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Newsletter

Digital Competition’s Newsletter n°3: DMA and more

Christophe Carugati

n°3 Free Edition

11 March 2024

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

What matters in digital competition? What might it mean for digital and competition policies, and what will happen next?


I am an expert on digital and competition policies and the founder of Digital Competition, a research and advisory firm that promotes open digital and competition policies for better innovation. We offer policy hubs for research on global digital and competition issues. Additionally, we provide consultations, training, and conferences to tech firms, law firms, and organisations navigating complex regulatory landscapes. For membership, consultations, and press inquiries, please contact us at christophe.carugati@digital-competition.com (or reply to this email).


While I am still looking for funding (I would be grateful for your help), transparency and integrity are at the heart of my identity. I did not receive any funding for this newsletter and do not have any conflicts with the firms mentioned below.


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


I'm in Brussels until 26 March. Let's meet up before I leave. Send me a message.

My work

 

Working Paper: Competition and cooperation in AI: How co-opetition makes AI available to all

Cloud providers and AI developers compete and cooperate to make AI accessible to all. Competition authorities should propose a code of conduct based on principles of access, choice, non-discrimination, and flexibility to tackle potential risks. The working paper


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. The submission


Opinion: The Great EuropeanDigital Markets Act Battle

European businesses are already fighting how Big Tech firms shape their behaviours in response to the Digital Markets Act.They can avoid legal battles by engaging in constructive dialogue. The opinion


Infographics: 5 Main Takeaways about compliance with the Digital Markets Act

The DMA is entering into the compliance phase. To ensure it works, stakeholders should unlock the gates, exploit the opportunities, voice interests, engage constructively, and complain when no consensus is possible. The infographics


Training: Generative AI

I provide GenAI training sessions for attorneys, economists, and civil servants. Join the GenAI and Competition Hub for research on generativeAI. Consultations and conferences are also available. GenAI Training. GenAI and Competition Hub


Training: DMA

I offer training sessions on DMA compliance plans for tech firms, law firms, and competition authorities. Join the DMA Dialogue Hub for impartial research and workshops that assess compliance plans and seek stakeholder consensus. DMA Training. DMA Dialogue 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. Share your views



Event: Generative AI and antitrust

I discussed generative AI and competition with Linsey McCallum, Paulo Rocha Abecasis, and Tone Oeyen at a Concurrences' event. We discussed the potential competition. risks and benefits of competition. A summary of the discussion will be available soon onConcurrences. Event


News

 

Digital Markets Act


On 7 March 2024, Europe opened the gates in digital markets with the DMA, offering more opportunities for businesses and consumers. Over the last six months, Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft and their counsels worked hard with the Commission to design effective compliance plans. Stakeholders were also invited to provide feedback on proposed solutions during public and private meetings. DMA Compliance


However, stakeholders with various interests are unhappy with the compliance solutions and have already called on the Commission to swiftly intervene by opening investigations into non-compliance. Some may also lodge lawsuits before national courts to request the end of the alleged violation.The first investigations will likely focus on Apple’s new business terms for alternative distribution and payment channels and Meta’s “pay-or-consent” business model on Instagram and Facebook. Potential inquiries into Apple and Meta. Letter from the hotel industry on Google’s compliance. Letter from EU Travel Tech on Google’s compliance. Letter from a group of developers on Apple’s compliance


The Commission is, therefore, under pressure to enforce. It has already swiftly intervened to resolve a dispute between Epic Games and Apple. The latter blocked Epic Games from creating its own Gaming application store due to concerns that it would not respect Apple’s business terms. Following the Commission’s intervention, Apple unbanned Epic Games as the latter committed that it would respect the rules. Epic Games banned. Epic Games unbanned


However, enforcement should be a last resort. The DMA is first and foremost about compliance and dialogue with stakeholders to find consensus and avoid lengthy and complex litigations that will take years. In this context, the Commission organises DMA workshops in March to get feedback from stakeholders. I registered and hoped to attend in person. DMA workshops


Besides, the DMA will only work and deliver fairer and more competitive digital markets if businesses and consumers understand and seize the opportunities that the DMA creates. Tech firms should engage with competition experts to seize opportunities and risks, assess workability with their products and services, evaluate the costs and benefits of entering new markets, study businesses and consumers’ reactions, and identify and resolve potential non-compliance. I will do so by impartially assessing the DMA compliance reports, and DMA consumer profiling reports for my members in the context of the DMA Dialogue Hub and my clients in the context of consultations with tech firms and law firms. The question is, who will benefit the most from the DMA? As I told Reuters, small developers will be the winners as they will get more options and visibility than large companies. DMA compliance reports. DMA consumer profiling reports. The Reuters interview. The infographics on DMA takeaways


