Jurisdiction

Google battles £7 billion lawsuit over search dominance in UK

Google is facing a billionaire lawsuit in London as Alphabet, its parent company, asked a tribunal to dismiss claims accusing the tech giant of abusing its dominance in the online search market. The lawsuit, which could amount to £7 billion ($9.3 billion), focuses on businesses’ costs when using Google’s search advertising services, which plaintiffs argue are ultimately passed on to consumers. The legal challenge is one of several targeting Google’s practices in recent years, including a similar case in Britain concerning its advertising market dominance and an ongoing antitrust trial in the United States.

Consumer rights advocate Nikki Stopford, representing the class of claimants, argues that Google’s overwhelming market presence allows it to increase costs unfairly. Her lawsuit also points to a €4.5 billion fine imposed by the European Commission in 2018 over Google’s restrictions on Android manufacturers, a decision currently being appealed. Furthermore, the lawsuit accuses Google of striking a deal with Apple to make its search engine the default on Apple’s Safari browser in exchange for a portion of mobile search ad revenues.

Google has dismissed these claims as unfounded. Its lawyer, Meredith Pickford, stated that the case is flawed, rejecting the notion that Google’s practices harmed consumers. Pickford also emphasised that Google’s agreement with Apple was legally sound and argued that the European Commission’s ruling was based on technicalities rather than substantive issues. The tribunal’s decision on whether the case will proceed to trial remains pending.

Binance founder CZ to be released this month

Binance founder Changpeng Zhao, better known as CZ, is due to be released from a US prison on 29th September. Zhao, 47, has been serving a four-month sentence for breaching US anti-money laundering and sanctions laws, particularly for allowing transactions with sanctioned countries such as Iran and Cuba. His legal troubles started in November 2023 when Binance and Zhao admitted to multiple charges, resulting in a substantial $4.3 billion fine for the company and a personal penalty of $50 million for Zhao.

Initially facing a potential three-year term, Zhao’s sentence was significantly reduced after US District Judge Richard Jones determined there was insufficient evidence to prove his direct involvement. The judge also considered Zhao’s personal history and character as mitigating factors. As part of the settlement, Zhao agreed to step down as Binance’s CEO.

Although Zhao’s legal woes have rattled Binance, the exchange continues to operate. Following his release, there is speculation about his future role in the crypto world. Earlier in 2024, Zhao hinted at launching a new venture, Giggle Academy, a free educational platform for underprivileged children, signalling his intent to leave a legacy beyond cryptocurrency.

Qualcomm fined €238.7 million in EU antitrust case

Qualcomm faced another legal setback in the EU as the continent’s second-highest court largely upheld an EU antitrust fine, reducing it slightly to €238.7 million ($265.5 million) from the original €242 million. The fine, imposed by the European Commission in 2019, stemmed from Qualcomm’s practice of selling chipsets below cost between 2009 and 2011—a tactic known as predatory pricing—aimed at driving British competitor Icera, now part of Nvidia, out of the market.

Qualcomm argued that the chipsets in question only accounted for a small fraction (0.7%) of the market, making it unlikely they could have effectively blocked competitors. However, the General Court in Luxembourg dismissed most of the company’s claims, apart from a minor point regarding the fine’s calculation, which led to a slight reduction.

The ruling marks another chapter in Qualcomm’s legal battles with the EU. While the company can appeal on legal grounds to the EU Court of Justice, it has already experienced mixed results in the European courts. In 2021, Qualcomm overturned a separate €997 million fine, which had been levied for paying Apple billions to exclusively use its chips in iPhones and iPads from 2011 to 2016.

For now, the EU’s watchdog continues to pursue antitrust enforcement in the tech sector, with Qualcomm remaining a key target in its efforts to curb anti-competitive behaviour.

Drone technology smuggling: Russian man charged in US

A Russian national has been arrested in Florida on charges of illegally exporting drone-related technology to Russia. Authorities allege that 44-year-old Denis Postovoy, residing in Sarasota, smuggled microelectronic components with military applications to Russia following the 2022 invasion of Ukraine.

