Archive – 2019

Ascension Health Care – Google Cooperation Being Reviewed by HHS for Privacy Compliance

Report from Reuters

In Brief – In response to the news that Ascension Health Care, the nation’s largest not-for-profit health care service, was engaged with Google to create innovative digital services for Ascension to better serve the evolving needs of consumers, patients and caregivers, the Department of Health and Human Service’s Office of Civil Rights announced that it had initiated an investigation of the project’s HIPAA (the federal health care privacy law) compliance.  In addition, a number of congressional critics publicly expressed their concerns over the prospect of Google having access to health care data on so many people, despite the claims by the health care company and the technology company that the digital services project fully complied was privacy and data security law.

Context – The public swirl around the relationship between Google and Ascension Health Care is instructive. Health care data is clearly ultra-sensitive. As opposed to too little privacy regulation in health care, many see HIPAA as holding back technology innovation. The HIPAA compliance claims of Ascension and Google better be accurate, and they probably are. However, the privacy advocacy community will apparently jump on any health data story that will gain traction. This is a great example of scare-mongering language, but review pretty much any story. Clearly caught out by the howls, Ascension followed up their original press statement with a further defense. Among the digital giants, Google is not unique in their health care services interest, so Amazon, Microsoft and Apple are forewarned.  Finally, note presidential candidate Sen. Amy Klobuchar (D-MN), who quickly expressed concerns with Google-Ascension and then pivoted to calling for new legislation, the Protecting Personal Health Data Act, totally unrelated to Ascension-Google. Her bill proposes privacy standards for types of health-related consumer data like fitness trackers and genetic testing that does not involve HIPAA-covered health care service providers like Ascension. Of course, this points to the prospect that the volume on the Google-FitBit acquisition will be turned up to 11.

China Disengaged from U.S. Internet a Decade Ago, Now the U.S. Might Be Doing the Same to China

In Brief – China has provided a real-life lesson that the Internet is not, and never has been, beyond the reach of government. This New York Times Magazine long-read is premised on “The longstanding consensus about the Chinese internet is that it “decoupled” from the rest of the world 10 years ago, and that for every American tech company there is an equivalent in China. While this is largely true for applications used by consumers — the ride-sharing apps and search engines and social media sites — in reality, the two internets have yet to fully disengage from each other.”  For those who don’t travel to China regularly, it is interesting to look in on an alternate digital ecosystem at scale to see a different reality. One that Freedom House scores as the least free. But is also one that sprouts new digital trends.

Context – As the Times piece says, “the two internets have yet to fully disengage from each other”. Decoupling from the Chinese side is old news. However, disengagement from the opposite direction, U.S. government concerns with potential security threats of Chinese-based Internet businesses, is gaining steam. TikTok, with tens of millions of young American users is a nexus, raising alarm bells on data risks and censorship. The reported CFIUS investigation of TikTok’s acquisition of Musical.ly, following engagement on MoneyGram and Grindr acquisitions by Chinese businesses, appears based on concerns with Chinese digital companies holding data on large numbers of Americans and their inability to say no to government exploitation. The Senate Minority leader is questioning the U.S. Army for posting recruiting advertisements on TikTok for that reason. On censorship, former TikTok employees claim that Chinese-based company executives made self-censorship decisions. And self-censorship goes beyond Chinese businesses. U.S. military leaders are reportedly concerned with global self-censorship in the U.S. entertainment industry, a point also raised by the humorists at South Park. And beyond entertainment, criticism aimed at Apple and the National Basketball Association. And I have not mentioned surveillance tech and AI.

Japan PM’s Digital Reform Working Group Discusses Legislative Plan with U.S. Platform Giants

Report from Kyodo News

In Brief – The cabinet-level working group on regulation of the largest digital businesses created by Prime Minister Abe met with representatives of Google, Amazon, Facebook and Apple to share the highlights and solicit feedback on the legislative proposal it intends to submit to the Japanese parliament in January.  The working group, led by cabinet chief Yoshihide Suga, had earlier met with leading Japanese-based digital firms, including Rakuten and Yahoo Japan. The legislative proposal is aimed at increasing transparency in platform decisions and search results, as well as address concerns with the treatment of small and medium-sized enterprises by the platforms.

