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  1. LONDON (Reuters Breakingviews) - Britain’s new Digital Markets Unit has a distinctively Silicon Valley vibe. A sweeping mandate and the ability to act with tech-like speed raises the risk it will emulate Facebook’s old “move fast and break things” mantra. Still, it’s an upgrade on the ponderous, court-based approaches usually followed by Europe and the United States. The DMU, unveiled on Friday and due to begin work in April 2021, will police dominant technology groups like Facebook and Google’s parent, Alphabet. The theory is that a nimble, dedicated regulator can fix any abuses of market power quickly, rather than waiting years for an antitrust review. By that time, nascent competitors may already have died. The mandate looks disconcertingly broad, from the perspective of Facebook Chief Executive Mark Zuckerberg and his opposite number at Google, Sundar Pichai. The government wants the DMU to ensure consumers and small businesses “aren’t disadvantaged” by the business practices of the duo, which together sucked up 80% of UK digital advertising in 2019. A worthwhile use of its powers would be to make it easier for users to move their data, such as Facebook photos or friend lists, over to rival websites. Yet overzealous intervention in areas where the pair are simply better, like targeted advertising, could backfire by deterring them from developing potentially useful new services. A report by the Competition and Markets Authority, the antitrust body within which the DMU will sit, provides plenty of food for thought by pointing to the massive profitability of Facebook and Google’s search business. A 40%-50% return on capital employed, way above their probable single-digit cost of capital, may indeed stem from monopolistic pricing of advertising services, necessitating regulatory action. On the other hand, it could simply be that digital marketers love their products. Yet for all the danger of overreach, the new regime is preferable to more cumbersome alternatives. European competition tsar Margrethe Vestager, for example, takes years to bring cases against Google, Amazon.com and others. Factor in lengthy appeals, and the tech giants’ may have increased their dominance before the process ends. The same could apply to the U.S. Justice Department’s recently launched case against Google. Britain’s decision to mimic Big Tech’s agility offers the best hope of reducing its clout. Source
  2. A report published Monday by the Australian Strategic Policy Institute claims that a large number of global companies are benefiting from the forced labor of Uyghurs and other minorities. A total of 83 companies are listed in the report, and some of those names are Microsoft Corp., Apple Inc., Amazon.com Inc., Google LLC, Huawei Technologies Co. Ltd., Samsung Electronics Co. Ltd. and Sony Corp. The report states that about 80,000 Uyghurs and a number of other ethnic minorities have been moved from the Xinjiang region in China and sent to work in factories that suggest “forced labor.” Besides being sent to work in dozens of factories for large global corporations, the researchers said the workers have also been part of a “re-education” campaign by the Chinese government. “In factories far away from home, they typically live in segregated dormitories, undergo organized Mandarin and ideological training outside working hours, are subject to constant surveillance, and are forbidden from participating in religious observances,” said the report. “Numerous sources, including government documents, show that transferred workers are assigned minders and have limited freedom of movement.” ASPI went on to say the 80,000 number was a conservative estimate, and it has so far identified 27 factories in nine Chinese provinces. The workers are said to have graduated from re-education camps where they were forced to denounce their religion. After graduation those workers were forcibly sent to work in factories, which was part of a government initiative called “Xinjiang Aid.” The Chinese government has denied mistreating the workers and had said the scheme has only been to “fight terrorism and separatism in Xinjiang.” It seems there’s a kind of double-speak going on, since China calls the camps and factories “vocational training centers,” while reports have surfaced that make the labor programs sound more like oppressive forced labor under constant surveillance. Indeed, when the Washington Post visited one such site where Nike Inc.’s products were being made, it described something that sounded more like a prison, with barbed wire fences and watchtowers. That report stated that workers were not allowed to go back to their province. In a statement to the media, Apple said it is “dedicated to ensuring that everyone in our supply chain is treated with the dignity and respect they deserve.” Microsoft said it would investigate the claims, adding that all forms of forced labor are banned by its supplier code of conduct. “Microsoft is committed to responsible and ethical sourcing,” the company said in a statement. “We take this responsibility very seriously and take significant steps to enforce our policies and code of conduct in support of human rights, labor, health and safety, environmental protection, and business ethics through our assurance program.” Source
  3. Lawmakers continue to amp up the pressure on tech companies. Lawmakers on Capitol Hill sent letters to Facebook, Amazon, Google and Apple on Friday requesting a trove of documents and other information as part of an antitrust investigation into online markets. Leaders of the House Judiciary Committee sent detailed requests asking for general information on the companies and their competitors in online commerce and content, as well as executive communications related to acquisitions and other competition matters. The companies were also asked to turn over any documents from prior investigations by US or foreign regulators in the past 10 years. The House committee said documents should be turned over by Oct. 14. The probe was announced in June by Rep. David N. Cicilline, a Democrat from Rhode Island and chairman of the House antitrust subcommittee. The investigation is exploring competition in online markets and whether big tech companies are engaging in "anti-competitive conduct." It'll also try to decide if the government's current antitrust laws and enforcement policies are enough to fix the problems. The House probe comes as tech giants faces a flood of scrutiny from government regulators, who've targeted tech companies over potential anti-competitive behavior, privacy breaches and data misuse. The Department of Justice and Federal Trade Commission, the two US agencies that handle antitrust issues, are looking into tech companies' business practices. Fifty state attorneys general earlier this week opened antitrust investigation into Google, and last week, New York Attorney General Letitia James announced a similar probe into Facebook. Amazon declined to comment. Apple and Facebook didn't immediately respond to a request for comment. Google pointed to a blog post it published last week written by Kent Walker, senior vice president of global affairs. In the post, Google acknowledges the regulatory scrutiny and said it'll work with government officials. Source
  4. Of the five biggest tech companies in the U.S., Microsoft is the only one that isn't currently in the crosshairs of U.S. antitrust authorities. The software giant already took its turn through the regulatory wringer starting two decades ago, a years-long confrontation that resulted in the finding that the Redmond, Washington-based company had illegally maintained its monopoly for personal-computer operating-system software. The case dealt with the company's moves to kneecap the Netscape web browser by bundling its own product, Internet Explorer, into Windows, the dominant PC operating system. A federal judge ordered the company split in two in 2000, a fate Microsoft avoided when an appeals court reversed that part of the ruling and the company eventually settled. That 2002 settlement led to nine years of court supervision of the company's business practices and required Microsoft to give the top 20 computer makers identical contract terms for licensing Windows, and gave computer makers greater freedom to promote non-Microsoft products like browsers and media-playing software. Because observers and legal pundits almost uniformly agree the software giant did virtually everything wrong in the course of the investigation -- which had its start as early as 1990, followed by a 1998 Justice Department lawsuit -- in retrospect its story serves as a useful instruction manual of what not to do. While no formal inquiries have yet been opened, the Federal Trade Commission and Justice Department carved up the territory of big tech -- Amazon.com, Apple, Google and Facebook -- as they prepare to dig in on antitrust issues. The Department of Justice will look at Google, which dominates the online search and advertising spaces, and Apple, whose pervasive App Store is likely to be under examination. The FTC drew Facebook, with its behemoth social networking and messaging apps and a slew of recent privacy missteps, and e-commerce giant Amazon, which has been pushing into areas like grocery and health. As these companies build their legal teams and prepare strategies for the fight ahead, here are several lessons that Google, Amazon, Apple and Facebook can learn from Microsoft's battle with the feds. - Don't deny the obvious. Or don't even put up a fight about whether you have a monopoly. Microsoft, whose Windows software accounted for about 90% of the market for PC operating systems, opted to argue that the space was actually competitive. Parts of the argument included videos where Microsoft employees offered a straight-faced marketing pitch for the benefits of rival Linux programs with a tiny share of the market. The impulse is understandable -- monopoly sounds like a dirty word. But U.S. antitrust law doesn't expressly forbid having a monopoly; it outlaws doing certain things to establish, maintain or extend one. That led some legal scholars to argue that Microsoft would have been better served by copping to the Windows monopoly and establishing a legal beachhead against the idea that it did anything illegal to gain it or keep it. Arguing against something so self-evident via the company's very first witness strained credibility and started the case off on a bad footing.It's easy to imagine a similar issue applying to Google, which has more than 84% of the web-search market and controls 82% of mobile-phone operating systems. In the app-store business, Google and iPhone maker Apple together control more than 95% of all U.S. mobile app spending by consumers, according to Sensor Tower data. It could be more effective for these companies not to start by denying that leadership position -- if you have 80% or 90% percent of a market, arguing that you don't really dominate isn't the hill you want your legal reasoning to die on. - Don't resort to spin. Microsoft's credibility with the press was no higher, hurt by constant counterfactual statements and spin. Each day, after a bruising in court as government lawyer David Boies poked holes in executive testimony and Judge Thomas Penfield Jackson alternated between chuckling at the witnesses and