In February 2024, Capital One announced its intention to acquire Discover Financial Services for $35.3 billion. The merger, if approved, would make Capital One the largest credit card issuer in the United States by balanced owed, and significantly challenge the market dominance of Visa and Mastercard.  However, the deal has raised significant regulatory concerns, particularly around potential anti-competitive effects and market concentration. Critics argue that the merger could reduce competition among credit card issuers, leading to higher fees and fewer choices for consumers. These concerns are expected to be at the forefront of regulatory scrutiny.

Strategic Motivation and Market Impact

Capital One’s motivation for the merger is clear: it aims to strengthen its position in the highly competitive credit card market. Currently, Capital One ranks as the fourth-largest credit card issuer by purchase volume, with $272.6 billion in transactions. Discover, while a notable player, has struggled to gain significant market share against giants like Visa and Mastercard. By acquiring Discover, Capital One would not only surpass JPMorgan Chase to become the largest credit card issuer in the United States by balance owed—holding approximately 19% of outstanding U.S. credit card loans—but also increase its overall market share to around 22%. This would make Capital One a more formidable competitor, both in terms of balances and the number of cards in circulation.

Potential Benefits and Concerns

The merger promises several potential benefits. Capital One could leverage Discover’s payment network to offer more competitive products, such as no-fee checking accounts and cashback debit cards aimed at lower-income consumers. Additionally, this deal could enhance competition among credit card networks by challenging Visa and Mastercard’s dominance.

However, there are significant concerns about the merger’s impact on competition and consumer costs. Critics argue that the merger could lead to higher interest rates and fees for consumers due to reduced competition among credit card issuers. The consolidation would give Capital One a substantial share of the non-prime credit card market, which refers to consumers with credit scores below 660 or those with limited or no credit history, who typically face higher interest rates and fees due to their perceived higher credit risk. This could potentially allow Capital One to raise interchange fees on transactions. Furthermore, the merger could reduce consumer choices. These concerns have led to calls from consumer advocacy groups and lawmakers to block the deal.

Regulatory Scrutiny and Antitrust Concerns

The merger faces intense scrutiny under the 2023 U.S. Merger Guidelines, which have adopted a more aggressive stance on antitrust enforcement. These guidelines suggest that mergers resulting in a market share above 30% are presumptively illegal due to potential anti-competitive effects. Although Capital One’s projected market share post-merger is below this threshold, at approximately 22%, the horizontal nature of the merger—where two companies operating in the same industry and offering similar products combine—raises significant antitrust concerns because it can reduce direct competition, potentially leading to higher prices, reduced innovation, or fewer choices for consumers.

Regulators, including the Federal Trade Commission (FTC) and Department of Justice (DOJ), are likely to scrutinize whether this merger would substantially lessen competition or pose risks to financial stability. The Biden administration has generally been skeptical of large bank mergers, adding another layer of complexity to the approval process.

Addressing Regulatory Concerns

To address regulatory concerns, Capital One has proposed a $265 billion community benefits plan. This initiative includes significant investments in low and middle-income communities and aims to mitigate potential negative impacts on competition by fostering economic opportunities. Specifically, the plan allocates $200 billion for loans to these communities and $44 billion for development work. Additionally, Capital One has committed to empowering customers with greater control over their financial decisions through accessible financial education and tools for managing finances. They have pledged $15 million in grants to credit counseling agencies and expanded programs like “Keep Customers in their Cars” to assist borrowers during financial setbacks. Furthermore, Capital One plans to increase spending with diverse suppliers by 70% and enhance support for small businesses with tools like Cash Flow Insights. These efforts are designed to address some of the potential competitive and consumer impact concerns raised by the merger, demonstrating Capital One’s proactive approach to regulatory compliance and community support.

Antitrust Trends and Comparisons

Recent trends in antitrust enforcement highlight a challenging environment for large mergers. For instance, the DOJ successfully blocked JetBlue’s acquisition of Spirit Airlines due to concerns over reduced competition and higher consumer fares. The proposed $3.8 billion merger would have combined two of the largest low-cost carriers in the United States, potentially reducing budget travel options and increasing prices for consumers reliant on ultra-low-cost airlines. The DOJ argued that eliminating Spirit as an independent competitor would reduce the availability of low-cost fares and increase overall ticket prices, particularly affecting price-sensitive consumers who rely on affordable travel options.

In contrast to JetBlue-Spirit, Capital One’s proposed acquisition of Discover is positioned as potentially increasing competition among payment networks rather than diminishing it. While both mergers involve significant market players aiming for growth through consolidation, Capital One argues that its merger would enhance competition against dominant networks like Visa and Mastercard. However, similar antitrust concerns exist regarding potential market concentration and reduced competition among credit card issuers.

On the other hand, JPMorgan’s acquisition of First Republic was approved due to its strategic importance for improving financial stability during a period of banking turmoil. This acquisition was facilitated by regulatory bodies like the Federal Deposit Insurance Corporation (FDIC) to prevent further disruptions following significant bank failures. JPMorgan acquired substantial assets from First Republic with FDIC assistance, emphasizing financial stability over competitive concerns.

The contrasting outcomes of these mergers highlight how regulatory bodies assess potential impacts on competition and consumer welfare differently across industries. While the Capital One-Discover merger presents opportunities for enhanced competition and consumer benefits, it also faces substantial regulatory hurdles. The outcome will depend heavily on whether regulators perceive the potential benefits as outweighing the risks of increased market concentration. As such, this merger represents a critical test case for the future of antitrust policy in the financial services industry.

