Archive – 2020
Amazon Plans to Acquire Electric Self-Driving Vehicle Company Zoox
Report from the New York Times
In Brief – Amazon has announced its intention to acquire self-driving vehicle company Zoox for a reported $1.2 billion. Zoox has positioned itself as developing electric, driverless, bi-directional ride-hailing vehicles. The acquisition would represent the third largest by Amazon, being very similar to the price paid for Zappos in 2009 and well below the $13.7 billion for Whole Foods. Analyst see Zoox as developing a ride-hailing fleet that could be competing with Google’s Waymo. In addition, Amazon has also been investing in delivery and logistics technology. Zoox recently settled a lawsuit with Tesla over the hiring of former staff with access to confidential company information, and Elon Musk responded to the announcement from Amazon by calling Jeff Bezos a copycat.
Context – Whether Amazon’s self-driving vehicle play will draw antitrust concerns is unclear. Google’s deal to acquire fitness wearable and wellness app company FitBit, the Facebook’s plan to acquire GIPHY, a popular platform of sharable animated images, are raising the hackles of those who believe that the largest digital platforms are already too big, with access to too much data, and an ability to undermine competitive threats. The Federal Trade Commission is reviewing all the acquisitions of the five largest tech firms, including Amazon, going back a decade, looking for signs of anti-competitive effect. The European Competition Authority has also announced that they are planning to look at smaller tech acquisitions. While concerns with the biggest firms getting bigger is widespread, the potential for undermining entrepreneurship by closing off routes that entrepreneurs, and private equity investors, use to monetize innovation, is a growing concern as well. While progressive Democrats, have called for various forms of a merger and acquisition freeze due to the pandemic downturn, Republicans have rejected the idea.
India Bans Chinese Smart Phone Apps in Retaliation for Border Clash
Report from Reuters
In Brief – Following weeks of increasingly tense relations between India and China, including a border confrontation in the western Himalayas that included a clash that resulted in 20 casualties on the Indian side, India has banned 59 mobile apps from Chinese developers, including Bytedance’s TikTok, Alibaba’s UC Browser and Tencent’s WeChat. In its statement, the Government of India cited concerns with data security and privacy, claiming that data mining and profiling is being done by elements hostile to the national security, sovereignty and integrity of India. While various forms of economic boycotts against Chinese businesses have been debated in India is recent weeks, retaliation against the Chinese digital companies is seen by some as impacting the broader Indian economy less than other alternatives because the Chinese companies are primarily serving consumers rather than Indian businesses and there are other non-Chinese alternatives.
Context – India, with it’s very large population, rapidly expanding Internet usage driven by mobile access, and relative openness to global Internet businesses in comparison to the closed Chinese digital environment, has made it a key growth market for the largest global digital businesses and fierce battleground between Chinese digital giants and their top U.S. competitors. India is TikTok’s largest market (Bytedance, TikTok’s parent company, has a separate but comparable service for its users inside China), while also WhatsApp’s largest and Instagram’s second largest market. The potential for Chinese-based digital services and apps to be influenced by Chinese government policies, including the imposition of various forms of censorship, user profiling and tracking, has been raised in the context of WeChat and other services used by Chinese speakers outside China, such as in Australia, Canada and the United States.
Section 230 Reform Focused on Transparency Could Cut Through Ideological Divide
Report from Reuters
In Brief – Sen. John Thune (R-SD), the Majority Whip and former Chairman of the Senate Commerce Committee, and Sen. Brian Schatz (D-HI), the ranking Democrat on the committee’s Internet subcommittee, have introduced legislation to reform Sec. 230 of the Communications Decency Act to expand transparency in platform moderation and accountability for removing illegal content. The Platform Accountability and Consumer Transparency (PACT) Act would require digital platforms to clearly explain their content moderation practices, establish processes for users to challenge decisions, and require them to take down court-determined illegal content in 24 hours. Platforms with fewer than a million users or two-year revenue of $25 million are exempt from the timetables but not the broad mandates.
Context – There have been mounting calls to drastically change Sec. 230, a key legal underpinning of the Internet that enables massive Internet platforms facilitating all kinds of user activity while also enabling platforms to restrict and block all manner of objectionable user behaviors. While frustration and criticism has come from both sides of the political and ideological divide, right up to President Trump and former Vice President Biden, legislation to drastically change Sec. 230 has been stymied by the reality that Republicans and Democrats generally want the platforms to do the opposite things. Conservatives charge them with ideological, anti-conservative interference, while progressives argue that too little is done to block lies, distortions, hate, misinformation and conspiracies. Look no further than the reaction to Twitter’s actions against the President’s tweets and Facebook’s hands-off policies on political ads. This transparency-focused effort from two Senators who are not regular Internet critics is a serious route to break the logjam by avoiding the near impossible task of finding agreement on the validity and worthiness of political communications.
India’s Pandemic Lock-Down Leads to Growth in Amazon’s Indian Seller Registrations
Report from the Financial Express
In Brief – The pandemic lockdowns and phased re-openings has given a major boost to ecommerce in India, resulting in a reported 50% increase in seller registrations on Amazon’s India marketplace. Amazon is one of the country’s two largest ecommerce platforms along with Walmart-owned Flipkart, which in May also reported major seller growth as Indian lockdowns began easing. Along with smaller retailers turning to ecommerce platforms to help address the challenges of lockdowns, analysts report that many of the largest brands across a wide range of product categories have seen major ecommerce boosts both when consumers moved online when stores were closed, but also even after many stores have reopened some shoppers appear more reluctant to venture out.
Context – India, with it’s very large population, deep technology roots, rapidly expanding Internet usage driven by mobile access, and relative openness to global Internet businesses in comparison to the closed Chinese digital environment, has made it a key growth market for the largest global digital businesses. India’s ecommerce legal environment is unique due to the country’s strict foreign direct investment (FDI) limits in the multi-brand retail sector compared to the open FDI rules for ecommerce marketplace platforms. In short, foreign-owned enterprises can operate digital marketplaces, they cannot own retail businesses that could undercut small shopkeepers. Amazon and Flipkart have been accused by shopkeepers of illegal tactics to circumvent the retail FDI rules and are the subject of an investigation by the Indian Competition Authority, which has been stayed by a court ruling, as well by the Indian Enforcement Directorate that enforces FDI restrictions. Amazon is also reported to be negotiating a $2 billion investment India’s No. 2 mobile carrier Bharti Airtel, following on Facebook’s recent $5.7 billion investment in Jio Platforms, the digital services arm of India’s largest wireless firm.