Context – Thematically, Prime Minister Abe’s cabinet working group is proceeding on a set of digital platform transparency and fair dealing requirements that appear similar to the regulation on platform-to-business trading practices enacted by the European Parliament in April. Regionally, the Korean Fair Trade Commission has announced a focus on digital giants, and the digital platform legislative initiative of the Abe Government is moving in parallel with new data and privacy thinking by the Japanese Fair Trade Commission. Finally, the head of Japan’s LDP Research Commission on the Tax System, has said the panel will explore changes to tax law in the coming year to bring the tax system more in line with the country’s increasingly digitized economy.

Microsoft Announces Plan to Apply California’s New Privacy Law to all U.S. Users

Report from Reuters

In Brief – Microsoft announced in a blog post from its Chief Privacy Officer that it will extend the California Consumer Privacy Act’s (CCPA) core rights for people to control their data to all Microsoft customers in the United States. The CCPA, enacted in mid-2018 and going into effect on January 1, 2020, requires websites to show users what data is collected on them, what the data will be used for and to identify third parties who have been given access to the data. Users will have the right to opt out of having their data collected and sold and to request that their information be deleted.

Context – With the CCPA going into effect in less than two months and the prospect of more states following suit, there have been bipartisan expressions of support for federal privacy legislation, as well as renewed calls for federal legislative action from business groups such as the Internet Association concerned with a morass of different state laws. However, meaningful substantive issues, including state law preemption and whether private lawsuits will be an enforcement mechanism, divide advocates and add to general legislative difficulties created by election year politics. With the initial sponsor of the CCPA recently announcing his intention to run a ballot initiative campaign in 2020 aimed at enacting an even more restrictive privacy law in California, as well as top Democratic policy leaders such as Reps. Eshoo and Lofgren setting out a very aggressive legislative marker, compromise in 2020 becomes less likely if privacy champions expect a better environment in 2021.

Blumenthal Calls on Uber and Lyft to Upgrade Rider and Driver Security Efforts

Report from the Washington Post

In Brief – Senator Richard Blumenthal (D-CT) has called upon Uber and Lyft to upgrade their rider security and driver background check policies, including adopting fingerprint-based background checks and increasing information sharing on driver security problems, both with law enforcement and between the companies. Blumenthal’s engagement on the security challenges of ride-sharing platforms follows an October hearing of the House Transportation Committee that was most notable for Uber and Lyft deciding not to participate. That hearing covered a range of security issues, including car signage, tools to assure riders they are in the proper vehicle, and vehicle safety certification (see H.R. 3262 for a full list). A number of Committee members also called for the ride-share platforms to adopt finger-print background checks on all drivers.

Context – Combating nefarious user behaviors on digital platforms has been a challenge from the earliest days of the commercial Internet, and it is important to recognize that pretty much every type of fraud or criminal behavior that occurs online or over platforms has had pre-Internet analogues. Digital platforms of all types engage in a range of anti-misbehavior activities to improve the platform user experience and protect the business from losses, liability and even regulation. AirBNB recently announced a major review of all “hosts” and short-term rental sites on the platform following high profile security incidents and an investigative report of organized scams on the site. One challenge AirBNB is attempting to deal with is fraudulent hosts using the threat of negative feedback against guests to cover up scams, a problem eBay addressed in 2008 when it ended the ability of sellers to leave negative feedback on buyers. Amazon’s major problems with fraudulent sellers and the manipulation of Amazon’s feedback and review regime is also increasingly being reported.

Google – Ascension Health Care Relationship Again Reveals Digital Health Interests 

Report from the New York Times

In Brief – It has been confirmed that Google is providing Ascension Health Care with cloud and analytics services to store and analyze the data of millions of Ascension patients in a project to improve medical services. Ascension Health Care, a non-profit and Catholic health system operating what is reported to be the nation’s second largest hospital network, oversees more than 2,600 facilities, including 150 hospitals and more than 50 senior living facilities in 20 states and the District of Columbia. Although Google’s work on medical services has long been publicly reported, including Google mentioning on its July earnings call that it was working with Ascension Health Care, when details of the scope of the relationship were released this week, privacy advocates aggressively expressed concerns. In response, statements released by both Ascension and Google focused on user privacy, HIPAA compliance, data security, and the fact that user data would not be used for Google commercial activity.