Environmental, social, and governance (“ESG”) considerations have influenced corporate choices more and more in the past several years, especially when it comes to cross-border mergers and acquisitions (“M&A”). Companies have been compelled by ESG principles to incorporate sustainability and ethical conduct into their strategies, shaping investment decisionmaking, due diligence, financial valuations. Although ESG has become increasingly popular as a tool for improving long-term value and minimizing risks, it has also come across increasing opposition from a variety of business, political, and economic stakeholders – a phenomenon described as “ESG backlash.” This backlash arises primarily from concerns that complying with ESG standards imposes burdensome expenses and restricts profitability. These concerns are especially prominent in countries like the United States, where opposition to ESG principles is on the rise.

Regulatory authorities across different regions, particularly in the European Union (EU), have placed growing importance on ESG compliance, driving multinational companies to prioritize these standards when expanding into new markets. For instance, the EU’s Corporate Sustainability Reporting Directive and the Sustainable Finance Disclosure Regulation mandate detailed ESG reporting, compelling acquiring companies to thoroughly assess and evaluate the ESG practices of their target companies.

Despite the increasing influence of ESG, it has faced substantial backlash, especially in countries like the United States. In the U.S., the rise of ESG backlash has been driven by political and economic opposition, with critics arguing that ESG principles impose unnecessary costs and regulatory burdens on businesses.

These criticisms are particularly strong in conservative-leaning states. For example, U.S. states such as Texas and Florida have introduced legislation restricting companies from considering non-financial factors when making investment choices. In these environments, companies must balance ESG concerns with broader political and market forces, adjusting their due diligence processes to reflect these shifting sentiments. However, with the introduction of numerous anti-ESG bills in various U.S. states, many of these legislative efforts are facing political and legal challenges, which result in delays, modifications, or failures. Key factors influencing these outcomes include party control in state legislature and economic impacts influencing the outcome.

ESG has become an important factor in cross-border M&A transactions, impacting target company selection, negotiation procedures, and post-merger integration plans. Businesses with strong ESG credentials are commonly seen as less risky by investors such as because they are in line with sustainability objectives, in compliance with regulations, and prioritize long-term financial success.

Due diligence in cross-border M&A transactions has evolved to incorporate ESG-related risks as part of the process. Companies must assess ESG risks associated with their targets and the potential for regulatory or political pushback in regions with strong anti-ESG sentiment.

Moreover, the financial valuation of companies has always been an essential factor in M&A deals, but ESG backlash has led the role of ESG-related risks and opportunities to become more nuanced. Companies seen as ESG-compliant may enjoy a premium in markets where these factors are valued, while those in industries facing backlash may face discounted valuations. This creates tension for companies engaging in cross-border M&A, where differing regulatory landscapes can lead to strategic misalignments between ESG-driven priorities and profitability concerns.

The intersection of ESG and cross-border M&A is still a critical factor in the global business environment. Companies facing increasing criticism over ESG practices must navigate a more intricate landscape where regulatory, political, and economic factors overlap. Multinational corporations face the challenge of maintaining the viability of cross-border deals while also following changing global standards by balancing the advantages of ESG compliance with the consequences of any potential backlash. Understanding this dynamic will be essential to ensure that M&A strategies remain relevant in a landscape where ESG remains significant both as a means of enhancing value and causing contention.

Cross-border mergers and acquisitions (M&As) are a crucial strategy for companies aiming for sustainable growth in diverse global markets. This approach allows firms to acquire cutting-edge technologies, expand their market presence, and optimize costs. However, a recent surge in investments from China and other emerging countries has raised alarms about the risks of leaking confidential information and technologies, as well as the dominance of key infrastructure, which pose threats to national security in various countries.

The Committee on Foreign Investment in the United States (CFIUS) plays a critical role in safeguarding national security. CFIUS oversees foreign investments to prevent the transfer of critical technologies, infrastructure, and information to foreign entities. Recently, however, there have been concerns regarding the political utilization of CFIUS reviews of cross-border transactions in the United States. The recent case involving Nippon Steel Corporation’s attempt to acquire United States Steel Corporation highlighted concerns over CFIUS being used for political purposes. Denying an acquisition on political grounds undermines the integrity of the process and creates uncertainty for future cross-border deals, which may potentially discourage foreign investment, particularly in key industries.

To understand the context of CFIUS, we should look back at its recent developments. In 2018, President Trump signed the Foreign Investment Risk Review Modernization Act (FIRRMA). This act aimed to (1) strengthen and broaden the scope of investments requiring CFIUS review and (2) enhance the efficiency, effectiveness, and transparency of the review process, thereby codifying previous CFIUS operations. Following a CFIUS review, if a deal poses a potential threat to national security, the President has the authority to cancel the transaction or impose conditions to mitigate the risks. But not all foreign investment deals require CFIUS review; only three categories necessitate scrutiny: (1) investments that result in foreign control of a US business (covered control transactions), (2) certain investments in US businesses dealing with critical technologies (covered investments), and (3) investments in specific real estate transactions (covered real estate transactions). While not all transactions will be reviewed by CFIUS, those where parties submit for review, or where CFIUS independently determines that a review is necessary, will undergo review.