Google Uses Ad Ban to Impose User Comment Moderation on Conservative Opinion Sites
Report from Politico
In Brief – Following notification from a progressive activist group that articles on The Federalist and Zero Hedge, two conservative political opinion sites, appeared to the group to violate Google’s terms of service, the platform dropped Zero Hedge from the company’s online advertising platform and threatened The Federalist with a similar ad ban. The Google ad network embargo on The Federalist was averted when the site dropped its unmoderated comments section. Earlier this year, Zero Hedge’s Twitter account was temporarily blocked by the company but was later restored with Twitter admitting that they had made an enforcement error.
Context – The Google action against The Federalist could play an oversized role in the political debate over ideological content moderation for three reasons. First, The Federalist is respected in conservative circles and the action will resonate with conservative leaders in an outsized manner. Second, the fact that Google justified its action based on objectionable user-generated content in The Federalist comments section in the midst of the Sec. 230 debate when Google opposes web sites being responsible for user-generated content is an irony that conservatives looking to reign in Sec. 230 will not miss. Sec. 230 protects Google from being responsible to government and courts for user comments, but nothing protects small platforms from being responsible to Google. Third, the threat to ban the sites from the Google ad platform highlights Google’s dominance in the digital ad market. The Federalist dropped its comments section because forgoing the Google ad system was too big a price and no substitute was available. That business line is a focus of the antitrust investigations of the Department of Justice and State AGs and could provide a competition-based response to Google’s major influence as a political content moderator without undermining Sec. 230 for the broader industry.
Amazon CEO Agrees to Appear Before House Judiciary Committee on Antitrust Concerns
Report from the New York Times
In Brief – Amazon CEO Jeff Bezos will address the House Judiciary Committee on an expected heavyweight panel of the CEOs of the digital giants in the antitrust spotlight. In May, the bipartisan leadership of the committee called on Bezos to come before the committee to address their concern that the testimony of an Amazon official in a July 2019 committee hearing, which stated that Amazon does not use data from individual third-party sellers on its marketplace to inform Amazon’s own retail strategy or compete with those sellers, was not truthful. The Judiciary Committee leaders cited a major Wall Street Journal expose that detailed the alleged conduct, a report that led Sen. Josh Hawley (R-MO) to call for a criminal investigation of Amazon by the U.S. Department of Justice.
Context – The fact that Amazon is itself the largest retailer on its digital commerce platform, accounting for approximately 40% of sales while a wide range of third parties account for nearly 60%, has created widespread concern that the competition is unfair given Amazon’s control of the process. These concerns are expected to soon result in a charge from the European Competition Authority, and EU Commissioner Vestager often refers to Amazon as being the kind of dominant digital gatekeeper that must be restrained. State Attorneys General from California and Washington are also reported to be exploring a case on these grounds, and it has been a focus of Federal Trade Commission questions as well. Allegations that Amazon uses its marketplace algorithms to enforce price floors on retailers when they sell on other web sites are the subject of litigation and could be added to the antitrust mix. Finally, the overwhelming distribution center services dominance of Fulfillment By Amazon that handles and controls the products of many sellers is also a subject of scrutiny, in particular from Italy and Spain.
German Competition Case Targeting Facebook Data Practices Restored by High Court
Report from Reuters
In Brief – In a major turnaround from a lower court ruling last August, the German Federal Court of Justice has overruled the Regional Court in Dusseldorf and reaffirmed a landmark determination of the German Federal Cartel Office (FCO), the country’s competition authority, that various Facebook data practices violate competition law. Last February, the Federal Cartel Office ruled that Facebook’s practice of combining user data from among its major platforms, and the collecting of data on users when they are online off Facebook, were anti-competitive practices because Facebook is the dominant social network service and users were not given a choice to opt out of some Facebook data practices. While the Dusseldorf court accepted Facebook’s argument that the FCO’s innovative application of competition law to data policies was outside the purview of competition law, the higher Federal Court has squarely sided with the competition authorities looking to peg back Facebook’s data policies.
Context – Competition regulators globally are ramping up their scrutiny of the largest digital platforms, in particular Google, Apple, Amazon and Facebook. Regulators appear to be more skeptical about business practices and acquisitions while applying traditional antitrust thinking, as well as exploring new frameworks such as by the FCO. Facebook’s announced plan to acquire GIPHY, a popular platform of sharable animated images, has drawn criticism on Capitol Hill, is the subject of an antitrust review turf battle between the FTC and Department of Justice (DoJ), and is drawing scrutiny in the UK and Australia. A coalition of State Attorneys General and the DoJ each have broad antitrust investigations of Facebook underway. In addition, charges are being raised that DoJ antitrust actions are being colored by other policy issues, and the law enforcement agency’s strong opposition to end-to-end encryption plans by Facebook (and Apple) is thought to be impacting DoJ positions on a range of issues, including Sec. 230 reform.
FTC “HyperBeard” COPPA Settlement Continues Focus on Child Data Collection
Report from Multichannel News
In Brief – In a further action highlighting the Federal Trade Commission’s focus on enforcing limits on data collection and targeted advertising to children, the agency has reached a settlement with app developer HyperBeard Inc regarding its “child-directed” games collecting personal information that was used for targeted advertising without notifying parents or getting their consent, a violation of the Children’s Online Privacy Protection Act (COPPA). The settlement imposes a $4 million fine on the company, although the firm will only pay $150,000. In addition, the firm agreed to delete the personal information it had collected. The Commission’s 4-1 vote reflected a disagreement over the determination of civil penalties in digital privacy cases, rather than any disagreement over the missteps of the company. Commissioner Phillips’ dissent argued that consumer harm should guide penalties, and that this case did not justify a $4 million penalty, a position rejected by the Chairman.
Context – Disagreement over the role of targeted advertising to support creative digital services permeates most privacy debates, especially around younger users. YouTube’s landmark 2019 COPPA settlement with the FTC has resulted in policies excluding child-oriented videos from many of the platform’s features that once created revenue for hundreds of thousands of video creators, effectively “protecting” young people from vast non-corporate creative content. At the other end of the creator spectrum, Google itself has been sued by the New Mexico AG for claims its G Suite for Education services violate COPPA. The FTC is undertaking a review of COPPA regulations, which drew over 175,000 comments, many from independent online video creators. A range of bills in Congress (examples here, here and here) propose expanding COPPA restrictions, including increasing coverage from age 13 to 18. The UK’s data protection authority has also proposed new Internet service design standards to block data-based services for those under age 18.
