British regulators haven’t totally lost the plot on Big Tech. These two decisions prove it (2023)

In the global campaign to crack down on the power of Big Tech, few regulators have swashbuckled with as much swagger as those in the U.K.

But two pronouncements Tuesday show the Brits have their limits, delivering a dash of hope to tech giants fearful of dramatic overseas intervention.

The first announcement came courtesy of the U.K.’s new digital secretary, Michelle Donelan, who said she had removed language forcing large tech companies to moderate “legal but harmful” content from a sweeping online safety bill under consideration.

The second statement arrived a few hours later from the U.K.’s top antitrust regulatory body, the Competition and Markets Authority, or CMA, which found no need for major government intervention in the highly concentrated music streaming industry.

The pair of proclamations mark rare moments of restraint by U.K. officials, who have moved aggressively in recent years to curtail the growing might of American tech giants.

In the past 12 months alone, U.K. officials have conducted investigations into several high-profile mergers, including the proposed Microsoft–Activision Blizzard acquisition and Nvidia’s since-abandoned plan to purchase Arm; started probes of potential market dominance by Apple, Amazon, and Google; ordered the unraveling of Meta’s acquisition of Giphy, despite minimal pushback from other foreign regulatory bodies; and introduced long-awaited online safety legislation aimed at increasing content moderation by tech platforms.

Tuesday’s developments, however, display some measure of moderation by U.K. regulators and policymakers.

In both cases, U.K. officials reached well-reasoned judgments about their areas of concern.

With regard to the “legal but harmful” provision, Donelan fairly concluded that the requirement would chill free speech and place vague, hard-to-enforce mandates on tech companies. In addition, the decision removes the “threat that tech firms or future governments could use the laws as a license to censor legitimate views,” Donelan said.

“I promised I would make some commonsense tweaks, and I have,” Donelan tweeted. “This is a stronger, better bill for it. It is focused where it needs to be: on protecting children and on stamping out illegality online.”

On the music streaming front, U.K. regulators concluded after a nearly yearlong market study that the industry remains sufficiently competitive—even though Spotify, Amazon, and Apple account for roughly 90% of the monthly active users on streaming platforms in the U.K. (The study excluded views of music videos through YouTube.)

In reaching their verdict, CMA officials noted that consumers have access to vast libraries of music and pay less for streaming than they did in the late 2000s. At the same time, U.K. officials found average royalty rates for artists and songwriters have increased over the past decade. To top it off, regulators said they have “not found evidence of substantial and sustained excess profits” by major record labels.

“We have found that it is unlikely that the outcomes that concern many stakeholders are primarily driven by competition,” CMA officials wrote. “Consequently, it is unlikely that a competition intervention would improve outcomes overall, and release more money in the system to pay creators more.”

The two decisions likely don’t signal a sea change within the U.K.’s hall of regulatory power.

British policymakers are still pursuing aggressive new rules for policing online content, some of which go well beyond those established by U.S. officials. As part of the updated language proposed by Donelan, tech companies would still need to give users options for avoiding harmful online content and work to shield children from such content.

In addition, leniency shown to low-margin music streamers likely won’t spill over to Apple and Google, currently under U.K. scrutiny for their massively profitable mobile operating system duopoly, or Amazon, which stands accused of bullying third-party merchants in its e-commerce platform. CMA approval of Microsoft’s $68.7 billion purchase of video game developer Activision Blizzard is hardly a slam dunk, either.

At least for this week, though, U.K. officials employed some discipline in their blitz on Big Tech.

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Jacob Carpenter

NEWSWORTHY

A breakdown in trust. Twitter’s former head of trust and safety said Tuesday that his resignation earlier this month followed a breakdown in corporate governance at the social media outfit, the Wall Street Journal reported. Yoel Roth, who led Twitter’s trust and safety team for about two years, said new owner Elon Musk ignored his unit’s guidance about the since-reversed rollout of an updated verification system, which triggered numerous fake accounts impersonating major brands. Roth said he believed his position was no longer needed because Musk dismissed rules designed to keep the platform safe for users.

There’s the door. DoorDash announced plans to lay off 1,250 corporate employees, or about 6% of its workforce, as part of a rightsizing effort underway at the delivery company, CNN reported. CEO Tony Xu told employees that he hired too aggressively in recent months, mistakenly anticipating that a pandemic-driven spike in demand would continue into 2022. DoorDash shares rose 8% in midday trading Wednesday, though they remain down 60% year to date.

Equal opportunity contributor? Former FTX CEO Sam Bankman-Fried claimed in an interview published Tuesday that he donated roughly equal amounts of money to Democrats and Republicans, though he funneled GOP contributions through dark money organizations. Bankman-Fried told crypto influencer and YouTube creator Tiffany Fong that he shielded donations to Republicans from public view to avoid criticism from left-leaning reporters. The comments follow Republicans’ condemnation of Democratic politicians who accepted more than $40 million in campaign contributions from the disgraced cryptocurrency mogul.

A walk-off hit. Disney disclosed Tuesday that it has completely bought out the streaming technology company BAMTech from Major League Baseball, Reuters reported. Regulatory filings show the entertainment conglomerate, which already owned 85% of BAMTech, paid $900 million for the remaining 15% of the firm. The move to fully acquire BAMTech, whose service powers Disney’s streaming platforms, came before CEO Bob Chapek was ousted and replaced by his predecessor, Bob Iger.

FOOD FOR THOUGHT

Ta-ta to TikTok. For better or worse, state leaders are once again out ahead of their federal counterparts on tech policy. Bloomberg reported Tuesday that South Dakota Gov. Kristi Noem issued an executive order banning the use of TikTok on state-owned devices, citing security concerns stemming from the app’s Chinese owners. The move by Noem, a Republican seen as a potential player in national politics, follows growing discontent in Washington over the rapid rise of TikTok. Some members of Congress and federal bureaucrats have called for new restrictions on TikTok, aiming to prevent any possibility of the Chinese government accessing data held by the app’s parent company, ByteDance. Many of those discussions, however, haven’t materialized into policy or legislation.

From the article:

The state’s employees and contractors are no longer allowed to download the app or access TikTok via the web, according to an executive order signed Tuesday by South Dakota Governor Kristi Noem.

“Because of our serious duty to protect the private data of South Dakota citizens, we must take this action immediately,” Noem, who’s been floated as a potential 2024 Republican presidential candidate, said in a statement. “I hope other states will follow South Dakota’s lead, and Congress should take broader action, as well.”

IN CASE YOU MISSED IT

Tech’s latest gold rush is selling influencers the tools they need to influence you, by Alexandra Sternlicht

Elon Musk reportedly delays the launch of Twitter Blue again, this time to spite Apple, by Nicholas Gordon

There’s another reason Elon Musk is so obsessed with Tim Cook and Apple—and it’s not about advertising money, by Alena Botros

Andreessen Horowitz dodged the FTX bullet. Was that skill or luck?, by Jeff John Roberts

Tesla’s dominance is ‘challenged’ as rivals devour its market share with more affordable electric cars, by Tom Krisher and the Associated Press

Arianna Huffington slams Elon Musk’s ‘hardcore’ Twitter edict and calls out his ‘outdated way of working,’by Jane Thier

Spotify Wrapped 2022 just dropped. Bad Bunny is the global artist—here’s who else made the top 5, by Chris Morris

BEFORE YOU GO

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