top of page

Newsletter

Digital Competition’s Newsletter n°1: GenAI and more

Christophe Carugati

n°1 Free Edition

16 January 2024

The newsletter outlines news related to GenAI, DMA, and more.

About

 

What matters in digital competition? What is happening in the tech sector, what might it mean for digital and competition policies, and what will happen next?


I am a renowned and passionate expert on digital and competition policies, studying competition in digital markets and related regulations for over 8 years. I worked in law firms and the economic think tank Bruegel. I frequently publish on the Digital Markets Act (DMA) and generative AI (GenAI), and my insights are showcased in leading news media across Europe and the United Kingdom. I am now the founder of Digital Competition, an advisory firm to tech firms, law firms, and competition authorities that strives to develop open digital and competition policies for better innovation. I work mostly on DMA, GenAI, international coherence, and digital innovation.


I am looking forward to working with you to tackle your challenges. You can contact me at christophe.carugati@digital-competition.com


The newsletter is a monthly free edition. You can share it and unsubscribe if you wish. I would love to hear your feedback on the newsletter (e.g., frequency, content).

My work

 

Comment: Response to the CMA’s study on Foundation Models

How can foundation models behind consumer-facing services like OpenAI-owned ChatGPT lead to positive competition and consumer protection outcomes? The UK Competition and Markets Authority (CMA) studies the sector with an appropriate approach and principles. Read


Infographics: Competition authorities are studying similar digital markets

How does competition in digital markets work? Competition authorities worldwide closely monitor several digital markets, including digital advertising, mobile ecosystems, cloud computing, and generative AI. Yet, to foster experience-sharing without resource duplication, they should conduct joint studies within a relevant network (e.g., ECN) for international coherence and efficient allocation. Read


Infographics: Countries are regulating competition in digital markets

Legislators worldwide are regulating competition in digital markets as they face similar competition issues. While most legislations are still under development, they should follow shared policy principles defined by an international organisation (e.g., OECD). Read


Formation: Digital Markets Act (DMA)

The DMA is two months ahead of the first March 6, 2024 compliance phase. I am offering formation on DMA implementation and compliance to in-house counsels, attorneys and economists, public policy teams, and civil servants. I am also proposing a DMA dialogue between gatekeepers and third parties to help them find a consensus on compliance solutions in the context of our DMA dialogue Hub. Formation. DMA Dialogue Hub


Ongoing: European elections

What should the next Commission do on digital and competition policies? I am welcoming views from interested parties. Contact


Ongoing: EC study on generative AI

How does competition in generative AI work? The Commission launched a sector inquiry on generative AI. Our generative AI and competition Hub does market research and develops competition policies to ensure favourable market conditions that benefit all. I will contribute to the consultation and help interested parties answer it. Work with us


Event: Generative AI and antitrust

I will discuss generative AI and competition with Linsey Mccallum (European Commission), Paulo Rocha Abecasis (Copenhagen Economics) and Tone Oeyen (Freshfields Bruckhaus Deringer) at a Concurrences’ event on 22 February 2024 in Brussels. Registration

 

News

 

Is the OpenAI/Microsoft partnership a merger?

Microsoft did a multi-year and multi-billion exclusive partnership with OpenAI. Now, the Commission is asking the parties whether the partnership falls under the European Merger Regulation. As I said to Politico, it all depends on whether Microsoft controls OpenAI, which is currently unclear as Microsoft has no voting rights on the board. Germany and the UK also study the partnership under their national merger laws. If it is a merger, how will the merger assessment impact the relationship between Microsoft and OpenAI and third parties, including cloud computing providers and developers? The investigation


Generative AI

Generative AI and competition is like a popular love story: Everyone speaks about it, but nobody knows what is happening, so everyone is trying to understand what is going on. The United Kingdom, Portugal, Hungary, India, and now Europe are doing market studies. The studies


The United States is also hosting a virtual summit on AI on 25 January 2024. The event


OpenAI launched its GPT app store. Will it be the next big platform? How will it impact competition in mobile ecosystems? Will it develop a store for Android and iOS? Will OpenAI develop next an operating system and AI device like in the movie “Her”? OpenAI