European Competition Authority Probing Apple App Store and Payments Policies
Report from the New York Times
In Brief – The European Competition Authority has opened investigations of Apple’s App Store and the Apple Pay mobile payments service. The Commission is focused on the App Store requirement that app providers use Apple’s in-app purchase system that carries a 30% commission on all subscription fees, and the prohibition on informing customers that less expensive alternatives are available outside of the App Store. On payments, the Commission has concerns with the terms and conditions for the integration of Apple Pay on merchant apps and websites, as well as reserving the NFC “tap and go” in-store payments technology embedded on iOS mobile devices solely for Apple Pay. The App Store investigation received a major boost in Europe when Sweden-based music competitor Spotify lodged a complaint, and other large digital services providers are now expressing concerns, although Apple rejects their charges and defends their fees and policies to support the successful ecosystem.
Context – As Apple has become increasingly reliant on growing services revenue, as opposed to hardware sales, charges that it disadvantages competitors in its App Store have grown, including in litigation, a Department of Justice investigation and a call from Sen. Elizabeth Warren (D-MA) to break off the Apple app business from the hardware and operating system business. The concept of digital platforms playing the role of “gatekeepers” in a manner that is anti-competitive is a recurring theme of EU Commissioner Vestager. Amazon is also expected to face a broad EU investigation for their gatekeeper-style treatment of 3rd party sellers. Finally, mega-giant Microsoft, which has failed to effectively dent the smart phone operating system market dominated by Google’s Android ecosystem and Apple’s iOS, has joined the call for regulatory review of app store policies, a likely boost to greater government intervention.
Judge Clears Path for California Privacy Rights Act to Get on November 2020 Ballot
Report from MediaPost
In Brief – Sacramento County Superior Court Judge Shelleyanne Chang has ruled that California Secretary of State should direct all county officials to complete the petition signature certification process by June 25 – the deadline for this year’s November ballot – a decision that is expected to clear the way to getting the California Privacy Rights Act (CPRA) in front of state voters this fall. Sponsors of November 2020 ballot initiatives need to collect approximately 630,000 valid signatures, a process that involves collecting significantly more and having the number of certified signatures whittled down by election officials on a country-by-county basis. The pandemic lockdown limited the ability of the Californians for Consumer Privacy to collect signatures, and then the Secretary of State proposed a June 26 deadline for country certification that opened the door to some counties certifying no signatures by the 25th. Judge Chang rejected that route, ordering all countries to report in time for November.
Context – California is already in the midst of implementing the landmark California Consumer Protection Act (CCPA), state legislation enacted in 2018. The CCPA requires businesses serving 50,000 state residents or with $25 million in revenues to disclose their data practices to consumers before collecting data, and provide consumers with the ability to have their data deleted. Due to California’s size and its role as the home of many digital companies, the law is expected to impact companies nationwide. The California businessman who instigated the CCPA through a proposed 2018 California ballot initiative is behind the new CPRA. If enacted by voters, the CPRA will establish a stand-alone state privacy regulator, provide additional consumer control over personal information including race, health, and location data, enact stiffer rules around data pertaining to children 16-and-under, require transparency related to algorithms used to determine employment, housing, credit cards, loans or other key services, and limit the state legislature from amending the law.
Australian Competition Regulator Challenges Google-FitBit and EU Following Up Soon
Report from Reuters
In Brief – The Australian Competition and Consumer Commission (ACCC) has released its preliminary analysis of the proposed Google acquisition of fitness wearables and wellness app company FitBit, raising concerns that the acquisition could harm competition and opening a review that will run through mid-August. The ACCC’s preliminary Statement of Issues indicates that the regulator believes that the acquisition could substantially reduce competition in the supply of data-dependent health services, certain ad tech services that rely on the collection and analysis of large amounts of individual data, and the market in wearables. Responses from interested parties to the questions and concerns raised in the Statement of Issues are due July 10 and a final decision is scheduled for August 13.
Context – Google’s plan to acquire FitBit is a touchpoint for two digital public policy trends — general concern with any acquisitions by the digital giants, and the implications of the biggest digital businesses expanding into health care. Google is not the only tech giant honing in on the health and wellness markets. Here is a striking summary of moves from Google, Apple and Amazon in the field. And Apple is the market leader in wearables, including with health data applications, increasingly leaving FitBit behind. The deal is seen as part of Google’s bid to challenge Apple, as well as a chance for FitBit to monetize their years of effort, an entrepreneur strategy that would be foreclosed if large tech companies cannot acquire smaller ones. But many see the size and scope of Google’s data and advertising services as simply too large as it is, including a consortium of European consumer groups and a coalition of U.S.-based public interest groups. The heavyweight reviews from the U.S. Department of Justice and the European Competition Authority are also underway, and the European regulator has set a July 20 target to rule on the deal or begin a further four-month review.
U.S. Proposal to Put OECD Digital Tax Talks on Hold Ratchets Up Tax and Trade War Risk
Report from the New York Times
In Brief – The United States has proposed putting on hold the multilateral talks currently underway to devise new rules for the taxation of large digital businesses, citing a lack of progress and distractions caused by the COVID pandemic. Senior European officials who have championed new corporate tax rules for large digital services businesses reacted very negatively setting off another round of threats that new unilateral digital services taxes (DST) will be operating by the end of 2020 if there is no multilateral agreement.
Context – The pressure to reorient corporate taxes on large digital companies to increase taxes paid to countries with large consumer markets (think the UK, France, Italy, India…), rather than countries where companies claim to do their operations (think the U.S. and a collection of lower-tax countries like Ireland, the Netherlands, Luxembourg, Singapore…), has been building for years. France has led the campaign, imposing a 3% DST on companies last summer, which nearly resulted in U.S. trade retaliation against a range of French export products. That tax and tariff punch and counter-punch was deferred by an agreement to defer action to allow for a broad corporate tax agreement at the OECD, which had proceeded with fits and starts last year but still aimed for agreement by end of 2020. A number of countries have followed France’s lead. (Here is a handy chart from the Tax Foundation.) The pre-pandemic balance between national DST threats and U.S. trade retaliation counter-threats appears to be breaking down as pandemic slowdowns are raising national revenue needs and hardening the belief that new taxes are needed for digital companies that seem to be benefiting while traditional businesses falter. The decision of US Government to step back from the OECD talks and prepare for tariff retaliation against the European Union and nine countries is raising the prospects for a tax and trade war.
