💻 TECH

Fighting The Valley

The EU has been busy with new litigation against Silicon Valley titans Microsoft and Apple.

On Monday, the bloc filed charges against Apple for allegedly using unfair, anti-competition practices in its app store. The charges were the first time a company has been prosecuted under the 2022 Digital Markets Act.

According to the New York Times, the charges are still preliminary and Apple has time to respond.

“The European Commission would like Apple to open its ecosystem, and Apple is saying no way,” Tommaso Valletti, a former economist for the European Commission, told the Times. “Apple is basically saying, ‘See you in court.’”

In fact, Apple said in a statement, "“Throughout the past several months, Apple has made a number of changes to comply with the D.M.A. in response to feedback from developers and the European Commission. …We are confident our plan complies with the law.”

Not a day later, on Tuesday, EU regulators charged Microsoft with breaking antitrust rules with its Teams product.

"Regulators said Microsoft’s packaging of Teams with other well-established software tools in Office 365 and Microsoft 365, which includes programs like Word, Excel, PowerPoint and Outlook, amounted to an illegal abuse of market dominance that rival companies like Zoom and Slack could not match," reports the Times. In other words, for businesses, there's no real other choice but Teams.

Should the EU investigation continue and find Microsoft in violation, the company could be charged a fine of some $211 billion.

“Having unbundled Teams and taken initial interoperability steps, we appreciate the additional clarity provided today and will work to find solutions to address the Commission’s remaining concerns," Microsoft president Brad Smith wrote in a statement according to CNN.

But not all of Silicon Valley is behind Apple and Microsoft. A representative for Salesforce said the EU's actions are "a win for customer choice and an affirmation that Microsoft practices with Teams have harmed competition."

The DOJ

The EU is not the only jurisdiction going after Apple and it's alleged monopoly over the App Store. In June, 4 states joined a civil antitrust lawsuit brought by the DOJ in March against the iPhone maker. Indiana, Massachusetts, Nevada, and Washington added their states to 15 others and the District of Columbia, who contend that Apple is "monopolizing multiple smartphone markets in violation of Section 2 of the Sherman Act." The suit was filed in the District of New Jersey.

THE VERDICT:

The era of reigning in Big Tech has upon us for some years now, but it seems like the EU is the first mover, rather than the US. These lawsuits are no surprise to the companies they affect, but their contingency plans for various outcomes remain unclear.

🤖 ARTIFICIAL INTELLIGENCE

Breaking The (AI) Record

If you've never heard of Suno or Udio AI, the world's largest record companies want to keep it that way.

The Recording Industry Association of America (RIAA) has filed two copyright infringement cases—one against Suno and one against Udio—in an attempt to halt what it says is "the mass infringement of copyrighted sound recordings copied and exploited without permission by two multi-million-dollar music generation services.”

“The music community has embraced AI and we are already partnering and collaborating with responsible developers to build sustainable AI tools centered on human creativity that put artists and songwriters in charge,” Mitch Glazier, head of the RIAA, said, reports the LA Times. “But we can only succeed if developers are willing to work together with us. Unlicensed services like Suno and Udio that claim it’s ‘fair’ to copy an artist’s life’s work and exploit it for their own profit without consent or pay set back the promise of genuinely innovative AI for us all.”

It's a battle that's been heating up for a few years now. In April of 2023, “Heart on My Sleeve" featuring Drake and The Weeknd became an overnight viral hit. The problem is, the song was completely AI-generated and unlicensed.

“It is now possible to produce infinite media in the style or likeness of someone else, soon with little effort, so we all have to come to terms with what that means,” Holly Herndon told the New York Times. "The question is, as a society, do we care what Drake really feels or is it enough to just hear a superficially intelligent rendering?"

For the two musicians and their teams, the answer was clear: take the song down or else.

But Mikey Shulman, CEO of Suno, doesn't think it's so black and white. In a statement regarding the RIAA lawsuit, he said “Suno’s mission is to make it possible for everyone to make music. Our technology is transformative; it is designed to generate completely new outputs, not to memorize and regurgitate pre-existing content. That is why we don’t allow user prompts that reference specific artists. We would have been happy to explain this to the corporate record labels that filed this lawsuit (and in fact, we tried to do so), but instead of entertaining a good faith discussion, they’ve reverted to their old lawyer-led playbook. Suno is built for new music, new uses, and new musicians. We prize originality.”

Feeding AI

The music industry's lawsuits mirror the lawsuits brought by the New York Times against Microsoft and OpenAI. The Times and RIAA both allege in their cases that their copyrighted works were used without license or consent to train the generative AI models that are now threatening the very businesses they "learned" from.

"[N]ormative questions about who’s in the right and who’s in the wrong here get very complicated, because the companies concerned about AI aren’t always properly compensating their own content creators," instructor Mason Kortz of the Harvard Law School told the Harvard Law Review. "As an example, look at record labels that are claiming that AI will destroy music and harm artists, but are only paying their artists five cents on the dollar. Overall, I agree that there’s a high potential for individual writers, artists, and actors to suffer here. But I don’t necessarily think that the big companies that for the moment are aligning against the AI developers really have the little guys’ interests in mind all the time."

THE VERDICT:

As Kortz rightly states, the battle here is not between content-hungry AI companies and publishers looking to protect artists, but two business models profiting off the same source. It begs the question then: how do the content creators themselves view the battle, and can they stop the changing guard?