Archive – 2019

Japanese Competition Authority Announces Plans to Step Up Oversight of Large Platforms

Report from The Japan Times

Key Insight – The Japanese Fair Trade Commission (JFTC) has reported to parliamentary officials that they have compiled proposals for tighter regulation of technology giants providing online shopping, social media, search engines and video, music and app distribution.  The JFTC will accept public comments through September 30 and is expected to deliver final proposals this fall. It is not clear at what business size thresholds the new standards will apply, but giants such as Amazon, Apple, Facebook and Google and been the subject of review for months. The new standards challenge the policies large digital companies use to obtain personal data from users and whether the platforms take advantage of a “superior bargaining position”. The relationship between anti-monopoly law and consumer data privacy interests is also being explored by the German Federal Cartel Office (FCO) and was the subject of a recent court setback.

Swedish Privacy Authority Fines a School District for Testing Facial Recognition for Attendance

Report from the BBC

Key Insight – The Swedish Data Protection Authority (DPA) has fined a Swedish municipality approximately 20,000 euros for testing facial recognition technology to monitor student classroom attendance.  The pilot was conducted in one high school classroom for a limited time, and the parents of the students involved had given their consent. The Swedish DPA concluded that the test violated several articles of the General Data Protection Regulation, including the municipality failing to do an adequate impact assessment, failing to consult with the DPA ahead of time, and that consent was not a valid legal basis given the imbalance between the data subjects and the controller.  The European Commission is reported to be drafting comprehensive facial recognition regulation to be included in a broad Artificial Intelligence regulatory proposal.

Amazon Flex Driver Classification Lawsuit Proceeds in Massachusetts

Story from the Boston Globe

Key Insight – Amazon is the target of a class action worker classification lawsuit from Amazon Flex delivery drivers who work in a manner that is described as an Uber or Postmates-like independent work platform. While the California Supreme Court Dynamex decision and state legislation endeavoring to provide a further framework around the decision has received considerable attention for its potential impact on Gig work models, as Senator Elizabeth Warren noted in a recent opinion piece on California AB 5, Massachusetts’ worker classification standards are very similar to the Dynamex decision’s “ABC Test”. The Amazon Flex suit in Massachusetts may provide some insight into how this development will begin to play out in California.

YouTube Video Creator Union and Transparency Challenge in Germany

Story from CNET

Key Insight – A German video creator who generated 2 million YouTube subscribers for a channel about slingshots and created YouTubers Union, an organization critical of Google’s ad and video monetization practices, and IG Metall, a more than 125-year-old German industrial labor union, have partnered to create FairTube and are calling for Google to implement a transparency regime related to videos and channel. IG Metall has threatened litigation to establish that some YouTube video creators should be considered Google employees if the company does not respond by August 23. Along with the issue of platform user unionization, the case could move in the direction of the transparency and user rights covered by the EU Regulation on platform-to-business relations adopted in June or the European Parliament’s legislation setting minimum standards for on-demand, intermittent and platform workers passed in April.

Facebook Announces Increased Transparency Policies for U.S. Political and Issue Advertising

Report from the Washington Post

Key Insight – Faced with ongoing concerns from many quarters over various aspects of political and public policy advertising and communications globally, Facebook has announced revised policies to increase transparency related to political and issue advocacy advertising in the United States. Highlights of the changes include requiring more information (consistent with Federal campaign finance laws) from political ad buyers regarding organizations providing funding for ads, as well as introducing new limitations on advertising adjudged to attempt to suppress voting. The Facebook actions on U.S. political advertising follows on political advertising proposals related to the upcoming election in Canada as well as the EU Parliament elections this year.

New Korean Fair Trade Commission Leader Says Digital Giants Will Be Scrutinized

Report from Yonhap News Agency

Key Insight – Joh Sung-wook, the nominee to lead the Korean Fair Trade Commission (KFTC), spoke to the media for the first time since her nomination by President Moon Jae-in, and said that unfair trade practices in the digital and technology sector is one of her main concerns and will remain a priority of the organization. In line with increased competition policy attention to the impact and conduct of large digital platforms globally, including across Asia, the KFTC has increased attention to the sector in recent years, including 2019 actions related to Google on its treatment of content creators that post on YouTube, Apple related to mobile phone distributors, and a collection of online gaming businesses related in-app purchase policies.

President Macron Claims a Digital Services Tax Deal with President Trump

Report from CNBC

Key Insight – French President Macron used a press event at the close of the G7 meeting in Biarritz to announce an agreement with the United States to avoid threatened tariff retaliation, including on French wine, in response to the French 3% digital services tax. Many tech companies and U.S. political leaders have objected to the tax as discriminatory, and bad tax policy as well, and the U.S. Government position on digital taxes is that the Organization for Economic Cooperation and Development (OECD) should develop a general corporate tax reform plan that would apply beyond just digital services businesses.  The deal announced by Macron would see France implement its new digital tax, but if and when there is an OECD tax agreement, France would refund to companies the difference between the taxes paid under the French law and the taxes that would have been owed under the new regime. U.S. officials have not confirmed that such an agreement has been reached.

