Jurisdiction

Legal tech firm DISCO launches AI platform across Europe

CS Disco, Inc. has officially launched its AI-driven Cecilia platform in the European Union and the United Kingdom. The Cecilia AI Platform helps legal professionals review large datasets faster, allowing for quicker identification and analysis of crucial documents. The platform offers tools like Cecilia Q&A, which answers fact-based questions from a user’s document set, streamlining the review process.

The company’s generative AI capabilities are designed to boost efficiency in legal work, with features such as single document Q&A and document summaries helping attorneys quickly navigate complex or lengthy documents. The platform also supports documents in multiple languages, offering significant time savings compared to traditional methods.

Early adopters in the United States have already reported success with Cecilia’s tools, praising their speed and accuracy. CS Disco is focusing on enabling legal teams to handle large volumes of data with greater precision, as it expands its services to the European market.

The Cecilia platform is expected to grow further, with additional AI features planned for release in the EU and UK by 2025. DISCO aims to continue its role as a leader in AI-enabled legal technology, improving outcomes for clients across different markets.

Big Tech’s AI models fall short of new EU AI Act’s standards

A recent assessment of some of the top AI models has revealed significant gaps in compliance with the EU regulations, particularly in cybersecurity resilience and preventing discriminatory outputs. The study by Swiss startup LatticeFlow in collaboration with the EU officials, tested generative AI models from major tech companies like Meta, OpenAI, and Alibaba. The findings are part of an early attempt to measure compliance with the EU’s upcoming AI Act, which will be phased in over the next two years. Companies that fail to meet these standards could face fines of up to €35 million or 7% of their global annual turnover.

LatticeFlow’s ‘Large Language Model (LLM) Checker’ evaluated the AI models across multiple categories, assigning scores between 0 and 1. While many models received respectable scores, such as Anthropic’s ‘Claude 3 Opus,’ which scored 0.89, others revealed vulnerabilities. For example, OpenAI’s ‘GPT-3.5 Turbo’ received a low score of 0.46 for discriminatory output, and Alibaba’s ‘Qwen1.5 72B Chat’ scored even lower at 0.37, highlighting the persistent issue of AI reflecting human biases in areas like gender and race.

In cybersecurity testing, some models also struggled. Meta’s ‘Llama 2 13B Chat’ scored 0.42 in the ‘prompt hijacking’ category, a type of cyberattack where malicious prompts are used to extract sensitive information. Mistral’s ‘8x7B Instruct’ model fared similarly poorly, scoring 0.38. These results show the need for tech companies to strengthen security measures to meet the EU’s strict standards.

While the EU is still finalising the enforcement details of its AI Act, expected by 2025, LatticeFlow’s test provides an early roadmap for companies to fine-tune their models. LatticeFlow CEO Petar Tsankov expressed optimism, noting that the test results are mainly positive and offer guidance for companies to improve their models’ compliance with the forthcoming regulations.

The European Commission, though unable to verify external tools, has welcomed this initiative, calling it a ‘first step’ toward translating the AI Act into enforceable technical requirements. As tech companies prepare for the new rules, the LLM Checker is expected to play a crucial role in helping them ensure compliance.

X corp settles with Unilever in antitrust dispute

Elon Musk’s X, formerly known as Twitter, has dropped Unilever from its antitrust lawsuit that accused the company and others of conspiring to boycott the social media platform, leading to a loss in ad revenue. X’s filing in a Texas federal court confirmed the decision, though details of the agreement between the two companies were not disclosed.

Unilever, known for products like Dove and Hellmann’s, confirmed the settlement, stating that X has committed to meeting standards ensuring brand safety. Both X and Unilever expressed satisfaction with the resolution, with X noting its plans to continue working with the company.

The original lawsuit, filed in August, named several other companies and accused the World Federation of Advertisers of leading a boycott that withheld billions in ad revenue. X has stated that it will continue to pursue its claims against the remaining defendants. The boycott followed concerns about harmful content appearing next to ads after Musk’s acquisition of X in 2022.

