Archive – 2021-22

Suit Alleging TikTok Liable for Child’s “Blackout Challenge” Death Dismissed Due to Sec. 230

Report from Reuters

In Brief –  US District Judge Paul Diamond has dismissed a federal lawsuit arguing that TikTok was liable in the death of a 10-year-old girl who strangled herself in December 2021 purportedly participating in a “blackout challenge” described by user videos circulating on the platform. The girl’s mother sued TikTok for promoting blackout challenge videos, arguing that while TikTok did not create the dangerous content, they did create the algorithms that determined which content to show her daughter, and therefore directed the blackout challenge videos to her and bore some responsibility for the terrible outcome. Judge Diamond rejected the argument that Sec. 230 of the Communications Decency Act, which clearly relieves online platforms of civil liability related to content created by third parties, did not protect the same platforms for liability based on surfacing the content to users. The judge added that “The wisdom of conferring such immunity is something properly taken up with Congress, not the courts.”

Context –  Trying to impose liability on digital platforms for surfacing objectionable third-party content is increasingly the top strategy for circumventing Sec. 230. As usual, harms to young people are given center stage. Social media companies are facing lawsuits for causing young people to become “addicted”, leading to harms including eating disorders, self-injury and suicide. In the UK, the 2017 suicide of a 14-year-old girl led to a high-profile state coroner investigation of social media and official recommendations to the platforms and the UK Government to create separate platforms for users under age 18. The UK Online Safety Bill just might push that. In US courts, the Snap speed filter product design case was the first prominent product liability-based crack in Sec. 230, but the more recent Omegle case might be more relevant because the platform was connecting people, not just offering an ill-designed digital tool to users. Finally, while Judge Diamond said Congress could step in, the Supreme Court is going first, taking a Sec. 230 case this term that looks squarely at platform algorithms.

European Commission Proposing a 40-Person Team for DMA Enforcement (That’s It?)

Report from Reuters

In Brief – The European Commission is proposing to establish a 40-person team to oversee implementation of the Digital Markets Act (DMA), landmark legislation to restrain giant digital platforms with regulations modeled on competition law principles without the enforcement processes that policymakers found too slow for digital markets. The plan is to tap 21 current Commission professionals, including individuals engaged on antitrust investigations into Apple and Amazon, two of the companies expected to fall under the DMA’s jurisdiction, as well as bring 19 new professionals into the new organization.

Context –  The intended change in digital market governance that is embodied by the EU’s DMA, and its equally ambitious cousin the Digital Services Act (DSA), cannot be over-hyped. It’s not completely clear how many large “digital gatekeepers” will fall under the DMA’s reach, but this thoughtful article explains that it may be a dozen or so to start. And here is nice summary of the 18 high-level mandates. Regulatory processes and enforcement have been big unanswered questions. Seriously, the goal is to regulate the biggest digital companies in the world (at least outside China) who operate massively complex, interlocking platforms. Forty people? The DSA, which aims to direct how all digital platforms address objectionable content, includes new rules on “dark patterns”, limitations on targeted advertising, specific take-down duties, and content moderation transparency requirements, at least includes a dedicated regulatory funding mechanism. Platforms having at least 45 million users face a new annual supervisory fee of up to .05% of global earnings. The DMA has no such funding mechanism. Commissioner Thierry Breton has provided some insight into DMA and DSA enforcement plans, describing hundreds of expert staff at the European Commission, while the European parliamentarian who ushered passage of the DMA has called for the Commission to dedicate at least 150 skilled staff to the DMA work alone.

New Zealand Employment Court Rules that Four Uber Drivers Were Company Employees

Report from TechCrunch

In Brief –  The Employment Court of New Zealand has ruled that four rideshare drivers who used the Uber driving platforms between 2016 and 2022 were acting as employees of the company, not independent contractors. The decision summary indicates that the ruling hinged on the fact that “Uber exercised significant control over each of the drivers” through “incentive schemes that reward consistency and quality and withdrawal of rewards for breaches of Uber’s Guidelines or for slips in quality levels, measured by user ratings.” Uber’s control over prices, service requirements, guidelines, terms and conditions, and the relationships with riders were all noted. The ruling applies directly to just the four drivers who appealed to the Employment Court but is likely to eventually be applied to more drivers.

Context –  This court decision puts New Zealand clearly in the European camp rejecting the classification of Gig drivers as independent contractors. It’s important to remember that changing Gig work models into more traditional jobs places the interest of a minority of the workers, who wish they had a traditional job, over the majority of participants, who prefer the independent model for what is side work or a second job for them. Most studies have found this to be about a 30:70 split. Once again, the issue of the level of control exerted by Uber over the drivers was critical. This was a key distinction in European court decisions distinguishing AirBNB, not an employer, from Uber. The European Commission’s massive legislative initiative on digital labor platforms claims to focus on platform control as well. In the US, federal and state worker reclassification legislation has been stymied since California voters overturned the state’s aggressive independent worker reclassification law in 2020. That vote also derailed changes Uber was making in California to give drivers more control and independence. It would have been interesting to see how they would have worked. Maybe they will reappear for Uber in markets where loosening the reins is needed to maintain drivers as contractors.

UK Ofcom Net Neutrality Review Raising Zero-Rating and ISPs Charging Platforms

Report from Bloomberg

In Brief – Ofcom, the UK’s telecommunications regulator, is opening a broad review of the country’s net neutrality rules following Brexit and shifting away from giving significant weight to EU regulations. The agency’s thoughtful paper kicking off the consultation process is broadly supportive of the principles of the open internet, meaning that consumers are empowered to choose which online “Content and Application Providers” (CAPs) they engage without being influenced by their Internet Service Provider (ISP). At the same time, Ofcom indicates that some changes in how the agency evaluates ISP offerings to consumers, in particular allowing ISPs to offer consumers a broader range of premium packages, could improve the market without undermining net neutrality. The review covers five major substantive issues, with the most contentious being “Zero Rating” and “Charging” CAPs for sending data to ISP’s consumer customers. On Zero-Rating, Ofcom recommends a slight softening, taking a more permissive view of plans that exempt from data caps connections to public interest and non-profit sites, such as the UK National Health Service, or to all sites for general classes of content, such as video streaming or gaming. On charging CAPs, especially to gain premium treatment for their data, Ofcom does not see that changes would benefit consumers. Stakeholder comments can be submitted through January 13, 2023.

Context –  Telecom companies have been accusing the Internet platforms of “free-riding” for nearly two decades and asking for the ability to charge the biggest ones in new ways, claiming it’s needed to invest in ever-better networks. The free-riding charge is baseless. Every Internet user, from individual consumers to the largest companies, pay for their bandwidth. That said, the drive to open new telecom company revenue streams never ceases, with the South Korean bandwidth payment regime the ISP darling. Ofcom is now officially reviewing the issue, the EU’s tech leaders are saying some sort of review is likely next year, and if a third Democratic FCC Commissioner is confirmed, expect rulemaking there too.

