FCC Chairman Questions YouTube TV on Channel Carriage Policies

Report from the Washington Post

In Brief – Federal Communications Commission Chairman Brendan Carr has written a letter to the CEO of Alphabet and the head of its YouTube business unit about allegations that its YouTube TV service “discriminates against faith-based programming.” The allegation of discrimination against faith-based content carriers was raised by Great American Media, a company founded in 2021 a former CEO of the Hallmark Channel's parent company, which operates several family-friendly TV and streaming networks carried by cable and streaming providers including Comcast, Cox, and Hulu. The content company claims that this discrimination is why its networks are not part of the YouTube TV channel offerings. Although Carr admitted in his letter that virtual Multichannel Video Programming Distributors (vMVPDs) like YouTube TV do not face the same regulatory regime as traditional MVPDs, he called on the company to brief FCC staff on the role of virtual MVPDs in the modern media marketplace and YouTube TV’s channel carriage negotiations process. A spokesperson for YouTube said that their channel decisions are "based on factors like user demand, operational cost and financial terms.”

Context – Many US conservatives have believed for years that tech giants had slanted rules and punished conservatives for challenging the ideological and cultural views of the largely-Bay Area corporate leaders. This is clearly President Trump’s top tech complaint, especially as it applies to him, and the top tech regulators in his new administration, including Carr, are vocal about censorship of conservative viewpoints. Over at the Federal Trade Commission, Chairman Andrew Ferguson has opened a public inquiry on "Tech Censorship" including so-called “de-monetizing” and “shadow-banning” by platforms. And while several top social media platforms are now moderating content in a very different manner than before, notably X and very recently Meta, beating this conservative drum will not slow down. But First Amendment challenges will likely stand in the way of government sanctions, including by the FCC.

Meta Sued by French Copyright Holders Over AI Training Data

Report from Reuters

In Brief – French publishers and authors are suing Meta for violating European copyright law when they copied massive amounts of their copyrighted material without permission and used it to train the company’s generative artificial intelligence (GAI) models. SNE, the trade association representing major French publishers, as well as authors’ association SGDL and writers’ union SNAC, have filed the complaint in a Paris intellectual property court. The plaintiffs allege to have evidence of “massive” breaches of copyright by Meta, with one saying, “We are witnessing monumental looting." The group is also reaching out to the European Commission, alleging that Meta’s actions violate the EU’s AI rules. This is the first copyright lawsuit in France involving AI training, but AI companies have been hit by a wave of similar lawsuits from authors, visual artists, music publishers and other copyright owners in the United States. In the US, AI companies argue that using copyrighted material to develop AI models constitutes “fair use” under US copyright law. A representative for Meta did not immediately respond to a request for comment on the new lawsuit.

Context – Questions around the legality of “training” the neural networks of major GAI models with non-licensed copyrighted material is a top legal and regulatory issue surrounding AI. Copyright lawsuits have taken center stage in the US, but in the EU, with its comprehensive AI Act, regulators and AI expert groups will play key roles setting the rules. The US lawsuits will likely focus on "fair use". Federal Judge William Orrick, overseeing cases involving image generating services, recently issued a ruling in which he explained that he is trying to ascertain how the GAI systems work. He will learn that they are not traditional databases. They do not store or retrieve copies. They "learn" from data and then produce new output. It will be interesting to see how US judges and EU expert groups react when GAI operators admit they truly don’t exactly know why their systems produce any particular output, hence the nagging existence of our favorite GAI concept, “hallucinations”.

Polish Government Plan to Tax Digital Giants Draws US Ire

Report from Notes from Poland

In Brief – The Polish Government is pressing ahead with plans to create a national Digital Services Tax (DST) hitting the largest digital companies despite harsh criticism from the incoming US Ambassador, adding to recent diplomatic spats between Poland and the United States. Poland currently imposes a 1.5% tax on its internet users who purchase streaming services, but the government’s Digital Minister is calling for Poland to join the collection of EU countries that impose a special corporate tax on large, mostly US-based, digital companies like Amazon, Google and Meta. The new tax reportedly could reach 7% of their in-Poland revenue. A Polish DST would come on the heels of the global corporate tax reform effort at the OECD hitting a roadblock with the election of President Donald Trump. That two-part agreement from 2021 was spearheaded by the Biden Administration. Several countries that had enacted national DSTs agreed to delay their operations as the multilateral tax plan was implemented, but the Trump Administration opposes the broader tax plan leaving national DSTs in its wake.

Context – During the first Trump Administration, France created the first DST to increase taxes on the biggest internet businesses. Most were US companies. Other countries followed suit. President Trump responded with tariff threats, the DSTs were delayed, and talks moved to the OECD. The second Trump Administration came out of the gate with two executive orders signaling that he opposed the OECD plan and will again aggressively fight foreign DSTs with retaliatory tariffs. And a further White House directive even more broadly threatens trade retaliation, covering any tax or regulatory actions that are “discriminatory, disproportionate, or designed to transfer significant funds or intellectual property from American companies to the foreign government or the foreign government’s favored domestic entities.” Meta would likely argue Poland is doing that with its new “neighboring rights” IP law aimed at forcing them to pay Polish media companies when Facebook and Instagram users freely post links to Polish media content.

UK CMA Releases Growth-Promoting Big Tech Competition Policy Vision

Report from Reuters

In Brief – The CEO of the UK Competition and Markets Authority (CMA) has set out a vision to oversee digital giants that will give them a regulatory road map of the agency’s priorities. The CMA’s strategic vision was laid out by Sarah Cardell in a speech to a London tech industry conference and is part of the antitrust agency’s response to the government’s call for the regulator to use its enforcement authority, especially in digital and technology markets, to contribute more to the country’s economic growth. That mandate was cited when the government removed the Chairman of the CMA’s Board of Directors in January and installed a former Amazon executive as the agency’s interim head. Cardell told the conference that the CMA would promote competition in ways that boost business and investor confidence, including prioritizing interventions with the most “clear and direct impact” on UK consumers and businesses and that consider “the interplay with other regulators domestically and internationally." She added that the agency, which has recently gained significant new regulatory authority over the largest digital companies, would exercise its mandate using its “4Ps” framework - pace, predictability, proportionality and process – that would apply to its Big Tech oversight and merger control.

Context – Presenting the UK as a more reasonable and business-friendly regulator than the EU has been a goal of post-Brexit British Governments, but on tech policy it’s mostly been a distinction without a difference. The DMCC, the UK’s take on Big Tech regulation, is not meaningfully different from the EU’s Digital Markets Act on policy, but the Starmer Government appears committed to the idea that the process of implementing similar mandates can be much more appealing. Apple and Google are are now being designated as having Strategic Market Status under the DMCC, a no brainer, and the CMA just released a report on how both undermine competition in the mobile browser market. Whether the CMA arrives at meaningfully different rules and limitations than will be imposed elsewhere will be a test. As is the UK’s standoff with Apple over encryption.