chastising them, Microsoft deployed a hapless PR person to the steps of the courthouse to recite the words, "Today was another good day for Microsoft." It never was. - Assume everything will be made public. Among the list of horrifying moments for Microsoft in court was the public showing of parts of the 20 hours of depositions of co-founder and Chief Executive Officer Bill Gates. The tapes (yes, they were tapes -- this was the 90s) showed an ill-lit, evasive and combative Gates engaging in Clintonian word-wrangling, such as asking about the definition of the word "definition" and arguing what "market share" meant. Microsoft claimed it had been assured the tapes would never be shown in court, or the company would have taken greater care with Gates's appearance and manner. During their playback in court, the judge laughed at several points -- not the impression the software giant wanted to make on either Jackson or the public. Jackson told New Yorker reporter Ken Auletta that Gates came off as "arrogant" in the depositions. Just as bad for Microsoft, an array of internal emails were read aloud in court that contradicted the testimony of its executives, which further angered Jackson. The takeaway? Assume everything will be aired in the court of public opinion. If it was true 20 years ago, it's even more apparent in the current era of oversharing, thanks to the tech companies' own services. - Don't be condescending about the technology. Most lawyers, judges and regulators don't appreciate being told or having it implied that they lack the ability to comprehend certain tech concepts. Or that the reason they think there's been an antitrust violation is because they just don't "get" the technology. It was true that Jackson and Boies seldom used a computer at the time. But it didn't require a computer science doctorate to divine the legal merits of the case. At the height of Microsoft's hubris (or carelessness, or both), the company sent Windows chief Jim Allchin to the stand with a doctored video that purported to show how computing performance would be degraded when the browser was removed from Windows on a single PC. It was actually done on several different computers and was an illustration of what might happen rather than a factual test, as the company initially claimed -- a fact that came to light only after several days of the government picking through every inconsistency in the video. Microsoft remade the simulation several times in an effort to save the testimony. The company seemed to think it could get away with baldy stating a technological claim and mocking up something that backed it up, perhaps reasoning that no one would know the difference, but it miscalculated badly. - Choose your lawyers wisely. Microsoft took on the U.S. government led by a combative Gates and an equally aggressive general counsel, Bill Neukom. Gates, the son of an attorney, was outraged, frustrated and convinced the company was being unfairly targeted. One of the company's outside lawyers, from the firm Sullivan & Cromwell, said the company could put a ham sandwich into Windows if it wanted to. And throughout, Neukom not only failed to tamp down his executives' worst impulses, he seemed to amp them up. His legal style led observers to point out that his last name -- pronounced `nuke 'em' -- was quite fitting. The U.S. government's latest antitrust targets should take heed: If your top executive's style tends towards waving a red flag in front of a bull, you may be wise to consider a top lawyer with a more conciliatory style. Google's top executives have already raised the ire of lawmakers for refusing to appear before Congress, and no one has ever accused Jeff Bezos of being afraid of a fight. At Facebook, where Zuckerberg regards Gates as a mentor and observers see similarities in their styles and temperaments, this lesson might be particularly important. - There are many different ways to lose. Right now, the companies are only at risk of an inquiry -- the agencies are deciding what, if any, action to take. But even at this stage, they should keep in mind that a loss doesn't only mean a full-scale breakup or forced divestiture. Companies can avoid that extreme fate and still find, as Microsoft did, that the years of distraction from the fight have hampered their business and sucked up executive time and mental energy. In an interview last year at the Code Conference, Microsoft President and Chief Legal Officer Brad Smith lamented the distraction the case caused, and cited it as a reason the company missed out on the search market -- the business that fueled the runaway success of Google, now under the microscope itself. Others have pinned Microsoft's abysmal performance in mobile computing partially on constraints and distractions from the case. Some of the company's business missteps can fairly be attributed to poor execution and strategic errors that had nothing to do with the government dispute. Still, the notion that merely fighting an antitrust battle may do almost as much harm as losing one brings us to our last point. Consider settling early. It's hard to say with certainty what the late 1990s and early 2000s might have looked like for Microsoft had it found a way to settle with the government earlier than 2002. Still, for the government's current targets, it's worth weighing a settlement against the impact of several years of investigation, a possible loss in court and potentially harsher restrictions or remedies. Amazon, Apple, Facebook and Google probably have a pretty good idea of what regulators may object to, and it's worthwhile for them to consider ways to assuage those concerns while keeping the core of their businesses and future ambitions intact. The alternative is years of investigations, possibly damaging evidence and testimony, and ample distraction, all leading up to what could be a devastating loss in court. Source
  5. It’s separate from the Google and Apple investigations that were announced earlier After months of heightened tech scrutiny from both Republicans and Democrats, the Justice Department is opening a new antitrust investigation into large tech firms like Facebook, Amazon, and Google. “Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” said Assistant Attorney General Makan Delrahim of the Antitrust Division. “The Department’s antitrust review will explore these important issues.” The investigation will address broad concerns over whether Big Tech is stifling competition, and will be separate from the department’s probes of Google and Apple that were reported earlier this summer and are intended to take a closer look at individual potential violations. The review reported today will look into search engines, social media platforms, and retail, but not focus on any individual company or practice. In a press release, the Justice Department said the review “will consider the widespread concerns that consumers, businesses, and entrepreneurs have expressed about search, social media, and some retail services online.” At Attorney General Barr’s confirmation hearing this past January, he told senators that he would like to see the Justice Department take a harder look at whether companies like Google and Amazon were abusing their market dominance. “I’d like to have the antitrust [officials] support that effort to get more involved in reviewing the situation from a competition standpoint,” Barr said at the time. “I don’t think big is necessarily bad, but I think a lot of people wonder [how] these big behemoths have taken shape in Silicon Valley.” Source
  6. The chair of the Federal Trade Commission, Chairman Joe Simons, acknowledged in an interview on Tuesday that perhaps maybe, just maybe, one outcome of an FTC task force inquiry into whether tech giants violated anticompetition laws could be forcing them to break up into smaller companies, according to reports in Reuters and Bloomberg. The likes of Facebook probably aren’t quaking in their bootsies yet. Simons—who perhaps has his hands tied by the ongoing status of his agency’s broad review of the tech sector, but whose agency was accused of coddling Facebook in a recent privacy settlement—more or less merely acknowledged that it was technically within his power to pursue corporate breakups. “If you have to, you do it,” Simons told Bloomberg. “It’s not ideal because it’s very messy. But if you have to you have to.” As Bloomberg noted, the FTC task force has seemed particularly interested in whether Facebook secured its current form as a globe-spanning behemoth by buying up subsidiaries like Instagram and WhatsApp for the sole purpose of eliminating competition. The Department of Justice has launched its own antitrust investigation of the tech sector that appears to have overlap with the FTC one, though Simons offered few details about how the agencies were coordinating. “It’s possible for sure that we could be investigating the same company at the same time but just for different conduct,” Simons told Bloomberg. However, he did reiterate to Bloomberg that Facebook’s 2012 acquisition of Instagram is a particularly open question to the FTC as of now: Simons didn’t confirm details of the Facebook investigation beyond what the company disclosed in July, when it said that the FTC had initiated a broad probe into several business lines — social media, digital advertising and mobile applications. Any inquiry into its past acquisitions would focus on what would have happened to those companies if they hadn’t been bought by Facebook, Simons said. “There’s a question about what caused Instagram to be as successful as it is,” Simons said. “Was it the fact that the seed was already there and it was going to be germinated no matter what or was the seed germinated because Facebook acquired it?” The consolidation of the tech sector in recent years and growing hostility to companies like Amazon, Apple, Facebook, and Google in D.C. certainly seems to have put the issues of scale and competition in the spotlight, and both leading Democratic candidates for the presidency such as Elizabeth Warren and Donald Trump’s administration have urged regulators to step in. (In the case of Trump, the anger clearly has more to do with conspiratorial and baseless accusations that tech companies are secretly backing Democrats than it does... any other coherent motive.) But there’s reason to be skeptical whether this is all just talk or the FTC and DOJ investigations will actually result in breakups anytime soon. As the Verge noted, the growing backlash to tech consolidation follows a long time period in which competition and antitrust watchdogs did basically nothing to stop it—and the pendulum is only slowly swinging back in the other direction. In June, New Street Research analyst Blair Levin told the Information that “any concrete action and coherent thinking on these things” is likely to take at least a year and a half to materialize, meaning the next presidential administration. Source