A key deal that highlighted the political implication of current cross-border transactions is the acquisition of US Steel by Nippon Steel. Nippon Steel, the world’s fourth-largest steel producer, is renowned for its advanced manufacturing processes. On December 18^th, 2023, Nippon Steel proposed an acquisition of US Steel with an all-cash transaction at $55.00 per share, representing an equity value of approximately $14.1 billion, in addition to the assumption of debt, resulting in a total enterprise value of $14.9 billion. Established in 1901, US Steel has been one of the most prominent steel makers, holding the second largest production volume in the US and playing a significant role during the Second World War. However, since the 1970s, the company has faced increasing competition from cheaper steel imports, resulting in a decline in competitiveness and recent financial struggles. As a result, US Steel has been actively marketed for sale, prompting Nippon Steel’s acquisition proposal. Yet, the United Steelworkers (USW), a union representing workers in the steel industry, has expressed concerns about the acquisition of a US company by a foreign entity. This issue was closely intertwined with the political landscape of the 2024 presidential election, further complicating the global deal. Notably, President Biden, former President Trump, and Vice President Kamala Harris had all publicly opposed the acquisition, arguing that US Steel should remain under American ownership. This position held particular significance in key swing states like Pennsylvania, where US Steel is headquartered. It was also significant in other Midwestern steel producing states like Ohio. The USW, which represents approximately half of US Steel’s employees, was poised to play a pivotal role in these battleground states during the 2024 election, making their support highly sought after by both presidential candidates.

While many arguments suggest that the Nippon Steel deal poses national security risks, a closer examination reveals that these risks are unlikely to materialize. First, there are concerns regarding Nippon Steel’s operations in China, particularly its past partnership with Baoshan Iron & Steel, a state-owned firm linked to the Chinese Communist Party. However, it is essential to note that Nippon Steel exited this partnership in August 2024 and has been progressively reducing its scale of business in China since 2021, resulting in a minimal market share in the region. Consequently, it can be inferred that the connection between Nippon Steel and the Chinese Communist Party is becoming increasingly insignificant. Second, there are worries about potential job and production relocations outside of the United States following the acquisition, which could impact economic security and industrial capabilities. However, Nippon Steel has made commitments to not lay off employees or close plants as a result of the transaction. Additionally, it has also pledged to invest $1.3 billion to upgrade the Mon Valley Works facilities in Pennsylvania and $300 million to improve a blast furnace at Gary Works in Indiana. Finally, it is worth noting that Japan is one of the United States’ closest allies and an economically robust nation. Critics of the potential risks associated with the deal, such as Edward Alden, a Senior Fellow at the Council on Foreign Relations, contend that acquiring a US company by a close ally does not inherently pose clear security threats.

If the acquisition of US Steel by Nippon Steel ultimately fails, the repercussions could be significant. US Steel has struggled with declining performances, experiencing decreases in revenue, EBITDA, and net income since 2021, with an EBITDA growth rate of –49.41% and a net income growth rate of –64.54% in 2023. If the deal collapses, it could lead to three major consequences: (1) There may be potential plant closures at Mon Valley Works in Pennsylvania and the mill in Indiana, which would affect employees in those locations; (2) US Steel’s corporate headquarters might be relocated out of Pennsylvania, imposing considerable burdens on current employees; and (3) there could be a continued shift in production to lower-cost sites, such as US Steel’s Arkansas factory.

Estimated Impacts in the Event of Acquisition Failure:

• The closure of the two plants will potentially impact 7,300 employees, representing 52% of the total workforce of US Steel’s US operations.
• The closure is expected to affect 53% of US Steel’s production volume (based on production capacity), resulting in an estimated $9 billion decrease in net sales by US Steel.
• US Steel’s Pennsylvania headquarters currently employs approximately 800 individuals, who may be affected by the relocation.
• The anticipated decline in sales is projected to account for about 5% of the entire steel and iron industry in the US, potentially leading to a deterioration in the sector’s competitiveness.

In conclusion, if CFIUS is employed for political purposes, the failure of the US Steel acquisition by Nippon Steel would have detrimental effects on US Steel and the entire steel industry in the United States, potentially undermining the industry’s competitiveness. While CFIUS has extended the review process until after the presidential election, it is vital that political considerations do not overshadow sound economic rationales. Denying this acquisition lacks justification, as both companies and their countries stand to gain from the deal.

With the Chevron Doctrine’s reversal by Loper Bright Enterprises v. Raimondo, the transformation of the regulatory landscape proves inevitable. The Chevron Doctrine previously granted federal agencies the power to interpret ambiguous federal statutes. Its dissolution poses a threat to legislative efficiency, with the judicial courts now taking the lead on such interpretations—an often lengthy and complicated process. But which communities are harmed when federal regulatory agencies can’t create public policy independently? The answer reveals a disproportionate impact on black and brown communities.

The Federal Trade Commission (FTC) is tasked with shielding consumers from unfair and deceptive business practices. A large historical track record precedes it: Congress empowered the agency to administer consumer protection laws in 1938, and the FTC has since benefited from the large range of latitude in rule-making granted by Chevron. While the FTC protects all consumers, their mission deeply impacts those most vulnerable to fraudulent business schemes: black and brown communities.