Republican National Committee Sues Google Over Political Email Spam Filters

Report from Reuters

In Brief –  The Republican National Committee (RNC) has filed a federal lawsuit against Google claiming that the digital giant’s Gmail service discriminates against the emails of Republican candidates by sending them disproportionately to spam folders when compared to the emails from Democratic candidates. The RNC attributes the discrimination to ideological opposition to Republicans’ conservative views. The issue of how the spam filters of the top email service providers, Google, Yahoo and Microsoft, treat political fundraising emails came to the fore in April when researchers at North Carolina State University released a paper claiming that during the 2020 election campaign Google’s spam filter appeared to identify Republican emails as spam to a greater degree than Democratic emails, while Yahoo and Microsoft spam filers appeared to identify Democratic emails as spam more than Republican ones. Congressional Republicans aggressively complained to Google leaders, leading the company to propose an opt-in program for campaign emails which was approved by the Federal Election Commission in August and went live in early October. While Democrats criticized the Republican spam filter complaints and Google’s response, they signed up for the pilot while the RNC still had not

Context –  Like we said about the White House’s progressive tech reform event in early September, file this suit in the campaign bin. And the Democratic complaints too. The RNC’s suit is just more fundraising email content. But is there anything meaningful to take from this? Yes. More than anything, Republicans have learned that charging big tech companies with woke ideological discrimination is a major political winner with conservative voters. Pew has found that most voters suspect the platforms are ideologically motivated, including many Democrats. If the Republicans retake either House of Congress, expect two years of relentless performative efforts raking large platforms over the coals for ideological discrimination.

Clearview AI Continues to Rack Up Fines and Data Deletion Orders (Now It’s France)

Report from TechCrunch

In Brief – France’s data protection authority (CNIL) has fined controversial facial recognition company Clearview AI 20 million euros for violating the EU’s General Data Protection Regulation (GDPR) by illegally collecting and processing biometric data of French citizens. The fine is the maximum that the company can receive under the European privacy law. The CNIL also ordered the company to stop all data collection activities on French citizens and delete all such data they hold within two months. Clearview AI representatives responded that the company has no operations in, or businesses connections to, France or the EU and is therefore not subject to the CNIL’s authority or GDPR regulation. The company also continues to argue that it is just a search engine for public images on the Internet that operate like Google, Duck Duck Go, and Bing, and that it cannot know the citizenship of a person based on a photo posted online.

Context –  The legal and regulatory challenges facing Clearview AI is the highest profile story involving facial recognition and AI applications more broadly, including France, Canada, Australia, Italy, Greece, the UK, and US states such as Illinois and Vermont. The small company came out of nowhere just two years ago claiming it had scraped billions of public photos off the Internet and built a functioning facial recognition system. While social media giants filed lawsuits to stop the company accessing the user photos, Clearview continues on, now claiming to be amassing 100 billion images. The company says that it will offer its facial recognition service only to government and law enforcement agencies, but that corporate clients will be able to access the facial recognition algorithm while needing to supply their own photos. In the US, despite protestations from civil libertarians and privacy advocates, clients in the federal government and law enforcement are growing. Internationally, governments are equally interested in facial recognition for security and law enforcement. For example, the EU’s landmark AI regulation proposal exempts many security service applications from facial recognition limits.

Brazilian Elections Chief Given Unilateral Power to Police Online Misinformation

Report from New York Timess

In Brief –  The seven judges of Brazil’s national electoral court have empowered the panel’s top judge, Alexandre de Moraes, to unilaterally order digital platforms to take down material he rules is election misinformation. De Moraes, a justice on the country’s Supreme Federal Court who has had repeated judicial run-ins with Brazilian President Jair Bolsonaro and his backers, can now unilaterally order digital platforms to remove content within two hours, and one-hour the eve of the election, or face suspension of their services in Brazil for 24 hours. The move comes as Bolsonaro and Lula Da Silva head towards a heavily contested NovN 30 run-off vote and extreme political attacks abound online with charges including claims that the candidates are Satanists, cannibals, and pedophiles. Elevating Judge de Moraes to a position of such authority during the final days of the election season has led to vocal objections from Bolsonaro and his backers, but also concerns from defenders of online free speech.

Context – Who would have seen the election in Brazil turning into a pitched and emotional ideological battle? Even more shocking, that having one judge named as the arbiter of misinformation to be banned from Internet channels would cause anxiety among those who think that person is not entirely neutral. Seriously, this isn’t about cannibalism, Satanism, and the like. The kind of issue raising concerns on the right involve whether Lula can be accused of corruption. He was jailed for corruption following his term in office, but ended up released on technical grounds, which de Moraes has ruled means the subject is off limits. Whether that call is right or wrong, there are at least three things to keep in mind. There are always grey areas where it’s not possible to objectively determine a nebulous concept like misinformation. The urge to police extreme online speech goes far beyond Brazil and is as global as the Internet. And as we see in Europe, thoughtful champions of responsible speech are always confident in their ability to determine and coral disinformation and misinformation while protecting free speech.

Could CFIUS Step in on Musk Buying Twitter? (And would he actually prefer that?)

Report from Reuters

In Brief – The White House is publicly disavowing published reports that Administration officials are discussing whether some of Elon Musk’s ventures should be subject to national security reviews. The security implications of his acquisition of Twitter, as well as his leadership of Space X’s Starlink satellite network, are most in focus. Twitter is the global communications platform most favored by government leaders and media members, including in many countries not aligned with the United States, and Starlink has played an important role in Ukraine allowing many to access the Internet in the face of Russia’s aggression. In those lights, intelligence officials are concerned that Musk’s policy views, which some view as erratic, could threaten US security interests. The avenue for some type of review might be for the Committee on Foreign Investment in the United States (CFIUS) to review Musk’s acquisition of Twitter which includes investors from countries that raise national security issues.

Context –  As we’ve been saying here since late April, US antitrust scrutiny was never likely to be a hurdle to Musk buying Twitter. Musk and Twitter may both play huge roles in social media dramas, but content moderation policies are not antitrust material. At the same time, we’ve also noted for months that it was worth keeping a closer eye on CFIUS. While a CFIUS challenge would push traditional norms, the agency is opaque, the standards for review are not fixed, and deals involving data-rich and digital firms have become a big priority on the bipartisan security agenda in recent years. Musk has brought non-US investors into the bid that could give CFIUS a hook to delve deeper, and Tesla’s reliance on the Chinese market, both for production and sales, has been raised by commentators concerned that the Chinese Government could press a Musk-led Twitter on global content policies. Of course, in the months since his original Twitter offer was accepted, Musk has worked hard to undo the deal. If CFIUS blocked it, he might not be disappointed.

India Fines Google for Anticompetitive Android Practices and Orders Changes

Report from Reuters

In Brief – The Competition Commission of India (CCI), the country’s antitrust regulator, has ruled that Google leveraged its dominant position in markets such as online search and Android app stores to protect the market position of its apps like Chrome and YouTube. The regulator has fined the digital giant 13.8 billion Indian rupees ($162 million) and ordered it to change how it operates the Android mobile platform, including restricting Google from engaging in certain revenue sharing agreements with smartphone makers to dissuade them from offering alternative apps to Google’s offerings. Google’s Android operating system is reported to power 97% of India’s smartphones.

