ReportWire

Tag: European Union

  • Italy ties China’s hands at Pirelli over fears about chip technology | CNN Business

    Italy ties China’s hands at Pirelli over fears about chip technology | CNN Business

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    London
    CNN
     — 

    Italy has imposed several curbs on Pirelli’s biggest shareholder, Sinochem, in a move aimed at blocking the Chinese government’s access to sensitive chip technology.

    The Italian government decided last week to make use of its so-called “Golden Power” regulations, designed to protect assets of strategic importance to the country, Pirelli said in a statement Sunday.

    The government order risks inflaming tensions between Europe and Beijing, and follows similar intervention by Germany and the United Kingdom to protect their semiconductor technology.

    Earlier this year, Europe joined a US-led effort to restrict China’s access to the most advanced chipmaking technology when the Netherlands — home to ASML Holding, a key supplier to the global semiconductor industry — said it would introduce export controls.

    Italy’s move comes as US Secretary of State Antony Blinken wraps up a high-stakes visit to China aimed at repairing strained relations between the world’s two biggest economies.

    Sinochem, owned by the Chinese government, is Pirelli’s biggest single shareholder, with a 37% stake, and has 60% of seats on the board of the Italian tire maker. CNN has contacted Sinochem for comment.

    In a statement Friday, the Italian government said Pirelli’s Cyber Tyre, which uses chip technology to collect vehicle data, is “configured as a critical technology of national strategic importance.”

    “Improper use of this technology can pose significant risks not only to the confidentiality of user data, but also to the possible transfer of information relevant to security,” the statement added.

    The order sets a host of limitations on Sinochem’s involvement in Pirelli, including a bar on it devising the company’s strategy and financial plans, or appointing a CEO.

    The government said these curbs would protect the “autonomy” of Pirelli and its management, as well as “information of strategic importance.”

    Europe is heavily reliant on China for trade and investment, but relations have come under strain from ideological differences, including over Russia’s war in Ukraine, and recent moves by European Union regulators and governments to limit China’s access to sensitive technology.

    The order takes a page out of this playbook. It requires that Pirelli refuse any requests from Sinochem’s owner — China’s State-owned Assets Supervision and Administration Commission of the State Council — for information sharing, including any information connected to the “know-how” of proprietary technologies.

    The government said “some” strategic decisions would require approval from at least 80% of board directors, a further limitation on Sinochem’s influence.

    Separately, Rome is also assessing whether to renew its partnership with Beijing on the Belt and Road Initiative — China’s global infrastructure and investment megaproject. Italy is the only Group of Seven nation to have joined the initiative.

    In a further sign of the steps multinational companies are beginning to consider to protect their operations from growing geopolitical friction, drugmaker AstraZeneca

    (AZN)     has drawn up plans to spin off its China business and list it separately in Hong Kong, according to the Financial Times. AstraZeneca

    (AZN)     declined to comment.

    Earlier this month, Sequoia Capital, the Silicon Valley venture capital group, said it would separate its China investments into an independent unit.

    On Tuesday, the European Commission will unveil measures — possibly including screening of outbound investments and export controls — to keep prized EU technology from countries such as China, Reuters reported.

    — Laura He in Hong Kong contributed to this article.

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  • EU approves Microsoft’s deal to buy Activision Blizzard | CNN Business

    EU approves Microsoft’s deal to buy Activision Blizzard | CNN Business

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    CNN
     — 

    European regulators have approved Microsoft’s $69 billion acquisition of Activision Blizzard, handing the technology giant a victory at a time when the deal is being challenged in other countries.

    While the merger could harm competition in some respects, particularly in the fast-growing market for cloud gaming services, concessions by Microsoft were enough to mitigate antitrust concerns stemming from the deal, the European Commission said in a statement.

    Among Microsoft’s offers were a 10-year commitment letting European consumers play Activision titles on any cloud gaming service. Microsoft also committed that it would not downgrade the quality or content of its games made available on rival streaming platforms.

