News insights

DeepSeek Chatbot Upends AI Investor and Policy Ecosystem

Report from the Washington Post

In Brief – DeepSeek’s AI assistant app and paper describing its technical infrastructure, which claims to have used far fewer and less advanced computer chips than the largest AI developers, undermined the core assumption of top AI investors and policymakers, that the top quality AI applications demand hugely expensive and advanced semiconductor investments. That caused major financial swings against AI chip giant Nvidia and sectors linked to data center construction and electrical generation. However, the DeepSeek models were “trained” using much larger models, including from OpenAI, and are an example of how smaller AI models built using larger models are proving capable and efficient.

Context – The top takeaway from the DeepSeek phenomenon is to remember the role of innovation and human creativity in the technology ecosystem. The prevailing techno-religious belief system in places like the SF Bay Area holds that data analytics will keep getting smarter forever. It is based on the idea that there are three supply factors that feed into data analytics. (1) Data. (2) Processing power (now called “compute”). And (3) Innovation. The foundation of the ever-upward arc of digital progress is the belief that more of each of the three leads to better analytics. And all three will grow forever. That was the view when “Big Data” was the buzzword. It’s the same in the “Neural Network” era. The current AI giants, presumed by many to own the future, dominate the data and processing power factors. But DeepSeek is a reminder, shocking to many, that the third, innovation, is historically the most unpredictable, least corporatized, and most powerful factor. DeepSeek has probably not revolutionized AI or LLMs. It’s been known for some time that small models trained on very large models can produce results close to the large ones on a small incremental investment, and DeepSeek did that better than ever. Maybe putting financial numbers on small versus large was key. Or the China factor. Or just the surprise. But AI has had examples where mercurial “innovation” allowed the very small to leapfrog over the very large. Don’t forget tiny Clearview AI jumping over the same giants.

CPSC Issues Final Order on Amazon Recall Duties for Marketplace Products in FBA

Report from AboutLawsuits

In Brief – The US Consumer Product Safety Commission (CPSC) has announced its final Decision and Order concluding its administrative litigation with Amazon and outlining the steps the company must take regarding some hazardous products sold on their marketplace. Amazon is now required to abide by recall requirements traditionally imposed on retailers in instances where recalled products are sold on its marketplace site by third-party sellers but are also handled by Amazon’s massive Fulfilment by Amazon (FBA) logistics network. The recall duties do not apply to third-party seller products sold on the Amazon marketplace but not held by FBA. However, in combination, Amazon is the “distributor” of the product, bringing retailer-like duties. The ruling applies to more than 400,000 defective items sold, including faulty carbon monoxide detectors, children’s pajamas, and hair dryers, that were sold on Amazon’s shopping site and handled by FBA. New Amazon duties include notifying purchasers and the public about the product hazards and providing refunds or replacements. The administrative action began in 2021, and Amazon has said that it will appeal the order in federal court.

Context – Amazon’s top ecommerce innovation was to reimagine the business of consumer product wholesaler. Businesses that traditionally supplied products to major retailers that were then housed and sold off the retailer’s store shelves, have become “third-party sellers” who pay Amazon to have their products housed and sold off Amazon’s FBA shelves. By 2019, their sales were 60% of the total on Amazon. Those sales are often more profitable to Amazon than traditional first-party sales because total “seller” fees often exceed 50%. And Amazon fully controls the customer experience. When its Marketplace and FBA are legally considered unrelated businesses, similar to when a product is sold on Etsy and shipped by the US Postal Service, there are big liability benefits for Amazon. But in practice, the Amazon Marketplace and FBA function as one retail enterprise. The FDA and several product liability lawsuits are also slowly pushing the ecommerce giant on this point.

Trump Blasts EU at Davos on Big Tech Fines

Report from Bloomberg

In Brief – US President Donald Trump blasted European Union regulators in his address to attendees of the World Economic Forum annual conference in Davos, Switzerland, which he delivered by video just four days after his inauguration to start his second term in the White House. In response to a question that was critical about the level and intrusiveness of European regulations, Trump raised European Commission “court cases” targeting Apple, Google, and Meta, in particular the $15 billion verdict against Apple and Ireland that accused the Irish of giving the iPhone giant unfair tax breaks and demanded that the back-taxes be paid to the national government. Apple has also been hit with a $2 billion antitrust fine for its app store policies imposed on music streaming competitors like Spotify, while Google has received nearly ten billion dollars in antitrust penalties, and Meta has been hit with billions in data policy penalties. The President wrapped up his comments on the European actions targeting the tech giants saying, “These are American companies.  Whether you like them or not, they’re — they’re American companies, and they shouldn’t be doing that.  And that’s — as far as I’m concerned, it’s a form of taxation. So, we have some very big complaints with the EU.”

Context – Trump often said in the run-up to last November’s Election Day that top tech CEOs from companies like Apple and Google were reaching out to him to complain about unfair treatment in Europe, using language very much like his Davos talk. His long running love-hate relationship Big Tech includes claims that he defended companies like Google from French Digital Services Taxes despite being treated unfairly in search results. “I have to protect American companies whether I like them or not, some I might not even like.” Now, among his slew of first day executive orders, was one pulling the US out of the global tax deal President Biden negotiated on digital taxes and threatening trade retaliation. And unlike during his first term, he enters his second with top digital giants facing new EU regulatory regimes and sidling up to him as allies.

European Consumer Group Argues Meta Ad-Free Plan Still Violates EU Laws

Report from Reuters

In Brief – BEUC, a non-profit organization that represents European consumers, has expressed to EU data protection and competition enforcement authorities that it believes Meta’s latest subscription policy violates consumer and data protection laws as well as the EU Digital Markets Act. In late 2023, Meta offered its first paid subscription versions of Facebook and Instagram. Privacy advocates and data protection regulators objected to the plan they dubbed “pay or consent.” Later, EU competition regulators ruled that the Digital Markets Act (DMA) “gatekeeper” law requires Meta to offer free versions that only employ less personalized “contextual ads”. Meta responded with a new free option that employs less-targeted ads, as well as lowering the price for their ad-free subscriptions. BEUC argues that Meta’s new offering involves misleading language, steers users to their standard targeted ad version, fails to gain free consent to process data for ads, fails to minimize the data collected, and continues to degrade the services offered to users who fail to consent to the use of their data.

Context – Meta still argues that offering consumers a paid, ad-free, option is consistent with European High Court rulings and that intentionally less effective online advertising harms small businesses with small ad budgets. Although neither the GDPR nor the DMA ban highly targeted advertising, if EU enforcers and courts interpret the laws to require the largest platforms to offer versions that are free and use far less-efficient, low-value, low-price advertising, it will reverberate throughout the digital ad ecosystem, including publishers, advertisers, and ad services providers. In the UK, the country’s data protection authority is releasing its own guidance on “consent or pay”, casting a wider net that covers publishers, including media sites, and the largest platforms, and claiming a business friendly mantle by indicating that most publishers will be allowed to offer a simple ad-free paid option while the largest platforms will likely be held to the emerging EU model requiring a free option with poorly-targeted ads. Will it be a distinction with a difference?

