Renters Revel as Federal Judge Rules Against Algorithmic Pricing Service

Report from Reuters

In Brief – US District Judge Robert Lasnik has ruled that a class action lawsuit brought by renters alleging that software maker Yardi Systems and a group of its landlord customers engaged in illegal price fixing can proceed. In his thorough rejection of the defendants’ motion to dismiss, Judge Lasnik sided with the plaintiffs’ arguments that competitors did not need to be bound to, or even often implement, the software company’s recommendations to be illegal. And on the key question of the legal standard to judge the pricing services, Lasnick’s order also rejected the defense argument that the digital services were innovations with unclear effects so the court should weigh the case based on the evidence of economic impact using the “rule of reason” that is more friendly to antitrust defendants. He instead ruled that he should apply Supreme Court precedents that direct horizontal price fixing to be considered “per se” illegal under the Sherman Act. The attorneys for the renters called it “a total victory”.

Context – The case is one of a growing number alleging so-called “algorithmic price fixing” where business competitors share confidential information one-on-one with a third-party service provider who then uses digital processes to determine what it believes is each customer’s optimum pricing based on the collective data. Services for apartment landlords and hoteliers have been operating for more than a decade and are major targets of tech-focused price-fixing lawsuits. RealPage, another apartment pricing service, is the lead defendant in several such suits. A federal district court in Tennessee found in the opposite direction on the rule of reason question in 2023 so there is an emerging circuit split. The US Department of Justice (DoJ) joined the RealPage litigation parade in August at the height of the presidential campaign where rising rents was an issue along with general price inflation. Unlike earlier legal challenges to RealPage, the DoJ complaint did not focus on the setting of higher rents, but instead targeted the sharing of non-public business data with a service used by competitors as itself illegal anti-competitive conduct, very much in line with Lasnik’s broad ruling.

Character.ai Sued by Parents Claiming Egregious Harms to Kids

Report from the Washington Post

In Brief – Character.ai, a popular Generative AI service that allows users to create so-called “companion” chatbots that have personalities and mimic human interactions, is facing a growing number of lawsuits from parents alleging that the service, which is increasingly popular with teens, was instrumental in leading their kids to engage in very harmful conduct. A recent lawsuit from a mother in Texas accuses the chatbots of encouraging her child to engage in self-harm, as well as criticizing the parents, leading to a mental health crisis. A second plaintiff alleges that the company’s chatbots engaged in sexualized interactions with their 11-year-old daughter for two years before her parents discovered the communications. In October, a mother in Florida filed a separate lawsuit alleging that Character.ai chatbot companions encouraged her depressed teen son to kill himself to relieve his pain, which he did.

Context – Alleged harm to young users from engaging with AI “companions” seems to be an AI version of the worst of social media. Most objectionable content on those platforms is created by other users and therefore the companies are often protected by Sec. 230. Critics have therefore been resorting to legislation and lawsuits targeting platform characteristics like auto-play that they allege addict and harm young users. The state laws are facing skeptical federal judges, but the lawsuits are having more luck. The application of Sec. 230 to AI services is a huge open question. During the Supreme Court’s oral arguments on Gonzalez v Google in early 2023, just months after the bombshell release of ChatGPT, Justice Gorsuch raised Sec. 230 and indicated that he thought AI-created content was probably not covered. That early view was reiterated by Sec. 230’s congressional authors. However, a strong argument can be made that everything created by a generative AI chatbot is just an advanced algorithmic re-ordering of existing third-party content. Then add in the seemingly inherent AI “hallucinations” and how, try as they might, AI creators and operators don’t fully understand why their models do what they do.

European Commission DSA Probe of TikTok and Romanian Election Activity

Report from Euro News

In Brief – The European Commission has opened a formal investigation of TikTok under the Digital Services Act (DSA) over concerns that foreign actors used the social media platform to influence the Romanian presidential elections. Commission President Ursula von der Leyen said protecting “our democracies from any kind of foreign interference” was a top DSA priority. When insurgent ultranationalist candidate Călin Georgescu won the most votes in the first round of the presidential campaign, putting the euro-skeptic into the final run-off, Romanian government officials claimed the shock result was due to a dramatic increase in videos on TikTok praising the previously low-profile candidate and alleged a campaign engineered abroad, likely by Russia. The country’s top constitutional court subsequently cancelled the run-off, voided the initial balloting, and prdered a rescheduled election. The commission announcement said its investigation would focus on the ability of TikTok’s content recommender systems to deal with “coordinated inauthentic manipulation or automated exploitation of the service,” along with policies on paid-for political content. A TikTok statement said, “We do not accept paid political advertisements, we proactively remove content for violating our policies on misinformation, harassment and hate speech, and continue to work with the European Commission” to discuss concerns.

Context – The DSA sets out the general online risks that the law is intended to address, including “any actual or foreseeable negative effects on civic discourse and electoral processes,” and then directs platforms to put in place effective mitigation measures. TikTok was apparently full of content praising Georgescu’s nationalism and euro-skepticism, and while the platform likely claims that it was enforcing policies to stop misinformation, harassment and hate speech, the pro-nationalist material may not have triggered those filters. Politically relevant material posted by foreign-based sources that could impact voters may now be part of the commission’s standard for objectionable electoral content.