    “These commitments fully address the competition concerns identified by the Commission and represent a significant improvement for cloud game streaming compared to the current situation,” the Commission said.

    The Microsoft deal, which would make the company the third largest game publisher in the world after Tencent and Sony, is being challenged in the United States and the UK.

    In a statement, Microsoft said its commitment on game streaming would go beyond the European Union.

    “The European Commission has required Microsoft to license popular Activision Blizzard games automatically to competing cloud gaming services,” said Microsoft President Brad Smith. “This will apply globally and will empower millions of consumers worldwide to play these games on any device they choose.”

    Activision CEO Bobby Kotick called the requirements “stringent” and pledged to expand investments in EU workers.

    “Our talented teams in Sweden, Spain, Germany, Romania, Poland and many other European countries have the skills, ambition, and government support needed to compete effectively on a global scale,” Kotick said in a statement. “We expect these teams to grow and prosper given their governments’ firm but pragmatic approach to gaming.”

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  • ‘Serious concerns’: Top companies raise alarm over Europe’s proposed AI law | CNN Business

    ‘Serious concerns’: Top companies raise alarm over Europe’s proposed AI law | CNN Business

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    Dortmund, Germany
    CNN
     — 

    Dozens of Europe’s top business leaders have pushed back on the European Union’s proposed legislation on artificial intelligence, warning that it could hurt the bloc’s competitiveness and spur an exodus of investment.

    In an open letter sent to EU lawmakers Friday, C-suite executives from companies including Siemens

    (SIEGY)    , Carrefour

    (CRERF)    , Renault

    (RNLSY)     and Airbus

    (EADSF)     raised “serious concerns” about the EU AI Act, the world’s first comprehensive AI rules.

    Other prominent signatories include big names in tech, such as Yann LeCun, chief AI scientist of Meta

    (FB)    , and Hermann Hauser, founder of British chipmaker ARM.

    “In our assessment, the draft legislation would jeopardize Europe’s competitiveness and technological sovereignty without effectively tackling the challenges we are and will be facing,” the group of more than 160 executives said in the letter.

    They argue that the draft rules go too far, especially in regulating generative AI and foundation models, the technology behind popular platforms such as ChatGPT.

    Since the craze over generative AI began this year, technologists have warned of the potential dark side of systems that allow people to use machines to write college essays, take academic tests and build websites. Last month, hundreds of top experts warned about the risk of human extinction from AI, saying mitigating that possibility “should be a global priority alongside other societal-scale risks such as pandemics and nuclear war.”

    The EU proposal applies a broad brush to such software “regardless of [its] use cases,” and could push innovative companies and investors out of Europe because they would face high compliance costs and “disproportionate liability risks,” according to the executives.

    “Such regulation could lead to highly innovative companies moving their activities abroad” and investors withdrawing their capital from European AI, the group wrote.

    “The result would be a critical productivity gap between the two sides of the Atlantic.”

    The executives are calling for policymakers to revise the terms of the bill, which was agreed upon by European Parliament lawmakers earlier this month and is now being negotiated with EU member states.

    “In a context where we know very little about the real risks, the business model, or the applications of generative AI, European law should confine itself to stating broad principles in a risk-based approach,” the group wrote.

    The business leaders called for a regulatory board of experts to oversee these principles and ensure they can be continuously adapted to changes in the fast-moving technology.

    The group also urged lawmakers to work with their US counterparts, noting that regulatory proposals had also been made in the United States. EU lawmakers should try to “create a legally binding level playing field,” the executives wrote.

    If such action isn’t taken and Europe is constrained by regulatory demands, it could hurt the region’s international standing, the group suggested.

    “Like the invention of the Internet or the breakthrough of silicon chips, generative AI is the kind of technology that will be decisive for the performance capacity and therefore the significance of different regions,” it said.

    Tech experts have increasingly called for greater regulation of AI as it becomes more widely used. In recent months, the United States and China have also laid out plans to regulate the technology. Sam Altman, CEO of ChatGPT maker OpenAI, has used high-profile trips around the world in recent weeks to call for co-ordinated international regulation of AI.