DST Act 3 – The Return of Trump and Threats of Tariff and Tax Retaliation

Report from the Financial Times

In Brief – President Donald Trump has effectively pulled the United States out of the global corporate tax reform agreement at the OECD negotiated by the Biden Administration in 2021 and backed by 140 countries. That deal tried to address two long-running progressive tax policy concerns – a way to increase taxes paid by digital giants who often operate across national borders, and frustration with low-tax “havens”. During the first Trump Administration, France led the way to increase taxes on digital giants, enacting a “Digital Services Tax” (DST) on the biggest internet companies, which were nearly all US-based. Other countries followed suit. President Trump responded with tariff threats, the DSTs were delayed, and talks moved to the OECD. The Biden Administration changed tack, adding the tax haven issue to the mix as their top priority. This led to a two-part deal. To eliminate tax havens, countries agreed to set a minimum corporate tax of 15 percent. The DST section was expanded to cover other highly profitable consumer-facing companies like pharmaceuticals. The new Memorandum on the OECD Global Tax Deal calls on the Treasury Secretary and USTR to propose ways to retaliate against governments that impose taxes that violate existing tax treaties, which likely includes DST regimes. A separate Memorandum on Trade Policy instructs officials to look for “discriminatory or extraterritorial” taxes on US citizens or companies in the context of US Section 891 that allows the US to double the tax bills of foreign companies or individuals whose governments impose higher taxes on Americans.

Context – The US Congress never made changes to conform to either part of the OECD deal due to opposition from Republicans and many parts of the US business community, who expect higher taxes on overseas earnings. Also, with the US not joining on, more than a dozen countries have started collecting their national DST taxes from large, mostly American, digital companies. President Trump took a very aggressive stance with the Europeans on DST taxes in 2020 at a time when his relationships with the tech giants seemed very strained. Those relationships appear much stronger now.

Meta Wins Temporary Relief in India from WhatsApp Data Sharing Ban

Report from Reuters

In Brief – A two-judge panel of the Indian National Company Law Appellate Tribunal (NCLAT) has temporarily halted the Competition Commission of India (CCI) order prohibiting WhatsApp from sharing user data with other services of its parent company, Meta. The judges ruled that the ban could cripple the WhatsApp business and that the CCI order should be stayed while it was appealed. The NCLAT also stayed the CCI’s penalty of 2.13 billion rupees (around $25.25 million), although WhatsApp was required to deposit 50 percent of the amount. The CCI ruled in November that WhatsApp and Meta violated the 2002 Competition Act by “abusing its dominant position” when the messaging app’s privacy policy was changed in 2021 to require users to accept that their data could be shared with other companies and services within Meta and imposed a five-year prohibition on WhatsApp sharing its user data with other Meta companies for advertising purposes. Data sharing for purposes other than advertising requires a detailed explanation in the user agreement and must be needed to provide the WhatsApp service itself. As part of their appeal of the order, Meta claimed that prohibiting data sharing between WhatsApp and other platforms such as Facebook and Instagram in India would reduce business opportunities for Indian small businesses using those platforms to connect with customers.

Context – India is Meta’s biggest market when measured by users, with 500 million people using WhatsApp and more than 350 million Facebook users. The CCI’s effort to use antitrust law to block data sharing between WhatsApp and other Meta services is similar to the successful effort of the German Federal Cartel Office (FCO) to police Meta data policies and prohibit combining the data of individual users across its different services without their freely given consent. The German antitrust agency announced new Meta data protocols last October that give German users “much greater control over how their data are combined.” Meta did not say if the new policies would be expanded to other markets.

EU and German Regulators Testing How Platforms Will Handle Elections

Report from Bloomberg

In Brief – The European Commission and German Government are planning to perform a “stress test” on the major digital platforms on January 31 to determine their processes regarding the upcoming German elections. Meta, Microsoft, Google, Snap, TikTok, and X have been invited to a meeting hosted by the German Digital Services Coordinator where Commission officials will quiz them on how they will deal with conduct involving the February 23rd election, including AI fakes, cyber-attacks or disinformation campaigns. The stress test is being performed as part of the platforms’ compliance with the EU’s Digital Services Act (DSA), which requires large platforms to combat harmful and illegal content. The Commission hosted a roundtable last June in the run-up to the EU parliamentary elections, as well as last November after the first round of the Romanian Presidential elections.

Context – Regardless of the official communiques, the increasingly massive public profile of Elon Musk on political matters, and the alleged role of social media, especially TikTok, on the now paused Romanian presidential election, are hanging over this regulatory intervention. And Musk comes hand-in-hand with the perspective of President Trump who seems to hold government-directed online “censorship” of conservative viewpoints as first among his digital policy concerns. It’s not possible to overlook that Musk’s high-profile intervention in the German elections, including praising the AfD and hosting a one-on-one interview with its leader, his criticism of leaders like UK PM Keir Starmer, his huge backing of candidate Donald Trump, or the shock win in the first Romanian election round by insurgent ultranationalist candidate Călin Georgescu quickly attributed by the Romanian Government to Russia-sponsored interference on TikTok, are all populist challenges to the traditional order. Both X and TikTok are already being investigated under the DSA by the Commission challenging whether their recommendation algorithms are properly balanced and protected from alleged disinformation or partisan interference.

Singapore Imposes App User Age Verification Duties on Large App Stores

Report from Channel News Asia

In Brief – Singapore’s Infocomm Media Development Authority (IMDA), the country’s digital and media regulator, has announced that app stores will soon be required to protect children from inappropriate apps through age verification measures. The new rules under the Code of Practice for Online Safety for App Distribution Services will take effect on March 31. Designated app stores, those with significant reach or impact, including the Apple App Store, Google Play Store, Huawei App Gallery, Microsoft Store, and Samsung Galaxy Store, will have to implement “system-level measures” to curtail the risk of exposure to harmful content for users, especially children. Under the code, categories of harmful conduct include sexual content, violent content, cyberbullying, promoting suicide and self-harm, and endangering public health. The IMDA’s fact sheet notes that governments worldwide, including Australia, the European Union, the UK, and the US, are introducing measures to ensure online services are age-appropriate for children and teens. The new Singaporean regime allows the app store providers to use systems for “age estimation” to determine the likely age of a user, such as through machine learning or facial age analysis, “age verification” that uses sources of identification such as a digital ID or credit card, or a combination of techniques. If a covered app store platform claims that it is unable to meet the March 31 deadline, they must reach agreement with the IMDA on an acceptable compliance plan and timeline, starting with blocking young people from apps for users 18 and above.

Context – As the IMDA noted, online age verification mandates look primed to spread. Australia’s legislation requiring social media platforms to set and enforce a minimum age of 16 made global news and many countries, including in Asia, are looking at versions of age floors, especially for online pornography and social media. Meta has been especially vocal arguing that the app stores, especially those linked to top device manufacturers, are best situated to enforce age verification.

