Cyber Week in Review: November 13, 2020

EU Announces Amazon Antitrust Charges

On Tuesday, the European Union announced long-anticipated antitrust charges against Amazon, claiming that the e-commerce giant unfairly uses nonpublic marketplace data from third-party sellers to replicate well-performing products and later undercut the original merchants. Margrethe Vestager, executive vice president for digital issues at the European Commission, said, “We must ensure that dual role platforms with market power, such as Amazon, do not distort competition.” Amazon is also facing a second antitrust investigation from the European Commission for allegedly favoring sales of its own products and those sold by merchants who use Fulfillment by Amazon, Amazon’s shipping and logistics service. Alfonso Lamadrid, a lawyer for the international law firm Garrigues, questioned the strength of the EU’s case: “As the law stands in the EU, even dominant companies are not subject to a general duty of neutrality.” Nonetheless, broad regulations that ban the tech giants from self-preferencing their own services and products and force them to share data are expected from the European Commission next month.

New EU Regulations on Surveillance Tech

On Monday, the European Union debuted rules that regulate the sale and export of "dual use" technologies, including surveillance systems. Going forward, selling technology with potential military applications or that could result in human rights abuses will require a government license, and governments will be obligated to publicize information regarding these licenses and the value, price, and buyers of the associated products. Companies are also expected to perform extensive due diligence before making a sale. Although enforcement may vary by country, the transparency requirements aim to hold governments and technology companies accountable on the global stage. The new rules follow years of negotiations and repeated calls from human rights organizations, including Amnesty International, to further regulate the export of surveillance and facial recognition technology. Markéta Gregorová, a European Parliament member, said, “Today is a win for human rights globally, and we set an important precedent for other democracies to follow suit.”

China Debuts Potential Anti-Monopoly Rules

On Tuesday, China’s State Administration for Market Regulation announced potential new anti-monopoly rules targeting Chinese tech giants such as Tencent, Alibaba, and Pinduoduo. Under particular scrutiny are alleged predatory pricing and agreements that force merchants to work exclusively with a single e-commerce platform. The draft rules follow repeated signals that Beijing is looking to further control big tech. Last week, regulators proposed new microlending rules that suspended the highly-anticipated IPO from Ant Group, whose payment and loan products have increasingly encroached on China’s politically-connected traditional financial sector. The final decision to suspend the listing, which according to the Wall Street Journal was made by Xi Jinping himself, appears to be motivated by the fear of systemic risks created by Ant Group’s myriad financial services as well as anger at a speech critical of the regulators given by Jack Ma, the company’s controlling shareholder and China’s richest person.

New Regulations for Telecoms Providers in the Netherlands

On Wednesday, the Dutch government issued new security regulations to telecoms providers including KPN, T-Mobile, and Vodaphone. Access to Dutch telecommunications networks will now require a background check, and in case of a suspected threat or attack, providers will have to maintain a three-month log of network data for retroactive analysis. These are the latest round of regulations for telecoms providers after Dutch regulators stated last year that they would likely have to exclude hardware and software suppliers with “close ties to foreign governments involved in spying.” Unlike recent regulation from neighboring European governments, the Dutch rules do not explicitly mention either Huawei or ZTE, though it is implied that they would be affected by them.

What is Happening with TikTok?

On Tuesday, ByteDance asked [PDF] a U.S. federal appeals court to vacate the Committee on Foreign Investment (CFIUS) order to divest from TikTok by Thursday. Despite the fast-approaching deadline, CFIUS reportedly had gone silent and stopped responding to inquiries from the company. Then, on Thursday evening, the Commerce Department stated that it wouldn’t enforce its order to shut down TikTok’s U.S. operations for the time being and was appealing an injunction against the order granted by a U.S. district judge in Philadelphia. For months, Oracle and Walmart have been negotiating a preliminary deal to purchase TikTok’s U.S. operations but have “received no substantive feedback on our extensive data privacy and security framework,” according to a TikTok statement. On Friday, U.S. officials granted TikTok and ByteDance a fifteen-day extension to complete the deal. While President-Elect Biden expressed concern about 100 million Americans using the app, how the new administration will deal with TikTok and other Chinese apps is unknown.