  7. FUKUOKA, Japan (Reuters) - Group of 20 finance ministers agreed on Sunday to compile common rules to close loopholes used by global tech giants such as Facebook to reduce their corporate taxes, a final version of the bloc’s communique obtained by Reuters showed. Facebook, Google, Amazon, and other large technology firms face criticism for cutting their tax bills by booking profits in low-tax countries regardless of the location of the end customer. Such practices are seen by many as unfair. The new rules would mean higher tax burdens for large multinational firms but would also make it harder for countries like Ireland to attract foreign direct investment with the promise of ultra-low corporate tax rates. “We welcome the recent progress on addressing the tax challenges arising from digitization and endorse the ambitious program that consists of a two-pillar approach,” the final version of the communique showed on Sunday. “We will redouble our efforts for a consensus-based solution with a final report by 2020.” Britain and France have been among the most vocal proponents of proposals to tax big tech companies that focus on making it more difficult to shift profits to low-tax jurisdictions, and to introduce a minimum corporate tax. This has put the two countries at loggerheads with the United States, which has expressed concern that U.S. Internet companies are being unfairly targeted in a broad push to update the global corporate tax code. Big Internet companies say they follow tax rules but they pay little tax in Europe, typically by channelling sales via countries such as Ireland and Luxembourg, which have light-touch tax regimes. The G20’s debate on changes to the tax code focus on two pillars that could be a double whammy for some companies. The first pillar is dividing up the rights to tax a company where its goods or services are sold even if it does not have a physical presence in that country. If companies are still able to find a way to book profits in low tax or offshore havens, countries could then apply a global minimum tax rate to be agreed under the second pillar. Earlier this year, countries and territories agreed a roadmap aimed at overhauling international tax rules that have been overtaken by the development of digital commerce. Source
  8. FUKUOKA, Japan (Reuters) - Group of 20 finance ministers agreed on Saturday to compile common rules to close loopholes used by global tech giants such as Facebook to reduce their corporate taxes, a copy of the bloc’s draft communique obtained by Reuters showed. Facebook, Google, Amazon, and other large technology firms face criticism for cutting their tax bills by booking profits in low-tax countries regardless of the location of the end customer. Such practices are seen by many as unfair. The new rules would mean higher tax burdens for large multinational firms but would also make it harder for countries like Ireland to attract foreign direct investment with the promise of ultra-low corporate tax rates. “We welcome the recent progress on addressing the tax challenges arising from digitization and endorse the ambitious program that consists of a two-pillar approach,” the draft communique said. “We will redouble our efforts for a consensus-based solution with a final report by 2020.” Britain and France have been among the most vocal proponents of proposals to tax big tech companies that focus on making it more difficult to shift profits to low-tax jurisdictions, and to introduce a minimum corporate tax. This has put the two countries at loggerheads with the United States, which has expressed concern that U.S. Internet companies are being unfairly targeted in a broad push to update the global corporate tax code. “The United States has significant concerns with the two corporate taxes proposed by France and the UK,” U.S. Treasury Secretary Steven Mnuchin said on Saturday at a two-day meeting of G20 finance ministers in the Japanese city of Fukuoka. “It sounds like we have a strong consensus” about the goals of tax reform, Mnuchin later said. “So now we need to just take the consensus across here and deal with technicalities of how we turn this into an agreement.” Mnuchin spoke at a panel on global taxation at the G20 after the French and British finance ministers voiced sympathy with his concerns that new tax rules do not discriminate against particular firms. Big Internet companies say they follow tax rules but have paid little tax in Europe, typically by channeling sales via countries such as Ireland and Luxembourg, which have light-touch tax regimes. The G20’s debate on changes to the tax code focus on two pillars that could be a double whammy for some companies. The first pillar is dividing up the rights to tax a company where its goods or services are sold even if it does not have a physical presence in that country. If companies are still able to find a way to book profits in low tax or offshore havens, countries could then apply a global minimum tax rate to be agreed under the second pillar. The path to a final agreement is still fraught with difficulty because of disagreement on a common definition of a digital business and on how to distribute tax authority among different countries. “There are differences between the United States and United Kingdom over pillar one. As for pillar two, there are also differences in views within the Group of 7,” said a senior Japanese finance ministry official present at the G20. The G7 likely will not issue any communique at a meeting of the world’s leading economic powers next month, according to the official. Still, several finance ministers at the G20 said on Saturday they needed to act quickly to correct unfair corporate tax codes or risk being punished by voters. “We cannot explain to a population that they should pay their taxes when certain companies do not because they shift their profits to low-tax jurisdictions,” French Finance Minister Bruno Le Maire said during the panel discussion. The U.S. government has voiced concern in the past that the European campaign for a “digital tax” unfairly targets U.S. tech giants. After listening to presentations by Le Maire and British finance minister Philip Hammond, Mnuchin said on Saturday G20 countries should issue “marching orders” to their respective finance ministries to negotiate the technical aspects of a deal. Earlier this year, countries and territories agreed a roadmap aimed at overhauling international tax rules that have been overtaken by the development of digital commerce. German finance minister says G20 ministers agree on minimum taxation FUKUOKA, Japan (Reuters) - Finance Ministers at a Group of 20 meeting in Japan are agreed that minimum taxation is a good idea, German Finance Minister Olaf Scholz said on Saturday, adding that it would come. He said this would mean higher tax revenues for everyone, including Germany. Sources : Here & Here
  9. These daily price charts show the possible support and resistance levels for key, widely followed, heavily-mentioned in the business media "FANG" stocks: Facebook, Amazon, Netflix and Google. Let's start with Mark Zuckerberg's publicly traded business: Facebook daily price chart You can see that once Facebook peaked at just above 215 back in July, the stock has steadily and relentlessly tanked. It took out that previous 149 support level (from March), attempted a small bounce and then continued to the recent deeper low down near 130. That July gap down area is an eventual target to overcome should Facebook ever begin to recover from this remarkable down trend. The price has been unable to close above that Ichimoku cloud since that time -- six months ago. That's getting to be a long time for a formerly hot Internet sensation. Here is the daily price chart for Jeff Bezos' big enterprise: Amazon daily price chart. Amazon made it to late August before establishing a significant top at 2050. Although the stock did not suddenly gap down like Facebook, the steady descent to lower prices is similar: remaining below the Ichimoku cloud even with a decent sized bounce in November before continuing to sell-off to a lower than the October low. You can make out clearly that Amazon remains above the 1275 support level of the February low price. Here is the Netflix chart: This one peaked earlier than the others -- the top of 420 came in June with a retest the following month. After that, you can see the steady decline that's become so representative of this Internet-related sector since June. At the most recent price of 250, it looks as if Netflix is about to at least re-test the previous low -- and support level -- of about 238 from February. This chart has established an ersatz type of head and shoulders top, possibly. Also, while Netflix continued downward for months, one of its competitors, Disney, has continued higher to establish new highs. And this is the Google (legal name: Alphabet, Inc.) chart: Another monster Internet stock makes a summertime high and then takes a dive. The Google peak price is 1270 and now we're all the way down to 1000 -- almost all the way back to the March 980 low which represents some kind of support level. Each of these FANG price charts is unique in structure and yet they all show the same kind of general, overall pattern where a summer peak gives way to extensive selling as fall approaches and kicks in. Google is no different judging from the appearance of this chart. Just for comparison's sake, here is a non-Internet stock you could have owned instead: Clorox daily price chart. You don't hear Clorox mentioned much on the business channels or in the financial media -- certainly not even close to the number of times the FANG stocks are referenced. Nonetheless, Clorox continues to make new highs. Maybe it's better not to be the focus of so much attention. I do not hold positions in these investments. No recommendations are made one way or the other. If you're an investor, you'd want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor. Source
  10. With few exceptions, the questioning was a national embarrassment Comment This morning the Senate Commerce Committee held a hearing with the CEOs of Google, Facebook and Twitter to discuss making changes to a critical piece of US legislation that provides online platforms, used by billions of people, legal protections from the content those people post. Yes, we're talking about changes to Section 230, and it was shambolic. In fact, it was worse than shambolic; it was a national embarrassment. Senator after senator appeared on screen and made wild allegations, often based on tiny, specific examples that no one else had heard of, and claimed it meant the end of democracy as we know it. After over four hours of this, it was hard not to conclude that the greater threat to democracy is the senators themselves. Dorsey's castaway during the virtual hearing look failed to wow senators. Source: US Senate Committee on Commerce, Science, and Transportation. There have been a number of hearings this year that have repeatedly pulled Google's Sundar Pichai, Facebook's Mark Zuckerberg and Twitter's Jack Dorsey into the Congressional orbit in order to explain their companies’ actions – and inaction. Sadly, they have achieved little except to flag the legislature’s dangerous lack of knowledge about online platforms. Today’s hearing, however, was a different magnitude of dysfunction. It should never have been held a week before an election. The collective madness that overtakes the political world in election season was in full effect, with senators from both sides spouting partisan talking points that had nothing to do with the nominal topic of the hearing: “Does Section 230’s Sweeping Immunity Enable Big Tech Bad Behavior?” We learnt almost nothing about what Google, Twitter and Facebook actually do when it comes to the flood of