Research has indicated that unfair business practices affect consumers of color disproportionately. Most notably, these communities pay more car loan interest than their white counterparts and are more frequently targeted by government impersonators and deceptive advertisers. Consequently, black and brown consumers benefit most from robust FTC power that can combat such conduct. The main source of that power was its discretionary authority to define what an “unfair” business practice is–a power that now exists as a relic of the pre-Loper Bright era.

Similarly, the Environmental Protection Agency (EPA) is charged with administering landmark legislations like the Clean Air Act and the Clean Water Act. These acts respectively regulate emissions of hazardous air and water pollutants. These regulations are crucial for black and brown communities disproportionately exposed to harmful pollutants from waste facilities, as corporations routinely choose to place hazardous facilities in low-income neighborhoods in efforts to exploit the low cost of operations and relaxed industry regulations.

Even with EPA regulations in place, corporations have regularly taken advantage of these disadvantaged communities to offset the costs of properly disposing their waste material. For example, in Louisiana, a predominantly black neighborhood concentrated with petrochemical facilities has earned the name Cancer Valley: it’s burdened by the largest rates of cancer caused by industrial pollutants in America. Lax Louisiana state regulations perpetuate this disproportionate environmental harm–shedding only a small light on the danger in the weakening of environmental regulation.

The EPA and the FTC, through their regulatory power, play crucial roles in enhancing the quality of life of all Americans, but especially Americans of color. However, the legitimacy of their enforcement policies has been exposed to widespread critique just months after the overruling of the Chevron Doctrine. Corporate giants such as Kroger Co., Meta Platforms Inc., and Express Scripts have recently challenged the FTC’s powers through defamation lawsuits that claim the agency’s in-house court to be unconstitutional. Most recently, in response to the administrative court’s complaint that the corporate group unlawfully raised the price of insulin via an illegal drug rebate program, corporations attacked the validity of the administrative court as an institution. These corporations challenge the in-house administrative commissions established by Humphrey’s Executor, a landmark 1935 Supreme Court decision. The FTC’s in-house court is home to administrative proceedings that enforce consumer protection laws without federal judicial interference—a power formerly granted by the Chevron Doctrine. Their administrative court is crucial to protecting communities of color from practices that disproportionately affect them, such as deceptive marketing. It most recently had success in settling a suit against a personal finance app, Brigit, for these practices. Attacks on long-standing institutions just months after the Loper Bright decision demonstrate the new vulnerability these agencies now face in the protection of consumers affected most.

The EPA and other similar environmental agencies are under equally pressing criticism, as a slew of cases on the Supreme Court’s docket directly challenge the breadth of their authority as an environmental regulator. Most prominently, a Utah coalition representing private corporate interests hopes to narrow the environmental impact analysis required by the National Environmental Policy Act (NEPA). The group, Seven County Infrastructure Coalition, hopes to construct a crude oil railway in the Uintah Basin of Utah. The project is largely backed by private partners such as Rio Grande Pacific Corporation, a Texas-based private railroad holding company. Local environmental groups have stressed that the potential effects of increased crude oil refining on communities in Louisiana and Texas must be considered before approval of the 80-mile railway. While the District of Columbia Circuit Court agreed that the downstream impact of the railway on Louisiana communities—over thirty percent of which’s oil production is predicted to pollute the Louisiana Gulf Coast—should be a required consideration before construction, the Supreme Court has put the scope of the NEPA’s standards into question as it agreed to hear challenges to this assertion. Seven County Infrastructure Coalition v. Eagle County, Colorado is set to be argued on December 10, 2024. If the Court agrees with the Coalition, the power of federal agencies to interpret what kind of analysis is necessary under NEPA may be diminished if the Supreme Court chooses to set the standard solely to the direct consequences of industrial construction. Narrowing the scope of NEPA would enable corporations to further exploit low-income communities for business gain, restricting the accountability the EPA provides in requiring a consideration of social impacts before corporate developments.

While the ambush of litigation challenging federal regulatory discretion to interpret regulatory statutes post-Loper Bright has been correctly anticipated, the implications of the possible success of such challenges proves particularly worrisome for communities of color. Black and brown communities should remain at the forefront of analysis of a post-Chevron regulatory sphere, as they are most impacted by federal regulatory discretion, or lack thereof. By shedding light on the specific impacts of suppressing regulatory oversight, public policy can focus on how to curb the looming effects of a post-Loper Bright political landscape on already-disadvantaged communities.

Even as private equity cools, the private credit market is rapidly growing, now valued conservatively at over $2 trillion. Private credit primarily takes the form of direct lending, where nonbank and other private institutions lend to companies. This boom is up by $400 billion since 2021 (while public debt has declined roughly the same amount in that period), and it is poised to grow another 87% in the next five years. The U.S. Securities and Exchange Commission (SEC) has concerns about the systemic risk associated with the private credit market’s opacity and is attempting to regulate it. But subjecting the private credit market to bank-style regulations is likely not the best solution.

Although private credit has existed for decades, its popularity has recently surged. Historically, businesses sought capital from banks and other highly regulated public institutions. The private lending industry arose after the 2008 recession when heightened banking regulations imposed tightened capital reserve, loan term, and disclosure requirements on public markets. In recent years, rising interest rates and inflexible loan structures in the public debt markets have led to untenable borrowing costs and stretched timelines for issuers seeking financing, resulting in a 25% dip in publicly traded high-yield debt in the last three years. In response, market share shifted from banks to the private sector as capital-hungry investors sought alternative borrowing options.

