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Europe’s Digital Markets Act Is Breaking Open the Empires of Big Tech

Europe’s Digital Markets Act Is Breaking Open the Empires of Big Tech

Citizens of the European Union live in an internet built and ruled by foreign powers. Most people in the EU use an American search engine, shop on an American ecommerce site, thumb American phones, and scroll through American social media feeds.

That fact has triggered increasing alarm in the corridors of Brussels, as the EU tries to understand how exactly those companies warp the economy around them. Five years ago, Shoshana Zuboff’s book The Age of Surveillance Capitalism neatly articulated much of lawmakers’ critique of the tech giants, just as they were preparing to enforce the flagship GDPR privacy law. Now as the EU enacts another historic piece of tech regulation, the Digital Markets Act, which companies must comply with starting tomorrow, March 7, a different critic du jour sums up the new mood in Brussels.

In his 2023 book, Technofeudalism, Yanis Varoufakis argues the big US tech platforms have brought feudalism back to Europe. The former Greek finance minister sees little difference between the medieval serf toiling on land he does not own and the Amazon seller who must subject themselves to the company’s strict rules while giving the company a cut of each sale.

The idea that a handful of big tech companies have subjugated internet users into digital empires has permeated through Europe. Technofeudalism shares bookshelf space with Cloud Empires and Digital Empires, which make broadly similar arguments. For years, Europe’s wanna-be Big Tech rivals, like Sweden’s Spotify or Switzerland’s ProtonMail, have claimed that companies like Google, Meta, and Apple unfairly limit their ability to reach potential users, through tactics like preinstalling Gmail on new Android phones or Apple’s strict rules for the App Store. “It’s not a problem to be a monopoly,” says Sandra Wachter, professor of technology and regulation at Oxford University’s Internet Institute. “It becomes a problem if you’re starting to exclude other people from the market.”

Crowbarred Open

In answer to that problem, Brussels’ politicos agreed to the Digital Markets Act in 2022. It is designed to rein in the largest tech companies—almost all of them from the US—that act as gatekeepers between consumers and other businesses. A sibling regulation, the Digital Services Act, which focuses more on freedom of expression, went into effect last month. Wachter says they follow a long tradition of laws trying to protect the public and the economy from state power, wielded either by the government or the monarch. “With the rise of the private sector and globalization, power has just shifted,” she adds. Tech platforms rule over digital lives like kings. The DMA is part of the attempt to keep up.

The rules change tomorrow for platforms deemed “gatekeepers” by the DMA—so far including Alphabet, Amazon, Apple, Meta, Microsoft, and TikTok parent Bytedance. The law essentially crowbars open what the EU calls the gatekeepers’ “core services.” In the past regulators have proposed containing corporate giants by taking them to pieces. EU lawmakers have adopted the motto “Don’t break up big tech companies, break them open.”

In theory, that means big changes for EU residents’ digital lives. Users of iPhones should soon be able to download apps from places other than Apple’s app store; Microsoft Windows will no longer have Microsoft-owned Bing as its default search tool; Meta-owned WhatsApp users will be able to communicate with people on rival messaging apps; and Google and Amazon will have to tweak their search results to create more room for rivals. There will also be limits on how users’ data can be shared between one company’s different services. Fines for noncompliance can reach up to 20 percent of global sales revenue. The law also gives the EU recourse to the nuclear option of forcing tech companies to sell off parts of their business.

Homegrown Challengers

Most tech giants have expressed uncharacteristic alarm about the changes required of them this week. Google has spoken of “difficult trade-offs,” which may mean its search results send more traffic to hotel or flight aggregators. Apple has claimed that the DMA jeopardizes its devices’ security. Apple, Meta and TikTok have all filed legal challenges against the EU, saying new rules unfairly target their services. The argument in favor of the status quo is that competition is actually thriving—just look at TikTok, a technology company launched in the past decade, now designated as one of the so-called gatekeepers.

But TikTok is an exception. The DMA wants to make it normal for new household names to emerge in the tech industry; to “drive innovation so that smaller businesses can really make it,” as the EU’s competition chief Margrethe Vestager explained to WIRED, back in 2022. Many hope some of the new businesses that “make it” will be European. For almost every big tech service, there is a smaller homegrown equivalent: from German search engine Ecosia to French messaging app Olvid and Polish Amazon alternative Allegro. These are the companies many hope will benefit from the DMA, even if there is widespread skepticism about how effective the new rules will be at forcing the tech giants to change.