Context – With health care accounting for nearly 18% of the U.S. economy, it is not surprising that many of the largest digital companies (as well as many smaller ones) are investing in efforts to develop and implement health care technology and analytics services. The health care services efforts of Apple, Microsoft and Amazon are also regularly reported, and the recently announced Google proposal to acquire fitness wearables business FitBit is also seen as a health care services-related investment. Similar to how generalized concerns with Google’s immense size and scope of data holdings might play out as a legal barrier in the FitBit acquisition, despite the argument than only a major business like Google can compete effectively with Apple (watch my video on why Google-FitBit is a very interesting case study on whether new acquisition limits are imposed on the digital giants), general concerns with Google’s privacy and data practices might limit their ability to serve health care clients, despite actual HIPAA compliance.

Vestager Again Expresses Concerns With Hydra Problem of Breaking Up Big Tech

Report from CNet

In Brief – Margrethe Vestager, who has been willing to challenge the tax and business practices of the largest U.S. digital businesses as head of the EU Competition Authority, and will soon begin a second term in that role, as well as taking on a new digital policy role in the government of incoming EU President Ursula von der Leyen, was a headline speaker at the Lisbon WebSummit Internet industry conference. She once again made clear that breaking up the largest digital businesses, in the spirit of Sen. Elizabeth Warren, is not her legal or policy preference. Instead, she outlined how in her view policy-oriented regulatory mechanisms aimed at digital businesses, as well as effective behavioral remedies targeting specific anti-competitive abuses, is preferable. She also noted that in her view the Google comparison shopping remedy was not appropriately addressing the Commission’s concerns in that nearly ten-year old case.

Context – The tension between digital concerns being focused on the largest platforms and addressed through targeted competition law-based remedies aimed at a few platforms, or those concerns being used to justify broad, industry-wide digital regulations, is emerging as Commissioner Vestager adopts her related but distinct roles. Vestager regularly responds to questions regarding breaking up the giant platforms by referencing what she calls the “Hydra” problem of Greek mythology, whereby the head of a monster is cut off but replaced by two or more which are just as problematic, indicating that in her mind policing a giant might be a more manageable route. This concise Vestager speech from a late October Digital Summit in Dortmund provides insight into her recent thoughts on digital competition and regulatory priorities.

Federal Trade Commission Continues Efforts to Explain Online Endorsement Guidelines

Report from NPR

In Brief – The Federal Trade Commission continued its efforts to provide guidance on truth-in-advertising in the burgeoning digital “influencer” brand advertising industry with the release of a simple guide called “Disclosures 101 for Social Media Influencers”.  The FTC is attempting to make it clear that it requires disclosure when an “influencer” has any “financial, employment, personal, or family relationship with a brand,” receives anything of value, including direct payment, free products or discounts.  Each recommendation should have a disclosure, and endorsements include “tags, likes, pins” and other actions.

Context – This recent article provides a summary of the state of the multi-billion dollar online influencer industry. The FTC has been engaged in efforts to provide influencers, advertising businesses and brands with guidance, including videos and written materials, on how truth-in-advertising applies to the full range of digital influencer activities. In related enforcement action, the FTC recently reached a settlement with the cosmetics company Sunday Riley for intentionally misrepresenting online reviews, which were posted by employees of the business.  A partisan 3-2 vote of the Commissioners saw the Democrats dissenting based on the lack of meaningful financial penalties imposed on the company or its owner, a view shared by many in the industry. On the other hand, the FTC imposed harsher treatment on the owner and CEO of the now defunct firm Devumi, imposing a $2.5 million fine for selling fake indicators of social media influence on platforms including Twitter, YouTube, Vine, LinkedIn and Pinterest.

Senate Hearing on Digital Businesses and China Roasts TikTok and Apple

Report from The New York Times

In Brief – The Senate Judiciary Committee, under the leadership of Sen. Josh Hawley (R-MO), an aggressive critic of large digital businesses, held a hearing on cyber and consumer data risks related to tech businesses and China. TikTok and Apple were a focus.  TikTok, the popular short-video social media app with more U.S. users than any other Chinese-owned digital service, is under fire for moderating content in ways aligned with the Chinese Government censorship, as well as the potential for data on U.S. users being accessed by the government because Chinese tech companies cannot reject government requests. Concerns with Apple focused on whether the American giant was also bending to Chinese Government demands, including the removal of apps from the App Store, due to the importance of the Chinese market and the perceived willingness of the Chinese Government to punish intransigent companies.