information that hits them every second of every day. Instead, it was all about what the senators had already decided was the problem, based on painfully thin evidence. All shouting, no listening The Republicans say they are convinced that Big Tech is censoring conservative voices, although whether they actually believe that is highly debatable. The CEOs gamely tried to explain in 100 different ways why that wasn’t the case, but no one was listening. The Democrats say they are convinced that Big Tech is not doing enough to cut down on misinformation, which they do appear to believe. But they also didn’t listen as the CEOs again gamely tried to explain in 100 different ways why that wasn’t the case. In truth, the tech platforms are putting warnings on more messages and accounts from right-wing accounts for the simple reason that those accounts are posting more misinformation; in fact misinformation has become an entire strategy for the Republican Party under President Trump. And in truth, tech platforms are not doing as much as they could with limiting misinformation because a) they don’t have to thanks to Section 230 and b) it is enormously time-consuming and incredibly expensive to do so. Their strategy appears to be to tackle the biggest examples of misinformation and let the rest slip through because anything else would require an enormous shift in how their services function. That dichotomy was, somewhat unfortunately, epitomized in the recent case of a New York Post story claiming to have emails from Joe Biden’s son, Hunter, that tangentially implied that the Democratic presidential candidate might have benefited from shady influence peddling. It is actually an interesting case study: the story is dubious to say the least. While some of a cache of emails appear to be real, the ones that are being heavily pushed are most likely not. It is transparently a political hit job with no verifiable evidence and as a result the story was turned down by several mainstream news organizations. Manipulation But Republican political operatives knew that didn’t matter if the story spread so widely on social media that it picked up its own momentum. Except in 2020, the social media companies were alert to this kind of manipulation – having been warned by the FBI to be on the lookout for it – and so when the story broke, all three of them took measures to limit its spread until the story could be verified. There was a good debate to be had about the measures they took and how they reached those decisions and what the impact was. But, of course, the actual subject matter made that impossible. Republican feigned fury at what they insisted was censorship when in reality they were railing against the fact that an effort to shift the election was stymied – in large part because of measures that the companies had put in place following pressure from Democrats. The Democrats had an opportunity to raise the level of conversation but also failed miserably. Rather than talk about the pros and cons of limiting the spread of suspected misinformation, they instead railed against how the Republicans had only called the hearing to raise the specter of censorship and re-up the Biden story in the final days of the election. And, of course, no one was able to resist complaining about President Trump in bitter, angry terms. It was shameful. But even the few senators that managed to drag themselves away from partisan attack let America down when they revealed over and over again what little understanding they have of how online platforms actually work, and then failed to listen to Pichai, Dorsey and Zuckerberg when they tried to explain. As ridiculous as it may seem, it was hard not to feel a little sympathy for the tech CEOs who, frankly, had much better things to do with their time than listen to a bunch of squabbling kids. The only benefit to them was that it prevented substantive discussion of Section 230 liability protections which they don’t want changed because of its huge benefit to them. It’s hard to imagine that Congress will manage to reach any kind of agreement on changes to the law if they can’t focus on the issue during their own hearing on the topic. The worst example? There were so many examples of appalling behavior that it’s hard to choose one. And it needs to be just one because it’s too tiring to go into more than one. Senator Ted Cruz (R-TX) should get an honorable mention for being most objectionable. But in terms of sheer idiocy of questioning, Senator Ron Johnson (R-WI) was up there with the best when he asked: “I don’t expect you to have taken poll of your employees but I just want to get a kind of a sense – because I think it’s pretty obvious – but would you say the political ideology of the employees of your company is, let’s say, 50-50 conservative versus liberal/progressive, or do you think it’s closer to 90 per cent liberal/10 per cent conservative?” Aside from the fact Johnson notes within his question that the CEOs won’t know the answer but he’ll ask it anyway AND the fact that he’s already decided what the answer is going to be and won’t accept anything other than that, the entire premise of the question – that the political leanings of employees will decide policies whose impact is much broader than partisan disputes – is itself faulty. The CEOs gamely responded – but no normal functioning member of society would imagine the question served any useful purpose when it comes to digging into the issue of Section 230 and online platforms. And that is pretty much how the entire hearing went down. The only issue worth noting is that Facebook and CEO Mark Zuckerberg has again broken ranks with the tech industry and said that he thinks it “makes sense to modify Section 230” to bring it inline with modern realities. But that Zuck hopes people will consider the impact on smaller companies and so either waive the impact of any changes on them, or add some kind of minimum (money or users) before any changes are imposed. Meta But there was a much greater irony surrounding the hearing. At the same time a virtually worthless discussion was going on within Congress, the online version of what was being discussed was dramatically different – and worse. Reams of tweets and posts emanated from political accounts that painted an entirely false view of what had happened. Ted Cruz’s team had even prepared graphics that looked like a boxing match and seeded Twitter asking people to turn in to see him berate Twitter’s Jack Dorsey. And within minutes of nonsensical angry questions being asked by senators in the hearing, video grabs of the questions – minus responses or context – were put together and posted online, presumably in an effort to make it look as though they were standing up to Big Tech and grilling their CEOs. Social media misinformation has become the goal. It’s no wonder that Congress can’t agree on how to limit or manage it when they are focused on producing their own versions. The bigger question may just be: is it time to reflect on the fact that COVID-19 has brought the globe to a standstill and decide that “going viral” is something that needs to be stamped out? There was however one thing that everyone could agree on: Jack Dorsey’s long, scraggly beard is an absolute disgrace. Seriously man, get some beard oil as an absolute minimum. What is Section 230? It's part of America's Communications Decency Act that, with some caveats, shields online platforms from being sued for content shared by their use. Source
  11. EU lawmakers are drawing up a "hit list" of Big Tech companies to target with new regulation, sources told the Financial Times. The list will have up to 20 companies on it, and is likely to include big players such as Facebook and Apple, the sources said. The EU is set to publish proposals for new technology laws in December. Left to right: Amazon CEO Jeff Bezos, Apple CEO Tim Cook, Facebook CEO Mark Zuckerberg, and Google CEO Sundar Pichai. EU lawmakers are writing a "hit list" of Big Tech companies to target with tougher regulation, sources familiar with the matter told the Financial Times. The sources did not say which names are on the list so far, but said it will feature up to 20 large tech companies, and that it is likely to include Silicon Valley behemoths such as Facebook and Apple. Under draft plans for new legislation, the companies named on the list will have to abide by stricter regulations than smaller competitors. The EU is currently working on a new set of technology laws called the Digital Services Act. It is due to set out its first proposals in December. "The immense market power of these platforms is not good for competition," a source familiar with the discussions told the FT. "Big platforms are invasive, they pay little tax and they destroy competition. This is not the internet we wanted," said another. Thierry Breton, the European commissioner for internal markets, told the FT in September that the EU was looking at giving itself sweeping powers to crack down on powerful tech companies, up to and including the ability to break them up. "There is a feeling from end-users of these platforms that they are too big to care," Breton said. This comes as Big Tech companies are facing ever-increasing antitrust scrutiny in the US, with the Department of Justice expected to charge Google with breaking antitrust laws in relation to its dominance of online search later this week. Source
  12. Google makes billions from its cloud platform. Now it’s using those billions to buy up the internet itself — or at least the submarine cables that make up the internet backbone. Above: An operator works during the mooring of an undersea fiber optic cable near the Spanish Basque village of Sopelana on June 13, 2017. In February, the company announced its intention to move forward with the development of the Curie cable, a new undersea line stretching from California to Chile. It will be the first private intercontinental cable ever built by a major non-telecom company. And if you step back and just look at intracontinental cables, Google has fully financed a number of those already; it was one of the first companies to build a fully private submarine line. Google isn’t alone. Historically, cables have been owned by groups of private companies — mostly telecom providers — but 2016 saw the start of a massive submarine cable boom, and this time, the buyers are content providers. Corporations like Facebook, Microsoft, and Amazon all seem to share Google’s aspirations for bottom-of-the-ocean dominance. I’ve been watching this trend develop, being in the broadband space myself, and the recent movements are certainly concerning. Big tech’s ownership of the internet backbone will have far-reaching, yet familiar, implications. It’s the same old consumer tradeoff; more convenience for less control — and less privacy. We’re reaching the next stage of internet maturity; one where only large, incumbent players can truly win in media. Consumers will soon need to decide exactly how much faith they want to place in these companies to build out the internet of tomorrow. We need to decide carefully, too; these are the same companies that are gaining access to a seemingly ever-increasing share of our private lives. Walling off the garden If you want to measure the internet in miles, fiber-optic submarine cables are the place to start. These unassuming cables crisscross