Billionaires and Others Eyeing Potential TikTok Purchase Overseen by Trump

Report from Bloomberg

In Brief – Following President Trump’s issuance of an executive order extending by 75 days the deadline for ByteDance to divest ownership of TikTok’s US operations or see the service shut down, a growing array of business leaders, investors, and even social media celebrities, are expressing interest in purchasing the business. Names floated include Oracle’s billionaire CEO and principal owner Larry Ellison, who is a friend of the President, billionaire Frank McCourt leading a group that includes “Shark Tank” investor Kevin O’Leary, and one organized by Jesse Tinsley, a tech entrepreneur, leading a group that includes YouTube content creator Jimmy Donaldson (aka MrBeast). President Trump, who has promised to “save” TikTok, said at an event announcing a huge AI investment that included the Oracle CEO, that he was willing to allow Ellison or Elon Musk to buy the platform if the US was given half the company.

Context – There is no clarity regarding the unprecedented TikTok matter. When the Supreme Court soundly rejected the First Amendment-based legal challenges of the company and a group of content creators, the law went into effect January 19th. While the legislation gave the President the authority to extend for 90 days the provisions prohibiting companies, including those with app stores like Apple and Google, from hosting TikTok services, it required the President to certify that the time was needed to wrap up a qualified deal to divest the company. Conservative Republican “China Hawks” such as Sen. Tom Cotton (R-AR) and the Wall Street Journal Editorial Board were harshly critical of President Trump’s 75-day extension order that they argue is outside the law. How the US might “own” half the company is also unclear, as engaging in its content moderation might then violate the First Amendment. As is whether Trump means ByteDance would own half and the US would own half, or its all US-owned. Finally, while there were reports that the Chinese Government might be willing to allow Elon Musk to buy the service, it’s not clear he made an offer, or if it was Chinese Government trolling to rile up Musk-inspired partisan divisions.

UK Government Replaces Antitrust Chief with Former Amazon Executive

Report from the BBC

In Brief – UK Prime Minister Keir Starmer’s Government has forced out Marcus Bokkerink as the chair of its antitrust regulator for failing to prioritize the government’s economic growth agenda. Chancellor of the Exchequer Rachel Reeves said she needed someone leading the Competition and Markets Authority (CMA) who was aligned with her “strategic direction”. Reeves called for plans from all regulatory agencies to “tear down” red tape, saying “I want to see this mission woven into the very fabric of our regulators through a cultural shift from excessively focusing on risk to helping drive growth.” That followed Starmer’s comments to a gathering of investors last year that, “We will make sure that every regulator in this country – especially our economic and competition regulators – takes growth as seriously as this room does.” A team from the CMA led by CEO Sarah Cardell met with the Reeves last week to present ideas on how to stimulate growth and clearly, they fell short. Bokkerink, who served as Chairman of the CMA Board since September 2022, will be replaced as the CMA’s interim chair by Doug Gurr, a former Amazon executive who led the company’s UK business.

Context – Presenting the UK as a more reasonable regulator than the EU, and therefore an appealing market for business investment, was a theme of the pro-Brexit Conservative Governments. But their tech policies were schizophrenic. The UK DMCC parallels the EU’s DMA, the Online Safety Act is the UK take on the EU DSA, and the CMA was actively scrutinizing AI and Big Tech companies along with EU and US regulators. The Labor Party backed those laws. But AI is now a top government priority for tech investment, and the PM recently said that his government will offer investors “stability, pragmatism and the good sense they would expect from democratic British values.” Canning the Chair of the CMA sends a strong signal. But there is so much more to digital regulation than just AI. Plus, Trump seems intent on pushing the tech regulation climate so much farther in the investor direction than Biden ever considered that it will be harder to appear comparatively friendly.

President Trump Fully Revokes President Biden’s Executive Order on AI

Report from Bloomberg

In Brief – President Donald Trump revoked President Biden’s Executive Order on Artificial Intelligence as one of the 78 Biden Administration executive orders and memorandums included in his Inauguration Day Executive Order fully rescinding “Harmful Executive Orders and Actions” undertaken from January 21, 2021, to January 16, 2025. Biden’s major AI order was issued in October 2023, nearly a year after the release of chatbot phenom Chat-GPT that led to a dramatic increase in public and government discussion of AI risks and regulation, and was his Administration’s effort to use federal regulatory and contracting authority to promote AI safety and transparency practices as the EU was enacting its formal AI Act regulatory regime and it was increasingly clear that the US Congress was not likely to enact federal regulation of the wide-ranging but nascent technology. Some of the mandates, including a requirement that the largest AI developers share safety test results and other critical information on their most powerful AI systems with the federal government, faced opposition from some AI promoters and investors, and President Trump said he would repeal Biden’s executive order if he was elected. Trump has appointed David Sacks, a longtime critic of tech regulation, as his crypto-AI czar.

Context – The top initial AI priority of the Trump Administration will be promoting investment, including in data centers and related electrical generating capacity. In his final week in office, President Biden issued an executive order supporting the creation of AI data centers and generating capacity on federal lands. That order was not revoked by President Trump, who indicated he liked the idea. On his second day in office, Trump joined the CEOs of OpenAI, SoftBank and Oracle to announce a major AI datacenter building project dubbed “Stargate” and billed as $500 billion over five years, with $100 billion available now. Elon Musk, a now-strident OpenAI critic who is heavily involved in AI development, said after the announcement that most of the project’s money was not in hand.

Digital Giants Agree to Updated EU Hate Speech Code of Conduct

Report from The Verge

In Brief – The European Commission announced that the Code of Conduct on Countering Illegal Hate Speech Online + has been formally integrated into the Digital Services Act (DSA). The updated code builds upon the initial EU Code of Conduct created in 2016. The latest version establishes commitments regarding platform terms and conditions, agreement to work with third-party ‘Monitoring Reporters’, which are not-for-profit or public entities with expertise on illegal hate speech that may include entities designated as DSA ‘Trusted Flaggers’, the review time for notices of hate speech violations, transparency of content moderation actions, multi-stakeholder cooperation, and awareness-raising. The Code has 12 signatories, including seven platforms designated as Very Large Online Platforms (VLOPS) under the DSA: Facebook, Instagram, LinkedIn, Snapchat, TikTok, X, and YouTube.

Context – Codes of conduct play a formal role in the DSA process. Although they do not replace the requirements of the law, and legal compliance is determined by the European Commission, the regulator does recognize that abiding by a code is a way to foster best practices to address requirements and adherence with an agreed upon code is an indicator of DSA compliance. Along with the latest iteration of the illegal hate speech code, other planned codes include the Code of Practice on Disinformation involving fact-checking, which is expected to soon be integrated into the DSA as well, and expected codes of conduct on online advertising and accessibility. Twitter was a member of the Code of Practice on Disinformation but withdrew following its acquisition by Elon Musk and its shift in content moderation through its Community Notes system.  Google is reported to have recently notified the Commission that it would not be adopting fact checking in its search service or on YouTube, which may require it to withdraw from the that code as well. And, of course, Meta is ending fact checking and adopted a version of community notes in the US with plans to spread the policy elsewhere.