German Court Pushes Back on FCO Directive on Facebook Data Practices

Story from ZDNet

Key Insight – A regional court in Dusseldorf, Germany, has issued a decision placing an injunction on the German Federal Cartel Office’s (FCO) order released in February prohibiting Facebook from consolidating data on individual German Facebook users that is collected on different Facebook-owned services such as Facebook, WhatsApp and Instagram, as well as data gathered on users broader Internet activities, without Facebook getting affirmative consent from a user. The German FCO, which is the country’s competition policy regulator, had proposed the data use restrictions in response to Facebook being a dominant social network business.  The case had drawn praise from advocates of more aggressive efforts to challenge the practices of the largest digital platforms as well as Internet privacy champions. The interim court decision, which German FCO leader Andreas Mundt says will be appealed, challenged the legal basis of linking corporate data practices to competition law and anti-monopolization efforts.

State Attorneys General Continue to Mobilize to Join Antitrust Activity Targeting Digital Giants

Story from Tech Crunch

Key Insight – Reports continue to surface that a collection of state Attorneys General, somewhere from 12 to 20, is preparing to pool their resources and cooperate in antitrust investigations of some of the largest digital platforms, with Google, Facebook, Amazon and Apple most often mentioned as targets.  The prospect of state AGs coordinating in some manner with the federal investigations being pursued by the Department of Justice and the Federal Trade Commission has been reported at various times this year, including on the occasion of a July meeting between AGs and US Attorney General William Barr as well as coming out of the National Association of Attorneys General conference in March.

Thailand Calls for Social Media Leaders to Set Up News Verification Centers

Story from The Jakarta Post

Key Insight – Takorn Tantasith, secretary-general of Thailand’s National Broadcasting and Telecommunications Commission, met with representatives of Facebook, Amazon, Netflix and other major digital companies to discuss a Thai Government proposal for the digital firms to establish and fund self-described news verification centers in each of the 10 ASEAN countries to assist governments in combating what governments see as fake news and other forms of objectionable content. The issue will also be discussed at this week’s meeting of the ASEAN Telecommunication Regulators’ Council (ATRC) in Bangkok, where the telecommunications ministers address a range of tax and regulatory proposals described as creating a “level playing field” between traditional services and Internet-enabled “Over The Top” (OTT) services.

Twitter and Facebook React to Chinese Government Activity on Hong Kong Protests

Report from the New York Times

Key Insight – Twitter and Facebook announced that they have taken action to block what they contend is non-transparent social media communications coordinated by the Chinese Government aimed at distorting perceptions of the pro-democracy activists in Hong Kong.  The Chinese Government is portrayed as following a social media playbook most noteworthy in the context of Russian-based activity but also reportedly employed by governments such as Iran, Saudi Arabia, Israel, the United Arab Emirates and Venezuela.  Neither Twitter nor Facebook is permitted to operate in mainland China, but both are used in Hong Kong, and most of the activity is in English, rather than Chinese, leading to speculation that English-speaking audiences in Hong Kong and internationally are being targeted. Twitter also announced that it would be banning advertising by state-controlled media entities, an action not being taken by Facebook at this point.

Digital Giants Lead Critics of French Digital Tax at Public USTR Hearing

Report from Agence France Press

Key Insight – The United States Trade Representative held a public hearing to accept comments from the private sector regarding the digital services tax enacted mid-year by France, applying a 3% levy on the France-based digital services revenues of firms with revenues of 750 million Euros globally and 25 million in France. The French Government claims that 30 companies are impacted, including one French company, but most are U.S.-based and U.S. Government leaders across the political spectrum have criticized the endeavor as transparently anti-American, some threatening prompt tariff retaliation. Representatives of Google, Amazon, Facebook and business trade associations testified, criticizing the discriminatory nature of the tax, the taxation of revenues rather than profits, retroactivity to January, and calling for an international digital tax framework such as those being developed at the OECD, and supported by the G20 leaders in July, rather than different national taxes.

Senator Warren Pens Opinion Piece in Support of California “Gig Worker” Bill AB 5

Opinion piece in the Sacramento Bee

Key Insight – Senator Elizabeth Warren, currently one of the leaders in the Democratic presidential nomination race and a prominent progressive voice, has jumped into the debate in California over worker classification, penning an opinion piece in the Sacramento Bee coming out strongly in support of California Assembly Bill 5.  The California Senate Appropriations Committee recently held a hearing on the legislation designed to add structure to the California State Supreme Court’s Dynamex Decision, which is seen by many as a threat to business models based on digital platforms for independent workers.  The hearing included representatives of many traditional independent worker-based professions and industries asking for exemptions from legislation aimed at the digital platform business models.