Context – Keep in mind that there are different strains of concerns emerging among U.S. officials based on the influence of the Chinese Government over China’s digital economy and therefore all Chinese digital businesses. First, there is concern with Chinese enterprises holding personal data on large numbers of Americans. The reported CFIUS investigation of TikTok’s acquisition of Musical.ly, and recent CFIUS engagement on MoneyGram and Grindr, slots in here. The apparent lack of Hong Kong content on TikTok brought Chinese-style censorship to the fore. The Senate hearing revealed that former TikTok employees claim that Chinese-based company executives made content moderation decisions aligned with Chinese-style censorship. Although political news might be less relevant among TikTok’s young user base, the implications of similar content moderation by WeChat on the political views of Chinese speakers in countries like Australia, Canada and the U.S. are being raised. The fact that corporate self-censorship might simply reflect business leaders preferring not to cross the Chinese Government, leads to the third thread, namely U.S. companies bending to Chinese Government interests for business reasons. Apple fits here, and their recent actions have drawn bipartisan criticism on Capitol Hill.

Google Expected to Come Forward With Its Version of a Political Ads Policy

Reports from the Wall Street Journal (paid) and The Hill

In Brief – With debate over the appropriate treatment of political speech and political advertising on digital platforms and social media hot and heavy, and Facebook and Twitter coming forward with meaningfully different policies, it finally appears that Google is formulating its own policy for both Google search ads and YouTube, to be released soon. It is reported that the Google policy will not be a political advertising ban in the manner of Twitter, nor a hands off approach like Facebook, but instead might involve some type of rules regarding user targeting, which may be aligned with the recommendation of the Chair of the Federal Election Commission to increase political advertising transparency by requiring ads to be widely broadcast in an open manner across a geography rather than limited to unique and narrow user groups.

Context – The ongoing controversy over the political advertising and speech policies by the large digital platforms continues the reinforce the reality that political speech is inherently contentious. Facebook continues to be widely criticized by progressives for not applying its fact checking operations to political campaign ads, but conservatives are applauding the decision not to put the company into the role of censor. Twitter, which has largely received kudos for the decision to ban political ads, at least in comparison to Facebook, is itself taking heat from some on the left, including from Sen. Elizabeth Warren, for its policy supposedly benefiting corporate interests, and on the right, for limiting speech and placing itself in the role of determining the difference between issue ads and political ads.  Finally, the debate is playing out globally.  For example, as the UK races to its December 12 national election, political ads on social media are causing a stir.  And, by the way, some are accusing the core Google search algorithm of being anti-Brexit. And at a major Internet policy conference in Lisbon, Margrethe Vestager, EU Competition and Digital Policy Commissioner, praised the Twitter policy and criticized the Facebook hands off approach.  

Reps. Eshoo and Lofgren Introduce Comprehensive and “Strong Online Privacy Act”

Report from CNBC

In Brief – In the face of relative inaction on federal privacy legislation throughout 2019, despite some expectations that implementation of the EU GDPR and passage of the California Consumer Privacy Act (CCPA) would prompt bipartisan movement, two of Silicon Valley’s most senior Members of Congress, Rep. Anna Eshoo and Rep. Zoe Lofgren, have introduced the Online Privacy Act (H.R. 4978), a thorough, detailed and prescriptive entry into the privacy debate that is not likely to engender bipartisan coalescing as Republican leaders on the House Energy & Commerce Committee labeled it dead on arrival. The authors highlight sections granting users the right to access, correct, or delete their data, as well as determine how long companies can keep their data, minimizes the amount of data companies collect, process, disclose, and maintain, establishes a new federal regulatory Digital Privacy Agency (DPA), and supplements DPA enforcement by empowering state attorneys general and some types of class action lawsuits.  (Section-by-Section here)