Private market heavyweights, such as Apollo and Blackstone, replicate traditional commercial banking practices but tap into deep pools of insurance capital to provide private loans rather than relying on highly regulated bank deposits. This liquidity enables them and other private credit firms to provide quick and adaptable financing solutions that are especially attractive amidst strapped, high-interest public debt markets. Corporate borrowers benefit from long-term financing structures and the relative freedom to bilaterally negotiate bespoke terms of size, type, or timing of transactions to meet borrowers’ and creditors’ distinctive needs—innovative agreement options that regulated banks cannot provide.

While regulators have yet to conclude that the private credit industry poses an immediate threat to the financial system’s stability, they have called for scrutiny. The SEC regulates private credit funds as private fund advisers, which are subject to limited disclosure requirements and often have greater discretion on investments. Critics—particularly from the banking sector—warn about the risks of private credit’s opacity and potential instability during economic downturns. Crucially, critics flag that the rapid growth of private credit and the resultant competition with banks to secure large transactions have led private credit providers to hastily deploy capital, leading to weaker underwriting standards, looser loan covenants, infrequent valuation, and unclear and often unassessable credit quality.

Perhaps most concerning is the muddled interconnectedness between private credit funds, commercial banks, and investors despite private credit’s lack of transparency. Increasingly, banks and private credit firms cooperate and compete. Although Deloitte found that many banks are not adopting new strategies in response to private credit, some heavy-hitters are. Where they cooperate, banks facilitate faster, more flexible lending terms for their corporate clients by serving as middlemen between private credit firms. Tapping into banks’ relationships benefits private credit firms and lowers credit risk for banks, although banks lose revenue. To compete directly with nonbanks, some banks, such as Morgan Stanley, are creating their own private credit capabilities.

Increased cooperation between banks and private funds has led regulators to scrutinize how banks, private equity firms, and insurers are tied to private credit, and how the private sector’s lack of transparency can affect those groups, creating wider systemic risk. The SEC recently called for greater transparency and regulation of private funds, and certain investors and investor groups have expressed support for wider availability of information related to fund performance and investment terms. However, a Fifth Circuit appeals court struck down a new set of proposed SEC rules that would require private fund advisers to provide investors with quarterly fee and performance reports, obtain annual fund audits, and prohibit certain preferential treatment of investors.

Increased transparency may prove beneficial in some regards, but private credit’s lack of transparency and regulation are what enable it to serve investors and companies so well. Saddling private credit with excessive regulation would defeat a crucial aspect of the sector’s strength. Considering that banks will continue to exist and not only compete with but support and benefit from the private credit market, the risks associated with prioritizing private decision-making—even if opaque—over regulatory decision-making are likely not fatal. As SEC Commissioner Hester M. Peirce illuminates, although “we should watch for hidden leverage, regulatory arbitrage, and hidden interconnections with banks,” we should not “run away from an efficient, effective, and economically useful form of finance.” Policymakers should aim to create a regulatory framework that enables private credit’s innovative financial solutions without excessive restrictions.

From the moment we unlock our phones, we are inundated with artificial intelligence (AI) advertisements—many making grandiose promises that seem too good to be true. Businesses have claimed their AI can help customers build an “AI-powered Ecommerce Empire” or “generate perfectly valid legal documents in no time.” But at what point do these lofty, AI-infused promises cross the line into deception—and more interestingly, is this even a new phenomenon?

The Federal Trade Commission (FTC) has attempted to delineate the boundary between unrealistic over-promises and realistic expectations through Operation AI Comply. This operation began on September 25, 2024, with five settlements and injunctions against companies that misused AI. It aims to protect consumers by deterring corporate misuse of AI, a goal which has been supported by the FTC Chair, Lina M. Khan, stating that “[u]sing AI tools to trick, mislead, or defraud people is illegal.”

Four of the target companies, DoNotPay, Ascend Ecom, Ecommerce Empire Builders, and FBA Machine, made false claims or exaggerated what their services could accomplish by hiding behind the premise of revolutionary AI advancements. Additionally, the fifth targeted company, Rytr, had a functional AI service that could produce thousands of product testimonials. However, the generated reviews served “[no] reasonable, legitimate use,” leading to consumer harm.

DoNotPay claimed its AI chatbot could allow users to “sue for assault without a lawyer” and “generate perfectly valid legal documents in no time.” This was not the case. The FTC found that “employees had not even tested the quality and accuracy of the legal documents” and that some “advertised features… [DoNotPay] simply did not provide.”

Ascend Ecom’s exaggerated promises make DoNotPay’s seem comparatively tame. Ascend Ecom called itself a “surefire business opportunity in e-commerce,” claiming that its AI-powered business model allows customers to “quickly earn thousands of dollars in passive income.” However, instead of producing vast incomes, most hopeful customers were left with empty bank accounts and hefty bills. The FTC determined that the “[d]efendants’ scheme has defrauded consumers of at least $25 million.”

Similarly, Ecommerce Empire Builders (EEB) was another scheme preying on consumers looking for passive income. It promised to help customers build an “AI-powered Ecommerce Empire.” EEB sold courses promising to teach customers how to “start a million-dollar business today” through “online stores powered by artificial intelligence” for prices between “$10,000 and $35,000.” Instead of creating thriving million-dollar businesses for users, EEB enriched itself, leaving its clients with failing ventures.

