Google Settles Android Auto Dispute with German Antitrust Regulator

Report from Reuters

In Brief – The German Federal Cartel Office (FCO) has announced the end of its antitrust probe of Google’s automotive services and maps platform with the company agreeing to changes addressing the regulator’s concerns. "I am delighted that we have been able to reach an agreement,” said FCO President Andreas Mundt. “Google's commitments have the potential to bring about far-reaching changes in the market." Under the settlement, automakers will be able to include non-Google services in in-vehicle infotainment systems that use Google Automotive Services, which consist of Google Maps, Google Play and Google Assistant. The company has also agreed to allow its map services to be combined in part or in whole into navigation services offered by other providers, such as HERE, Mapbox or TomTom. Google is expected to apply the terms of the agreement across the European Economic Area.

Context – The FCO investigation of Google’s auto services was undertaken under Section 19(a) of the German Competition Act. That law, enacted in 2021, allows the FCO to regulate the largest digital giants rather than rely on traditional antitrust investigations and enforcement actions. Following the FCO designation of Google as a digital company "of paramount significance on competition across markets", the antitrust regulator was able to address company conduct it believed was anticompetitive, opening an investigation of its auto services in 2022. The German law was a harbinger of the EU Digital Markets Act. Some German officials have questioned the DMA for being too limited in the conduct it can address. While there are seven DMA “gatekeepers”, only 24 of their designated “core platform services” are covered by the law. Germany’s Section 19(a) authority allows the FCO to regulate any service of the five designated digital giants -- Amazon, Apple, Google, Meta and Microsoft. For example, the FCO is challenging Apple's in-app ad tracking rules. Allegations that Microsoft uses Office 365 to benefit products like Teams and its cloud services are not in scope for the DMA, but they are for the FCO.

European Commission Rolls Out New “AI Continent Action Plan”

Report from CNBC

In Brief – The European Commission has announced a set of actions it dubbed “The AI Continent Action Plan” to boost the EU’s artificial intelligence industry to compete more aggressively with the US and China in developing the groundbreaking technology. The effort appears to be a direct reaction to criticism from Europe’s technology firms and investors that the bloc’s regulatory and tax environment is too cumbersome and is slowing AI development. Included in the plan outlined by the Commission are a commitment to build a network of AI “gigafactories”, which are giant datacenters optimized to develop and train the most advanced AI models, as well as to create specialized labs to give startups better access to high-quality training data. In rolling out the plan, the Commission reiterated support for its landmark AI Act, saying the legal regime, “raises citizens’ trust in technology and provides investors and entrepreneurs with the legal certainty they need to scale up and deploy AI throughout Europe,” while also announcing that the action plan includes creating a new AI Act Service Desk to be “the central point of contact and hub for information and guidance” on the rules.

Context – Backers of the AI Act sincerely believe that guardrails benefit AI development by easing user uncertainty with AI-enabled service. The initial framework was a tiered, risk-based regulatory regime for applications using AI, not an effort to regulate the underlying AI technology itself. However, after the emergence of Chat-GPT, the EU Parliament moved beyond regulating specific AI applications and imposed rules on core “foundation models”. This shift was divisive among EU-based AI innovators. When the law went into force in 2024, the EU had planted the flag globally for AI regulation. That was not without risk. The US, UK, and Japan have each shifted their AI policies in a deregulatory way since last year. Some European leaders are joining in, with French President Macron calling for the EU to “resynchronize with the rest of the world" and Commissioner Henna Virkkunen saying that the Commission will be business-friendly in implementing its new rules.

Apple and Google Face Regulation Under Japan’s New Digital Regime

Report from the Japan Times

In Brief – The Japanese Fair Trade Commission has formally designated three companies as being subject to the new law regulating major information technology companies in the smartphone application market, the American mobile ecosystem giants Google and Apple, and iTunes K.K., an Apple subsidiary in based in Tokyo that manages iTunes for Apple in the market. The law regulates app stores, operating systems, browsers and search engines, and prohibits the two giants from blocking the entry of other companies into their app mobile market or giving preferential treatment to their own services. Google is subject to regulation in all four areas, while Apple will face restrictions in three areas excluding search engines. For iTunes, restrictions will apply to the app store it operates with Apple. Last December, the JFTC determined that the new law would apply to mobile companies with an average monthly user base of 40 million or more. The law goes fully into effect in December.

Context – Japan has pursued more moderate digital regulation than the EU and the UK. There are five digital giants in Japan – Amazon, Apple, Google, Rakuten and Yahoo Japan. Two are Japan-based. None of the original six digital “gatekeeper” companies regulated by the EU’s Digital Markets Act (DMA) is European. And it’s unlikely any UK-based companies will be designated as having “Strategic Market Status” under the Digital Markets Competition and Consumers Act (DMCCA). If Japan’s app store regulation reflects the country joining the European trend of regulating digital markets rather than sticking to traditional antitrust enforcement, it’s noteworthy that they have narrowly chosen a market with just two digital giants, both not Japanese. And they picked a digital market where the regulatory tide is well underway elsewhere. In the EU, the Commission has rejected both Google’s and Apple’s app store rules for not meeting the DMA’s rules on “steering”, meaning giving users easy access to low fee alternatives. In the US, federal judges are covering much the same ground in the federal antitrust cases filed by Epic. And both will soon be regulated under the DMCCA.

UK “Drip-Pricing” and Fake Review Rules Come Online

Report from The Verge

In Brief – The UK Competition and Markets Authority (CMA) has announced that rules to implement the consumer protection sections of the Digital Markets, Competition and Consumers Act (DMCCA) have come into force. The 2024 law, which notably authorizes the CMA to regulate the digital platform giants, also empowers the agency to enforce consumer protection laws directly. The DMCCA bans the posting and commissioning of fake reviews, and prohibits 'drip pricing’, where shoppers are shown an initial price for a product, but more fees are added as they proceed with their purchase. The pricing rules apply to services like food delivery apps and ticket booking platforms, requiring that obligatory fees are clearly displayed at the start of the checkout process, although truly optional fees, such as for upgraded airline seats, are not affected. The review rules ban businesses from using or commissioning fake reviews and requires website providers to take “reasonable and proportionate steps” to prevent and remove them.

Context – Consumer reviews, widely used by nearly everyone online to gather valuable information on all manner of goods and services, have proven to be one of the top benefits of the commercial internet. At the same time, frauds and deceits, often powered by an international fake review industry, have been a chronic problem. Regulators and leading online companies are engaged. The DMCCA rules come online just months after FTC rules on fake reviews went into effect in the US. In addition, a collection of the leading review platforms has formed the Coalition for Trusted Reviews to further encourage and cooperate with government efforts. In keeping with the CMA’s recent focus on promoting a pro-growth business environment, Sarah Cardell, its chief executive, noted that the agency understands that businesses, especially small businesses, face compliance challenges and said, “We’re working hard to support them with that and keep burdens to a minimum – through accessible guidance and communications, as well as direct engagement – alongside listening and responding to feedback."