elon musk – Page 5

X Payments delayed after Musk’s X weirdly withdrew application for NY license

consumer financial protection bureau, elon musk, fintech, Policy, Twitter, X, x corp, x payments / Tim Belzer / October 25, 2024

Will X Payments launch this year? Outlook not so good.

Credit: Aurich Lawson | Getty Images/Bloomberg

This October, many Elon Musk believers are wondering, where is X Payments?

Last year, Musk claimed in a Spaces conversation that he “would be surprised” if it took longer than mid-2024 to roll out the payments feature that he believes is crucial to transforming the social media app formerly known as Twitter into an everything app.

“It would blow my mind if we don’t have that rolled out by the end of next year,” Musk said around this time last year, clarifying that “when I say payments, I actually mean someone’s entire financial life. If it involves money, it’ll be on our platform. Money or securities or whatever. So, it’s not just like ‘send $20 to my friend.’ I’m talking about, like, you won’t need a bank account.”

Echoing Musk as recently as June, X CEO Linda Yaccarino was hyping the US release of X Payments as imminent. But it has been months without another peep from X leadership, and Ars recently confirmed that X took a curious step in April that suggests the payments feature may be delayed indefinitely.

During the Spaces conversation last December with Ark Invest CEO Cathie Wood, Musk discussed X’s bid to secure money transmitter licenses in all 50 states, noting that it would be “irrelevant” to launch X Payments without California and New York licenses.

Since then, X has made a decent amount of progress, picking up money transmitter licenses in 38 states, including a critical license in California.

But approvals in New York were reportedly stalled for months after a New York City law firm, now called Walden Macht Haran & Williams (WMHW), sent an open letter to attorneys general and banking commissioners in all 50 states in September 2023, urging that X be deemed “unfit” for a money transmitter license.

WMHW had filed a lawsuit alleging that Twitter—before Musk acquired it—”acted at the direction of the Kingdom of Saudi Arabia (KSA) in furtherance of KSA’s long-running campaign of transnational repression.”

That campaign led to the murder of Washington Post correspondent Jamal Khashoggi and the “imprisonment of Abdulrahman Al-Sadhan, a human rights worker and anonymous Twitter user, whose confidential user data—leaked by Twitter’s employees—precipitated and enabled this barbarity,” the letter alleged. And when Musk took over the platform, he only deepened the app’s KSA ties further when he “invited KSA to convert its shares in Twitter into a financial stake during his private take-over of the platform,” the letter said.

Rather than grant X money transmitter licenses, WMHW recommended that attorneys general and banking commissioners use X’s money transmitter licenses as an excuse to investigate the allegations and demystify the app’s allegedly dangerous KSA ties.

Apparently, X either did not like the heat or decided to rethink its X Payments strategy, because the New York Department of Financial Services provided new information to Ars this week confirming that X withdrew its money transmitter license in New York in April 2024.

The department also confirmed that X has not since resubmitted the application.

However, WMHW this month voluntarily dismissed its client’s lawsuit against X and declined to comment on whether the open letter seemingly worked to block X Payments’ launch. It seems possible that X may leverage that court win to eventually resubmit its application for a New York license, but Ars could not confirm if X has any plans to resubmit any time soon.

An X spokesperson answered Ars’ request to comment (which rarely happens) but declined to provide an update on any new timeline for X Payments’ launch.

X Payments unlikely to launch without New York

It seems possible that X has gone silent on X Payments because there is no timeline currently.

A global payments expert for tech consultancy Capco, Daniela Hawkins, told Ars that, as an outsider going just off a “gut check,” if X has withdrawn its application from New York—with “New York obviously being such a major metropolitan area… that would seem to be a barrier to entry into the payments market.”

X could launch X Payments without New York and other states, but Hawkins said users might be confused about where they can and cannot send money. Hawkins thinks it’s unlikely that Musk—who co-founded PayPal and has wanted to launch his own payments app since—would roll out X Payments “half-assed.”

Basically, if X pushed through with the launch, users could accept and send funds just like they can using any other payments app, but without licenses in all states, X users could only send money to people located in states where X has licenses. Hawkins said that inconsistency could deter popular use of the payments feature because “it’s too difficult for the consumer to understand.”

“If you roll it out with handcuffs on it, it’s gonna have a bumpy launch,” Hawkins said. “So why would you do that?”

Going that route, X seemingly risks users ditching X to complete payments on apps where every transaction reliably goes through, Hawkins suggested.

“They’re gonna be like, ‘Wait, I don’t know where this Etsy shop is located, I don’t care,” Hawkins said, noting, “that’s just a bad user experience.”

More regulations on payment apps coming

Last year, Hawkins told Ars that X faced an “uphill battle” launching X Payments, partly due to intensifying regulations on the financial services industry that are increasingly pulling payments apps into regulations typically focused on regulating traditional banking services.

Just days ago, the Consumer Financial Protection Bureau (CFPB) issued a final rule requiring banks, credit unions, and online payments services to make it easy and safe for customers to port banking data to a new financial service provider.

The CFPB argues customers need to have control over their data, but Hawkins told Ars that banks considered the controversial rule potentially allowing customers to transfer sensitive data in one click to be a “freaking nightmare.”

Banks warned of fraud risks and privacy concerns about sharing sensitive data with third parties that could profit off that data, possibly heightening risks of data breaches. Compliance isn’t required until 2026, but already the rule is being challenged in court, Hawkins said.

In one way, the new rule could be good for X, Hawkins told Ars, as the app could quickly gain access to valuable financial data if X users did switch from, say, using a bank to managing money through X Payments. Then X wouldn’t have “to go build all this data from scratch” to make X Payments profitable, Hawkins suggested.

But in another way, the rule could put X in “an interesting spot” where the app is required to share its user data with third parties in a way that could potentially have Musk second-guessing whether X would even benefit from becoming a bank in the way that he initially planned. Banks have protested the CFPB rule as allowing third parties to profit off data that they can’t, and Musk’s whole X Payments plan appears to revolve around profiting off users’ financial data.

“If somebody wants to pay with X, now X has to transfer the data to the third party, and they may not want to do that, because obviously, data is power, right?” Hawkins said.

Not a bank

But if Musk is suddenly shy about turning X into a bank, it comes at a time when banks are less likely to partner with social media apps for potentially risky new payment ventures.