Context – From the kickoff of the global legal and regulatory campaign of big app developers to regulate the fees and policies of the Apple and Google mobile ecosystems, Apple has been more in the spotlight, at least in the US. Epic Games filed simultaneous antitrust lawsuits against both in 2020, but the Apple case moved to trial much faster. Federal Judge Yvonne Gonzales Rogers ruled largely in Apple’s favor by September 2021. Even the appeal hearing in the Ninth District Court of Appeals, expected this fall, will precede the initial Epic v Google trial, which is scheduled for January. Apple’s “walled garden” business model, with strict and well-enforced rules, seems more likely to violate antitrust laws to casual observers. Plus, the two companies have similar market shares. Google’s Android is a very different hybrid-type system. The source code can be used in an “open source” manner, but if manufacturers produce devices they plan to brand as official “Android” devices (think green robot logo), they must follow many contractual mandates, including regarding apps. The OS code may be open source, but the Android device ecosystem is not. So, while Google claims that their Android system is more open than Apple’s, it is still under fire. In South Korea and now India, two jurisdictions where Android has huge market shares, Google has suffered real setbacks. Google also lost a similar case on Android policies in Europe.

Amazon Facing a UK Class Action Suit Targeting Buy Box for Hiding Lower Price Options

Report from CNBC

In Brief – The latest antitrust challenge to Amazon’s ecommerce business is a proposed class action suit in the UK targeting the company’s Buy Box algorithm for directing customers to buy products that are stored and handled by Amazon’s own logistics business even when “the same product” is offered for a lower price on their marketplace. The plaintiffs claim that 80 percent of sales on Amazon are for products in the Buy Box and allege that the ecommerce and logistics giant uses a “secretive and self-favouring algorithm to ensure the Buy Box nearly always features goods sold directly by Amazon itself, or by third-party retailers who pay hefty storage and delivery fees to Amazon”. The law firm developing the abuse-of-dominance suit is alleging 900 million pounds in damages to Amazon consumers in the UK who paid more than necessary for products on the site.

Context – Amazon is the largest online retailer, the largest ecommerce marketplace, and the largest ecommerce fulfilment center services provider (outside the separate Chinese market). Unlike true third-party marketplaces, Amazon physically stores and handles the goods for most of their top marketplace sellers just like they do for their own retail goods. This opaque business model has been roiling the legal and legislative environment for years. The biggest misunderstanding about Amazon is that they are primarily a retailer. That’s far off base. Their biggest and most profitable ecommerce business is shoppers buying “third-party goods” stored in the Amazon logistics business. They earn more in fees and spend less on those sales than for their own retail products. After years of misdirection about Amazon “retail” taking advantage of third-party sellers, lawsuits and regulatory actions are finally coming around to understanding that Amazon is most focused on preferencing third-party sellers who use Amazon logistics and penalizing sellers who do not. That, not first-party retail, is their priority. The European Commission, Italian, German, and UK competition regulators digging into that linkage is Amazon’s top risk.

A UK Coroner Calls for Separate Social Media Sites for Under-18’s (Yes, Coroner)

Report from TechCrunch

In Brief – A UK coroner has sent policy recommendations to the UK Government and social media platforms Meta, Pinterest, Twitter, and Snapchat, recommending that the platforms much more aggressively ensure that young users are not subjected to harmful content. The coroner’s report followed his five-year long review of the tragic death of 14-year-old Molly Russell in 2017, who he determined committed suicide “while suffering from depression and the negative effects of online content” that included binge-viewing material concerning self-harm and suicide. The coroner recommends that the platforms segregate their services between young users and adults, heavily moderate the content available to young users to protect them from harm, utilize age verification when users sign up for services, and link accounts for young people to a parent or guardian that would be able to monitor the online activity.

Context – A mid-level employee who worked at Facebook for nearly two years might definitely be capable of redesigning giant social media companies, but a UK coroner? He is taken seriously? No, it’s not a Holiday Inn Express commercial. As PEI readers in countries like the UK and Australia know, coroners there have a public policy role with authority to issue policy recommendations aimed at improving health and safety in the community that they believe stem from their death investigations. This Regulation 28 Report happens to align with the views of UK leaders committed to the Online Safety Bill (OSB) that would heavily regulate online content moderation. While Conservative Party officials have said that the OSB should be changed to better protect “free speech” by adults, many call for the rules regarding content that appears to those under age 18 to be retained and potentially even strengthened. If there is a risk of a “splinternet” in Western countries, it’s not from Chinese or Russian-engineered plans, it’s far more likely from government mandates emerging in places like the UK and California to protect teenagers from a range of legal but objectionable content.

EU Diplomat for Silicon Valley Hopes for DMA & DSA Collaboration – Can We All Get Along?

Report from Bloomberg

In Brief – The senior government official recently posted to the EU’s new office in San Francisco, dubbed by many as an “embassy” to Silicon Valley, says that the digital giants will need to decide the “kind of relationship” they want to have with European government. Gerard de Graaf, who joined the European Commission in 1991 and has held many trade, technology, and telecommunications policy posts, most recently helped engineer the Digital Markets Act (DMA) and the Digital Services Act (DSA) enacted into law this year. He says that the EU expects some digital companies to challenge the measures in court but hopes that most adopt a collaborative approach with regulators to achieve the goals of the legislation. He sees his role, and that of the new San Francisco Commission office, as diplomatic and advisory, helping the Bay Area’s tech business community understand what the European government is trying to accomplish, rather than being part of the regulatory and enforcement infrastructure. “We’re available, we can talk, we can advise and have a regulatory dialogue, but the obligation to comply rests with those who are under the obligations of the legislature,” he said.

Context – The sea change that will be created by the DMA and the DSA cannot be understated. In about a year, they will begin to make up an unprecedented European regulatory regime for digital platforms. Commissioner Margrethe Vestager describes the effort as establishing oversight of digital firms akin to the regulated banking, energy, and telecommunications sectors. While there has been no shortage of cheerleading from champions of the European regulatory model for the US Congress to follow suit, it is very unlikely that either a DMA-like crackdown on the digital giants, or DSA-like content moderation regulation, will pass this year. And if Republicans win a majority in either congressional body, agreement is even less likely next year, setting up a major divergence in digital legal and regulatory regimes that will operate in parallel.

UK Competition and Markets Authority Wins! Meta Finally Agrees to Sell Giphy.

Report from Bloomberg

In Brief – After a two-year legal battle between Meta and the UK Competition and Markets Authority (CMA), the company has grudgingly capitulated and agreed to sell off Giphy, the GIF platform that it acquired in May 2020 for $315 million. The CMA opened its investigation in June of 2020, eventually ruling that Facebook buying the start-up threatened competition in the social media and digital display advertising markets, and that unwinding the acquisition as the only acceptable resolution. The CMA is expected to work with the parties to identify an acceptable buyer.

Context – The Meta-CMA standoff over Giphy has been a tent-post of the debate over Big Tech acquisition policy because the CMA took a very hard line that has not emerged elsewhere with much bigger deals. Initially, critics speculated that the Giphy purchase was not about GIFs, which were already seen as old news, but that Facebook wanted the platform to gather market data, replaying a strategy critics claimed was behind their 2013 Onavo acquisition. The CMA never went that route. Rather they raised traditional antitrust objections. Meta hoped that promising to give competitors like Snap and Twitter access to GIFs would be enough. And the idea that Giphy would ever become a meaningful ad platform is not shared by many industry analysts. Meta (and everyone else) has learned that this UK regulator is procedurally very hard to beat in UK courts. Other big takeaways include: (1) the impact on tech startups as more regulators globally lower the size thresholds of deals they review, challenging acquisitions of small firms with no connection to their market; (2) comparing the UK courts’ deference to the CMA’s speculation about the far-off evolution of digital markets, with US courts who have been dealing setbacks to the FTC and DoJ and will soon review the FTC’s challenge of Meta’s buying VR app startup Within; (3) whether the CMA will take an equally hard line on Microsoft’s massive Activision acquisition; and (4) whether this episode will set back the UK Government selling itself as a less-regulatory counterpart to the EU.

