Campaign To Break Big Tech Is Regulatory Overkill

When Massachusetts Sen. Elizabeth Warren (D) first went on the warpath against big banks, she captured the attention of middle America.  Now, Warren has turned her wrath on Big Tech.  Her mantra is that big companies are bad, and the bigger the badder they are for all of us.  The government, she argues, should step up its regulation of these companies and step in to break them up if necessary.  Not only is Warren wrong but she is also out of step with most Americans today.

It would be unfair to lay all the blame on Warren for the campaign against big corporations.  This sort of populism has been a strain in American politics since the Revolution, and most recently since the Occupy Wall Street campaign.  But today’s anti-corporate movement has a new look and a new lexicon, including terms like privacy, net neutrality, and transparency, to accompany the typical notions of competition and consumer protection.

Continue reading “Campaign To Break Big Tech Is Regulatory Overkill”

Reflections on the Microsoft/Ireland Case

Last week the Supreme Court granted a review of a Second Circuit decision upholding Microsoft’s defiance of a U.S. warrant for the production of e-mail messages, stored in a server housed in Ireland, of a man suspected of drug trafficking.

At its simplest, the legal battle between Microsoft and law enforcement is a debate over the reach and intent of a law passed many years (1986) before the coming of age of the Internet.

Microsoft and its allies argue that that law, the Stored Communications Act (SCA), was written at a time when Congress knew virtually nothing about the Internet and what it would become, and that furthermore there is no indication in the language of the law or congressional intent that suggests it could be applied extraterritorially. Continue reading “Reflections on the Microsoft/Ireland Case”

News Corp. CEO Robert Thomson: Telling It Like It Is

It’s not every day that a speech given by a publishing executive is truly noteworthy, but remarks given earlier this month by Robert Thomson, CEO of News Corp., are the exception to the rule.

Speaking on August 13 at Australia’s Lowy Institute for International Policy, Thomson delivered a powerful speech in which he decried, among other things, the business practices of “distribution” companies like Google, the commentariat’s disdain for markets, the theft of intellectual property, and the politically correct mindset of Silicon Valley.

Though now chief executive officer of one of the largest newspaper and publishing companies in the world, Thomson has spent most of his life as a journalist, having earlier in his career been an editor of the Financial Times, The Times newspaper in London, and the Wall Street Journal.  And it’s these experiences that inform his views about the media and more.

Speaking about markets, Thomson had this to say:

When some commentators speak of markets it is in the abstract, slightly pejorative sense – markets are actually an aggregation of collective effort and hope and action….  >> Read More

Who’s Behind the Push for Net Neutrality?

If “net neutrality” were a life form, it would be classified as a simple organism.  And that lack of complexity, as it happens, is its very appeal to certain “progressives,” garden-variety regulators, and large Internet companies, who see in government regulation of the Internet opportunities to cement and extend their franchises.

The brave and gifted Federal Communications Commission (FCC) Commissioner Ajit Pai, and former commissioner Robert McDowell, are doing all they can to point out the many already identifiable problems, as well as potential pitfalls, that line the path of this regulatory nightmare.  Among those problems are higher user fees to consumers, a slowdown in the rate of investment in broadband infrastructure, regulatory creep, and the wrong kind of example to set before foreign dictators and tyrants.

Alas, none of this is likely to deter the three Democratic FCC commissioners, as instructed by the White House, from passing this regulation.

What has not been much discussed in all of this is the role in the promotion of net neutrality played by some of the actors: activist groups like Free Press, Public Knowledge, and Media Matters; huge grant-giving foundations like the Ford, Soros, and Knight foundations; and companies like Google.   >>Read More

Nowhere To Hide

Because free speech aficionados like us are attracted to those subjects where even angels fear to tread, let’s talk about Donald Sterling.

The first thing one wants to say is that the guy is a slob.  Indeed, there’s evidence that he’s been a slob for quite some time.  Read, for instance (if you have the stomach for it) an account of the 2003 lawsuit filed against his former mistress–not his more recent one, V. Stiviano, but an earlier flower child named Alexandra Castro.