DMA

Alphabet, Meta, Amazon, Apple, Microsoft, and ByteDance must comply with the DMA on 6 March 2024. Yet, Alphabet is already implementing compliance solutions regarding linked services (Article. 5(2) DMA). Google Help Center


Apple, Meta, and ByteDance are challenging the designation of some of their services before the European Court of Justice (ECJ). Their main arguments are now publicly available. Apple iMessage. Apple App Store. Meta. ByteDance


Cloud computing

Cloud providers heavily compete to attract customers to their services. Yet, several sector inquiries found competition issues due to barriers to switching, like data transfer fees when moving from one cloud provider to another. The Data Act addresses some competition concerns in Europe, notably by removing data transfer fees. The Act is now in force, and most provisions will apply starting September 2025. The Data Act


Google is not waiting for the application of the Data Act. It announced that it is removing data transfer fees to all customers globally. Still, it noted that competition issues remain due to alleged uncompetitive licensing agreements. In Europe, the trade association CISPE filed a complaint against Microsoft for alleged anticompetitive licensing practices before the Commission. Microsoft then proposed some solutions to alleviate the competition concerns. The case is still ongoing. Google blog. CISPE complaint. Microsoft remedies


Self-preferencing

For years, competition experts spoke about self-preferencing when a firm promotes its own products or services over rivals. In an influential ECJ opinion about the Google Shopping case, Advocate General Kokott supported the Commission’s findings and the theory of self-preferencing as an independent form of abuse. As I said to Euractiv, this is the first time the Court has used the term “self-preferencing”. Opinion. Euractiv


The Commission is also testing whether the theory of self-preferencing works in merger control in the Amazon/iRobot merger. The Commission threatened to block the deal last November, but Amazon did not propose remedies. The parties are now waiting for the Commission, which might or might not offer them a Valentine’s Day present on 14 February 2024. The merger


The UK Digital Markets Unit

The UK will also soon regulate competition in digital markets with the forthcoming Digital Markets, Competition and Consumers (DMCC) Bill. The Bill gives considerable discretionary powers to the CMA, the sole enforcer. It plans to adopt a participative approach with relevant stakeholders via public consultations and impose outcome-focused obligations and prohibitions, some of which are similar in spirit to the DMA. 200 staff will work on the implementation initially, and the CMA will designate 3-4 firms. By contrast, the Commission, which represents nearly six times the population of the UK (67 million), has only 80 staff to implement the DMA against 6 firms. The CMA provisional approach

 

Outside matters

 

How will Generative AI change law firms? According to the Economist, it could radically impact the workforce (especially young associates) and business models based on time spent. As the opinion argues, “If AI can do in 20 seconds a task that would have taken a dozen associates 50 hours each, then why would big firms continue hiring dozens of associates?” Fair enough. But this issue is akin to wonder in the 15 century when the press arrived: “if a printer can replicate a book in 10 seconds that would have taken a month to a dozen scribes, why should we still have them?” Scribes became printers. We will still need associates. They will just do other add-value tasks. For that, universities and law firms must retrain the young and future generation of lawyers to adapt to AI adoption. The challenge starts now. The opinion


I am a big consumer of pasta. The same Barilla Pasta Fusilli box at Carrefour costs 1.25€ on the Italian website, 1.09€ on the French website, and2.42€ on the Belgian website. Assuming the cost of production for Italy, France, and Belgium is the same, the question is why there is such a big difference. Is competition an explanatory factor? How does it impact trade between member states if the Italian community in Brussels goes to Lille to buy pasta? Carrefour Italy, Carrefour France, Carrefour Belgium

 

About the author

Christophe Carugati

Dr. Christophe Carugati is the founder of Digital Competition. He is a renowned and passionate expert on digital and competition issues with a strong reputation for doing impartial, high-quality research. After his PhD in law and economics on Big Data and Competition Law, he is an ex-affiliate fellow at the economic think-tank Bruegel and a lecturer in competition law and economics at Lille University.

bottom of page