Alibaba’s AliExpress gets hit with an EU probe—and TikTok feels the heat in Italy

First up, we have the European Commission opening its third formal investigation under the new Digital Services Act, the one setting standards for content moderation and other what-happens-on-platforms stuff. The first two probes hit social media companies—X and TikTok, in that order—but number three goes to an online marketplace, Alibaba’s AliExpress.

The Commission’s list of AliExpress’s potential DSA infractions is painfully long, so here are a few highlights. AliExpress is suspected of failing to crack down on the use of its platform for the sale of fake medicines, fake food, and risky dietary supplements, and distributing pornography without age checks. It’s also suspected of allowing influencers in its affiliate program to promote illegal or harmful products, failing to make it possible for users to flag up illegal content, and failing to check the reliability of traders’ information.

Two things to say about this: 1) It’s very clear that EU Big Tech laws aren’t just cracking down on U.S. companies anymore; and 2) Given the rapid rise of big online marketplaces selling questionable goods, this feels like timely action. AliExpress responded to the accusations in a statement: “We respect all applicable rules and regulations in the markets where we operate…and will continue to ensure that we will be able to meet the requirements of the DSA.” Next!

Over to Italy now, where the national competition watchdog just fined TikTok €10 million ($11 million) for failing to protect young users from harmful content, including videos that promoted a self-harm trend called the “French Scar challenge.” As Reuters reports, TikTok claims it “long ago restricted visibility” of the challenge videos so kids couldn’t see them, but the Italian watchdog says its algorithmic profiling systems “systematically re-proposed” the content to users. “This causes undue conditioning of users who are stimulated to increasingly use the platform,” it said in a statement.

Interestingly, this is an antitrust case—the Italian Competition Authority says TikTok is guilty of an “unfair commercial practice”—but it does dovetail quite neatly with the European Commission’s DSA investigation into TikTok, which also covers the platform’s algorithmic addictiveness and negative effects on kids’ mental health. Also, this obviously provides more fuel to the push for banning TikTok in the U.S., which the House accelerated yesterday with an overwhelming vote calling for divestment or a ban. Next!

One of Apple’s many new obligations under the new, antitrust-focused Digital Markets Act is to give European iPhone users a clear choice of which default browser to use. Rival browser developers now say they’re seeing a clear increase in downloads. Firefox-maker Mozilla told The Verge there’s been a 50% jump in German downloads and a 30% bump in France, and Brave is also touting an increase in excess of 30%.

Apple caught some criticism for how it complied with this DMA requirement—EU users firing up Safari after the iOS 17.4 update see a randomized list including many browsers they probably haven’t ever heard of—but hey, these are meaningful upticks for Firefox and Brave, which are legit options. Let’s see how those trajectories pan out over time. Next!

Microsoft has finally followed rival cloud providers Google and AWS in abolishing exit fees for corporate users who remove their data from Azure. The Register reports that this likely has a lot to do with complying with the European Data Act, yet another piece of new EU legislation that aims to give people more freedom to do what they will with their data. However, unlike Amazon, both Microsoft and Google will only waive fees for those who outright cancel their cloud accounts.

And now, finally, I yesterday asked you for your opinions on the EU’s incoming AI Act, specifically whether it strikes the right balance between safety and the stimulation of innovation. B.W. from the Netherlands gave a succinct answer: “It certainly does.”

But J.G., writing from the U.S. I think, warned that startups wanting to build high-growth businesses using AI technologies “will have to make a careful evaluation if they really want to do their startup and scaling work in the Europe markets as an initial point of getting going.” He also suggested that European companies wanting to use AI will probably find themselves with “only a few options from the large North American businesses” as smaller companies shy away, leaving only larger ones with deep pockets that “might be willing to take the risks of doing business in Europe.”

Thanks for the feedback! More news below.

David Meyer

Want to send thoughts or suggestions to Data Sheet? Drop a line here.

NEWSWORTHY

Musk v. Lemon. Elon Musk has abruptly cancelled Don Lemon’s tie-in with X, after the former CNN host used the first episode to interview Musk himself, and it apparently didn’t go so well. Musk said he scrapped the deal because the show was “basically just ‘CNN, but on social media,’ which doesn’t work, as evidence by the fact that CNN is dying.” Semafor reports that there may now be a legal battle over whether Lemon gets paid for the work he did for X. Either way, Lemon will release the video on Monday on YouTube and on X, and the spat serves as good promotional fodder.

Epic v. Apple. The tussle between Fortnite maker Epic Games and Apple continues, this time back in the U.S. rather than the EU. The September 2021 Californian court ruling that allowed Apple to block Fortnite from iPhones also forced Apple to let developers direct users to non-Apple payment methods through buttons or external links. Now, as Reuters reports, Epic has told the court that Apple is in “blatant violation” of the injunction, because it still bans the buttons and has slapped new fees and rules on purchases that make the links “commercially unusable.”

TikTok’s would-be buyers. Former Treasury Secretary Steven Mnuchin told CNBC he’s putting together a group of investors to buy TikTok if that House bill becomes law and if TikTok parent ByteDance agrees to the sale (a very big if, as it would require Beijing’s approval—though the alternative would be an effective TikTok ban in the U.S.). Meanwhile, former Activision CEO Bobby Kotick is reportedly also trying to scoop up the beloved/cursed social network.

SIGNIFICANT FIGURES

134

—The number of countries that are considering digital versions of their currencies, according to new Atlantic Council research. That’s 98% of the global economy, with all G20 nations except for Argentina having moved to “advanced” stages of central bank digital currency development. However, the report notes that progress in the U.S. has stalled.

IN CASE YOU MISSED IT

Biden’s big play to attract foreign chip and EV investments could be stumbling as Samsung, TSMC and others reportedly balk at high costs, by Lionel Lim

Neil Young is begrudgingly returning to Spotify after admitting his protest against Joe Rogan was unsuccessful, by Chris Morris

Exclusive: A German AI startup hoping to be a UiPath killer secures $3 million in seed funding, by Jeremy Kahn

TikTok is trying to distance itself from Beijing but U.S. lawmakers aren’t having it: ‘There’s no such thing as a private company in China’, by the Associated Press

Elon Musk is letting Tesla loyalists cut the line and buy Cybertrucks before everyone else, by Dylan Sloan

Elon Musk’s Tesla is now a ‘growth company with no growth,’ Wells Fargo writes in scathing downgrade, by Bloomberg

BEFORE YOU GO

Google’s game-playing AI. Having previously worked on AI agents that can play specific games, Google’s DeepMind unit is now focusing on an agent that can play loads of them. As described in a blog post yesterday, the agent is called Scalable Instructable Multiworld Agency, or SIMA, and it can apparently understand the 3D virtual worlds into which it is inserted. People can give it natural-language instructions, and it can then interpret on-screen images to interact with its environment, without the need for access to the game’s source code or APIs.