Indeed, one would be willing to wage a fair amount of money on the proposition that when Sterling passes away, he will do so unwept by anyone.  Whatever joys and beauties this life offers up, Sterling has had, and abused, all of them.

But the question that has been on my mind is this: Is Sterling a slob because of the statements he made, or did he make those statements because he’s a slob?  There is, it seems, a difference worth noting, especially at a time when, because of the growing lack of privacy, anything (including what one might consider the most intimate and confidential conversation) may find its way into widespread distribution.

Consider, for instance, Google glasses, or the even more worrisome prospect of video camera-embedded contact lenses!  What, then, would prevent the recording, editing, and uploading – to sites like Google’s YouTube – of conversations that were recorded and edited, in or out of context, of which the speakers were unaware?

Does there exist any person in the world who has not said something in confidence, or without reflection, or just for effect on the hearer, that he or she would not want bruited about?

As stressed at the beginning, none of this is said in defense of Donald Sterling.  He is of no interest or consequence, whatever becomes of him.  But as reported, on CNN, by First Amendment lawyer Mark Randazzo:

Isn’t it bad enough that the National Security Agency can spy on all of us? How can we complain when we condone giving our friends the ability to do worse – perhaps just to try to destroy us?

The opinions expressed above are those of the writer and not of The Media Institute, its Board, contributors, or advisory councils.

Aereo and the Future of Content and Copyright

A case being petitioned for review by the Supreme Court will, if accepted, tell us a lot about the future of broadcasting. More importantly, it will tell us a lot about the future of all the content media, and of the nation’s copyright laws generally.

The case in question concerns the business practices of an outfit called Aereo, which streams for a fee over-the-air TV programming to the company’s subscribers.  Because this programming is delivered through the Internet, it is accessible when and where the subscriber wants it.  Sounds good, right?

Bu there’s a hitch.  Unlike cable and satellite systems, which pay the broadcasters for the right to retransmit their copyrighted programming, Aereo pays nothing. And how are they able to do this?  Well, that’s the heart of the Supreme Court petition filed last month by the four big broadcast networks, ABC, CBS, NBC, and Fox.

When cable and satellite operators distribute broadcast programming to their subscribers this is deemed a “public performance,” which is why those operators have to pay the broadcast copyright holders for the privilege.  When, however, an individual records a copyrighted program on his DVD this is deemed a “private performance,” and requires no compensation to the copyright holder.

Aereo’s business plan plainly exploits this public/private dichotomy by the simple device of installing tens of thousands of dime-sized antennas, each of which stream the over-the-air programming to Aereo’s subscribers individually, thereby qualifying, according to Aereo, as a private performance.

Lest you think for a minute that this is a triumph of engineering, rest assured it is not.  As noted by Rod Smolla, the lawyer who filed a brief for The Media Institute in support of the petition for review: “If a picture tells a thousand words, a thousand antennas tell the picture.”

Nor is Smolla the only person who sees through this scheme.  Denny Chin, an appeals court judge who was part of a panel that earlier ruled against an injunction against Aereo, wrote this in his stinging dissent:

The [Aereo] system employs thousands of individual dime-sized antennas rather than one central antenna; indeed, the system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law. 

Because the Supreme Court agrees to review less than one percent of the cases brought before it, it’s no sure thing that Aereo will be reviewed, even though Aereo has declined to oppose the petition for review.  Much may depend on the decision in another appeals court, which is considering a case concerning a company with an Aereo-like setup.  If that court rules against the company, there will be a conflict between two appeals courts (the Second and Ninth circuits), something that would increase the chances that the Supreme Court would agree to review the case.

The importance of this case is not just whether broadcasters can derive revenue for their programs from third-party Internet distributors.  The importance is in what it will tell us about the future of all the content industries and of copyright itself.

To put it another way, you don’t have to be a fan of broadcasting (or Hollywood, or the recording industry, etc.) to have a high regard for copyright.  Like the First Amendment, copyright is enshrined in the U.S. Constitution, and in practice it is copyright that provides the incentive that leads to the creation of the content that the First Amendment protects!

