The beginning of a new year always marks some sort of introduction of a new regulatory framework. The EU welcomed Romania and Bulgaria to the Schengen Zone, and the common charger policy went live (including in Northern Ireland, raising concerns of a BINO again). In the UK however, we had one of the most consequential digital legislation going live: the Digital Markets, Consumers and Competition Act 2024 (DMCCA), which is the framework for digital markets here in the UK.

Not soon after, the Competition and Markets Authority (CMA) with its newfound power, decided to investigate Google for its market dominance as a search engine and in search ads. This investigation is to establish whether Google has a “Strategic Market Status” (SMS) in these fields. Once designated as such, the CMA will then have the power to impose conduct requirements (CRs) or Pro Competition Intervention (PCIs) on how Google can provide its service, which very much affects consumers.

An example of what these interventions might look like can be found in the EU. If you google a restaurant or a shop, a map may be displayed, but clicking on the map has been disabled and the Maps link in the Google search bar has also been removed. This is because the EU believes that Google is promoting its own product, Google Maps, and not allowing other map providers to compete against its product, a concept that is called self-preferencing.

The EU’s demands have been a great source of inconvenience to many consumers, where consumer interface and efficiency have been made worse off thanks to bureaucratic overreach. The CMA will also investigate other companies in due course and has now launched an investigation into Apple.

The CMA has now pulled one of the classic tricks to legitimise their proposed intervention, by launching a consultation and bombarding it with incomprehensible gibberish that throws off the everyday consumer from being able to voice their concerns. Also note that the background for this consultation is pretty much a copy-paste job from their investigation into Google in 2019-2020. Since then, the industry has had seismic changes, such as the introduction of AI in search engines.

The reality is that this investigation is a very loaded question, with the potential to have wide-ranging consequences that the everyday consumer will bear the impact of. If a new independent restaurant is not able to use one of the biggest search engines to locate itself on the map, then how will it be possible for the restaurant to succeed and consumers to enjoy this new restaurant?

I understand the CMA’s dilemma: It is being scapegoated as the institution that has to regulate digital activity with a small team (even smaller now having had to fire 10 per cent of its employees due to a budgeting error). This is an impossible task to achieve, even if you spend 100 per cent of the UK GDP in attempting so. Regulators react to innovation and not preempt it. This also leads to far more restrictive legislation.

The other dilemma is squaring competition with the network effect. What makes the internet an interesting market is the fact that it gains additional value as more people use it. The more people input their data in Google, the more it becomes useful for everyone else. This intuitively would lead to a conclusion that eliminates competition as everyone will be inclined to use Google.

However, this has not been the case. If anything we have seen fierce competition between all the big tech companies, enabling the creation of more innovative products. This is amplified by the introduction of AI, where more and more people are now using Chat-GPT instead of Google, forcing Google to introduce its own AI capabilities in its search engines. This is not a monopoly, this is competition.

Crucially, these regulatory interventions are so bureaucratically minded that these investigations did not even consider current consumer satisfaction with products owned and used, or even attempt to quantify the change of consumer satisfaction before and after such interventions. Meanwhile, for businesses to profit in this sector, they need to greatly factor in consumer satisfaction, an arguably better means of self-regulating consumer protection.

The reality is at a time when the UK has been stagnating economically, it has been due to these restrictive measures. The Whitehall bureaucratic mentality values its ability to control and impose itself over industry rather than working with the markets to encourage innovation and consumer protection and convenience.

To grow, we need to encourage innovation and technological advancements, which will catalyze what resources we have now to increase our output exponentially. Rachel Reeves hinted at such measures when she mentioned the replacement of the CMA chair in her speech. However, amending such a bureaucratically restrictive mentality requires more than just words, which will be the Government’s challenge in the next few years.

To conclude, The First and Second Industrial Revolutions were spearheaded by Britain. Whilst notable British figures assisted in driving the Third Industrial Revolution, we were not in a position to lead, and now as we approach the Fourth Industrial Revolution, the era of Artificial Intelligence, it is the Americans who have created the petri dish for such innovation.

With the inauguration of Donald Trump, it is most likely that their permissive environment for innovation is amplified. Reeves said all the right things in her speech at Siemens, but for the UK to have a decent chance at being a playmaker in digital innovation, we need less investigations and EU alignment, and more entrepreneurial and realistic thinking.

Originally published here

In the rapidly evolving digital landscape, South Korea stands at a crucial juncture. As the nation considers new regulatory measures to address the growing influence of digital platforms, it is vital to carefully weigh the potential long-term impacts of these decisions. While the desire to ensure fair competition and protect consumers is understandable, we respectfully suggest that the Korean government adopt a market-based approach that prioritizes innovation, consumer choice and the country’s continued leadership in global technology.

Some governments, such as those in the European Union, have quick wins by implementing regulations that seem to open up platforms or dismantle walled gardens. However, it is worth noting that EU countries are not at the forefront of developing consumer technology. These short-sighted measures may have unintended consequences, especially in a sector propelled by rapid technological advancements. For instance, artificial intelligence (AI) is set to revolutionize the tech industry in unpredictable ways, potentially requiring certain levels of platform control to ensure authenticity and security. Prematurely forcing these systems to open up could stifle innovation and slow the adoption of transformative technologies like AI, ultimately limiting the options and benefits available to consumers.

A look at the history of mobile operating systems provides valuable insights into how market-driven competition can serve consumer interests. Despite Apple’s iOS being a closed system, its competition with Google’s Android has spurred continuous innovation, lowered prices and improved service quality. This rivalry has expanded consumer choice, driving the widespread adoption of smartphones and making advanced technology accessible to millions. The ongoing decline in mobile phone prices, even as features and capabilities have expanded, illustrates that a competitive market can effectively safeguard consumer interests without the need for heavy-handed regulation.

While regulation plays a role in protecting markets, it must remain targeted and focused on preventing clear abuses, such as bureaucracy and red tape, rather than imposing broad, sweeping rules that could stifle the market’s dynamism. Overregulation risks undermining the creativity and innovation that have positioned South Korea as a global leader in technology. Conversely, a market-based approach allows for a diverse range of solutions to emerge organically, driven by the innovation of market participants. This environment enables both large and small players to innovate and thrive, and consumers to benefit.

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SACRAMENTO, CA – The week of July 8, the California legislature once again considered SB1047, the “Safe and Secure Innovation for Frontier Artificial Intelligence Models Act,” a sweeping framework that aims to regulate and issue compliance guidelines for AI large language models and related products and services.

Consumers of existing AI models and products benefit greatly from what’s happening right now in this sector, thanks to open source developers that make the ecosystem competitive, free, and accessible for all sorts of people with unique use cases in mind.

The mandates and compliance forced by SB1047 threaten innovation and should be rejected by state legislators.

Yaël Ossowski, deputy director of the consumer advocacy group Consumer Choice Center, said of SB1047:

“California’s proposed AI law would bring virtually all development to a grinding halt. This law would require developers to usher their innovations through government bureaucracies to meet various demands and standards that are neither clear nor realistic.

“Most alarmingly, the proposed bill would assign an unprecedented liability standard to open source developers, reducing the incentives for intelligent and creative coders to dedicate themselves to building the next generation of artificial intelligence technologies,” said Ossowski. “This would be perilous for emerging tech innovations that rely on open source models to exist.

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