Context – With the CCPA going into effect on January 1^st, and the prospect of more states following suit, there have been bipartisan expressions of support for federal privacy legislation, as well as renewed calls for legislative action from business groups such as the BRT and Internet Association. However meaningful substantive issues, including state law preemption and whether private lawsuits will be an enforcement mechanism, divide advocates and add to general difficulties created by election year politics.  With the initial sponsor of the CCPA recently announcing his intention to run an even more restrictive privacy-focused ballot initiative campaign in 2020, as well as top Democratic policy leaders such as Eshoo and Lofgren setting out a very aggressive legislative marker, compromise in 2020 is unlikely, in particular as privacy champions may believe that a Democratic election sweep could create conditions for a very strong bill in 2021.

IBM Joins Corporate Calls for Federal Facial Recognition Regulation in the United States

Report from CNet

In Brief – IBM has joined the list of giant technology companies including Microsoft and Amazon by releasing a white paper calling for federal legislation to govern the development and use of facial recognition technologies in the United States to avoid a morass of state and local regulations.  Amazon has even reported that they are drafting model federal legislation to help move the legislative process forward. The use of facial recognition by law enforcement and government is increasingly raising concerns with privacy and civil liberties advocates with the Electronic Privacy Information Center (EPIC) and the Electronic Frontier Foundation (EFF) providing thoughtful summaries. The use of facial scanning technology and related analysis in video job interviews has been raised with the Federal Trade Commission through a complaint raised by EPIC for potentially discriminatory impacts.

Global Context – Facial recognition used for law enforcement surveillance is raising concerns globally.  Some recent global news includes –

o The Australian Government has indicated that a facial recognition-based identification system might be appropriate for policing age requirement laws for accessing online pornography.

o The national data protection agency of Sweden levied a GDPR fine against a local school district for testing a facial recognition-based classroom attendance system with parent consent but no prior regulatory approval, but have approved the use of facial recognition by the police.

o The Indian Government is moving forward on bids for a national facial recognition system that is expected to be linked into law enforcement authorities.

o In China, the Ministry of Industry and Information Technology has announced plans for facial recognition to be incorporated into the registration of mobile devices to confirm the identity of the user of each device.

Social Media Political Ad Policies Causing Stir in UK with Election Campaign Underway

Report from The Guardian

In Brief – As the UK enters their expedited campaign season before their December 12 national election, the debate over political advertising on social media platforms is heating up.  The leaders of the UK Advertising Standards Authority (ASA), a self-regulatory advertising industry organization that enforces a code of truth-in-advertising practices, appeared before a House of Lords committee where legislators called on them to step into political advertising, in particular on social media, in the way they regulate commercial advertising.  A week earlier a House of Commons committee called for more social media ad transparency from the parties and fact checking from platforms. The leaders of the ASA agreed that a UK regulatory authority policing online political ads is preferable to U.S.-based platforms implementing company policies, but they believe the ASA is not positioned to play that role.

Context – The content moderation challenges faced by digital platforms are only exacerbated by the fact that the platforms have large numbers of users in countries globally. While political advertising on television and radio in the UK is highly regulated during their campaign season, advertising on digital platforms is not treated the same way and has become an important and controversial part of campaigning, with Labour seen as the leaders in the space.  The divergent policies of Facebook and Twitter on political advertising which has generated so much interest in the United States is being followed in the UK, and how platforms deal with the unique British campaign system will be in the spotlight in coming weeks. For example, the Boris Johnson Government was criticized for potentially skirting advertising law through a Facebook campaign lauding an economic development program just as the campaign season began.

Indonesia Engaged in Discussions Over Plans for More Robust Social Media Policing

Report from Reuters

In Brief – The Government of Indonesia is developing a regulatory proposal to compel social network businesses to better and more proactively monitor and delete user content that the government deems obscene, promoting radicalism, or otherwise objectionable. The government is engaged in discussions with company representatives prior to the release of a plan, likely in 2020.  A system of fines are envisioned to promote compliance.  Indonesia is a top-five market globally for U.S social media giants Facebook and Twitter.  In 2018, Indonesia implemented a web site monitoring regime using domestic telecommunications services to block access to objectionable sites. Indonesian authorities also briefly banned the services of social media companies Telegram and TikTok in order to compel them to establish content monitoring teams in Indonesia.

