DW Weekly #132 – 16 October 2023

Dear all,

As the conflict in the Middle East unfolds, and the world watches closely, those relying on social media for updates are left confused over what’s real and what’s not. This may be just the beginning of an age dominated by mis- and disinformation. In other news, there are new AI guidelines in the pipeline, while the EU has unveiled plans for a Digital Networks Act (which we’ll cover when things solidify a bit more).

Let’s get started.

Stephanie and the Digital Watch team

PS. Due to a technical glitch, this issue has been published a bit later than usual. Our apologies.

// HIGHLIGHT //

How the Middle East crisis is being (mis-)reported online

In recent days, as people have been grappling with the violence unfolding in Israel and Gaza, social media platforms have become inundated with graphic images and videos of the conflict. Without diminishing the gravity of what’s happening in the Middle East and the need to make it known, the problem with such social media content is that some of it is fake.

What’s fake, exactly? There’s a distinction between reporting something that didn’t happen and repurposing visuals from other conflicts for stronger impact. From a production point of view, there’s something sinister and malicious in fabricating a lie; during wartime, this is meant to raise alarm and stir up animosity. Reporting the truth but attaching a fake image is theoretically less sinister – although it is still a lie, and can fuel confusion, hostility, public safety risks, and harmful civil discourse among those who consume it.

Additionally complex. In some cases, the issue is more complex than this. Perpetrators go to the trouble of creating fake accounts, and of circulating uncaptioned imagery, leaving it to readers to draw their own conclusions. In this way, they can tap into biases and powerful emotions, such as fear, without having to take responsibility for the level of truthfulness of the content.

The worst part. Most parts of the world have taken sides. Polarisation has reached unprecedented heights. When individuals decide to condone a violent action (or not) based on whether an image really originates from their adversaries rather than their favoured faction, that brings out the worst in people. We won’t go into the gory details: Killing innocent children is an atrocity, regardless of who’s behind it – or whether a report has attached the correct image to it. 

Where it’s happening. Misinformation is as old as humanity and decades old in its current recognisable form, but social media has amplified its speed and scale. To say that online misinformation spreads like wildfire is an understatement. The challenge is compounded when shared by people with large followings. This could also happen if the press falls victim to the misinformation that’s flowing into newsrooms at a staggering scale.

Deprioritised. Earlier this year, Meta, Amazon, Alphabet, and Twitter laid off many of the team members focusing on misinformation and hate speech. This was part of a post-COVID-19-induced restructuring aimed at improving financial efficiency. 

The EU takes action: X, Google, Meta, TikTok ordered to remove fake content   

It didn’t take long for European Commissioner Thierry Breton to request that X, YouTube (Google), Facebook (Meta), and TikTok take down fake content.

In letters sent to X’s Elon Musk and to TikTok’s Shou Zi Chew, Breton wrote how their platforms had been used to disseminate fake content related to ‘the terrorist attacks carried out by Hamas against Israel’ (in his letter to Facebook’s Sundar Pichai and to Meta’s Mark Zuckerberg, Breton simply wrote about a surge in such content ‘via certain platforms’).

Each letter reminded the platforms of their obligations under the new Digital Services Act (DSA), including prompt responses to take-down requests by law enforcement. In X, Facebook, and TikTok’s case, the Commissioner gave the platforms 24 hours to respond.

The case of X. In TikTok and Microsoft’s case, things went more or less quiet. In X’s case, CEO Linda Yaccarino responded to complaints, confirming the removal of hundreds of Hamas-linked accounts and the removal or flagging of thousands of pieces of content – but this was either an unsatisfactory response or a predictable course of events that left the European Commission, just a day later, to send X a formal request for information. Breton tweeted the development as ‘a first step in our investigation to determine compliance with the DSA’, hinting that things will require more than just a handful of exchanged letters to be resolved. 

Elections in sight. The immediate worry may well be the Middle East conflict, but the longer-term worry is the numerous elections in 2024 – from the EU’s parliament and those in European countries, to the US presidential elections. It’s a concern that affects many countries.