Right-to-Repair Advocates Question John Deere’s New Promises

Right-to-Repair Advocates Question John Deere’s New Promises

Deere’s new agreement states that it will ensure that farmers and independent repair shops can subscribe to or buy tools, software, and documentation from the company or its authorized repair facilities “on fair and reasonable terms.” The tractor giant also says it will ensure that any farmer, independent technician, or independent repair facility will have electronic access to Deere’s Customer Service Advisor, a digital database of operator and technical manuals that’s available for a fee.

The memorandum also promises to give farmers the option to “reset equipment that has been immobilized”—something that can happen when a security feature is inadvertently triggered. Farmers could previously only reset their equipment by going to a John Deere dealer or having a John Deere-authorized technician come to them. “That’s been a huge complaint,” says Nathan Proctor, who leads US PIRG’s right-to-repair campaign. “Farmers will be relieved to know there might be a non-dealer option for that.”

Other parts of the new agreement, however, are too vague to offer significant help to farmers, proponents of the right to repair say. Although the memorandum has much to say about access to diagnostic tools, farmers need to fix as well as identify problems, says Schweitzer, who raises cattle on his 3,000-acre farm, Tiber Angus, in central Montana. “Being able to diagnose a problem is great, but when you find out that it’s a sensor or electronic switch that needs to be replaced, typically that new part has to be reprogrammed with the electronic control unit on board,” he said. “And it’s unclear whether farmers will have access to those tools.”

Deere spokesperson Haber said that “as equipment continues to evolve and technology advances on the farm, Deere continues to be committed to meeting those innovations with enhanced tools and resources.” The company this year will launch the ability to download software updates directly into some equipment with a 4G wireless connection, he said. But Haber declined to say whether farmers would be able to reprogram equipment parts without the involvement of the company or an authorized dealer.

The new agreement isn’t legally binding. It states that should either party determine that the MOU is no longer viable, all they have to do is provide written notice to the other party of their intent to withdraw. And both US PIRG and Schweitzer note that other influential farmers groups are not party to the agreement, such as the National Farmers Union, where Schweitzer is a board member and runs the Montana chapter. 

Schweitzer is also concerned by the way the agreement is sprinkled with promises to offer farmers or independent repair shops “fair and reasonable terms” on access to tools or information. “‘Fair and reasonable’ to a multibillion-dollar company can be a lot different for a farmer who is in debt, trying to make payments on a $200,000 tractor and then has to pay $8,000 to $10,000 to purchase hardware for repairs,” he says. 

The agreement signed by Deere this week comes on the heels of New York governor Kathy Hochul signing into law the Digital Fair Repair Act, which requires companies to provide the same tools and information to the public that are given to their own repair technicians.

However, while right-to-repair advocates mostly cheered the law as precedent-setting, it was weakened by last-minute compromises to the bill, such as making it applicable only to devices manufactured and sold in New York on or after July 1, 2023, and by excluding medical devices, automobiles, and home appliances.

The US Has a Plan to Document Human Rights Violations in Ukraine

The US Has a Plan to Document Human Rights Violations in Ukraine

The US announced today that it will fund data-gathering on the conflict in Ukraine. In addition to laying the groundwork for war-crime prosecutions, the move would share critical, real-time data with humanitarian organizations.

The newly established Conflict Observatory will use open source investigation techniques and satellite imagery to monitor the conflict in Ukraine and collect evidence of possible war crimes. Outside organizations and international investigators would be able access the resulting database, a US State Department spokesperson confirmed in an email.

Partners for the Conflict Observatory include Yale University’s Humanitarian Research Lab, the Smithsonian Cultural Rescue Initiative, artificial intelligence company PlanetScape Ai, and Esri, a geographic information systems company, according to a State Department press release. The Observatory will have access to commercial satellite data and imagery from the US government, which will “allow civil society groups to move at a faster pace, towards a speed once reserved for US intelligence,” says Nathaniel Raymond, a lecturer at Yale’s Jackson School of Global Affairs and a coleader of the Humanitarian Research Lab.

Raymond himself is no stranger to using technology to investigate conflicts and crises. More than a decade ago he was the director of operations for the Satellite Sentinel Project, cofounded by actor George Clooney, which used satellite imagery to monitor the conflict in South Sudan and documented human rights abuses. It was the first initiative of its kind but would be too costly and resource-intensive for other organizations to replicate.