Context – Government agencies in Southeast Asia are moving forward to address concerns with digital platforms, both the more easily regulated local enterprises as well as the largest international platforms heavily used by their large and growing online populations. Along with the proposed policies on objectionable social media content, Indonesia has been pressing forward with legislation to require digital firms, regardless of physical presence in the country, to collect VAT on digital services. Thailand’s Telecommunications Commissioner unveiled a proposal this summer for digital platforms to support the creation and operation of “fake news centers” across South East Asia where the platforms would cooperate with national governments to address problematic content.  Finally, in Singapore, its landmark “fake news” law has gone into effect for smaller digital services, but the government has granted a temporary exemption to the subsidiaries of the largest international communications platforms, including Google, Facebook, Twitter, Baidu and Tencent’s Wechat.

Filter Bubble Transparency Act Proposes to Manage How Digital Services Operate

Report from The Hill

In Brief – U.S. Sens. John Thune (R-SD), Richard Blumenthal (D-CT), Jerry Moran (R-KS), Marsha Blackburn (R-TN), and Mark Warner (D-VA) have introduced The Filter Bubble Transparency Act  (S. 2763) which would require larger Internet firms to notify users that their platforms use algorithms to determine what information is shown, or in what order, and offer users the opportunity to opt-out of such curated content.  The bill’s mandates apply to companies that collect data from more than 1 million users, employ more than 500 people or make more than $50 million in annual revenues, a fairly small threshold compared to other Senate Internet bills, and covers websites and digital application, including social network sites, video sharing services and search engines.  Sen. Thune is Chairman of the Senate Commerce Committee, which has legislative jurisdiction over consumer protection, and expressed interest in the bill being included in federal privacy legislation.

Context – This bill adds to a collection of prescriptive Senate bills to change how web sites and mobile applications operate, often based on the contention that users are unaware of many practices or are coerced into accepting them. Examples include S. 2314, aimed at “Internet addiction”, which would prohibit practices such as auto-playing and content scrolling, S. 1951 to require digital companies to regularly report to users and the SEC on the value of their data to the company, S. 2658 to require large platforms to support interoperability and data portability,  S. 1578 to create a mandatory Internet “Do Not Track” system, and S. 1084 to prohibits a range of user interfaces which are sometimes called “Dark Patterns”.  The bills have various business size thresholds, but 100 million users tends to be a common initial size recommendation.

Prager University Gets Bad News in Court Again, This Time California State Court

Report from Reason.com

In Brief – California State Superior Court Judge Brian Walsh has issued a tentative ruling that raises significant questions with the arguments being made by Prager University in its case against Google for its YouTube content moderation policies.  The ongoing legal dispute between Prager University, a non-profit organization that creates videos on various political, economic and philosophical topics from a conservative perspective, and Google, who’s YouTube video platform applies some content moderation restrictions to some Prager videos, includes litigation in California state court as well as the 9^th Circuit Federal Court of Appeals.  (Video of the recent 9^th Circuit oral argument here.)

Context – The content moderation practices of platforms such as YouTube, which include outright bans, but also a range of limitations such as “de-monetization” which prohibit or restrict an ability to earn advertising income, have been criticized by many conservative social media activists. The White House held a Social Media Summit in July to provide a forum for complaints that the progressive leanings of the largest tech companies is leading to discrimination. Sen. Josh Hawley (R-MO), a leading conservative critic of the largest digital platforms, has sponsored S. 1914, a bill to eliminate Section 230 liability protection for large platforms that cannot prove to the FTC that their moderation practices are politically neutral. Progressives generally reject the contention that the largest platforms discriminate against conservatives. aFinally, the First Amendment claims of Prager U. are seen as suffering a setback in this summer’s Supreme Court decision in Manhattan Community Access Corporation v. Halleck, where the Court found that private companies that offer public forums are not subject to First Amendment constraints on editorial discretion.

China’s TikTok Facing U.S. National Security Review of 2017 Social Media Acquisition

Report from Reuters

In Brief – Under mounting pressure from U.S. Government officials, including calls from Senators Marco Rubio (R-FL), Chuck Schumer (D-NY) and Tom Cotton (R-AR), for an investigation of the 2017 acquisition of social media app Musical.ly by Chinese-based app business ByteDance for integration with its popular social media app TikTok, it is reported that the Committee on Foreign Investment in the United States (CFIUS) has in fact opened an investigation. TikTok is the most popular Chinese-based app in terms of the number of non-Chinese users, with tens of millions of users in the United States.