French Court Decision on Joint Liability for AirBNB Raises Platform Liability Questions
Report from Bloomberg
In Brief – A French court has ordered AirBNB and the tenant of a Paris apartment to jointly compensate the apartment’s owner nearly 52,000 euros ($59,000) for repeatedly subletting the unit on AirBNB behind the owner’s back. The platform and tenant were also ordered to pay 5,000 euros in legal fees, and AirBNB was ordered to pay back commissions. The judge ruled that AirBNB can be considered a publisher of content rather than merely a host due to its active role in linking renters and travelers, giving it the responsibility to review advertisements of hosts to ensure they comply with laws, regulations and similar requirements, and sharing in the liability for improper actions. AirBNB will appeal the decision arguing it goes against French and European law regarding the liability of digital host providers.
Context – Paris, reported to be AirBNB’s second largest market globally, is home to legal, regulatory and tax challenges from industry competitors and political leaders. The French government is demanding new data from AirBNB that it proposes to use to improve rental tax compliance. The Mayor of Paris argues that short-term rentals undermine neighborhoods and affordable housing and is proposing a city referendum to further limit the practice. In December, the company won a major legal victory over the French hotel industry when the European Court of Justice (ECJ) ruled it should be considered an ‘information society service’ rather than a real estate business. The latest decision will test the state of the law regarding digital host provider liability under the EU’s eCommerce Directive in the context of rental service-type platforms. In addition, the eCommerce Directive itself, including the liability standards for digital platforms, is expected to undergo potentially significant revision through the Digital Services Act that will be introduced later this year by the European Commission.
IBM, Amazon and Microsoft All Change Facial Recognition Policies for Law Enforcement
Report from the Washington Post
In Brief – In the face of national protests against societal racial inequality and systemic law enforcement mistreatment of blacks, tech giants IBM, Amazon and Microsoft have each announced changes to their facial recognition services. In a letter to Democratic Members of Congress, IBM’s CEO announced that the company, which had previously worked with the New York City Police Department on a facial recognition service but is not considered a leader in the field, was stopping all work on facial recognition technology and called for a national debate on law enforcement using facial recognition. Amazon, a much larger provider of facial recognition services to law enforcement, and a strident defender of the practice even in the face of significant criticism from racial justice advocates, later announced a one-year moratorium on police use of its facial recognition service, calling for Congress to enact appropriate rules. Finally, Microsoft, which heretofore had not provided facial recognition services to law enforcement, said that it would not sell such services to police in the United States until a federal law regulating the practice was in place. Amazon and Microsoft did not mention other government uses.
Context – Facial recognition is a major focus of concerns among both progressives and conservatives. The technology has come under fire for chronic biases in identifying minorities, as well and promoting a surveillance state threatening privacy and civil liberties. The U.S. House Oversight Committee held a hearing on the topic in January, the European Commission has proposed a draft five-year moratorium on facial recognition in public areas, and the State of Washington passed a comprehensive facial recognition law in March. California instituted a three-year moratorium on law enforcement use of such systems last fall, and Sec. 374 of the recently introduced police reform legislation introduced by the U.S. House Democrats bans the use of facial recognition in police body cameras and cruiser cameras.
European Commission Calls for Monthly Reports on Efforts to Combat COVID Fake News
Report from Reuters
In Brief – The European Commission, led by Commissioner Vera Jourova, the Vice President for Values and Transparency, is calling for social media platforms to increase their efforts to combat fake news related to the coronavirus. The major platforms, including Google, Facebook and Twitter, are parties to the EU’s Code of Practice on Disinformation initiated in 2018 to expand transparency about content moderation and cooperation with researchers, fact-checkers and European Governments. While the Code called for annual self-assessment reports, the Commission is now asking for monthly reports focused on pandemic-related issues, citing dangerous disinformation campaigns regarding fake cures and claims that hygiene practices like washing hands does not help, and predicting that anti-vaccination campaigns would grow. Commissioner Jourova applauded the recent actions by Twitter to flag and attach a fact-check rebuttal to a post from President Trump regarding voting processes, claiming that it was an example of adding facts to a debate and increasing speech, rather than restricting speech.
Context – Increasing the responsibilities of platforms to police content users post on their sites is a major component of the upcoming European Digital Services Act. European Commissioner Thierry Breton of France has been particularly direct in threatening social media platforms with harsh regulation if they don’t police content better. While the largest platforms have been quite aggressive in their willingness to police coronavirus and public health content in recent months, as the economic impacts of harsh public health measures worsened, and the lack of certainty regarding the behavior of the virus became more clear, political consensus on virus-related issues has evaporated. The major U.S. media treatment of mass gatherings to protest racial injustice compared to lock-down protests added to polarization. Finally, here is a thoughtful 5-minute read on the destructive effects of shielding elite views from open criticism.
Republican Senators Call on the FCC to Take Up President’s Call for Sec. 230 Review
Report from TechCrunch
In Brief – Four Republican Senators, led by Marco Rubio (FL) and Josh Hawley (MO), the leading Republican critic of the digital giants, have urged the Federal Communications Commission (FCC) to take up the review of Section 230 of the Communications Decency Act as requested by the President’s recent Executive Order Preventing Online Censorship. The order calls for the FCC clarify the scope of Sec. 230, in particular to find that “good faith” content moderation does not include ideologically biased practices. The initial reaction of the Republican FCC Commissioners was to affirm the importance of the concerns over censorship without committing to concrete action, while analysts have noted that a rulemaking process would stretch many months, would fly in the face of the Commission’s current hands-off position on Net Neutrality, as would be very unlikely to survive a court challenge absent new congressional legislation.
Context – While the FCC or FTC could provide conservative activists with forums to air grievances like they did at White House and DoJ events last year, changing Sec. 230 will require Congress. And legislation to place an ideological screen on content moderation is plagued by the fact that Republicans and Democrats consistently want the platforms to do the opposite things. When one charges too much interference, the other sees too little policing of what they consider lies and distortions. Twitter’s recent actions on the President’s tweets regarding vote-by-mail and looters were praised by progressive and decried by conservatives. Facebook’s hands-off policies resulted in the opposite reactions. The same cycle played out on the doctored video of Speaker Pelosi and the ad attacking VP Biden on Ukraine. Sen. Hawley introduced legislation last June to require large platforms to be politically neutral in content moderation or lose their Sec. 230 liability protection, but it has no cosponsors. Rather than change the law, Senate Minority Leader Schumer (D-NY) advised the President to stop tweeting.