European Commission Reviewing Ongoing Big Tech Investigations (or Not)

Report from the Financial Times

In Brief – The European Commission is reported to be undertaking an internal review of all the investigations of major US tech companies begun during the past year, including under the Digital Markets Act (DMA) regulating the largest digital “gatekeepers” and the Digital Services Act (DSA) regulating how digital platforms deal with objectionable and illegal content. According to sources within the commission, all decisions and potential fines will be paused while the review is underway, but technical work on the cases will continue. The review comes at a time when a new roster of commissioners takes over as President Ursula von der Leyen enters her second term, but also as President Trump begins his second term with what appears to be far closer relationships with many of the largest US digital companies than he had during his first term, as well as his long-time tendency to take an adversarial role with the European Union when he believes that US interests or US companies are being disadvantaged. The official reaction of the Commission to the reports was to deny that any such review was taking place and investigations were all continuing apace, including comments from Commissioner Teresa Ribera of Spain, the new head of competition policy, saying at a public event that there had been “no freezing” and “no reassessments” of the cases being pursued under the Digital Markets Act.

Context – Apple, Meta, and Google were the first three digital giants facing investigations under the DMA while X and Meta are under investigation for not complying with the DSA (as are China-affiliated TikTok and AliExpress), with the relationship with X being particularly fraught. Meta’s announcements aligning with X, Elon Musk and the new Trump Administration on content moderation, including Mark Zuckerberg comments like “the US government has a role in basically defending [the US tech industry] abroad” are clearly aimed to engage the President in a standoff with the EU. And the President has talked repeatedly about the tech leaders asking him to help deal with Europe.

EU Commission Expands X Investigation to Include Recommender Systems

Report from Euronews

In Brief – As expected, the European Commission has announced the expansion of its ongoing investigation of X under the Digital Services Act (DSA) to include reviewing the operations of its recommender systems, including the algorithms that determine the content that users will see. The move follows Elon Musk, X’s principal owner, engaging in a series of high-profile interventions in political debates in numerous countries, generally criticizing progressive government officials and backing populist conservatives. In Germany, Musk hosted a lengthy one-on-one interview on X with Alice Weidel, the leader of the Alternative for Germany (AfD), a political party that has long been accused of neo-Nazi views by opponents on the political left, but also by many traditional, mainstream conservatives. This followed highly critical comments calling on UK Prime Minister Keir Starmer to resign based on allegedly failing to effectively address so-called “child grooming rings” in the UK a decade ago. As European leaders called for Musk to face sanctions for what they called election interference, a European Commission spokesperson said that the DSA protects free expression but also requires digital platforms to restrict the spread of objectionable and illegal content, and that the EU executive would be looking into how X might be improperly boosting or recommending election content, as part of its ongoing investigation of X.

Context – The DSA is intended to press platforms to stop the circulation of illegal and objectionable content online. Its backers have consistently argued that it protects free expression and claim that government judging how platforms accelerate or decelerate the circulation of content is different. Critics disagree. Now, trying to make the case that regulating how X promotes Musk’s own posts is not actually regulating Musk’s posts will be quite a stretch. And other US tech leaders under scrutiny in Europe will likely back President Trump taking a hard line on his top concern – online censorship. Of course, the Commission will argue it’s not just X algorithms, they are investigating TikTok, its algorithms, and the now aborted elections in Romania.

Supreme Court Upholds TikTok Law

Report from Platform Economy Insights

In Brief – The US Supreme Court decisively ruled against the First Amendment challenges of TikTok and a group of content creators against the federal law that requires the business to be sold by China-based ByteDance to a new owner not based in an “adversarial country”. The 27-page decision, available here, was per curium, meaning the justices did not release any vote or the opinion’s author.

The court determined that First Amendment “intermediate scrutiny” was the appropriate level of review, and found that the law comprehensively met that standard. “As applied to petitioners, the Act satisfies intermediate scrutiny. The challenged provisions further an important Government interest unrelated to the suppression of free expression and do not burden substantially more speech than necessary to further that interest.”

The justices, who described their ruling as “narrowly focused” due to the “expedited time allowed” for their review, paid particular attention to the massive data collection by TikTok due to the number of users and type of data collected, the congressional concern with the security implications of that data in light of the linkages between ByteDance, its TikTok business, and the “adversarial” government of China, and the fact that the law requires divestiture, not shutting down of the platform.

It has been reported that TikTok planned to shut down the service on Sunday if they lost in the Supreme Court, that the outgoing Biden Administration would not take action implementing or delaying the law and leave it to the new administration, and that the President-elect Trump will attempt to “to save” TikTok.

Supreme Court Justices Sound Amenable to Age Checks for Online Porn

Report from the New York Times

In Brief – Several members of the Supreme Court’s conservative majority appear willing to overturn a 2004 decision that prohibited requiring online pornography sites to use age verification techniques to keep underage users off their sites. The case involves a Texas law that requires commercial websites adjudged to be “more than one-third of which is sexual material harmful to minors” to use age verification. It was upheld by the Fifth Circuit Court of Appeals in a direct rejection of the High Court’s decision in Ashcroft v. ACLU and the plaintiffs largely replayed the free speech and privacy arguments that had prevailed 20 years ago, including that complying with age checks was an undue burden on adults with the right to view sexually explicit material, that they were justified in fearing giving out personal information on such sensitive activity, and that parents could protect their children by using content-filtering software. The State of Texas argued that age checking technology was vastly improved, content-filtering tools had proven a failure, and online pornography had vastly expanded and was harming young people. Justices appeared to agree the online ecosystem had changed. Chief Justice Roberts said, “Technological access to pornography, obviously, has exploded,” and “the nature of pornography, I think, has also changed.” The Fifth Circuit’s decision employed a far more relaxed legal standard than the “strict scrutiny” test the High Court has employed. Justices asked if they could rule in a manner that backed the strict scrutiny standard and still kept the Texas law in place because they believed the law met that test.

Context – The impact of this case will go beyond age verification for online pornography. State laws regulating social media use by teens operationally require age verification. This decision may impact the legal standard for them, as well as provide a snapshot into how the justices are thinking about how “the internet” is changing things. The TikTok ruling too. Finally, I’m reminded of how the FOSTA-SESTA law weakened Sec. 230 to combat “sex trafficking” and some forecast a general weakening of Sec. 230. But that has not really come to pass yet.

