Navigating the Legal Minefield: Tech Giants Face an Unprecedented Surge of Regulatory Actions in 2023
June 24, 2023
The unfolding story of 2023 has been dominated by an escalating wave of lawsuits and regulatory actions against some of the most influential tech giants. As the year progresses, these legal confrontations are gaining momentum. The initial flashpoint was the dispute between the Federal Trade Commission (FTC) and Microsoft (MSFT) over the latter’s proposed acquisition of Activision (ATVI). This was quickly followed by multiple attempts to dismantle Google’s (GOOG, GOOGL) advertising stronghold. Concurrently, Amazon (AMZN) finds itself on the precipice of an antitrust lawsuit, hot on the heels of a recent lawsuit for alleged deceptive practices. Moreover, other influential players who command the social media realm are now squarely in the crosshairs of regulatory scrutiny.
The Canada Conundrum: Digital Firms versus Domestic Media
In a significant development, Canada has implemented plans obliging digital firms to remunerate domestic media organizations for using their content. This initiative, named the Online News Act, has met with considerable resistance from Meta Platforms (META), leading them to threaten withdrawal of news access on Facebook and Instagram for Canadian users. Meta had previously challenged a similar law enacted in Australia in 2021, eventually reaching a compromise with the government. In recent times, Meta has also found itself under the scrutiny of Californian regulators and lawmakers on Capitol Hill.
European Regulatory Pressures Intensify
Europe is also experiencing a seismic shift in its regulatory landscape, with online platforms, most notably Twitter, facing a looming deadline to comply with the Digital Services Act by the end of the summer. This imminent legislation, predicted to set global benchmarks akin to the GDPR, aims to facilitate the reporting of illegal content, enhance the transparency of recommended content, and modify algorithms to combat the spread of disinformation. Additionally, the act will require clear labeling of AI-generated content, impose restrictions on targeted advertising, and enforce annual audits on platforms for potential systemic risks.
Big Tech’s Resilience Amid Legal Turbulence
Amidst the storm of legal challenges, Big Tech has surprisingly thrived, contributing to the overall strength of the market. SA analyst Cavenagh Research insightfully notes, “The most recent stock market rally is buoyed by AI speculation, which in turn is driven by the Big Tech giants,” forecasting that the rally will continue its upward trajectory.
Intensifying Internal Competition Among Tech Titans
A closer analysis reveals that competitive catalysts are not solely from external sources but are also sprouting within the tech behemoths themselves. Buzz continues to swirl around “Threads” and “Project 92,” Meta’s potential countermeasures to Twitter, which would allow Instagram users to transfer their followers and user information to the new app. In a memorable public relations maneuver, Elon Musk joined a Twitter conversation discussing this news, challenging Meta’s CEO to a cage match fight, infamously quipping, “Earth can’t wait to be exclusively under Zuck’s thumb.” However, Meta’s CEO responded to the challenge with poise, addressing it on Instagram.