Supreme Court Sets Rapid Review of Challenges to Federal TikTok Ban

Report from CNN

In Brief – Not unexpectedly, the Supreme Court has agreed to hear arguments over the constitutional challenges filed by TikTok and a group of content creators against the federal law that requires the business to be sold to new owners not based in an “adversarial country”. If there were any surprises, it is the tight schedule. A three-judge panel of the US Court of Appeals for the District of Columbia issued a ruling on December 6 that comprehensively rejected the arguments that the law violated the First Amendment, ruling that the measure satisfied “strict scrutiny” based on the national security concerns that led the Congress to enact a law dealing with digital services operated by companies based in “adversarial countries” such as China and Russia. The same judges rejected the company’s request to delay implementation of the law until the Supreme Court ruled on the matter, saying that the appeals panel adhered to a schedule requested by the litigants designed to give the High Court time to address the matter if it chose to do so. The Supreme Court has stepped in and set an extremely compact briefing and hearing schedule, ordering opening briefs, including from amicus curiae, to be filed by December 27th, reply briefs by January 3^rd, and setting oral arguments for January 10th. The justices indicated that they would defer consideration of whether to temporarily block the law until the day of oral arguments.

Context – The Court of Appeals opinion was written by Judge Douglas Ginsburg, a nominee of Ronald Reagan, and Judge Neomi Rao, a Trump nominee, fully joined. Chief Judge Sri Srinivasan, an Obama nominee, wrote a concurring opinion agreeing with the result but argued that intermediate scrutiny was the appropriate legal standard, that the law met that standard, and that judging based on strict scrutiny was not appropriate. There has never been a communications platform like TikTok operating at such scale in the US. It will get its day in the highest court. Next questions include whether a ruling will be out by January 19 and how incoming President Trump will respond, both before the 27th and after a decision?

Australia Planning Social Media Corporate Tax to Fund News Companies

Report from The London Times

In Brief – Meta’s threat to walk away from agreements to pay Australian news companies millions of dollars and instead block news posts has led the government to announce a new tax on large social media and search businesses to fund payments to media companies. It is the latest move in a five-year battle to force Google and Meta to pay ad-reliant media companies when news content is on their platforms. Although both Google and Meta threatened to block news in 2021 rather than be forced to pay for news links, the News Media Bargaining Code was enacted and both platform giants negotiated millions in media payments deals. However, Meta has since decided that news is not important to their platforms and said they will ban news content if local laws require that they pay media companies when third parties post links. They implemented a news ban in Canada last year. With the initial Australian media payments deals expiring in 2025 and Meta saying they will not renew them, the government response appears to be to tax covered companies, which now includes TikTok too, an amount greater than what the government says should be paid to media companies, and then if a company doesn’t meet the media payments threshold, collect the tax and distribute the money to the media companies.

Context – “You can’t fight city hall” and “Never argue with someone who buys ink by the barrel” are political proverbs that come to mind. The divergence between Meta and Google on forced media payments is the most interesting development in this global battle by governments to force foreign digital giants to pay their domestic media companies. Google ends up paying, Meta has been willing to block news and fight, arguing that their free distribution platforms are worth more to news companies than news is to them. We are awaiting Meta’s response. Lower ad rates in Australia to get below the revenue threshold and block news? Are there tax benefits to media payments being a tax? Turn to the Trump Administration to fight a discriminatory tax? And for the first time, a news media payments scheme includes TikTok.

Vertical Search Businesses Continue to Object to Google’s DMA Plan

Report from Reuters

In Brief – More than 20 Europe-based price comparison websites continue to criticize Google’s proposed changes to its search service designed to comply with the EU’s Digital Markets Act (DMA) that regulates the top platforms of the seven largest digital “gatekeeper” companies. The European Commission is formally investigating Google’s treatment of “vertical” search competitors, such as services specializing in hotels, airfares, retail products, or local services. Google’s main search service is prohibited from favoring the company’s specialized vertical services at the expense of competitors. Many vertical service providers have complained that Google’s DMA plans fall short, and the effort to find agreement has included months of meetings, stakeholder forums, and the release of new compliance plans. The latest broadside from the price comparison companies alleges that Google has “simply, repeatedly, ignored this feedback, and instead continued to iterate on the same non-compliant solution for months.” They are calling on the Commission to issue preliminary findings that Google is not complying with the law, as they have with Apple and Meta, and impose fines.

Context – Charges by vertical search providers that they were penalized by Google as the search giant built its own vertical businesses is one of the longest standing Big Tech antitrust complaints. It is the issue behind the Google Shopping case that is over a decade old. A top challenge is that many companies that sell directly to online consumers, such as airlines, hotel chains, and retailers, argue that they should not be penalized in Google search results so that vertical search aggregators can be elevated in search results. In a recent test of these competing interests, Google temporarily removed its “hotels” feature in three EU member states, offering what was described as search results similar to the “blue links” of Google search from years ago. However, Google has since reinstated the hotels feature, saying that traffic to hotels’ own websites fell 10% and left users less satisfied with their search results.

