Welcome to the CAVEAT Weekly Newsletter, where we break down some of the major developments and happenings occurring worldwide when discussing cybersecurity, privacy, digital surveillance, and technology policy.
At 1,600 words, this briefing is about a 7-minute read.
At a Glance.
- Google loses second antitrust case.
- Trade restrictions raise chipmaker concerns.
Google loses online advertising antitrust lawsuit.
The news.
Last week, the US Department of Justice won an antitrust case against Google, which was accusing the company of operating a monopoly in the advertising technology industry. In her ruling, US District Judge Leonie Brinkema, found Google liable under Sections 1 and 2 of the Sherman Act given the company’s practices in the ad tech tool and exchange spaces. When issuing this ruling, Judge Brinkema wrote:
“For over a decade, Google has tied its publisher, ad server and ad exchange together through contractual policies and technological integration, which enable the company to establish and protect its monopoly power in these two markets.”
In response to this ruling, Google’s vice president of regulatory affairs, Lee-Anne Mulholland, stated that “we won half of this case and we will appeal the other half.” Mulholland continued stating that “the Court found that our advertiser tools and our acquisitions, such as DoubleClick don’t harm competition…[, and Google disagrees] with the Court’s decision regarding our publisher tools.”
The knowledge.
With this ruling, this instance marks the second case in under a year where Google has been found guilty of maintaining a monopoly. In the previous case, Google was being sued by the Justice Department for maintaining a monopoly in the search engine business. In that case, US Judge Amit Mehta stated that “Google is a monopolist, and it has acted as one to maintain its monopoly.”
Judge Meta found that Google had violated Section 2 of the Sherman Act and maintained its dominance, in part, by paying other companies billions to ensure Google was automatically handling search queries on devices and browsers. Currently, Google is facing a second sentencing trial, which will determine appropriate remediation outcomes for its search engine monopoly.
This second sentencing trial is specifically noteworthy as earlier this year, the Trump administration emphasized the government’s desire to force a company breakup. While pursuing this breakup, the government stated that “Google’s illegal conduct has created an economic goliath, one that wreaks havoc over the marketplace to ensure that - no matter what occurs - Google always wins.”
As these two Google cases are resolved over the coming months, these cases are representative of notable changes in US antitrust policy. For decades, the US has been characterized as oftentimes hesitant to reign in monopolistic companies with the last notable effort occurring in 2000 when the US government sued Microsoft. While the US did win the case, the effort did not have any significant impacts on Microsoft, and since then no successful antitrust cases have gained traction till now. As these antitrust cases continue to find companies guilty, these efforts will likely encourage the Justice Department to continue pursuing these cases against large tech companies.
The impact.
With Google now losing its second antitrust lawsuit, this marks another significant set back for Google and a notable step forward in antitrust litigation. While it is unclear how long this appeal process will take and what its outcome will be, these efforts mark a significant development in US antitrust enforcement.
If federal authorities do succeed in forcing a breakup in either of these businesses, organizations and individuals who rely on Google should prepare for significant impacts. These breakups could lead to service disruptions, impacts on how tools operate, how data is integrated within Google’s suite of products, and how organizations interact with the platform.
Chipmakers face pressures as trade tensions rise with China.
The news.
Tensions between China and the United States (US) continue to escalate as the Trump administration looks to expand restrictions on artificial intelligence (AI) technologies. One of the key methods will involve blocking the sale of unlicensed AI chips to China and requiring licenses for all future chip exports. In addition to these restrictions, the administration is also reportedly considering imposing new tariffs on China, which would notably include previously omitted products like semiconductor chips and other advanced electronic devices.
With this news, US chipmaking companies have already begun to feel substantial impacts. Alongside notable stock dips across the sector, Nvidia announced that it will take a $5.5 billion charge against its revenue for the quarter. This charge stems from its now unsellable H20 chip inventory, purchase commitments, and related reserves being stalled as a direct result of these new restrictions.
Looking ahead, the administration also has until May 15th to decide whether or not it will impose a significant semiconductor trade control framework. For context, the Framework for AI Diffusion was created under the Biden administration and would limit the number of chips that could be exported to most countries.
