🚨AI&Tech Legal Digest || December 6, 2024
Anita Yaryna
Senior IP & Tech Legal Counsel | US-EU Product, Privacy, and Policy Counsel | AI Advisor | Commercial Counsel
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FTC Secures Major Settlements with Data Brokers Over Sensitive Location Data Sales
The Federal Trade Commission (FTC) has reached significant settlements with data brokers Mobilewalla and Gravy Analytics, prohibiting them from selling sensitive location data that could reveal individuals' medical facility visits or places of worship. These enforcement actions represent the latest chapter in the FTC's ongoing crackdown on the data broker industry under Chair Lina Khan's leadership, following similar settlements with X-Mode and InMarket earlier this year.
The settlements address serious privacy concerns, with the FTC alleging that Mobilewalla collected data from women visiting pregnancy centers and individuals attending racial justice protests, while Gravy Analytics employed geofencing techniques to compile and sell lists of users participating in medical or religious activities. Bureau Director Sam Levine characterized these cases as a "paradigm shift" in the FTC's approach to data protection enforcement, establishing clear boundaries around sensitive data usage.
As Chair Khan's term likely approaches its end with the upcoming administration change, these settlements highlight the evolving landscape of data privacy regulation. While there has been some bipartisan support for data broker oversight, with current Republican commissioners Melissa Holyoak and Andrew Ferguson backing certain enforcement actions, the future direction of such initiatives remains uncertain. The industry's response has been mixed, with Mobilewalla disputing the FTC's allegations while agreeing to the settlement terms, and Gravy Analytics (now part of Unacast) advocating for privacy legislation from elected lawmakers rather than regulatory enforcement.
UK Fintech Giant Revolut Under Legal Fire Over €700,000 Fraud Case
In a significant legal development, Revolut Ltd. is facing a lawsuit in London over a sophisticated fraud case where Serbian energy company Terna Energy Trading lost €700,000 ($735,880) to an alleged scammer. The case centers on a payment transfer to what Terna believed was a business partner's Revolut account, but which allegedly belonged to a 22-year-old Czech fraudster. Despite initial security alerts, Revolut's system ultimately cleared the transfer, allowing the funds to be dissipated.
The lawsuit highlights broader concerns about Revolut's fraud prevention mechanisms, with Terna's legal team criticizing the fintech's lack of immediate communication channels for reporting suspected fraud. This case is particularly noteworthy as it joins thousands of similar complaints against Revolut regarding authorized push payment scams, where the company leads UK competitors in fraud-related grievances according to the Financial Ombudsman Service.
The implications of this case extend beyond the immediate €700,000 dispute, as it emerges against a backdrop of Revolut's increasing resistance to fraud reimbursement requests and its own cybersecurity challenges, including a $20 million loss in 2022 due to vulnerabilities in its US payment processing system. While Revolut denies all elements of the claim and maintains it received the funds in good faith, the case underscores the growing challenges fintech platforms face in balancing rapid payment processing with robust security measures.
OpenAI Faces Fresh Copyright Battle as Canadian Media Giants Launch Legal Action
In a significant development for AI and media copyright law, five of Canada's largest news publishers have initiated legal proceedings against OpenAI, challenging the company's use of their content in training AI models like ChatGPT. The lawsuit, filed in the Ontario Superior Court of Justice, represents a major portion of Canada's journalistic content providers, including Torstar Corp., Postmedia Network Canada Corp., Globe and Mail Inc., the Canadian Press, and CBC/Radio-Canada.
The legal action mirrors the recent lawsuit filed by The New York Times and signals growing tension between traditional media outlets and AI companies over content rights. The Canadian publishers are seeking unspecified damages, alleging that OpenAI has profited from unauthorized use of their content in training its AI systems. Paul Deegan, president of News Media Canada, strongly criticized OpenAI's practices, characterizing them as "strip mining journalism" while unlawfully enriching themselves.
OpenAI has defended its position, stating that its models are trained on publicly available data in accordance with fair use principles and international copyright laws. The company emphasized its ongoing work with news publishers regarding content display, attribution, and linking options, including opt-out mechanisms. This case, following the $157 billion startup's earlier legal challenges, highlights the escalating global debate over AI training data and intellectual property rights in the digital age.