Seen this way (and even acknowledging that there is always some tension between the First Amendment and copyright, usually over arguments about the reach of “fair use”), both of these concepts are not just important in their own right, they’re the opposite sides of the same coin.

Today, however, those industries that rely on copyright protection – the so-called content media like newspapers, magazines, motion pictures, recording companies, book publishers, and broadcasting – are being decimated by piracy and/or the copyright-skirting practices of Internet companies like Google.

Whether the Supreme Court reviews the case or not, Aereo won’t be the last word on the subject of copyright protection.  But if Aereo, or any company, can escape paying copyright fees simply by creating a service that turns on a technological sham like Aereo’s, it’s not just content producers that will suffer; it’s the content-consuming public and copyright law generally.

                                               

The opinions expressed above are those of the writer and not of The Media Institute, its Board, contributors, or advisory councils. A version of this article appeared in the online edition of USA Today on Dec.16, 2013.

 

Google, the FTC, and ‘Plausible’ Justifiability

Though it was surely not its intention, the Federal Trade Commission’s conclusion last week of its investigation of Google invites the question: What useful function does the FTC serve?

Not content, after two years of investigation on the taxpayers’ dime, to largely look past the mountain of evidence of marketplace harm caused by Google’s search and advertising practices, the Commission compounded that error by declining to issue a formal consent order, leaving it in the hands of Google itself, without the prospect of penalty, to change some of its business practices.

As even Commissioner J. Thomas Rosch said in his statement of concurrence and dissent, the FTC’s “settlement” with Google “creates very bad precedent and may lead to the impression that well-heeled firms such as Google will receive special treatment at the Commission.”

In elaboration of his dissent from the settlement procedure, Comm. Rosch added this:

Instead of following standard Commission procedure and entering into a binding consent agreement to resolve the majority’s concerns, Google has instead made non-binding commitments with respect to its search practices….

Our settlement with Google is not in the form of a binding consent order and, as a result, the Commission cannot enforce it by initiating contempt proceedings.  The inability to enforce Google’s commitments through contempt proceedings is particularly problematic given that the Commission has charged Google with violating a prior consent agreement.

What Comm. Rosch delicately calls “special treatment,” the more cynical of us would recognize as political influence peddling, a practice that Google has become quite adept at employing.  First it bankrolled the codification, at the Federal Communications Commission, of “net neutrality” regulations, thereby providing a solution to a nonexistent problem; then it led the successful opposition to the PIPA and SOPA copyright bills, the better to protect its investment in YouTube; now it has neutered the FTC, with the consequence being that it can continue to game its search results in ways that favor companies it controls.

So how has Google managed such political feats?  Well, would you believe that money has played a role?  In the FTC investigation alone Google reportedly spent some $25 million lobbying the matter.  To give an idea of the magnitude of this kind of spending, it equals 10 percent of the FTC’s total annual budget of $250 million.

But in addition to its FTC-specific lobbying, it’s well known that Google has cast its lot, through munificent campaign contributions and public policy support, with the current administration. Though it failed to come to pass, there was undoubtedly substance to the rumor that Google’s Eric Schmidt was being considered for a cabinet post in the Obama Administration.

Even so, there is evidence that the FTC commissioners know what they have done.  Their concluding statement about Google’s search practices, for instance, displays an almost comical defensiveness as they contend that, even if Google’s search practices favor its own companies, that is arguably okay:

In sum, we find that the evidence presented at this time does not support the allegation that Google’s display of its own vertical content at or near the top of its search results page was a product design change undertaken without a legitimate business justification.  Rather, we conclude that Google’s display of its own content could plausibly (emphases added) be viewed as an improvement in the overall quality of Google’s search product….  Although at points in time various vertical websites have experienced demotions, we find that this was a consequence of algorithm changes that also could plausibly be viewed as an improvement in the overall quality of Google’s search results….

Although our careful review of the evidence in this matter supports our decision to close this investigation, we will remain vigilant and continue to monitor Google for conduct that may harm competition and consumers.