the ocean floor worldwide, carrying 95-99 percent of international data over bundles of fiber-optic cable strands the diameter of a garden hose. All told, there are more than 700,000 miles of submarine cables in use today. While past cable builders leveraged cable ownership to sell bandwidth, content providers are building purposefully private cables. The internet is commonly described as a cloud. In reality, it’s a series of wet, fragile tubes, and Google is about to own an alarming number of them. The numbers speak for themselves; Google will own 10,433 miles of submarine cables internationally when the Curie cable is completed later this year. The total shoots up to 63,605 miles when you include cables it owns in consortium with Facebook, Microsoft, and Amazon. Including these part-owned cables, the company has enough submarine infrastructure to wrap around the earth’s equator two-and-a-half times (with thousands of cable miles to spare). The impetus for Google’s submarine projects This submarine cable boom makes more sense when you look at the growth of traffic that’s taken place in the past decade. In the Atlantic and Pacific, content providers accounted for over half of total demand in 2017. Content provider data use has skyrocketed from less than eight percent to near 40 percent in the past 10 years. It should be noted here that stats are significantly lower in Africa and the Middle East, suggesting that developed nations hunger for video content and cloud apps are a driver of the trend. This is supported by overall international bandwidth use between countries. In 2017, India only used 4,977 Mbps of international bandwidth. The U.S. used a staggering 4,960,388 Mbps that same year. The cost of privatized infrastructure Like the removal of Net Neutrality, privatizing internet infrastructure has only reduced prices for consumers. The problem we now face is a moral one: Do we want a private internet? Or do we want to preserve the “Wild West” web that we’ve had to this point? Unfortunately, the question isn’t as simple as drawing a line between “good” and “bad” network optimizations. Practices like edge networking and zero-rating are critical to the business models of companies like Netflix and AT&T — they also don’t technically violate the rules, and ultimately deliver much better services to consumers. As we look to the future, we need to start asking ourselves what the internet is really going to look like whenever the content services that already command so much of our attention are in control of the internet backbone as well. Privatized infrastructure may bring untold benefits for consumers in the short run, but is there a cost we aren’t considering? Source
  13. A meeting of the country’s top federal and state law enforcement officials on Tuesday could presage a series of sweeping new investigations of Apple, Amazon, Facebook, Google and their tech industry peers, stemming from lingering frustrations that these companies are too big, fail to safeguard users' private data and don’t cooperate with legal demands. Attorney General Jeff Sessions met with the attorneys general of several states to discuss complaints against social media companies. A meeting of the country’s top federal and state law enforcement officials on Tuesday could presage a series of sweeping new investigations of Apple, Amazon, Facebook, Google and their tech industry peers, stemming from lingering frustrations that these companies are too big, fail to safeguard users' private data and don’t cooperate with legal demands. The gathering at the Justice Department had been designed to focus on social media platforms and the ways in which they moderate content online, following complaints from President Trump and other top Republicans that Silicon Valley companies deliberately seek to silence conservative users and views online. Attorney General Jeff Sessions opened the meeting by raising questions of possible ideological bias among the tech companies and sought to bring the conversation back to that topic at least twice more, according to D.C. Attorney General Karl A. Racine. But the discussion proved far more wide-ranging, as attorneys general from eight states and the District — and officials from five others — steered the conversation toward the privacy practices of Silicon Valley. Those in the meeting did not zero in on specific business tactics, but they did cover such issues as how companies collect user data and what they do with it once the information is in their hands. “We were unanimous. Our focus is going to be on antitrust and privacy. That’s where our laws are,” Jim Hood, Mississippi’s attorney general, said in an interview. Most in the meeting agreed that the Justice Department would probably play a role in any legal action against the tech industry. Still, much of the group’s momentum now appears to be driven by an emerging multistate inquiry — not the Justice Department — with Nebraska Attorney General Doug Peterson expected to coordinate the attorneys general’s conversation. “[The] AGs are really focused on understanding more as to what consumers are truly consenting to and what they may not know is going on with their data,” Racine said in an interview. For months, tech giants like Facebook, Google and Twitter have weathered brutal criticism in the nation’s capital for their business practices — from the ways they safeguard their data to their preparedness to combat misinformation online ahead of the 2018 midterm elections. As these companies have faced pressure to actively monitor the content on their platforms, however, they’ve opened themselves up to new political attacks from Republicans who think Silicon Valley’s policies result in the silencing of conservatives. The criticisms have even come from the White House, where Trump most recently accused Google of producing “rigged” search results — and his administration has floated regulating the industry in response. Announcing the gathering earlier this month, the Justice Department said it hoped to convene “a meeting with a number of state attorneys general this month to discuss a growing concern that these companies may be hurting competition and intentionally stifling the free exchange of ideas on their platforms.” On Tuesday, though, DOJ said that “discussion principally focused on consumer protection and data privacy issues, and the bipartisan group of attendees sought to identify areas of consensus.” A spokesman at the agency declined to provide further detail. Exiting the discussions, Hood, for example, floated the possibility of a “working group going forward to look at the anti-competitive aspects” of the tech industry. The formal partnership between attorneys general and the federal government would allow them to have “information sharing on separate litigations we have ongoing,” he said. But attorneys general from both parties seemed reluctant to use antitrust law to address allegations of online bias. Hood, for one, said there are issues with the way tech companies moderate their platforms. “We AGs don’t want to wade off into that battle,” he said. Another attorney general — Democrat Brian E. Frosh of Maryland — said there was little basis for using antitrust law to prosecute allegations of ideological bias. Whether state and federal officials have the legal tools under antitrust law to regulate the tech industry’s data practices was a major question for the group. Citing previous cases in which the government intervened against anti-competitive behavior, the officials considered the dominance of Standard Oil, the Justice Department’s breakup of AT&T’s telephone monopoly and the quest to take apart Microsoft. Few in the meeting seemed ready to seriously discuss breaking up Silicon Valley’s most dominant players. But those cases represented “pivot points” in the nation’s history that could prove instructive to policymakers, said California Attorney General Xavier Becerra. “All of those cases and situations inform you when it comes to a conversation about this new sector,” he told reporters Tuesday. For other states, the issue was the tech industry’s relationship with law enforcement. That included talk about Apple and “how we in law enforcement depend on cellphones.” Hood said that Apple has “waved at us and didn’t use all their fingers” in its handling of encryption. A number of tech companies, including Apple, Google and Twitter, are expected to testify Wednesday before the Senate Commerce Committee in a hearing on privacy safeguards. More law enforcement officials could be drawn into the state and federal discussion over the coming months, particularly during a convention of state attorneys general that is scheduled for late November. Sessions opened the meeting, which also included Deputy Attorney General Rod J. Rosenstein, by talking about “some of the antitrust issues and concerns, about how consolidated the information is,” Hood said. Sessions returned to the question of ideological bias once in the middle of the session and once again toward the end, according to Racine. At one point, Sessions turned to the Justice Department’s antitrust chief, Makan Delrahim, who was also in attendance, for his perspective. “The antitrust head, in turn, made it clear that his office and his resources were available for AGs to look at these technologies under an antitrust analysis,” Racine said. The Justice Department called the gathering a “productive dialogue” in a statement Tuesday and pledged to review the results. Source
  14. WASHINGTON (Reuters) - A senior Democratic U.S. senator on Thursday unveiled draft legislation that would allow hefty fines and as much as 20-year prison terms for executives who violate privacy and cybersecurity standards. Senator Ron Wyden released a draft of legislation that would grant the Federal Trade Commission authority to write privacy regulations. The measure would also allow maximum fines of 4 percent of revenue - matching European rules adopted earlier this year. “It’s time for some sunshine on this shadowy network of information sharing,” Wyden said in a statement. “My bill creates radical transparency for consumers, gives them new tools to control their information and backs it up with tough rules.” Data privacy has become an increasingly important issue since massive breaches compromised the personal information of millions of U.S. internet and social media users, as well as breaches involving large retailers and credit reporting agency Equifax Inc. Wyden would also create a national “Do Not Track” system to stop companies from tracking internet users by sharing or selling data and targeting advertisements based on their personal information. The bill would also subject senior executives at companies with privacy violations to fines of $5 million or more. Facebook Inc , the world’s largest social media network, said earlier this year that the personal information of about 70 million U.S. users was improperly shared with political consultancy Cambridge Analytica. It said last month that cyber attackers stole data from 29 million Facebook accounts using an automated program that moved from one friend to the next. In September, Amazon.com Inc , Alphabet Inc , Apple Inc , AT&T Inc , Charter Communications Inc and Twitter Inc all told senators they would back new federal privacy regulations. Senator John Thune, who chairs the Commerce Committee, is also working on privacy legislation. The Internet Association, which represents more than 40 major internet and technology companies, backs modernizing data privacy rules but wants a national approach that would pre-empt new regulations in California that take effect in 2020. The Trump administration is also seeking comments on how to set nationwide data privacy rules. The European Union General Data Protection Regulation took effect in May, replacing the bloc’s patchwork of rules dating back to 1995. Breaking EU privacy laws can result in fines of up to 4 percent of global revenue or 20 million euros ($22.8 million), whichever is higher, as opposed to a few hundred thousand euros. Source