EU’s Digital Services Act Promises Lobbying Battle Pitting Luxury Brands v. Digital Platforms
Report from Politico
In Brief – Plans for an EU Digital Services Act to rewrite the liability of digital platform services for user actions is kicking off a major lobbying battle between Europe’s luxury goods industry and digital platforms that enable individuals and small enterprises to sell over the Internet. Most media is focusing on potential new duties for social media platforms to block hate speech and objectionable content, such as with the one-hour mandate in France’s new online hate speech law. But opening up the EU’s key Ecommerce Directive governing how digital platforms police online sellers, whether to stop counterfeits or enforce selective distribution and authorized selling regimes, will flare up a long-running policy battle in Europe pitting traditional industry giants against the services that empower small businesses and enable the Digital Single Market. While voluntary cooperative agreements have helped address conflicting interests over the past decade, the luxury brands are pressing for mandatory, top-down policing of sellers.
Context – The parallel U.S. debates are similar. The relationship of Sec. 230 of the CDA to the policies of platforms to police political speech and misinformation (or not) attracts headlines, but big companies have been aggressively lobbying to change the Internet’s underlying liability regimes for years to stifle new business models. Copyright industries such as software and digital entertainment are covered by the DMCA, but trademark goods are not, and some brands are calling for digital platforms to police counterfeits as well as grey market and generic goods. The Trump Administration has called for expanding platform duties to block counterfeits and ban sellers, especially on products from China. The bipartisan leadership of the House Judiciary Committee has also sponsored legislation to dramatically increase the liability of digital platforms for counterfeit trademark goods, including requiring online platforms to vet sellers, remove listings, and ban sellers.
Thailand Joins Parade of Countries Imposing Digital Services VAT on Foreign Platforms
Report from Reuters
In Brief – Thailand, Southeast Asia’s second largest economy, is moving to require non-resident digital companies to collect a 7% VAT on digital products and services. The tax collection mandate kicks in for foreign digital companies with revenues of 1.8 million baht (approximately $57,500) in the country. The Thai Government noted that VAT collection on digital services such as music and video streaming, gaming, and hotel booking, is already required for domestic digital businesses. The move was supported by the Thai E-commerce Association. The economic and revenue impact of the pandemic downturn were again cited by analysts as a justification of the tax change.
Context – Expanding VAT and other forms of sales taxes to digital services, and requiring digital platforms to collect them, has been the “below the radar” front in the battle to expand taxation of the digital economy. Conscripting foreign digital platforms to collect consumption taxes has avoided the tax and tariff threats brought on by national Digital Services Taxes applied directly to the revenues of the largest digital businesses. In Southeast Asia, Singapore and Malaysia expanded VAT to cover foreign digital services providers on January 1, Indonesia recently acted, and the Philippines is debating the change. In Latin America, Chile enacted a 19% VAT on digital video and music earlier this year, and Mexico’s VAT expands to streaming services on July 1. The economic and tax revenue impacts of the pandemic has accelerated the creeping change to the meaning of “permanent establishment” and the “nexus” standard needed for governments to tax companies. And unlike their adamant opposition to corporate digital taxes, the Trump Administration itself argued for a digital “virtual presence” tax collection standard in the Supreme Court’s South Dakota v. Wayfair case. Twenty-five U.S. states impose sales taxes on digital goods and more than 20 currently require remote digital platforms to collect them. Both numbers will grow.
State Attorneys General May Press to Break Up Comprehensive Google Ad Businesses
Report from CNBC
In Brief – The coalition of 50 state attorneys general, led by Ken Paxton (R) of Texas, investigating Google for anti-competitive conduct, is focusing on the company’s broad digital advertising business and may push for a breakup of its ad technology components. The Google search advertising business has always been the main source of the company’s revenue. The company also built a market leading position in broader Internet banner advertising services, fueled in part by its acquisitions of DoubleClick in 2007 and AdMob in 2009. While the U.S. Government has successfully broken up corporate giants such as Standard Oil and AT&T, antitrust cases against technology giants IBM, in the 1980s, and Microsoft, in 2000, threatened the harsh treatment but concluded with lesser remedies.
Context – The AG and DoJ investigations of Google can draw on the nearly decade-long competition clash between the company and the European Competition Authority, which probed its search practices, AdWords advertising business and conduct related to Android, as well as the less robust FTC review from 2010 – 2013. In Europe, each case has resulted in a finding against Google, a major fine, and a succession of appeals. The digital advertising market, with Google and Facebook as the leading players, is subject to additional competition investigations internationally, in particular by the Australia’s ACCC and the UK CMA, each of which is producing reports and taking input from industry and experts that provide insights into what the U.S. cases will produce. One noteworthy contributor is Microsoft in the UK and Australia. While the company reportedly withdrew in 2016 from a coalition of Google search policy antagonists in a rapprochement of sorts, it is engaged to peg back the two giants on the advertising front. Verizon’s submission to the ACCC cautions against policies that would restrict smaller ad competitors like itself while objecting to Google browser and 3rd-party cookie policies that it has raised with the U.S. Congress.
California AG Finalizes CCPA Privacy Regulations and Asks for Expedited Approval
Report from MediaPost
In Brief – The Attorney General of California has submitted final regulations for implementation of the landmark California Consumer Privacy Act (CCPA). The law, enacted in mid-2018, and further amended twice, went into effect January 1st pending completion of the regulatory process. The state’s Office of Administrative Law now has up to 90 days to approve the regulations, although the AG has requested expedited approval in order to begin enforcement by July 1. The CCPA requires businesses to disclose data collection and sharing practices to consumers before collecting data, and provide consumers with the ability to have their data deleted. The law applies to any business that collects consumers’ personal data and does business in California or with consumers in the state, with thresholds set at annual gross revenues in excess of $25 million, or handling personal information of 50,000 or more Californians, or earning more than half of its revenue from selling consumers’ personal information.
Context – California’s CCPA, enacted soon after the EU’s General Data Protection Regulation (GDPR) went into effect, was widely expected to trigger federal privacy legislation due to industry concerns with the prospect of overlapping state privacy standards. That has not yet happened. While often paired in peoples’ minds, the CCPA is meaningfully different from the GDPR. However, the California businessman who instigated the CCPA through a proposed 2018 California ballot initiative, is pressing for a new privacy-focused state ballot initiative this November that would make the two more alike. The November 2020 effort is reported to have collected the necessary signatures, and would establish a stand-alone state privacy regulator, provide additional consumer control over personal information including race, health, and location data, enact stiffer rules around data pertaining to children 16-and-under, and require transparency related to algorithms used to determine employment, housing, credit cards, loans or other key services.