    The EU rules are the world’s “first ever attempt to enact” legally binding rules that apply to different areas of AI, according to the European Parliament.

    Negotiators of the AI Act hope to reach an agreement before the end of the year, and once the final rules are adopted by the European Parliament and EU member states, the act will become law.

    As they stand now, the rules would ban AI systems deemed to be harmful, including real-time facial recognition systems in public spaces, predictive policing tools and social scoring systems, such as those in China.

    The Act also outlines transparency requirements for AI systems. For instance, systems such as ChatGPT would have to disclose that their content was AI-generated and provide safeguards against the generation of illegal content.

    Engaging in prohibited AI practices could lead to hefty fines: up to €40 million ($43 million) or an amount equal to up to 7% of a company’s worldwide annual turnover, whichever is higher.

    But penalties would be “proportionate” and consider the market position of small-scale providers, suggesting there could be some leniency for startups.

    Not everyone has pushed back on the legislation so far. Earlier this month, Digital Europe, a trade association that counts SAP

    (SAP)     and Ericsson

    (ERIC)     among its members, called the rules “a text we can work with.”

    “However, there remain some areas which can be improved to ensure Europe becomes a competitive hub for AI innovation,” the group said in a statement.

    Dragos Tudorache, a Romanian member of parliament who led the bill’s drafting, said he was convinced that those who signed the new letter “have not read the text but have rather reacted on the stimulus of a few.”

    “The only concrete suggestions made are in fact what the [draft] text now contains: an industry-led process for defining standards, governance with industry at the table, and a light regulatory regime that asks for transparency. Nothing else,” he said in a statement.

    “It is a pity that the aggressive lobby of a few is capturing other serious companies in the net, which unfortunately undermines the undeniable lead that Europe has taken.”

    Brando Benifei, an Italian member of parliament who also led the drafting of the legislation, told CNN “we will listen to all concerns and stakeholders when dealing with AI regulation, but we have a firm commitment to deliver clear and enforceable rules.”

    “Our work could positively affect the global conversation and direction when dealing with artificial intelligence and its impact on fundamental rights, without hindering the necessary pursuit of innovation,” he said.

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  • How Meta got caught in tensions between the US and EU | CNN Business

    How Meta got caught in tensions between the US and EU | CNN Business

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    CNN
     — 

    Facebook-parent Meta has perhaps become the most high-profile casualty of a long-running privacy dispute between Europe and the United States — but it may not be the last.

    Meta has been fined a record-breaking €1.2 billion ($1.3 billion) by European Union regulators for violating EU privacy laws by transferring the personal data of Facebook users to servers in the United States. Meta said Monday it would appeal the ruling, including the fine.

    The historic fine against Meta — and a potentially game-changing legal order that could force Meta to stop transferring EU users’ data to the United States — isn’t just a one-off decision limited to this one company or its individual business practices. It reflects bigger, unresolved tensions between Europe and the United States over data privacy, government surveillance and regulation of internet platforms.

    Those underlying and fundamental disagreements, which have simmered for years, have now come to a head, casting a significant shadow over thousands of businesses that depend on processing EU data in the United States.

    Beyond its huge economic implications, however, the fine has once again highlighted Europe’s deep mistrust of US surveillance powers — right as the US government is trying to build its own case against foreign-linked apps such as TikTok over similar surveillance concerns.

    The origins of Meta’s fine this week trace back to a 2020 ruling by Europe’s top court.

    In that decision, the European Court of Justice struck down a complex transatlantic framework Meta and many other companies had been relying on until then to legally move EU user data to US servers in the ordinary course of running their businesses.

    That framework, known as Privacy Shield, was itself the outgrowth of European complaints that US authorities didn’t do enough to protect the privacy of EU citizens. At the time Privacy Shield was created, the world was still reeling from disclosures made by National Security Agency leaker Edward Snowden. His disclosures highlighted the vast reach of US surveillance programs such as PRISM, which allowed the NSA to snoop on the electronic communications of foreign nationals as they used tech tools built by Google, Microsoft, and Yahoo, among others.