The knowledge.
These new restrictions mark the first time that the Trump administration has targeted the AI chip industry. However, these new moves are not unprecedented. Under the previous administration, former President Biden imposed numerous increasingly restrictive sanctions on US chipmakers. Regarding Biden’s Framework for AI Diffusion, this policy would place caps on chip sales, require new licenses for chip exporters, and limit the number graphic process units that countries could purchase from the US. While the framework did give some exceptions for specific allied nations and allow individual entities the ability to apply for special purchasing statuses, this framework was met with significant industry pushback.
Alongside his framework, Biden’s administration also routinely used federal agencies to enforce export controls. In 2024, President Biden announced a series of broader restrictions on what technologies could be sent to China. These restrictions prohibited the sales of certain types of chips and technologies alongside adding over 100 Chinese companies to the restricted trade list. Throughout his administration, former President Biden consistently used these trade powers to curb China’s access to advanced technologies.
Now, with President Trump imposing these new restrictions and having made no changes to the Framework for AI Diffusion, it appears that these trade policies are here to stay for the foreseeable future. As tensions continue to rise between the two nations, it is also possible that these restrictions could become even more stringent if the ongoing trade dispute escalates.
The impact.
Given President Trump’s upending of many of the previously established trade norms, it is not surprising that his administration has pivoted to target the AI and semiconductor industries. While the full effects of these restrictions will not be felt instantaneously, these changes have the potential to significantly impact the market, which could lead to lost trade deals, and increase pressures on supply chains. Additionally, if former President Biden’s Framework for AI Diffusion were to be implemented as is, this would further tighten the market and amplify these challenges.
For companies that rely on these technologies or manufacture these products, people should expect a significant increase in market volatility and potential disruptions to supply chains. While it is unclear if these policies will be permanent or walked back, these efforts have already introduced significant investor uncertainty. People dependent on these technologies should prepare accordingly to mitigate these impacts and avoid any foreseeable risks that could result from these policies.
Highlighting key conversations.
In this week’s Caveat Podcast, our team met with Avani Desai, the CEO of Schellman, to talk about the Digital Operational Resilience Act, otherwise known as DORA, and the implications of the act now that the bill is in effect. Additionally, our team also discussed the two antitrust cases that Google is facing and the implications of these recent rulings.
Like what you read, and curious about the conversation? Head over to the Caveat Podcast for the full scoop and additional compelling insights. Our Caveat Podcast is a weekly show where we discuss topics related to surveillance, digital privacy, cybersecurity law, and policy. Got a question you'd like us to answer on our show? You can send your audio file to caveat@thecyberwire.com. Hope to hear from you.
Other noteworthy stories.
Lawmakers launch 23andMe investigation.
What: House lawmakers have launched a probe into 23andMe’s handling of customers’ sensitive data following the company’s bankruptcy proceedings.
Why: Last Thursday, House Commerce and Energy Committee Chair Brett Guthrie, Representative Gus Bilirakis, and Representative Gary Palmer asked the company to get additional data privacy and security protections for former customers.
In their letter, the lawmakers wrote that “the company is in possession of highly sensitive personal information, including biological samples, medical information, and personal information for more than 15 million customers.” They continued that “regardless of whether the company changes ownership, we want to ensure that customer access and deletion requests are being honored by 23andMe.”
Discord sued by New Jersey.
What: New Jersey filed a lawsuit against Discord for allegedly exposing children to graphic content and exploitation.
Why: Last week, New Jersey filed its lawsuit against Discord with the state’s attorney general, Matthew Platkin, stating “we’ve seen child exploitation, child sexual abuse material, grooming, kidnapping - all kinds of awful things that happened on this platform, and the company has just not done enough.”
Jillian Susi, a spokeswoman for Discord, responded to the lawsuit stating that “Discord is proud of our continuous efforts and investments in features and tools that help make Discord safer.” Susi continued stating that “given our engagement with the attorney general’s office, we are surprised by the announcement that New Jersey has filed an action against Discord today.” Additionally, the company also emphasized the new security features that the company introduced, including safety alerts and content filters on direct messages.