US-UK CLOUD Agreement Goes into Effect Enabling Cross-Border Data Surveillance

Report from Reuters

In Brief – The US and UK have entered into a Data Access Agreement to govern cross-border law enforcement requests for information from telecommunications and digital services providers. The agreement is the first based on the Clarifying Lawful Overseas Use of Data (CLOUD) Act enacted in 2018. Under the CLOUD Act, law enforcement investigators can access data stored by service providers in another country if the data is relevant to the investigation of serious crimes such as terrorism and child exploitation, and the law enforcement agency does not target individuals located in the other country. In other words, US law enforcement investigators can request data from digital services providers that is held in the UK, as long as the subjects of the data request are not located in the UK. Likewise, UK law enforcement can access data held in the US but may not target US residents. The new agreement also incorporates procedures established by the recent Executive Order from President Biden on Enhancing Safeguards for US Signals Intelligence Activities that provides for independent review mechanisms under the US Director of National Intelligence and within the Department of Justice. They offer individuals in qualifying countries, in this case the UK, a forum to challenge the collection of their personal data if they believe it violates US law.

Context – Context – This US-UK agreement is a sidelight compared to the decade-long US-EU dispute over “Cross Border Data Flows” following the Snowden revelations and the two “Schrems” decisions by the European Court of Justice. While the US Congress has rejected calls from European privacy advocates to change federal law to limit US intelligence access to data from foreign persons, they did enact the CLOUD Act. But that was done to bolster US law enforcement data access, clarifying that digital companies operating in the US (Microsoft in the case in question) was required to turn over data on US residents to US law enforcement even when the data was stored in a foreign country, in that case Ireland.

Comparison Shopping Firms Call on EU to Turn Off Google Shopping One-Box

Report from Reuters

In Brief –  More than 40 websites offering online price comparison services have again called on the European Commission to reject Google’s “One-Box” remedy implemented to comply with the Commission’s Google Shopping competition case. The shopping sites want the Commission to force Google to restore price comparison links to its general search engine results, not surface them in a separate space on the Google search results page. The competitors argue that the Digital Markets Act (DMA), which will be implemented over the coming year, requires Google to restore comparison shopping results to general search results in a way that is the same as Google’s own Shopping service.

Context – Google is more than a decade into three major competition law enforcement cases in Europe. The first case involved how Google modified search engine results. Competitors who offered specialized online search services, such as for travel, jobs, local reviews, and shopping, argued that Google was changing its search service to harm specialized search competitors and preference its own specialty services. The European Commission focused on the price comparison “vertical” and in 2017 found that Google was engaged in unfair practices. Along with a $2.8 billion fine, Google and the Commission agreed on a remedy that replaced the Google Shopping box with a similar box that included non-Google services. But the new shopping box is considered advertising, meaning sites pay Google when they earn clicks, unlike search results, which are not paid. Vertical search firms continue to object on multiple grounds, including that the Commission should have addressed other verticals by now, and that replacing free search results with an ad-based system is unfair. The long-running Google cases were a driving force behind the DMA. The eventual impact on the Google search results, and whether Europe will try to stop Google’s more than a decade effort to evolve search to give “answers” directly rather than just provide links (here is an example of the 2012 search results page with blue links), is one big DMA question.

TikTok Dreams of Running an Amazon-like eCommerce Fulfilment Center Business

Report from Axios

In Brief – While social media platforms make changes to become more like the mega successful short-video app TikTok, the global darling of Chinese parent company ByteDance is planning to become more like Amazon by building its own global ecommerce fulfilment center system in the United States. Reports are based on more than a dozen TikTok job listings, primarily located in Amazon’s hometown of Seattle, for positions to create and run an ecommerce fulfilment system that will operate in the United States and internationally and provide warehousing, customs clearance, order prediction, inventory management, parcel consolidation, transportation, and management of returns. TikTok has been exploring various shopping features to allow content creators to list and sell goods, including a partnership with Shopify.

Context – Amazon FBA is the largest ecommerce fulfilment center services provider in the world outside of the walled-off Chinese ecommerce market, with hundreds of centers in the US alone. Unlike true third-party marketplaces, Amazon physically handles the goods for most of their top marketplace sellers just like their own retail goods. In fact, Amazon’s most profitable ecommerce business is third-party sellers using FBA to sell on Amazon. That’s far more important than direct Amazon retail. TikTok is not the first digital giant to try to replicate Amazon’s combined marketplace + logistics business. eBay bought a logistics business in 2011 and sold it in 2015, never able to replicate Amazon’s retail-like model. The closest parallel to Amazon today is Chinese giant Alibaba. It has similar massive scale as the dominant ecommerce business in the protected Chinese market, and operates a huge logistics business in China with centers in major international markets primarily for cross-border sales. Ecommerce software provider Shopify made huge waves in 2019 announcing plans to build a logistics business ostensibly to challenge Amazon, but it remains very small compared to Amazon and the company has announced scaled down plans under financial challenges.

Final Progressive Push for Gigi Sohn’s FCC Nomination to Achieve Net Neutrality Goal

Report from Washington Post

In Brief –  As the 117th Congress moves to a close and the slim Democratic majorities look to wrap up work on achievable priorities, more than 240 largely progressive public interest and trade groups have called on Senate leaders to bring Gigi Sohn’s nomination to the Federal Communications Commission (FCC) to the Senate floor before the it recesses for the election. Sohn, a stalwart and highly respected advocate for progressive telecommunications policy, would give Democrats a third vote and majority on the FCC, especially on Net Neutrality. However, Senate Republicans, backed by telecommunications giants who oppose her policy positions and have been investing heavily in lobbying wavering Democrats, appear united in opposing her nomination. In the current 50-50 Senate, all 50 Democrats will need to back her, allowing VP Harris to cast a tie-breaking vote. Alvaro Bedoya, a progressive champion of digital privacy and antitrust reform, was confirmed to the Federal Trade Commission with that formula in May.

Context – The partisan Net Neutrality divide, Democrats supporting “strong” rules and Republicans objecting to mandates, is a political football with hardened positions on both sides. The Obama FCC, with Sohn staffing then Chairman Tom Wheeler, enacted landmark rules in 2015. They were overturned by the Trump FCC in 2017. President Biden campaigned in support of Net Neutrality and another FCC reversal was expected when he won. It was taken for granted that Senate Democrats, even with the barest majority, would approve a strong pro-NN FCC Commissioner like Sohn. But it has proven much harder than anticipated. Net neutrality opponents have pulled out all the stops to block her, and in doing so, stymie the agency from moving forward on new rules that do not enjoy bipartisan, meaning industry, support. If Republicans win a Senate majority, they would likely block any pro-net neutrality FCC nominee, which is the only kind Biden would nominate. Some conservatives are talking up the merits of an FCC with no majority.

