The Cyberspace Administration of China (CAC), China’s internet regulator, has publicly identified and named agents facilitating local ChatGPT access. The latest crackdown comes in the backdrop of OpenAI’s decision to restrict access to its API in ‘unsupported countries and territories’ like mainland China, Hong Kong, and Macau.
Alongside CAC, other local authorities have penalised several website operators this year for providing unauthorised access to generative AI services like ChatGPT. These measures are indicative of the CAC’s commitment to enforcing China’s AI regulations, which mandate rigorous screening and registration of all AI services before they can be publicly made available. Even with these stringent rules, some developers and businesses have managed to sidestep the regulations by using virtual private networks.
Why does this matter?
Despite Beijing’s ambition of leading the world’s AI race, it is stringent about its requirement of GenAI providers upholding core socialist values and avoiding generating content that threatens national security or the socialist system. As of January, about 117 GenAI products have been registered with the CAC, and 14 large language models and enterprise applications have been given formal approval for commercial use.
Spain’s antitrust regulator, the CNMC, has launched an investigation into Apple’s App Store for potentially anti-competitive behaviour. The investigation focuses on Apple’s alleged imposition of unequal commercial conditions on developers of mobile applications sold through its platform.
The CNMC has suggested that these practices could constitute a serious violation of competition law. If Apple is found guilty, it could face a substantial fine of up to 10% of its global revenues. The following investigation in Spain highlights ongoing concerns about Apple’s dominance in the app store market and its impact on competition and developers.
Italian tax police have seized €121 million from Amazon’s Italian logistics unit as part of an investigation into alleged tax fraud and illegal labour practices. The Milan Prosecutors’ Office has accused Amazon Italia Transport of bypassing labour and tax laws by using cooperatives and limited liability companies to supply workers, avoiding VAT tax duties, and reducing social security payments.
Prosecutors claim this system allowed Amazon to maintain competitive service prices in the Italian market. An Amazon spokesperson in Italy did not comment on the case when contacted by Reuters.
The investigation follows similar probes targeting other large businesses in recent years, including DHL, UPS, DB Schenker, and the Italian supermarket chain Esselunga.
South Korean authorities have arrested Kim Beom-su, the billionaire founder of technology giant Kakao Corp, on allegations of stock manipulation. The charges relate to the acquisition of a K-Pop agency last year. Prosecutors claim Kim manipulated the stock price of SM Entertainment in order to hinder a competitor, Hybe, from acquiring it. Kim, also known as Brian Kim, denies the accusations and maintains he never ordered or tolerated any illegal activity.
Kakao Corp, which operates South Korea‘s largest messaging app, expressed regret over the situation. Chief Executive Shina Chung is leading efforts to manage the company during Kim’s absence. The Seoul Southern District Court approved the arrest warrant, citing potential evidence destruction and flight risk as reasons for detaining Kim. He is currently held at the Seoul Nambu Detention Centre for up to 20 days while prosecutors continue their investigation.
The case against Kim poses significant risks to Kakao’s future, potentially impacting investments in artificial intelligence and overseas expansion plans. Industry experts warn that regulatory scrutiny could complicate major business decisions. Kim is the largest shareholder of Kakao Corp, controlling a 24% stake, and any conviction could affect the company’s control over its online banking arm, KakaoBank Corp, due to financial crime restrictions.
Following the news of Kim’s arrest, Kakao Corp shares fell by 5.4%, marking their largest daily drop since December 2022. Affiliates Kakaopay and Kakao Games also hit record lows, dropping by 7.8% and 5.2% respectively, while Kakaobank shares fell by 3.8%. The ongoing legal troubles could further strain the company’s market performance and strategic initiatives.
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.
Tesla’s attempt to secure a 5G patent licence in the UK has been dismissed by the High Court. The automaker sought the licence before its planned launch of 5G vehicles in Britain.
The lawsuit, filed against US technology firm InterDigital and the patent licensing platform Avanci, was thrown out on Monday. Tesla wanted the court to determine fair, reasonable, and non-discriminatory (FRAND) terms for using patents owned by InterDigital and licensed by Avanci.
Judge Timothy Fancourt ruled that Tesla’s bid for a license must be dismissed. However, Tesla’s separate claim to revoke three InterDigital’s patents will continue.
The Content Origin Protection and Integrity from Edited and Deepfaked Media Bill, also known as the COPIED Act, was introduced on 11 July 2024 by US lawmakers, Senators Marsha Blackburn, Maria Cantrell and Martin Heinrich. The bill is expected to safeguard the intellectual property of creatives, particularly journalists, publishers, broadcasters and artists.
According to the bill, images, videos, audio clips and texts are considered deepfakes if they contain ‘synthetic or synthetically modified content that appears authentic to a reasonable person and creates a false understanding or impression’. If moved into legislation, the bill restricts online platforms where US-based customers frequent, and annual revenue of at least $50 million is generated or where 25 million active users are registered for three consecutive months.
Under the bill, companies that deploy or develop AI models must install a feature allowing users to tag such images with contextual or content provenance information, such as their source and history, in a machine-readable format. After that, it would be illegal to remove such tags for any other reason than research, use these images to train subsequent AI models or generate content. Victims will then have the right to sue offenders.
The COPIED Act is backed by several artist-affiliated groups, including SAG-AFTRA, the National Music Publishers’ Association, the Songwriters Guild of America (SGA), the National Association of Broadcasters as well as The US National Institute of Standards and Technology (NIST), the US Patent and Trademark Office (USPTO) and the US Copyright Office. The bill also has received bipartisan support.
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.
Elon Musk is seeking to dismiss a lawsuit filed by former Twitter shareholders, alleging that he delayed revealing his large ownership stake in the company in early 2022. The shareholders claim Musk and his wealth manager, Jared Birchall, knew they were required by SEC rules to disclose when Musk’s stake exceeded 5% by 24 March 2022 but waited another 11 days. The delay, they argue, allowed Musk to buy more shares at lower prices, saving over $200 million.
In a filing in Manhattan federal court, Musk argued that the delay was a mistake rather than an attempt to defraud shareholders. He contended it was implausible to believe he intended to deceive investors who were unaware of his 9.2% stake and who missed out on significant gains by selling their shares prematurely. Musk claimed he initially planned to disclose his stake at the end of 2022 but did so earlier after realising he had misunderstood the SEC disclosure rule.
An Oklahoma public pension fund is leading the lawsuit. Despite Musk’s defence, a US District Judge had previously refused to dismiss the case, citing evidence that Musk understood the SEC’s disclosure requirements. Musk eventually bought Twitter, now known as X, for $44 billion in October 2022, and the SEC has also investigated his stock purchases.
On 16 May 2024, Apple Inc. and Apple Distribution International Ltd filed a case against the European Commission, contesting a decision regarding their App Store practices, particularly concerning music streaming services. Represented by a team of lawyers, Apple is seeking the annulment of the Commission’s decision from 4 March 2024, which imposed fines and remedies on the tech giant.
Apple’s legal action is based on five main arguments. Firstly, they argue that the European Commission made errors in defining the market and Apple’s dominance within it. Secondly, Apple claims the Commission wrongly deemed its anti-steering provisions as abusive. The third point of contention is the calculation and imposition of fines, which Apple believes were erroneous. Additionally, Apple contends that the remedies imposed were disproportionate and inadequately justified. Lastly, they argue that the decision infringed on their rights of defence.
The case highlights the ongoing tension between major tech companies and regulatory bodies over market practices and competition rules. Apple aims to overturn or mitigate the Commission’s decision, which could significantly affect how digital marketplaces operate within the European Union.