OpenAI Removes Political Bias Landmine from AI Policy Document

Report from TechCrunch

In Brief – OpenAI quietly edited its “Economic Blueprint” soon after release to remove language in the section on “the proper rules” for AI that called for AI models to be “politically unbiased by default”. The report is part of a public policy campaign to stress the benefits of investment in AI and the infrastructure that will power AI development, including datacenters and the electrical generating capacity that will power them. The chatbot phenom has a reputation for being pro-regulation and its government relations team has always been led by Democrats. Allegations that its chatbots were biased in favor of progressive viewpoints have plagued the San Francisco-based company from the first months it operated publicly. President-elect Trump’s crypto and AI “czar” David Sacks has singled out ChatGPT as “programmed to be woke” and untruthful about politically sensitive subjects.

Context – One big divide in AI policy has been between trying to address so-called existential risks, essentially that some super-powerful AI system will go rogue someday and destroy humanity, and more tangible near-term problems, such as AI systems fostering discrimination because the training data or algorithms are biased, or being used to further hatred, misinformation, or political division. In lieu of any AI-specific regulations policing the present-days “risks” like hateful content and discrimination, many companies building AI tools have put in “guardrails” that essentially police the tools by tailoring or blocking outputs on sensitive topics. It’s not just OpenAI. Google has been heavily criticized, especially from conservative commentators, because its generative AI services appeared to be trained and governed by guardrails that skewed left. This all parallels experiences of social media companies trying to deal with objectionable content, including repeated charges that the company efforts are ideologically biased. OpenAI’s quick retreat from discussing the inherently partisan topic of “political bias” can be chalked up with Meta’s momentous decision to change content moderation.

TikTok Reported to be Planning Full Shutdown on Sunday Absent Reprieve

Report from Reuters

In Brief – TikTok is reported to be planning to shutdown their US app on Sunday, January 19th if the US Supreme Court or Biden Administration does not issue an order delaying the effective date of the federal law requiring the company’s US operations be sold to an owner not based in an “adversarial country”. The law does not require that TikTok cease operations on the 19th. It prohibits US service providers such as app store operators from supporting the application, so that new downloads and updates would be blocked. But TikTok could argue that cutting off various support services means the app must be stopped. Anonymous sources said that TikTok would show users opening the app a pop-up message directing them to a website with information about the ban, as well as give users the option to download data related to their use of the service.

Context – The Supreme Court heard oral arguments on January 10 in the First Amendment-based legal challenges filed by TikTok and a group of creators. A US Court of Appeals panel had ruled that the law met the “strict scrutiny” legal test based on national security justifications. The expedited consideration given by the Supreme Court reflects the unprecedented US move to force a foreign-based company to sell a massive online communications service. The justices quizzed both sides and most media reports have speculated that TikTok would come out on the losing end. One question was whether the app would shut down as of the 19th, with the government saying not necessarily but TikTok’s lawyer saying it likely would. Leaking shutdown plans sends a message to the court on that one! In addition, news of potential user “grassroots” will remind DC people of the company’s grassroots lobbying of Congress last spring. It generated a lot of user anger but also seemed to energize opposition on Capitol Hill. TikTok faces very hard tactical choices weighing how their actions, possibly seen as pressure tactics by the High Court or the incoming Trump Administration, will play. And are reports of “senior Chinese officials” considering Elon Musk as an acceptable buyer just China trolling the US and EU governments?

UK CMA Open Probe of Google Search Under New Competition Law

Report from CNBC

In Brief – The UK Competition and Markets Authority (CMA) has opened an investigation of Google under the Digital Markets, Competition and Consumer’s Act (DMCC) to determine if the digital giant has “strategic market status” (SMS) under the new law designed to protect competition in digital markets. The regulator is focused on Google search, which reportedly holds a 90% market share in the UK. Designating a company as an SMS allows the CMA to develop and enforce new rules against anticompetitive conduct. The CMA’s chief executive said the goal was to ensure a “level playing field” in search and cited the interests of users, rival search engines, advertisers, and news organizations. Google issued a response that noted “the need to align regulatory decisions with the Government’s growth mission” and argued against “overly prescriptive digital competition rules”.

Context – Of course, Google will have SMS per the DMCC. All five US-based digital giants determined to be “gatekeepers” by the EU’s Digital Markets Act (DMA) will. The main questions are how long it will take, and more importantly, what are the company-specific rules that will be instituted. For example, the DMA now imposes 18 high-level mandates on 24 platforms of seven gatekeepers. The DMCC creates a company-by-company regulatory process to set the rules. That process is now part of a plodding effort by the UK to chart some manner of middle path between the EU and US on digital regulation. The DMCC parallels the DMA, and the Online Safety Act the EU’s Digital Services Act. And there are big antitrust enforcement actions in all three jurisdictions. AI is another matter with the EU charting the regulatorily path. Prime Minister Keir Starmer recently announced initiatives to push for AI investments and a pro-growth innovation climate in the UK, saying regulation will “be proportionate and grounded in the science” and investors will get “stability, pragmatism and the good sense they would expect from democratic British values.” Hence Google’s reference the Government’s growth mission.

Zuckerberg Wants Trump to Protect US Tech Giants from EU Regulators

Report from Euractiv

In Brief – In a major one-on-one interview with leading podcaster Joe Rogan, Meta CEO Mark Zuckerberg framed the company’s public policy battles in Europe in the context of “censorship” and argued that incoming President Donald Trump should step in to protect American tech companies from foreign pressure. The discussion with Rogan followed announcements from Meta and Zuckerberg that the social media giant was changing its Facebook and Instagram content moderation processes, including eliminating the role of paid fact-checkers and replacing them with a community notes program like X has used since Elon Musk acquired that platform, and changing its speech codes and the automated filters to relax limits on language and commentary some call hate speech. The changes will be rolled out in the US first but are intended for other major markets as well, including in Europe. Zuckerberg said he expects a clash with EU officials and argued that “the US government has a role in basically defending [the US tech industry] abroad”.

Context – Meta’s big “rightward” shift in content moderation practices is best understood in the context of competition policy and digital platform regulation. President-elect Trump, but really US conservatives across the board, have believed for years that tech giants, especially in social media, have slanted the rules against them. Ending so-called “viewpoint censorship” is a universally accepted conservative tech policy priority. On the other hand, there is no conservative consensus on anti-Big Tech competition reforms and regulation. The EU moved ahead on all fronts with laws and enforcement actions applauded by most US progressives. On content moderation, X and Musk are clearly in the EU crosshairs in a way that may pull in Trump. Meta seems intent to join that fray with policies and rhetoric similar to X and Musk. Zuckerberg appears to hope that standing with Trump on “free speech” pulls him onto their side in their other standoffs with European regulators. And the President-elect has said repeatedly that other Big Tech leaders are also asking for nationalist help dealing with Europe.

