E-commerce and trade

UK regulator accuses Google of abusing ad market power

The UK’s antitrust regulator, the Competition and Markets Authority (CMA), has accused Google of abusing its dominant position in digital advertising, restricting competition in the sector. According to the CMA, Google’s practices, which allegedly favour its ad exchange platform, have hurt British publishers and advertisers, impacting their ability to generate revenue through digital ads. The regulator’s provisional findings suggest that Google has been using its influence in the advertising market’s buying and selling sides since 2015.

The CMA highlighted the potential harm these practices could cause businesses relying on online ads to fund their websites and apps, reaching millions across the UK. Juliette Enser, interim executive director of enforcement, stressed that this anti-competitive behaviour undermines free or lower-cost digital content. In response, Google disagreed with the CMA’s conclusions, arguing that its advertising tools support businesses of all sizes in a highly competitive industry.

The issue is part of a larger global scrutiny of Google’s advertising practices, with similar investigations underway by the US Department of Justice and the European Commission. In 2023, the EU regulators even suggested that Google might need to sell parts of its adtech business, though the company dismissed this idea as disproportionate. The CMA is now set to review Google’s response before deciding on possible fines or other legal actions to end the infringement.

Coinbase faces class action over SEC lawsuit and asset risks

A US federal judge has rejected Coinbase’s attempt to dismiss a class-action lawsuit from shareholders. The lawsuit claims that Coinbase, the largest US cryptocurrency exchange, misled investors by downplaying the chances of facing legal action from the US Securities and Exchange Commission (SEC). The ruling comes 15 months after the SEC sued Coinbase for allegedly operating as an unregistered securities exchange, leading to a significant drop in the company’s stock price.

The shareholders argue that Coinbase and its top executives falsely portrayed the company’s position, emphasising that the crypto assets it listed were not securities and thus unlikely to attract regulatory action. Additionally, they allege that the company misled investors about the risks customers faced regarding their assets in the event of bankruptcy. Coinbase’s share price fell sharply after revealing disappointing earnings and adding new disclosures in May 2022.

While the judge dismissed claims that Coinbase falsely denied engaging in proprietary trading, some allegations can proceed, including those about misrepresenting risks to customer assets. Coinbase remains confident in its legal standing and is prepared to defend its case in court.

FedEx expands fulfilment with investment in AI robotics firm Nimble

FedEx has made a strategic investment in AI robotics and automation company Nimble to enhance its fulfilment services for small and medium-sized businesses. The investment aims to support FedEx’s Fulfilment unit, which assists businesses with order fulfilment and inventory management.

The investment comes as parcel delivery companies increasingly turn to automation to reduce costs and improve efficiency, particularly during periods of lower freight demand. FedEx believes Nimble’s automated third-party logistics solutions will help optimise supply chain operations across North America.

Scott Temple, president of FedEx Supply Chain, stated that the alliance with Nimble will expand the company’s presence in e-commerce, allowing FedEx to scale its fulfilment offerings throughout North America. The exact size of the investment has not been disclosed.

Nimble’s AI robotics technology is expected to help FedEx improve the efficiency of its fulfilment operations and further strengthen its position in the e-commerce sector.

ASML export rules tightened as Netherlands prioritises safety

The Dutch government announced on Friday that it will expand export licensing requirements for some of ASML’s semiconductor tools, bringing regulatory control back from the United States. The move aligns Dutch policy with the US and eases tensions between the two governments.

The licensing change comes amid ongoing efforts to restrict China‘s access to advanced technology. ASML, the Dutch company that produces the specialised lithography machines, does not anticipate that the policy shift will affect its earnings.

Dutch Trade Minister Reinette Klever emphasised the decision was made for national safety reasons, citing increased technological risks. ASML’s mid-range tools, such as the 1970i and 1980i DUV immersion lithography machines, are the focus of the new rules.

While the Netherlands has historically banned the export of ASML’s most advanced machines to China under the United States‘ pressure, recent US actions added further restrictions on ASML’s mid-range tools. Dutch lawmakers had expressed concerns about their country’s sovereignty under U.S.-driven policies.

Google’s new proposals under EU antitrust review

European Union regulators will gather feedback next week on Google’s latest proposals to comply with competition rules aimed at curbing the dominance of Big Tech. The process could determine whether formal charges will be brought against the company.

The European Commission initiated an investigation in March to examine whether Google unfairly favours its own vertical search services, including Google Shopping, Flights, and Hotels, over rivals. Competitors have raised concerns that Google has not fully complied with the EU’s Digital Markets Act (DMA), which seeks to level the playing field for smaller competitors.

In response, Google has offered a proposal that would display a separate box for competitors below its product listings in search results. It also suggested adding two adjacent boxes to show intermediaries alongside direct suppliers like airlines and hotels. Regulators will hold workshops in September to hear from stakeholders, though Google will not participate.