  15. The technology sector has a hazardous materials problem, beyond the mountains of electronic waste it generates. More immediately, Big Tech fails to warn users when its products and services are hazardous. Users are long overdue for a clear, concise rating system of privacy and security risks. Fortunately, tech can learn from another industry that knows how to alert consumers about the dangers of improperly storing and leaking toxic products: the chemical industry. Nearly sixty year ago, the chemical industry and its regulators realized that simple communication of hazards is critical to safety. Material Safety Data Sheets, the chemical equivalent of technology user terms and conditions, have offered descriptions of those hazards since the early 1900s. But as the industry evolved, it became clear, sometimes tragically, that end users rarely read these lengthy technical volumes. A quick reference was required. Enter the fire diamond, the now ubiquitous, universally understood symbol of chemical safety. You’ve seen them on propane tanks, chemical containers, and laboratories: cartoon rhombuses divided into colored quadrants, each filled with a number, between 0 and 4, indicating a substance’s toxicity (blue), flammability (red), and reactivity (yellow). Introduced in 1960 by the National Fire Protection Association, the diamond, officially called NFPA 704, is the standard for communicating the most basic and essential safety information of hazardous materials in the United States. Even if users don’t read the safety data sheet, they are greeted by this bright, unavoidable summary of material hazards every time they look at the container. Whereas the chemical industry and its regulators have worked to ensure clearer warnings, the tech industry has worked to make it increasingly difficult for consumers know what hazards their products pose (hello, FaceApp). As technology companies use and misuse the personal data they collect in increasingly sophisticated ways, user agreements have only become longer and more byzantine. Facebook, for example, has terms of service and related policies that stretch for over 35,000 words, about as long as The Lion, The Witch, and the Wardrobe, and as bewildering as Narnia. Buried within are clauses that have significant privacy implications such as granting Facebook a “non-exclusive, transferable, sub-licensable, royalty-free, and worldwide license to host, use, distribute, modify, run, copy, publicly perform or display, translate, and create derivative works of your content.” License agreements, like toxicology studies, provide valuable information, but they’re of little use when users need to quickly know what they’re getting themselves into. When emergency personnel are considering using a chemical product, they immediately need to know: Will it explode? Will it poison me? Will it burn me? Right away, the fire diamond answers. When considering a new app or service, tech users have similar questions: How much of a security risk is this? What data is collected and stored? Do I have any control? Will it poison me? Will it burn me? To find those answers, a user often first has to jump into the fire. Besides the self-interest of entrenched tech industry players, there is no excuse for the need to read dozens of pages of dense text to learn the dangers of a product when that information can be condensed into a few numbers and color-coded blocks. If users are to rapidly adopt new services and technologies and to bear responsibility for understanding the content and implications of the burdens posed by license agreements of those technologies, then a transparent and standardized method of hazard communication is required. Who should administer this? It could be a mandatory regulatory framework (from the FTC or Consumer Product Safety Commission) or a voluntary independent rating system created from accreditation bodies or industry watchdogs like the Electronic Frontier Foundation. What should it look like? There are myriad design options, but one would be to create a tech safety diamond. Instead of stating physical harm, this warning system must summarize the key aspects of data collection, user control, data use, and data handling, to let users know if it’s worth the risk. Blue: For data collection, the technology equivalent of toxicity, a low rating would indicate that the service would gather only names, IP addresses, or other basic information, while a high rating would mark the hoarding of deeply personal and potentially dangerous information like voice recordings or detailed location data. Yellow: User control, the parallel to reactivity, is perhaps the simplest to rate, once a service has my data, can it be fully deleted, and if not, to what extent will it persist? Red: Data use, or flammability, is extremely difficult to summarize in a single number, but low ratings would correspond to in-house uses for the service’s essential functions, high ratings would indicate aggressive third-party sharing, strong intellectual property claims on user content, or use of data to sculpt user behavior. White: Data handling, which would range from secure storage and encryption (0) to unaccountable third parties (4). Clear warnings will empower users to make better-informed decisions. With them, we wouldn’t need to reconsider only after we learned about the next phone company and app selling our location data to the highest bidder, or an insecure IoT device allowing bad actors to peer into our bedrooms. And perhaps companies will think twice before offering another service that would be labeled with the equivalent of a skull and crossbones. Source
  16. If you ask Sen. Ron Wyden, there’s only one thing that will stop executives at Facebook and other tech giants from violating their users’ privacy: the taste of prison chow. Multi-billion dollar fines, after all, don’t seem much of a deterrent. After Facebook was hit with a $5 billion fine earlier this year, its shareholders’ net worth actually increased. There’s little sense the penalty made any difference at all. As one lawmaker reportedly put it upon hearing the figure, $5 billion, to Facebook, is nothing more than a “mosquito bite.” A constant privacy hawk, Wyden is one of the few Washington lawmakers willing to go the distance, to put something into law that would instantly and dramatically change the way major companies handle our private data. Over the past year, he’s been quietly revising a bill meant to do just that. Of all the privacy bills we’ve seen in recent years, Wyden’s is the only that has any real teeth, and today, he’s going to introduce it to the United States Senate. First off, the “Mind Your Own Business Act” would finally arm the Federal Trade Commission (FTC) with the power and personnel necessary to adequately punish out-of-control corporations. Companies would no longer simply get off with a warning the first time they break their users’ trust. Instead, they would face immediate fines of up 4 percent of their annual revenue. For companies the size of Google and Facebook, that means billions of dollars. But here’s the kicker: Under the bill, executives who knowingly lie to the FTC about privacy violations could face up to 20 years behind bars, and their companies could then be forced to pay a tax based on the salary of the convicted executive. Violating consumers’ privacy has been exceedingly profitable for corporations like Facebook, and according to Wyden, there’s really no other recourse. “Mark Zuckerberg won’t take Americans’ privacy seriously unless he feels personal consequences,” Wyden told Gizmodo in an email. “A slap on the wrist from the FTC won’t do the job, so under my bill he’d face jail time for lying to the government.” What’s more, the legislation would also empower consumers to halt the sale or exchange of their personal information with a single click through the introduction of a national “Do Not Track” system. Sites like Facebook—free to use because they mine their users’ personal information—would be forced to offer a “privacy-friendly” versions of their product. To offset any harm this might cause to their business, companies could charge a “privacy fee.” To prevent companies from taking advantage of consumers, the fee cannot exceed the amount of money a company would forfeit by not selling a user’s data. Facebook, for example, would only be able to charge users in North America around $26 a year—what it has typically made on average per user in that region, according to the company’s own financial data. And to prevent privacy from becoming a luxury, low-income consumers who meet the same eligibility requirements for the U.S. government’s Lifeline program cannot be charged under Wyden’s bill. “I spent the past year listening to experts and strengthening the protections in my bill,” Wyden said. “It is based on three basic ideas: Consumers must be able to control their own private information, companies must provide vastly more transparency about how they use and share our data; and corporate executives need to be held personally responsible when they lie about protecting our personal information.” The bill, which, importantly, does not preempt states from passing their own privacy laws (such as the California Consumer Privacy Act or Nevada’s Senate Bill 220), would also beef up the FTC with 175 new employees dedicated solely to policing the private-data market. Moreover, it would require companies to audit algorithms that process user data “to examine their impact on accuracy, fairness, bias, discrimination, privacy, and security.” The “Mind Your Own Business Act” has evolved in response to feedback since a draft of the bill was first circulated last year: It would now permit state attorneys general to also enforce the regulations, as opposed to placing that responsibility solely on the FTC. Further, states would be allowed to each create a watchdog organization whose purpose would be to file civil suits against corporations that violate the law. These organizations would be funded in part by fines collected by the FTC. Lastly, the “Mind Your Own Business Act” would give consumers the right to examine what data about them companies have collected, challenge inaccurate information companies are propagating about them, and to request information about with whom that data has been shared and sold. Over two years have passed now since the catastrophic Equifax breach. In that time, Congress has done next to nothing to protect Americans from the immensely profitable corporate malfeasance that, rampant over the last decade, has left hundreds of millions of people exposed to potential fraud, identity theft, and cyber-stalking, to name only a few threats. Many would argue (with some justice) that corporate data abuse even threatens to undermine American democracy by placing the integrity of elections in question. Companies like Facebook have turned the phrase “privacy policy” into an oxymoron. Privacy violators are almost never punished, but regulators do dole out the rare consequence, it’s invariably a joke. What’s worse, everyone knows it. The decade is nearly over and with it, the time for half-measures has passed. Consumers need a law at least as rigorous as the “Mind Your Own Business Act” now. In fact, they needed it yesterday. Source