ACLU Sues Facial Recognition Firm Clearview AI Under Illinois BIPA Law
Report from the Philadelphia Tribune
In Brief – The American Civil Liberties Union (ACLU) has sued Clearview AI, the maker of a facial recognition tool primarily sold to law enforcement and government entities, for violating the State of Illinois’ Biometric Information Privacy Act (BIPA). The company’s facial recognition tool, which it describes as a search engine for pictures, is based on a database of billions of photos of individuals that it has gathered across the Internet, in particular from social media platforms, without consent of the platforms or the users. Pictures of unknown individuals can be uploaded to the database and the service returns matches and web links to where the indexed pictures were found on the Internet. The once low-profile company was the subject of a detailed New York Times expose in January, and has since faced a consumer class action BIPA suit in Illinois, which led to it promising to stop scraping Illinois-based IP addresses, a range of cease-and-desist orders from the social network companies housing the user pictures, and a lawsuit from the Attorney General of Vermont for violations of state consumer protection laws.
Context – Illinois’ BIPA is the center of biometric privacy litigation since the Illinois Supreme Court decided in January 2019 that a statutory violation was sufficient to trigger standing, a ruling that has recently been extended to the federal courts in Illinois by the 7th Circuit Court of Appeals. BIPA imposes a range of obligations on companies that collect or obtain biometric information (such as facial scans, fingerprints, iris scans and voice prints), including obtaining written consent before collecting or sharing such information, and most importantly, allows for a private right of action for violations. Facebook recently settled a BIPA suit regarding its photo tagging services for $550 million, and TikTok, the Chinese-owned short-video social networking service was recently hit with a BIPA suit for allegedly failing to tell users they would collect face scans. They join Google, IBM, Amazon and Vimeo among others.
New Jersey Legislation Requiring Portable Benefits for Gig Workers Passes Senate Committee
Report from Politico
In Brief – Following enactment of AB 5 in California, New Jersey emerged as a leading forum on the East Coast for similar efforts to move many independents workers to traditional employment. Legislation failed in the Garden State at the end of its 2019 legislative session due to opposition from a range of freelancers and traditional entrepreneurs. In an alternative effort to address concerns that people who use gig work platforms as their primary income source do not have access to traditional employee benefits, NJ State Senator Troy Singleton (D-Delran) introduced legislation to create a portable independent worker benefits system funded by contributions from companies that use large numbers of independent contractors, including gig platforms. The bill, S. 943, which has been passed by the NJ Senate Labor Committee, would require firms to contribute $6 for every hour the freelancer works, or 25 percent of the total fee collected from the consumer for each transaction.
Context – Concerns over the negative impacts of AB 5 on more traditional freelancers such as writers and musicians, who often greatly value their independence, gained attention after the law AB 5 went into effect. A landmark 2016 study of both traditional and platform-enabled independent workers revealed that almost three-quarters do it voluntarily, often as second jobs, and greatly value it, often more than traditional work. Prior to the pandemic slowdown, Gallup polling data indicated that almost no independent or gig workers reported that they could not find a traditional job. However, traditional employer-style benefits remain an important topic as tax and regulatory policies tend to preference benefits from an employer, a regime often criticized by conservatives. In California, Uber, Lyft and DoorDash have proposed a portable-benefits-based reform of AB 5 to better support people engaged in independent work models, and tech-policy activist in the U.S. Senate, Mark Warner (D-VA), has sponsored legislation to direct $20 million to support state-level portable worker benefit pilot projects.
Digital Services Tax Stare-Down Escalates with U.S. Reinforcing Trade War Threat
Report from CNBC
In Brief – The United States Trade Representative (USTR) has opened a series of investigations of the proposed Digital Services Tax (DST) regimes of the European Union and nine countries – India, Brazil, Britain, Austria, the Czech Republic, Indonesia, Italy, Spain and Turkey – challenging them as unfair trade practices under Sec. 301 of the Trade Act of 1974. France was not included in the latest round of investigations as their 3% DST was already subject to a Sec. 301 review last summer which nearly resulted in U.S. trade retaliation against a range of French export products. That tax and tariff punch and counter-punch was deferred by an deal to await a broader corporate tax agreement to be reached at the Organization for Economic Cooperation and Development (OECD), where talks have proceeded with fits and starts but they aim for agreement by year’s end.
Context – Pre-pandemic, there appeared to be relative balance between national efforts to tax global digital companies in a new way, and threats of U.S. trade retaliation from a Trump Administration perceived as willing to fight trade wars, backed by rare bipartisan support in Washington. However, that balance, and the willingness to wait for an OECD plan to bear fruit, appears to be breaking down. (Here is a handy chart from the Tax Foundation detailing the moves by countries targeted by USTR.) Officials from France, Indonesia and the European Commission have argued that the pandemic makes DSTs more urgent. The shutdowns have imposed unprecedented budget shortfalls on most governments, digital giants are weathering the crisis so well that they have the means to pay and seem exempt from the collective economic suffering, and some speculate that trade has fallen so much that U.S. tariffs threats don’t carry as much weight as before.
Snapchat Drops Trump Campaign From Their “Discover” Recommendation Service
Report from the New York Times
In Brief – Stepping into the debate over whether and how social media companies should intervene in the communications of political leaders on the platforms they operate, Snapchat has removed the account of President Trump from the Discover section of its service, where the company presents users a curated selection of popular channels. Snapchat is a photo and short-video sharing, social media and messaging app. Half of U.S. Internet users ages 15-25 report using the service and its top competitors are Instagram and TikTok. The move was announced in an impassioned, progressive reflection from the company’s CEO on public policy issues, especially racial justice and economic inequality. The Trump Campaign, which has been growing its presence on Snapchat to reach younger voters, responded with a stark, critical rebuke.
Context – This is not the first time Snap’s CEO has stepped into the debate over social media moderation policy and reflected the prevailing progressive sentiment that platforms should exercise more control. Last November, when the debate swirled around political ad fact-checking, Facebook announced it would not fact-check political ads to avoid ideological censorship, a position roundly criticized by progressives. Twitter proposed banning most political ads and Google adopted a policy restricting some political ad micro-targeting. Snap’s CEO announced the company would fact check political ads, the most interventionist policy of the major platforms. In the wake of the Trump Administration’s Executive Order threatening Sec. 230 based on anti-conservative content moderation, it is worth remembering that the federal courts, including the Supreme Court in Manhattan Community Access Corporation v. Halleck (2019), have ruled that private companies that offer public forums are not subject to First Amendment constraints on editorial discretion.
