Competition regulation

US DoJ aims to break Google’s search engine monopoly

The US government is considering drastic measures to break up Google’s dominance in the online search industry, which could lead to the company divesting critical parts of its business, such as its Chrome browser and Android operating system. The potential legal move follows a judge’s August ruling that declared Google had illegally established a monopoly in online search. With the tech giant controlling about 90% of internet searches in the US, the Justice Department is pushing for remedies that could transform how Americans access information and shrink Google’s revenue while creating more opportunities for competitors.

One of the government’s proposals involves halting Google’s massive payments to ensure its search engine remains the default on new devices. In 2021 alone, Google paid $26.3 billion to companies like Apple to keep its search engine pre-installed on smartphones and browsers. The Justice Department argues that ending these agreements is necessary to prevent Google from maintaining its dominant position in search distribution today and in the future, particularly as the market expands into AI.

Prosecutors are also eyeing Google’s role in the growing AI sector. They propose opening up Google’s vast indexes, data, and models to its rivals to prevent the company from monopolising AI-driven search technologies. Additional suggestions include limiting Google’s ability to make deals, restricting competitors’ access to web content and allowing websites to opt out of having their data used for AI training. Google, however, has pushed back, arguing that such interventions could distort the rapidly developing AI industry and stifle innovation at a crucial moment.

The stakes are high for Google, which plans to appeal the proposed remedies, calling them ‘radical’ and far beyond the scope of the legal case. Google maintains that its search engine’s popularity is due to its superior quality and points to competition from companies like Amazon as proof of a competitive market. Meanwhile, the company faces mounting legal battles, including a separate ruling forcing it to open its Play app store to greater competition.

The Justice Department is expected to submit more detailed proposals by 20 November, with Google having until 20 December to respond with its suggestions.

Why does it matter?

The antitrust case is seen as a significant victory for regulators seeking to rein in the power of Big Tech, with similar lawsuits already filed against Meta, Amazon, and Apple. Smaller competitors, like Yelp and DuckDuckGo, have voiced support for breaking up Google’s assets, advocating for changes that could level the playing field in both search and AI.

Judge allows FTC antitrust case against Amazon to proceed

A US District judge has allowed the Federal Trade Commission’s antitrust case against Amazon to proceed, although some claims made by state attorneys general from New Jersey, Pennsylvania, Maryland, and Oklahoma were dismissed. The FTC accuses Amazon of using anti-competitive tactics to dominate the online retail market, including an algorithm that allegedly inflated prices for US households by over $1 billion before it was discontinued in 2019.

Amazon had sought to dismiss the case, arguing that the FTC had not proven harm to consumers. However, the judge ruled that it’s too early to consider Amazon’s defense that its practices benefited competition. The case will continue, keeping the spotlight on Amazon’s business practices.

Court ruling forces Google to allow rival app stores

A US judge has ruled that Google must make significant changes to its Play Store, allowing Android users to access third-party app stores and payment methods for three years. The ruling comes after a jury sided with ‘Fortnite’ creator Epic Games, which accused Google of monopolising app access and in-app payments on Android devices.

The order, issued by Judge James Donato, prevents Google from blocking alternative payment options or pre-installing its app store through deals with device makers. The decision is set to take effect on 1 November 2024, giving Google time to comply. However, Google plans to appeal the ruling, arguing that it could harm consumers, developers, and device makers.

Epic Games CEO Tim Sweeney called the decision “big news” and said it could lead to a more competitive Android ecosystem by 2025. Meanwhile, Google is also facing antitrust cases over its dominance in web search and ad technology.

Rivals urge EU to rein in Microsoft’s Edge advantage

Several rival web browsers, including Vivaldi, Waterfox, and Wavebox, along with a web development advocacy group, have called on the European Commission to impose stricter antitrust regulations on Microsoft’s Edge browser. In a letter dated 17 September, the group argued that Edge, pre-installed on all Windows devices, is given an unfair distribution advantage, limiting competition. This follows a recent lawsuit by Opera, a Norwegian browser company, which challenged the Commission’s decision to exempt Edge from the Digital Markets Act (DMA).

DMA aims to stop dominant online platforms from restricting consumer choices by setting guidelines for ‘gatekeeper’ services. Rival browsers argue that Microsoft’s practice of making Edge the default browser on Windows undermines the spirit of the law. They contend that Edge’s pre-installed presence gives it an unfair advantage, making it harder for independent browsers to compete, especially as many users rely on Edge to download alternatives.

Neither Microsoft nor the European Commission has commented on the issue, but critics have pointed out that Edge’s pop-up messages often misrepresent the features of rival browsers. Despite these allegations, Microsoft Edge holds only a small portion of the global browser market, with just over 5%, while Google Chrome dominates with 66%.

Amazon’s AI partnership with Anthropic cleared by UK regulator

The United Kingdom‘s Competition and Markets Authority (CMA) has confirmed that Amazon’s $4 billion partnership with AI startup Anthropic will not be subject to a more in-depth investigation. The regulator determined that the deal did not raise competition concerns under Britain’s merger regulations.

Amazon expressed support for the CMA’s decision, noting that it acknowledged the regulator’s lack of jurisdiction over the collaboration. The CMA also cleared a similar partnership between Microsoft and Inflection AI, while a deal between Alphabet and Anthropic remains under review.

Anthropic, which was co-founded by siblings Dario and Daniela Amodei, former OpenAI executives, reiterated that its partnerships with major tech firms do not compromise its independence or governance. The startup has received billions in investments from several large companies.

Amid growing antitrust scrutiny of deals between startups and big tech firms, regulators are closely monitoring collaborations like those involving Anthropic and its partners.