UK PM Keir Starmer Continues to Pitch AI Investment as a Top Tech Priority

Report from CNBC

In Brief – UK Prime Minister Kein Starmer continued to press forward on initiatives he argues will make the UK “the best state partner” in the world for “anyone working at the AI frontier”, releasing an AI Opportunities Action Plan focused on building up computing power in Great Britain. Developed under British tech investor Matt Clifford, the plan aims to increase public sector “compute” capacity by twentyfold by 2030, including opening access to the AI Research Resource, setting up several AI “growth zones” with relaxed development regulations to speed building data centers, and forming an “AI Energy Council” with industry leaders from both energy and AI. In a Financial Times opinion piece, Starmer argues that AI technology is already helping improve lives and productivity in the UK, that AI advances are at the center of his government’s plans for the country, and that they will take a “distinctively British approach” to AI regulation that “will test AI long before we regulate” and will offer investors “stability, pragmatism and the good sense they would expect from democratic British values.”

Context – The biggest global question in AI public policy is whether governments are moving toward direct regulation or “soft law” governance such as “best practices” and “safe AI” recommendations. The EU’s AI Act is the standard for concrete regulation. And other EU regulators are stepping up action on AI. Japan, on the other hand, has been a leader of the soft law model, including through the G-7’s “Hiroshima AI Process” with principles and a code of conduct. The last US Congress did not legislate, and President Biden issued a major AI Executive Order that mostly set AI policies for the federal government but also aimed to push companies on safety. Donald Trump campaigned to repeal Biden’s order for over-regulation and the new administration is expected to push harder on AI development and regulatory restraint. In that context, a middle ground between the EU and US, such as that being described by PM Starmer, may be technically possible, but it’s not clear that it is something AI investors and developers are looking for.

Federal Judge Rejects Blocking Some Aspects of California’s Social Media Law

Report from Courthouse News Service

In Brief – US District Judge Edward Davila responded to a motion to enjoin California’s Protecting Our Kids from Social Media Addiction Act by blocking some provisions, rejecting the motion to block some sections, and granting an injunction pending appeal of the entire statute until February 1, 2025, to allow the US Ninth Circuit Court of Appeals to consider an appeal. The law, challenged by NetChoice, a trade group representing several large social media companies that has successfully challenged a large number of state laws imposing restrictions and regulations on social media companies, bans online platforms from using personalized recommendation algorithms to display content to people under age 18, set limits on when minors are allowed to use social media, and restrict the hours when social media companies can send minors notifications, unless parents consent for the platforms to do otherwise. Judge Davila’s order did enjoin the law’s requirement that platforms report the number of minor users; however the state could start enforcing the portions of the law concerning algorithmic feeds, rejecting the argument that algorithms governing the operations of social media platform are themselves expressive content.

Context – Several states have enacted laws aimed at regulating social media platforms based on allegations that social media is addictive and harmful to teens. Those state laws have been paused by federal courts based on a range of 1st Amendment and privacy arguments. The same allegations are also powering lawsuits against large social media companies in federal and California courts. The lawsuits have been having more luck than the new laws, at least until Davila’s ruling. Although the lack of solid evidence of a causal link between teen social media use and negative mental health remains an important issue, in this case what is most noteworthy is Davila’s interesting application of the Supreme Court’s recent ruling in Moody v NetChoice. A majority on the High Court said that social media content sorting algorithms are clearly expressive content, which Davila used to argue that other social media algorithms and practices are likely not similarly protected.

Meta Trials eBay Listings in Facebook Marketplace to Address EU Concerns

Report from the Wall Street Journal

In Brief – Meta and eBay have each announced that the social media giant would run a test in Germany, France, and the US enabling people to browse listings from eBay on Facebook Marketplace and complete transactions on eBay. The move comes following a recent decision of the European Commission to fine Meta 800 million euros for unfairly bundling its classified ads-type Marketplace service into Facebook’s huge social network and abusing its dominance in online advertising to impose unfair business terms on rival shopping platforms. Meta launched the Facebook Marketplace in 2016 and quickly integrated it into its massively used core social media platform. Their Marketplace has since grown into one of the top classifieds ads platforms in many markets, including in Europe. The Commission claimed that tying the Marketplace to Facebook gave the service an unfair advantage over classifieds and consumer-to-consumer shopping competitors, and that Facebook imposed unfair terms and conditions on those competing businesses when they advertised on Facebook, often requiring them to share user data that was then used to benefit Meta’s Marketplace. In announcing the trial involving eBay listings, Meta noted that it continued to object to the Commission’s decision and would continue with their appeal, while adding that their new practice could benefit users on both platforms as eBay sellers will have more exposure to Facebook users and those on Marketplace will see more listings from eBay.

Context – Competition regulators for the European Union and UK initiated parallel investigations of Meta’s Marketplace in 2021. Meta reached a settlement with British competition regulators in 2023 in a parallel case by agreeing to allow classifieds and shopping services that advertise on Meta’s social media platforms to opt out of data sharing that could be used to benefit Meta’s Marketplace. EU regulators turned down a similar offer. In the EU, the Digital Markets Act also now regulates Meta as a “gatekeeper” company and its Marketplace as a “core platform service”.

Supreme Court Hears Arguments Over Law Requiring ByteDance to Sell TikTok

Report from Platform Economy Insights

In Brief – The US Supreme Court heard oral arguments earlier today on the constitutional challenges filed by TikTok and a group of content creators against the federal law that requires the business to be sold by China-based ByteDance to a new owner not based in an “adversarial country”. The justices allowed arguments to go more than two-and-a-half hours. You can listen here. The collection of briefs is available here. And reporter teams from the Washington Post and New York Times gave running commentary.

As we’ve been saying for months, this is a really tough case. There has never been a communications platform like TikTok that is allegedly controlled by a near-peer adversarial foreign power, that has such massive reach in the United States, and that has the content manipulation and data collection capabilities inherent in modern social media platforms. The federal law in question was crafted to force the platform to be sold to an owner not based in an adversarial country, meaning China, Russia, Iran, and North Korea. TikTok argues that a sale can’t happen and the law is a de facto ban. As we’ve noted, Supreme Court precedents related to adversarial propaganda, such as from the Cold War regarding communist content, point to the law having big First Amendment problems. However, the federal courts have been historically wary of challenging the two elected branches on national security.

The arguments were everything that should have been expected. The justices are very sharp legal minds that tend to give both sides a tough time. That was the case today. Depending on when you listened in, you could think the side being questioned was up against it. Early on, the justices kept pressing the plaintiffs on whether the law was about ByteDance, which is a foreign company without First Amendment rights, and platform ownership rather than speech. Later, Solicitor General Prelogar was pressed time after time on the law being a transparent effort to block speech the US Government did not like, the biggest First Amendment no no. If I were speculating about individual justices, I think Justice Gorsuch is the one who tipped his hand most, and that would be against the law’s constitutionality. Maybe Sotomayor on that side as well.

Prediction – Besides reminding everyone that making a prediction of a Supreme Court decision based on oral arguments is a bad idea, I recall political prognosticator Nate Silver saying the week before last November’s election to not trust anybody’s gut feeling, including his, and that his gut feeling was that Trump would win. I have the same view regarding gut feelings in a Supreme Court case like this, especially my gut. And my gut feeling following the arguments is that TikTok will get a let-off of some type and the law will not go into effect on January 19. Mostly, I fall back on this court’s track record of avoiding big digital policy decisions when there is a way out legally or procedurally, and an administrative delay past the 19th is likely to offer that kind of out. But I could be wrong.