Such limp-wristed rhetoric aside, there is a chance that Google will be brought to heel, just not by American authorities.  As it happens, the European Commission has also been investigating Google’s misdeeds, and the odds are good that, lacking the kind of political clout in Europe that it has in the USA, the company may actually receive from the Europeans something more than just a slap on the wrist.  On Dec. 18 the Commission gave the company 30 days to provide it with proposals to settle its complaints, something that could cost Google billions if it fails to do so.

Whatever the Europeans do, however, there remains the FTC’s foozled play, well put in a Bloomberg News editorial:

The FTC missed an opportunity to explore publicly one of the paramount issues of our day: Is Google abusing its role as gatekeeper to the digital economy?  Lawmakers, economists, other regulators, and consumers should all be in on this important debate over whether Google is leveraging its overwhelming dominance of search into unassailable market power in other areas. 

                                               

The opinions expressed above are those of the writer and not of The Media Institute, its Board, contributors, or advisory councils.

Google and the First Amendment

By guest blogger KURT WIMMER, ESQ., partner at Covington & Burling LLP in Washington, D.C., and chairman of The Media Institute’s First Amendment Advisory Council.

I just had the privilege of participating in a panel discussion at an American Antitrust Institute conference.  My panel included such luminaries as Eli Noam of Columbia, Gene Kimmelman of the Antitrust Division of the Department of Justice, and Susan DeSanti of the Federal Trade Commission.  Unlike many of my colleagues on the panel, I’m far from being an antitrust expert.  My topic was a more familiar one – whether enforcement of antitrust law against a search and advertising provider would violate the First Amendment. 

The question arises because of a novel proposition being advanced by Google.  The Federal Trade Commission is investigating claims that Google has violated antitrust law by manipulating search results to favor its own services and bury the services offered by vertical search engines that might compete with Google.  Google has argued that it is absolutely immune from antitrust liability because its search results constitute speech protected by the First Amendment – in fact, it asserts that the First Amendment actually “blocks” the application of antitrust law to it.  Google analogizes its work to that of a newspaper editor selecting information for publication, and seeks the same “absolute” protection that a newspaper editor would receive under the First Amendment.

But wait – newspaper editors don’t receive absolute protection under the First Amendment.  If editors’ work is absolutely protected, why did I spend last night discussing a story with an editor to mitigate defamation risk?  Why did I defend a deposition last week of a reporter attempting to keep his source confidential?  Why have reporters gone to prison in the United States to protect sources?  Why are some in Congress talking about doubling down on legal restrictions to stop leaks to the press?

The First Amendment is not absolute, and never has been, for anyone, whether they run a newspaper, a blog, or a search-and-advertising business. False and deceptive speech, as Google’s manipulated search results are alleged to be, falls outside the protection of the First Amendment.  Jon Leibowitz, chairman of the FTC, made precisely this point in an All Things Digital interview just this month, and he’s precisely right as a matter of constitutional law.  Otherwise, the FTC would have no jurisdiction to enforce privacy laws or laws against false advertising and deceptive trade practices.

Of course, non-deceptive speech also may be regulated in many circumstances.  The antitrust laws, which regulate commercial behavior to promote competition, are an example of laws that may permissibly restrict certain kinds of speech.  The plain fact is that “the First Amendment does not provide blanket protection to restraints of trade effectuated through speech,” in the words of the Department of Justice.  This principle has been applied consistently since the Supreme Court affirmed an antitrust judgment against the Associated Press in 1945, and remains the law today.

Google’s arguments that it is uniquely immune from antitrust liability, regardless of how it has abused its massive market share, remind me of the quaint musings of early Internet pioneers that law cannot apply in “cyberspace.”  But the same law that applies offline generally applies online (in the absence of online-specific legislation such as Section 230), and damage to competition that may occur on the Internet can destroy real businesses in the real world.  No one is above the law – not even Google.  Whether any of the allegations against Google can be proved, of course, remains to be seen.  But to assert at the very outset that the First Amendment actually “blocks” liability, regardless of what the FTC or a court might find, ignores the law.

If you’d like to read more, the Media Institute has graciously agreed to host my paper (available here) that addresses these issues in more depth.

                                  

The opinions expressed above are those of the writer and not of The Media Institute, its Board, contributors, or advisory councils.