Postovoy is accused of violating US law by shipping technology that could enhance Russia’s military capabilities in the conflict. The Department of Justice stated that the exported components are used in drones and have dual-use potential for military purposes.

To conceal his activities, Postovoy allegedly worked through a network of companies in Russia and Hong Kong. He is said to have purchased the components from US distributors and sent them to intermediary locations before reaching Russia.

While the Russian embassy has acknowledged Postovoy’s detention, it noted no official communication from US law enforcement regarding the arrest has been received.

EU to fine Meta over anti-competitive practices

Facebook’s owner company, Meta, is bracing for a substantial fine from the European Union, according to sources familiar with the matter. The penalty stems from allegations that Meta is leveraging its dominance in social networking to stifle competition in the classified advertising sector. The company’s practice of linking its free Marketplace service with Facebook has raised concerns among the EU regulators, who view this strategy as an attempt to edge out rivals.

The decision is expected as soon as next month, and it could be one of the final significant moves overseen by the EU’s current competition chief, Margrethe Vestager, before her departure. The investigation into Meta’s business practices marks a continuation of the EU’s broader efforts to crack down on the monopolistic behaviour of tech giants.

Currently, neither Meta nor the EU regulators have commented on the looming decision. However, this case could signal a more stringent approach to maintaining a level playing field in the digital marketplace, where tech companies have long held considerable power. The ruling could have substantial financial and operational consequences for Meta, potentially setting the tone for future regulatory actions in the tech industry.

Telegram’s Pavel Durov faces criminal probe in France under LOPMI law

France has taken a bold legal step with its new law, targeting tech executives whose platforms enable illegal activities. The pioneering legislation, enacted in January 2023, puts France at the forefront of efforts to curb cybercrime. The law allows for criminal charges against tech leaders, like Telegram CEO Pavel Durov, for complicity in crimes committed through their platforms. Durov is under formal investigation in France, facing potential charges that could carry a 10-year prison sentence and a €500,000 fine. He denies Telegram’s role in facilitating illegal transactions, stating the platform complies with the EU regulations.

The so-called LOPMI (Loi d’Orientation et de Programmation du Ministère de l’Intérieur) 2023-22 law, unique in its scope, is yet to be tested in court, making France the first country to target tech executives in this way directly. Legal experts point out that no similar laws exist in the US or elsewhere in the Western world.

What is LOPMI?

The LOPMI law for the Ministry of the Interior outlines a €15 billion plan over five years to address future security challenges by enhancing human, legal, and budgetary resources. It aims to modernise operations through digital transformation, with nearly half the budget dedicated to digitising services, modernising investigative tools, and improving cybercrime response. The law plans to create 8,500 new jobs, improve recruitment diversity, and double police and gendarme presence by 2030. It emphasises crisis management, especially for civil security and climate events, and strengthens public order for major international events like the 2024 Olympics. Additionally, it aims to improve border security through advanced technology and cooperation.

While the US has prosecuted individuals like Ross Ulbricht, founder of the Silk Road marketplace, those cases required proof of active involvement in criminal activity. However, French law seeks to hold platform operators accountable for illegal actions facilitated through their sites, even if they were not directly involved.

Prosecutors in Paris, led by Laure Beccuau, have praised the law as a powerful tool in their fight against organised cybercrime, including child exploitation, credit card trafficking, and denial-of-service attacks. The recent high-profile arrest of Durov and the shutdown of other criminal platforms like Coco highlight France’s aggressive stance in combating online crime. The J3 cybercrime unit overseeing Durov’s case has been involved in other relevant investigations, including the notorious case of Dominique Pelicot, who used the anonymous chat forum Coco to orchestrate heinous crimes.

While the law gives French authorities unprecedented power, legal and academic experts caution that its untested nature could lead to challenges in court. Nonetheless, France’s new cybercrime law seriously escalates the global battle against online criminal activity.

23andMe to pay $30 million in data breach settlement

American personal genomics and biotechnology company 23andMe has agreed to a $30 million settlement after a data breach exposed the personal information of 6.9 million users. The breach, which occurred last year, compromised sensitive data, including DNA Relatives profiles and Family Tree information. Affected users will receive financial compensation and three years of security monitoring under the Privacy & Medical Shield + Genetic Monitoring program.

