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Newsletter

Digital Competition’s Newsletter n°2: GenAI and more

Christophe Carugati

n°2 Free Edition

13 February 2024

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

What matters in digital competition? 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 DMA and generative AI, showcasing my insights in leading news media across Europe and the United Kingdom. I am now the founder of Digital Competition, a research and advisory firm that advances open digital and competition policies for better innovation.


We operate across four main policy hubs related to DMA, GenAI, digital competition coherence, and digital innovation. We invite private and public organisations to join our efforts to advance research in these critical areas by becoming a member of our hubs. Members contribute to the research agenda, share their input on studies, frequently engage with researchers to gain valuable insights, and participate in workshops and forums with relevant stakeholders and competent authorities. Our membership is accessible to firms, competent authorities and international organisations. Members can access all our hubs against an annual fixed membership fee. Additionally, we offer consultations, training sessions, and conferences to organisations seeking expert guidance in navigating complex market and regulatory developments.


For inquiries regarding membership in our hubs, consultation services, or press, please do not hesitate to contact us at christophe.carugati@digital-competition.com. We look forward to collaborating with you to shape the future of digital and competition policies.


The newsletter is a monthly free edition. You can share it and unsubscribe if you wish.

My work

 

Comment: Submission to the European Commission’s on Generative AI

How does competition in Generative AI work? I provide input to the Commission’s consultation on Generative AI. Read


Working paper: The Generative AI Challenges for Competition Authorities

What are the Generative AI challenges for competition authorities? They must deal with emerging markets and technologies alongside regulatory uncertainties. They should thoroughly study market and regulatory developments before intervening when necessary and justified. Read


Analysis: Digital Markets Act Shapes Big Tech Behaviours in Europe

How does the Digital Markets Act change big tech behaviours in Europe? Some gatekeepers have publicly released compliance solutions ahead of the 6 March deadline for compliance. Businesses and consumers can share views on proposed compliance solutions to improve them by engaging in constructive dialogue. Read



Infographics: The GenAl value chain is competitive

The Generative Al value chain has various players. Yet, competition authorities should monitor how competition works at each value chain level. Moreover, they should scrutinise the benefits and risks arising from vertical integration. Read



Training: Generative AI

Generative AI is the priority of competition authorities worldwide. I offer training sessions to attorneys and economists, public policy teams, and civil servants on how competition in Generative AI works. Tech firms, law firms, competition authorities, and international organisations can also join the Hub to advance research on generative AI in the context of our GenAI and Competition Hub. Finally, I am also providing consultations. GenAI Training. GenAI and Competition Hub


Ongoing: European elections

What should the next Commission do on digital and competition policies? The focus will definitely be on AI, industrial policy, and digital skills. I am welcoming views from interested parties. Contact


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 February2024 in Brussels. Registration is sold out, but Concurrences will provide a summary after the event. Registration


News

 

Digital Markets Act

Gatekeepers must comply with the Digital Markets Act by 6 March 2024. While Alphabet, Amazon, Apple, and Meta have released some compliance solutions publicly, certain stakeholders who advocated for the DMA are dissatisfied with these proposals (see my above analysis and the DMA Dialogue Hub that tracks them). It is anticipated that they may file complaints before the Commission as soon as the DMA compliance phase begins. However, practical constraints may delay this process as plaintiffs need to provide evidence of non-compliance, which could be challenging without full information about the proposed solutions.


Subsequently, the Commission will determine whether to initiate a market investigation into non-compliance. Given the significance of the first non-compliance case for credibility, the Commission may opt to proceed with an investigation only if there is strong evidence of non-compliance, considering that the case will ultimately have to win before the Court of Justice. Alternatively, plaintiffs can challenge non-compliance before national courts.


A lingering question remains: Should the DMA strive to universally benefit all third parties, or should we acknowledge that it may result in some gaining, some losing, and others maintaining the status quo? Spotify’s reaction against Apple. Kelkoo's reaction against Alphabet. BEUC’s reaction against Meta (consumerprotection law). DMA Dialogue Hub


The Dutch competition authority will host a European Competition Network event on the DMA “empowering business models” that will take place in Amsterdam on 24 June 2024. Announcement


The President of the Court of Justice rejected TikTok's request for an interim order to suspend its designation as a gatekeeper due to the lack of serious and irreparable damage. The order


Amazon/iRobot and the theory of self-preferencing

Amazon abandoned the proposed Amazon/iRobot merger following a potential veto from the Commission. Amazon is a retailer and an online marketplace. In this context, Amazon would have had the ability and incentive to promote its own Robot vacuum cleaners over rivals in its online marketplace.The Competition Commissioner Margrethe Vestager argued that “it is key to take into account what the transaction would mean for rivals and customers of the merged entity. This applies in particular to transactions by which large, established sales channels acquire suppliers that are heavily dependent on the acquirer's infrastructure and customer reach to be successful in the EEA market.” However, one can also wonder what signal the Commission sends to platforms with dual roles as marketplace and retailer. Can platforms still acquire a supplier? How can platforms solve self-preferencing issues? iRobot. Vestager


Generative AI

The French competition authority opened a market study on Generative AI, focusing on practices by large online platforms, practices in the cloud sector, and partnerships between cloud providers and generative AI firms. You can answer the public consultation (in French) by 22 March. Announcement


The Federal Trade Commission and the Department of Justice study partnerships between some large cloud providers and generative AI firms. FTC. DoJ


The head of several competition authorities mentioned Generative AI as their main priority at the Caffara conference. Conference


MEP Yon Courtin has already organised an event on how to address Big Tech's monopoly in the AI sector.