The Truth Behind Google’s Copyright-Bills Hysteria

Though the final chapter in the legislative history of the copyright bills hasn’t yet been written, a couple things are obvious even now: The tech industry has demonstrated great political clout through the mobilization of its users and fan base; and the industry lobby, led by Google, will say and do pretty much anything to advance its commercial interests.

This provides the background for what happened within just a few days last week, as Congress was flooded with calls and mail, and petitions were signed by millions, in opposition to bills whose intent was to provide an effective way to combat content infringement on rogue websites abroad.

Didn’t matter that most fans of social media, file-sharing, blogs, and the like know next to nothing about communications policymaking, or even the details of the laws they were moved to oppose.  They know what they like, and dislike, and when manipulated into seeing the copyright bills as a threat they responded in great numbers.

None of which, of course, is to wonder why people feel more of a kinship with things like the social media than they do with the mainstream media.  The one-way and “one-to-the-many” aspects of the old media don’t empower people, or allow for their personal expression, in the manner of blogs or social media like Facebook and YouTube.

But the reason so many people were disposed to dislike the copyright bills, and their knowledge of what was actually in them, are two different things.  What moved them to act on their dislike was yet another.  For these parts of the story we have to look to the tech industry lobby, and Google most importantly.  It was Google that floated the canard that passage of the bills would forever change “the Internet as we’ve known it.”

The irony in Google’s claim was apparently lost on most of the media, tech and mainstream, which may explain why so few reporters pointed out that this alleged threat is word-for-word what the company said, 13 years ago, in opposition to another copyright bill (the Digital Millennium Copyright Act), passage of which has since proven to be a positive boon to Internet companies.

It may also explain why so few reporters pointed out that Google’s claims about the copyright bills – as precursors to the regulation of the Internet – are not just over the top but hypocritical.  It was, after all, Google that successfully lobbied, with the active help of a majority of FCC Commissioners, for so-called “network neutrality” regulations, the precedent of which provides not for just speculative but “here and now” regulation of the Internet.

Still, if crass exaggeration and hypocrisy were all that Google displayed in this regard, one might be inclined just to dismiss it as boys being boys.  But it didn’t stop there.  Google, and other groups that should know better, also gave expression and currency to the bunkum that the copyright bills amounted to an assault on the First Amendment.

That this argument was utterly demolished by the country’s leading First Amendment expert, Floyd Abrams, didn’t give them a moment’s pause, with the upshot being that this nonsense was parroted by all sorts of people as a reason for rejection of the bills.

In August of last year, The Media Institute filed a white paper with the Federal Trade Commission titled “Google and the Media: How Google is Leveraging its Position in Search to Dominate the Media Economy.”  Among other things, the paper demonstrated the ways in which Google profits from copyright infringement; that indeed the use of other people’s content without their permission has been at the heart of the company’s business plan.

Though the paper didn’t recommend any particular remedy, it asked the FTC to intervene in a way that would prevent the media economy from being dominated by a single entity.  Google’s conduct regarding the copyright legislation shows that, far from pulling back, its interest in this kind of domination is growing apace.

                                  

The opinions expressed above are those of the writer and not of The Media Institute, its Board, contributors, or advisory councils.  This piece was first published in the Dallas Morning News on Jan. 25, 2012.

 

Rationalizing Theft: The Technology Lobby’s Attack on Copyright Legislation

The technology crowd’s objections to the copyright protection bills, now moving their way through Congress, put one in mind of H.L. Mencken’s crack that criticism is prejudice made plausible.  This, because that industry’s leaders, scribes, and think tanks uniformly oppose every legislative initiative aimed at protecting copyrighted content, even as they frequently give lip service to the concept .

From the Digital Millennium Copyright Act (DMCA) in the late ’90s – which they fought tooth and nail, but cling to in today’s debates as though it were an uncle come to jail with money for the bail bondsman – to today’s Protect IP and Stop Online Piracy acts (good summaries of which are here and here), the techies profess all sorts of high-minded concerns, but never at the expense, you understand, of their business plans.