EU Governments Fail to Agree on Digital Surveillance Legislation Targeting CSAM

Report from Tech Radar

In Brief – The Council of Europe, the branch of the European Union made up of representatives of the 27-member state governments, failed to agree on a legislative proposal drafted by the European Commission to fight the spread of online child sexual abuse material (CSAM) by requiring that all digital communications and messaging services be able to be scanned to identify illegal and objectionable content. The latest version of the legislation to fight CSAM, dubbed “Chat Control” by critics, was proposed by the Commission in February and continues to pit the EU executive against privacy and data security advocates. An earlier effort from the Commission was amended in the European Parliament in November 2023 to remove provisions weakening encryption that critics argued could lead to a general surveillance state. Belgium in the first half of 2024, and now Hungary, attempted to bring the Council onside with the Commission on CSAM legislation, but the latest effort fell short of a qualified majority with Austria, Germany, Slovenia, Luxembourg, Netherlands, Czechia, Poland, Estonia, Finland and Belgium objecting. A temporary exemption to the e-Privacy Directive that allows messaging services to voluntarily detect CSAM is due to expire in April 2026, which CSAM bill backers argue creates a need for action next year. However, Poland, the next member state to take over as President of the Council, voted against the measure and has expressed concerns with the bill promoting general surveillance of personal communications.

Context – The battle over encryption between defenders of privacy and civil liberties on one side, and those arguing that strong encryption protects criminals on the other, is decades old. The point of the spear is often CSAM. Similar efforts to require that messaging services can access encrypted communications have been underway in the US, with the EARN IT Act, the EU, with Chat Control bill, and the UK Online Safety Act. While the UK standoff was defused by a government minister stating that no change on encryption was forthcoming, child safety is a top online safety priority of the current government.

TikTok’s Request for a Temporary Injunction Denied by US Court of Appeals

Report from Politico

In Brief – The three-judge panel of the US Court of Appeals that rejected TikTok’s arguments challenging the constitutionality of the federal law that requires the business to be sold to new owners not based in an “adversarial country” quickly turned aside the company’s request that the law be temporarily paused while it appeals the ruling to the US Supreme Court. The unsigned order noted that the panel had already expedited consideration of the case based on a schedule agreed to by both sides “to give adequate time before the Act’s prohibitions take effect to request emergency relief from the Supreme Court.” The panel further reiterated that it “has already unanimously concluded the Act satisfies the requirements of the First Amendment under heightened scrutiny” and said that TikTok’s lawyers “have not identified any case in which a court, after rejecting a constitutional challenge to an Act of Congress, has enjoined the Act from going into effect while review is sought in the Supreme Court.” The company says that it will appeal to the Supreme Court.

Context – The decision does not change the TikTok strategy. They are still pursuing two tracks. They will ask the High Court for emergency relief that would pause the law’s implementation while the court sets a schedule to hear arguments. If enough justices, which generally mean at least four, want to weigh in on the unanimous decision by the appeals court panel made up of judges nominated by two Republicans and one Democratic president, it would almost certainly push the resolution past the statutory date of January 19. It would also indicate a meaningful split with the initial ruling. The current Supreme Court is led by a free speech champion. But there has never been a media service like TikTok. Then there is the hope of TikTok-backers that one-time critic President Trump, who did a 180 during the campaign, will save the platform under it current owners. The President can extend the current deadline 90 days. Expect that even if President Biden does not do it on the 19th. And expect Trump to push for some deal, although recent comments hedged on the eventual outcome.

Republican Commissioner Andrew Ferguson Named as the Next FTC Chair

Report from the New York Times

In Brief – President-elect Donald Trump has chosen current FTC Commissioner Andrew Ferguson as its next chair, replacing Lina Khan. Ferguson, a former counsel to Sen. Mitch McConnell (R-KY) and Solicitor General of Virginia, was named to the agency in March along with fellow Republican Melissa Holyoak, ending a year-long stretch when the agency operated with just three commissioners, all Democrats, following the rancorous resignations of both Republicans. In his announcement, Trump noted his “proven record of standing up to Big Tech censorship, and protecting Freedom of Speech”. Trump also nominated Mark Meador, an antitrust lawyer and former counsel to Sen. Mike Lee (R-UT), to serve as the third Republican Commissioner.

Context – Ferguson and Meador largely wrap up the top nominations for the front-line Trump II tech regulators, especially on Big Tech and antitrust. If you take these two FTC nominees, Gail Slater as the Head of the DoJ Antitrust Division, her likely boss, incoming US AG Pam Bondi, and even incoming FCC Chair Brendan Carr, they are all vocal about one thing… alleged Big Tech censorship of conservative viewpoints. This is clearly President Trump’s top tech complaint. As he recently said, “I’m not a fan of Google. They treat me badly.” Content moderation and “viewpoint” discrimination will be priorities across the board. On the other hand, on antitrust in general, and the Khan-led aggressive FTC rulemaking on things like “unfair methods of competition”, employer non-complete clauses, “commercial surveillance”, Gig work, “all in pricing”, and merger reviews, expect steps back. Finally, on the Big Tech antitrust cases, the tea leaves are unclear and the Magic 8 Ball says, “Cannot predict now”. For example, when Ferguson was first nominated to the FTC, Sen. Josh Hawley (R-MO) held up his candidacy because he was suspected of not being tough enough on Big Tech. Meador, on the other hand, is seen as coming from the more aggressive Big Tech antitrust camp of populist conservatives. Bondi’s lobbying clients in Florida included Amazon and Uber, so potential balance with Slater, who recently worked for Fox and Roku. They will all agree on “censorship”.