    PRISM relied on a basic fact of internet architecture: Much of the world’s online communications take place on US-based platforms that route their data through US servers, with few legal protections or recourse for either foreigners or Americans swept up in the tracking.

    A 2013 European Parliament report on the PRISM program captured the EU’s sense of alarm, noting the “very strong implications” for EU citizens.

    “PRISM seems to have allowed an unprecedented scale and depth in intelligence gathering,” the report said, “which goes beyond counter-terrorism and beyond espionage activities carried out by liberal regimes in the past. This may lead towards an illegal form of Total Information Awareness where data of millions of people are subject to collection and manipulation by the NSA.”

    Privacy Shield was a 2016 US-EU agreement designed to address those concerns by making US companies certifiably accountable for their handling of EU user data. For a time, it seemed as if Privacy Shield could be a lasting solution facilitating the growth of the internet and a globally connected society, one in which the free flow of data would not be impeded.

    But when the European Court of Justice invalidated that framework in 2020, it reiterated longstanding surveillance concerns and insisted that Privacy Shield still didn’t provide EU citizens’ personal information the same level of protection in the US that it enjoys in EU countries, a standard required under GDPR, the EU’s signature privacy law.

    The loss of Privacy Shield created enormous uncertainty for the more than 5,300 businesses that rely on the smooth transfer of data across borders. The US government has said transatlantic data flows support the more than $7 trillion dollars of economic activity that occurs every year between the United States and the European Union. And the US Chamber of Commerce has estimated that transatlantic data transfers account for about half of all data transfers in both the US and the EU.

    The Biden administration has moved to implement a successor to Privacy Shield that contains some changes to US surveillance practices, and if it is fully implemented in time, it could prevent Meta and other companies from having to suspend transatlantic data transfers or some of their European operations.

    But it’s unclear whether those changes will be enough to be accepted by the EU, or whether the new data privacy framework could avoid its own court challenge.

    The possibility that US-EU data transfers may be seriously disrupted is refocusing scrutiny on US surveillance law just as the US government has been sounding its own alarms about Chinese government surveillance.

    US officials have warned that China could seek to use data collected from TikTok or other foreign-linked companies to benefit the country’s intelligence or propaganda campaigns, using the personal information to identify spying targets or to manipulate public opinion through targeted disinformation.

    But US moral authority on the issue risks being eroded by the EU criticism, a problem for the US government that may only be compounded by its own missteps.

    Just last week, a federal court described how the FBI improperly accessed a vast intelligence database meant for surveilling foreign nationals in a bid to gather information on US Capitol rioters and those who protested the 2020 killing of George Floyd.

    The improper access, which was not “reasonably likely” to retrieve foreign intelligence information or evidence of a crime, according to a Justice Department assessment described in the court’s opinion, has only inflamed domestic critics of US surveillance law, and could give ammunition to EU critics.

    The intelligence database at issue was authorized under Section 702 of the Foreign Intelligence Surveillance Act — the same law used to justify the NSA’s PRISM program and which the EU has repeatedly cited as a danger to its citizens and a reason to suspect transatlantic data sharing.

    While the US distinguishes itself from China based on commitments to open and democratic governance, the EU’s concerns about the US are not much different in kind: They come from a place of deep mistrust of broad surveillance authority and suspicions about the potential misuse of user data.

    For years, civil liberties advocates have alleged that Section 702 enables warrantless spying on Americans on an enormous scale. Now, the FBI incident may only further validate EU fears; add to the existing concerns that led to Meta’s fine; contribute to the potential unraveling of the US-EU data relationship; and damage US credibility in its push to warn about the hypothetical risks of letting TikTok data flow to China.

    If a new transatlantic data agreement is delayed or falls apart, Meta won’t be the only company stuck with the bill. Thousands of other companies may get caught in the middle, and the United States will have to hope nobody looks too closely at why while still trying to make a case against TikTok.