“This kind of work is very labor-intensive,” says Alexa Koenig, executive director at the Human Rights Center at UC Berkeley School of Law. “I think on the money and capacity side, we’re at a moment where a lot of these organizations do need to be thinking about the information environment in which they’re working. Open source information can be invaluable at the preliminary investigation stage, as you’re planning either humanitarian relief or to conduct a legal investigation.”

None of the data the Observatory will use and disseminate is classified; the satellite imagery will be taken from the National Geospatial-Intelligence Agency’s commercial contracts with private companies. But having access to many types of data in one place, rather than spread across many different entities, and the ability to analyze it, would make it powerful. Although the Observatory would be using publicly available data, it does not plan to make its data open source, unlike many other humanitarian projects, according to Raymond.

“The level of detail and how fast, in some cases, imagery data can be collected means that it could have value for those seeking to target civilians and protected infrastructure like hospitals and shelters,” he says.

Raymond is particularly aware of these kinds of risks. While he was at Satellite Sentinel, a report that the group published may have led to the kidnapping of a group of Chinese road workers by the South Sudan People’s Liberation Army. Though the image had been de-identified by removing longitude and latitude, Raymond says locals could have recognized the terrain and identified where the road crew was.

Google’s Alleged Scheme to Corner the Online Ad Market

Google’s Alleged Scheme to Corner the Online Ad Market

In 2010, a Google product manager named Scott Spencer gave an interview explaining Google’s use of “second-price” auctions to place ads across the web. In a second-price auction, the highest bidder wins, but only has to pay whatever the second highest bid was. Economists love this setup—the guy who theorized it won a Nobel Prize—because it encourages participants to bid whatever the item is truly worth to them without worrying about overpaying. As Spencer explained, “ it minimizes the need to ‘game’ the system.”

But what if Google was the one gaming the system?

That’s the accusation made in an antitrust lawsuit brought by a coalition of states led by Texas attorney general Ken Paxton. On Friday morning, a federal judge released an unredacted version of the most recent complaint in the case, which was first filed in 2020. The document provides unprecedented insight into how Google allegedly misled advertisers and publishers for years by manipulating auctions in its own favor using inside information. As one employee put it in a newly revealed internal document, Google’s public claim about second-price auctions were “untruthful.”

The Texas case, one of several the company is facing, takes aim at Google’s control of the auction-driven display advertising market. Google utterly dominates every link in the chain between advertiser and audience. It owns the biggest buyer platform, the biggest ad exchange, and the biggest publisher platform. So when you see an ad on a website, it’s a good bet that the advertiser used Google to place it, Google’s exchange submitted it to the site, and the site used Google to make the space available. Google, in other words, runs the auction while representing both the buyers and sellers in that auction.

This presents an obvious conflict of interest. As one employee put it, quoted in a previously unsealed version of the lawsuit, “The analogy would be if Goldman or Citibank owned the NYSE.” According to Texas, Google has failed to resist the temptation to use its control of the market to its own advantage. The lawsuit accuses it of deploying at least three programs secretly designed to distort the supposed second-price auctions. While the existence of those programs was already public, the newly unredacted complaint provides new detail into how they allegedly work.

The first program, launched in 2013, was the strangely named Project Bernanke, as in former Federal Reserve Chair Ben Bernanke. According to Texas’s description of internal Google documents, here’s how it worked. Suppose the highest bid placed through AdX, Google’s ad exchange, was $10, and the second highest was $8. In that case, the advertiser who bid $10 should win the auction and pay the publisher $8. Under Project Bernanke, however, Google would allegedly instead pay the publisher whatever the third-highest bid was—let’s say $5—while still charging the advertiser the full $8.

What happened to the $3 difference? According to the complaint, Google would siphon it into a “Bernanke pool” that it used to advantage its own ad-buying tool, Google Ads. The filing quotes an internal 2014 document in which a Google employee describes the need to reverse “a worrisome 2013 trend”: rival ad-buying platforms were winning too many auctions on AdX. According to the complaint, Google used the money in the pool to boost bids that otherwise would be lower than bids placed through those other platforms. (This could explain why the program is named after Bernanke, who promoted “quantitative easing”—pumping money into the economy—to combat the Great Recession. An internal Google slide uses the phrase quantitative easing.) At first, Google kept track of how much money it was withholding from publishers and eventually paying them back. But, according to the complaint, later versions of the program stopped even doing that.