European Commission 2–Apple 0.
The EU’s Digital Markets Act has been in place for less than five days, and its enforcers have already pushed Apple into two humiliating U-turns. If Apple has been trying to test how much it can throw its weight around in its increasingly hilarious hissy fit over the new Big Tech antitrust law, it’s had its answer now.
The first reversal came earlier this month when Apple meekly agreed to let home-screen web apps continue functioning as intended on iPhones. It had previously killed off the entire category on the basis of protecting users’ security under a rather odd reading of the DMA. The Commission threatened an investigation, and Apple retreated.
Then, on Friday, Apple agreed to reinstate a developer account for archnemesis Epic Games, effectively allowing it to roll out a third-party iOS app store (an actual DMA demand) and also finally return Fortnite to iOS devices in the EU.
Apple’s reason for axing Epic’s account was that Epic had previously violated Apple’s policy by launching an alternative to Apple’s payment system for in-app payments (which is why Apple banned Fortnite from the App Store in 2020). Apple had also argued that Epic’s criticism of Apple’s new EU business model meant it couldn’t be trusted to follow the terms for third-party app stores, even though Epic had promised to abide by them. Apple’s reasoning was doubly ludicrous because a) the Commission wants affected companies to give feedback on Big Tech’s attempts to comply with the DMA, and b) Apple claimed a California court ruling gave it the ability to cancel Epic’s developer accounts anytime it wanted, anywhere in the world.
After the Commission again threatened an investigation—and presumably after Apple’s lawyers googled “jurisdiction”—the company again backed down. “I take note with satisfaction that following our contacts Apple decided to backtrack its decision on Epic exclusion,” cackled Commission digital chief Thierry Breton in an X post. “From Day 2, [the] DMA is already showing very concrete results!”
I think at this point it’s fair to say that Tim Cook’s team has been massively overreaching in its response to the DMA. But hey, nobody ever said compliance with EU tech law was easy.
You know who else just learned that lesson? The European Commission.
This morning, the European Data Protection Supervisor (EDPS)—the privacy regulator that specifically keeps an eye on big EU institutions—slammed the Commission for breaking a 2018 data-protection law in how its staff use Microsoft 365. The watchdog said the Commission had failed to implement safeguards to ensure that people’s personal data is only being sent to countries whose data-protection rules are equivalent to the EU’s. What’s more, the Commission hadn’t been properly specifying what types of personal data would be collected in the use of Microsoft 365, and what the data would be used for, as the law demands. (This isn’t the well-known General Data Protection Regulation or GDPR, but rather a special companion law that only applies to the EU institutions.)
As a result, the Commission will have to “suspend all data flows resulting from its use of Microsoft 365 to Microsoft and to its affiliates and sub-processors located in countries outside the [EU and European Economic Area]” that lack adequate privacy protections. It’s unclear which countries the watchdog means. The EDPS has given the Commission until early December to comply, reflecting how difficult it will be to comply with the decision without majorly disrupting the Commission’s work.
The Commission insists that its use of Microsoft 365 is legally compliant; it’s studying the EDPS order before deciding how to respond. But, it said in a statement, “compliance with the EDPS decision unfortunately seems likely to undermine the current high level of mobile and integrated IT services. This applies not only to Microsoft but potentially also to other commercial IT services.”
Fairly or not, I suspect quite a few Silicon Valley regulatory officers will be chuckling at the irony of the situation. More news below.
David Meyer
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NEWSWORTHY
Open-source Grok. Elon Musk’s xAI will open-source its Grok AI this week, the billionaire announced early this morning. The move (if it happens; this is Musk, after all) comes in the context of Musk’s legal battle with OpenAI over the abandonment of its original, “open” mission. Other open-source AI models are already available, from the likes of Meta and Mistral.
Reddit IPO valuation. Reddit’s long-awaited initial public offering will come at a valuation of up to $6.4 billion, the company hopes. Reddit said today that it intends to raise up to $748 million through the sale of around 22 million shares, which will probably take place later this month. As CNBC notes, this will be the first major tech IPO of the year, and as such will be closely watched.
U.S. spectrum bill. A new bill introduced by Republican Sens. Ted Cruz (Texas) and John Thune (S.D.) would force the government to let go of some of the radio spectrum it holds, for the benefit of commercial 5G networks. As Reuters reports, the U.S. has seen soaring mobile data traffic in recent years, and this bill would require the Federal Communications Commission to auction off at least 1,250 megahertz of freshly released spectrum (likely from current Defense Department allocations) within six years.
SIGNIFICANT FIGURES
767 million
—The number of Instagram downloads last year, helping the Meta property finally beat out TikTok as the world’s most downloaded app. As The Guardian points out, Instagram achieved this feat partly by aping TikTok’s short-form video format in Reels.
IN CASE YOU MISSED IT
Sam Altman confirms return to OpenAI board as law firm’s review rips ‘loss of trust’ that led to his sudden ouster, by Amanda Gerut
Exclusive: The FTC is probing Amazon’s new controversial fees in its $140 billion seller business, by Jason Del Rey
Exclusive: Elon Musk’s X is launching a YouTube clone for smart TVs, starting with Amazon and Samsung, in its bid to pivot to video, by Kylie Robison
Microsoft admits Russian state hack still not contained. ‘This has tremendous national security implications,’ by the Associated Press
TikTok shareholders who make any ‘disparaging statement’ about the company risk having their entire holdings seized, by Alexandra Sternlicht
TikTok floods Congress with complaints over a potential ban—making politicians’ point for them, by Marco Quiroz-Guteirrez
Team behind popular Falcon AI models unveils new startup with $20 million in funding aimed at helping companies tailor LLMs for business, by Jeremy Kahn
BEFORE YOU GO
Bitcoin breaks $72K. Bitcoin today set a new all-time high north of $72,400. The cryptocurrency has been on a tear recently, largely thanks to the advent of so-called Bitcoin ETFs (which are not actually exchange-traded funds as they only have one product—Bitcoin—in the basket). Ethereum, the second-most popular cryptocurrency, also crossed the $4,000 barrier.
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