UK Ofcom May Be Given Regulatory Authority Over Social Media Platforms

Report from Sky News

Key Insight – The UK Office of Communications (Ofcom) is reported to be under consideration to receive interim enforcement authority over digital social media platforms regarding their responsibility to restrict harmful online content.  Ofcom’s role, which could eventually include authority to impose fines on social media platforms as well as potentially take enforcement action against executives of offending platform businesses, is seen as meeting compliance requirement under both the EU Audiovisual Media Services Directive, which goes into force in September 2020, as well as expected legislation following up on the UK Online Harms White Paper, one of the most prescriptive digital platform oversight proposals currently under review in a major western market.

LGBTQ+ Plaintiffs Sue YouTube for Discriminatory Content Moderation

Story from the Washington Post

Key Insight – Five content creators who have used YouTube to distribute video content have filed a suit against the platform, accusing the company of discriminatory content moderation practices, a charge often leveled against major social media platforms by conservative critics who claim ideological discrimination by technology companies with overwhelmingly progressive leaders and employees.  The law firm representing the plaintiffs is also involved in ongoing legal action against YouTube by Prager University, a non-profit organization that creates videos on various political, economic and philosophical topics from a conservative perspective, against YouTube.

Nigeria Considering New VAT for Online Sales With Payment Card Bank Collection

Report from QZ.com

Key Insight – Facing revenue challenges, the Nigerian Government is reportedly considering a new 5% Value Added Tax on domestic online commerce purchases, targeting banks that support payment cards as the collection agents.  Online commerce has been a growing in Africa with Nigeria leading the way, including being home to Jumia, the continent’s largest ecommerce site. Industry leaders have reacted to the proposal with concern, arguing that the new VAT will undermine a key technology-based growth industry and also runs contrary to the government’s stated interest in promoting cashless commerce.

White House Drafting an Executive Order to Police User Content Moderation Policies

Story from CNN

Key Insight – Aiming to address concerns regularly expressed by President Trump that content moderation by large social media platforms discriminate against conservative users, the White House is reportedly crafting an executive order to authorize the Federal Communications Commission and the Federal Trade Commission to review corporate content moderation practices and impose rules on Internet firms hosting user content.  However, given the clear legal foundation of the content moderation authority of Internet platforms in Section 230 of the Communications Decency Act, an executive order would likely be limited to peripheral issues absent legislative changes. Despite harsh criticism across the political spectrum, there is little agreement in detail on content moderation, with conservatives focused on overly-aggressive partisan targeting of users, as highlighted in a recent White House event, while progressives decry lax practices allowing fakes and falsehoods, highlighted by frustration over a doctored video of Speaker of the House Pelosi, which was permitted on some sites.

Singapore Names “Accountability Agent” for APEC Cross Border Privacy Rules System

Report from The National Law Review

Key Insight – Singapore has announced that the Info-comm Media Development Authority (IMDA), a board the operates under the Singaporean Ministry of Communications, as the “accountability agent” required to complying with the APEC Cross Border Privacy Rules System (CBPRS). Singapore’s tapping of a government agency to take on the role of accountability agent, which was initially thought to be a role for private tech associations, may be pursued by other APEC countries such as Canada and Mexico and give a boost to the CBPRS. The CBPRS is an agreement between APEC member countries that is analogous to the US-EU Privacy Shield in the sense that it intends to set minimum data protection standards allowing for cross-border data flows between member countries.  It is also sometimes compared to the EU’s General Data Protection Regulation and a helpful thumbnail side-by-side can be found here.

EU Job Search Businesses Call on Vestager to Impose Temporary Halt on Google Search Practices

Story from Reuters

Key Insight – Looking ahead to the likely end of the term of Commissioner Margaret Vestager as the head of the EU Competition Authority when the new EU Commission takes office on November 1, a group of 23 EU-based online jobs search services and platforms have sent a letter to Vestager calling on her to order Google to temporarily halt a range of search-related practices preferencing their job search service while the Competition Commission completes the investigation they initiated last fall. The Google Job Search investigation follows on the model set by the EU’s Google Shopping decision, with an investigation initiated in 2010 resulting in a 2.3 billion Euro fine under the leadership of Vestager in 2017.  While the job search investigation is reported to be a Vestager priority, the smaller firms are looking to set the best stage under a new Competition Commissioner.

DC-Based Technology Trade Associations Face Difficult Choices on Digital Platform Antitrust Cases

Story from Politico

Key Insight – The proliferation of competition policy challenges facing the largest digital platforms, in particular Google, Facebook and Amazon, is imposing challenging internal questions on technology industry trade associations, all of whom tend to include the digital giants as big-budget members but also have member companies who are competitors of the giants and likely have divergent views on some competition matters.  The article details how various trade groups are attempting to navigate the minefield, sometimes by being vocally engaged, sometimes not getting involved, and sometimes attempting to take nuanced actions on a case-by-case basis. None of trade groups are reported to be engaged on behalf of the mid-sized companies with competition concerns.