Canada Takes Bold Step Against Google's Ad Tech Dominance
In a significant antitrust action, Canada's Competition Bureau has filed a lawsuit against Google, seeking unprecedented remedies including forced divestiture of key advertising technology products. The legal challenge, filed with the Competition Tribunal, alleges that Google illegally maintained market dominance by bundling its advertising tools and manipulating ad auctions to favor its own products.
The Bureau's demands are notably aggressive, seeking not only the sale of Google's publisher ad server DFP and ad exchange AdX but also substantial financial penalties. The proposed penalty structure is particularly striking, demanding either triple the value of Google's derived benefit or 3% of its global gross revenue if the benefit cannot be precisely determined. This enforcement action aligns with similar investigations in other jurisdictions, including the UK's ongoing probe.
The timing of this lawsuit is significant, coming just one week after the US Justice Department's major antitrust case seeking structural changes to Google's operations, including a forced sale of its web browser. Google, whose parent company Alphabet is valued at approximately $2 trillion, has responded through Vice President Dan Taylor, defending its practices by emphasizing the competitive nature of the ad tech market. This mounting legal pressure from multiple jurisdictions poses a significant challenge to Google's dominant position in the digital advertising ecosystem.
Turkish Regulator Clears Meta Following Resolution of Threads-Instagram Data Sharing Concerns
Turkey's competition authority has concluded its antitrust investigation into Meta Platforms, accepting the tech giant's commitments regarding data-sharing practices between Threads and Instagram. The probe, which had led to Threads' temporary suspension in Turkey earlier this year, focused on potential competition law violations related to the integration of Meta's social media platforms.
Meta's commitments include a significant shift in its platform accessibility, allowing users to create Threads profiles without requiring an Instagram account when the service resumes in Turkey. Additionally, the company has pledged that user data from Threads will remain separate from Instagram unless users explicitly choose to merge their accounts.
This regulatory resolution marks a notable development in Meta's platform integration strategy, as the company had previously required an Instagram account to use Threads. The decision to terminate the investigation demonstrates the effectiveness of regulatory oversight in shaping tech companies' data-sharing practices, while also highlighting the growing importance of user data autonomy in global markets.
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FDIC Launches New Initiative to Monitor Bank-Fintech Partnerships
The Federal Deposit Insurance Corporation (FDIC) is enhancing its oversight capabilities by developing an internal database to track fintech companies that partner with U.S. banks. This strategic move, despite the FDIC's lack of direct regulatory authority over fintech firms, aims to strengthen the monitoring of third-party relationships within the banking sector.
The initiative represents a significant shift in the FDIC's approach to financial technology oversight, enabling its examiners to identify and assess potential vulnerabilities in bank-fintech partnerships before they escalate into serious concerns. This proactive stance suggests growing regulatory attention to the increasing integration of traditional banking and financial technology services.
While the FDIC has declined to comment on its internal processes, this development signals the regulator's commitment to maintaining financial stability as the banking sector becomes increasingly intertwined with technology providers. The creation of this monitoring system reflects the growing importance of understanding and managing risks associated with bank-fintech partnerships in the modern financial ecosystem.
AI and Prediction: A Critical Analysis of Tech's Modern Oracle Ambitions
In a significant analysis of predictive technologies, particularly focusing on AI's role in forecasting future events, experts are highlighting fundamental flaws in modern prediction systems that echo ancient divination practices. This critical examination reveals how current AI-powered prediction tools, despite their sophisticated algorithms, may be repeating historical mistakes in their approach to forecasting future events.
The parallel between ancient divination practices and modern AI prediction systems highlights a persistent human desire for certainty in an inherently unpredictable world. Just as historical societies relied on elaborate systems like astrology, today's reliance on AI for predictive analytics faces similar limitations, particularly when attempting to forecast complex human behaviors and societal events. The analysis specifically points to AI crime prediction systems as an example where statistical correlation might be mistaken for meaningful causation.
