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Nvidia Expected to Face Antitrust Charge Sheet in France

Report from Reuters

In Brief – Nvidia, which reported in recent months that it is facing antitrust scrutiny in a number of markets including the EU, France, UK, and China, is likely to soon face formal charges of anticompetitive conduct in France. The French antitrust regulator recently issued a report on competition and the market for generative artificial intelligence (GAI), which cited the risk of abuse by chip providers and expressed specific concerns with the unique role of Nvidia's CUDA chip programming software, which has been central to advancements in GAI and operates best on Nvidia hardware. The initial investigation of Nvidia by the French authorities was linked to an investigation of the cloud services business and the Nvidia charge sheet is expected to include concerns regarding the AI giant’s investments in, and sales to, various cloud services providers.

Context – One mantra of tech regulation advocates is that governments should not make the “same mistakes” with AI that they made with social media, including having a more activist competition policy. In the US, the two federal antitrust agencies recently agreed to divide up lead authority on two big potential AI-related targets, with the Department of Justice (DoJ) taking Nvidia and the FTC looking into Microsoft’s relationship with OpenAI and other AI startups. The presumption that massive size is key to AI success is strong with many regulators, including the DoJ’s antitrust chief and the head of the German Competition Authority, but some experts see the largest GAI models hitting a point of diminishing returns and smaller specialized systems may prove more efficient. Besides the fact that some of the biggest AI leaps have come from startups such as OpenAI and Clearview AI. Do take note that the French officials are interested in Nvidia’s CUDA rather than just its GPU (Graphics Processing Unit) hardware. CUDA is a programming language with a massive community of AI developers that is operated by Nvidia and is tightly integrated with their processors. If they have a “moat”, this is it.

High Court's Regulatory Rulings May Hamper Progressive Regulation Plans

Report from the Washington Post

In Brief – A series of Supreme Court rulings paring back the authority of federal agencies is likely to hamper efforts to regulate digital markets and tech business models absent federal legislation. The two decisions that overturned the legal principle called “Chevron deference”, a four-decade-long direction to federal judges to defer to executive branch agencies when they make rules and interpret laws, lowers the bar for legal challenges alleging that an agency has misapplied the law or exceeded its statutory authority. The Biden Administration has backed regulatory interventions to achieve progressive policy goals on several digital policy issues where Congress has failed to legislate, including data privacy, Gig-style work platforms, net neutrality, and artificial intelligence. The Court’s conservatives have also weakened the authority of agency-based administrative law judges, such as at the FTC, and resuscitated the “Major Questions Doctrine” that rejects agencies regulating on important topics absent direct statutory authority.

Context – The recent decisions that have pared back the authority of executive agencies have cut directly along the Court’s ideological fault line, just as many of the digital policy issues that are stalled in Congress and have progressives pressing for strong agency action are highly ideological. The FTC offers the clearest examples. Meta accuses the agency of trying to make policy on behavioral advertising and how social media serves teens, and Kochava argues that they are legislating on the use of mobile phone location data. Add in rulemaking on “unfair methods of competition”, "commercial surveillance", Gig work, “all in pricing”, and merger reviews that appear more aligned with European regulators than US court rulings. But don’t expect the increased risk that regulatory actions will eventually be overturned in federal court to temper the agencies now. First, the new legal landscape doesn’t change the political dynamics. Plus, the prospect that a regulation will be trimmed or overturned in court actually makes it easier to privately explain to opponents that they shouldn’t get so upset by your regulatory plans.

House GOP Leaders Torpedo Committee Action on Bipartisan Privacy Bill

Report from the Washington Post

In Brief – Top House Republican leaders torpedoed the plans of the House Energy & Commerce Committee to mark-up federal data privacy legislation crafted by Cathy McMorris Rodgers (R-WA), who leads the House Committee, and Senator Maria Cantwell (D-WA), who leads the Senate Commerce Committee. The committee heads released draft legislation in April that some saw as a bipartisan breakthrough that could lead to a major data privacy bill being enacted this year. They claimed to resolve the top two issues of partisan disagreement that have stymied privacy bills in Congress, the ability to use consumer class action lawsuits to enforce the law, a priority for many Democrats that is rejected by most Republicans and business groups, and robust state law preemption, a priority of many Republicans that is rejected by many Democrats, especially from states like California with their own data privacy laws. Although McMorris Rodgers believed the compromises were acceptable, and the committee was expected to pass the bill, Speaker of the House Mike Johnson (R-LA) and Majority Leader Steve Scalise (R-LA) intervened to express their opposition to the committee’s Republicans, leading to action being cancelled. The prospects for the bill being resuscitated this year are not seen as good.

Context – Last Congress, a bipartisan data privacy bill earned the backing of three of the four primary committee leaders, including McMorris Rodgers, with only Senator Cantwell holding out, likely because the class action provision was not permissive enough. That bill died amidst complicated legislative crosscurrents in the House and Senate. This year’s deal included a big left shift on class actions, leading us to question how the business community would react. Consider this development an answer. Other big hurdles include the tight legislative calendar, very narrow House and Senate majorities, Republican and business antipathy for the current FTC leaders, and GOP reluctance to give President Biden a big win. Rather than wait for legislation, progressives are calling on the FTC to enact strong new federal privacy rules this fall.

Uber and Lyft Agree to Ridesharing Minimum Pay in Massachusetts

Report from the Wall Street Journal

In Brief – Uber and Lyft have reached an agreement with the Attorney General of Massachusetts to settle a long-running legal and political battle over the pay and benefits for ride-share drivers in the state. The settlement ends a lawsuit filed by the state in 2020 and allows the companies to continue to classify their drivers as independent contractors. The two platforms agree to pay drivers minimum earnings of $32.50 per active hour spent on a trip as well as some employee-type benefits, including paid sick leave based on the number of hours they spend on the job. The companies also will pay the state a combined total of $175 million to resolve allegations that they violated the state’s wage and hour laws in past years, with most of that money being distributed to drivers. The state sued Uber and Lyft in 2020 demanding that they classify their drivers as employees on the heels of California enacting AB 5 in 2019 to reclassify many independent workers, including rideshare drivers, as employees. However, in November 2020, California voters overturned AB 5 for ridesharing and delivery workers by strongly backing Prop. 22, which kept rideshare drivers as independent contractors but committed the platforms to minimum pay and benefits levels. The ridesharing companies then attempted to enact a similar ballot measure in Massachusetts, but the effort has been tied up in state courts since.

Context – In May, two years of contentious battles over ridesharing legislation in Minnesota was resolved with agreement to set a statewide minimum pay rate for drivers, allow the platforms to hire drivers as independent contractors, and guarantee some employment-type benefits. That deal was noteworthy because while Minnesota is a solidly blue state and Minneapolis-St. Paul are progressive bastions, ridesharing regulation, in particular setting pay floors, has been limited to very wealthy coastal cities of New York (2019) and Seattle (2022) and the states of California (2020) and Washington (2022). We said at the time to expect more city and state officials nationwide to explore similar deals.

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Platform Economy Insights aims to provide small-to-mid-sized digital platform business leaders, investors and firms that support industry growth, and public officials, staff and media who track the platform economy, with expert analysis of public policy trends impacting the digital platform industry globally. 

Executive Editor Brian Bieron and Senior Advisor Tod Cohen are recognized Internet, trade and platform policy leaders who have served as top global public policy experts to some of the Internet industry's leading platform businesses. They are now providing insights, analysis and reporting to wider audiences through a public policy platform that challenges the reach of all but the largest Internet industry public affairs teams.

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