EU Telecom Regulators Oppose New Direct Payments from Platforms to Telecoms

Report from Reuters

In Brief – The Body of European Regulators for Electronic Communications (BEREC), an influential EU organization that that provides guidance and assistance to the European Commission and Member State national telecommunications regulators, has come out in opposition to a telecommunications industry proposal that the largest digital platforms, such as Google, Netflix, Meta and TikTok, should be required to provide a new type of direct payments to telecommunications companies to fund investments in upgraded network infrastructure. The BEREC findings said the internet had proved resilient to changing traffic patterns in the past and following the telecom industry’s proposals could lead to “significant harm”. The European Telecommunications Network Operators (ETNO), the trade group that lobbies for the largest network operators on the continent, rejected the BEREC findings and said it would submit new evidence to the European Commission to support its position.

Context – Like the fight over Net Neutrality itself, telecom companies have been accusing the Internet platforms of “free-riding” for nearly two decades. And asking for new revenue streams. The free-riding charge is baseless. Every Internet user, from individual consumers to the largest companies, pay for their bandwidth. Nevertheless, the digital giants have been on a losing streak in Europe with passage of the Digital Markets Act. Media companies, who also have been accusing Internet platforms of free riding for two decades, are winning new payments from Google and Facebook. So the telecom giants are hoping to finally reap some financial wins from their lobbying. They are especially inspired by bandwidth payments policy in South Korea, where data usage fees are imposed on large digital businesses to subsidize the data usage of consumers. This despite clear net neutrality concerns. Top EU tech policy leaders Margrethe Vestager and Thierry Breton have both indicated that the Commission will open a consultation on the topic in 2023, but consumer advocates seem solidly opposed.

Biden DoL Releases Long-Expected Gig Worker Classification Proposal

Report from New York Times

In Brief –  The US Department of Labor (DoL) has announced a new rule proposal changing the criteria that businesses should use when they determine if a person doing work should be classified as an employee or an independent contractor. As expected, the proposal moves federal standards in the direction of pushing businesses to classify workers as employees rather than independent contractors, a long-time priority of labor advocates and the campaign position espoused by President Biden. The new test changes a more flexible standard instituted by the Trump Administration. Independent contractor business models provide more flexibility to both employers and workers, but independent contractors do not fall under wage and benefit mandates and cannot join unions. Digital platforms have created many new types of independent workers, including myriad skilled freelancers, and Gig workers for ridesharing, delivery, and many services, but traditional industries like custodial services, home-healthcare, entertainment, and construction have long used them as well. The DoL proposal now enters a months-long comment period, and the final rule is widely expected to face legal challenges.

Context – Like the partisan back-and-forth regulatory battle over Net Neutrality at the FCC, worker classification follows a similar cadence at the DoL. So don’t forget the court challenge phase. And regulators challenging independent contractor models have suffered years of court setbacks. Then add in the Supreme Court’s recent application of the “Major Questions” Doctrine that limits federal agency authority to meaningfully change a federal standard absent legislative direction. Often progressive high-skill freelancers have stepped up defending independent work, and labor legislation is bogged down in Congress. Like on many digital issues, Europe is moving in a direction US progressives support. On the compromise front, Washington State is breaking ground on Gig ridesharing regulation that foregoes reclassification but expands benefits in ways large Gig platforms support.

Truth Social Finally has an Android App (and Approval from the Play Store)

Report from Reuters

In Brief – More than six months after its iPhone app made its debut in the Apple App Store, Truth Social’s Android app has been approved by Google for release in its Play Store. It was reported in August that Google had rejected the app because it did not meet it standards to address content that violates Google’s terms of use, including hosting violent threats. Truth Social is the Twitter-like platform announced by former President Trump in October 2021 as an “anti-woke” alternative. It is reported to have around 2 million users. Android has approximately 40% of the US smart phone market.

Context – The contention that Google was “blocking” an Android version of Truth Social was always misinformed. A major difference between Google’s Android ecosystem and Apple’s iOS ecosystem are their policies on distributing apps outside their two app stores. Apple does not allow apps to be downloaded outside their App Store, a practice often called “sideloading”. Google does not prohibit sideloading. So, while the Google Play Store is the largest Android app distribution platform, and critics argue that it is unfairly preferenced on Android devices, apps don’t need access to the Play Store. This key difference has been playing out for over a year with Parler, another social media service known for eschewing the content moderation practices of the social media giants. Parler’s app was banned by Apple’s App Store and Google’s Play Store soon after the Jan. 6 Capitol Riot, and the site was then kicked off the web entirely by Amazon abruptly withdrawing its AWS web hosting. Parler eventually found alternative web hosting, reached an agreement with Apple to increase its content moderation, and got back into the App Store in May of 2021. Parler did not rejoin the Google Play Store until this September, distributing its Android app for over a year in other ways. Although Truth Social claimed Google was the reason it did not have an Android app for months, they quietly released one in recent weeks using similar methods to Parler, before any agreement with Google over content standards.

Biden Executive Order Aims to Solve EU Legal Problems with Data Flows to the US

Report from Washington Post

In Brief –  President Biden has issued an executive order that aims to address European concerns about the digital surveillance practices of US national security agencies. The order aims to implement a March deal between US and EU negotiators to address EU court rulings by imposing new restrictions on US intelligence agencies collecting data on European residents, as well as allowing them to challenge whether their data is unlawfully collected. The order requires US intelligence agencies to limit collection to the “pursuit of a defined national security objective,” requires that data collection be “proportionate” and “necessary” to execute a priority objective, and creates new review processes for EU residents within the US Office of the Director of National Intelligence and the Department of Justice. The new agreement will need to be formally certified by the EU government, which could take months, and is very likely to be challenged in European courts.

Context – We are nearly 10 years into the US-EU legal dispute over “Cross Border Data Flows” following the Snowden revelations. The European Court of Justice invalidated the US-EU Safe Harbor agreement in 2015 and then invalidated the follow-on US-EU Privacy Shield agreement in 2020. Both cases nominally pitted Facebook, which stored and processes data on their EU users in the US, against EU privacy activists, but the fights are about US intelligence and anti-terrorism surveillance laws and practices. The Congress isn’t changing the laws aimed at fighting terrorism and criminal activities. EU leaders keep reaching deals with the US to avoid major digital service shutdowns and engage in antiterrorism surveillance as well. The same privacy advocates are highly critical of the new deal saying it lacks meaningful change. In related news, the US and UK are implementing a bilateral law enforcement data access agreement. And Meta is proceeding with a solution to escape the litigation cycle by building a huge EU user data center in the Netherlands, although anti-development activists have stymied its opening.

New US Restaurant Lobbying Group to Battle Delivery Apps Linked to Former Uber CEO

Report from Financial Times

In Brief – Digital Restaurant Association (DRA), a new trade group that aspires to lobby in cities and states across America on behalf of restaurants in policy battles against digital delivery platforms, is reported to be linked to former Uber CEO Travis Kalanick’s “dark kitchens” start-up CloudKitchens. Policy battles over high fees, access to customer data, app contractual terms, and treatment of delivery workers, have become pronounced since the pandemic, especially in urban centers that often maintained the most strict and lasting restrictions on in-person dining, were home to the largest networks of delivery people, and had the most long-standing and influential restaurants. A DRA representative rejected that the lobbying organization was directed by Kalanick’s business and claimed the restaurant group was created and led by former Obama Administration officials at a New York City-based public relations firm.

