E-commerce and trade

Google faces antitrust trial in US over ad dominance

Google is set to face a critical antitrust trial as the US Department of Justice targets the tech giant’s advertising practices, accusing the company of using its dominance to stifle competition and harm news publishers. The legal case will be heard in Alexandria, Virginia, and marks another important move in the Biden administration’s broader campaign to curb the influence of Big Tech through the enforcement of antitrust laws.

The trial will scrutinise Google’s less-visible but highly lucrative adtech system, which connects advertisers with website publishers and accounted for over 75% of Google’s $307.4 billion in revenue last year. While the Justice Department recently won against Google in a separate case concerning the company’s search engine monopoly, this new trial will delve into how Google allegedly maintains a ‘privileged position’ as the dominant middleman in the digital advertising market.

Prosecutors and a coalition of states argue that Google’s dominance in adtech is due to its strategy of tying together tools for advertisers and publishers, effectively controlling critical parts of the advertising ecosystem. They claim Google controls 91% of the ad server market, over 85% of ad networks, and more than half of the ad exchange market, making it nearly impossible for competitors to gain a foothold. Google, however, disputes these figures, arguing that when broader markets like social media and streaming are considered, its market share is significantly lower.

It is expected to feature testimony from key players in the advertising industry and executives from major news organisations that have felt the impact of Google’s practices. The Justice Department will likely argue that the consolidation of the digital advertising market, primarily driven by Google, has contributed to the decline of journalism, with one-third of US newspapers closing or being sold since 2005.

On the other hand, Google is expected to defend its business practices by highlighting its tools’ benefits to small businesses and publishers, arguing that a breakup would stifle innovation and harm these smaller players. The company has lined up witnesses to support this narrative, including current and former executives, such as YouTube CEO Neal Mohan, who played a significant role in developing Google’s adtech.

EU chipmakers push for ‘Chips Act 2.0’ and quicker support measures

Europe’s leading computer chip industry group, ESIA, has urged the European Union to accelerate aid and introduce a revamped ‘Chips Act 2.0’ to support the sector. The group, which represents key chipmakers like Infineon, STMicroelectronics, and ASML, also called for the appointment of a dedicated ‘Chips Envoy’ to oversee the bloc’s semiconductor strategy.

The first EU Chips Act, launched in April 2023, aimed to boost Europe’s global chip market share to 20% by 2030. Despite several major projects, including a €10 billion TSMC plant in Dresden and a €30 billion Intel project in Magdeburg, the industry is not on track to meet the goal. Delays and the absence of timely aid have raised concerns, particularly around Intel’s ambitious project.

The ESIA is calling for a more streamlined aid process and fewer export restrictions to bolster the sector. While the group acknowledges the need for security, it advocates for a more proactive approach that focuses on incentives rather than defensive trade policies. Recent restrictions on ASML’s high-tech exports to China exemplify the challenges the industry faces.

Amid these obstacles, Europe’s chip sector is seeking strong leadership and faster policy implementation to compete globally. The success of upcoming projects and the timely rollout of ‘Chips Act 2.0’ are seen as vital for Europe’s future in semiconductor manufacturing.

Japan faces Chinese backlash over chip equipment restrictions

China has issued a stern warning to Japan, threatening severe economic retaliation if it intensifies restrictions on selling and servicing chipmaking equipment to Chinese companies. The warning came as part of China’s ongoing effort to counter Japan’s alignment with US measures to limit China’s semiconductor production capabilities.

Toyota Motor reportedly informed Japanese officials that China may retaliate by cutting off access to essential minerals required for automotive manufacturing. The concerns were raised during recent meetings between Chinese and Japanese officials, where China’s stance on the issue was made clear.

Japan recently began limiting exports of 23 types of semiconductor manufacturing equipment, joining a US-led initiative to curb China’s ability to produce advanced chips. These restrictions have sparked fears of further economic conflict between the two nations.

Toyota and China’s foreign ministry have yet to comment on the matter, while tensions over trade controls continue escalating in the region.

CCIA supports USTR’s challenge to Canada’s Digital Services Tax

The Computer and Communications Industry Association (CCIA) has expressed strong support for the US Trade Representative’s (USTR) recent announcement regarding consultations with Canada over its digital services tax (DST). The action marks the initial step in a formal dispute process under the US-Mexico-Canada Agreement (USMCA). If the issue is not resolved within 75 days, the US may escalate the matter to a dispute settlement panel.