The restructuring may prove costlier for those platforms laying off disinformation teams to save money.

// AI GOVERNANCE //

G7 to agree on AI guidelines by year’s end, Japan PM confirms

Japan confirmed that G7 leaders will agree on international guidelines for users by the end of the year, as well as non-binding rules and a code of conduct for developers of AI systems by the end of the year. This was announced by Prime Minister Fumio Kishida during last week’s Internet Governance Forum (IGF) in Kyoto. 

The texts form part of the Hiroshima AI Process, which was kickstarted during May’s G7 summit, held in Hiroshima. The upcoming summit will take place online.

Why is it relevant? There has been a lot of anticipation for the G7 rules on AI, even though they are non-binding. Japan, the current G7 president, will want to see its plans through by the end of the year, before it passes the baton to Italy.

ASEAN eyeing business-friendly AI rules

Southeast Asian countries are taking a business-friendly approach to AI regulation, according to a leaked draft text. The Association of Southeast Asian Nations (ASEAN) draft guide to AI ethics and governance asks companies to consider cultural differences and doesn’t prescribe categories of unacceptable risk. 

The guide is voluntary and meant to guide domestic regulations. ASEAN’s hands-off approach is seen as more business-friendly, as it limits the compliance burden and allows for more innovation. 

Why is it relevant? The EU has been discussing AI rules with countries in the region in a bid to convince them to follow its approach. But ASEAN’s approach clearly goes against the EU’s push for globally harmonised binding rules and is more aligned with other business-friendly frameworks.

// ANTITRUST //

Done deal: Microsoft’s acquisition of Activision Blizzard is approved

Microsoft has completed its USD68.7 billion acquisition of video games producer Activision Blizzard after the UK’s Competition and Markets Authority (CMA) approved the deal. The approval was granted after Microsoft presented the CMA with a restructured agreement in which the company said it would transfer the licensing rights for cloud streaming rights to Ubisoft, a proposed offer which the CMA had already said addressed their previous concerns.

The EU had already given the green light to the merger in May, but media reports said the European Commission was deciding whether it would look further into the restructured deal. Now it seems the European Commission won’t pursue this after all. However, the US Federal Trade Commission (FTC) intends to look into the licensing agreement Microsoft signed with Ubisoft.

Why is this relevant? Microsoft’s acquisition of Activision has been controversial. It’s the most expensive acquisition yet by Big Tech, so due to its scale, regulators feared it could hurt competition and give Microsoft too much power in the gaming market. European regulators are satisfied, but will these approvals solve the bigger problem of Big Tech accumulating ever more power? 

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// TAXATION //

IRS audit: Microsoft faces potential USD28.9 billion tax bill

The US Inland Revenue Service (IRS) has notified Microsoft that it owes USD28.9 billion in back taxes, penalties, and interest, covering the period 2004–2013 (which is nowhere near the USD160 million (GBP136 million) the company just paid the UK’s tax authority). The audit, which has been ongoing for over a decade, focuses on a deal where Microsoft transferred intellectual property to a factory in Puerto Rico for more favourable tax treatment. 

Microsoft says the taxes it has already paid could decrease the final tax owed under the audit by up to USD10 billion. The company plans to appeal the IRS’ conclusions, and the case is expected to continue for several more years.

Why is it relevant?

First, it’s the largest audit in US history. The IRS may be looking at the Microsoft case as a chance to prove the agency’s effectiveness in being more aggressive against corporations with endless resources. 

Second, it’s yet another example of Big Tech shifting income to low-tax jurisdictions specifically to lower their tax bill. 

Third, it coincides with the OECD’s latest inroad into its overhaul of global tax rules: The OECD has just published the text of a multilateral convention to implement the so-called Amount A of Pillar One. In simpler terms, this part of the new global rules will oblige some of the largest tech companies in the world to pay tax where their users are located, rather than where their corporate offices are based.