Global Antitrust in 2024: 10 key themes

Full steam ahead for digital regulation in the EU as gatekeepers grapple with the DMA

Following the enactment of the Digital Markets Act (DMA), the European Commission (EC) designated six “gatekeepers” in September 2023, identifying 22 “core platform services” among them. "Gatekeepers" have until March 2024 to ensure compliance with the slew of DMA obligations covering different types of specified conduct, ranging from self-preferencing to tying and bundling and the use of data, which seek to enhance contestability and fairness in EU digital markets. Controversy surrounds the designations; the EC has opened market investigations to establish whether several core platform services should have been designated, and a number of gatekeepers are challenging decisions in the EU courts.

The EC will be responsible for ensuring gatekeepers comply with their obligations. However, national competition authorities also have the power to provide investigatory support to the EC to monitor compliance with the DMA’s obligations. Authorities in France, Germany and the Netherlands have expanded their resources and investigatory tools to enable support.

The broader impact of the DMA on antitrust enforcement will become clearer in 2024. Both the EC and national competition authorities have stressed that the DMA will not supplant traditional dominance or merger control enforcement. However, authorities – including those with regulatory powers impacting digital markets (such as data protection) – will need to ensure consistency, avoid encroachment and prevent the risk of double jeopardy.

Launch of the legislative process for digital regulation in the UK: a less prescriptive approach

In the UK, the long-awaited Digital Markets, Competition and Consumers Bill (DMCC Bill), was introduced to the legislative process in 2023. Among other things, the DMCC Bill promises to give the Competition and Markets Authority (CMA) powers to enforce a new ex-ante regulatory regime for digital markets through its established Digital Markets Unit (DMU). In a markedly different approach to the prescriptive obligations in the DMA, the DMU will be able to impose bespoke “conduct requirements” on businesses with “strategic market status” (SMS). It will also be able to address perceived competition problems in digital markets by making “pro-competition interventions” on an SMS firm’s digital activities where it considers doing so would “remedy an adverse effect on competition”. Any interventions must be proportionate or risk challenge on appeal.  

The DMCC Bill is expected to take effect in late 2024. Businesses that have been the subject of recent market studies and investigations by the CMA in digital markets should expect to be among the first firms to be designated as having SMS and potentially face the first conduct requirements. Given the proposed scope ambit of the DMU’s powers, businesses that interact with designated SMS firms will also be heavily impacted by the new regime.

Regulation of digital markets remains on the agenda in the US

Despite previous attempts falling short, Congress has not given up hope of passing digital-facing legislation. 2023 saw the introduction of several new bills, including the Digital Consumer Protection Commission Act which would establish a new commission to regulate online platforms alongside the Federal Trade Commission (FTC) and the Department of Justice Antitrust Division. Lawmakers will continue to push for legislation addressing digital markets and AI in 2024. More immediately, US companies will have to grapple with the global implications of digital regulation in other jurisdictions, given the interconnected nature of digital markets and the potential knock-on effects of legislation such as the DMA.

Regulation of digital markets is extending beyond antitrust authorities

Complex regulatory structures for digital markets that go beyond antitrust authorities are developing in multiple jurisdictions. SAMR is just one piece of the Chinese regulatory puzzle for digital markets – companies must also take into account broader governmental involvement, which can increasingly have a national security angle. In Japan, the Japanese Fair Trade Commission will likely lead the implementation of the upcoming digital legislation but it will do so in close coordination with the Digital Market Competition Headquarters, the Ministry of Economy and other government bodies. While the Australian Competition and Consumer Commission is currently the only authority responsible for digital markets, the ongoing Digital Platform Services Inquiry promotes a holistic approach beyond competition aspects. In Brazil, the draft of new digital platforms legislation implies significant coordination between the Administrative Council for Economic Defence and the National Telecommunications Agency. A similar picture is emerging in Mexico, with both the competition watchdog and the telecom regulator enforcing digital markets. Digital companies will therefore need to interact with an expanding ecosystem of government bodies when implementing their commercial strategies and undertaking transactions.

Artificial intelligence taking center stage in 2023  

2023 was the year of generative AI. Since ChatGPT’s launch in November 2022, there has been a flurry of model and product announcements and remarkable investment in AI.

To keep up, global regulation of AI is developing at pace. Some countries (such as China) have already introduced laws that specifically target AI, while others (such as Canada, Thailand and Brazil) have new legislation under consideration. The EU’s AI Act – which made headlines when it was passed in December 2023 but is unlikely to take effect until at least 2025 – will include various obligations, including those surrounding risk management systems, accountability and user information, with significant financial penalties for noncompliance. Other countries, such as the UK, are taking a less direct approach to AI regulation, often seeking to work within existing laws and regulatory structures.

Fostering competition and innovation across the AI value chain

New capabilities in machine learning have already started to realign industrial organization around a new “AI value chain” centered around generative model capabilities. Much of the political and regulatory attention on AI (evident at the UK’s AI Safety Summit and in the establishment of the US AI Safety Institute and G7 Guiding Principles) has initially focused on the safety and security of highly capable foundation models, the protection of IP and personal data, and the implementation of strong governance.

Recently, authorities have started to explore competition and consumer protection issues across the AI value chain. The CMA’s October 2023 initial report on AI foundation models has led the way in proposing principles to guide the development of foundation models and to protect consumers. An update report is due in March 2024. The US agencies have also set out initial views – specifically encouraged by President Biden’s executive order on AI – to look closely at competition issues and possible consumer harms stemming from AI.

While antitrust agencies recognize the fast-evolving nature of the technology and the value chain itself, three key focuses have emerged:

1. Access to key AI inputs as possible barriers to entry/expansion, with a particular focus on computing power, pre-training and fine-tuning data (including human input for reinforced learning), talent and expertise, and access to capital.

2. Sustained diversity in model competition across model performance and downstream use cases, including balancing the pro-competitive benefits of open-source projects against the associated proliferation risks of frontier models.

3. Effects on downstream markets and wider digital ecosystems from AI model integration across the digital sector.

Antitrust authorities view merger control as an essential tool to address concentration risk at different levels of the AI stack. For example, the CMA was clear in its October 2023 initial report that it will be “vigilant” in scanning for potential harm to competition from transactions in the space.