Context – The major exception to legislative gridlock over Gig work in the US has been food delivery platform regulation. A number of cities led by Progressive Democrats have responded to complaints by restaurants over fee levels and terms of service, as well labor advocates angered by the tough conditions faced by many bike couriers. While food delivery apps likely boosted carry-out that helped restaurants survive during the pandemic, fees that regularly reach 30% have created political firestorms. Led by San Francisco and New York City, many cities imposed fee caps that continue today. Contradictions abound. While restaurants argue fees are too high, driver advocates argue their pay is far too low, and market analysts note that even then the platforms are still not profitable. NYC has pushed the regulatory envelope furthest at the metro level, while California has done the most among states, with delivery platform sanitation mandates, a underline;”>restriction on delivering from unaffiliated restaurants, and legislation regulating app pricing and transparency.

Spotify Buys Content Moderation Firm to Show Its Commitment to Podcast Policing

Report from TechCrunch

In Brief –  Spotify, which overtook Apple in 2021 as the top listening platform for audio podcasts, has announced the acquisition of Kinzen, a Dublin-based technology firm that uses machine learning to analyze audio and detect potential harmful content and hate speech in multiple languages and countries. Spotify has used Kinzen technology since 2020. Unlike its traditional music offerings, its burgeoning user-generated podcast business has created the kind of content moderation challenges faced by social media platforms like YouTube, Facebook, and TikTok. The issue most prominently arose early this year when Spotify’s podcasting sensation Joe Rogan was accused of spreading COVID and vaccine misinformation, as well as making hateful comments. In response, the company published platform rules and formed a Safety Advisory Council to help craft and implement content policies.

Context – One of the greatest things about the Internet is that the cost of sharing your views with the world have become so small compared to traditional media methods (not that the world will listen, but you can try). Of course, that means that hundreds of millions of people are doing it globally… endless video, audio, images, text and all sorts of combinations. Shockingly, some people create bad stuff, running from the illegal and depraved to an unlimited range of objectionable, hateful, mean, uninformed and misleading. Much of it is what the UK Government is calling “legal but harmful”. Besides the unlimited range of content, meaning lots of “grey areas”, there are scale issues that are mind-boggling. Scanning hundreds of millions of pieces of content takes digital (even AI) tools, something Google, Facebook, and others have been using for years, and never perfectly. Super smart tech policy expert Mark Masnick describes the job as “Impossible to do well”. And soon the Supreme Court will rule on whether digital platforms will be liable when terror attacks happen if they failed to block bad content well enough, as well as whether states can prohibit them from restricting (similar) legal but harmful content at all.

Another Gig Driver Suits Accuses Amazon and Contractors of Myriad Labor Violations

Report from Axios

In Brief – Ten package delivery drivers based in Seattle have filed a class action lawsuit in Washington state court alleging that Amazon and 30 small package delivery firms that work for the ecommerce giant violated wage, hour, and driver safety rules since 2019. The drivers claim that the delivery requirements imposed by Amazon on the delivery contractor companies, which Amazon calls Delivery Service Partners (DSPs), are so onerous that drivers are pushed beyond the thresholds of safety and health standards, including long-time accusations that drivers do not have time or opportunities to take bathroom breaks. The suit accuses the defendants of not allowing for required breaks and not compensating the drivers financially as required by law when breaks were missed. Amazon has faced similar suits in several states in recent years, including an $8.2 million settlement in 2021 for a 2017 class action claim also brought in Washington State.

Context – Amazon has been one of the largest Gig Work businesses for years. Two Gig platforms are central to Amazon’s delivery services. One is the Delivery Service Partner fleet of small businesses that buy delivery vans, often using Amazon credit, and use Gig drivers to drive them, with the driver performance tightly guided by Amazon. When safety, health, and labor shortcoming occur, Amazon pins the failings on the small firms. Amazon’s second Gig delivery program, called Flex, is the giant’s own Uber-style app where drivers sign up directly and use their own vehicles. Both programs face criticism globally for worker misclassification, lax safety, and aggressive monitoring by Amazon. In the UK, the law firm that forced Uber to reclassify drivers as company workers is now targeting Amazon. In Japan, Amazon delivery drivers have moved to form a union. In the EU, the European Commission has proposed a directive to regulate Digital Labor Platforms and address issues such as “algorithmic control” and “bogus self-employment” that have plagued Amazon.

Brazil Approves Microsoft’s Acquisition of Giant Game Developer Activision-Blizzard

Report from Forbes

In Brief –  The Brazilian competition authority (CADE) has granted its approval to Microsoft’s proposed $68.7 billion acquisition of giant game developer Activision-Blizzard. Most striking is the regulator’s complete rejection of the arguments of lead complainant Sony that Microsoft will likely make top Activision games, especially Call of Duty, exclusive to Microsoft gaming platforms, harming competition and gamers. Microsoft has denied charges it will go that route with Call of Duty. But CADE does not care, stating in the decision that “the central objective of CADE’s activities is the protection of competition as a means of promoting the well-being of Brazilian consumers, and not the defense of the particular interests of specific competitors,” and that “in the event that Activision Blizzard games – and especially Call of Duty – become exclusive to the Microsoft ecosystem, CADE does not believe that such a possibility represents, in itself, a risk to competition in the console market as a whole.” Brazil’s antitrust regulator is the second to approve the deal, following Saudi Arabia in August.

Context – Microsoft’s Activision deal is the biggest digital acquisition of all time and is coming at a time when tech acquisitions are coming under greater scrutiny. The Federal Trade Commission is taking the lead in the US and made a “second request” for additional information in mid-summer. They are reported to be focusing on labor impacts. The UK Competition and Markets Authority has announced that it believes the deal could harm competition in the gaming industry and opened its version of a deeper dive Phase 2 review, with a decision due in March of 2023. And the European Competition, in its initial review, is questioning industry stakeholders to get official feedback on a range of issues, including game exclusivity. It will make an initial ruling in November. Despite increased criticism of Big Tech acquisitions, this massive deal tests whether activist regulators will reject something bigger than just bids for start-ups (FTC, CMA).

Apple Sees French Court Cut Huge Price Fixing Antitrust Fine by Two-Thirds

Report from Reuters

In Brief – A French appeals court has significantly pared back a March 2020 decision of the French antitrust authority (CNIL) that imposed a $1.2 billion fine on Apple for engaging in illegal retail price fixing, dropping to fine to $366 million. At the time, the $1.2 billion fine was the biggest ever levied by the national antitrust regulator. The CNIL’s original ruling followed a decade-long investigation of Apple’s distribution practices between 2009 and 2017 for hardware such as tablets and computers. The regulator ruled that Apple imposed prices on premium retailers so that they were aligned with those in Apple’s retail stores and on the Internet. Specific charges included operating of a cartel with two electronics wholesalers from 2005 to 2013 to have them enforce prices set by their retail customers (the two wholesalers were also fined), attempting to directly set and enforce the retailer prices from 2012 to 2017, and contractually obliging retailers who were economically dependent on Apple to sell Apple products almost exclusively between 2009 and 2013. The appeals court dismissed some of the price fixing charges, retained the decision regarding illegal contractual provisions imposed on the economically dependent retailers, and reduced the damages multiple imposed by the regulator. Both Apple and the CNIL have indicated that they may appeal the decision.

