The technology sector is currently navigating through an unprecedented landscape of regulatory scrutiny and antitrust challenges, marking 2024 as a critical year for major players like Google, Apple, Amazon, Meta, and othersThese companies are grappling with a paradigm shift in the way governments assess competition and market dominance, particularly in the rapidly evolving realm of artificial intelligence (AI).

This year, global antitrust authorities are reshaping their enforcement strategies to address unconventional competitive behaviors in the tech industryThey are paying close attention to how AI's rapid growth alters fundamental notions of competitionFor instance, European regulators have surpassed traditional metrics of market share and pricing power to examine broader dimensions of competitive impact in the AI sector.

Regulatory challenges are mounting for tech giants

Google's troubles are particularly noteworthy; in August, the U.SDepartment of Justice won a significant case against the company over search engine monopolization, pushing for the possibility of breaking up the tech giantIn Europe, France hit Google with a record €250 million fine for violating commitments related to the use of media contentThe regulatory landscape in Asia is similarly daunting, with South Korea's Supreme Court siding with antitrust regulators to impose a $168.6 million fine on Google for restricting competition in the Android ecosystemIndonesia is also conducting an investigation into Google’s alleged abuse of market dominance regarding its Play Store payment system.

Apple faces multiple obstacles as well; the company was slapped with a record €1.8 billion fine from the European Union in March for abusing its market dominance in the streaming app distribution sector

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Additionally, a court ruling affirmed that Apple owes Ireland €13 billion in back taxesCompounding the situation, Indian regulators have also flagged Apple's practices in its iOS app store as potentially monopolistic, while the EU has commenced investigations into restrictions surrounding its NFC mobile payment system.

Meta, too, is under heightened compliance pressure, particularly concerning data privacy and mergers and acquisitionsEarlier this year, the company reached a settlement in Israel, paying €6 million for conducting unapproved mergersIn Turkey, Meta faced fines totaling €16 million for failing to adequately demonstrate its compliance with data separation obligations.

Amazon has also encountered significant hurdles, particularly concerning its acquisition strategies and platform governanceIts planned $1.4 billion acquisition of iRobot collapsed after the company rejected remedy measures proposed by the European Commission, while Italian authorities imposed a €10 million fine on Amazon for unfair trading practices

Indian regulators have similarly pointed out anti-competitive behaviors involving preferential treatment for affiliated sellers on its platform.

The regulatory ambit is continually broadeningRecently, the U.SConsumer Financial Protection Bureau made headlines by including Google and Apple’s electronic payment services in its oversight, a significant move towards increased regulation of technology payment systems.

As we look to the future, global regulatory environments are expected to strengthen further“The new U.Sadministration is likely to continue and expand existing enforcement trends, including a focus on the labor market, rigorous examination of the technology sector, and higher standards for merger remedies,” experts assertStatements from new EU Competition Commissioner Margrethe Vestager promise that the European Commission will maintain a tough stance on tech giants.

In this evolving landscape, the global transition towards more systemic regulatory frameworks for digital markets has gained momentum

As technology advances, economies worldwide are shifting from case-based regulations to comprehensive regulatory frameworks, a trend that is deepening in 2024.

This year, antitrust regulators have intensified their oversight of the rapidly advancing AI industryThey are not only exploring how to understand and address the “AI market” but are also developing analytical frameworks for AI regulation through extensive market studies, reviews of corporate consolidations, and proactive regulatory tools.

In upstream sectors of the AI industry, regulatory focus is shifting to accessibility to critical resources, particularly examining whether challenges in accessing computational power and data resources create barriers for smaller independent AI developersConversely, in downstream markets, regulators are closely monitoring how major tech companies leverage their dominance in digital products, services, and data to gain an edge in new AI technologies.

This trend is observable on a global scale

Earlier this year, Hungary initiated a competition assessment for the AI market, while South Korea began revising its Monopoly Regulation and Fair Trade Act to enhance oversight of online platformsIn March, India introduced a draft Digital Competition Act, borrowing from EU experiences to establish a dedicated regulatory framework for digital marketsBy May, the UK passed the Digital Markets, Competition and Consumers Act, introducing new review standards for digital companies deemed to have “strategic market status” and enhancing the antitrust enforcement framework.

The EU, as a trailblazer in digital market regulation, is pushing forward with the implementation of the Digital Markets ActBy May 2024, the EU plans to include the online booking platform Booking.com on its “gatekeeper” list while continuing to assess compliance measures for other gatekeeper firms, including Apple

Meanwhile, Japan has enacted the Special Competition Promotion Law to regulate the mobile app market, and Australia announced in October that it would implement mandatory merger control regulations focusing on supermarkets, sequential acquisitions, and complex transactions by January 2026.

The U.Sregulatory bodies are also ramping up their scrutiny of the AI marketThe Federal Trade Commission (FTC) and the U.SDOJ have initiated assessments of acquisitions and investments in the AI sector by tech giants like Microsoft, Google, and Amazon, zooming in on potential “killer acquisitions” and monopoly risksThe FTC is also preparing a report on AI-related investments, aiming to enhance market transparency through the disclosure of transaction details.

In a notable development, cross-border regulatory collaboration is advancingOn October 28, the EU and the UK finalized technical negotiations on an antitrust cooperation agreement, thereby laying a robust foundation for dialogue between the EU Commission, member state antitrust authorities, and the UK's Competition and Markets Authority.

The emergence of new antitrust challenges in the AI sector stems from the rapid advancement of AI technologies, which introduce numerous novel competitive behaviors

Traditionally, antitrust frameworks have focused on direct acquisition actions; however, tech giants have now started to delve into a more covert form of “quasi-acquisition.” This involves strategic partnerships, equity investments, and “acqui-hiring” talent to achieve substantial control over target companies, pulling off a clever evasion of existing antitrust laws.

This trend has become apparent over the past few yearsFor example, Microsoft successfully recruited several executives and key researchers from AI unicorn Inflection AIFurthermore, Microsoft invested over $13 billion in OpenAI, securing Azure's status as OpenAI's exclusive cloud service provider in the agreementSimilarly, Amazon injected $4 billion into Anthropic in March 2024, stipulating that the latter utilize AWS as its primary cloud services platform.

Responding to this trend, regulators have taken action this year

In April 2024, the UK’s Competition and Markets Authority declared it would evaluate transactions between Microsoft and Inflection AI, as well as Amazon and AnthropicAlthough both investigations ultimately received approvals, the CMA emphasized that “the transfer of assets or employees can constitute a substantial merger,” retaining the authority to scrutinize similar transactions in the future.

Regulators are adjusting their enforcement strategies to tackle some of these unconventional competitive behaviors in the tech industryFor instance, the CMA has begun reviewing new forms of consolidation in the AI sector under its broad and flexible merger control regime.

Notably, the deep partnership between Microsoft and OpenAI has drawn intense scrutiny from global regulatory bodiesInvestigations by the CMA, the European antitrust authorities, and the FTC have all been prompted, focusing on whether this collaboration amounts to a de facto “acquisition” and if it violates existing antitrust regulations.