It is a beautiful narrative for the European Election, but it currently lacks substantive evidence (please refer to my publications on the topic for more detailed insights). If we assume that large online platforms dominate the AI sector, the question arises whether this constitutes a competition problem if we witness 1) intense competition and innovation, with frequent releases of new products and services, and 2) vigorous competition from smaller players, which forces big tech companies to stay competitive. Competition policy aims to safeguard the competition process and does not inherently oppose market dominance, as long as dominant actors do not distort the competitive landscape with unfair means. While the issue of market dominance may warrant attention as an industrial policy concern, it does not necessarily fall within the scope of competition policy (I know the Neo-Brandeisianism will disagree, but this is how the European Court of Justice interprets European competition law).


The event will take place at the European Parliament on 19 February with Karen Melchior (MEP), Margrethe Vestager (European Commission), Lina Khan (FTC), Javier Espinoza (FT), Benoit Coeuré (French competition authority), Tobias Haar (Aleph Alpha), Nathalie Laneret (Criteo), Barry Lynn (Open Markets Institute), Carel Mask (Microsoft), and Andreas Mundt (German CompetitionAuthority). The event


Microsoft Copilot is now available to all Microsoft Office users. Will users widely adopt it? Copilot


Microsoft offers GenAI solutions that help retailers provide better experiences to their users. Microsoft


Amazon also proposes a GenAI solution to retailers on its marketplace with its chatbot Amazon Rufus. Amazon


Google is offering Generative AI in Google Maps and Google Ads. Google Maps. Google Ads


The UK parliament published a report on LLMs and Generative AI. The report


Competition policy

The Commission released its revised notice on market definition after announcing its revision in 2019. The revision took more time than the DMA adoption and designation phase. It provides a new framework to define markets, especially in the digital sector, with concepts used in past antitrust and merger cases like multisided markets and new ones like “digital ecosystems.” The latter will likely trigger passionate debates among economists and lawyers in the coming cases as the Commission rarely defined a market with the notion of ecosystems. We know that the Commission used the notion of ecosystems in the Booking/eTraveli merger, but the public decision is not yet published. On a personal note, I am glad that the revised notice took some of my PhD recommendations on board. Revised market definition. Booking/eTraveli


 An American FT columnist accused the Commission of not doing enough in competition policy compared to the United States. The Frenchman Olivier Guersent, in charge of the competition department, was unhappy and rightly responded that the Commission is one of the most active competition authorities in the world. Indeed, under Guersent’s term, from 1 January 2020 until now, the Commission has counted 43 antitrust cases, 1600 mergers, and 3404 state aid cases. It also made several significant revisions to its competition tools, including the Horizontal Block Exemption Regulations, the Vertical Block Exemption Regulations, Article 22 European Union Merger Regulation (EUMR) Guidance, and the market definition notice, to name just a few. The Commission also adopted several regulations to promote competition in various sectors, like the DMA, the Data Act, and the Data Governance Act. My dear American friends, when it comes to making markets work for people, the French can produce quality outcomes as good as your beloved hams, cheeses, bread, wines, and luxury goods. The FT opinion. Guersent letter


Spatial Computing

Apple now offers a new spatial experience with Apple Vision Pro, directly competing with Meta in the virtual world. Will it replace our phones and computers? Will it create a new “spatial economy” as the iPhone did less than 20 years ago with the “app economy”? Apple


The Commission also seeks stakeholders’ input about how competition in virtual words works.You can answer the public consultation by 11 March. Consultation


AI Act

The Member States unanimously approved the AI Act. Now, the Parliament must also approve it. The text includes significant changes proposed by politicians, particularly regarding Generative AI. However, they did not do any impact assessments or public consultations. This raises an essential democratic question: Why should the Commission bother with impact assessments and public consultations if legislators do not do similar studies with the final text? Announcement


The Commission launches an AI innovation package to support AI firms. Press release


The Commission also established a dedicated AI office within the Commission, tasked with coordinating AI policy at the EU level and overseeing the AI Act. The decision



Assimakis Komninos provided a very insightful comment on the AI Act and AI office. Next time, politicians should use KomminosGPT to draft AI regulations.


DRCF AI and Digital Hub

The UK Digital Regulation Cooperation Forum is preparing its AI and Digital Hub to help innovators with cross-regulatory AI and digital issues. I am providing a similar initiative with my Digital Innovation Hub that helps innovators understand how their AI and digital-related business practices interact with European current and future regulatory regimes, such as competition, privacy, and AI. Contact us to join the Hub. DRCF. Digital Innovation Hub


Outside matters

 

A research paper found that generative AI can do better than senior lawyers in reviewing contracts while significantly reducing time (mere seconds instead of hours) and costs (cost reduction by 99.97%). The authors concluded that generative AI will be a seismic shift in legal practice. The paper



I am moving back to the South of France next month. Brussels has provided me with numerous professional opportunities and allowed me to meet incredible individuals (some of whom are now close friends). However, as a Frenchman from the South, I have missed the familiar sights of the sea, mountains, and outdoor activities. I also want to be closer to innovators by collaborating with tech firms in Sofia Antipolis. Be reassured I will regularly visit Brussels and London for face-to-face discussions. I also look forward to welcoming you and sharing the beauty of my little corner of the French Riviera (the picture is Cannes at sunset time with the Esterel in background). Contact me to have a coffee before I leave.


I attended the World AI Cannes Festival for its third edition on 8-10 February 2024. The festival aims to become one of the most important festivals on AI in the world. Many small and medium-sized firms were doing interesting work on cloud computing and generative AI. Interestingly, large American and Chinese firms were absent. The festival

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.

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