State Dept Office Monitoring Foreign Online Disinformation Loses Funding

Report from the Washington Post

In Brief – The State Department’s Global Engagement Center (GEC), which attempts to track and combat foreign disinformation operations, may shut down on December 23 as efforts to fund it through one of Congress’s last remaining “must pass” bills appear to have fallen through. With a budget of $61 million and 130 employees, the GEC attempts to monitor online influence campaigns from foreign adversaries like Russia and China, but it has faced growing criticism from Republicans and other conservatives for allegedly labelling conservative viewpoints as disinformation and misinformation. A particularly egregious misstep involved a $100,000 grant to the Global Disinformation Index (GDI), a London-based organization that claims to identify online outlets that spread disinformation. The group authored a report on the US online media ecosystem that named various conservative media outlets as disinformation risks and was generally seen as part of what many conservatives believe is a network of progressive advocacy groups, quasi-academic institutes, and government agencies that press digital platforms to censor conservative viewpoints.

Context – If the Global Engagement Center is shuttered for being linked to efforts to label public policy viewpoints as disinformation, it won’t be the first such federal office. Back in 2022, the Department of Homeland Security created a Disinformation Governance Board to counter misinformation and tapped Nina Jankowicz, a noted figure in the field of online disinformation, as the board’s executive director. Videos posted by Ms. Jankowicz of her progressive parody showtunes calling out so-called disinformation on politically sensitive topics quickly fueled conservative charges of government censorship that ended the DHS effort. In Europe, EU Commissioner Thierry Breton resigned shortly after trying to use the Digital Services Act to press Elon Musk to not interview then candidate Donald Trump. And Romania called off its presidential election over claims that online content praising an anti-establishment right-wing candidate was generated from Russia.

TikTok Asks for Injunction Allowing High Court Appeal and Trump Inauguration

Report from Reuters

In Brief – TikTok and its parent ByteDance have asked the Federal Court of Appeals for the District of Columbia to grant a temporary injunction pausing enforcement of the federal law that requires TikTok’s US business be sold to a company not based in China by January 19, 2025, or face a national ban. The company’s petition says that it will soon appeal to the Supreme Court to overturn last week’s decision by a three-judge panel that unanimously upheld the constitutionality of the landmark law, arguing that the law’s sanctions should not implemented while the High Court considers the case. TikTok’s lawyers highlight the appeals panel’s determination that the law does restrict the free speech rights of the company and its users and that it meets the test of “strict scrutiny”, a very high legal standard that includes requiring laws such laws to be narrowly tailored to achieve a compelling governmental interest and use the least restrictive method possible. The judges gave strong weight to the national security determination of the Congress and the Executive Branch to ban large platforms operated by companies based in “adversary countries” such as China and Russia. The three judges agreed that the law met the strict scrutiny test, while one filed a concurring opinion arguing that lesser intermediate scrutiny sufficed.

Context – The current Supreme Court is led by a free speech champion. But there has never been a media service like TikTok, which claims 170 million US users, can comprehensibly track them, can non-transparently control the messaging they see, and is based in an authoritarian country seen by many as the US’s top global security rival. January 19 is a day before President-elect Trump in inaugurated. Although he tried to ban TikTok in 2020, he seemed to do a 180 during the recent campaign. Any court-imposed delay would give him greater flexibility, including to extend the deadline 90 days or possibly simply declare that ByteDance satisfies the statute. The Biden Administration’s Justice Department has opposed the request for the temporary injunction. President Trump could eventually say a ban was all Biden’s doing.

New EU Competition Chief Says Breaking Up Tech Giants is “On the Table”

Report from Bloomberg

In Brief – Teresa Ribera, the Spanish European Commissioner who is the EU’s new competition policy chief, recently said that “divestments” to break up digital giants like Google accused of antitrust violations are “still on the table”. Ribera is taking over as the EU’s top competition law enforcer following a decade of service by Big Tech antagonist Margrethe Vestager.  Ribera said she aimed to build on Vestager’s “legacy” and would “try to work together with other relevant competition authorities worldwide, including the US competition authorities,” adding that consideration of breaking up offending firms would be assessed “case-by-case.” Vestager has pitched a breakup of Google’s AdTech services to address its dominance in digital advertising, while the US Department of Justice has proposed a forced sale of the company’s Chrome browser as part of its remedy recommendation to the federal judge who recently ruled that Google Search was a monopoly.

Context – When the respective EU and US antitrust chiefs were Vestager and the Biden team of Jonathan Kanter and Lina Khan, there was general agreement on pushing a new tougher line inspired by progressive antitrust thinking. Along with its legal and regulatory cases, the EU also passed landmark laws to regulate digital platforms, especially the giant, mostly US, “gatekeepers”. Ribera will be involved in both antitrust cases and company regulation. In the US, progressive Big Tech legislation failed to gain traction, but antitrust cases targeting Google, Apple, Meta, and Amazon are underway. The impact of the transition to a Trump Administration is a question mark for the US and EU initiatives. Gail Slater, considered a Big Tech (or at least Google) skeptic, has been nominated to replace Google-skeptic Kanter at the DoJ, pointing to Trump wanting to strike a tough tone with Tech on litigation, possibly to maximize leverage. On the EU’s regulation of the US-based tech giants, there is Trump’s new-found comfort with some top business leaders of US tech giants who are facing aggressive EU scrutiny and comments critical of European efforts to “take advantage of” US businesses.