Facebook Leaders Criticized by Employees for Presidential Communications
Report from the New York Times
In Brief – Facebook’s decision to respond to some recent communications by President Trump in a hands-off manner different than Twitter (who applied a “Get the facts” rebuttal link to recent tweets on mail-in voting fraud, and restricted a tweet about racial justice protests for “glorifying violence”) has led to public protests from some Facebook employees, former employees and former investors. Facebook’s leaders, starting with CEO Mark Zuckerberg, have attempted to defend their position as being both opposed to the tenor of the President’s communications while continuing to defend the ability of government leaders to openly communicate their positions on current events and public issues, and free speech principles more broadly. Racial justice advocates have been very critical of the company’s reasoning.
Context – Like nearly every controversy emerging on issues related to content moderation, beneath the surface of seemingly bipartisan frustration with the platforms is stark disagreement over the specifics. Facebook employee criticism of the handling of the President’s communications appears to confirm a contention of the President and conservative activists that many progressive employees in the largest tech platforms want to practice content moderation in what many conservatives see as an ideological manner, a key charge behind the recent Presidential Executive Order attempting to limit Sec. 230 liability protection for platform content moderation. Many of the other largest tech businesses, also criticized by conservatives as being dominated by progressives, have faced similar internal pressure from activist employees, including Amazon for a range of climate, employment and surveillance policies, and Google on employment and internal communication policies, a broad tech industry employee trend that some see potentially impacting company recruiting, although the depressed job market might delay that forecast for some time.
Food Delivery Platform Fined by Korean Competition Authority for Price Parity Policy
Report from the Korea Times
In Brief – The Korea Fair Trade Commission (KFTC) has fined Delivery Hero Korea 468 million Korean won (US $382,000) for anti-competitive price fixing in the form of a “best price” contract clause imposed on restaurants from 2013 – 2016, the first time it has fined a delivery platform for the practice. The company is a branch of Germany-based Delivery Hero and operates the second largest delivery app in the market. During the time the company enforced the price parity clause, it prohibited restaurants registered with the app from offering lower prices for the same food on other delivery platforms, for phone-in orders, or in their restaurant dining room. The KFTC announced in its decision that it considered the conduct to represent an abuse of a dominant market position. The company expressed disappointment with the decision and reiterated that it cancelled the program soon after the KFTC opened the investigation.
Context – The use of contractual price parity (or “MFN”) clauses by digital platforms has been a regulatory concern for years, in particular when applied to sales on competing platforms and when fee levels are meaningfully different. The Online Travel Agency (OTA) industry, with platforms demanding hotels offer the same room rates on their platform as they do on their website or other platforms, has been a particular target of regulatory concern, and the KFTC has ramped up its focus on the OTA business as well, following regulators in Europe, Japan and India. The KFTC’s focus on food delivery platforms will likely be cheered by U.S. litigants who have filed a class action suit targeting the four largest U.S. food delivery platforms. Amazon also has a price parity track record, abandoning their MFN contract clause in Europe under regulatory pressure in 2013, and in the U.S. last year, although many third-party sellers charge that Amazon now uses it’s Buy Box algorithm to impose a price parity requirement.
European Commission Kicks Off Public Consultation on Digital Services Act
Release from the European Commission
In Brief – The European Commission has begun the public consultation on the Digital Services Act, a major rewrite of the regulations governing digital platform services in Europe. President Ursula von der Leyen has made digital policy a core part of her agenda. The consultation to gather views, evidence and data from interested parties is scheduled to run through September 8, and one or more legislative proposals are expected in late 2020 or early 2021. Major topics include reform of the seminal E-Commerce Directive, which has governed online platforms liability and responsibility for user content since 2000, as well as policies to address competition in digital markets. Finally, the Commission will be considering new regulations governing platforms that enable independent “gig” and freelance work.
Context – The responsibilities of platforms related to user content encompasses both social concerns, such as blocking or taking down offensive, illegal or objectionable material, as well as long-time commercial concerns regarding counterfeits and piracy. In short, content moderation and platform liability for third party actions. In the U.S., the heated debate over Sec. 230 of the CDA, and long-time squabbles over digital piracy, counterfeits and the notice-and-takedown regime of the DMCA, are the equivalents. The recent online hate speech law passed in France, and the EU online terrorism law caught up in negotiations, give a foretaste of the challenges balancing free speech sensibilities in Europe with officials desiring the U.S.-based platforms to block speech many reject. The competition issues are even broader, running from targeted efforts to rein in today’s dominant platforms through mandates on data access, portability, transparency and fair dealing with users, to reforming competition policy laws and tools more generally to address perceived structural competition problems in digital markets faster and more effectively, which is the subject of a parallel EC consultation.
Japanese Diet Enacts Law on Transparency and Fair Dealing by Large Platforms
Report from the Japan Times
In Brief – Japan’s parliament has enacted legislation that was the product of a Prime Minister working group to require the largest digital commerce platforms, in particular Japanese-based Yahoo Japan and Rakuten, and U.S.-based Google, Apple, Amazon and Facebook, to be more transparent and fair in dealing with merchants who offer goods and services through their platforms. Large ecommerce platforms will be required to submit annual reports on their business practices to the Ministry of Economy, Trade and Industry (METI) starting in 2021. They will be required to give users advance notice of any contract changes, set up processes to reply to user complaints, and improve transparency into how search results are determined. The law proposes enforcement by a combination of METI investigations and orders to address shortcomings, as well as egregious cases being referred to the Japan Fair Trade Commission (JFTC), the country’s competition authority.
Context – Some of the most focused thinking on digital platform terms and conditions, and the treatment of small business users, is going on in Japan. Last spring, the JFTC reviewed the seller policies of the country’s largest ecommerce platforms, and Amazon agreed to change a buyer rewards program that imposed the costs of sellers. The JFTC also released comprehensive guidelines in December regarding digital platforms exploiting an unfair bargaining position and has been engaged in a stare-down with Rakuten over a “free shipping” program imposed on its sellers. Small businesses facing unfair or opaque terms on large digital platforms is also a top regulatory concern in Europe, being the subject of so-called P2B legislation enacted by the European Parliament last April, as well as being part of the Australian Government’s 2020 work program to implement recommendations of the ACCC Digital Platforms Inquiry.