The lawsuit also accused 23andMe of failing to inform customers of Chinese and Ashkenazi Jewish descent that they were specifically targeted in the breach. The stolen information was later found for sale on the dark web. A federal judge must now approve the proposed settlement, which the company considers fair and beneficial for its users.

Despite its financial challenges, the company expects to cover $25 million of the settlement with cyber insurance. The breach, which began in April 2023 and lasted five months, affected nearly half of the company’s 14.1 million customers at the time. 23andMe disclosed the incident in an October 2023 blog post.

The company, led by co-founder Anne Wojcicki, is also facing financial difficulties. It posted a significant quarterly loss and has been attempting to go private. Shares of 23andMe have been trading below $1 since December 2023, a sharp drop from its original public offering price.

Facebook and Instagram data to power Meta’s AI models

Meta Platforms will soon start using public posts on Facebook and Instagram to train its AI models in the UK. The company had paused its plans after regulatory concerns from the Irish privacy regulator and Britain’s Information Commissioner’s Office (ICO). The AI training will involve content such as photos, captions, and comments but will exclude private messages and data from users under 18.

Meta faced privacy-related backlash earlier in the year, leading to its decision to halt the AI model launch in Europe. The company has since engaged with UK regulators, resulting in a clearer framework that allows the AI training plans to proceed. The new strategy simplifies the way users can object to their data being processed.

From next week, Facebook and Instagram users in the UK will receive in-app notifications explaining how their public posts may be used for AI training. Users will also be informed on how to object to the use of their data. Meta has extended the window in which objections can be filed, aiming to address transparency concerns raised by both the ICO and advocacy groups.

Earlier in June, Meta’s AI plans faced opposition from privacy advocacy groups like NOYB, which urged regulators to intervene. These groups argued that Meta’s notifications did not fully meet the EU’s privacy and transparency standards. Meta’s latest updates are seen as an effort to align with these regulatory demands.

Elon Musk’s X may sidestep EU’s big tech regulations

Elon Musk’s social media platform, X, is likely to avoid being subjected to the EU’s stringent new tech regulations aimed at curbing the power of Big Tech. The company is expected to fall outside the scope of the Digital Markets Act (DMA), which imposes strict rules on firms that act as key intermediaries between businesses and consumers.

The European Commission investigated X in May, exploring whether the platform met the criteria to be classified as a ‘gatekeeper’ under the DMA. To qualify, a company must have over 45 million active users and a market capitalisation of at least €75 billion. Gatekeepers must open their messaging apps to rival services, allow users more control over pre-installed apps, and avoid giving preferential treatment to their products.

X has argued that it does not serve as a critical gateway between businesses and consumers, distancing itself from the obligations set by the DMA. While the investigation remains ongoing, the Commission has not provided further comment on its findings.

However, X faces more pressing issues under the EU’s newly implemented Digital Services Act (DSA), which requires large platforms to actively combat harmful or illegal content or face significant fines—up to 6% of their global turnover. X is under scrutiny as part of several ongoing investigations related to its compliance with the DSA.

Antitrust investigation finds Amazon and Flipkart prioritised sellers

An Indian antitrust investigation has concluded that Amazon and Walmart’s Flipkart breached competition laws by favouring select sellers on their platforms. The probe, initiated by the Competition Commission of India (CCI), revealed that both companies created an ecosystem that prioritised certain sellers, making it harder for other retailers to compete.

Reports found that these preferred sellers were given an unfair advantage, appearing higher in search results and receiving additional services, leading to deep discounting practices. The findings highlighted that these practices harmed smaller retailers and stifled competition, especially in the mobile phone sector.

Both Amazon and Flipkart are expected to review the reports and submit objections before any fines are imposed. These companies have consistently denied any wrongdoing and argued that their operations comply with Indian regulations.

The investigation stemmed from complaints by traditional retailers and follows growing concerns about the dominance of e-commerce giants in India. Both Amazon and Flipkart remain major players in a market projected to be worth $160 billion by 2028.