Interview with Rima Alaily
Corporate Vice President & Deputy General Counsel - Competition Law Group
Microsoft
For the past 25 years, Microsoft has engaged in a highly productive partnership with Toulouse researchers, contributing to the growing success of TSE Digital Center. Recently, this support helped TSE to launch research projects on mergers and competition, and on cloud computing. Rima Alaily, who has been at the forefront of this endeavour shares her thoughts about regulatory responses to digital innovation, particularly in the field of artificial intelligence.
What are your responsibilities at Microsoft?
I lead the Competition and Market Regulation Group. Our team helps Microsoft follow competition laws, close mergers and acquisitions, and respond to investigations around the world. We also engage on competition policy and regulation. It requires a broad understanding of our industry, customers, technology, the political environment and the law, as well as the ability to effectively collaborate and communicate across disciplines to solve problems. As a senior leader at Microsoft, I am also responsible for nurturing a culture aligned with Microsoft’s values in which everyone can do their best work.
You have worked as a lawyer in a law firm and in a corporate environment. What do you enjoy most about working in a corporation?
In private practice, I worked within the constraints of the legal process. Now, at Microsoft, I am closer to the business and our products and strategies. I have more tools to solve problems: working with the business teams directly to change products and practices, engaging with media to shape understandings and views; and working with policymakers, academia, and others to develop policy, laws and regulations. But the best part is never having to account for my time in six-minute increments.
What is your position on recent debates about the role of economics in antitrust?
Antitrust is a legal process aimed at an economic goal: promoting competition. So, analysis and decision-making in antitrust must be grounded in broadly accepted economic principles. Otherwise, even well-intentioned interventions can lead to poor consumer outcomes. It also promotes legal objectivity and predictability. Even so, there is always room to evolve. Economics must keep pace with marketplace innovations and new competition dynamics. There may also be opportunities to better build on the intuition and outcomes of real-world business strategies. And, to stay relevant and have impact in the most important policy debates, economics needs to be more accessible to a broader set of readers and thinkers.
European digital regulation is undergoing major changes, notably with the introduction of the DMA, the DSA, and the Data Act. Do you welcome these developments?
Microsoft has consistently supported the EU’s adoption of uniform, forward-looking regulation that ensures technology companies, including Microsoft, operate fairly and without undermining the ability of others to compete. We are engaging actively with the Commission to comply with regulation.
At the same time, regulation alone is not enough to fulfil the EU’s digital strategy. Broader changes and investments – beyond market regulation – are necessary to spur entry and innovation by digital firms. Creating more cloud computing competition requires more than the Data Act. For example, to scale up and compete, providers need to build out their physical infrastructure. But today, in Europe, it takes longer to secure the requisite permits than it does to build a datacenter.
How can economic research help policymakers to avoid the potential anti-competitive consequences of acquisitions in the digital economy?
We all could benefit from a better understanding of the role of scale in the digital economy. Cloud computing services paired with networking infrastructure create an unprecedented platform for the diffusion of technology worldwide. A farmer in rural India can reap the benefits of generative AI at the same time as a large corporation in the heart of Paris. What role do acquisitions play in creating scale, both for the acquiring and the target firm? As competition agencies seek to protect emerging markets and potential competition, what role does the need for a path to scale play?
The extraordinary speed of the development of AI is leading many to call for regulation. What steps do you think are appropriate at this early stage?
Regulation must, as a priority, ensure that generative AI is safe and secure for use. To that end, the European Union has passed the AI Act and other governments are working on similar legislation alone and together.
Governments should be cautious, however, when it comes to intervention in the development of the market. The underlying technology continues to evolve at unprecedented speed and competition is fierce today. There is significant uncertainty about the use case for generative AI. Where will it matter? What will the markets for those products look like? That is why we are seeing a funding frenzy by investors. No one knows what will win, so they are diversifying and making lots of different bets. Most too fast and there is a real danger that regulation will get it wrong. Almost all the companies and services that grabbed the headlines in the early days of the web – AOL, MSN, Yahoo!, Napster, and MySpace – did not pass the test of time. It took years before the products and services that now dominate the internet era emerged, e.g., Google Search, Facebook, Amazon and the iPhone.
Interview published in TSE Reflect, March 2024
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