FTX and Binance among firms hit by $32 billion in US fines

US regulators have imposed $32 billion in fines on crypto companies to resolve compliance disputes. A record $19.45 billion of that total came in 2024, primarily due to a $12.7 billion payment involving FTX and Alameda Research. In August, a judge ruled that the firms must pay $8.7 billion in restitution to those affected, along with a $4 billion fee for ill-gotten gains.

Terraform Labs also faced hefty fines in 2024, totalling $4.5 billion. Founder Do Kwon is required to pay $204.3 million in interest, fines, and compensation. Other significant fines include Binance’s $4.3 billion and Celsius’s $4.7 billion, both issued in 2023. Binance settled criminal charges, paying $1.81 billion in fines and $2.51 billion in compensation.

The surge in settlements reflects increased regulatory scrutiny following the FTX collapse in 2022. In 2023, US regulators settled eight lawsuits for $10.87 billion, a record-breaking 8,327% increase from the previous year. As of 2024, with eight more settlements totalling $19.45 billion, this year’s total has already surpassed 2023 by 78.9%.

Hundreds lose jobs as TikTok focuses on AI moderation

TikTok, owned by ByteDance, is cutting hundreds of jobs globally as it pivots towards greater use of AI in content moderation. Among the hardest hit is Malaysia, where fewer than 500 employees were affected, mostly involved in moderation roles. The layoffs come as TikTok seeks to improve the efficiency of its moderation system, relying more heavily on automated detection technologies.

The firm’s spokesperson explained that the move is part of a broader plan to optimise its global content moderation model, aiming for more streamlined operations. TikTok has announced plans to invest $2 billion in global trust and safety measures, with 80% of harmful content already being removed by AI.

The layoffs in Malaysia follow increased regulatory pressure on technology companies operating in the region. Malaysia’s government recently urged social media platforms, including TikTok, to enhance their monitoring systems and apply for operating licences to combat rising cybercrime.

ByteDance, which employs over 110,000 people worldwide, is expected to continue restructuring next month as it consolidates some of its regional operations. These changes highlight the company’s ongoing shift towards automation in its content management strategy.

Google seeks delay on Play Store competition ruling

Google is pushing back against a federal judge’s recent order that would force it to allow more competition in its Play Store. In a court filing, the tech giant requested that US District Judge James Donato’s injunction, set to take effect on 1 November, be paused. Google argues that the ruling could introduce significant security, privacy, and safety risks to the Android ecosystem and is seeking time to pursue an appeal.

The injunction stems from a lawsuit initiated by Epic Games, the creator of ‘Fortnite,’ which argued that Google monopolised app distribution and in-app payment processes on Android devices. A jury sided with Epic, and the judge’s order now requires Google to allow users to download apps from third-party platforms and use alternative payment methods for in-app purchases.

In addition, the ruling prevents Google from paying manufacturers to preinstall its Play Store on devices and from sharing revenue generated through the Play Store with other distributors. These measures aim to reduce Google’s control over the app marketplace, opening up more space for competitors.

If Judge Donato denies Google’s request to delay the order, the company can take its case to the 9th US Circuit Court of Appeals, based in San Francisco. Google has already filed its notice of appeal and is preparing to challenge the injunction and the antitrust verdict that underpins it.

As the appeal process unfolds, the court will ultimately decide whether Google must comply with the ruling or if the tech giant can maintain its current app store policies while reviewing the case.

The legal battle has significant implications for app distribution on Android devices.

Temu faces deadline from EU over illegal product sales

The European Commission has set a deadline of October 21 for the Chinese online marketplace Temu to respond to inquiries regarding its compliance with the Digital Services Act (DSA). The Commission is seeking detailed information about Temu’s efforts to combat the sale of illegal products on its platform and the measures it has implemented to ensure consumer protection, public health, and user wellbeing.

Temu, founded in 2022 by PDD Holdings, was classified as a Very Large Online Platform due to its user base exceeding 45 million monthly average users in the EU. It was previously required to meet DSA standards by the end of September, including addressing systemic risks and preventing the sale of counterfeit goods. This latest inquiry marks the second time the Commission has sought clarification from Temu, following questions in June about its compliance with the “Notice and Action mechanism” for reporting illegal products.