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  • EU blesses transatlantic data sharing deal | CNN Business

    EU blesses transatlantic data sharing deal | CNN Business

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    Washington
    CNN
     — 

    The European Union on Monday gave final approval to an agreement with the US government that restores the ability for thousands of businesses to easily transfer the personal information of European citizens to servers located in the United States, and vice versa, in the face of surveillance concerns by privacy advocates.

    The decision resolves, for now, years of uncertainty about the future of transatlantic data flows that US officials say support more than $1 trillion in annual economic activity. Those data flows had been threatened when a previous EU-US agreement was struck down in 2020 by Europe’s top court over insufficient privacy protections for EU citizens.

    With the EU’s approval, the new agreement again allows businesses to transfer European data to the United States as if it were another EU member state, without requirements to implement additional privacy safeguards.

    Monday’s so-called “adequacy decision” by the European Commission paves the way for companies to sign up for the EU-US Data Privacy Framework, which entered into force the same day.

    EU officials said the new framework improves upon its predecessor by tying in an executive order signed by President Joe Biden last year limiting how US intelligence agencies may access European citizens’ personal information.

    The order also provided for the creation of a new court-like body that can force US companies to delete EU citizens’ data if an investigation determines that EU citizens’ privacy rights were violated. EU citizens will be able to file individual complaints to the Data Protection Review Court.

    In a statement, EU President Ursula von der Leyen called the US enhancements “unprecedented.”

    “Today we take an important step to provide trust to citizens that their data is safe, to deepen our economic ties between the EU and the US, and at the same time to reaffirm our shared values,” von der Leyen said. “It shows that by working together, we can address the most complex issues.”

    But civil liberties advocates on Monday sharply criticized the framework as too similar to “Privacy Shield,” the agreement struck down in 2020, signaling that the new framework is likely to be tested with its own court challenges.

    “Guess what: it is largely a copy of the old principles!” tweeted Max Schrems, the privacy activist who led the charge that resulted in Privacy Shield’s nullification.

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  • Twitter loses its top content moderation official at a key moment | CNN Business

    Twitter loses its top content moderation official at a key moment | CNN Business

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    CNN
     — 

    Twitter has lost its top content moderation official just weeks before the company is set to undergo a regulatory stress test by European Union officials focused on its handling of user content, in the latest sign of turbulence at the company under owner Elon Musk.

    On Thursday, Twitter’s head of trust and safety, Ella Irwin, told Reuters she had left the company. Irwin has not addressed the reasons for her departure, but the move coincided with the company’s content moderation dispute with the Daily Wire, a conservative outlet.

    The dispute focused on the forthcoming release of a self-described documentary, “What Is a Woman?” that Twitter warned would be labeled as “hateful content” due to two instances of misgendering, according to Daily Wire CEO Jeremy Boreing. Musk intervened later Thursday, calling the content moderation decision “a mistake by many people at Twitter” and that the video would be “definitely allowed.”

    Twitter did not immediately respond to a request for comment on Irwin’s departure.

    But the sudden and unexpected vacancy at Twitter could leave the company without a key content moderation official at a sensitive moment. Later this month at Twitter’s San Francisco offices, EU officials are set to review whether the platform is likely to be compliant with a sweeping content moderation law that could eventually trigger millions of dollars in fines for Twitter if it’s found to be noncompliant.

    That law, known as the Digital Services Act, will require so-called “very large online platforms” including Twitter to abide by tough content moderation standards by as early as August. It’s far from clear whether the company can meet those requirements by the deadline, and recent developments at Twitter seem to have further alarmed EU regulators in that respect.

    For months, as Musk has increasingly welcomed more incendiary speech onto the platform Twitter had previously restricted, EU officials have been reminding Twitter of its content moderation obligations under the DSA. The warnings have also come amid mass layoffs at the company that have eliminated entire teams, including much of its content moderation staff.

    Last month, Twitter pulled out of the European Union’s code of conduct on disinformation, a series of voluntary commitments to combat mis- and disinformation that the EU has said would be considered as part of any evaluation of a platform’s compliance with the overall Digital Services Act (DSA).

