A South Korean court is reviewing a prosecution request to arrest Brian Kim, the billionaire founder of Kakao Corp, for alleged stock manipulation during a 2023 acquisition. The development follows a hearing last year involving Kakao and an executive over similar accusations. Prosecutors claim Kim manipulated the stock price of SM Entertainment to obstruct Hybe’s acquisition attempt. Kim, not formally charged, denies any wrongdoing.
Kim, the largest shareholder of Kakao Corp, holds a 24% stake through his entities. The court’s decision, expected late Monday or early Tuesday, will determine the necessity of a warrant without ruling on the allegations. Analysts warn that a conviction could jeopardise Kakao group’s control over KakaoBank Corp, as financial crime rules restrict ownership stakes in banks.
Regulatory and social scrutiny might impact Kakao’s bold investment decisions, including plans for AI services and fundraising through IPOs. Kim chairs a council coordinating Kakao group’s 128 affiliates, guiding their business focus. The outcome of the case could influence the company’s strategic moves in the near future.
Kakao plans to launch new AI services this year, amid growing challenges from legal and regulatory pressures. The decision on Kim’s arrest warrant will be crucial for the future direction of the tech giant and its numerous affiliates.
A recent study has revealed that AI chatbots pose significant risks to children, who often view them as lifelike and trustworthy. Dr Nomisha Kurian from the University of Cambridge calls for urgent action to prioritise ‘child-safe AI’ in the development of these technologies.
Kurian’s research highlights incidents where AI chatbots provided harmful advice to children, such as Amazon’s Alexa instructing a child to touch a live electrical plug and Snapchat’s My AI giving tips on losing virginity.
These cases underscore the ’empathy gap’ in AI, where chatbots fail to respond appropriately to children’s unique needs and vulnerabilities.
The study proposes a 28-item framework to help developers create safer AI by working closely with educators and child safety experts. Kurian argues that AI has great potential if designed responsibly, but proactive measures are essential to protect young users.
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.
Poland’s antitrust and consumer protection watchdog, UOKiK, has fined PayPal Europe 106.6 million zlotys ($27.3 million) for failing to clearly outline activities that could incur penalties in its contractual clauses. UOKiK stated that PayPal’s descriptions of prohibited activities could have been more precise, making it difficult for users to understand what actions were not allowed and the potential consequences.
UOKiK’s head, Tomasz Chrostny, criticised PayPal’s clauses as general, ambiguous, and incomprehensible, giving the company excessive discretion to determine whether a user has committed a prohibited act and what penalties to impose. That could include actions like blocking money on accounts.
PayPal responded by emphasising its commitment to fair treatment and transparent communication with customers. The company stated that it has been cooperating with UOKiK during the investigation and is reviewing the decision. PayPal also noted that the decision is not final and that it has the opportunity to appeal in court.
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 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.
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.
In a decision issued on 28 June 2024, a US federal judge authorised most of the US Securities and Exchange Commission (SEC) lawsuit against leading cryptocurrency exchange Binance. The origin of the lawsuit can be traced back to June 2023, when the SEC alleged that Binance and its CEO, Zhao, had manipulated the market, misused customer funds, non-complied with US customer restrictions, and misrepresented investors on their market surveillance controls.
Binance was also accused of enabling trades of crypto tokens, which were classified as unregistered securities by the SEC. For Binance, this ruling compounds its challenges following its recent $4.2 billion settlement with the Department of Justice and the Commodity Futures Trading Commission over financial misconduct.
However, the verdict partially favours the cryptocurrency industry as the judge invoked a previous ruling, stating that the SEC failed to prove that secondary sales of Binance’s tokens (those sold by sellers other than Binance on exchanges) should be classified as securities.
Why does this matter?
The following case reflects a broader regulatory trend directed to major crypto firms, such as Coinbase, Kraken, and Consensys, in an attempt to increase oversight of the cryptocurrency sector.
The EU antitrust regulators have charged Meta Platforms with violating landmark tech rules through its new ‘pay or consent’ advertising model for Facebook and Instagram. The model, introduced last November, offers users a choice between a free, ad-supported service with tracking or a paid, ad-free service. The European Commission argues this binary choice breaches the Digital Markets Act (DMA) by forcing users to consent to data tracking without providing a less personalised but equivalent alternative.
Meta asserts that its model complies with a ruling from EU’s top court and is aligned with the DMA, expressing a willingness to engage with the Commission to resolve the issue. However, if found guilty, Meta could face fines of up to 10% of its global annual turnover. The Commission aims to conclude its investigation by March next year.
The charge follows a recent DMA-related charge against Apple for similar non-compliance, highlighting the EU’s efforts to regulate Big Tech and empower users to control their data.