The DST, enacted through Bill C-59, is perceived by the CCIA and other trade associations as discriminatory against US companies, primarily targeting large foreign tech firms based in the US. The DST imposes a 3% tax on revenue generated by foreign companies from Canadian users, affecting firms with global revenues exceeding $1.1 billion, which includes major US companies like Google and Meta. CCIA’s Vice President of Digital Trade, Jonathan McHale, highlighted the negative impact of the DST, estimating potential losses of up to $2.3 billion annually for US companies and significant job losses.

Why does this matter?

The association has long advocated for US action against the DST, emphasising that it undermines the fair market access stipulated in the USMCA and could set a precedent for similar measures by other countries. In response, Canadian officials have stated that the consultations are part of ongoing discussions and reiterated their commitment to international tax agreements. Canadian officials suggested that the DST would be rescinded if a multilateral solution is achieved.

BigCommerce partners with Google for AI-powered platform upgrades

BigCommerce is bolstering its AI capabilities through collaboration with Google, aiming to enhance online store performance and drive customer growth. The Austin-based company introduced a suite of new AI-focused solutions during its recent product launch, including tools for personalised product recommendations and AI-generated quote proposal emails, with plans for more features like semantic search and predictive analytics.

These enhancements build on BigCommerce’s partnership with GoogleCloud’s AI technology, which was formed about a year ago. The company is positioning itself against competitors like Shopify and Amazon, which have also integrated AI to improve their platforms. BigCommerce believes these updates will benefit merchants significantly, particularly in terms of efficiency and customer experience.

Despite a challenging journey since going public in 2020, BigCommerce is making substantial investments in AI, and it is already showing positive results. Recent earnings reports indicate an 11% increase in revenue, driven partly by the success of these AI tools, and a reduction in net losses compared to the previous year.

The company remains optimistic that its AI strategy will pay off, helping it compete more effectively in e-commerce. BigCommerce is committed to providing merchants with various AI-powered tools, enabling them to choose the best solutions for their unique needs.

Dutch Watchdog fines Uber €290 million for data transfer violations

American multinational transportation company Uber faces a significant penalty of €290 million in the Netherlands for transferring the personal data of European taxi drivers to the United States. The Dutch Data Protection Authority (DPA) ruled that the ride-hailing company violated the General Data Protection Regulation (GDPR) by failing to safeguard the data appropriately. Data transfer to the US was deemed a serious breach of the EU privacy laws.

Uber, which has halted the practice, plans to appeal the fine, arguing that its data transfer process complied with GDPR during legal uncertainty between the EU and the US. The appeal process could extend over four years, during which any fines will be suspended.

The case originated from a complaint by a French human rights organisation on behalf of over 170 taxi drivers in France. Although the complaint was initially filed with France’s national data protection regulator, CNIL, it was forwarded to the Dutch DPA because Uber’s European headquarters is in the Netherlands.

Earlier this year, Uber was also fined €10 million by the DPA for other privacy infringements involving its drivers’ data. These fines reflect increasing scrutiny over how global tech companies handle sensitive data across borders.

Amazon and rivals supply Chinese firms with US tech

Chinese entities linked to the state are turning to cloud services from Amazon and its rivals to access advanced US chips and AI capabilities that are otherwise restricted. Over the past year, at least 11 Chinese organisations have sought cloud services to bypass US export restrictions on high-end AI chips, according to tender documents.

Amazon Web Services (AWS) was specifically mentioned as a provider in several cases, though Chinese intermediaries were used to access the services. US regulations focus on the export or transfer of physical technology, leaving a loophole for cloud-based access. This has allowed US companies to profit from China’s growing demand for computing power.

Efforts to close this loophole are ongoing. US legislators have expressed concerns, and the Commerce Department is considering new rules to tighten control over remote access to advanced technology. AWS has stated that it complies with all applicable laws, including trade regulations in the countries where it operates.

Microsoft’s cloud services have also been sought by Chinese universities for AI projects. These activities highlight the increasing demand for US technology in China and the challenges in enforcing export controls. Both Amazon and Microsoft declined to comment on specific deals, but the implications for US-China tech relations are significant.