    Although Twitter said it was “committed to fully complying with the Digital Services Act” and would meet its DSA obligations with respect to misinformation “in a manner that reflects Twitter’s unique service,” the company told EU officials “we feel we have no alternative” but to withdraw from the code.

    The announcement prompted swift backlash from Thierry Breton, a top EU commissioner and digital regulator, who appeared to regard Twitter’s decision as an attempt to evade responsibility.

    “Obligations remain,” Breton said. “You can run but you can’t hide.”

    Irwin’s departure could undercut the EU’s confidence further. Without a trust and safety head who would otherwise be expected to attend the EU stress test, Twitter’s ability to effectively respond to the evaluation may be constrained. A spokesperson for the European Commission didn’t immediately respond to a request for comment.

    On Friday, The Wall Street Journal reported that Twitter’s head of brand safety and ad quality also departed the company this week.

    All of this could be problematic for Twitter and Musk in the long run – and could also create an added headache for Linda Yaccarino just as she takes over as the company’s new CEO.

    Companies that fail to abide by the DSA risk fines of up to 6% of their global annual revenue. For Twitter, which is already struggling to regain its financial footing amid significant debt and an advertiser backlash, that’s a cost it can ill afford.

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  • TikTok ‘stress test’ shows it’s not ‘fully ready’ for looming EU social media rules, commissioner says | CNN Business

    TikTok ‘stress test’ shows it’s not ‘fully ready’ for looming EU social media rules, commissioner says | CNN Business

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    Washington
    CNN
     — 

    TikTok has “more work” to do to meet tough new European standards that are coming for social media and content moderation, according to a top EU official who performed a “stress test” of the company this week.

    The report by EU Commissioner Thierry Breton comes ahead of a looming Aug. 25 deadline for platforms such as TikTok to comply with the Digital Services Act (DSA) — a package of regulations aimed at battling misinformation, potential privacy abuses and illegal content, among other things.

    European Commission staff conducted the TikTok test on Monday at the company’s Dublin offices, according to a statement from the commissioner, and Breton outlined the results of the voluntary inspection to CEO Shou Chew on Tuesday.

    “TikTok is dedicating significant resources to compliance,” Breton said, pointing to changes TikTok has made to its recommendation algorithms and its transparency procedures as evidence the company appears to be taking its obligations seriously.

    But, he added, the test results also showed “more work is needed to be fully ready for the compliance deadline.”

    “Now it is time to accelerate to be fully compliant,” Breton said, indicating that officials will be revisiting at the end of the summer whether TikTok has closed the gap.

    TikTok didn’t immediately respond to a request for comment on the test results.

    TikTok isn’t the only large tech platform to submit to an EU stress test. Last month, European officials evaluated Twitter’s platform for DSA compliance and also announced plans to stress test Facebook-parent Meta’s services.

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  • Europe is leading the race to regulate AI. Here’s what you need to know | CNN Business

    Europe is leading the race to regulate AI. Here’s what you need to know | CNN Business

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    London
    CNN
     — 

    The European Union took a major step Wednesday toward setting rules — the first in the world — on how companies can use artificial intelligence.

    It’s a bold move that Brussels hopes will pave the way for global standards for a technology used in everything from chatbots such as OpenAI’s ChatGPT to surgical procedures and fraud detection at banks.

    “We have made history today,” Brando Benifei, a member of the European Parliament working on the EU AI Act, told journalists.

    Lawmakers have agreed a draft version of the Act, which will now be negotiated with the Council of the European Union and EU member states before becoming law.

    “While Big Tech companies are sounding the alarm over their own creations, Europe has gone ahead and proposed a concrete response to the risks AI is starting to pose,” Benifei added.

    Hundreds of top AI scientists and researchers warned last month that the technology posed an extinction risk to humanity, and several prominent figures — including Microsoft President Brad Smith and OpenAI CEO Sam Altman — have called for greater regulation of the technology.

