Tech Regulation Showdown: EU Tightens Grip While US Slows the Pace

According to The Pew Research Center survey in February 2024, 51% of US adults favoured stronger tech regulation of big tech companies, up from 44% two years prior, reflecting concerns over generative AI chatbots. Only 16% wanted less regulation, while 31% preferred maintaining current regulations. 

However, the US faces growing concerns about tech regulation. Data protection, online safety, and consumer protection top the list. 

As generative AI tools, like conversational AI chatbots, generative AI chatbots, and large language models, reshape industries, calls for stricter digital regulation grow. 

Digital markets rely more on AI models for tasks like natural language processing, image generation, and more. 

To protect consumers, lawmakers push for enforcement actions. The rise of artificial intelligence and AI chatbots has sparked debates about how best to regulate these technologies.

The US Department of Justice’s (DOJ) lawsuit against Google’s advertising practices officially opened Monday in Virginia. 

In the lawsuit, the US accuses Google of building, acquiring, and maintaining a monopoly on the technology that connects online publishers and advertisers. 

The software’s dominance, on both the buy and sell sides, allows Google to keep up to 36 cents on the dollar. It brokers sales between publishers and advertisers. Google could see its advertising business dismantled if the DOJ wins.

The European Commission finds Meta and Apple in violation of the DMA

Tom Wheeler, former chairman of the Federal Trade Commission from 2013 to 2017 and a visiting fellow at the Brookings Institution, said the DMA would likely lead to significant changes in how tech giants operate. That could also affect the United States. 

While the EU strengthens its regulations, the United States is reducing the powers of its federal agencies. However, the EU measures could force tech giants to radically change their operating models.

EU regulators found Meta’s “pay or consent” advertising model and Apple’s App Store rules violate the Digital Markets Act (DMA). The latter aims to promote competition and interoperability among digital platforms. This law targets closed operating models of tech giants like Meta and Apple, potentially leading to significant changes in their operations, with implications for the US as well.

Tech Regulations: Shields against the European Union

Some disagree with the EU’s approach to tech regulations regulating digital markets. The EU demands Meta to provide both free and ad-free versions of Facebook and Instagram. The latter are supported by major tech companies. However, critics warn that this could lead to a global “free-rider problem,” burdening users outside the EU with costs.

If companies fail to comply, they could face fines of up to 10% of their total annual turnover. If they continue to breach the DMA, they could face additional corrective measures. The latter include structural measures such as requiring companies to sell part of their business.

Google accused of harming competition in online advertising

Several of Google’s businesses have been under scrutiny by US authorities in recent years following antitrust complaints. 

Google lost a lawsuit last month denouncing the deals it struck with numerous companies, including Apple, to make its search engine the default on smartphones. 

Moreover, the company has been convicted of building an illegal monopoly in online search. Judge Amit Mehta’s ruling states that Google violated Section 2 of the Sherman Act and represents the first major setback for the company.

A month after this bitter defeat, Google has been facing a new antitrust lawsuit since September 9. This time, the tech giant finds itself before a Virginia state court to answer for its practices in the online advertising market. 

According to the American authorities, Google exercises “excessive control over all stages of the sale of online advertising space by publishers and over the manner in which advertisers purchase it.”

Google benefits to the detriment of almost all other players?

Furthermore, according to authorities, Google has destroyed competition in the ad tech industry. It engaged in a systematic campaign to gain control of the broad range of high-tech tools used by publishers, advertisers, and brokers to facilitate digital advertising.

According to the complaint, Google’s system allows it to extract more money from advertisers while paying publishers as little as possible. The DOJ also claims that Google designed the scheme to manipulate ad auction rules to its advantage.

For the search engine, it’s unclear what remedies the DOJ is seeking. The DOJ will provide an outline of the proposed remedies in the case in December, according to Reuters. But the judge isn’t expected to rule until August. 

However, for Google’s ad technology, the DOJ is seeking a divestiture of the Google Ad Manager suite of services.

DOJ lawsuit accuses Google of illegally controlling multiple monopolies

At stake in the lawsuit is a potential breakup of Google’s advertising system. DOJ lawyers said Monday that ending Google’s antitrust practices is critical, adding that the company has multiple monopolies in the technology space. 

Justice Department attorney Julia Tarver Wood said in her opening statement that Google’s actions have angered publishers. However, they have been unable to do anything about the company’s monopoly.

Wood confirmed that the DOJ plans to call several publishers to testify in the coming weeks to explain the harm they’ve done. 

Executives from companies including USA Today, News Corp., and the Daily Mail are expected to take the stand. Experts say that this ad tech trial might last four to six weeks. Thus, it could be the largest of the monopoly trials Google has faced in recent times.

In its defence, Google says the US government’s case is based on how the internet worked in the old days when desktop computers ruled.

Final Thoughts

The United States has taken several steps to develop tech regulations to harness AI for economic growth while addressing concerns about AI adoption. 

For example, AI-generated voices were declared illegal by the Federal Communications Commission earlier this month. 

Recently, the US government announced the creation of the US AI Safety Institute (AISI) under the National Institute for Standards and Technology (NIST) to harness the potential of AI while mitigating its risks. 

Several major tech companies, including OpenAI, Meta, Google, Microsoft, Amazon, Intel, and Nvidia, have joined the consortium to ensure the safe development of AI. 

Despite this, the lack of clear and well-defined regulations has the potential to impact the growth of AI in the country. The lack of regulations may backfire. Delays in drafting a comprehensive set of laws can deter companies from deploying the technology to grow their businesses.

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