Duck Duck Go Calls for EU Commission to Expand Its DMA Probe of Google

Report from TechCrunch

In Brief – Duck Duck Go is calling on the European Commission to expand its non-compliance investigation of Google under the Digital Markets Act that regulates the largest platforms of the largest digital companies for adherence to competition policy-inspired mandates. The company’s privacy-focused search engine competes with Google’s dominant general search service. Duck Duck Go claims that Google’s program to share anonymized search data is woefully deficient and withholds significant important data based on questionable privacy arguments, and that the search giant’s implementation of choice screens allowing users to change default search settings is not adequately rolled out and remains too cumbersome. Providing users with choice screens for default services such as search, and browser apps was imposed on Google’s Android system since 2018 under one the three major Google antitrust cases pursued by the European Commission. Duck Duck Go argues that they show choice regimes can lead to pro-competitive outcomes but also that it can be hard to get effective Google compliance.

Context – There are now seven DMA gatekeepers with a total of 24 “core platform services” that must adhere to the law’s regulatory mandates. After the initial six submitted their DMA plans last spring, the Commission opened non-compliance investigations of Apple, focused on their App Store rules, Meta, over their ad-free paid subscription plan and ad targeting in their free services, and Google regarding how its search algorithms deal with competing vertical search services. Google search is a zero-sum game for websites and those ranked low often feel aggrieved. The EU referees will hear endless advice on how Google search can be made fairer, and that is before expanding regulatory review to more aspects of the search market, per Duck Dock Go, and the other seven Google platforms regulated by the DMA. Finally, Duck Duck Go is likely looking to the remedies proceeding in Google’s US antitrust case and attempting to highlight for Judge Amit Mehta that Google search compliance is complicated and hard to enforce.

Texas AG Alleges That Advertiser Trade Group Illegally Boycotted X

Report from Media Daily News

In Brief – Texas Attorney General Ken Paxton (R) has announced an investigation of the World Federation of Advertisers (WFA) for potentially violating Texas antitrust law by allegedly organizing a boycott of its members to not advertise on the X social media platform. “Trade organizations and companies cannot collude to block advertising revenue from entities they wish to undermine,” said Paxton. The WFA’s now-shuttered Global Alliance for Responsible Media (GARM) created what it called “voluntary industry standards on brand safety and suitability” for social media advertising it said its members could “voluntarily adopt, adapt or reject.” Many WFA members stopped or significantly reduced their advertising on X after Elon Musk took over the company, with an especially large exodus of advertisers in November 2023 following reports from the Center for Countering Digital Hate and Media Matters that argued X was failing to effectively remove illegal and hateful content under its new management. A WFA spokesperson said that GARM activities were “voluntary and pro-competitive.”

Context – Attorney General Paxton has been a regular contributor in the years-long conservative legal and policy campaign alleging that many of the largest digital companies discriminate against conservative viewpoints. Back in early 2021, Paxton issued civil investigative demands (CIDs) demanding information from pre-Musk Twitter regarding their content moderation practices and alleging viewpoint discrimination, a similar legal tactic to the current effort. Twitter challenged the CIDs in federal court as a violation of the platform’s First Amendment rights. The US Ninth Circuit dismissed Twitter’s challenge ruling that absent an effort by the Texas AG to take enforcement against the company for not responding to the CID, which did not happen, the case was premature. Since then, Elon Musk’s acquisition and management of X/Twitter has changed the social media ecosystem by dramatically expanding the diversity of content moderation styles, and Musk’s rapid elevation in Republican and Trump circles is likely to bring even further change.

Federal Court Upholds TikTok Ban and Sets Up Supreme Court Review

Report from the Washington Post

In Brief – A unanimous three-judge panel of the US Court of Appeals for the District of Columbia has rejected TikTok’s effort to have the federal law requiring China-based ByteDance to divest its US TikTok business or face a nationwide ban ruled unconstitutional. The plaintiffs are expected to appeal the decision, potentially asking for a review by the full Court of Appeals or going right to the Supreme Court. Although the law was comprehensively upheld by the judges, who were nominated by Presidents GW Bush, Obama, and Trump, they rejected the government’s argument that it did not implicate the First Amendment rights of TikTok and its users. They instead ruled that the law met the needed level of constitutional scrutiny based on the national security-based concerns that led the Congress to enact a law dealing with digital services operated by companies based in “adversarial countries” such as China and Russia. The law gives ByteDance until January 19, 2025, to sell TikTok’s US operations to an entity acceptable to the US Government or face a ban in the US. In the meantime, the Supreme Court will decide whether to hear the case.

Context – There are now two tracks. Attempting to ban TikTok was always setting up a historic court fight. The First Amendment has traditionally protected adversarial speech, including anti-American propaganda. And the current Supreme Court is led by a free speech champion. But there has never been a media service like TikTok, which claims 170 million US users, can comprehensibly track them, can non-transparently control the messaging they see, and is based in an authoritarian country seen as the US’s top global security rival. Unprecedented. Then there is the return of the President-elect. Although President Trump tried to ban TikTok in 2020, he seemed to do a 180 during the recent campaign. The statute gives the President the authority to extend the current deadline 90 days. Fully expect that. He will push for a deal, could declare that whatever ByteDance does satisfies the statute as a “qualified divestiture,” or could choose not to immediately enforce the law. Finally, he could say he did his best and it was Biden’s law.