    At the Yale CEO Summit this week, more than 40% of business leaders — including Walmart chief Doug McMillion and Coca-Cola

    (KO)     CEO James Quincy — said AI had the potential to destroy humanity five to 10 years from now.

    Against that backdrop, the EU AI Act seeks to “promote the uptake of human-centric and trustworthy artificial intelligence and to ensure a high level of protection of health, safety, fundamental rights, democracy and rule of law and the environment from harmful effects.”

    Here are the key takeaways.

    Once approved, the Act will apply to anyone who develops and deploys AI systems in the EU, including companies located outside the bloc.

    The extent of regulation depends on the risks created by a particular application, from minimal to “unacceptable.”

    Systems that fall into the latter category are banned outright. These include real-time facial recognition systems in public spaces, predictive policing tools and social scoring systems, such as those in China, which assign people a “health score” based on their behavior.

    The legislation also sets tight restrictions on “high-risk” AI applications, which are those that threaten “significant harm to people’s health, safety, fundamental rights or the environment.”

    These include systems used to influence voters in an election, as well as social media platforms with more than 45 million users that recommend content to their users — a list that would include Facebook, Twitter and Instagram.

    The Act also outlines transparency requirements for AI systems.

    For instance, systems such as ChatGPT would have to disclose that their content was AI-generated, distinguish deep-fake images from real ones and provide safeguards against the generation of illegal content.

    Detailed summaries of the copyrighted data used to train these AI systems would also have to be published.

    AI systems with minimal or no risk, such as spam filters, fall largely outside of the rules.

    Most AI systems will likely fall into the high-risk or prohibited categories, leaving their owners exposed to potentially enormous fines if they fall foul of the regulations, according to Racheal Muldoon, a barrister (litigator) at London law firm Maitland Chambers.

    Engaging in prohibited AI practices could lead to a fine of up to €40 million ($43 million) or an amount equal to up to 7% of a company’s worldwide annual turnover, whichever is higher.

    That goes much further than Europe’s signature data privacy law, the General Data Protection Regulation, under which Meta was hit with a €1.2 billion ($1.3 billion) fine last month. GDPR sets fines of up to €10 million ($10.8 million), or up to 2% of a firm’s global turnover.

    Fines under the AI Act serve as a “war cry from the legislators to say, ‘take this seriously’,” Muldoon said.

    At the same time, penalties would be “proportionate” and consider the market position of small-scale providers, suggesting there could be some leniency for start-ups.

    The Act also requires EU member states to establish at least one regulatory “sandbox” to test AI systems before they are deployed.

    “The one thing that we wanted to achieve with this text is balance,” Dragoș Tudorache, a member of the European Parliament, told journalists. The Act protects citizens while also “promoting innovation, not hindering creativity, and deployment and development of AI in Europe,” he added.

    The Act gives citizens the right to file complaints against providers of AI systems and makes a provision for an EU AI Office to monitor enforcement of the legislation. It also requires member states to designate national supervisory authorities for AI.

    Microsoft

    (MSFT)     — which, together with Google, is at the forefront of AI development globally — welcomed progress on the Act but said it looked forward to “further refinement.”

    “We believe that AI requires legislative guardrails, alignment efforts at an international level, and meaningful voluntary actions by companies that develop and deploy AI,” a Microsoft spokesperson said in a statement.

    IBM

    (IBM)    , meanwhile, called on EU policymakers to take a “risk-based approach” and suggested four “key improvements” to the draft Act, including further clarity around high-risk AI “so that only truly high-risk use cases are captured.”

    The Act may not come into force until 2026, according to Muldoon, who said revisions were likely, given how rapidly AI was advancing. The legislation has already gone through several updates since drafting began in 2021.

    “The law will expand in scope as the technology develops,” Muldoon said.

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  • EU officials accuse Google of antitrust violations in its ad tech business | CNN Business

    EU officials accuse Google of antitrust violations in its ad tech business | CNN Business

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    Washington
    CNN
     — 

    Google’s advertising business should be broken up, European Union officials said Wednesday, alleging that the tech giant’s involvement in multiple parts of the digital advertising supply chain creates “inherent conflicts of interest” that risk harming competition.