Hawkins noted that banks have struggled to roll out new payment capabilities as easily as fintechs can, and that struggle inspired longtime partnerships between banks and tech companies that have recently begun to collapse. On Wednesday, the CFPB ordered Apple and Goldman Sachs to pay more than $89 million over “illegally mishandled transaction disputes.” Now Goldman Sachs is banned from offering new credit cards until it can be trusted to comply with laws. And Wells Fargo recently bowed out of PayPal and Square partnerships, citing compliance costs, The Information reported this week.

For Musk, who has notoriously butted heads with his trust and safety compliance teams at X, working with regulators on launching X Payments might, at this moment, seem less attractive.

“It’s one thing to want to move money on a payments app,” Hawkins told Ars. “It’s another thing to be a bank. Like he’s gonna hate being a bank.”

Earlier this year, the CFPB risked being dismantled after the financial services associations alleged its funding scheme was improper. But shortly after X withdrew from New York, the Supreme Court ruled in May that nothing was amiss with CFPB’s funding, despite Justice Samuel Alito warning in his dissent that SCOTUS’s decision meant the CFPB could “bankroll its own agenda without any congressional control or oversight,” Reuters reported.

In this strained environment, X could potentially overcome all obstacles and become a bank and fill a gap left by banks beginning to be spooked by fintech deals, Hawkins said, insisting that she would never bet against Musk, whose successes are many. But granting money transmitter licenses helps states prevent financial crimes through compliance requirements, and X quietly pulling out of New York earlier this year suggests that X may not be prepared to take on regulatory scrutiny at this current moment.

The last major development regarding X Payments came in August. It didn’t come from X leadership but from an app researcher, Nima Owji, who posted on X that “X Payments is coming soon!” Digging in X’s code, Owji apparently found references to new payments features enabling “transactions, balance, and transfer,” as well as a “Payments” button seemingly ready to be added to X’s bookmarks tab, TechCrunch reported.

But for Musk fans awaiting an official update, X executives’ silence on X Payments has been deafening since June, when Yaccarino forecast the feature would be coming soon, despite knowing that X had withdrawn its application for a money transmitter license from New York.

X continuing to hype the payments service without publicly disclosing the apparent speed bump in New York “doesn’t feel very honest,” Hawkins told Ars.

X still losing users, advertisers

It has been two years since Musk took over Twitter, soon after revealing that he intended to use Twitter’s userbase as the launchpad for an everything app that would be so engaging and useful that it would be the only app that anyone would ever need online.

Market intelligence firm Sensor Tower shared data with Ars showing that, compared to October 2022, when Musk bought Twitter, global daily average users on X were down 28 percent in September 2024.

Sensor Tower attributed part of the recent decline to X’s ban in Brazil driving out users but noted that overall, users “were down significantly compared to the pre-acquisition period,” as now-X “contended with a rise of controversial content and technical issues.”

While the decline in users could hurt Musk’s ambitions to launch a hugely popular payments app nested in X, the spike in offensive content has notably alienated advertisers who traditionally are X’s dominant source of revenue. And in lockstep with X’s decline in users, major brands have continued to shed the social app in 2024, Sensor Tower told Ars.

Last November, ad agencies flagged then-Twitter brand safety concerns, including GroupM marking Twitter “high risk” and Interpublic Group recommending that advertisers pause spending. By the end of last year, Sensor Tower reported that “of the company’s top 100 US advertisers in the days before” Musk purchased the platform, “only 50 were still there as of October 2023.”

The picture is even bleaker as X approaches the end of 2024, Sensor Tower’s data shows, estimating that “72 out of the top 100 spending US advertisers on X from October 2022 have ceased spending on the platform as of September 2024.” Compared to the first half of 2022, prior to Musk’s acquisition, X’s ad revenue from top 100 advertisers during the first half of 2024 was down 68 percent, Sensor Tower estimated.

Since becoming X’s CEO, Yaccarino has appeared most vocal about driving growth in X’s video services, allowing advertisers to avoid toxic content on the app by only running their ads alongside pre-approved creators’ content. In particular, Yaccarino has hyped X’s partnership with the NFL, announcing today on X that the partnership will be expanded.

That NFL partnership has seemingly helped X grow its ad revenue, with Sensor Tower estimating that “four out of the top 10 spending US advertisers on X in September 2024 were tied to sports or sports betting, likely in an attempt to capitalize on heightened consumer interest around the beginning of the NFL season.”

But overall, X’s revenue has not recovered in 2024, with Fidelity recently estimating that X is worth 80 percent less than when Musk bought the app, CNN reported.

Instead of working with advertisers, Musk went on the attack, suing the World Federation of Advertisers in August over what he calls an “illegal boycott” of X. But X’s spokesperson, Michael Abboud, linked Ars to an X post suggesting that X has held discussions with big brands about a brand safety solution.

“X is pleased to have reached an agreement with Unilever and to continue our partnership with them on the platform,” X’s post said. “Today’s news is the first part of the ecosystem-wide solution and we look forward to more resolution across the industry.”

Unilever did not respond to Ars’ request to comment on X’s proposed solution.

Musk’s strategy for monetizing X has always been to reduce reliance on advertising, but his everything app pursuit does not seem to be coming together as quickly as planned to make up for lost ad revenue. He initially projected that it would take three to five years to roll out all the features turning X into an everything app. But two years in, launching the core product experts say is critical to the success of everything apps like WeChat—X Payments—seems to be the major obstacle that Musk faces to manage the app without relying nearly entirely on advertisers’ meddling ideas regarding brand safety.

Hawkins said that Musk perhaps did not make a “great bet” when buying Twitter as the foundation of his everything app.

X “has continued to trend down in terms of profitability and users, and I’m sure he’s considering X Payments to be maybe a Hail Mary to try to pull X back into the black,” Hawkins said.

But by trying to disrupt the financial industry, Musk perhaps rashly “picked a highly regulated capability to bet the farm on,” Hawkins suggested.

As it stands now, it’s currently unclear when or if X Payments will launch, as the feed on the X account for Payments remains pointedly blank and Musk has not indicated whether X Payments can possibly launch without New York.

“I think it’s very telling he pulled out his application from New York, when he had even said in the media, there’s no point in doing this if I don’t have New York,” Hawkins said.

Ashley is a senior policy reporter for Ars Technica, dedicated to tracking social impacts of emerging policies and new technologies. She is a Chicago-based journalist with 20 years of experience.

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Tesla, Warner Bros. sued for using AI ripoff of iconic Blade Runner imagery

Blade Runner, blade runner 2049, copyright, copyright law, elon musk, Policy, Tesla, warner bros. discovery, X / Kris Guyer / October 22, 2024

A copy of a copy of a copy

“That movie sucks,” Elon Musk said in response to the lawsuit.