Finally, Apple iMessage, Microsoft Edge, Bing, and Ads successfully rebutted their presumption as gatekeepers. Thus, they will not have to comply with the DMA. Furthermore, the Commission assesses whether X, ByteDance, and Booking should be gatekeepers regarding undisclosed services. Successful rebuttal. Commission’s investigation


Antitrust


Apple Music Streaming case: In a rare case of exploitative abuse, the Commission imposed €1.84 billion against Apple for preventing music streaming developers (aka Spotify) from informing their users of alternative offers. For the first time in EU competition law, the Commission imposed a lump sum to consider non-monetary harm, raising criticism of legal uncertainties from competition lawyers and economists. Besides, the removal of the illegal clause as a remedy shows that antitrust complements the DMA, which requires a similar obligation. Interestingly, the press release does not refer to the basic amount of €40 million. Apple is appealing. The Commission’s finding. Apple’s reaction. Spotify’s reaction


Google damage claim case: Google is facing a €2.1 billion damage claim from publishers in the Netherlands concerning alleged anticompetitive practices in the ad tech sector. The case


Meta class action case: Meta is facing a $3 billion class action from UK consumers concerning alleged anticompetitive data collection practices. Meta is contesting the claims. The case

 

US FTC Chair Lina Khan under heavy criticism: A US Judiciary Committee report criticised how Chair Lina Khan managed the FTC during her mandate. The report


Guideline on exclusionary abuse of dominance: Vestager stated at the GCLC event that redaction is guided by maintaining a workable effect-based approach and considering national competition authorities' enforcement practices. Vestager’s statement


New staff: The Commission seeks to hire a Chief Economist and a Chief Technology Officer. European nationality required. Chief Economist. Chief Technology Officer


Merger


Ecosystem theory: Vestager to consider ecosystem theory in future digital mergers. Vestager’s statement


Generative AI


Microsoft/MistralAI partnership: Microsoft concluded a non-exclusive partnership with the GenAI developer MistralAI. The partnership consists of hosting some MistralAI models on Microsoft Azure Cloud and a €15 million investment from Microsoft. Some French and European politicians heavily criticised the partnership over competition and sovereignty concerns and unjustified lobbying during the trilogue negotiation of the AI Act. The Commission is scrutinising whether the partnership meets the requirements for a merger review under the EU merger law. As with the Microsoft/OpenAI partnership, the main question is whetherMicrosoft controls MistralAI. If not, the deals will not meet the requirements.The partnership. The critics. The investigation


MistralAI: Mistral models are also available on other cloud providers, including Amazon and IBM. Amazon. IBM


New AI models: Mistral and Anthropic proposed models that outperform some OpenAI models. Besides, a French institution, Centrale Supélec, developed an open-source model for legal practice. Mistral. Claude. CentraleSupélec


European politicians fear concentration: Some European politicians and experts fear concentration in the generative AI sector and call for swift market intervention, including a breakup of the cloud sector and investment prohibitions from big tech. As I said to Bloomberg, big is not inherently bad. It only becomes problematic when big firms distort the competition process. Besides, my last working paper showed that the calls for structural market intervention are unfounded and proposed alternative policy recommendations. The fear. Expert’s proposal to break up. Vestager’s statement. The Bloomberg interview. The working paper


Microsoft’s commitment: Microsoft is proposing commitments to foster competition and innovation in the AI economy, thus alleviating potential competition concerns. Microsoft’s commitment

 

Benefits of AI: Fintech Klarna developed an AI assistant using OpenAI models, which now manages two-thirds of its customer service chats. This has resulted in time-saving for consumers and reduced human resource allocation for Klarna, ultimately leading to increased profitability. Klarna


Outside matters

 

SuperMicro: The US company manufactures servers and has benefited considerably from AI hype. In a year, the stock price has increased by 1,176.89% from $89 to $1 140. I am not a financial expert, but how a firm can commit to its shareholders such a dramatic change in demand and supply in a a short period of time?


Seattle and California: The US city is home to large tech firms, including Amazon and Microsoft, and California is shaping the AI economy. I am considering a trip there to understand why.

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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