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1. Antitrust issues raised by answer engines

Author:
Christophe Carugati
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Rapid development of generative artificial intelligence chatbots like ChatGPT is leading search engine providers to move from search to answer engines. Unlike search engines, which provide search results in the form of blue links to content creators, answer engines generate personalised answers through a conversation with end users. This revolution impacts the internet ecosystem of content creators and the digital advertising market. This paper outlines some early antitrust issues related to answer engines, from the transition from search to answer engines (sections 2 and 3) and the response competition authorities should adopt (section 4). It finds that search and answer engines complement and compete with each other. While the answer-engine market is still at an early stage of development, it already raises some competition issues in relation to data scraping, vertical integration and unfair terms and conditions. Intervention by competition authorities is more likely than not to prevent market power in this new market. In this regard, competition authorities should act to preserve dynamic competition and minimise adverse effects on content creators. Finally, the paper concludes with several research questions for future research (section 5).
Topic:
Science and Technology, Governance, European Union, Digital Economy, Innovation, Artificial Intelligence, and Competition
Political Geography:
Europe

2. The competitive relationship between cloud computing and generative AI

Author:
Christophe Carugati
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Cloud computing providers and generative artificial intelligence (GenAI) providers nurture a close, interdependent relationship: GenAI providers need cloud providers to train, run and deploy their GenAI solutions, while cloud providers see GenAI providers as a business driver to grow their market shares in cloud and related markets, such as productivity software or search engines. The cloud/GenAI relationship takes various forms, including exclusive and strategic partnerships, especially between large cloud providers and GenAI providers across all parts of the cloud market, including infrastructure, platforms and software. Competition benefits and risks are likely to result from the relationships. Competition benefits arise from increased competition and innovation in the cloud and GenAI sectors. Risks relate to potential concentrations arising from the partnerships between cloud and GenAI providers, and from anticompetitive practices, including discrimination in the supply of IT equipment by dominant IT providers, interoperability obstacles to switching, use of business-user data, self-preferencing of cloud services over third parties, tying and pure bundling. Merger control and antitrust laws can address some of the competition risks, while laws, including the European Union’s Digital Markets Act and Data Act, can deal with competition issues in digital markets and the cloud sector. Nevertheless there are gaps. The European Commission should amend existing EU instruments, including by changing the definition of a concentration under merger control, and should specify interoperability requirements for cloud providers under the Data Act. The Commission should also closely monitor developments in and outside Europe through market investigations, including with international counterparts, and should intervene to tackle imminent competition risks using fast procedural tools, such as interim measures.
Topic:
European Union, Antitrust Law, Artificial Intelligence, Cloud Computing, and Competition
Political Geography:
Europe and Global Focus

3. Compliance principles for the Digital Markets Act

Author:
Christophe Carugati
Publication Date:
11-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Under the European Union’s Digital Markets Act (DMA), six ‘gatekeepers’ (Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft) have been designated in relation to 22 core platform services (CPS). The gatekeepers have until 6 March 2024 to propose to the European Commission how they will comply with their DMA obligations. The DMA gives flexibility to gatekeepers to achieve compliance by providing some guidance what can constitute compliance and non-compliance with the obligations. However, it does not provide compliance principles. These offer a standard of compliance-by-design, while offering flexibility to each gatekeeper to develop specific solutions tailored to each obligation and CPS. Compliance principles would also be easily observable elements helping to inform the Commission – the DMA’s enforcer – aboutcompliance. We propose fiveDMA compliance principles for gatekeepers to follow. These have been derived from the list of DMA obligations. The principles relate to access, fair conditions, information, choice and flexibility. Each principle would be accompanied by a second level of sub-principles based on the economics literature and case law. We recommend that gatekeepers implement the principles and that the Commission monitors whether gatekeepers follow the compliance principles. Gatekeepers, in their annual DMA compliance reports, should provide the Commission with methodologies, tests and other relevant documents as evidence of compliance in practice. Commission monitoring should include regular engagement with gatekeepers, third parties and consumers, before and after the implementation of the compliance solutions.
Topic:
European Union, Regulation, Compliance, and Digital Markets Act (DMA)
Political Geography:
Europe

4. How to implement the self-preferencing ban in the European Union’s Digital Markets Act

Author:
Christophe Carugati
Publication Date:
12-2022
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Large online platforms are intermediaries between end-users and business users. They sometimes propose their own products and services alongside those of rivals. This can lead to platforms promoting their offers over those of competitors in so-called self-preferencing. The European Union Digital Markets Act (DMA) bans large online platforms under its scope from treating their own products and services more favourably that those of rivals when ranking, crawling and indexing. Platforms – or gatekeepers in the DMA definition – should apply transparent, fair and non-discriminatory conditions when ranking products and services. However, the identification, detection, compliance with and monitoring of self-preferencing is complex and resource-intensive. It requires a case-by-case approach and access to and analysis of platform data and algorithms. The DMA allows gatekeepers to promote their own products and services if rivals are subject to the same treatment. Nonetheless, the DMA neither defines equal treatment nor the main elements of self-preferencing, thus preventing platforms within the DMA’s scope from correctly applying the prohibition. To ease enforcement, the European Commission should issue guidance on what constitutes self-preferencing under the DMA, outlining two main principles. First, gatekeepers should use objective and unbiased parameters to determine ranking, indexing and crawling. Second, gatekeepers should demonstrate equal treatment. The guidance will make compliance easier. The Commission should then monitor compliance by appointing and ensuring sufficient rotation of external auditors to avoid capture by gatekeepers. The Commission should also work with competent national authorities that develop technological tools. When monitoring flags a risk of non-compliance, the Commission should then further specify the ban on self-preferencing on a case-by-case basis.
Topic:
European Union, Digital Economy, Economy, Innovation, and Digital Markets Act (DMA)
Political Geography:
Europe