Credit: via Alcon Entertainment

Elon Musk may have personally used AI to rip off a Blade Runner 2049 image for a Tesla cybercab event after producers rejected any association between their iconic sci-fi movie and Musk or any of his companies.

In a lawsuit filed Tuesday, lawyers for Alcon Entertainment—exclusive rightsholder of the 2017 Blade Runner 2049 movie—accused Warner Bros. Discovery (WBD) of conspiring with Musk and Tesla to steal the image and infringe Alcon’s copyright to benefit financially off the brand association.

According to the complaint, WBD did not approach Alcon for permission until six hours before the Tesla event when Alcon “refused all permissions and adamantly objected” to linking their movie with Musk’s cybercab.

At that point, WBD “disingenuously” downplayed the license being sought, the lawsuit said, claiming they were seeking “clip licensing” that the studio should have known would not provide rights to livestream the Tesla event globally on X (formerly Twitter).

Musk’s behavior cited

Alcon said it would never allow Tesla to exploit its Blade Runner film, so “although the information given was sparse, Alcon learned enough information for Alcon’s co-CEOs to consider the proposal and firmly reject it, which they did.” Specifically, Alcon denied any affiliation—express or implied—between Tesla’s cybercab and Blade Runner 2049.

“Musk has become an increasingly vocal, overtly political, highly polarizing figure globally, and especially in Hollywood,” Alcon’s complaint said. If Hollywood perceived an affiliation with Musk and Tesla, the complaint said, the company risked alienating not just other car brands currently weighing partnerships on the Blade Runner 2099 TV series Alcon has in the works, but also potentially losing access to top Hollywood talent for their films.

The “Hollywood talent pool market generally is less likely to deal with Alcon, or parts of the market may be, if they believe or are confused as to whether, Alcon has an affiliation with Tesla or Musk,” the complaint said.

Musk, the lawsuit said, is “problematic,” and “any prudent brand considering any Tesla partnership has to take Musk’s massively amplified, highly politicized, capricious and arbitrary behavior, which sometimes veers into hate speech, into account.”

In bad faith

Because Alcon had no chance to avoid the affiliation while millions viewed the cybercab livestream on X, Alcon saw Tesla using the images over Alcon’s objections as “clearly” a “bad faith and malicious gambit… to link Tesla’s cybercab to strong Hollywood brands at a time when Tesla and Musk are on the outs with Hollywood,” the complaint said.

Alcon believes that WBD’s agreement was likely worth six or seven figures and likely stipulated that Tesla “affiliate the cybercab with one or more motion pictures from” WBD’s catalog.

While any of the Mad Max movies may have fit the bill, Musk wanted to use Blade Runner 2049, the lawsuit alleged, because that movie features an “artificially intelligent autonomously capable” flying car (known as a spinner) and is “extremely relevant” to “precisely the areas of artificial intelligence, self-driving capability, and autonomous automotive capability that Tesla and Musk are trying to market” with the cybercab.

The Blade Runner 2049 spinner is “one of the most famous vehicles in motion picture history,” the complaint alleged, recently exhibited alongside other iconic sci-fi cars like the Back to the Future time-traveling DeLorean or the light cycle from Tron: Legacy.

As Alcon sees it, Musk seized the misappropriation of the Blade Runner image to help him sell Teslas, and WBD allegedly directed Musk to use AI to skirt Alcon’s copyright to avoid a costly potential breach of contract on the day of the event.

For Alcon, brand partnerships are a lucrative business, with carmakers paying as much as $10 million to associate their vehicles with Blade Runner 2049. By seemingly using AI to generate a stylized copy of the image at the heart of the movie—which references the scene where their movie’s hero, K, meets the original 1982 Blade Runner hero, Rick Deckard—Tesla avoided paying Alcon’s typical fee, their complaint said.

Musk maybe faked the image himself, lawsuit says

During the live event, Musk introduced the cybercab on a WBD Hollywood studio lot. For about 11 seconds, the Tesla founder “awkwardly” displayed a fake, allegedly AI-generated Blade Runner 2049 film still. He used the image to make a point that apocalyptic films show a future that’s “dark and dismal,” whereas Tesla’s vision of the future is much brighter.

In Musk’s slideshow image, believed to be AI-generated, a male figure is “seen from behind, with close-cropped hair, wearing a trench coat or duster, standing in almost full silhouette as he surveys the abandoned ruins of a city, all bathed in misty orange light,” the lawsuit said. The similarity to the key image used in Blade Runner 2049 marketing is not “coincidental,” the complaint said.

If there were any doubts that this image was supposed to reference the Blade Runner movie, the lawsuit said, Musk “erased them” by directly referencing the movie in his comments.

“You know, I love Blade Runner, but I don’t know if we want that future,” Musk said at the event. “I believe we want that duster he’s wearing, but not the, uh, not the bleak apocalypse.”

The producers think the image was likely generated—”even possibly by Musk himself”—by “asking an AI image generation engine to make ‘an image from the K surveying ruined Las Vegas sequence of Blade Runner 2049,’ or some closely equivalent input direction,” the lawsuit said.

Alcon is not sure exactly what went down after the company rejected rights to use the film’s imagery at the event and is hoping to learn more through the litigation’s discovery phase.

Musk may try to argue that his comments at the Tesla event were “only meant to talk broadly about the general idea of science fiction films and undesirable apocalyptic futures and juxtaposing them with Musk’s ostensibly happier robot car future vision.”

But producers argued that defense is “not credible” since Tesla explicitly asked to use the Blade Runner 2049 image, and there are “better” films in WBD’s library to promote Musk’s message, like the Mad Max movies.

“But those movies don’t have massive consumer goodwill specifically around really cool-looking (Academy Award-winning) artificially intelligent, autonomous cars,” the complaint said, accusing Musk of stealing the image when it wasn’t given to him.

If Tesla and WBD are found to have violated copyright and false representation laws, that potentially puts both companies on the hook for damages that cover not just copyright fines but also Alcon’s lost profits and reputation damage after the alleged “massive economic theft.”

Musk responds to Blade Runner suit

Alcon suspects that Musk believed that Blade Runner 2049 was eligible to be used at the event under the WBD agreement, not knowing that WBD never had “any non-domestic rights or permissions for the Picture.”

