May 18, 2024

Welcome to Letters from CAMP, a newsletter on anti-monopoly activity in Canada and abroad, brought to you by the Canadian Anti-Monopoly Project. In this installment we have:

• Delays in the Canadian Google trial demonstrate the access to justice issue in competition law
• A new report highlights the economic and national security issues stemming from concentrated cloud computing
• Grok’s bizarre behaviour highlights the dangers of AI’s ability to shape our access to information

Now let’s dive in.

Justice Delayed is Monopoly Sustained

Canadian businesses, advertisers, and publishers received disappointing news last week as the Competition Tribunal announced that the Google ad-tech monopoly case would not get a hearing until early 2027. This timeline, with hearings beginning more than six years after the beginning of the investigation, delays access to justice and relief for affected Canadian businesses.

As previously covered in this newsletter, Google’s dominance in online advertising extracts significant monopoly rents, inflating costs for advertisers and reducing revenue for publishers. While the U.S. DOJ has secured wins in both their Google search and ad tech cases, it is unlikely Canadians will see relief unless we bring our own corresponding cases. In the meantime, Google’s gatekeeper position will continue to pull in an outsized portion of the $16 billion Canadian online advertising market.

The one exception would be in the case of the DOJ securing a global break up of Google’s businesses, separating out the parts of the business that support the search giant’s monopoly stranglehold. But it’s not just antitrust enforcers who are calling for a break up of Google. Financial analysts are increasingly seeing a breakup as beneficial, suggesting that shareholders might see greater returns if they were able to invest in the individual pieces of the search giant’s corporate empire. The analysis is a reminder that break ups are not simply a punishment for bad behaviour, but an important tool to unlock productive competitive forces in a monopolized market.

The delays in the Canadian Google trial are a reminder of the need for rapid access to justice and the limitations of an approach that relies solely on courts to restore competition in markets. While the Competition Bureau must continue its important work, policy makers must consider the other avenues available to restore fair competition in markets across the economy.

📰 CAMP in the News 📰

• Wasserman, Letting Private Equity Buy Law Firms May Stifle Service, Mobility, (Bloomberg Law)
• Wickham, The Canadian government wanted grocers to keep it up to date on efforts to stabilize food prices. Sobeys and Metro refused, (Ricochet Media)

Cloud Computing’s Looming Monopoly Risk

This week the Open Markets Institute released a sobering new report highlighting critical concerns about monopoly control in cloud computing—the infrastructure that increasingly supports the modern economy. With just three American firms (Amazon, Microsoft, and Google) controlling two-thirds of global cloud infrastructure, these companies possess immense and growing power over the economic and national security concerns of countries around the world.

The report urges a fundamental rethinking of regulatory approaches, emphasizing active measures to reverse current consolidation. It calls for breaking down barriers to competition through interoperability mandates, greater transparency requirements, and a clear policy recognizing cloud services as essential public utilities rather than purely private commercial products.

This is not an esoteric technical issue; cloud computing power translates directly into political and economic leverage in an increasingly unstable global environment. In the coming years we can expect to see access to cloud services and the security of the data that flows through these services become flashpoints in negotiations between the U.S. and countries around the world.

To mitigate our exposure to these risks, Canadian policy makers should heed the warnings of this report and work to ensure tomorrow’s digital infrastructure is open, competitive, and secure.

📚 What We’re Reading 📚

• Mendelsohn and Shell, Mark Carney passed a tough test in Washington. He now faces an even tougher one at home (Toronto Star)
• ​Manitoba takes lead in nixing property controls, (REMI Network)
• Murray, Mr. Carney, Tear Down These Walls!, (Substack)

What Musk’s Meddling Reveals About the Dangers of AI

Elon Musk’s recent debacle with xAI’s chatbot Grok illustrates an alarming risk of monopolistic control over information through artificial intelligence. This week, Ars Technica reported that Grok repeatedly generated unprompted responses about “white genocide” in South Africa which the AI itself later revealed had been instructed to regurgitate by a “rogue employee.”

While the extent of ineptitude is amusing, the blunder is a cautionary tale about the dangers inherent in AI models taking on the role of sources of truth for a growing body of internet users. The image of AI systems as neutral purveyors of truth was never accurate. Instead, their output can covertly (or in this case, bizarrely overtly) reflect their owners’ biases and incentives, magnified by the algorithms that shape public discourse on a massive scale.

This issue extends beyond Musk. As AI technologies become central to information consumption, their black box nature threatens our shared reality, public trust, and the health of our democracy. While Canada’s last attempt to regulate AI models failed to make it over the finish line, policy makers are not off the hook to establish clear standards and regulations for AI governance.

We should be grateful for the Grok incident as a Sputnik moment for AI regulation. Left unchecked, control over AI platforms will hand even more power to shape what we understand as true to the monopolists who sit atop these black boxes.

If you have any monopoly tips or stories you’d like to share, drop us a line at hello@antimonopoly.ca

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