Apple's App Store violates the Digital Markets Act (DMA) because it prevents app developers from freely steering consumers to alternative channels for offers and content, the European Commission said in preliminary findings Monday. It also opened a third probe against the company over concerns that its new contracts for third-party app developers and app stores, including its own "Core Technology Fee," don't ensure effective compliance with the law. Under the DMA, developers who distribute their apps via the App Store should be able to tell customers about other, cheaper purchasing options and steer them in that direction, the EC noted. Apple has three sets of business terms governing its relationship with developers, yet none let developers communicate freely with customers. In fact, the EC said, under most of the provisions, Apple allows steering only via "link-outs" -- links developers can include in their apps that redirect customers to a web page where they can sign contracts. Another concern is that Apple's fees for facilitating developers' initial acquisitions of customers on the App Store "go beyond what is strictly necessary." Apple may review and reply to the investigation documents. If the EC's views are confirmed, all three sets of business terms would fail to comply with the DMA, which requires "gatekeepers" to allow app developers to direct customers to app stores outside their own for free. If noncompliance is confirmed, the EC could set fines of up to 10% of Apple's total annual worldwide revenue and, in cases of systematic breaches, could also force it to sell its business or the part of it related to the infringement. The European Consumer Organisation praised the EC's "swift enforcement action." Apple didn't comment. Apple is one of several Big Tech companies designated under the DMA as gatekeepers. That means they have a certain annual revenue in the European economic area and provide platform services in at least three EU countries; offer core platform services to more than 45 million monthly active end users in the EU and more than 10,000 yearly active businesses established in the EU; and met the second criterion during the past three years (see 2309250020).

The FTC recouped more than $324 million in refunds to consumers in 2023, the agency said Friday in its annual refund report. That number compares with $392.9 million in 2022, $472.4 million in 2021 and $483 million in 2020. The FTC’s civil remedy authority was weakened in 2021 when a unanimous U.S. Supreme Court found FTC Act Section 13(b) doesn’t authorize the agency to seek equitable monetary relief like restitution or disgorgement (see 2104220068). The total for 2023 included $99 million returned to consumers who were charged fees when trying to cancel Vonage phone plans, the agency said. Slightly more than 88% of the $324 million was returned to consumers, the agency added. Another 2.9% of the funds were sent to the U.S. Treasury, and 9.1% of the funds covered administrative costs. The 9.1% administrative cost compares with 1.7% for 2022, 1.8% for 2021 and 6.5% for 2020.

Pornhub’s decision to block access in Nebraska over a new age-verification law is a “great development” for “kids, culture and values,” Gov. Jim Pillen (R) said. Thursday. The Online Age Verification Liability Act, which requires adult websites to verify age via user ID, becomes effective July 15. Sen. Dave Murman (R) wrote the bill. In a statement, Pillen said: “To the news that one of the world’s busiest porn traffickers will shut down in Nebraska, I say: ‘good riddance.’ I was proud to sign LB1092 into law and am grateful for Sen. Dave Murman’s leadership on this issue.”

The “danger” of the federal government colluding with “concentrated private power” can’t be overstated, FTC Commissioner Andrew Ferguson said Thursday. The former Virginia solicitor general noted his state signing onto an amicus brief with 14 other states that sided with Missouri and Louisiana in a social media censorship lawsuit against the Biden administration (see 2405010079). Speaking at a Federalist Society event, Ferguson discussed how Missouri and Louisiana accused Biden officials of “coercing or colluding” with large tech platforms to “drive COVID-19 skepticism” off social media. “I cannot overstate the danger of government colluding with concentrated private power to infringe the liberties of everyone in this room,” he said. Ferguson said more states should assert themselves to protect individual rights when the federal government is “unwilling or unable.” Ferguson lauded Republican efforts in Texas and Florida to pass laws intended to address perceived biases against conservative content on social media. NetChoice and the Computer and Communications Industry Association sued to block those laws (see 2402270072). The central government is incapable of “doing anything like Florida and Texas did,” he said. The best governance is done by the people closest to those they govern, meaning state and local authorities, Ferguson said.

The FTC referred a complaint to DOJ against TikTok and parent company ByteDance for potential children’s privacy violations, the agency announced Thursday. The commission voted 3-0-2 to refer the complaint to the department. Republican Commissioners Andrew Ferguson and Melissa Holyoak, who joined the commission in March, were recused. The FTC’s investigation of the companies started during a compliance review associated with the agency’s 2019 settlement over Children’s Online Privacy Protection Act allegations against Musical.ly, TikTok’s predecessor, the commission said in a statement. In addition, the commission was investigating additional potential violations of COPPA and the FTC Act. “The investigation uncovered reason to believe named defendants are violating or are about to violate the law and that a proceeding is in the public interest, so the Commission has voted to refer a complaint to the DOJ, according to the procedures outlined in the FTC Act,” the commission said. Typically, the FTC doesn't announce publicly that "it has referred a complaint," it said. However, "we have determined that doing so here is in the public interest.” The commission looks forward to collaborating with DOJ, the agency said. TikTok said in a statement Tuesday it’s worked with the FTC for more than a year to “address its concerns” and is “disappointed the agency is pursuing litigation instead of continuing to work with us on a reasonable solution.” TikTok “strongly” disagrees with the allegations, which relate to “past events and practices that are factually inaccurate or have been addressed,” the company said.

