Big Tech Under Scrutiny in the EU
The European Union has launched a robust reinforcement of what is already the world's toughest regulation on Big Tech, referring to the largest digital companies. They have already faced stringent requirements regarding personal data storage. Next in line are regulations on artificial intelligence (AI), preventing the spread of child pornography, and demands to share funds for the implementation of a significantly faster 5G data transmission standard in mobile communication. Meanwhile, on the sidelines of the main stage, local battles unfold over imposing astronomical fines and antimonopoly measures regarding the acquisition of relatively small companies by technological "sharks."
The latest, perhaps, scandal is linked to the antitrust claims by EU authorities against Amazon, which more than a year ago announced the acquisition of the well-known robot vacuum manufacturer, iRobot, for $1.4 billion. The main accusation is that other manufacturers of robot vacuums will face discrimination on the Amazon-managed marketplace. On the one hand, valid concerns. On the other hand, in virtually every genuinely large supermarket network, we see a bunch of food products sold under so-called private labels, i.e., the own trade brands of a particular retail network. And next to them are the analogs from globally known brands on the same shelves. This doesn't hinder shoppers from choosing what they like the most.
Yet, the concerns are not entirely unfounded. The attention of the European government to this Amazon-iRobot deal is not extraordinary, as last year, work on this acquisition progressed against the backdrop of a strengthening not only in the EU but globally, regulatory control over the acquisition of interesting startups and younger competitors by Big Tech companies. Valid concerns were related to the consequences of such deals, such as eliminating smaller competitors from the market and obtaining their accumulated data, which could potentially significantly strengthen the already formidable capabilities of Big Tech.
For now, Amazon promises to cooperate with the European Commission to resolve the antitrust dispute. Of course, arbitrations with regulators lead to fines for Big Tech companies. These companies involve lawyers and indefinitely postpone payment, and sometimes even overturn those fines after lengthy legal battles. However, the wave of interest in artificial intelligence has shifted the focus towards the latest technologies away from purely financial stories.
PHOTO: UK Prime Minister Rishi Sunak welcomes the world's first summit on AI Safety. Source: Gov.UK
Very Artificial Intelligence
The recent scandal surrounding OpenAI and its leadership changes has drawn considerable attention to the broader issues of artificial intelligence (AI). This attention is further amplified by deliberate or inadvertent leaks during discussions among the leaders about concerns regarding the safety of AI as a phenomenon and its generated products. It would be remiss to think that this interest is situational. In fact, as early as November, a notable AI summit took place in the United Kingdom, featuring a keynote address by the country's Prime Minister, Rishi Sunak.
The stance of world leaders, succinctly summarised by Mr. Sunak, was, "I genuinely believe that nothing in our foreseeable future could be more transformative for our economy, our society, and our lives than the development of technologies like artificial intelligence." However, he couldn't overlook the reality, acknowledging various risks associated with AI, from the risk of improper use by criminals to the potential loss of control over AI. At this moment, everyone starts recalling a young Arnold Schwarzenegger in "Terminator" and the uprising of the "Skynet" network. Yes, we seem to be getting uncomfortably close to the plot of this disaster film; hopefully, we haven't opened those doors yet.
Critics of the summit, despite its highly esteemed participants, expressed valid concerns about both its outcomes and implementation. Interestingly, they logically linked the two. First and foremost, organizers and participants were accused of the dominance of government and major corporate representatives on the summit, contrasting with the limited representation of civil society against the backdrop of Big Tech.
The second accusation was related to the summit's focus on far-reaching life risks rather than the tangible daily harm generated here and now. This was likely a consequence of the summit leaving out the theme of restraining dominant corporations in the AI sphere. Although it's worth noting, overly stringent restraint on providers of new technologies hinders, or at least significantly slows down, the development of these technologies. A silver bullet to resolve this contradiction has not been found yet.
Perhaps the only positive news is that governments are attempting to find means for effective and not overly burdensome regulation of AI. However, this industry currently outpaces the means of its regulation by at least two strides.
Decoding with the Best Intentions
In November, EU legislators began drafting rules that would require Big Tech to identify and remove online child pornography, which is an extremely important task with no room for debate. However, concerns arise in the market regarding the tools that will be used for this purpose, specifically mentioning the threat to privacy ensured by end-to-end encryption. As if the measures that could be implemented will not affect data security.
A proposal by the European Commission a year ago for rules to combat child sexual abuse material (CSAM) received a lot of negative reactions from privacy advocates, while supporters of internet safety measures insisted on advancing these rules.
Currently, EU lawmakers are starting to reconcile with EU member states the final form of legislation against CSAM. Approval of these regulations is expected in 2024. It is highly likely that these regulations will be considered until May 2024, amid a powerful pre-election campaign, and the discussion of CSAM legislation will be used in the political parties' election campaigns.
What's "onboard" with the new regulations? For instance, there are requirements for messaging services, app stores, and internet service providers to report and remove unacceptable content.
Certainly, there is a risk of total surveillance, but legislators are trying to at least slightly protect internet users. They want to allow courts to issue time-limited orders for searching and removing CSAM. Judges will only be able to issue such orders if there are valid grounds to suspect child sexual violence. Companies will be allowed to choose the technologies they use to detect such offenses, and the effectiveness of these technologies will be assessed through an independent public audit.
As of now, there is no mention of excluding end-to-end encryption. Therefore, it seems that indiscriminate monitoring of chats will not be approved as an allowed tool for detecting and removing CSAM. Only targeted monitoring with a court order for specific individuals and groups suspected of being linked to materials of sexual violence against children will remain on board.
PHOTO: The new mobile communication standard is very cool but requires a lot of money. Source: GSMA
Money Matters Again
Here's another interesting piece of news that's all about the money. European regulators are considering the possibility of shifting the costs of full-scale 5G deployment onto Big Tech in EU countries. In simple terms, this means that Big Tech, primarily companies like Google (or Alphabet), Facebook (or Meta), Netflix, Microsoft, and Amazon, which generate a significant portion of mobile data traffic, would have to pay special sums to mobile operators to support 5G deployment programs.
If six months ago, the Body of European Regulators for Electronic Communications (BEREC) approached the European Commission with reservations about such friendly financing of mobile operators by Big Tech, the situation now seems to be leaning more towards implementing these contributions. For example, the Global System for Mobile Communications (GSMA) has initiated a campaign advocating for the adoption of such practices.
The idea itself is neither good nor bad. The cost of deploying 5G is indeed substantial, and relying solely on the profits of mobile operators will slow down the spread of high-speed mobile internet. Securing loans for this purpose will result in more expensive services from mobile operators. It's worth mentioning that, for the vast majority of users, the current 4G standard is still perfectly acceptable and comfortable. Is it really worth transferring the funding burdens of a small portion of the most demanding users to the general population? Perhaps not too much. So, funding the transition of the network to 5G through contributions from Big Tech seems quite market-driven and fair. Because advanced users of resource-intensive services from Big Tech are ultimately the beneficiaries of the implementation of fast 5G internet.
How did Brussels behave in this case? It postponed the matter to a later date, i.e., to the European Commission, which will be formed after the elections to the European Parliament scheduled for June 2024. However, it is still worth understanding that for some time both mobile operators and Big Tech will attempt to shift the costs of implementing 5G onto end consumers. The question is only about who and how much can add to their profits from this increase in prices for telecom and digital services.