FBA Machine was the third “AI-powered” ploy promising unsuspecting customers a guide to making a “7-figure business” backed by “risk-free” guarantees, with promises of “$20,000 in revenue in 90 days… or the company will work for free.” However, “of the 42 known clients, approximately 86% had gross aggregated sales of $15,000 or less… 12% had no sales at all.” Customers who attempted to return the product had their refunds conditioned on removing their negative online reviews, but regardless, the business still “failed to pay the promised refunds.”

Finally, Rytr, unlike the others, seemingly offered a legitimate service as an “AI assistant.” However, one of its tools, a “Testimonial & Review” feature, led to harmful consumer outcomes. This service let users generate “detailed reviews that contain specific… details [about consumer products] that have no relation to the user’s input [and] that would almost certainly be false.” Furthermore, “respondent [Rytr] set[] no limit on the number of reviews a user… c[ould] generate and copy.” Predictably, this was abused by its consumers: “Subscribers generated tens of thousands of reviews in a short time…[which] pollute[d] the marketplace with a glut of fake reviews.” The FTC found the “Testimonial & Review” service to provide no “legitimate use,” with “its likely only use [being] to facilitate subscribers posting fake reviews with which to deceive consumers.”

At first glance, the premise of these five cases seems novel. AI has recently taken the spotlight, and the FTC hasn’t prosecuted AI cases in the past for “deceptive marketing” claims. However, if we peel back the shiny AI-gilded cover of these cases, there is something to be discovered. None of these five businesses’ tactics are new or unique to AI. Throughout history, advancing technologies like the dot-com boom or some early blockchain ventures have been leveraged to make exaggerated promises, only to fall short and deceive consumers. Only last year, the FTC fined the cryptocurrency company Celsius $4.7 billion dollars because it “promised consumers that Celsius was ‘safer’ than a bank… because Celsius earned profits at ‘no risk’ to consumers.” Celsius subsequently went bankrupt after it “engag[ed] in uncollateralized and undercollateralized lending despite their promises to the contrary.” Consumer deception is not new—the only thing that has changed is that AI provides another option for ill-intentioned businesses and opportunistic hustlers to obfuscate false claims.

Since 1914, the FTC has defended consumers against deceptive businesses and their unfair conduct. The FTC treats these AI cases no differently: “There is no AI exemption from the laws on the books.” While the medium has evolved, the fundamental issue of deceptive marketing remains the same. There are consequences when companies fail to exercise caution and integrity when marketing their products.

While these five businesses have faced repercussions from FTC enforcement, the crackdown is not meant to be purely punitive. By removing misleading advertisements and opportunities for product abuse, the “FTC is ensuring that honest businesses and innovators can get a fair shot and consumers are being protected.” Bad actors will continue to misappropriate AI in their advertisements and promises—harming all honest businesses. However, with the injunctions from these cases and a warning signal sent to deter future malfeasors, companies with legitimate AI features and services may be able to prevail while consumers are simultaneously protected.

On March 4, 2024, the European Union (EU), after a five year long investigation, fined Apple nearly $2 billion over unfair trade practices related to music streaming for iOS users. Apple was accused of making unfair rules and regulations for the developers of the music streaming applications. The fine imposed by the EU is one of the largest antitrust penalties which was unanticipated even by antitrust lawyers.

The speculation was brought forth by Spotify, a music streaming application, in 2019 claiming that Apple was practicing anti-competitive practices by ensuring that the Apple Store limited user choices, thereby, restricting the user experience. Daniel Ek, the CEO of Spotify, stated that Apple required Spotify and other digital services to pay a 30% tax on purchases made through Apple’s payment system. This inflated the price of the Premium Membership and essentially constituted a special preference for Apple Music by keeping lower membership prices. Even after repeated requests by Spotify, the companies could not find an amicable solution which resulted in the involvement of the EU.

The EU released a statement on March 4, 2024 reporting that the investigations conducted suggested that Apple’s policies restricted application developers, which intervened with user satisfaction and their ability to alternative and cheaper music streaming subscriptions. The Commission found that Apple’s anti-steering provisions ensured that application developers could not inform the iOS users within their application about offers available outside the application and the price difference between the subscriptions sold through Apple’s in-app purchase mechanism and those available elsewhere. The investigations also found that Spotify could not provide links to send the iOS users directly to the original website to access alternate subscriptions, nor could they contact the newly acquired subscribers through email to provide the alternate pricing information. The EU found Apple in violation of Article 102 of the Treaty on the Functioning of the European Union and Article 54 of the European Economic Area Agreement which prohibit the abuse of a dominant position.

The fine imposed by the EU is one of the highest fines ever imposed on a single company other than Google, which was fined €4.34 billion and €2.42 billion in two separate cases. When asked about the same, Margrethe Vestage, the Executive Vice President of the EU said “For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store” and “[The fine] reflects both Apple’s financial power and the harm that Apple’s conduct inflicted on millions of European users”.

Apple’s plan of action is to appeal against the findings of the EU as they claim that the EU’s decision lacks “credible evidence of consumer harm” and disregards the competitive nature of the market. Furthermore, they claim that the decision benefits only Spotify who themselves control more than fifty-percent of the European market.