Mexico Enacts Gig Worker Legislation Classifying Top Earners as Employees

Report from Mexico News Daily

In Brief – Mexico has enacted “Gig Worker” legislation that aims to provide hundreds of thousands of platform-enabled workers with traditional employment benefits and protections. The new law, which goes into effect in June, establishes that gig workers earning at least the national minimum monthly salary (currently the equivalent of approximately US $450) on a digital platform will be categorized as an employee of that platform and be due employee rights and benefits, including the right to join a union. Work and pay on platforms will continue to be task-based, with pay for a task including the proportional contributions for benefits such as weekly rest day, vacation, and overtime, rather than additional amounts being added afterward. Those who work on digital platforms but do not reach the monthly minimum wage threshold on any single one will continue to be classified as independent contractors. A digital platform will be required to register their platform employees with the Mexican Social Security Institute and withhold and pay the employee and employer contributions, including to the Mexican Workers Housing Fund Institute. Platforms will also be responsible for payment of the insurance under the social security system for any labor accident that occurs while a task was being done, both for employee workers and independent contractors. It is reported that about 658,000 people work on digital platforms in Mexico, of including 272,000 estimated to reach the minimum monthly wage.

Context – Although the EU’s Platform Labor Directive was initially intended to set uniform Gig worker employee classification standards, the final version left that in the hands of each member state, with some, including Spain and Portugal, going further than others. The Biden Administration was engaged in regulatory action at the US Department of Labor and the FTC intended to energize progressive labor advocates, but the incoming Trump Administration is expected to halt those efforts and be more amenable to independent contractor-based business models.

Polish Comparison-Shopping Site Sues Google for Years of Damages

Report from Reuters

In Brief – Google has been sued by Ceneo, a Poland-based comparison-shopping unit of European ecommerce platform Allegro, seeking 2.33 billion zlotys (about $568 million) for damages suffered at the hands of the digital giant from 2013 through 2024. The civil lawsuit filed in the District Court in Warsaw builds on the determination of the European Commission that Google favored its own comparison-shopping service, Google Shopping, in Google search results, disadvantaging comparison-shopping competitors. In September, the EU’s top court upheld the €2.42B fine imposed on Google by the Commission for this anti-competitive conduct. Ceneo’s claims consist of 1.72 billion zlotys for losses sustained by the company from 2013 through 2024, as well as interest payments of around 615 million zlotys related to the unpaid compensation during those years. Google issued a statement in response to the lawsuit saying, “Our Shopping remedy has been working successfully for several years and we continue to invest in formats that support brands, retailers and comparison shopping sites of all sizes across Poland and Europe.”

Context – The charge the Google was unfairly preferencing its own specialized “vertical” search services for products and services such as airfares, lodging, local services, and jobs, and penalizing vertical search competitors in Google’s general search engine, 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 the case, and companies competing against Google’s verticals continued to complain throughout, was a major impetus for the Digital Markets Act regulating dominant digital “gatekeepers”. 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, let alone regulating the other seven Google “core platform services” as well.

Amazon Must Face Price-Parity Antitrust Lawsuit from Zulily

Report from Bloomberg

In Brief – US District Judge John Chun, who is overseeing a collection of federal antitrust cases targeting Amazon’s marketplace practices, has rejected the company’s bid to have a lawsuit from now-defunct online apparel marketplace Zulily fully dismissed. Chun’s order allows Zulily to proceed with the claim that Amazon’s “anti-discounting” practices that penalized third-party retailers who offered lower prices on other platforms violated federal antitrust law. Chun did dismiss Zulily’s complaints alleging that third-party retailers using the Amazon platform were engaged in a price-fixing conspiracy and that Amazon violated a Washington state consumer protection law. Zulily contends that Amazon used its marketplace algorithms to push third-party sellers to use its high-priced Fulfilment by Amazon (FBA) logistics services, pushing up the sellers’ prices on Amazon to account for the FBA fees, while simultaneously engaging in “anti-discounting” practices that scanned the internet for offerings on competitor platforms and penalized sellers who set lower prices on other platforms. Zulily argues that few sellers were willing to make lower price offers on lower-fee Zulily for fear of losing access to sales on Amazon. Chun said that Amazon’s arguments that its price-parity policies were pro-competitive need to be argued at the trial.

Context – Third-party sellers account for 60% of the sales on Amazon. These sales mostly involve products that are housed in and handled by Amazon in their FBA network. The sellers are not “beating” Amazon so much as supplying Amazon the way wholesalers do in traditional retail. The third-party seller fees often exceed 50% of the sales price and the sales are often more profitable for Amazon than their own first-party retail sales. Zulily’s complaint parallels a central component of the FTC’s antitrust lawsuit. Chun is also handling that case and similarly rejected Amazon’s motion to dismiss. A similar lawsuit filed by California’s Attorney General is proceeding in California state court and it is reported that Amazon will face heightened scrutiny for self-preferencing in Europe under the Digital Markets Act in 2025.

US Appeals Court Rejects FCC Authority for Net Neutrality Regulations

Report from the Wall Street Journal

In Brief – A three-judge panel of the Sixth Circuit Federal Court of Appeals has fully set aside the net neutrality (NN) rules put in place last April by the Federal Communications Commission (FCC), ruling that broadband internet services providers are “information services” providers under the Federal Communications Act and that the FCC does not have the statutory authority to regulate them using the “telecommunications service” provision of the law. The judges cited last June’s landmark Supreme Court ruling that struck down the judicial principle known as Chevron deference that directed federal courts to defer to federal agencies in setting regulatory standards. The Sixth Circuit panel cited what they called the “vacillations” of the FCC in the absence of clear statutory authority on net neutrality, noting, “This order—issued during the Biden administration—undoes the order issued during the first Trump administration, which undid the order issued during the Obama administration, which undid orders issued during the Bush and Clinton administrations.” The outgoing Democratic chair of the FCC reacted to the decision calling on Congress to legislate, while the new Republican chair lauded the decision and called the rules an example of Biden Administration “regulatory overreach”.

Context – The fight over net neutrality emerged in the mid-2000’s, quickly settled into a highly partisan divide, and became the internet’s highest profile political football pitting Democrats and consumer groups against Republicans and broadband providers. However, its bite waned as rules came and went while abuses never much materialized. Unless the Supreme Court accepts an appeal, which is very unlikely, the federal issue is now in Congress’s hands, and they are equally unlikely to legislate. The appeals court ruling did not overturn state-level net neutrality laws, such as in California, which may become the focus of progressive policy advocates and conservative critics. Meanwhile, those looking for a similarly partisan tech policy regulatory football during the new Trump Administration can still turn to Gig worker classification regulations.