New York City Council to Consider Modifying Anti-AirBNB Law

Report from the Wall Street Journal

In Brief – Four New York City Councilmembers have introduced legislation to ease the restrictions on short-term rental hosts that were enacted in 2023. The de facto AirBNB ban was pitched at the time as a strategy to increase housing availability and reduce rents by stopping the use of city housing by tourists looking for alternatives to traditional hotels. Opponents of the legislation argue that since the law went into effect, severely cutting short-term rental listings, long-term rents are up, hotel rates reached record highs, and many thousands of residents lost a potential revenue stream. The legislation, sponsored by a Brooklyn-based councilmember, is focused on owners of one-and two-family homes, including expanding the number of allowable adult guests from two to four, and allowing a unit to be rented without the owner being present, so people could rent out their space while on vacation. Members of the Hotel Association of New York City oppose loosening the short-term rental rules, saying they will allow the market to be flooded with many thousands of listings in potentially commercial operations.

Context – Platform-enabled short-term rentals have been highly controversial in major cities around the world. Shockingly, traditional hotels don’t like competition from short-term rental hosts and don’t mind higher hotel prices either. High rents are a feature of many large cities, especially those that are also popular with tourists. Earlier this year, the EU enacted legislation two years in the making to require transparency and streamline data-sharing between the platforms and governments, an effort supported by AirBNB to establish a more welcoming ecosystem. But localities remain free to enact restrictions and even bans, leaving hotspots like Paris, Amsterdam, and Barcelona to continue their years of aggressive action against platform-based hotel alternatives, while cities including Berlin, Athens, Budapest, Edinburgh, Bruges, and Prague are joining the queue. In October, Mexico City enacted new limits on short-term rentals, capping a property being rented at 50% of the year and prohibiting rentals of government-built housing.

TikTok Accused of Failing to Protect Integrity of Romanian Election

Report from Politico

In Brief – Romanian Government officials are alleging that TikTok failed to effectively enforce election laws and its content moderation rules during the first round of the Romanian Presidential campaign that resulted in Călin Georgescu, an insurgent ultranationalist candidate who has praised Vladimir Putin for his commitment to Russian nationalism and is a skeptic of NATO and aid to Ukraine, unexpectedly winning the most votes. Romanian officials suspect that a covert effort, funded from outside the country and involving thousands of fake accounts, may have been used in a TikTok campaign of videos portraying Georgescu as personally strong, vigorous, and committed to traditional Romanian values. Authorities raised concerns with TikTok about ads and expressed frustration with TikTok’s slow response and what they claim are the social media giant’s ineffective content moderation practices, including videos running outside of the limits on political advertising established by Romanian law. A TikTok spokesperson called reports of potential election interference “inaccurate and misleading” and that Georgescu was treated, “in the same way as every other candidate on TikTok, and subject to exactly the same rules and restrictions.” European Union officials are also getting engaged, with TikTok being called before European Parliamentarians and Commission regulators tasked with enforcing TikTok’s compliance with the Digital Services Act questioning the platform.

Context – The Digital Services Act regulates how digital platforms enforce rules to prohibit the spread of online harms, including content that undermines free and fair elections. The European Commission enforces the law for the largest platforms, including TikTok. The prospect that government authorities, including in Brussels, step in after a conservative anti-establishment candidate wins a shock vote following significant online activity on TikTok by all candidates, a popular platform in Romania where trust in traditional media is down, will reinforce concerns that platform regulation carries risks of censorship.

Trump Pick for DoJ Antitrust Role Looks a Tough One for Google

Report from Reuters

In Brief – President-elect Donald Trump has selected Gail Slater, a senior advisor to Vice President-elect JD Vance, to head up antitrust enforcement at the Department of Justice (DoJ). Prior to joining Senator Vance, who is a leading Republican populist critic of the tech giants, the Irish-born and Europe-educated Slater held numerous tech and economic policy roles in Washington. She served at the FTC for ten years, including as an advisor to Democratic Commissioner Julie Brill during Barack Obama’s administration, was on the staff of the White House National Economic Council during Trump’s first term, was a senior counsel at the now defunct trade group the Internet Association, and held top legal roles at media giant Fox Corp and Roku. In his announcement of the selection, Trump said, “Big Tech has run wild for years, stifling competition in our most innovative sector and, as we all know, using its market power to crack down on the rights of so many Americans, as well as those of Little Tech!”

Context – If Google officials took some heart when then-candidate Trump expressed reticence about breaking up the company at an October conference, they must feel they now took a few steps back. Market watchers are taking the nomination as a sign that the threats to the tech giants remain high, particularly Google, who is the target of two DoJ-led antitrust complaints, and Apple, also the subject of a DoJ-led antitrust suit. And from Google’s perspective, not only has Vance, Slater’s current boss, called for Google to be broken up and expressed sympathy for progressive antitrust maven Lina Khan’s leadership of the Biden-era FTC, but both of Slater’s recent corporate employers, Fox and Roku, have had competition policy run-ins with the digital behemoth. Federal Judge Amit Mehta, who ruled earlier this year that Google had a monopoly in internet search, recently said that he would not delay the remedy phase of the case despite the change in administrations. The Biden DoJ has asked for the Chrome browser to be broken out of Google and for other limits. Maybe no delay is needed.