Social media companies should display warnings about mental health risks associated with their platforms, U.S. Surgeon General Vivek Murthy said in a New York Times opinion piece Monday. Murthy has been examining the impacts of social media on youth mental health (see 2305230062). “A surgeon general’s warning label, which requires congressional action, would regularly remind parents and adolescents that social media has not been proved safe,” Murthy wrote. Cigarette packaging has carried warning labels since 1966 and Murthy believes similar warnings might reduce mental health impacts. Sens. Marsha Blackburn, R-Tenn., and Richard Blumenthal, D-Conn., issued a joint statement supporting the surgeon general’s announcement and urging Congress to pass their Kids Online Safety Act (see 2308040048).

The EU should focus on delivering concrete results for AI investment and coordinating with member states so regional startups can compete globally, European Court of Auditors member Mihails Kozlovs said Friday. The court held a hearing with EU policymakers, including European Parliament member Dragos Tudorache, a key negotiator for the EU AI Act (see 2405290007). The European Court of Auditors recently said the EU is lagging the U.S. and global leaders on AI development (see 2405290038). It found “weaknesses in implementation and performance monitoring,” said Kozlovs. He noted a 2018 EU strategy called for the EU economy to be the “world-leading region for cutting-edge ethical and secure AI.” The U.S., the UK and China have recognized the “criticalness” of AI and outlined “ambitious” strategies, he said. Meanwhile, the EU hasn’t updated its AI investment targets since 2018, and it’s unclear how each member state will contribute, he said. “This pinpoints the need for increased focus on delivering results and better coordination with member states,” he said. “The ultimate goal should be to build an attractive and effective AI ecosystem in Europe, where AI startups could scale and grow to a competitive level globally.” Tudorache said AI is an “enabling technology” that will affect every sector of the economy. The EU being the first “jurisdiction” in the world with a comprehensive AI regulation is a “good thing,” and it provides a global model, he said. But the “hard work,” including implementation of technical standards, “starts now,” he noted: Funding AI workforce training will be the most important investment.

The FTC should finalize its privacy rulemaking before year's end, more than 30 organizations urged Chair Lina Khan in a letter Thursday. Signers included Fight for the Future, Demand Progress Education Fund, Center on Race and Digital Justice, Athena Coalition, Free Press, MediaJustice and Consumer Federation of America. Khan’s FTC first sought public comment on a potential rulemaking in August 2022 (see 2208110068). Since then, the “harmful impacts of unregulated surveillance and data collection have worsened,” the groups said, citing the rise of AI technology. They cited Amazon’s biometric surveillance using Ring technology and Meta’s tracking of users across the internet as examples. Groups are “frustrated” with the agency’s “lack of action” since the initial announcement, they said: “As core privacy rights are being challenged and data surveillance corporations are finding new ways to extract even more personal, sensitive data from individuals, we implore the FTC to put forth the NPRM on commercial surveillance.” The agency declined comment.

A California bill that would force tech platforms to pay for news content would undermine the independence of journalists by making them “dependent on government handouts,” NetChoice said Wednesday. Tech associations oppose the California Journalism Preservation Act (AB-886), a bill the Assembly approved, but the Senate failed to pass in 2023. The bill was re-referred to the state's Senate Judiciary Committee on Monday and is scheduled for a June 25 hearing. Assemblymember Buffy Wicks (D) introduced the legislation. Nothing in the bill ensures news organizations will use the proceeds to better fund journalism efforts, Vice President Carl Szabo said. In addition, it would let the government decide who’s a journalist, while forcing companies like Reddit and Pinterest to pay millions to major news companies, he said.

The federal government should rely less on Microsoft for information technology services given the company’s 2023 cyber breach, tech associations wrote to the Biden administration and Congress on Wednesday. Microsoft President Brad Smith is scheduled to testify before the House Homeland Security Committee on Thursday in a hearing about the company’s July cyber breach (see 2404080054). The incident, which has been attributed to Chinese hackers, exposed 22 organizations and 500 consumers who do business with Microsoft. The Department of Homeland Security’s Cyber Safety Review Board in April described the attack as “preventable” and blamed Microsoft for a “cascade of errors” and a lack of investment in security standards. NetChoice, the Computer Communications Industry Association, the Software & Information Industry Association, Internet Infrastructure Coalition and the Coalition for Fair Software Licensing wrote the joint letter. “This over-reliance on single vendors is a growing concern, as many public sector organizations worldwide are using the same provider for everything from operating systems to security tools,” they wrote. The organizations recommend the government review past security performance more thoroughly in the procurement process and assess concentration risks associated with overreliance on one vendor.