product sales

The European Commission has set a deadline of October 21 for the Chinese online marketplace Temu to respond to inquiries regarding its compliance with the Digital Services Act (DSA). The Commission is seeking detailed information about Temu’s efforts to combat the sale of illegal products on its platform and the measures it has implemented to ensure consumer protection, public health, and user wellbeing.

Temu, founded in 2022 by PDD Holdings, was classified as a Very Large Online Platform due to its user base exceeding 45 million monthly average users in the EU. It was previously required to meet DSA standards by the end of September, including addressing systemic risks and preventing the sale of counterfeit goods. This latest inquiry marks the second time the Commission has sought clarification from Temu, following questions in June about its compliance with the “Notice and Action mechanism” for reporting illegal products.

The European Consumer Organisation (BEUC) has also raised concerns about Temu’s practices, filing complaints against the platform for failing to protect consumers and employing manipulative tactics. These complaints, supported by representatives from 17 EU member states, allege that Temu does not provide essential seller information, hindering consumers’ ability to verify product safety compliance. The DSA has been in effect since February, and the EU has initiated several investigations into other major platforms for similar compliance issues.

G7 ministers address urgent semiconductor industry challenges

Industry ministers from the G7 advanced democracies have agreed that non-market practices in the semiconductor industry pose an urgent challenge that requires collective action. This consensus was announced by the Italian presidency and is a response to growing concerns about China’s influence in the sector. During the G7 summit in June, leaders had previously pledged to address what they called unfair business practices by China, particularly as the country aggressively advances its semiconductor manufacturing capabilities.

The majority of global semiconductor production takes place in South Korea and Taiwan, with Taiwan’s closeness to mainland China heightening concerns about potential military conflicts that could disrupt global supply chains. Due to Taiwan’s leadership in advanced chip manufacturing, major economies such as the US and European nations have enacted legislation to enhance domestic semiconductor production. Initiatives like the US CHIPS Act and corresponding European measures have allocated substantial funding to incentivise companies to set up chip production facilities within their countries.

Alongside semiconductor issues, the newly established G7 task force will also focus on undersea cable connectivity, which has grown increasingly critical. Recent outages in major undersea cables have underscored the necessity for a stable and secure global internet infrastructure. This expansion of the G7’s agenda aims to address broader technological stability, moving beyond semiconductor concerns to encompass essential aspects of digital connectivity.

New competition rules for digital platforms in Brazil

Brazil‘s government has proposed a reform to its competition law that would empower the antitrust authority, CADE, to designate certain digital platforms as systemically relevant, imposing new obligations on them as needed. The Finance Ministry emphasises the importance of equipping local legislation with tools to tackle the challenges posed by large tech firms that inhibit competition due to their size and market influence. This reform targets practices like exclusivity agreements, ‘killer acquisitions,’ and self-preferencing in search results.

The proposed changes would require digital platforms to submit pre-merger notifications and follow transparency rules concerning service and product usage. They would also need to disclose any modifications to their terms of service. The government seeks to find a balance between the regulatory frameworks of the US and the EU while taking inspiration from practices in Japan, the UK, and Germany.

The next steps for the Brazilian government include deciding whether to present these recommendations as a new bill to Congress or to integrate them into existing legislative proposals. Economic Reforms Secretary Marcos Pinto highlighted that the goal of the proposal is to promote competition while avoiding hindrances to innovation or unnecessary bureaucracy, underscoring the need to maintain a competitive economic environment.

Meta agrees to data collection changes in Germany

German cartel authorities have closed their investigation into Meta’s data practices following extensive negotiations that led to the US tech giant agreeing to address regulatory concerns. Meta, the owner of Facebook and Instagram, has committed to implementing several measures to change how user data is collected and processed on its platforms, the officials announced on Thursday.

According to Andreas Mundt, the president of the German Federal Cartel Office, one of the most significant changes is that users of Facebook will no longer be required to consent to the unrestricted collection and association of data to their user accounts. This new approach ensures that data not generated through Facebook’s services cannot be automatically linked to a user’s account without specific consent. The decision marks a significant step in limiting the scope of Meta’s data collection and improving user privacy in Germany.

The investigation into Meta was part of a larger initiative by European regulators to closely examine and regulate the data practices of major tech firms. Meta’s cooperation with German authorities highlights its readiness to comply with regulatory standards and could set a precedent for similar cases across Europe. The agreed changes aim to enhance privacy protections for users and increase transparency in how tech platforms manage and utilise personal data.