Context – This Apple antitrust case is not related to the legal and policy battle with app developers over the terms, conditions, and fees imposed by Apple through its App Store and its iOS mobile operating system. In fact, the case is a throwback to the days when Apple was thought of as an elite hardware company rather than a digital “Gatekeeper” and was largely given a pass in the emerging Techlash. Today, when retail price fixing is an issue with digital platforms, it is generally in the context of Amazon’s widely criticized Fair Pricing Policies, efforts by restaurant delivery apps to impose meal pricing on restaurants, and longstanding criticisms of online travel booking platforms.

Truss Mini-Budget Changes Independent Contractor Determination for UK Taxes

Report from iNews UK

In Brief –  “Mini Budget” of proposed tax and regulatory changes released by the new UK Government led by Prime Minister Liz Truss includes a proposal to scale back a tax reporting rule intended to reduce tax fraud by workers who claimed to be a self-employed contractor but really work as a traditional employee. The IR35 proposal targeted by the Truss Government shifted responsibility for determining whether a worker was an independent contractor or an employee, which has tax and national insurance payments implications, from the worker to the client business. That policy had been widely criticized by self-employed people, especially skilled freelancers, who argue that the policy change made it more difficult and expensive for businesses to secure freelance work, reducing their economic opportunities. If implemented, independent contractors in the UK will return to determining their status in April 2023.

Context – “Worker classification” battles involving digital platforms most often revolve around low-skill, low-wage, Gig workers. But the long-running UK IR35 debate implicates a different class of Internet-enabled independent contractors entirely, skilled contractors and freelancers. In the US, similar skilled freelancers have stymied Gig work-focused employee classification schemes they fear would harm their independent work options. Like their UK counterparts, US tax officials have also been concerned that the Internet made it easier for people to earn money outside of traditional employment channels and skirt their taxes. A new form of third-party income reporting, IRS form 1099-k, was created in 2011 and targeted people receiving $20,000 in payments (from at least 200 transactions) from online platforms to ferret out small online businesses. The COVID relief law passed in March 2021 included a provision dropping that threshold to just $600, creating a new tax compliance burden for millions of US Internet users, and leading marketplaces and taxpayer advocates to push for a repeal.

Internet “Multistakeholder” Governance News – US Beats Russia at the ITU

Report from Reuters

In Brief – In what was portrayed as a head-to-head battle between the United States and Russia over competing visions of government’s role in directing the Internet and other digital technologies, Doreen Bogdan-Martin, the US candidate, overwhelmingly defeated Russian Rashid Ismailov to be elected Secretary-General of the International Telecommunication Union (ITU). The ITU is the UN body that sets international standards for the telecommunications industry, including some impacting the Internet. It membership includes 193 UN member states but also close to 900 technical and academic representatives. Bogdan-Martin, a long-time ITU official, is the first woman to hold the organization’s top role.

Context – The ITU election was portrayed as a non-violent proxy fight paralleling the Ukraine war and some member states were reportedly unwilling to publicly side with the Russian candidate. But the ITU is also an Internet governance organization, and as a UN body where national governments are explicitly the lead members, it has been seen by some as a potential staging ground for a change in how the Internet operates. There is not space here to delve deeply, but just know that Internet governance is complicated and unique, with a host of technical standards, protocols and governing bodies. As opposed to a centralized or top-down network, it is known for it’s “multistakeholder” governance model. To get a sense of the complexity, look to the chart on page 12 here. The ITU is in there (but not easy to find in the crowd). Three final takeaways: (1) As China has shown for years, and others are trying to replicate, national governments can already create their own restrictive version of the Internet. (2) Speaking of China, the outgoing ITU Secretary General is Chinese. (3) If there is a risk of a “splinternet” in Western countries it is less from Chinese or Russian-engineered plans than from their own government mandates for online speech moderation or to protect teenagers from a range of legal but objectionable content.

European Competition Authority Allows Gig Workers to Collectively Bargain

Report from Euractiv

In Brief –  The European Commission has announced new guidelines to allow self-employed people who do not employ others, called “solo self-employed people”, to engage in collective bargaining without violating EU competition rules. While the new policy applies to all solo self-employed people, whether they use a digital Gig work platform or work entirely offline, the change is a part of the Commission’s campaign to address problems with Gig work platforms that employ independent contractors who are treated like employees but without employment law protections and benefits. The guidelines set out criteria to help clarify when a solo self-employed person is in a situation comparable to a worker, including those who: (i) provide services exclusively or predominantly to one undertaking; (ii) work side-by-side with workers; and (iii) provide services to or through a digital labor platform. Labor groups applauded the change.

Context – The legal and regulatory treatment of Gig workers and digital labor platforms in the US and Europe has been diverging for the past few years. European courts continue to support classifying ridesharing and delivery workers as employees, and both Spain and Portugal enacted Gig driver and food delivery worker laws last year. The European Commission’s massive legislative initiative on digital labor platforms, directing a Europe-wide change on worker classification for platforms that strictly control the performance of workers, as well regulating “algorithmic” management practices for all labor platforms, is the biggest endeavor globally. Worker classification fights have been relatively quiet in the US since California voters rejected their state Gig worker law. The issue has been stymied in Congress, but a very Labor-friendly new rule is expected soon from the Biden Department of Labor. In addition, the three Democratic FTC commissioners have released a policy statement promising aggressive action against deceptive claims from Gig platform companies about wages and hours and unfair contract terms.

Google Settles Arizona’s Location Data Tracking Suit (Expect More to Come)

Report from Wall Street Journal

In Brief – Google and the Attorney General of Arizona have settled a lawsuit alleging that Google violated state consumer protection laws by collecting and retaining location data on Android devices even after users selected “Location History” account settings that turned off tracking. As reported in an AP story in 2018, a collection of other settings involving Google apps such as Maps, Search and YouTube, enabled location data tracking and retention. While Google will pay Arizona $85 million in the settlement, the company did not admit wrongdoing and continues to assert that the complaint was based on outdated policies that were changed years ago, and that the company provides “straightforward controls and auto delete options for location data.”

Context – Location tracking is a ubiquitous aspect of smart phones and facilitates many of the tools that people rely on. However, a lack of clarity on when and where Google collected location data, how long they kept it, and how they used it, especially from 2014 to 2017, has dogged the company. They have been accused of using deceptive “dark pattern” tactics to trick users into thinking they had opted out of tracking when that was not in fact the case. Google has faced similar charges to those brought in Arizona in a number of forums, including by the Australia Competition and Consumer Commission, in the EU, and by the Attorneys General of Texas, Washington State, Indiana, and Washington, DC. The company was fined $40 million in Australia in August, and when Google failed to have the Arizona AG’s case dismissed in January, it looked to be on track for a similar setback. Settlements and fines are likely now in the works in the other cases. On the other hand, Google was successful in having a federal consumer class action lawsuit dismissed in US Federal District Court in December 2019 for being too speculative and failing to identify any actual harms.