Once Musk requested to use the Blade Runner imagery, Alcon alleged that WBD scrambled to secure rights by obscuring the very lucrative “larger brand affiliation proposal” by positioning their ask as a request for much less expensive “clip licensing.”

After Alcon rejected the proposal outright, WBD told Tesla that the affiliation in the event could not occur because X planned to livestream the event globally. But even though Tesla and X allegedly knew that the affiliation was rejected, Musk appears to have charged ahead with the event as planned.

“It all exuded an odor of thinly contrived excuse to link Tesla’s cybercab to strong Hollywood brands,” Alcon’s complaint said. “Which of course is exactly what it was.”

Alcon is hoping a jury will find Tesla, Musk, and WBD violated laws. Producers have asked for an injunction stopping Tesla from using any Blade Runner imagery in its promotional or advertising campaigns. They also want a disclaimer slapped on the livestreamed event video on X, noting that the Blade Runner association is “false or misleading.”

For Musk, a ban on linking Blade Runner to his car company may feel bleak. Last year, he touted the Cybertruck as an “armored personnel carrier from the future—what Bladerunner would have driven.” This amused many Blade Runner fans, as Gizmodo noted, because there never was a character named “Bladerunner,” but rather that was just a job title for the film’s hero Deckard.

In response to the lawsuit, Musk took to X to post what Blade Runner fans—who rated the 2017 movie as 88 percent fresh on Rotten Tomatoes—might consider a polarizing take, replying, “That movie sucks” on a post calling out Alcon’s lawsuit as “absurd.”

Ashley is a senior policy reporter for Ars Technica, dedicated to tracking social impacts of emerging policies and new technologies. She is a Chicago-based journalist with 20 years of experience.

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X’s depressing ad revenue helps Musk avoid EU’s strictest antitrust law

Antitrust law, Digital Markets Act, dma, elon musk, European Union, Policy, social media app, Twitter, X, x corp / Tim Belzer / October 16, 2024

Following an investigation, Elon Musk’s X has won its fight to avoid gatekeeper status under the European Union’s strict competition law, the Digital Markets Act (DMA).

On Wednesday, the European Commission (EC) announced that “X does indeed not qualify as a gatekeeper in relation to its online social networking service, given that the investigation revealed that X is not an important gateway for business users to reach end users.”

Since March, X had strongly opposed the gatekeeper designation by arguing that although X connects advertisers to more than 45 million monthly users, it does not have a “significant impact” on the EU’s internal market, a case filing showed.

A gatekeeper “is presumed to have a significant impact on the internal market where it achieves an annual Union turnover equal to or above EUR 7.5 billion in each of the last three financial years,” the case filing said. But X submitted evidence showing that its Union turnover was less than that in 2022, the same year that Musk took over Twitter and began alienating advertisers by posting their ads next to extremists’ tweets.

Throughout Musk’s reign at Twitter/X, the social networking company told the EC, both advertising revenue and users have steadily declined in the EU. In particular, “X Ads has a too small and decreasing scale in terms of share of advertising spend in the Union to constitute an important gateway in the market for online advertising,” X argued, further noting that X had a “lack of platform power” to change that anytime soon.

“In the last 15 months, X Ads has faced a decline in number of advertising business users, as well as a decline in pricing,” X argued.

X’s depressing ad revenue helps Musk avoid EU’s strictest antitrust law Read More »

Elon Musk makes bold claims about Tesla robotaxi in Hollywood backlot

Cars, elon musk, robotaxis, tesla autopilot / Paul Patrick / October 12, 2024

“It’s going to be a glorious future,” Musk said, albeit not one that applies to families or groups of three or more.

Musk claims that Tesla “expects to start” fully unsupervised FSD next year on public roads in California and Texas. A recent analysis by an independent testing firm found the current build requires human intervention about once every 13 miles, often on roads it has used before.

A rendering of the two-seat interior of the Tesla Cybercab — Only being able to carry two occupants is pretty inefficient when a city bus can carry more than 80 passengers. Credit: Tesla

“Before 2027” should see the Cybercab, which Musk claims will be built in “very high volume.” Tesla-watchers will no doubt remember similar claims about the Model X, Model 3, Model Y, and most recently the Cybertruck, all of which faced lengthy delays as the car maker struggled to build them at scale. Later, Musk treated the audience to a video of an articulated robotic arm with a vacuum cleaner attachment cleaning the two-seat interior of the Cybercab. Whether this will be sold as an aftermarket accessory to Cybercab owners, or if they’re supposed to clean out their robotaxis by hand between trips, remains unclear at this time.

Musk also debuted another autonomous concept, the Robovan. It’s a small bus with no visible wheels, but brightly lit interior room for up to 20 occupants. Musk said little about the Robovan and how it figures into Tesla’s future. In 2017 he revealed his dislike for public transport, saying “it’s a pain in the ass” and that other passengers could be serial killers.

After promising that “unsupervised FSD” is coming to all of Tesla’s five models—”now’s not the time for nuance,” Musk told a fan—he showed off a driverless minibus and then a horde of humanoid robots, which apparently leverage the same technology that Tesla says will be ready for autonomous driving with no supervision. These robots—”your own personal R2-D2,” he said—will apparently cost less than “$30,000” “long-term,” Musk claimed, adding that these would be the biggest product of all time, as all 8 billion people on earth would want one, then two, he predicted.

Elon Musk makes bold claims about Tesla robotaxi in Hollywood backlot Read More »

Ex-Twitter execs push for $200M severance as Elon Musk runs X into ground

elon musk, Policy, severance, Twitter, wrongful termination, X, x corp / Mike M. / October 11, 2024

Musk’s battle with former Twitter execs intensifies as X value reaches new low.

Former Twitter executives, including former CEO Parag Agrawal, are urging a court to open discovery in a dispute over severance and other benefits they allege they were wrongfully denied after Elon Musk took over Twitter in 2022.

According to the former executives, they’ve been blocked for seven months from accessing key documents proving they’re owed roughly $200 million under severance agreements that they say Musk willfully tried to avoid paying in retaliation for executives forcing him to close the Twitter deal. And now, as X’s value tanks lower than ever—reportedly worth 80 percent less than when Musk bought it—the ex-Twitter leaders fear their severance claims “may be compromised” by Musk’s alleged “mismanagement of X,” their court filing said.

The potential for X’s revenue loss to impact severance claims appears to go beyond just the former Twitter executives’ dispute. According to their complaint, “there are also thousands of non-executive former employees whom Musk terminated and is now refusing to pay severance and other benefits” and who have “sued in droves.”