Amazon Raided by Japanese Competition Authority Over Buy Box Practices

Report from the Japan Times

In Brief – Amazon Japan’s Tokyo office was raided by the Japanese Fair Trade Commission (JFTC) to gather information on potential antitrust violations in dealings with sellers on its marketplace. Amazon, an ecommerce giant in Japan, is suspected of two abusive practices tied to how its marketplace algorithms award the key “Buy Box” placement to a third-party seller’s product. One is requiring a seller to lower their price on Amazon to match, or be lower than, the price they offer on other online platforms, regardless of the comparable fees or terms on the other platforms. The second is linking awarding the Buy Box to the seller purchasing Amazon’s logistics service, which often carries significant fees for the seller. The JFTC believes the practices could amount to the abuse of a superior bargaining position or trading on restrictive terms, which are unfair trade practices under the Antimonopoly Act. The regulator is also expected to open a public process to gather information and opinions from the third-party sellers soon.

Context – Amazon has reimagined what it means to be a retail wholesaler. Third-party sellers have accounted for more than 60% of the sales on Amazon since 2019, when Jeff Bezos proudly claimed that third-party sellers were “kicking our first-party butt”. But the truth is that most third-party sales on Amazon involve goods housed and handled by Amazon. The sellers look a lot like wholesalers in the traditional retail world. They are not “beating” Amazon, they are supplying Amazon. Fees often exceed 50% and sales are often more profitable for Amazon than first-party sales. The charge that Amazon’s algorithms penalize retailers who offer lower prices on other websites, a price parity policy that protects its high seller fees from lower-fee competition, is gaining traction in US courts, including as part of the FTC’s antitrust complaint. Amazon’s role as the largest ecommerce logistics services provider is a central part of the complex process, with Amazon’s marketplace algorithms rewarding sellers who buy Amazon logistics that are themselves a major component of Amazon fees.

Google Continuing to Negotiate How Search Will Work in Europe

Report from TechCrunch

In Brief – Google will test a version of its main search service on some users making hotel queries in Belgium, Estonia, and Germany that the company describes as a throwback to the plain “blue link” style of search results. The latest test, announced in a blog post from a company legal officer, is part of Google’s effort to comply with EU’s Digital Markets Act (DMA). The “gatekeeper” law mandates that the company’s general search service treat rivals offering search “verticals” fairly. Verticals often specialize in offerings for hotels, airfares, retail products, local services, or jobs. Their treatment by Google has been a top concern and a focus of their DMA compliance plan. Many vertical providers have long believed that they were penalized by Google as it built its own specialized search offerings. The European Commission’s DMA enforcers have been focused on this issue since Google released its initial compliance plan in March, and despite a series of modifications and offers, a formal finding of non-compliance remains possible. A top challenge is that many companies that sell directly to online consumers, such as airlines, hotel chains, and retailers, argue that they should not be penalized in Google search results so that vertical search aggregators can be elevated in search results.

Context – The charge the Google was unfairly preferencing its own verticals and penalizing competitors was the basis of the EU’s Google “Shopping” antitrust case involving its price comparison service. The fact it took well over a decade to complete, and companies competing against Google’s other verticals continued to complain throughout, was a major impetus for the DMA. The Commission has held regular DMA stakeholder forums aimed at finding an acceptable result balancing the interests of verticals providers and direct sellers, let alone consumers and possibly even Google itself. Regulating Google Search is likely to be a long-term employment contract in the Commission. And that’s before unrelated search complaints from the likes of Duck Duck Go and regulating the other seven Google “core platform services”.

FTC and Meta Will Square Off in April Over Social Media Monopoly Complaint

Report from Bloomberg

In Brief – US District Judge James Boasberg has scheduled the antitrust trial pitting the FTC against Meta to start on April 14, 2025. The FTC’s complaint, which was originally filed in the final weeks of the first Trump Administration, alleges that Meta’s acquisition of Instagram in 2012 and WhatsApp in 2014 were used to illegally monopolize the social media market and the deals should be unwound by forcing the platforms to be sold off. Back in 2021, Judge Boasberg sent shockwaves through the tech policy community by fully dismissing the original FTC complaint, but he gave the regulators an opportunity to improve their case and refile. They did, and the matter has proceeded relentlessly with Boasberg most recently rejecting most of Meta’s motion for summary judgement. However, in that ruling, the judge, who will oversee the bench trial, struck a skeptical tone, saying “Under the forgiving summary-judgment standard, the FTC has put forward evidence sufficient for a reasonable factfinder to rule in its favor,” but “time and technological change pose serious challenges” to the FTC’s market definition.

Context – Like in many antitrust cases, defining the market of the company in question, and then determining that company’s market share and power, is key. As the judge notes, market questions are front and center as the FTC attempts to overturn merger approvals from more than a decade ago. The FTC argues that Meta is the dominant “personal social networking” company whose top competitor is Snapchat, and that social media giants TikTok, YouTube and LinkedIn are not direct competitors. The FTC resuscitated its case following Boasberg’s initial dismissal by presenting evidence that Meta has held at least an 80% share based on their preferred market definition. Meta argues that their business is as a digital advertising platform and that they compete with all of those giant platforms for user attention and advertiser dollars. Meta’s transformation of Facebook and Instagram to have them operate more like TikTok, with its continued disruptive growth, is likely the kind of change the judge was referring to.