This cautionary perspective gains particular relevance as AI systems are increasingly deployed in critical decision-making processes. The comparison between historical prediction methods and modern AI tools suggests that while the technology has evolved, the fundamental challenges of prediction remain unchanged, especially in complex social systems. The investigation emphasizes that the true risk lies not in failed predictions, but in the potential for these systems to influence and alter the very futures they attempt to predict, creating self-fulfilling prophecies in areas like election polling and social behavior forecasting.
Meta Faces Major Spanish Legal Challenge Over Advertising Data Practices
A significant legal battle is set to unfold in Madrid as Meta Platforms prepares for an October 2025 trial to defend against a €551 million ($582 million) unfair competition lawsuit filed by Spanish media companies. The case, which will be heard in Madrid's 15th commercial court, represents a coordinated effort by over 80 media organizations under the AMI media association umbrella.
The lawsuit alleges that Meta violated EU data protection rules between 2018 and 2023, with Spanish publishers claiming the tech giant gained an unfair advertising advantage through "massive" and "systematic" use of personal data collected from users across Facebook, Instagram, and WhatsApp. Major media players, including Prisa (El Pais) and Vocento (ABC Newspaper), are among the complainants, while Spanish broadcasters have separately filed a €160 million lawsuit on similar grounds.
This legal challenge represents a broader struggle between traditional media and tech platforms over advertising revenue and data usage. However, similar efforts in other countries have led to unexpected consequences, with Meta responding by blocking news content in markets like Canada and Australia. The company has also been reducing news promotion across its platforms globally, stating that news links now constitute a minimal portion of users' feeds.
EU Launches Deep Probe into Nvidia's Run:ai Acquisition Amid Bundling Concerns
The European Union's antitrust regulators have intensified their scrutiny of Nvidia's proposed $700 million acquisition of Run:ai, focusing on potential anticompetitive bundling practices. The investigation, which comes as the Commission approaches its December 20 preliminary review deadline, is particularly examining whether Nvidia has offered customers incentives to purchase GPU software and hardware together.
At the heart of the probe is Nvidia's dominant position in the GPU market, where it commands an 84% share, significantly ahead of competitors Intel and AMD. The Commission is specifically questioning customers about potential competitive advantages gained through bundling GPU Orchestration Software with hardware, and whether end-users have been influenced through discounts or other inducements to purchase combined packages.
Nvidia has responded to the investigation by emphasizing its plans to open-source Run:ai's technology post-acquisition and stating it has received no complaints about the deal from customers, partners, or competitors. The regulatory examination reflects growing concerns about market concentration in the critical GPU sector, which serves various industries from data centers to gaming and cryptocurrency mining, as the Commission evaluates the potential impact on market competition.
Microsoft Hit with UK Legal Challenge Over Alleged Anti-Competitive Cloud Licensing
A significant legal battle has emerged in Britain as Microsoft faces a £1 billion ($1.27 billion) lawsuit over alleged anti-competitive practices in its cloud computing licensing. Competition lawyer Maria Luisa Stasi has filed a case at the Competition Appeal Tribunal, claiming that British businesses using cloud services from Amazon, Google, and Alibaba are being forced to pay higher Windows Server license fees.
The lawsuit alleges that Microsoft's 2020 introduction of new licensing fees for running its software on major cloud providers effectively penalizes customers for not using its Azure platform. This claim is supported by Competition and Markets Authority data showing Microsoft's significant customer acquisition rate increase following the licensing changes.
The case gains additional significance as it coincides with broader regulatory scrutiny of Microsoft's cloud practices. Britain's competition regulator is currently investigating the cloud computing market, while the US Federal Trade Commission has recently launched its own antitrust investigation into Microsoft's cloud business practices, particularly examining allegations of punitive licensing terms that may prevent customer migration from Azure to competing platforms. This multi-jurisdictional scrutiny highlights growing concerns about Microsoft's market power in both software licensing and cloud services.
In this fast-paced, ever-changing world, it can be challenging to stay updated with the latest legal news in the AI and tech sectors. I hope you found this digest helpful and were able to free up some time for the real joys of life.
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Anita