Appario sues to dismiss Indian antitrust investigation

Appario, a former top seller on Amazon India, has petitioned a court to dismiss an antitrust investigation that concluded Amazon and several sellers breached local competition laws. The Competition Commission of India (CCI) alleges that Amazon, Walmart’s Flipkart, and certain smartphone brands favoured select sellers and prioritised specific listings. These accusations were based on a 2021 Reuters investigation, which exposed Amazon’s internal practices. Despite the findings, Amazon continues to deny any misconduct.

Appario, which has ceased selling on Amazon, is contesting the CCI’s findings in the Karnataka High Court, asserting that the report implicating it should be “set aside.” This legal action marks the first challenge to the CCI’s ongoing investigation, initiated in 2020, and poses a significant obstacle for Amazon in India, one of its most important markets.

The CCI previously conducted raids on Appario and other sellers during its investigation. Court records indicate that Appario is also challenging a CCI order that requires it to submit financial statements following the investigation. Neither Amazon nor Appario has commented on the ongoing legal proceedings.

EU debates future of telecom regulations amidst competing visions

The European Commission’s Competition Directorate (DG COMP) and the Connectivity Directorate (DG CNECT) are at the centre of a critical debate over the future of the EU telecom regulations. That discussion highlights the struggle within the EU to balance regulatory harmonisation with market fragmentation.

DG CNECT advocates for increased consolidation in the telecom sector, arguing that the current fragmented landscape hampers competitiveness and investment compared to the more integrated markets of the US and China. In contrast, DG COMP warns that excessive national consolidation could lead to higher consumer prices and undermine the competition necessary for innovation.

As these discussions progress, DG COMP and DG CNECT are examining the implications of indirect deregulation in the telecom sector. Specifically, DG COMP has raised concerns that eliminating regulated sub-markets could increase the bureaucratic burden on national regulators, thereby reducing the effectiveness of oversight across the EU. That shift would transfer more responsibility to individual member states, potentially leading to inconsistencies hindering the EU’s telecom objectives. Meanwhile, while DG CNECT supports deregulation, it must consider the potential impacts on market dynamics and consumer protection.

DG COMP and DG CNECT are committed to fostering innovation within the telecommunications sector through strategic investments in future technologies. DG COMP emphasises the importance of competitive markets in driving advancements like edge computing and OpenRAN. At the same time, DG CNECT argues for regulatory frameworks and consolidation to facilitate these investments. Ultimately, their shared focus on innovation aims to enhance the EU’s telecommunications infrastructure and maintain its competitiveness in the global market.

US eases AI chip exports to Middle Eastern data centres

The United States Commerce Department has announced a new rule that could streamline the process for sending AI chips to data centres in the Middle East. The rule will allow data centres to apply for Validated End User (VEU) status, enabling them to receive AI chips through a general authorisation, eliminating the need for individual licences for each shipment.

The move follows concerns in Washington that Middle Eastern countries could act as intermediaries for China to acquire US chips that are restricted from direct export to China. G42, an AI company based in the United Arab Emirates with historical connections to China, has been at the centre of these concerns, despite its efforts to distance itself from China and comply with US regulations.

The VEU program will involve rigorous screening to ensure safeguards are in place to prevent the misuse or diversion of US technology. The Commerce Department emphasised the importance of this review process to protect national security.

The Bureau of Industry and Security reiterated its commitment to facilitating international AI growth while mitigating risks to US and global security, aiming to balance technological development with safety concerns.

Meta postpones joining EU AI Pact, focuses on compliance

Meta Platforms has announced it will not immediately join the European Union‘s voluntary AI Pact, which is a temporary initiative ahead of the AI Act coming into force. The company is currently focusing on compliance with the forthcoming regulations set out in the act, but may sign the pact at a later stage.

The EU’s AI Act, agreed in May and adopted by the European Council, will introduce strict rules governing the development and use of artificial intelligence. Under these regulations, companies must provide detailed summaries of the data used to train their AI models. The majority of the law’s provisions will take effect from August 2026.

In the interim, the AI Pact encourages companies to voluntarily adopt some of the key requirements of the forthcoming act. Meta has expressed its support for harmonised EU regulations but is prioritising work on meeting the obligations of the AI Act.

The AI Act will be part of a wider legislative framework, joining the Digital Markets Act, Digital Services Act, Data Governance Act, and Data Act, in shaping the future of digital regulation in the EU.

Israel to promote competition in cellular market

The Israeli Communications Ministry is taking decisive steps to stimulate competition in the cellular infrastructure market by welcoming new entrants. That initiative aims to diversify a landscape dominated by a few major players, foster innovation, and attract investment in cellular services.

By opening the market to fresh competition, the ministry intends to accelerate the rollout of 5G networks nationwide, benefiting consumers with improved service quality and more choices. Ultimately, this effort is critical as Israel strives to bolster its technological infrastructure and meet the increasing demand for faster, more reliable communication services.

However, the Israeli Communications Ministry needs help balancing these changes with the concerns of existing industry stakeholders. The market currently comprises three primary cellular networks – Pelephone, Cellcom, and Partner (including Hot Mobile), each operating its infrastructure independently. Consequently, introducing new players may disrupt the established order, raising questions about potential impacts on service quality and competition.

Moreover, the ministry has encountered resistance from the workers’ union of Pelephone, which contends that the proposed changes could undermine competition and jeopardise national security. The union argues that this initiative prioritises financial interests over the integrity of communication services. In this context, they express concern that instead of addressing fundamental infrastructure issues, the ministry opts for a superficial solution that may lead to long-term negative consequences for the industry and consumers.