Drone delivery brings food to Great Wall tourists

Visitors to the Great Wall of China can now enjoy the convenience of having food and drinks delivered by drones. Chinese delivery company Meituan has launched the first drone service in Beijing, designed to serve tourists exploring a remote section of the Great Wall. The drones, which can carry up to 2.3 kilograms, cover the distance from a nearby hotel rooftop to a watchtower in just five minutes, significantly faster than the 50 minutes it would take on foot.

The service operates between 10 a.m. and 4 p.m., with a nominal delivery fee of just 4 yuan. After completing deliveries, drones also assist in carrying waste to recycling stations. While the drones are autonomous, they still require human assistance to load packages at the hotel and receive them at the watchtower, where app users collect their orders.

Meituan’s expansion into drone delivery is part of a broader trend across China, where drones are increasingly used for logistics in both urban and rural areas. The company first tested drone deliveries in Shenzhen in 2021 and now operates over 30 routes across multiple cities, including Shanghai. These drones navigate urban spaces by following set paths and delivering packages to designated kiosks.

The rise in drone delivery services aligns with the Chinese government’s push to develop the ‘low-altitude economy,’ a new growth sector focusing on businesses that utilise civil aerial vehicles. This initiative is seen as a key driver for the country’s economic future, reflecting the growing importance of innovative technology in everyday life.

Shein and Temu clash over copyright allegations

A fast fashion retailer Shein has escalated its legal battle against rival Temu by filing a lawsuit accusing Temu of operating as an unlawful enterprise. The allegations against Temu include counterfeiting, theft of trade secrets, and manipulating sellers on its platform. Shein claims Temu exerts complete control over its sellers, even preventing them from removing products after admitting to intellectual property infringement.

The lawsuit is part of an ongoing feud between the two budget retailers, which have exchanged legal threats before. Temu had previously accused Shein of pressuring manufacturers to cut ties with it, while Shein claimed Temu encouraged false statements by influencers. Both companies are known for aggressive tactics to dominate the US market, where Temu has recently overtaken Shein in sales.

Shein’s latest lawsuit also highlights its own struggle to improve its reputation as it prepares to go public in the US. The company, notorious for poor working conditions and accusations of copying independent designers, now accuses Temu of similar practices. Both retailers are heavily reliant on the Chinese supply chain and exploit trade loopholes to maintain their competitive pricing.

Meanwhile, Shein itself faces a class action lawsuit, accused of large-scale copyright infringement against small designers and artists. Despite these legal challenges, Shein continues to battle Temu in a race to the bottom in the competitive world of fast fashion.

India warns Amazon over predatory pricing

India’s Commerce Minister, Piyush Goyal, has accused Amazon and other e-commerce giants of predatory pricing practices that threaten the survival of millions of traditional brick-and-mortar stores in the country. He expressed concerns that these companies are using their vast investments to mask business losses and undercut smaller retailers, thus bypassing Indian regulations designed to protect local businesses.

Amazon and Walmart-owned Flipkart have significantly transformed India‘s retail sector by investing billions to attract consumers with enticing discounts. However, India’s regulations prohibit these companies from directly selling to consumers, limiting them to operating marketplaces where third-party sellers offer products. Despite these restrictions, small retailers have alleged that Amazon and Flipkart use complex business structures to circumvent the rules.

Goyal’s comments came during an event in New Delhi, where he criticised Amazon, accusing the company of using its substantial investments to cover up losses linked to predatory pricing tactics. He questioned the legitimacy of Amazon’s business practices but did not provide specific evidence to support his claims. Both Amazon and Flipkart have yet to respond to these allegations.

Why does this matter?

In the past, Goyal has openly criticised US e-commerce companies for exploiting their scale and access to low-cost capital to the detriment of small retailers. A report in 2021 revealed that Amazon allegedly helped a select group of sellers thrive on its Indian platform by offering them discounted fees, which allowed the company to bypass foreign investment laws—a claim Amazon has denied.

Both Amazon and Flipkart are currently under investigation by Indian antitrust authorities, but they continue to deny any wrongdoing. Goyal’s remarks have reignited the debate over the impact of large e-commerce players on India’s traditional retail landscape.