EU Digital Law Missing 'Gamechanger' Generative AI... "Limits of Platform Pre-Regulation"

EU DMA Regulation Targets to Be Finalized Soon
Concerns Over Innovation Hindrance and Privacy Vulnerabilities
"Strengthen Post-Regulation Instead of Pre-Regulation"

"Recently emerged generative artificial intelligence (AI) services are not subject to regulation under the European Union (EU) Digital Markets Act (DMA). This means that even if generative AI dominates a market, it does not need to comply with the DMA."

Professor Thibault Schrepel from Vrije Universiteit Amsterdam presenting at the 'International Seminar on Online Platform Regulation Trends' held at the National Assembly Members' Office Building on the 6th.
[Photo by YouTube capture]

Professor Tivolt Shrepel of Vrije Universiteit Amsterdam said this on the 6th at the 'International Seminar on Online Platform Regulation Trends' held at the National Assembly Members' Office Building. The DMA is a regulation created by the EU to prevent abuse of market dominance by big tech companies. Seven companies subject to regulation include Alphabet, Google's parent company, Amazon, Apple, Meta, Microsoft (MS), ByteDance, which operates TikTok, and Samsung Electronics. The EU will soon finalize the list of regulated entities.

The DMA preemptively regulates large platforms based on quantitative criteria such as revenue and number of users. Experts unanimously pointed out the limitations of preemptive regulation, stating that it fails to properly reflect rapidly changing industries. A representative example is generative AI. The DMA did not include generative AI, considered a 'game changer' in the digital industry, among the regulated platform services. This is because it emerged relatively recently after the ChatGPT boom in November last year. Shin Young-sun, a legal advisor at Yulchon Law Firm and former vice chairman of the Korea Fair Trade Commission, said, "As ChatGPT expands services from shopping and reservations to finance, academia, and software (SW) development, the platform industry is also undergoing drastic changes," adding, "In such an environment, preemptive regulation should be approached cautiously."

Concerns were also raised that it could hinder innovation. The 'prohibition of self-preferencing' clause in the DMA is a representative example. Self-preferencing means treating one's own products or content more favorably than those of other companies. For example, Google should not display its own shopping site at the top of its search engine results. Professor Shrepel pointed out, "If new services cannot be shown within existing services, the motivation to drive innovation will disappear," and "Consumers will not receive the best search services."

The office of Kim Hee-gon, a member of the People Power Party, held an "International Seminar on Trends in Online Platform Regulation" on the 6th at the National Assembly Members' Office Building.
[Photo source=YouTube capture]

Another issue overlooked by the DMA is privacy and security concerns. Ensuring interoperability as required by the DMA could lead to lax information protection measures. The DMA mandates that messenger services must ensure interoperability. This means Meta must open its own messengers, Facebook and WhatsApp, to other smaller messengers. Professor Mikolai Barczentewicz of the University of Surrey argued, "Exchanging two-way data with third-party services could lead to sensitive information leakage," and "It is difficult to properly verify third-party companies, increasing vulnerability to external attacks such as hacking." Although the intent is to allow small companies to compete with big tech, it opens the door for services with low security levels to access a large user base. Conversely, users lose the right to choose safer services.

To avoid such side effects, there are calls to strengthen ex-post regulation. Attorney Oh Gyuseong of Kim & Chang Law Firm said, "The Fair Trade Commission already has detailed regulations," and "It is sufficient to respond by strengthening existing laws or promoting the speed of law enforcement."

The EU will finalize the list of regulated entities under the DMA on this day and begin enforcement from March next year. Regulated companies will be prohibited from ▲ self-preferencing ▲ tying sales (e.g., bundling YouTube Music when subscribing to YouTube Premium) ▲ demanding most-favored-nation treatment (platform operators requiring minimum price sales from merchants) ▲ restricting the use of other services. In case of DMA violations, the EU can impose fines up to 10% of the company's annual global turnover. For repeated violations, the fine can be increased up to 20%. If organized violations are confirmed, the EU can also order the divestiture of parts of the business unit.

This content was produced with the assistance of AI translation services.