EU Commission to Review Legality of Musk-X Boosting German AfD

Report from Bloomberg

In Brief – Elon Musk’s increasingly high-profile global activity criticizing progressive governments and political leaders that he objects to, and boosting conservative candidates and parties that he supports, is drawing criticism from government officials, especially in Europe. In Germany, his backing of the populist conservative Alternative for Germany (AfD) party in the upcoming national election, including plans to host a livestream with leader Alice Weidel on X, the social media platform he largely owns, is raising hackles from political leaders in Germany and elsewhere in Europe. The AfD, which has long been accused of neo-Nazi views by opponents on the political left, but also by many traditional, mainstream conservatives, is unabashed in its German nationalism, Euro-skepticism, and criticism of significant, often Muslim, immigration into Germany. A spokesperson for the European Commission, which regulates X under the Digital Services Act (DSA), a law that requires digital platforms to restrict the spread of objectionable and illegal content and meet transparency and content moderation standards, said that the EU executive would be looking into how X might be improperly boosting or recommending election content, including related to the AfD, as part of its ongoing DSA investigation of X.

Context – In October 2023, the Commission began investigating X for violating the DSA. They made an initial ruling last July that the company violated provisions dealing with “dark patterns” and transparency. The regulator also continued to investigate whether X’s content moderation practices, including its Community Notes, properly countered information manipulation and the dissemination of illegal content. Former EU Commissioner Thierry Breton used his role as lead DSA enforcer to challenge Musk over hosting a Donald Trump interview in August, an intervention that backfired. Breton, currently just a “concerned” European citizen, has taken to X to challenge the AfD’s Weidel on potentially benefiting from illegal help from Musk and X. Progressive critics argue that free speech covers Musk’s comments but not X algorithms that boost them.

Meta Moving from “Fact Checking” Content to “Community Notes”

Report from the Wall Street Journal

In Brief – Meta CEO Mark Zuckerberg has announced major changes to Meta’s content moderation policies and practices, ending “fact-checking” and reducing restrictions on speech across Facebook and Instagram in what he described as “restoring free expression on our platforms.” This announcement said that fact-checkers would be replaced with “Community Notes similar to X.”  The dramatic change in content moderation practices is the latest in a series of Meta moves aligned with the incoming Trump Administration, including promoting Republican Joel Kaplan, a long-time public policy leader in the company into its top government policy role, bringing Zuckerberg to Mar-a-Lago to meet with the President-elect and contribute $1 million to his inauguration fund, and naming Dana White, CEO of Ultimate Fighting Championship and longtime friend of the incoming President, to the Meta Board of Directors. As part of the changes, Meta will “remove restrictions” on topics like immigration and gender called “out of touch with mainstream discourse,” focus “filters” on “tackling illegal and high-severity violations”, and move the “trust and safety and content moderation teams out of California,” to “help remove the concern that biased employees are overly censoring content.”

Context – The full 239-word thread from Zuckerberg outlines a shift that may prove as big as when Elon Musk took over Twitter. It covers a lot in a few words. Note two things. First, he specifically calls out Musk’s X and its Community Notes by name. Second, the final action listed is that Meta will, “Work with President Trump to push back against foreign governments going after American companies to censor more.” The European Commission is currently “investigating” X and its Community Notes-based content moderation system for potentially violating the Digital Services Act. The DSA was also the legal basis cited by former Commissioner Thierry Breton when he formally advised Musk to watch out and not violate the law in interviewing then candidate Trump in August. Pushing back on aggressive tech regulation in Europe and elsewhere, and not just on “censorship”, is something Meta would like help from President Trump.

President-elect Trump Asks Supreme Court to Delay the TikTok Ban Law

Report from the New York Times

In Brief – Not unexpectedly, President-elect Trump has intervened in the Supreme Court’s consideration of the constitutionality of the federal law requiring TikTok’s US operations to be sold to new owners not based in an “adversarial country”, asking the justices to delay implementation of the law to allow him to seek to “resolve the issues at hand through political means once he takes office.” His amicus brief is one of more than three-dozen submitted to the High Court for its January 10th oral arguments on the First Amendment-based challenges of TikTok and a group of content creators. A three-judge panel of the US Court of Appeals soundly rejected the First Amendment-based challenges, ruling that the law satisfied “strict scrutiny” based on the national security concerns that led Congress to enact the law. The same judges rejected the company’s request to delay implementation of the law. The High Court responded with an extremely compact briefing and hearing schedule, with the justices indicating that they would defer consideration of whether to temporarily block the law until the day of oral arguments. Rather than address the First Amendment issues, the incoming President’s brief focuses on the “President’s prerogative to manage the Nation’s geopolitical, strategic relationships” and argues that the statute’s “unfortunate timing interferes with President Trump’s ability to manage the United States’ foreign policy and to pursue a resolution to both protect national security and save a social-media platform that provides a popular vehicle for 170 million Americans to exercise their core First Amendment rights.”

Context – The President-elect’s brief argues that if he can negotiate a solution, then the Court would not need “to decide the historically challenging First Amendment question presented” on a “highly expedited basis.” Given that these justices have chosen to avoid big First Amendment rulings on Sec. 230 and algorithms, state social media laws, and allegations that the federal government engaged in online censorship-by-proxy, an argument allowing the Court to defer may be very appealing.

Apple Responds to EU Commission Interoperability Demands by Arguing Meta is Bad

Report from the Wall Street Journal

In Brief – Apple has responded to the European Commission proposing measures that the iPhone giant should implement to comply with Digital Markets Act (DMA) interoperability requirements by arguing that some companies might “attempt to abuse” the new rules and harm user safety. Apple calls out Meta by name, describes them as a “data hungry company”, and claims that they have made 15 interoperability requests that they allege could enable Meta to read all of a user’s messages and emails, see every phone call they make or receive, track every app that they use, scan all of their photos, look at their files and calendar events, log all of their passwords, and more. Apple’s sharp rebuke of expansive interoperability requirements came in response to the Commission sending preliminary findings to Apple in the context of the two DMA compliance proceedings it started in September. The EU executive has proposed that Apple ensure its operating systems are functional with other technologies, including for notifications, Wi-Fi connection, AirPlay, AirDrop, and Bluetooth switching, as well and telling Apple to give rivals’ smartwatches and other wearable technology the same access it gives to its Apple Watch and Apple Vision Pro. A Meta spokesperson responded to Apple saying, “they just don’t believe in interoperability. Every time Apple is called out for anticompetitive behavior, they defend themselves on privacy grounds that have no basis in reality.” The Commission set a Jan 9, 2025 deadline for public comments.

Context – Apple v. Meta and Microsoft v. Google regularly vie for top billing in the digital giant classification for legal and regulatory feuds. Microsoft v. Google legal and lobbying battles were in high gear by 2010, but an unorthodox public truce was declared in 2016. Soon, Apple and Meta took their place, led by their CEOs. However, Google and Microsoft ended their détente in 2023, and a top Microsoft lawyer posted a highly unusual public blog in October accusing Google of running extensive “shadow campaigns” to discredit the software giant with regulators in major global markets.