The US Federal Trade Commission (FTC) has taken a significant step in reshaping employment practices nationwide by voting to ban noncompete agreements, deeming them unfair methods of competition. These agreements, especially prevalent in the tech industry, aim to restrict employees from joining or establishing competing businesses. Recent cases, including Amazon’s enforcement and retraction of a noncompete agreement for warehouse workers, have underscored the contentious nature of these agreements.
Under the new ruling, companies must nullify existing noncompete agreements and inform employees of the change. While existing agreements for senior executives are permitted to remain in effect, companies will be prohibited from implementing new noncompete agreements. The FTC defines senior executives as individuals involved in policy-making decisions earning over $151,164 annually.
In response to criticisms of noncompete agreements, the FTC has advocated for alternative measures such as trade secret laws and non-disclosure agreements. FTC Chair Lina Khan emphasised that noncompete clauses hinder wage growth, stifle innovation, and impede economic progress. The agency estimates that approximately 30 million workers are bound by noncompete agreements, prompting the ban’s potential to generate thousands of new businesses annually while enhancing healthcare affordability and increasing worker compensation.
Having initially proposed the ban in January 2023, the FTC anticipates that the new rule will be implemented 120 days after its publication in the Federal Register. This development marks a significant shift in labour practices, signalling a broader reevaluation of the impact of non-compete agreements on workers and the economy.
Japan’s antitrust watchdog has issued a directive to Google, stating that the US tech giant must address its advertising search restrictions that affect Yahoo in Japan. According to the Japan Fair Trade Commission, Google’s practices were found to impede fair competition in the advertising market, particularly in relation to Yahoo Japan Corp., which merged with Line, a Japanese social media platform.
The issue stems from Google’s keyword-targeted search advertising services, which Yahoo Japan utilised after a collaboration initiated in 2010. The Fair Trade Commission claims that Google imposed restrictions in its advertising agreement with Yahoo Japan that hindered competition in targeted search ads for over seven years. Google responded by dropping these restrictions following an investigation by the FTC into potential violations of the Anti-Monopoly Law.
In response to the commission’s findings, Google has pledged full cooperation and emphasised that the commission did not find outright violations of anti-monopoly laws. The company committed to implementing the commission’s directives to enhance search functions for Japanese users and advertisers. Meanwhile, Line Yahoo declined to comment on the matter.
Why does it matter?
Google will remain under scrutiny for the next three years to ensure compliance with necessary changes. However, the commission did not impose fines or other penalties on the tech giant, which remains popular in Japan. This action by the commission comes shortly after another legal setback for Google in Japan, where Japanese doctors filed a civil lawsuit against the company for allegedly allowing groundless derogatory and false comments on its platform. In response, Google stated its continuous efforts to combat misleading or false information through human oversight and technological solutions.
The EU regulators are swiftly moving to conclude a preliminary investigation into Microsoft’s relationship with OpenAI, according to Margrethe Vestager, the EU’s antitrust chief. The probe, initiated in January, aims to determine whether Microsoft’s substantial investment of $13 billion into OpenAI should undergo scrutiny under the EU merger regulations. Vestager indicated in an interview with Bloomberg TV that a resolution is forthcoming, highlighting ongoing discussions with other regulatory authorities.
Vestager emphasised that the EU authorities closely monitor Microsoft’s investments and the broader trend of large tech companies investing in AI. The scrutiny extends beyond Microsoft to include other significant AI investments from major tech firms like Google, Amazon, and Nvidia. The EU mainly ensures competitiveness and prevents anti-competitive practices in this rapidly evolving AI landscape.
Microsoft’s involvement with OpenAI represents a significant stake, with the tech giant investing in other AI ventures, such as French startup Mistral and acquiring the team from Inflection AI. This investment landscape extends to other major players like Google and Amazon, which have their stakes in AI ventures. Vestager stressed the importance of vigilance in this emerging field, characterising it as a critical area for regulatory oversight to safeguard competition and innovation in the AI sector.
Independent browser companies within the EU are reporting significant increases in user numbers following the implementation of new EU legislation to foster fair competition among tech giants. The Digital Markets Act (DMA), effective on 7 March, requires major players like Google, Microsoft, and Apple to present mobile users with a ‘choice screen’ where they can opt for alternative web browsers. Before this regulation, default browsers like Chrome for Android and Safari for iPhones dominated the market, providing free services in exchange for user tracking and targeted advertising.
Since the new rules came into effect, companies like Cyprus-based Aloha Browser have experienced a 250% surge in the EU users. Aloha, known for its privacy-focused approach, has seen its EU market ranking rise from fourth to second place. Similarly, other companies like Vivaldi from Norway, Ecosia from Germany, and Brave from the US have also noted increased user numbers following the regulatory changes. DuckDuckGo and Opera, with substantial global user bases, are also witnessing growth within the EU due to the choice screen.
Why does it matter?