Failure to address the regulators’ concerns could result in formal charges and a potential fine of up to 10% of Google’s global annual turnover. Google stated that it will continue to engage with the European Commission and the industry in the coming months.

Robinhood Crypto settles California lawsuit over withdrawal restrictions

Robinhood’s cryptocurrency platform has agreed to pay $3.9 million to settle claims it blocked customers from withdrawing crypto assets between 2018 and 2022. The California Attorney General’s office announced that Robinhood Crypto had violated state laws by preventing customers from accessing cryptocurrencies they had purchased, forcing them to sell their assets to leave the platform.

The platform was also accused of misleading customers regarding where their assets were held and falsely advertising competitive pricing through multiple trading venues. As part of the settlement, Robinhood will allow customers to withdraw their crypto assets to personal wallets and honour its commitments regarding trading practices.

Robinhood did not admit wrongdoing but expressed satisfaction with the settlement. The company aims to make cryptocurrency more accessible and affordable, according to a statement from its general counsel.

California’s Attorney General Rob Bonta emphasised that the settlement serves as a warning that all companies, including those in the cryptocurrency space, must comply with consumer protection laws. Robinhood shares rose slightly after the news.

Salesforce expands AI portfolio with acquisition of Tenyx

The American cloud-based software company has announced plans to acquire Tenyx, a startup specialising in AI-powered voice agents. The acquisition, set to close in the third quarter, will bring Tenyx’s co-founders and team into Salesforce as the company expands its AI-driven solutions. Founded in 2022, Tenyx provides services to various industries, including e-commerce, healthcare, and travel.

This acquisition comes after Salesforce, facing pressure from activist investors, previously shifted its focus away from large-scale mergers and acquisitions. Now, with an eye on reigniting revenue growth, the company is resuming acquisitions to boost its capabilities in AI. Salesforce’s move aligns with broader industry trends, as tech giants like Microsoft and Amazon have also been acquiring AI startups this year.

Salesforce’s focus on AI began with the launch of the first AI centre in London, and is part of a competitive race in the tech industry. Microsoft has paid $650 million in March to acquire talent from AI startup Inflection, and Amazon hired key talent from another AI startup, Adept, in June. Salesforce, meanwhile, reported better-than-expected results in its second-quarter earnings, driven by increased demand for its enterprise cloud products.

As AI becomes increasingly vital to the technology landscape, companies like Salesforce are investing heavily in innovation to stay ahead. The Tenyx acquisition marks another step in its strategy to remain a leader in the cloud and AI sectors, even as competition intensifies.

Alibaba to add WeChat Pay on Taobao and Tmall

According to a recent statement from the company, Alibaba’s domestic e-commerce platforms, Taobao and Tmall, will soon start accepting payments through Tencent’s WeChat Pay. That marks a significant shift in China’s e-commerce landscape, as WeChat Pay is the main rival to Alipay, the payment service affiliated with Alibaba’s Ant Group.

Historically, Alibaba and Tencent have maintained a ‘walled garden’ approach, where users could only use Alipay on Alibaba platforms and WeChat Pay on Tencent-affiliated sites. However, this separation has been breaking down in recent years. While WeChat users have been able to share links to Alibaba products since 2021, they have not been able to complete transactions using WeChat Pay until now.

Alibaba’s decision to add WeChat Pay as a payment option comes as the company aims to stabilise its domestic e-commerce market share. While revenue from its domestic e-commerce segment dropped by 1% last quarter, the company reported an increase in the number of purchasers and the frequency of their purchases, leading to double-digit order growth. The exact timeline for the full rollout of WeChat Pay on Taobao and Tmall has yet to be disclosed.

US safety officials push for probe into Shein and Temu

Two US Consumer Products Safety Commission (CPSC) leaders are urging the agency to investigate e-commerce giants Shein and Temu after dangerous baby and toddler products were found on their websites. CPSC Commissioners Peter Feldman and Douglas Dziak have expressed concerns about how these foreign-owned platforms, based in Singapore and China, comply with US safety regulations, manage relationships with third-party sellers, and represent imported goods.

Shein and Temu, known for shipping low-cost products from China to the US, are particularly concerning due to their reliance on the ‘de minimis’ rule. This rule allows packages valued at $800 or less to bypass tariffs when sent directly to consumers, which is a loophole critics argue has contributed to their rapid success in the US market.

The scrutiny of Shein and Temu isn’t new; their low prices and product quality have been questioned before. Last year, a bipartisan group of US lawmakers proposed eliminating the de minimis rule, which is widely used by these platforms and third-party sellers on major sites like Amazon and Walmart.

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.