  17. Google announced “quantum supremacy” last week, a technological achievement that has huge repercussions, not only for the company and its role in the world but for all of us individuals who want to maintain a semblance of the right to privacy. Google researchers have developed a computer called Sycamore, which is exponentially more powerful in its processing power than a “standard” supercomputer. The workings behind Sycamore are what make it such a breakthrough, since it uses an algorithm that would take 10,000 years to give a similar output on a classical computer but only 200 seconds on Google's processor. We should all be very concerned that an industry with a questionable track record on data protection, privacy and political neutrality now has access to the world’s most powerful computer. There is still time for our governments to play catch up and protect consumers. Although Google’s Sycamore is advanced, it is still not capable of fulfilling every data scientist’s deepest desires. The charge sheet against Facebook, rather than Google, is the longest – and is still growing. There have been long-standing concerns about the amount of data Facebook is harvesting from its users and what it would (or could) be used for. However, these issues are systemic and industry-wide, and in my opinion, the scandals involving Facebook in recent months and years could just as easily have affected Google, or perhaps even Microsoft. These issues came to a head around the Cambridge Analytica scandal, where Facebook was implicated in allowing a Russian-linked firm to harvest a huge amount of personal data, including political preferences, and allowing that knowledge to be used to meddle in the 2016 US presidential election. Now that the processing power available to manipulate and use large amounts of data has increased, the stakes are raised in what big data can be used for. The industry, however, doesn’t seem to accept these dangers. The implicit aim of tech companies is to acquire more users, more data, and ultimately more advertisers. The symbiotic relationship between these three factors underpins most tech companies’ business models, including the current wave of startups in Silicon Valley and elsewhere. This will not change. But what must change is the regulation around data security and its implementation and enforcement. Regulation is, by and large, already present: in almost every developed country, it is illegal for someone to hold data without a range of rigorous checks and balances on how it is sourced, held and transferred between parties. A range of international treaties, such as the European Union’s General Data Protection Regulation (GDPR) and the EU-US Privacy Shield mean that data can only achieve “freedom of movement” by fulfilling strict criteria. The largest data owners like Facebook and Google tend to follow these rules closely, meaning that the main concern is not control of data, but the data’s actual power. Big data can already predict an individual’s consumer habits and personal desires to a somewhat eerie extent. As processing power grows exponentially, will we have Facebook ads that can penetrate deeper and deeper into our lives and consciousness? What will be the effect on our mental health? Our family relationships? And at the macro level, our economies? None of these deeper questions appear to be being asked by either the industry or the regulators. Inevitably, they will become relevant as processing power increases; it is a matter of when, not if. There is still time for our governments to play catch up and protect consumers. Although Google’s Sycamore is advanced, it is still not capable of fulfilling every data scientist’s deepest desires. The Sycamore chip is a 54-qubit processor. That is relatively limited, and is one of the many reasons that the discovery is not practically useful. Researchers want a 100-qubit - or even 200-qubit - system before they are really able to put it to the test and see whether the dreams of quantum computing are realised. Rather than just controlling data transfer, it is time for a wider conversation about data usage. Which uses of data - regardless of who owns it and how it has been sourced - are ethical and safe? And which are unethical and dangerous? As lawmakers like US congresswoman Alexandria Ocasio-Cortez seem to enjoy grilling tech executives like Mark Zuckerberg on the minutiae of data usage, I hope we do not lose sight of the bigger picture. The stakes are too high, and the processing power is now too big, for us to be complacent. By Jamal Ahmed the founder of Kazient Privacy Experts Source
  18. He argues that it just creates more companies that behave badly. Bill Gates is unsurprisingly very familiar with antitrust regulations of large tech companies, so how does he feel about the US government's ongoing competition review? He's not a fan -- though not necessarily for the reasons you might think. The former Microsoft CEO told Bloomberg in an interview that it was better to correct the specific practices than to break the companies up. If you split them, you now have two companies "doing the bad thing," he said. He wasn't completely averse to the concept, but there were a "narrow" set of circumstances where it would work. Gates also took a mixed approach to taxation. He agreed with tech giants that the current tax system is completely legal, but also felt that politicians should change the rules if they wanted to remove incentives to minimize taxes. He did agree that it was up to society (including government) to ensure that innovation in Big Tech didn't have harmful effects, such as radicalization and highly partisan news. Others would disagree. Presidential candidate Elizabeth Warren, for instance, has called for the breakup of these companies in part because of their sizes. They use their clout to buy up would-be rivals and otherwise stymie competition, she argued, and the situation won't get better if they're allowed to hold on to all their acquisitions. And Microsoft President Brad Smith might not be calling for an explicit breakup, but he has warned that a lack of strong regulation could threaten the very foundations of democracy. Gates could have a point -- many would argue that the breakup of AT&T led to multiple poorly-behaving carriers. However, the answer might not be as clear cut as either side is arguing. Source
  19. LONDON (Reuters) - Google, Alibaba and other “Big Tech” companies could be forced to share data on financial services customers with banks and financial technology firms to prevent unfair competition. As Facebook’s plan for its Libra “stablecoin” faces scrutiny, a global body of regulators from the world’s main financial centers said that Big Tech’s growing tentacles raised questions for financial stability, competition and data privacy. The Financial Stability Board (FSB) called in a report released on Sunday for “vigilant monitoring” of Big Tech’s shift into financial services, which it said could crimp the ability of banks to generate capital through retained profits. While still only “nascent” in most countries, Big Tech in countries like China has brought financial services within reach of underserved communities, the FSB, which is chaired by Federal Reserve Governor Randal Quarles, said in the report. The FSB said players including Microsoft, Amazon, eBay, Baidu, Apple, Facebook and Tencent, have massive databases, while some offer asset management, payments and lending. Many Big Tech firms like Amazon, Facebook, eBay, Alipay and Google have acquired payments-related licenses in European Union countries including Luxembourg, Ireland and Lithuania, although most have not yet built up any big volumes. Banks in Europe and elsewhere are already required to share customer data with third party “fintech” companies that want to offer rival payments services, and this may need to be the case with Big Tech too, the FSB said. “Big Tech firms’ ability to leverage customer data raises the question of whether – and the degree to which – authorities could consider the potential to promote the mobility of data between the various actors that are involved in the provision of financial services,” the FSB said. “Doing so may help encourage competition and help ensure a level playing field amongst market participants.” GRAPHIC: here Regulators may also need to replicate their approach to insurers and asset managers by focusing on “activities that have implications for financial stability” rather than a focus solely on the size of the firm, the FSB said. GRAPHIC: here Source
  20. BOULDER, Colo (Reuters) - In April 2019, Tile.com, which helps users find lost or misplaced items, suddenly found itself competing with Apple Inc, after years of enjoying a mutually beneficial relationship with the iPhone maker. Apple carried Tile on its app store and sold its products at its stores since 2015. It even showcased Tile’s technology at its biggest annual event in 2018 and the startup sent an engineer to Apple’s headquarters to develop a feature with the company’s voice assistant Siri. Early the following year, Tile’s executives read news reports of Apple launching a hardware product along with a service that resembled what Tile sold. By June, Apple had stopped selling Tile’s products in stores and has since hired away one of its engineers. “After thoughtful consideration and months of bringing our concerns to Apple through regular ... channels, Tile has made the decision to continue raising concerns over Apple’s anti-competitive practices,” Tile general counsel Kirsten Daru told Reuters in an interview. The startup will be one of four companies testifying at the latest hearing of the House Judiciary Committee’s antitrust subcommittee in Colorado on Friday, urging Congress to look at how these companies use their considerable clout in the online market to hurt rivals. Similar investigations are underway at the Justice Department, the Federal Trade Commission and a bipartisan collection of attorneys general from dozens of states. An Apple spokesman said the company has not built a business model around knowing a customer’s location or the location of their device, that users have control of such data and they can choose which location services they want enabled or disabled. In September, House lawmakers asked more than 80 companies for information about how their businesses may have been harmed by any anti-competitive behavior from Amazon.com Inc, Apple, Facebook and Alphabet’s Google. In October, Committee Chairman David Cicilline said he expects to have a final report on its probe by the “first part” of 2019. Another company testifying on Friday is Basecamp, which sells an online project management tool, and has raised concerns about Google’s advertising and search practices. Google makes up more than 40% of Basecamp’s traffic. Google allows competitors to purchase ads on Basecamp’s trademark, and then blocks consumers from reaching its site, Co-Founder David Heinemeier Hansson told Reuters in an interview. The company has started multiple trademark infringement investigations through Google’s internal process, but it is “onerous and slow,” he said. “Google’s monopoly on internet search must be broken up for the sake of a fair marketplace,” Hansson said. Basecamp is now forced to run a more than $70,000 annual advertising campaign to defend its trademark on Google, he said. Google spokesman Jose Castaneda said for trademarked terms like names of a business, the company’s policy balances the interest of both users and advertisers. Google allows competitors to bid on trademarked terms because that offers users more choice when they are searching, but if a trademark owner files a complaint, Google blocks competitors from using their actual name in the text of the advertisement, Castaneda said. Source