Under the DMA, mobile device manufacturers are required to present users with a selection of browsers, search engines, and virtual assistants during device setup. Apple, for instance, now displays up to 11 browser options alongside Safari in the choice screens tailored for each EU country, updating them annually. However, companies like Mozilla have criticised the rollout as slow and clunky, hindering the migration of users to alternative browsers. The European Commission has initiated an investigation into Apple’s compliance with the new rules, particularly focusing on whether users have genuine freedom to choose alternative services beyond defaults like Safari.
Google’s parent company, Alphabet, is reportedly considering acquiring the marketing software company HubSpot. Despite experts’ views that it would not stifle competition in the market, the deal could face consequential opposition from regulators, even though Google is still preliminarily considering the potential deal and assessing the associated antitrust risks.
Several industry analysts and antitrust experts believe that an acquisition of HubSpot by Google would not negatively impact competition, considering major players like Salesforce, Adobe, Microsoft, and Oracle in the Customer Relationship Management (CRM) software sector. Google does not currently compete in CRM, and the acquisition could strengthen HubSpot’s position with Google’s cloud-computing capabilities, leading to improved offerings and pricing for customers.
However, experts also anticipate that a Google-HubSpot deal would likely face challenges from US and EU antitrust regulators due to their increasing concerns about tech giants expanding through acquisitions. Former general counsel of the US Senate antitrust subcommittee, Seth Bloom, noted that such a deal would likely encounter a harsh reception from regulators and could lead to a lengthy court battle.
The reported consideration of a major acquisition like HubSpot reflects Google’s desire to strategically deploy its substantial cash reserves, estimated at $110 billion, to generate returns. Google has historically avoided large acquisitions since it purchased Motorola Mobility over a decade ago, focusing instead on smaller deals in advertising. Despite its investments in AI, Google’s shareholder returns have trailed behind competitors like Microsoft and Meta Platforms in recent months, prompting interest in potential transformative acquisitions like HubSpot.
The EU antitrust regulators are scrutinising a proposal by Apple to determine if it meets their directive allowing Spotify and other music streaming services to inform users of alternative payment methods outside of Apple’s App Store. This review follows the European Commission‘s recent order and hefty fine imposed on Apple for breaching competition rules. Under Apple’s proposal, services like Spotify can now include links on their apps directing users to their websites to purchase digital content or services, circumventing Apple’s payment system.
However, there’s a catch: any transactions resulting from these links will incur a 27% fee to Apple, including subsequent auto-renewing subscriptions. The European Commission is evaluating whether Apple’s proposal fully aligns with its decision. If there’s suspicion of non-compliance, the Commission may issue a Statement of Objections to address the concerns.
Apple insists that its plan adheres to the Commission’s decision, although Spotify has expressed frustration over Apple’s delay in complying with the EU order, which was issued five weeks ago. Meanwhile, the Commission is conducting a separate investigation into Apple’s App Store rules and its recent measures to comply with the Digital Markets Act (DMA) amid concerns that these could restrict developers from freely communicating and promoting their offerings.
Why does it matter?
The outcome of the EU’s assessment will determine whether Apple faces additional antitrust charges and penalties if its proposal is found to fall short of the Commission’s requirements. The ongoing dispute highlights the broader regulatory scrutiny facing tech giants like Apple over their market practices and dominance in the digital ecosystem, particularly concerning payment systems and app store policies.
Turkey’s competition authority has enacted a provisional restriction on Meta, limiting data exchange between Instagram and Threads during an ongoing market abuse investigation. The interim measure now will be maintained until a definitive ruling is made.
The regulator had initiated the probe into Meta back in December due to potential competition law breaches and significant market damage from the data merging of Instagram and Threads. The regulator stated that the company’s data sharing communication across Facebook, Instagram, and WhatsApp lacked clarity and sufficient information. Additionally, the user prompts for data sharing approval were seen as inadequate for addressing competition issues.
Previously, on a separate matter, the Turkish authority had also imposed a daily fine of $148,000 on Meta for its data sharing notification practices.
The European Commission has imposed a first-time fine of 1.8 billion euros ($1.95 billion) on Apple for restricting Spotify and other music streaming services from offering alternative payment options outside its App Store. This verdict follows Spotify’s 2019 complaint concerning these limitations and Apple’s 30% App Store fees.
The EU competition authority deemed Apple’s restrictions as unfair trading practices. Margrethe Vestager, EU antitrust chief, explained how Apple exploited its market dominance for a decade by limiting developers from suggesting cheaper music services outside the Apple ecosystem, a violation of EU antitrust regulations. Apple is instructed to eliminate App Store constraints, aligning with requirements from the new Digital Markets Act (DMA), which Apple must comply with by March 7.
Apple expressed its intent to contest the EU’s decision in court, stating the ruling disregards the lack of credible proof of consumer harm and overlooks a flourishing and competitive market. The company further remarked that Spotify, the primary proponent and benefactor of this decision, holds the world’s largest music streaming app and has engaged extensively with the European Commission.
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.
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.