The Chevron doctrine was established in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. (1984), during a period of widespread agency budget-cutting. While Chevron was initially celebrated as a win for the deregulatory state, it has since evolved into a cornerstone legal test in the world of administrative law. Loper Bright Enterprises v. Raimondo (Loper Bright) and Relentless, Inc. v. Department of Commerce (Relentless), two cases on the Supreme Court’s docket this year, seem poised to overturn the regulatory power that Chevron provided for government agencies.

The case of Chevron specifically reviewed the regulatory regime established by the Clean Air Act (CAA). The Environmental Protection Agency (EPA) had long defined the term “stationary source” within the CAA to include each individual source of pollution within a plant or a factory. In 1984, however, the EPA redefined it: “stationary sources” started to encompass entire plants and factories, rather than the machinery within them. The Natural Resources Defense Council challenged this, arguing that it defeated the purpose of the CAA by allowing corporations to easily dodge regulatory review. In a unanimous 6-0 decision, however, the Supreme Court ruled against the Council, establishing the principle of Chevron deference. As long as the meaning of the statutory text was ambiguous – and as long as the agency’s interpretation of that ambiguity was relatively reasonable – federal courts had to defer to agency interpretation.

The modern Supreme Court has maintained a general antipathy towards Chevron’s principles – while, so far, refusing to explicitly overrule the case. For example, American Hospital Association v. Becerra (2022) and Becerra v. Empire Health Foundation (2022) both involve challenges to the Department of Health and Human Services (HHS)’s interpretations of the Medicare act. In American Hospital Association, rather than addressing how the HHS interpreted its power to “calculate and adjust” drug prices under the Medicare Act, the Court claimed instead that HHS had failed to properly survey the “average price” of drugs before it made its modifications. In Empire Health Foundation, the Court held that the definition of Medicare “eligibility” merely had to be read consistently throughout the entire statute. Neither applied Chevron principles, even though both could have been resolved by asserting the power of the HHS to promulgate its reasonable interpretation of healthcare statutes. Niz-Chavez v. Garland (2021) and West Virginia v. Environmental Protection Agency (2022) involved agency interpretations of a 1966 immigration reform act and the CAA, respectively – and yet the Court failed to mention the Chevron doctrine in either.

Loper Bright and Relentless pose a more direct challenge to Chevron deference. Both address the Magnuson-Stevens Act, which obligates the National Marine Fisheries Service (NMFS) to “implement a comprehensive fishery management program.” Part of this program is a system of federal observers that are randomly assigned to different fishing vessels. NMFS holds that private businesses, such as Loper Bright and Relentless, should pay for the costs of these observers. With the help of a public-interest law firm, Cause of Action, Loper Bright challenged the payment requirement. In both cases, the lower courts ruled against the challenges, citing directly to Chevron. Both Loper Bright and Relentless then requested certiorari, asking the Supreme Court to overrule Chevron entirely.

Ironically, the Loper Bright case seems to mirror the same circumstances that drove the initial Chevron ruling. Chevron, at the time, went to court because it would benefit directly from court deference to agency interpretation. While Loper Bright and Relentless are small, local fisheries, they are backed by larger industry interests that are going to court now hoping to benefit from strict judicial review of agency action. Cause of Action’s attorneys have been traced back to Americans for Prosperity, a libertarian policy advocacy group explicitly backed by Koch Industries. Koch, an oil-industry business magnate, has supported deregulation in dozens of different industries. Given that the many factories and plants his subsidiaries own would benefit significantly from overturning Chevron in favor of a softened regulatory regime, it comes as little surprise that Koch would be found with pecuniary interests in Loper Bright and Relentless as well.

Oral arguments were heard on January 17^th for both cases, with a joint decision expected this summer. If Chevron is overturned, the future of agency regulation is in peril. Rather than allowing agencies to update their regulations based on real-world conditions, any amendments would have to be passed through Congress to avoid potential judicial review. This would significantly slow down regulation: while agencies pass more than 3,000 rules per year, the polarized House and Senate take much longer to enact – let alone edit – any bills whatsoever, particularly with enough specificity to avoid potential ambiguity. Agencies also rely heavily on the expansive interpretation of decades-old statutes, adjusting their language and definitions to better pursue the overall statutory goals that Congress has provided them. With the threat of litigation looming on the horizon, how vulnerable are these interpretations going to become?

David Doniger, one of the original lawyers in the Chevron case, called the Loper Bright litigation an obvious way to “cloth[e] nakedly private interests in highfalutin constitutional arguments”: the separation of powers, the limits of statutory interpretation, and the question of who Congress has delegated this interpretation to. Without Chevron – and facing the realities of a conservative Supreme Court and a host of conservative federal judges hand-picked by Donald Trump –these “private interests” might end up benefiting from the same constitutional arguments used to limit them in the 1980s.

In the age of digital technology, Section 230 of the Communications Decency Act has become a crucial law, molding how online interaction and content moderation unfold. Initially designed to promote innovation and free expression online, Section 230 has come under increasing scrutiny, especially regarding its effects on competition.

At its core, Section 230 provides online platforms with immunity from liability for content posted by users. The provision shields platforms from legal repercussions for hosting user-generated content, granting them considerable leeway in content moderation without fear of facing lawsuits for defamation or other legal claims different from copyright infringement. This immunity has been instrumental in enabling the growth of social media giants like Facebook, Twitter, and YouTube, which serve as conduits for diverse voices and ideas.