In some of these other severance suits, executives claimed in their motion to open discovery, X appears to be operating more transparently, allowing discovery to proceed beyond what has been possible in the executives’ suit.

But Musk allegedly has “special ire” for Agrawal and other executives who helped push through the Twitter buyout that he tried to wriggle out of, executives claimed. And seemingly because of his alleged anger, X has “only narrowed the discovery” ever since the court approved a stay pending a ruling on X’s motion to drop one of the executives’ five claims. According to the executives, the court only approved the stay of discovery because it was expecting to rule on the motion to dismiss quickly, but after a hearing on that matter was vacated, the stay has remained, helping X’s alleged goal to prolong the litigation.

To get the litigation back on track for a speedier resolution before Musk runs X into the ground, the executives on Thursday asked the court to approve discovery on all claims except the claim disputed in the motion to dismiss.

“Discovery on those topics is inevitable, and there is no reason to further delay,” the executives argued.

The executives have requested that the court open discovery at a hearing scheduled for November 15 to prevent further delays that they fear could harm their severance claims.

Neither X nor a lawyer for the former Twitter executives, David Anderson, could immediately be reached for comment.

X’s fight to avoid severance payments

In their complaint, the former Twitter executives—including Agrawal as well as former Chief Financial Officer Ned Segal, former Chief Legal Officer Vijaya Gadde, and former general counsel Sean Edgett—alleged that Musk planned to deny their severance to make them pay for extra costs that they approved that clinched the Twitter deal.

They claimed that Musk told his official biographer, Walter Isaacson, that he would “hunt every single one of” them “till the day they die,” vowing “a lifetime of revenge.” Musk supposedly even “bragged” to Isaacson about “specifically how he planned to cheat Twitter’s executives out of their severance benefits in order to save himself $200 million.”

Under their severance agreements, the executives could only be denied benefits if terminated for “cause” under specific conditions, they said, none of which allegedly applied to their abrupt firings the second the merger agreement was signed.

“‘Cause’ under the severance plans is limited to extremely narrow circumstances, such as being convicted of a felony or committing ‘gross negligence’ or ‘willful misconduct,'” their complaint noted.

Musk attempted to “manufacture” “ever-changing theories of cause,” they claimed, partly by claiming that “success” fees paid to the law firm that defeated Musk’s suit attempting to go back on the deal constituted “gross negligence” or “willful misconduct.”

According to Musk’s motion to dismiss, the former executives tried to “saddle Twitter, and by extension the many investors who acquired it, with exorbitant legal expenses by forcing approximately $100 million in gratuitous payments to certain law firms in the final hours before the Twitter acquisition closed.” Musk had a huge problem with this, the motion to dismiss said, because the fees were paid despite his objections.

On top of that, Musk considered it “gross negligence” or “willful misconduct” that the executives allegedly paid out retention bonuses that Musk also opposed. And perhaps even more egregiously, they allowed new employees to jump onto severance plans shortly before the acquisition, which “generally” increased the “severance benefits available to these individuals by more than $50 million dollars,” Musk’s motion to dismiss said.

Musk was particularly frustrated by the addition of one employee who allegedly “already decided to terminate and another who was allowed to add herself to one of the Plans—a naked conflict of interest that increased her potential compensation by approximately $15 million.”

But former Twitter executives said they consulted with the board to approve the law firm fees, defending their business decisions as “in the best interest of the company,” not “Musk’s whims.”

“On the morning” Musk acquired Twitter, “the Company’s full Board met,” the executives’ complaint said. “One of the directors noted that it was the largest stockholder value creation by a legal team that he had ever seen. The full Board deliberated and decided to approve the fees.”

Further, they pointed out, “the lion’s share” of those legal fees “was necessitated only by Musk’s improper refusal to close a transaction to which he was contractually bound.”

“If Musk felt that the attorneys’ fees payments, or any other payments, were improper, his remedy was to seek to terminate the deal—not to withhold executives’ severance payments,” their complaint said.

Reimbursement or reinstatement may be sought

To force Musk’s hand, executives have been asking X to share documents, including documents they either created or received while working out the Twitter buyout. But X has delayed production—sometimes curiously claiming that documents are confidential even when executives authored the documents or they’ve been publicly filed in other severance disputes, executives alleged.

Executives have called Musk’s denial of severance “a pointless effort that would not withstand legal scrutiny,” but so far discovery in their lawsuit has not even technically begun. While X has handed over incomplete submissions from its administrative process denying the severance claims, in some cases, X has “entirely refused” to produce documents, they claimed.

They’re hoping once fact-finding concludes that the court will agree that severance benefits are due. That potentially includes stock vested at the price of Twitter on the day that Musk acquired it, $44 billion—a far cry from the $9 billion that X is estimated to be valued at today.

In a filing opposing Musk’s motion to dismiss, the former executives noted that they’re not required to elect their remedies at this stage of the litigation. While their complaint alleged they’re owed vested stock at the acquisition value of $44 billion, their other filing suggested that “reinstatement is also an available remedy.”

Neither option would likely appeal to Musk, who appears determined to fight all severance disputes while scrambling for nearly two years to reverse X’s steady revenue loss.

Since his firing, Agrawal has won at least one of his legal battles with Musk, forcing X to reimburse him for $1.1 million in legal fees. But Musk has largely avoided paying severance as lawsuits pile up, and Agrawal is allegedly owed the most, with his severance package valued at $57 million.

Last fall, X agreed to negotiate with thousands of laid-off employees, but those talks fell through without a settlement reached. In June, Musk defeated one severance suit that alleged that Musk owed former Twitter employees $500 million. But employees involved in that litigation can appeal or join other disputes, the judge noted.

For executives, a growing fear is seemingly that Musk will prolong litigation until X goes under. Last year, Musk bragged that he saved X from bankruptcy by cutting costs, but experts warned that lawsuits piling up from vendors—which Plainsite is tracking here—could upend that strategy if Musk loses too many.

“Under Musk’s control, Twitter has become a scofflaw, stiffing employees, landlords, vendors, and others,” executives’ complaint said. “Musk doesn’t pay his bills, believes the rules don’t apply to him, and uses his wealth and power to run roughshod over anyone who disagrees with him.”

Ashley is a senior policy reporter for Ars Technica, dedicated to tracking social impacts of emerging policies and new technologies. She is a Chicago-based journalist with 20 years of experience.

