The Digital Economy

Anthropic has formed an exclusive artificial intelligence consortium to use its general purpose artificial intelligence model, Claude Mythos, to identify and fix vulnerabilities in critical internet and digital infrastructure. Madhavi Singh warns this consortium, called Project Glasswing, could contravene antitrust law and argues for regulatory oversight to ensure that it does not become a front for an illegal cartel.

Chinese automotive manufacturers gain a competitive edge through laxer rules governing personal data protection and intellectual property. Oscar Borgogno and Giovanni Veronese argue that ensuring effective compliance with European law could help European manufacturers re-establish a level playing field while upholding EU constitutional values.

India is working on legislating new competition rules to govern artificial intelligence and other tech markets. But recommendations from a recent report by the Competition Commission of India suggest it might revert to old competition standards that will likely prove ineffectual in governing the new AI market, writes Abhineet Nayyar.

Meta prevailed in its monopoly case against the Federal Trade Commission by showing that the FTC’s market definition of personal social media was too narrow. However, Meta’s argument—and Judge James Boasberg’s ruling—rested on a flawed empirical assumption that confuses how users divert their time to other activities when no longer able to use a Meta platform with true product substitution.

Judge Amit Mehta’s remedies for Google’s search monopoly stopped short of banning payments for default search placement, reflecting the hope that generative AI will erode the power of traditional search. Cristian Santesteban argues the opposite: in the AI era of search, defaults may matter more by steering critical data and learning signals from AI-powered search sessions to the most dominant product. This mechanism can potentially compound Google’s advantage.

Congressional attempts to ban cryptocurrency platforms from providing yield, or interest, on stablecoin holdings have so far failed, and will likely continue to fail, as long as they run up against economic logic, writes David Krause.

The EU’s proposed Digital Omnibus to simplify digital regulation suggests repealing the 2019 Platform-to-Business Regulation. This poses a problem for the Digital Markets Act, which relies on the P2B-Regulation for how to define core platform services like search engines. Moving forward with the repeal will require legislators to renegotiate first the DMA, which is necessary anyways to adapt the law to the age of artificial intelligence, writes Jan-Frederick Göhsl.

Previous plaintiffs have argued unsuccessfully that Google’s Jedi Blue agreement with Facebook is anticompetitive and illegal. The agreement grants Facebook preferential access to Google’s dominant digital advertisement system in exchange for not building competing technologies. The plaintiffs’ challenges to Jedi Blue would have been on stronger ground had they argued that Jedi Blue is compelling evidence of illegal monopoly maintenance, as occurred in Microsoft, writes Joshua B. Gray.

Brazil’s new child protection law has gained less global press than its new digital competition bill. However, the two are complementary efforts that demonstrate how governments must rethink how different regulatory concerns and mandates blend into one another in the digital economy.

In the second of two articles, Stavros Makris and Filip Lubinski discuss how governments can reimagine competition policy to protect democracy and citizen welfare without abandoning traditional consumer welfare goals like innovation.