Critics argue that the broad immunity granted by Section 230 has inadvertently stifled competition and innovation. The provision has empowered dominant platforms to consolidate their market share without facing the same legal risks and liabilities as traditional publishers. As a result, smaller competitors struggle to enter the market and challenge the incumbents, leading to a less diverse and dynamic digital ecosystem. However, removing this provision would unfairly disadvantage smaller companies endeavoring to thrive in the digital marketplace.  It would deter innovation and hinder their ability to compete on an equal footing with larger entities, as they did in the past.

One of the primary concerns regarding competition stems from the dominance of a few technology giants in key sectors of the digital economy. Companies like Google and Facebook exert significant control over online advertising and capture a substantial portion of digital advertising revenue. Their dominance not only limits competition but also raises antitrust concerns, as they leverage their vast user bases and troves of data to maintain market dominance. Furthermore, the immunity provided by Section 230 has led to a lack of accountability among tech platforms regarding their content moderation practices. argue that the broad immunity shield allows platforms to selectively enforce their policies, stifling competition by suppressing dissenting voices or favoring content that aligns with their own interests. This lack of transparency and accountability erodes user trust and undermines the principles of free expression and open discourse that Section 230 was intended to uphold.

In response to these concerns, calls for reforming Section 230 have grown louder in recent years. Policymakers and legal scholars advocate for a more nuanced approach that preserves the core principles of Section 230 while addressing its unintended consequences on competition and accountability. Some proposals include narrowing the scope of immunity for platforms that engage in certain types of content moderation or imposing additional obligations on dominant platforms to ensure fair competition and transparency.

Nevertheless, navigating the complexities of Section 230 reform poses significant challenges. Any attempt to amend the legislation must strike a delicate balance between promoting competition, protecting free expression, and preserving the innovative spirit of the Internet. Moreover, regulatory intervention risks unintended consequences and could stifle innovation or inadvertently favor incumbents over emerging competitors.

One potential avenue for addressing competition concerns within the framework of Section 230 is through targeted enforcement of existing antitrust laws. Regulators could scrutinize the market power of dominant platforms and take action to promote competition and level the playing field for smaller players. Additionally, encouraging interoperability and data portability could empower users to switch between platforms more easily, fostering competition and innovation.

Another approach involves promoting self-regulatory mechanisms and industry standards for content moderation and platform governance. By encouraging platforms to adopt transparent and consistent moderation policies, policymakers can enhance accountability and promote a more competitive landscape. Collaborative efforts between industry stakeholders, civil society organizations, and policymakers can help establish best practices that balance the interests of users, platforms, and society at large.

In conclusion, addressing Section 230 concerns regarding competition requires a multifaceted approach that considers legal, economic, and societal factors. While the legislation has undoubtedly shaped the digital landscape in profound ways, it is imperative to reassess its impact in light of new technological and market dynamics. By engaging in thoughtful dialogue and exploring innovative solutions, stakeholders can navigate the challenges posed by Section 230 and foster a more vibrant and competitive digital ecosystem for the benefit of all.

March 7 is the first day for Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft—the first six gatekeepers designated by the European Commission for their platform services—to fully comply with the EU’s Digital Markets Act (DMA). Since May 2023, the DMA has been aiming to ensure fair and open markets in the digital sector. It requires gatekeepers to (1) allow third parties to inter-operate with the gatekeeper’s own services, (2) grant business users access to the data they generate while using the gatekeeper’s platform, (3) provide tools and information necessary for advertisers and publishers to carry out their own independent verification, and (4) permit business users to promote their offers and conclude contracts outside the gatekeeper’s platform. If a gatekeeper fails to comply, they will face initial fines of up to 10% of the company’s total worldwide turnover. The fines increase to 20% for repeated infringement.

As of March 7, all six gatekeepers have released DMA compliance measures. For example, Google implemented updates affecting Google Chrome and the Google Play store that aimed to simplify the third-party app download process. This allows users to use alternative app stores and billing options outside Google Play. Apple modified App Store, Safari, iOS, and Apple Pay to enable third-party applications to interact with the Apple systems. Whereas TikTok (owned by ByteDance) challenged its gatekeeper designation in Europe’s second top court—the Luxembourg-based General Court—it still complied with the DMA requirements as the Court refused to suspend its obligation to comply. Consequently, TikTok released its compliance measures on March 3: it enhanced its “download data” feature for both users and developers and granted additional data access to business accounts.

The DMA is considered a tool to break the dominance of Big Tech in the EU. However, it has faced criticism such as claims that it protects competitors rather than consumers, overregulates, and decreases economic efficiency. In fact, the EU acknowledges that the DMA will increase the time costs for consumers to choose digital services. Conversely, supporters argue that the DMA helps to build a more competitive environment for businesses by regulating the self-preferencing of big tech companies and bringing fairness to the mobile app ecosystem. Additionally, consumers can benefit from a wider range of choices. Regardless of the evaluation, the DMA has opened the closed market created by big tech companies, which have for years leveraged their market dominance to exclude competition by self-preferencing and building closed ecosystems. Under the DMA, tech companies are obligated to open up their ecosystems, facilitate data flow between platforms, and treat search results equally. For small companies, the opportunities outweigh the challenges, while for gatekeepers, DMA compliance will become an essential part of future corporate compliance.