Ex-Twitter execs push for $200M severance as Elon Musk runs X into ground Read More »

X ignores revenge porn takedown requests unless DMCA is used, study says

deepfake, elon musk, explicit deepfake, ncii, non-consensual intimate imagery, Online Privacy, Policy, revenge porn, Twitter, X / Mike M. / October 8, 2024

Why did the study target X?

The University of Michigan research team worried that their experiment posting AI-generated NCII on X may cross ethical lines.

They chose to conduct the study on X because they deduced it was “a platform where there would be no volunteer moderators and little impact on paid moderators, if any” viewed their AI-generated nude images.

X’s transparency report seems to suggest that most reported non-consensual nudity is actioned by human moderators, but researchers reported that their flagged content was never actioned without a DMCA takedown.

Since AI image generators are trained on real photos, researchers also took steps to ensure that AI-generated NCII in the study did not re-traumatize victims or depict real people who might stumble on the images on X.

“Each image was tested against a facial-recognition software platform and several reverse-image lookup services to verify it did not resemble any existing individual,” the study said. “Only images confirmed by all platforms to have no resemblance to individuals were selected for the study.”

These more “ethical” images were posted on X using popular hashtags like #porn, #hot, and #xxx, but their reach was limited to evade potential harm, researchers said.

“Our study may contribute to greater transparency in content moderation processes” related to NCII “and may prompt social media companies to invest additional efforts to combat deepfake” NCII, researchers said. “In the long run, we believe the benefits of this study far outweigh the risks.”

According to the researchers, X was given time to automatically detect and remove the content but failed to do so. It’s possible, the study suggested, that X’s decision to allow explicit content starting in June made it harder to detect NCII, as some experts had predicted.

To fix the problem, researchers suggested that both “greater platform accountability” and “legal mechanisms to ensure that accountability” are needed—as is much more research on other platforms’ mechanisms for removing NCII.

“A dedicated” NCII law “must clearly define victim-survivor rights and impose legal obligations on platforms to act swiftly in removing harmful content,” the study concluded.

X ignores revenge porn takedown requests unless DMCA is used, study says Read More »

Elon Musk’s X loses battle over federal request for Trump’s DMs

Donald Trump, elon musk, government data requests, January 6, Policy, presidential record act, Stored Communications Act, Twitter, X, x corp / Tim Belzer / October 7, 2024

Prosecutors now have a “blueprint” to seize privileged communications, X warned.

Last year, special counsel Jack Smith asked X (formerly Twitter) to hand over Donald Trump’s direct messages from his presidency without telling Trump. Refusing to comply, X spent the past year arguing that the gag order was an unconstitutional prior restraint on X’s speech and an “end-run” around a record law shielding privileged presidential communications.

Under its so-called free speech absolutist owner Elon Musk, X took this fight all the way to the Supreme Court, only for the nation’s highest court to decline to review X’s appeal on Monday.

It’s unclear exactly why SCOTUS rejected X’s appeal, but in a court filing opposing SCOTUS review, Smith told the court that X’s “contentions lack merit and warrant no further review.” And SCOTUS seemingly agreed.

The government had argued that its nondisclosure order was narrowly tailored to serve a compelling interest in stopping Trump from either deleting his DMs or intimidating witnesses engaged in his DMs while he was in office.

At that time, Smith was publicly probing the interference with a peaceful transfer of power after the 2020 presidential election, and courts had agreed that “there were ‘reasonable grounds to believe’ that disclosing the warrant” to Trump “‘would seriously jeopardize the ongoing investigation’ by giving him ‘an opportunity to destroy evidence, change patterns of behavior, [or] notify confederates,” Smith’s court filing said.

Under the Stored Communications Act (SCA), the government can request data and apply for a nondisclosure order gagging any communications provider from tipping off an account holder about search warrants for limited periods deemed appropriate by a court, Smith noted. X was only prohibited from alerting Trump to the search warrant for 180 days, Smith said, and only restricted from discussing the existence of the warrant.

As the government sees it, this reliance on the SCA “does not give unbounded, standardless discretion to government officials or otherwise create a risk of ‘freewheeling censorship,'” like X claims. But the government warned that affirming X’s appeal “would mean that no SCA warrant could be enforced without disclosure to a potential privilege holder, regardless of the dangers to the integrity of the investigation.”

Court finds X alternative to gag order “unpalatable”

X tried to wave a red flag in its SCOTUS petition, warning the court that this was “the first time in American history” that a court “ordered disclosure of presidential communications without notice to the President and without any adjudication of executive privilege.”

The social media company argued that it receives “tens of thousands” of government data requests annually—including “thousands” with nondisclosure orders—and pushes back on any request for privileged information that does not allow users to assert their privileges. Allowing the lower court rulings to stand, X warned SCOTUS, could create a path for government to illegally seize information not just protected by executive privilege, but also by attorney-client, doctor-patient, or journalist-source privileges.

X’s “policy is to notify users about law enforcement requests ‘prior to disclosure of account information’ unless legally ‘prohibited from doing so,'” X argued.

X suggested that rather than seize Trump’s DMs without giving him a chance to assert his executive privilege, the government should have designated a representative capable of weighing and asserting whether some of the data requested was privileged. That’s how the Presidential Records Act (PRA) works, X noted, suggesting that Smith’s team was improperly trying to avoid PRA compliance by invoking SCA instead.

But the US government didn’t have to prove that the less-restrictive alternative X submitted would have compromised its investigation, X said, because the court categorically rejected X’s submission as “unworkable” and “unpalatable.”

According to the court, designating a representative placed a strain on the government to deduce if the representative could be trusted not to disclose the search warrant. But X pointed out that the government had no explanation for why a PRA-designated representative, Steven Engel—a former assistant attorney general for the Office of Legal Counsel who “publicly testified about resisting the former President’s conduct”—”could not be trusted to follow a court order forbidding him from further disclosure.”

“Going forward, the government will never have to prove it could avoid seriously jeopardizing its investigation by disclosing a warrant to only a trusted representative—a common alternative to nondisclosure orders,” X argued.

In a brief supporting X, attorneys for the nonprofit digital rights group the Electronic Frontier Foundation (EFF) wrote that the court was “unduly dismissive of the arguments” X raised and “failed to apply exacting scrutiny, relieving the government of its burden to actually demonstrate, with evidence, that these alternatives would be ineffective.”

Further, X argued that none of the government’s arguments for nondisclosure made sense. Not only was Smith’s investigation announced publicly—allowing Trump ample time to delete his DMs already—but also “there was no risk of destruction of the requested records because Twitter had preserved them.” On top of that, during the court battle, the government eventually admitted that one rationale for the nondisclosure order—that Trump posed a supposed “flight risk” if the search warrant was known—”was implausible because the former President already had announced his re-election run.”