Advocates for Big Tech Antitrust Reform Now Looking to “Lame Duck” for Final Push

Report from Bloomberg

In Brief – Advocates for landmark antitrust legislation aimed at curbing alleged anticompetitive practices of Amazon, Apple, Google, Meta, and Microsoft gathered at a Capitol Hill restaurant to develop a final strategy to enact a tough bill before the end of the year. The group included public interest organizations, representatives of pro-reform tech companies, top Biden Administration antitrust officials, and Senator Elizabeth Warren (D-MA). The bill supporters admitted that their legislation, despite being reported out of key committees in the Senate and the House of Representatives, will not be scheduled for a floor vote in either body before Election Day. They therefore planned to press forward for votes during a post-election “Lame Duck” session of Congress.

Context – The signs that the multiyear campaign to revamp antitrust regulation of the largest digital platforms in the US has fallen short continue to pile up. The House Judiciary Committee reported out their bills in June of 2021 and the Senate Judiciary Committee in January of this year. In both bodies the vote counting dynamic seemed similar. Republican anger with digital giants they accused of ideological interference, combined with long-brewing Progressive Democratic support for major antitrust reform, raised hopes of enough bipartisan support to drastically rewrite the digital legal landscape. But in both bodies, growing Republican concern with regulatory overreach, especially at the FTC, combined with enough Democratic naysayers from California and moderate districts, kept the bills from getting floor votes. Despite the repeated claims from bill supporters that they “had the votes”, they appear not to have had exactly the right combination. “Lame Duck” strategies are often part of big but unsuccessful lobbying campaign. Why not? Lobbyists get paid to lobby. But they rarely succeed for major, controversial, partisan measures. The 2014 version of the Internet Sales Tax fight was similar. If Republicans win control of the House, the bill prospects will be similarly slim.

Formal EU Review of Microsoft-Activision Deal Begins

Report from Reuters

In Brief – The European Commission Competition Authority has officially begun its formal review of Microsoft’s proposed $68.7 billion acquisition of Activision Blizzard. The regulator is scheduled to release its initial decision by November 8, 2022, consistent with the merger review timelines under EU law. Activision Blizzard produces some of the most popular video game franchises, including Call of Duty and Candy Crush. Sony, Microsoft’s largest competitor in console gaming, has led opposition to the deal, making charges that Microsoft would likely restrict top Activision games, especially Call of Duty, from PlayStation. Microsoft says it will not cut off competitors from major titles and has bolstered its public campaign backing the acquisition with a new website claiming benefits for game players, developers, and the industry.

Context – Although the deal was announced by Microsoft in January, the company delayed formally notifying the European regulator out of comity to improve their chances to reach an agreement straight away. Microsoft’s Activision deal is the biggest digital acquisition of all time. Competition regulators in many global markets are claiming authority to review the deal. The Federal Trade Commission is taking the lead in the US and made a “second request” for additional information in mid-summer. They are reported to be focusing on labor impacts. The UK Competition and Markets Authority has announced that it believes the deal could harm competition in the gaming industry and opened its version of a deeper dive Phase 2 review, with a decision due by March 1, 2023. Running the regulatory rapids is a huge test of Microsoft’s progressive-regulator goodwill campaign with overtures on cloud services competition, app store regulation, labor organizing, and legislation forcing Google and Facebook to pay media companies. For the regulators, it’s a test of whether they will challenge a huge tech deal rather than just bids for start-ups (FTC, CMA) that might influence competition a decade out.

Supreme Court Accepts Two Section 230 Cases Focused on Liability for Terrorist Attacks

Report from Bloomberg

In Brief – The Supreme Court has decided to hear a pair of cases addressing whether Sec. 230 of the Communications Decency Act shields social media platforms from financial liability for terrorist attacks overseas. The two cases emerged from ISIS-inspired attacks in Paris (2015) and Istanbul (2017). In Gonzalez v Google, surviving relatives of a victim killed in a Paris nightclub sued Google claiming that the company’s YouTube algorithm facilitated ISIS recruitment and money raising. A federal judge dismissed the suit based on Sec. 230, a position upheld by the Ninth Circuit Court of Appeals. In Twitter v Taamneh, surviving relatives of a victim of an attack on an Istanbul nightclub argued that Twitter, Facebook, and Google were liable for the attack because the platforms did not do enough to block ISIS activity on their sites. While the District Court judge dismissed the claims, a Ninth Circuit appeals panel overturned, ruling that repeated complaints that ISIS materials remained on the platforms despite claims from the companies that they tried to block it amounted to adequate knowledge to fall under the applicable US antiterrorism laws. All three platforms asked the Supreme Court to take up the Taamneh case, a platform loss, if they also accepted the Gonzalez case, a platform win.

Context – Don’t conflate these Supreme Court cases involving Sec. 230 and platform liability for terrorism with the widely expected judicial showdown over state efforts to regulate how platforms moderate offensive content. Yes, Justice Clarence Thomas has called for cases to test the scope of Sec. 230, which these terrorism cases do. But they are distinct edge cases, raising particularized federal antiterrorism laws and issues of extraterritorial application. It is nearly certain that the Texas and Florida social media laws, one left standing and one temporarily blocked, will also soon be reviewed by the High Court. The state law case is the Big Kahuna. And taking up the two terrorism cases first means the platforms will be arguing that they need to be able to police highly offensive and dangerous speech on their social media networks to a Court fully briefed on legal but highly repugnant hate speech online.

TikTok Likely to Face UK Fine for 2018-2020 Child Privacy Failings

Report from BBC

In Brief – TikTok, the massively popular video-sharing app, has been notified by the UK’s Information Commissioner’s Office (ICO) that it may face a fine of £27 million for failing to protect children’s privacy in the United Kingdom. The ICO, which is the country’s data privacy authority, investigated TikTok’s operations from May 2018 through July 2020 and has provisionally found that the company handled information of children below age-13 without appropriate permission from their parents, processed sensitive details without the legal grounds to do so, and failed to explain the platform’s data practices in ways that children could easily understand. Sensitive data potentially includes information such as ethnic and racial origin, religious beliefs, sexual orientation, or biometric data. While the regulatory proceedings are not final, they firmly indicate that the regulator intends to impose a fine. TikTok said it disagreed with the provisional findings and “intend to formally respond to the ICO in due course.”

Context – TikTok’s emergence as a true giant of social media has led to it joining Meta, Google, and Twitter as the target of repeated lawsuits and regulatory complaints, in many cases focused on young users. The most recent UK determination adds to action in theNetherlands, Italy, France, South Korea and the United States. The company has established US and EU safety advisory councils to help address privacy and child safety concerns. As the most globally successful Chinese-owned app, it also faces unique regulatory challenges in countries wary of Chinese government influence. The most extreme example remains India, which banned TikTok and dozens of other Chinese apps in 2020, stymieing the platform’s growth. In the US, the Committee on Foreign Investment in the United States (CFIUS) has been investigating the app since 2020. It is reportedly close to an agreement regarding housing data in US-based Oracle servers and oversight of algorithms, although reports of Chinese-based employee access to US user data and their actual control over US operations dog the company.