X Alternative BlueSky Needs to Comply with the EU’s DSA

Report from Bloomberg

In Brief – After being publicly called out by a spokesperson for the European Commission for not complying with the EU’s Digital Services Act (DSA), BlueSky, a US-based social media platform widely seen as a progressive-friendly alternative to X, said it was working with its lawyers to do so. BlueSky has experienced rapid growth since the US election, including among academics, journalists, and left-leaning politicians who were top users of Twitter in the pre-Musk years. The Commission spokesperson noted that while BlueSky likely does not have enough European users to face direct Commission enforcement of the DSA’s mandates, it does have users in Europe, and it is required to comply with various provisions of the law, including listing on its website the number of active users in Europe, and naming an official representative of the company who is based in the EU and authorized to represent the company with European officials. The spokesperson added that the Commission is reaching out to member state governments to ask if they are aware of any local corporate presence of BlueSky.

Context – The DSA, which regulates how digital platforms address illegal and objectional content, designates digital platforms with over 45 million active users in the EU as Very Large Online Platforms (VLOPs). They face stricter criteria as well as direct enforcement by the European Commission. No more deferring to regulators from a big tech company’s European HQ, such as Ireland. There are currently 25 VLOPs. The Commission has already opened full investigations of six — X, TikTok, Facebook, Instagram, AliExpress, and Temu, and is questioning Snapchat and YouTube. BlueSky’s obligations are a reminder that the DSA requires mid-size and small digital platforms with more than a few users in Europe to comply, regardless of physical presence in the EU. And with Musk’s X already having been found in violation of several DSA transparency rules, and as it continues to be investigated for content moderation practices that have been criticized by progressive commentators, EU leaders likely want to appear to apply the law equally to all social media platforms regardless of ideology.

Australia Enacts Social Media Ban for Teens Under Age 16

Report from the New York Times

In Brief – The Australian Parliament has enacted legislation setting a strict age limit of 16 for the use of social media platforms in the country. The law, which passed with bipartisan support, requires social media platforms to take reasonable steps to prevent children under 16 years of age from having an account, does not exempt teens who have parental consent, and does not include penalties for underage users who circumvent the age-gating systems. Key details, including the “reasonable steps” required of covered platforms, and the platforms that could be exempted, potentially including some direct messaging services and platforms highly curated to young users, will be established in the implementation process by the eSafety Commissioner and the Communications Minister. The law does specify that online users will not be forced to provide government identification as part of the verification process. The law’s requirements will not come into effect for at least 12 months.

Context – Over the past decade, Australian leaders have not been shy about aggressively criticizing and regulating tech platforms. Their age limit is noteworthy for setting 16 as a hard floor and not allowing parents to exempt their children, as France and the State of Florida do. As questions recently directed at the UK’s tech minister show, their limit will prompt calls in other countries. The First Amendment could create distinct differences between the US and non-US digital ecosystems. Several US states have enacted regulatory regimes aiming to “protect” teens on social media, but they are faring badly in US courts. And the US Supreme Court is scheduled to address online age verification in the context of pornography sites. A decision could impact social media age limits as well. Finally, the US judge who recently blocked Utah’s social media bill noted the lack of evidence that teens are harmed by using social media, finding more evidence of balanced and individualized effects, something the Australian Government noted and then moved forward anyhow.

FTC Launches Microsoft Antitrust Investigation with Document Demand

Report from Bloomberg

In Brief – The FTC has opened a broad antitrust investigation into Microsoft, including its software licensing and cybersecurity practices, cloud computing businesses, and AI services. The probe, which began with a detailed demand letter requesting documents from the digital behemoth, was approved by FTC Chair Lina Khan. Although Microsoft seemed to avoid the heightened scrutiny faced by other tech giants in the first years of the “Techlash”, complaints that the company was abusing its dominance in productivity software to preference its other businesses have been growing. For example, cloud services competitors, especially Google, have criticized Microsoft for software license practices that they claim make it expensive for businesses to operate Windows using a cloud infrastructure other than from Microsoft. Office chat and video conferencing competitors including Zoom and Slack have complained that Microsoft bundles services such as Teams with Microsoft Office to unfairly compete with stand-alone competitors. The new FTC inquiry also delves into Microsoft’s AI-related services and investments to a greater degree than before by a US regulator, as well as issues raised by cybersecurity and authentication competitors following the widespread Windows PC shutdown precipitated by a software update circulated by the third-party cybersecurity vendor CrowdStrike earlier this year.

Context – The regulatory mesh surrounding Microsoft is far more advanced in Europe. The European Commission recently found that Microsoft has engaged in anticompetitive conduct by bundling its Teams service into Office 365. Microsoft is a “gatekeeper” under the EU Digital Markets Act and its Windows OS and LinkedIn are regulated as “core platform services.” And the German Federal Cartel Office has authority to regulate all major Microsoft services. In the US, the full-bore Biden-era Khan/Kanter/Wu antitrust campaign is very likely to be dialed back under the new administration, although much tea leaf reading will accompany the nomination of a new Republican FTC commissioner and chair.