X unsuccessfully pushed SCOTUS to take on the Trump case as an “ideal” and rare opportunity to publicly decide when nondisclosure orders cross the line when seeking to seize potentially privileged information on social media.

In its petition for SCOTUS review, X pointed out that every social media or communications platform is bombarded with government data requests that only the platforms can challenge. That leaves it up to platforms to figure out when data requests are problematic, which they frequently are, as “the government often agrees to modify or vacate them in informal negotiations,” X argued.

But when the government refuses to negotiate, as in the Trump case, platforms have to decide if litigation is worth it, risking sanctions if the court finds the platform in contempt, just as X was sanctioned $350,000 in the Trump case. If a less restrictive alternative was determined appropriate by the courts, such as appointing a trusted representative, platforms would never have had to guess when data requests threaten to expose their users’ privileged information, X argued.

According to X, another case like this won’t come around for decades, where court filings wouldn’t have to be redacted and a ruling wouldn’t have to happen behind closed doors.

But the government seemingly persuaded the Supreme Court to decline to review the case, partly by arguing that X’s challenge to its nondisclosure order was moot. Responding to X’s objections, the government had eventually agreed to modify the nondisclosure order to disclose the warrant to Trump, so long as the name of the case agent assigned to the investigation was redacted. So X’s appeal is really over nothing, the government suggested.

Additionally, the government argued that “this case would not be an appropriate vehicle” for SCOTUS’ review of the question X raised because “no executive privilege issue actually existed in this case.”

“If review of the underlying legal issues were ever warranted, the Court should await a live case in which the issues are concretely presented,” Smith’s court filing said.

X is likely deflated by SCOTUS’ call declining to review X’s appeal. In its petition, X claimed that the court system risked providing “a blueprint for prosecutors who wish to obtain potentially privileged materials” and “this end-run will not be limited to federal prosecutors,” X warned. State prosecutors will likely also be emboldened to do the same now that the precedent has been set, X predicted.

In their brief supporting X, EFF lawyers noted that the government already has “far too much authority to shield its activities from public scrutiny.” By failing to prevent nondisclosure orders from restraining speech, the court system risks making it harder to “meaningfully test these gag orders in court,” EFF warned.

“Even a meritless gag order that is ultimately voided by a court causes great harm while it is in effect,” EFF’s lawyers said, while disclosure “ensures that individuals whose information is searched have an opportunity to defend their privacy from unwarranted and unlawful government intrusions.”

Ashley is a senior policy reporter for Ars Technica, dedicated to tracking social impacts of emerging policies and new technologies. She is a Chicago-based journalist with 20 years of experience.

Elon Musk’s X loses battle over federal request for Trump’s DMs Read More »

X fails to avoid Australia child safety fine by arguing Twitter doesn’t exist

australia, child sexual abuse materials, csam, elon musk, online child safety, Online safety, Policy, Twitter, X, x corp / Rejus Almole / October 5, 2024

“I cannot accept this evidence without a much better explanation of Mr. Bogatz’s path of reasoning,” Wheelahan wrote.

Wheelahan emphasized that the Nevada merger law specifically stipulated that “all debts, liabilities, obligations and duties of the Company shall thenceforth remain with or be attached to, as the case may be, the Acquiror and may be enforced against it to the same extent as if it had incurred or contracted all such debts, liabilities, obligations, and duties.” And Bogatz’s testimony failed to “grapple with the significance” of this, Wheelahan said.

Overall, Wheelahan considered Bogatz’s testimony on X’s merger-acquired liabilities “strained,” while deeming the government’s US merger law expert Alexander Pyle to be “honest and ready to make appropriate concessions,” even while some of his testimony was “not of assistance.”

Luckily, it seemed that Wheelahan had no trouble drawing his own conclusion after analyzing Nevada’s merger law.

“I find that a Nevada court would likely hold that the word ‘liabilities'” in the merger law “is broad enough on its proper construction under Nevada law to encompass non-pecuniary liabilities, such as the obligation to respond to the reporting notice,” Wheelahan wrote. “X Corp has therefore failed to show that it was not required to respond to the reporting notice.”

Because X “failed on all its claims,” the social media company must cover costs from the appeal, and X’s costs in fighting the initial fine will seemingly only increase from here.

Fighting fine likely to more than double X costs

In a press release celebrating the ruling, eSafety Commissioner Julie Inman Grant criticized X’s attempt to use the merger to avoid complying with Australia’s Online Safety Act.

X fails to avoid Australia child safety fine by arguing Twitter doesn’t exist Read More »

Elon Musk claims victory after judge blocks Calif. deepfake law

AI, ai-generated content, California, deceptive content, Deepfakes, disinformation, election laws, election misinformation, elon musk, Gavin Newsom, Policy, Twitter, X, youtube / Paul Patrick / October 3, 2024

“Almost any digitally altered content, when left up to an arbitrary individual on the Internet, could be considered harmful,” Mendez said, even something seemingly benign like AI-generated estimates of voter turnouts shared online.

Additionally, the Supreme Court has held that “even deliberate lies (said with ‘actual malice’) about the government are constitutionally protected” because the right to criticize the government is at the heart of the First Amendment.

“These same principles safeguarding the people’s right to criticize government and government officials apply even in the new technological age when media may be digitally altered: civil penalties for criticisms on the government like those sanctioned by AB 2839 have no place in our system of governance,” Mendez said.

According to Mendez, X posts like Kohls’ parody videos are the “political cartoons of today” and California’s attempt to “bulldoze over the longstanding tradition of critique, parody, and satire protected by the First Amendment” is not justified by even “a well-founded fear of a digitally manipulated media landscape.” If officials find deepfakes are harmful to election prospects, there is already recourse through privacy torts, copyright infringement, or defamation laws, Mendez suggested.

Kosseff told Ars that there could be more narrow ways that government officials looking to protect election integrity could regulate deepfakes online. The Supreme Court has suggested that deepfakes spreading disinformation on the mechanics of voting could possibly be regulated, Kosseff said.

Mendez got it “exactly right” by concluding that the best remedy for election-related deepfakes is more speech, Kosseff said. As Mendez described it, a vague law like AB 2839 seemed to only “uphold the State’s attempt to suffocate” speech.