Tile Expands Antitrust Criticism of Apple By Calling on Vestager to Expand EU Investigation
Report from the Washington Post
In Brief – The digital hardware and services company Tile, best known for its Bluetooth tracking devices to help users find lost or stolen items, has asked European Competition Commissioner Margrethe Vestager to investigate Apple for anti-competitive conduct. Tile alleges that Apple has disadvantaged Tile following Apple’s move to develop its own Tile-like device in 2019. A key charge is that Apple now sets the default “always allow” function to “off” for third-party tracking products, while the default is “on” for Apple’s own FindMy app, as well as denying Tile’s app “equal placement” in the App Store. Apple strongly rejected the claims of Tile and defend their policies as based on providing users with stronger privacy features, in particular on location data.
Context – Tile is increasingly public as an antitrust foil to Apple. It was one of four tech companies that testified at a House Judiciary Antitrust Subcommittee hearing on the digital giants in January. Expanding their regulatory outreach to Europe is not unusual for aggrieved U.S.-based tech companies, whether the targets were Microsoft and Intel two decades ago, or Google, Amazon, Apple or Facebook today. Spotify, one of the largest Europe-based digital platforms, filed a similar complaint with Vestager last spring. Using the goal of protecting user privacy as a defense for limiting third party access to data or services, as Apple is claiming in this case, is increasingly common for the platform giants and has been criticized by Rep. David Cicilline (D-RI), the Chairman of the House Antitrust Subcommittee. As Apple has become increasingly reliant on growing services revenue, as opposed to hardware sales, charges that it disadvantages competitors in its App Store have grown, including in litigation, a Department of Justice investigation and a call from Sen. Elizabeth Warren (D-MA) to break off the Apple app business from the hardware and operating system business.
Bill to Impose Sales Tax Collection on Marketplace Platforms Passes the Louisiana Legislature
Report from The Center Square
In Brief – Legislation to require internet marketplace platforms to collect sales taxes has passed the Louisiana House and Senate and is expected to be signed into law. Louisiana will be the 39th state requiring digital marketplaces to collect and remit sales taxes on the sales made by all third-party sellers, even individuals and small businesses. The legislation was necessitated by a January decision of the Louisiana Supreme Court prohibiting the state from requiring Walmart to collect sales taxes on third-party sales through its website. Payments processors and digital advertising platforms are exempt from the new marketplace tax collection as long as they are operating narrowly in those roles.
Context – In the aftermath of the Supreme Court’s Wayfair v. South Dakota decision, nearly every state has imposed sales tax collection duties on remote retailers based on “economic nexus”. One big challenge facing states has been the number of very small businesses that use the Internet to sell goods. The Court’s Wayfair opinion indicated that compliance burdens on small remote businesses was an important consideration, noting South Dakota’s exemption for out-of-state sellers with less than 200 transactions or $100,000 in sales. With most small businesses selling online through marketplaces such as eBay, Etsy and Amazon (a unique business model with its network of local warehouse facilities already bringing tax obligations), states have rapidly moved to impose the sales tax duties for small business sales on marketplaces in aggregate at the level the South Dakota law set for individual small businesses, effectively imposing taxes on goods sold by the very smallest businesses online. Of the 45 states with sales taxes, only Missouri and Florida have not yet enacted legislation to implement remote sales tax duties. Finally, having expanded their sales tax reach across the Internet, a number of states are exploring ways to apply economic nexus to a range of direct corporate taxes.
LA Joins Cities Responding to Restaurants by Imposing Fee Caps on Delivery Platforms
Report from Los Angeles Magazine
In Brief – With lockdowns shuttering restaurant dining rooms, and takeout and delivery of meals becoming the only way many restaurants could serve customers, the issue of third-party delivery platform fees imposed on restaurants has led to a wave of cities moving to impose fee caps and other regulations. The Los Angeles City Council is proposing to cap restaurant fees at 15%, following similar action by San Francisco, New York, Baltimore, Santa Cruz, Seattle and Washington, D.C., while Chicago is imposing a fee transparency mandate. Although many restaurants complain that they cannot operate profitably with the current level of fees, which are often as high as 30%, a number of restaurants in Los Angeles opposed the fee cap over concerns with the impact on independent drivers and the prospect that delivery services might be cut back.
Context – Disputes over the fees imposed on restaurants by the food delivery platforms is interesting because despite the seemingly high fees none of the platforms appears to be making a profit, leading some to question whether the services are providing any real efficiencies. One aspect of the delivery platforms’ fee model is an MFN-type menu price parity clause which requires in-restaurant prices to match the prices on the delivery platforms, which is the subject of a recently-filed federal lawsuit claiming that the practice harms consumers and restaurants by driving up in-restaurant prices. The proposed acquisition of GrubHub by Uber, to combine the 2nd and 3rd largest platforms, will increase focus on the profitability and fees questions, as neither are profitable and market analysts applaud the prospect of consolidation in the industry. A number of Democratic lawmakers have voiced concerns with the proposed acquisition.
Korean National Assembly Pulls Foreign Digital Services into Network Usage Payments Regime
Report from The Korea Herald
In Brief – The Korean National Assembly has amended the country’s Telecommunications Business Act to bring foreign-based digital services giants such as Netflix, Facebook and YouTube under the Korean network usage fee regime that requires content providers to pay Korean broadband network companies based on the amount of data that the network company’s customers consume from the content company. Korean Internet content businesses have been paying usage fees to Korean broadband companies since 2012. The ability of the large non-Korean digital companies, who are believed to be more profitable than their Korean counterparts, to avoid the fees has led to charges that foreign content companies gain an unfair advantage over Korean content companies. In addition, the Korean broadband giants believe they are not appropriately compensated by non-Korean video companies for the bandwidth being used by their Korean customers. The National Assembly also passed legislation requiring online platforms to remove digital content involving sexual crimes from their services as well as amend the country’s Digital Signature Act to expand competition.
Context – Efforts to expand the network usage fee payments to the non-Korean digital video giants has been playing out in business, legal and regulatory disputes over the past few years. Facebook prevailed in court last summer against a fine by the Korean Communications Commission penalizing their response to a major network usage fee bill by Korea Telecom (KT) by shifting the location of servers for KT customers outside of Korea. Similarly, Netflix is engaged in a usage fee conflict with SK Broadband. While Korea has generally been praised by U.S. net neutrality advocates for its network investments, high speeds and relatively low consumer broadband costs, the ability of Korean network companies to charge content companies for consumer bandwidth in order to preserve stability of services raises traditional net neutrality concerns.