  21. The Markup, dedicated to investigating technology and its effect on society, will be led by two former ProPublica journalists. Craig Newmark gave $20 million to help fund the operation. A $20 million gift from the Craigslist founder Craig Newmark is helping to underwrite The Markup, a news site dedicated to investigating technology and its effect on society When the investigative journalist Julia Angwin worked for ProPublica, the nonprofit news organization became known as “big tech’s scariest watchdog.” By partnering with programmers and data scientists, Ms. Angwin pioneered the work of studying big tech’s algorithms — the secret codes that have an enormous impact on everyday American life. Her findings shed light on how companies like Facebook were creating tools that could be used to promote racial bias, fraudulent schemes and extremist content. Now, with a $20 million gift from the Craigslist founder Craig Newmark, she and her partner at ProPublica, the data journalist Jeff Larson, are starting The Markup, a news site dedicated to investigating technology and its effect on society. Sue Gardner, former head of the Wikimedia Foundation, which hosts Wikipedia, will be The Markup’s executive director. Ms. Angwin and Mr. Larson said that they would hire two dozen journalists for its New York office and that stories would start going up on the website in early 2019. The group has also raised $2 million from the John S. and James L. Knight Foundation, and $1 million collectively from the Ford Foundation, the John D. and Catherine T. MacArthur Foundation, and the Ethics and Governance of Artificial Intelligence Initiative. Ms. Angwin compares tech to canned food, an innovation that took some time to be seen with more scrutiny. “When canned food came out, it was amazing,” said Ms. Angwin, who will be the site’s editor in chief. “You could have peaches when they were out of season. There was a whole period of America where every recipe called for canned soup. People went crazy for canned food. And after 30 years, 40 years, people were like, ‘Huh, wait.’ “That is what’s happened with technology,” Ms. Angwin said, calling the 2016 election a tipping point. “And I’m so glad we’ve woken up.” The site will explore three broad investigative categories: how profiling software discriminates against the poor and other vulnerable groups; internet health and infections like bots, scams and misinformation; and the awesome power of the tech companies. The Markup will release all its stories under a creative commons license so other organizations can republish them, as ProPublica does. Ms. Angwin, who was part of a Wall Street Journal team that won a Pulitzer Prize in 2003 for coverage of corporate corruption, said the newsroom would be guided by the scientific method and each story would begin with a hypothesis. For example: Facebook is allowing racist housing ads. At ProPublica, Ms. Angwin’s team bought ads on the site and proved the hypothesis. At The Markup, journalists will be partnered with a programmer from a story’s inception until its completion. “To investigate technology, you need to understand technology,” said Ms. Angwin, 47. “Just like I got an M.B.A. when I was a business reporter, I believe that technologists need to be involved from the very beginning of tech investigations.” Ms. Angwin has known Mr. Newmark since 1997, when she wrote about him while a reporter at The San Francisco Chronicle. “Craig is ideal for us because he has no interest or temperament for trying to interfere in coverage,” she said. Mr. Newmark, who splits his time between San Francisco and New York, has for years kept a low profile. But he worries about what he sees as a lack of self-reflection among engineers. “Sometimes it takes an engineer a while to understand that we need help, then we get that help, and then we do a lot better,” Mr. Newmark said. “We need the help that only investigative reporting with good data science can provide.” Craigslist, which Mr. Newmark founded in the mid-1990s, helped to decimate print newspapers’ main source of revenue at the time: classified advertising. Recently, he has given several substantial donations to journalistic institutions, including $20 million to the CUNY Graduate School of Journalism. “We’re in an information war now,” Mr. Newmark said. For many years, the outrageous success of Silicon Valley companies — and the aggressive public relations teams who worked for them — kept many journalists at a remove. The societal effects of tech were hard to quantify, and moral responsibility was often sloughed off on something called an algorithm, which most people could not quite explain or examine. Even if, as in the case of Facebook, it influenced around 2.5 billion people. At ProPublica, Ms. Angwin and Mr. Larson subverted the traditional model of tech reporting altogether. They did not need access. With the right tools, they could study impact. “There’s an opportunity for more reporters to use statistics to uncover societal harms,” said Mr. Larson, who has been doing data-driven journalism for a decade. “And then Julia’s gift is she takes data journalism and doesn’t make it like an academic report.” Some of Ms. Angwin and Mr. Larson’s reporting tactics may violate tech platform terms of service agreements, which ban people from performing automated collection of public information and prohibit them from creating temporary research accounts. Ms. Angwin has been a strong defender of these practices and has argued that tech companies ought to allow reporters to be an exception to their rules. “Without violating those rules, journalists can’t investigate our most important platform for public discourse,” Ms. Angwin wrote in August. The two worked together on investigations like one into criminal sentencing software, which took a year. Ms. Angwin would report and write. Mr. Larson would measure and analyze. In the end, they proved that the algorithm was racially biased. Mr. Larson, who will be The Markup’s managing editor, said the result was just as much a surprise to readers as it was to those who had made the biased algorithm. “Increasingly, algorithms are used as shorthand for passing the buck,” said Mr. Larson, 36. “We don’t have enough people to look at parole decisions, so we’re going to pass it on to the computer and the computer is going to decide, and once they go into production, there’s no oversight.” The two also showed how big tech companies were helping extremist sites make money, how African-Americans were overcharged for car insurance, and how Facebook allowed political ads that were actually scams and malware. “There are unintended consequences,” Mr. Larson said. “In all three of those cases, it was a complete surprise to the people who made those algorithms as well.” Engineers being surprised by the tools they have made is, to the Markup team, part of the problem. “Part of the premise of The Markup is the level of understanding technology and its effects is very, very low, and we would all benefit from a broader understanding,” Ms. Gardner said. “And I would include people who work for the companies.” Ms. Angwin said part of her goal was to help readers understand what exactly they should be worried about when it comes to tech. “We’re all a little uncertain,” Ms. Angwin said. “The evidence isn’t in. I want to be providing the evidence.” She hopes the stories they take on will lead to better government and corporate policies. “We are a numbers-driven data society,” Ms. Angwin said. “That’s the price of entry these days for political change — a data set.” And searching for that information, Ms. Angwin said she was not worried about getting Facebook or Google to return her phone calls. “I’ve never been on Google’s or Facebook’s campus and I imagine I’ll never be invited,” she said. “I’m kind of a dorky scientist just over here measuring stuff.” Source
  22. The Illinois Keep Internet Devices Safe Act would have empowered average people to sue big companies for recording them without consent, but industry association lobbying defanged it. An Illinois bill that sought to empower average people to file lawsuits against tech companies for recording them without their knowledge via microphone-enabled devices was defanged this week after lobbying from trade associations representing Silicon Valley giants. On Wednesday, the Illinois State Senate passed the Keep Internet Devices Safe Act, a bill that would ban manufacturers of devices that can record audio from doing so remotely without disclosing it to the customer. But after lobbying from trade associations that represent the interests of Google, Amazon—makers of the microphone-enabled Google Home and Alexa smart speakers, respectively—and Microsoft, among other companies, the interests of big tech won out. In the bill’s original form, users could file a complaint with the Illinois Attorney General’s office that could lead to penalties of up to $50,000. But after technology trade associations, led by the Internet Association objected, claimed that the state’s definition of a “digital device” was too broad, and that the Act would lead to “private litigation which can lead to frivolous class action litigation,” the bill was scaled back. In its current, neutered form, the bill provides exclusive authority to the Attorney General to enforce the Act, which means regular citizens won’t be able to bring forward a case regarding tech giants recording them in their homes. Matt Stoller, a research fellow at Open Markets Institute, an anti-monopoly advocacy group, shared the lobbying groups’ statements on Twitter. Just this week, a report from Bloomberg detailed how Amazon employs thousands of people around the world to listen to commands spoken to its line of Echo speakers in order to improve its Alexa digital assistant, sometimes even after users opt out of having their data used in the program. Amazon workers reportedly heard the terms people were searching for online, private conversations, and unsettling situations like a potential assault—all connected to the user’s Amazon ID number and personally identifying information like their name. The bill arrived in Illinois’ House of Representatives today, but unless Illinois’ Attorney General makes privacy violations an active priority, it’s not likely the bill will provide much more protection for consumers. Source
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