The walls close in on Google’s data practices as European antitrust enforcement bites

Over in the U.K., the Competition and Markets Authority today announced an investigation into the cloud sector—specifically the conduct of hyperscalers such as Microsoft and Amazon—following a recommendation by the communications regulator, Ofcom. The CMA will probe how the hyperscalers might be locking their customers into their services by implementing fees and technical barriers for those who want to switch away. Particularly as the sector becomes ever more relevant in the context of the AI explosion, this investigation could have serious ramifications if the CMA forces change.

But here in Germany, the local antitrust regulator—the Bundeskartellamt or Federal Cartel Office—is already claiming a significant victory.

You may recall that, a few months back, the EU began enforcing its new Digital Markets Act, which imposes heavy restrictions on “gatekeeper” services that businesses and consumers can’t really avoid. In the case of Google, this covers core services like Android, Maps, and YouTube—and one of the restrictions is that Google can no longer share and combine data between these services without users’ express consent.

Buoyed by a favorable ruling from the EU’s top court in a separate case involving Meta, Germany’s Bundeskartellamt has now effectively extended the scope of this restriction to cover all of Google’s other services, from Gmail and Google News to Google Assistant and Android Automotive—as well as Google’s use of data gleaned from third-party services. (Germany updated its national competition law a year or so before the EU-wide DMA was agreed upon, so the two laws are pretty aligned, but Germany and the Commission are trying to stay off each other’s turf when it comes to enforcement, which is why the commitments that the Bundeskartellamt wrung out of Google essentially cover everything not already covered by the DMA.)

Here’s agency chief Andreas Mundt, today summing up the impact of Google’s new commitments: “Without the users’ free and informed consent, the data from Google’s services and third-party services can no longer be cross-used in separate services offered by Google or even be combined.”

This regulatory offensive demonstrates how data, which used to be the exclusive domain of privacy regulators, is now something that European competition authorities can take into account when cracking down on companies. Mundt again: “Data are key for many business models used by large digital companies. The market power of large digital companies is based on the collection, processing, and combination of data. Google’s competitors do not have these data and are thus faced with serious competitive disadvantages.”

I recently wrote about how antitrust enforcement would shape the future of tech business models. That’s what we’re starting to see here because it’s a fundamental shift for companies like Google and Meta to be no longer able to mix and match user data across their portfolios as they see fit.

More news below, and be sure to read Kylie Robison and Michal Lev-Ram’s profile of OpenAI chief technology officer Mira Murati. As they write, CEO Sam Altman may be OpenAI’s public face, but Murati is in charge of key services such as ChatGPT and DALL-E and is “increasingly responsible for explaining the latest iterations to a public that can seem hyper-attuned to every breakthrough and misstep.”

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David Meyer

NEWSWORTHY

Ubisoft arrests. French police have reportedly arrested five former Ubisoft executives, including erstwhile chief creative officer Serge Hascoët and editorial vice president Tommy François, in a sexual harassment investigation. As The Verge reports, these and other employees left the gaming firm in 2020, following complaints about widespread misconduct and management allegedly protecting those who were responsible.

Metaverse layoffs. Meta reportedly told staffers this week that it was laying off some employees in the custom-silicon part of the company’s Reality Labs metaverse division. Reuters reports that the extent of the cuts is not clear. So far, Meta’s augmented-reality devices still rely on Qualcomm chips, and the cuts may indicate this situation isn’t changing anytime soon.

X news. The platform formerly known as Twitter is seeing 500 million posts a day, according to CEO Linda Yaccarino. As TechCrunch notes, this seemingly contradicts owner Elon Musk’s recent assertion that the figure is 100 million to 200 million posts a day—which would signal a decline in activity—but the discrepancy is probably down to Yaccarino including retweets. Meanwhile, X is no longer showing headlines for posted links to news sites, a change that Fortune’s Kylie Robison reported was in the works back in August. Musk may think it looks nicer this way, but, in the words of climate researcher Ketan Joshi, “No headlines in article previews makes it look like media accounts are just drunk-posting stream-of-consciousness nonsense.”

ON OUR FEED

“Do you want to be a goldfish?”

—SoftBank CEO Masayoshi Son believes artificial general intelligence is coming soon, and those who don’t embrace AI will end up with inferior intellectual capabilities. (Parents: Try not to let this quote play in your head to the tune of “Do You Want to Build a Snowman?” from Frozen. You’re welcome.)

IN CASE YOU MISSED IT

Alibaba’s Belgian hub is being monitored over ‘espionage’ concerns, report says, by Ryan Hogg

Google is betting its Pixel phones can finally threaten iPhone’s reign by hitting Apple where it hurts: AI, by Rachyl Jones

To generate ad revenue, Meta has a new job for its AI tools, by Alexandra Sternlicht

Apple just released a software update aimed at fixing an overheating problem in some iPhone 15 Pros, by Bloomberg

Apple CEO Tim Cook got a $41 million payday after massive stock sale, as the iPhone maker’s shares creep down from summer highs, by Eleanor Pringle

Digital culture guru Taylor Lorenz’s new book reveals how the Instagram influencer ‘floodgates’ really opened: a backfiring FTC crackdown, by Taylor Lorenz

September was so hot climate scientists are calling it ‘mind-blowing,’ by the Associated Press

BEFORE YOU GO

Amazon’s Protoflight. Tomorrow will finally see Amazon’s broadband-beaming Project Kuiper get off the ground. The first test launch will only involve two satellites, neither of which will form a long-term part of the planned 3,236-strong constellation, but Amazon says this “Protoflight” will be “an important learning opportunity for the team.”

In a blog post, Amazon said it intends to have production satellites going up in the first half of next year, with beta testing following later in the year for early commercial customers. By way of comparison, SpaceX already has nearly 5,000 of its Starlink satellites in orbit.