    The formal accusations mark the latest antitrust challenge to Google over its sprawling ad tech business, following a lawsuit by the US Justice Department in January that also called for a breakup of the company.

    The EU Commission has submitted its allegations to Google in writing, officials said, kicking off a legal process that could potentially end in billions of dollars in fines in addition to a possible breakup that could impact part of its core advertising business.

    The commission alleges that since 2014, Google has unfairly boosted its own proprietary ad exchange — the online auction house known as AdX that matches advertisers and publishers — through its simultaneous ownership of some of the most popular ad tools for publishers and advertisers.

    For example, the commission claims, advertisers who used Google’s ad buying tools frequently had their purchases routed to AdX instead of to rival ad exchanges.

    Meanwhile, Google’s publisher-facing tools unfairly gave AdX a leg up over rival ad exchanges, the commission alleged, because Google’s publisher tools gave AdX competitive bidding information that the exchange could use to help advertisers win an auction.

    One proposed solution by the commission would spin off Google’s ad exchange and publisher tools from the ad-buying tools it provides to advertisers.

    “@Google controls both sides of the #adtech market: sell & buy,” tweeted Margrethe Vestager, the commission’s top competition official. “We are concerned that it may have abused its dominance to favour its own #AdX platform. If confirmed, this is illegal.”

    In a statement, Dan Taylor, Google’s vice president of global ads, said the EU’s probe “focuses on a narrow aspect of our advertising business,” that the company opposes the commission’s preliminary conclusions and that Google plans to “respond accordingly.”

    “Our advertising technology tools help websites and apps fund their content, and enable businesses of all sizes to effectively reach new customers. Google remains committed to creating value for our publisher and advertiser partners in this highly competitive sector,” Taylor said.

    A Google spokesperson told CNN Wednesday that the company has only just received the commission’s complaint and that it will take time to review the commission’s claims. Google also added that it will oppose calls for a breakup.

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  • Microsoft under European antitrust investigation over Teams | CNN Business

    Microsoft under European antitrust investigation over Teams | CNN Business

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    Washington
    CNN
     — 

    European officials are investigating whether Microsoft’s practice of bundling its Teams software with Office 365 is anticompetitive, the European Commission said Thursday.

    The EU probe follows a formal complaint by Microsoft’s rival, the Salesforce-owned Slack, in 2020, alleging that Microsoft has illegally circumvented competition.

    By packaging Teams together with its “well-entrenched” productivity suite, including apps such as Word and Outlook, Microsoft could be effectively blocking customers from seeking out rival collaboration tools, the Commission said. Antitrust officials are also concerned about interoperability issues between Microsoft’s software and third-party products, it added.

    “These practices may constitute anti-competitive tying or bundling and prevent suppliers of other communication and collaboration tools from competing,” the Commission said in a statement.

    Microsoft said in a statement it is cooperating with the probe.

    “We respect the European Commission’s work on this case and take our own responsibilities very seriously,” said a Microsoft spokesperson. “We will continue to cooperate with the Commission and remain committed to finding solutions that will address its concerns.”

    In a press briefing Thursday, EU spokesperson Arianna Podesta told reporters that “at this stage, possible commitments [by Microsoft to resolve the concerns] are too early to be discussed. We first need to identify indeed if there is a breach of antitrust considerations.”

    The in-depth investigation reflects rising EU antitrust scrutiny for Microsoft, which was last fined on a competition violation in 2013 for not honoring a commitment to give European consumers a choice in web browsers.

    Slack’s initial EU complaint alleged that Microsoft forces Teams onto millions of customers, “blocking its removal, and hiding the true cost to enterprise customers.”

    A Slack executive at the time argued that Microsoft sells a closed ecosystem of its own products, while Slack provides customers with more freedom to mix and match services.

    “This is a proxy for two very different philosophies for the future of digital ecosystems, gateways versus gatekeepers,” said Slack’s VP of communications and policy, Jonathan Prince.

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