The European Consumer Organisation (BEUC) has also raised concerns about Temu’s practices, filing complaints against the platform for failing to protect consumers and employing manipulative tactics. These complaints, supported by representatives from 17 EU member states, allege that Temu does not provide essential seller information, hindering consumers’ ability to verify product safety compliance. The DSA has been in effect since February, and the EU has initiated several investigations into other major platforms for similar compliance issues.

Crypto.com files lawsuit against SEC for exceeding authority

Crypto.com has filed a lawsuit against the US Securities and Exchange Commission (SEC), accusing the agency of overreaching its legal authority by classifying most crypto transactions as securities. The lawsuit follows a Wells Notice issued by the SEC in August, signalling potential enforcement action. Crypto.com argues that the SEC’s inconsistent regulatory approach, exempting Bitcoin and Ether, undermines the crypto sector’s future in the US.

In its legal filing, Crypto.com claims the SEC bypassed essential procedural steps, including the notice and comment rulemaking process. The exchange aims to halt what it views as the agency’s ‘unlawful’ crackdown on cryptocurrency. Alongside the lawsuit, Crypto.com has petitioned the SEC and Commodity Futures Trading Commission (CFTC) for clearer regulation of cryptocurrency derivatives.

Several crypto firms, including blockchain technology company Consensys, have also sued the SEC this year after receiving Wells Notices.

Google faces potential breakup as DOJ targets search monopoly

The US Department of Justice has proposed remedies to dismantle Google‘s dominance in the search market, which analysts warn could undermine the company’s primary profit source and hinder its advancements in AI. The DOJ may seek to compel Google to divest parts of its business, including the Chrome browser and Android operating system, while also considering measures such as barring the collection of sensitive user data, requiring transparency in search results, and allowing websites to opt out of their content being used for AI training.

The proposed changes have already affected Alphabet’s stock, which fell by 1.5% after the announcement. Analysts indicate that if these remedies are put into action, they could diminish Google’s revenue while providing more opportunities for competitors like DuckDuckGo and Microsoft Bing, as well as AI companies such as Meta and Amazon. With Google’s share of the US search ad market expected to fall below 50% for the first time in over a decade by 2025, these remedies are viewed as essential for creating a more competitive landscape.

Despite the ambitious nature of the DOJ’s proposals, some experts are sceptical about their feasibility. Adam Kovacevich from the Chamber of Progress argues that these remedies could encounter legal challenges and may not withstand the appeals process. While investors appear doubtful that a forced breakup of Google will take place, the situation highlights the increasing scrutiny and pressure on the tech giant within a rapidly changing competitive landscape.

X exempt from gatekeeper obligations in EU’s Digital Markets Act

Elon Musk’s platform, X (formerly known as Twitter), will not be classified as a ‘gatekeeper’ under the EU’s Digital Markets Act (DMA), a landmark set of tech regulations that impose strict obligations on major digital players. According to sources familiar with the situation, the European Commission, which has been investigating X since May, is expected to confirm this decision in the coming week.

The DMA prevents dominant tech companies from abusing their market power, particularly in messaging apps and pre-installed software. Platforms designated as gatekeepers must comply with rules to promote competition, such as ensuring their messaging systems are interoperable with rival apps and allowing users to choose which apps to install by default on their devices.

Despite meeting the user-base threshold for a gatekeeper, X argued that it does not meet the additional criteria of being a key intermediary between businesses and consumers. This claim led the Commission to launch its investigation to clarify whether the platform should face the extra obligations imposed by the DMA.

While several major companies, including Alphabet, Amazon, Apple, Meta, Microsoft, TikTok’s parent company ByteDance, and Booking.com, have already been named as gatekeepers under the act, X has successfully avoided this designation, at least for now. If violations are found, this decision could spare X from stringent requirements and potential penalties, amounting to up to 10% of a company’s global revenue.

As the Commission’s ruling draws near, it highlights the ongoing scrutiny faced by tech giants under EU regulations to curb their influence over the digital economy. For Musk’s X, this is a significant reprieve amid growing regulatory pressure on Big Tech worldwide.