Take, for instance, Google, the 800-pound gorilla, inside and outside the Beltway, regarding all things digital.  The company’s executive chairman, Eric Schmidt, claims that attempts to crack down on rogue sites profiting from copyright infringement could set a “disastrous precedent” for freedom of speech, and also that they would encourage more restrictive Internet policies in countries like China.

This is serious stuff, and would be more serious still if (a) it were true, and (b) it issued from a company with any public policy credibility in this regard.  Alas, neither is the case.  Let’s start with the credibility problem first.

The best example of a U.S. policy that really would have (or might still) set a bad precedent regarding repressive regimes abroad is the FCC’s recently concluded Network Neutrality proceeding.  Indeed, in March of last year the U.S. Coordinator for International Communications & Information Policy at the State Department, Philip Verveer, had this to say about the subject at a Media Institute luncheon in Washington: “The net neutrality proceeding is one that could be employed by regimes that don’t agree with our perspectives of essentially avoiding regulation of the Internet … it could be employed as a pretext or as an excuse for undertaking public policy activity that we would disagree with pretty profoundly.”

Though there are those, of whom I’m one, who think the FCC’s subsequently enacted Internet rules, though greatly watered down, still went too far, the more interesting thing to note in this regard is that Google was the leading figure among those lobbying in support of net neutrality.

In the summer of 2006, for instance, Eric Schmidt himself penned a note on Google’s Public Policy Blog that read in part:

The Internet as we know it is facing a serious threat.  There’s a debate heating up in Washington, D.C. on something called “net neutrality” – and it’s a debate that’s so important Google is asking you to get involved.  We’re asking you to take action to protect Internet freedom….

Creativity, innovation, and a free and open marketplace are all at stake in this fight. Please call your representative and let your voice be heard.  

And then there’s the argument, made by Google and lesser apologists of unfettered infringement, that the Protect IP and Stop Online Piracy acts undermine the speech guarantees of the First Amendment.  Whether it’s because they like the sound of the accusation, or because, not knowing any better, they actually believe it, there’s a lot of this nonsense going around the technocracy.

They might be more cautious about making such claims if they read the First Amendment analysis of the Protect IP Act written by the most distinguished First Amendment scholar of our age, Floyd Abrams.  In a 12-page letter sent on May 24 to Senate Judiciary Committee members Leahy, Hatch, and Grassley, Abrams lays out a compelling argument that the Act is consistent with the First Amendment, and concludes with these observations:

Among a range of objections, two core critiques stand out.  First, there is a recurring argument that the United States would be less credible in its criticisms of nations that egregiously violate the civil liberties of their citizens if Congress cracks down on rogue websites.  Second, there is the vaguer notion that stealing is somehow less offensive when carried out online….

I disagree.  Copyright violations are not protected by the First Amendment.  Entities “dedicated to infringing activities” are not engaging in speech that any civilized, let alone freedom-oriented nation protects.  That these infringing activities occur on the Internet makes them not less, but more harmful.  The notion that by combating such acts through legislation, the United States would compromise its role as the world leader in advancing a free and universal Internet seems to me insupportable.  As a matter of both constitutional law and public policy, the United States must remain committed to defending both the right to speak and the ability to protect one’s intellectual creations.  This legislation does not impair or overcome the constitutional right to engage in speech; it protects creators of speech, as Congress has since this Nation was founded, by combating its theft.

Abrams’ last point is especially noteworthy.  Not only is the current concern with copyright protection  nothing new, it is in fact as old as the country itself.  Reading the overwrought diatribes of the tech community one might get a different impression, but in fact it’s all there in black and white, among the “enumerated powers” in Article 1, Section 8 of the U.S. Constitution.

For those who have forgotten, or never knew, this so-called copyright clause empowers Congress “To promote the Progress of Science and the useful Arts, by securing for limited Times to Authors and Inventors the exclusive right to their respective Writings and Discoveries.”

Language and wisdom, that is to say, that is not the contemporary creation of the heads of the motion picture studios, but of the Founding Fathers more than 200 years ago.

                                  

The opinions expressed above are those of the writer and not of The Media Institute, its Board, contributors, or advisory councils.