Context – TikTok’s rapid growth in the U.S. has brought together two streams of concern with Chinese influence on the Internet in the United States, in particular due to the suspected close relations between Chinese digital companies and the Chinese Government. The first involves the potential for data on American users being accessed by Chinese Government entities. The second is that Chinese digital services engage in censorship, either voluntary or under direction, consistent with Chinese Government goals, which has come to the fore in the context of Hong Kong protests. CFIUS’s 2018 rejection of the Ant Financial acquisition of MoneyGram, and the reported CFIUS-inspired unwinding of the Grindr app acquisition by Chinese firm Kunlun Tech, indicates that data concerns appear to be a growing CFIUS focus. Senator Josh Hawley (R-MO), one of the most aggressive congressional critics of the digital giants, is chairing a hearing today that includes a review of the Chinese influence on the U.S. digital ecosystem. Both TikTok and Apple, who face their own criticism for Hong Kong-related App Store policies in China, were invited to testify but are reported to have rejected the offer.

Twitter Bans Political Advertising in Contrast with Facebook Ad Policies

Report from CNBC

In Brief – Twitter’s CEO Jack Dorsey has announced that Twitter will no longer accept political ads on the platform in the run-up to the 2020 elections. In a series of tweets (the full set can be read here), Dorsey thoughtfully addresses a number of challenges related to content moderation in the context of political debates, including Twitter’s views on the distinctions between advertising and general engagement on the platform.  Twitter has faced public scrutiny regarding its content moderation policies in the context of political leaders, in particular President Trump, which largely allow leaders to publicly communicate.

Context – Twitter’s decision to end political advertising on its platform has been widely reviewed in contrast to Facebook’s equally high-profile decision to not subject political advertisements to its fact checking regime out of concern with potential censorship. Google which appears to have tried to stay below the radar despite its platforms, in particular YouTube, being a hub for social media political advertising, is increasingly being called on to clarify its policies. The overarching debate has increasingly become ideological with progressives vociferously arguing for platforms to step in and impose content moderation and “fact checking”, while conservatives, often distrustful of establishment media outlets, reject the notion of unbiased content moderation on ideological and political issues. The increasingly partisan divide reduces the prospects for any legislative action on content moderation in the current divided political environment. If you are interested in a thoughtful “third-way”, I believe that this opinion piece from the Chair of the Federal Election Commission, proposing for platforms to ban social media micro-targeting of political ads, rather than the ads themselves, is worth a quick read.

Australia Competition Authority Suing Google Over Misrepresentation of Location Data

Report from The Guardian

In Brief – The latest from Australia, which is carrying out one of the most aggressive reviews of digital platform competition concerns, with a particular focus on digital communications, advertising and social media, meaning Google and Facebook, is that the Australian Competition and Consumer Commission (ACCC) has filed suit against Google for false and misleading policies related to the collection of user location data.  The ACCC completed their comprehensive Digital Platforms Inquiry in July, releasing a 600+ page report that included 23 policy recommendations for the Australian Parliament and Government. The report also outlined five investigations that the ACCC has underway, including an investigation of Google’s collection and use of location data (see pages 385 – 412 of the ACCC report), which has resulted in the filing of this lawsuit.

Context – The Australian Government’s regulatory efforts aimed at digital platforms is moving steadily forward and is driven by government leaders who are willing to be aggressively critical of platform companies, including Prime Minister Scott Morrison and ACCC Chairman Rod Simms.  The Treasury of the Australian Government is in the final weeks of a consultation period related to the ACCC report and recommendations prior to the next phase of government action, which is expected to include regulatory and legislative initiatives.

AirBNB is on a Florida Court Winning Streak in Tax Cases

Report from the Bradenton Herald

In Brief – AirBNB and other short-term rental platforms have faced tax-related legal and political challenges in markets around globe.  AirBNB has arranged for tax collection agreements with almost 50 U.S. states, including in Florida (since 2015), a dozen countries and various cities.  Along with state taxes, Florida’s counties also impose taxes on short-term rentals and hotel stays, and while AirBNB has come to tax-related agreements with 41 of the state’s 67 counties, the platform is engaged in some contentious tax-related litigation with some counties. Most recently, the company received a positive ruling from Florida Judicial Circuit Court Judge Edward Nicholas who granted AirBNB’s request to dismiss the lawsuit brought by the Manatee County Tax Collector that looked to require AirBNB to collect and remit taxes. The judge cited a state court ruling earlier this year on similar litigation in Palm Beach County based on the determination that the platform was not the property renter.

Context – Short-term room or property rentals facilitated by digital platforms are a hotbed of state and local tax and regulatory conflicts. While the platforms are often remote businesses, and generally not considered the provider of the rental property, the people using the platforms to rent property are local residents subject to potentially aggressive local law enforcement. In a third Florida court case, a Miami-Dade circuit judge earlier in October struck down a Miami law that fines homeowners $20,000 for a first violation illegally renting on sites such as Airbnb, the highest such fines in the nation.

California AB 5 Saga Continues… New Gig Platform Ballot Initiative Announced

Report from Associated Press

In Brief – California’s AB 5 state law implementing the ABC Test of the California Supreme Court’s Dynamex decision, tightening the legal test determining when a worker should be categorized as a company employee rather than an independent contractor, is the U.S. front line in the debate over gig labor public policy due to the size of the California economy and the prevalence of in-state businesses in the sector. Ride hailing giants Uber and Lyft have stated that they believe that drivers on their platform are appropriately classified as contractors even under the new standards, but both have also consistently called for greater flexibility to offer drivers new forms of benefits. The companies are now moving forward with a 2020 ballot initiative that would circumvent the state legislature, affirmatively exempt a range of platform drivers and delivery workers from AB 5’s mandates, and allow for a set of new benefits, including minimum earnings, based on the amount of time that people work on any particular platform.

Context – A range of worker classification litigation targeting the largest platforms, including Uber and Amazon, is underway in Massachusetts, New Jersey and New York, and labor lawyers wasted no time following passage of AB 5 to file a class action lawsuit in California challenging Uber under the new state standard. A similarly important market from a regulatory and size perspective is Europe, and the European Parliament’s enactment of legislation in April setting new minimum standards for national laws on gig worker rights is driving the issue forward on the continent. In addition, European Commissioner Margrethe Vestager, head of the Competition Authority and taking on a new digital policy portfolio, recently called for gig workers having the right to join labor unions. Finally, if you are interested in a reflection on the potential impact of AB 5-style regulation on a platform-enabled avocation, read this account from a freelance writer.

Turkey Joins the National Digital Services Tax Procession Proposing a 7.5% Levy

Report from The National

In Brief – Turkey has joined the march of national governments creeping forward on Digital Services Taxes (DST) aimed at large, mostly US-based, tech companies, which the U.S. Government vigorously opposes as transparently discriminatory.  The Turkish proposal applies to digital services businesses with a size threshold of 750 million Euros ($823 million) and approximately $3.5 million in sales in Turkey.  The global size threshold is similar to the level in the leading multilateral proposal, an OECD proposal recently endorsed by the G20 Finance Ministers, as well as national proposals from France, Italy and the UK. However, the Turkish proposal of a 7.5% tax is meaningfully higher than those national proposals. In addition, the Turkish legislation is quite direct on the government’s authority to require Turkish telecommunications providers to block access to the services of non-compliant companies.

Context – Countries around the world are considering various versions of digital services taxes.  Here is a helpful chart on the status of national DST laws in Europe, an article on similar national DST initiatives in a number of Asian countries, as well as news on active proposals in Canada and Mexico. The OECD proposal endorsed by the G20 appears the most likely path to multilateral agreement that would avert a string of national digital taxes followed by U.S. trade retaliation. It is worth noting that Turkey under President Erdogan has been willing to force its national telecommunications providers to block access to foreign Internet sites and services, in particular politically sensitive social media and web sites, including intermittently blocking Wikipedia. In addition, the government has pressed compliance with national data localization requirement which included PayPal, the leading Internet payments business, withdrawing from the market.