Parody is vital to democratic debate, judge says

The only part of AB 2839 that survives strict scrutiny, Mendez noted, is a section describing audio disclosures in a “clearly spoken manner and in a pitch that can be easily heard by the average listener, at the beginning of the audio, at the end of the audio, and, if the audio is greater than two minutes in length, interspersed within the audio at intervals of not greater than two minutes each.”

Elon Musk claims victory after judge blocks Calif. deepfake law Read More »

Elon Musk’s X gives up fight in Brazil, starts complying with judge’s demands

elon musk, elon musk brazil, Policy, x brazil / Rejus Almole / September 23, 2024

Xed out in Brazil —

X announces reversal but must prove compliance before it can be reinstated.

Jon Brodkin – Sep 23, 2024 3: 52 pm UTC

Getty Images | SOPA Images

Elon Musk is apparently conceding defeat in his fight with Brazil Supreme Court Judge Alexandre de Moraes, as the X social platform has started complying with the judge’s demands in an attempt to get the service un-blocked in the country.

X previously refused to suspend dozens of accounts accused of spreading disinformation. Internet service providers have been blocking X under orders from the government since early September, and De Moraes seized $2 million from a Starlink bank account and $1.3 million from an X account to collect on fines issued to X.

X has claimed the orders violate Brazil’s own laws. “Unlike other social media and technology platforms, we will not comply in secret with illegal orders. To our users in Brazil and around the world, X remains committed to protecting your freedom of speech,” the company said in late August.

But in a reversal detailed in a court filing on Friday night, “X’s lawyers said the company had done exactly what Mr. Musk vowed not to: take down accounts that a Brazilian justice ordered removed because the judge said they threatened Brazil’s democracy,” The New York Times reported. “X also complied with the justice’s other demands, including paying fines and naming a new formal representative in the country, the lawyers said.” (X said last month that its previous legal representative in Brazil resigned after de Moraes threatened her with imprisonment.)

X has to prove compliance

According to Reuters, “It was not immediately clear which were the accounts X has been ordered to block, as the probe is confidential.” But it has been reported that many of the accounts belonged to supporters of former President Jair Bolsonaro, who was accused of instigating the January 8, 2023, attack on the Brazilian Congress after his election loss. Some of the accounts reportedly belonged to users accused of threatening federal police officers involved in a probe of Bolsonaro.

De Moraes acknowledged X’s about-face in an order issued Saturday and said that X must submit documents proving its compliance before it can be reinstated. X had an estimated 22 million users in Brazil before the suspension. Bluesky and Meta’s Threads gained users in the country after X was blocked by ISPs.

X briefly became accessible in Brazil last week after the company started routing traffic through Cloudflare, but Brazil’s telecom regulatory agency said that Cloudflare subsequently made changes that let ISPs resume their blocking of X without affecting other websites that use Cloudflare. (Cloudflare CEO Matthew Prince later denied working with the Brazilian government to implement any such changes.) While X said it was merely “an inadvertent and temporary service restoration to Brazilian users,” de Moraes announced a new daily fine of more than $900,000 for failing to comply with the order suspending X operations in Brazil.

Elon Musk’s X gives up fight in Brazil, starts complying with judge’s demands Read More »

Cards Against Humanity sues SpaceX, alleges “invasion” of land on US/Mexico border

cards against humanity, elon musk, Policy, spacex / Paul Patrick / September 20, 2024

A mockup of two cards in the style of the Cards Against Humanity game. One card says — Aurich Lawson | Cards Against Humanity

Cards Against Humanity sued SpaceX yesterday, alleging that Elon Musk’s firm illegally took over a plot of land on the US/Mexico border that the party-game company bought in 2017 in an attempt to stymie then-President Trump’s attempt to build a wall.

“As part of CAH’s 2017 holiday campaign, while Donald Trump was President, CAH created a supporter-funded campaign to take a stand against the building of a Border Wall,” said the lawsuit filed in Cameron County District Court in Texas. Cards Against Humanity says it received $15 donations from 150,000 people and used part of that money to buy “a plot of vacant land in Cameron County based upon CAH’s promise to ‘make it as time-consuming and expensive as possible for Trump to build his wall.'”

Cards Against Humanity says it mowed the land “and maintained it in its natural state, marking the edge of the lot with a fence and a ‘No Trespassing’ sign.” But instead of Trump taking over the land, Cards Against Humanity says the parcel was “interfered with and invaded” by Musk’s space company. The lawsuit includes pictures that, according to Cards Against Humanity, show the land when it was first purchased and after SpaceX construction equipment and materials were placed on the land.

This picture was taken in 2017, according to Cards Against Humanity:

Cards Against Humanity says this picture of SpaceX equipment and materials on the same land was taken in 2024:

The lawsuit seeks up to $15 million to cover “the cost to restore and repair the Property, the diminution in the Property’s fair market value, the reasonable value of SpaceX’s use of the Property, the loss of goodwill, damages to CAH’s reputation, and other pecuniary loss and actual damages suffered by CAH.” The suit also seeks punitive damages.

Lawsuit: SpaceX “never asked for permission”

The lawsuit said that SpaceX “acquired many of the vacant lots along the road on which the Property is situated,” and started using the Cards Against Humanity property as its own:

SpaceX and/or its contractors entered the Property and, after erecting posts to mark the property line, proceeded to ignore any distinction based upon property ownership. The site was cleared of vegetation, and the soil was compacted with gravel or other substance to allow SpaceX and its contractors to run and park its vehicles all over the Property. Generators were brought in to run equipment and lights while work was being performed before and after daylight. An enormous mound of gravel was unloaded onto the Property; the gravel is being stored and used for the construction of buildings by SpaceX’s contractors along the road.

Large pieces of construction equipment and numerous construction-related vehicles are utilized and stored on the Property continuously. And, of course, workers are present performing construction work and staging materials and vehicles for work to be performed on other tracts. In short, SpaceX has treated the Property as its own for at least six (6) months without regard for CAH’s property rights nor the safety of anyone entering what has become a worksite that is presumably governed by OSHA safety requirements.

The lawsuit said that “SpaceX has never asked for permission to use the Property, much less for the egregious appropriation of the Property for its own profit-making purposes,” and “never reached out to CAH to explain or apologize for the damage caused to the Property and CAH’s ownership interest therein.”

We contacted SpaceX about the lawsuit and will update this article if it provides a response.

Cards Against Humanity sues SpaceX, alleges “invasion” of land on US/Mexico border Read More »

Creator of fake Kamala Harris video Musk boosted sues Calif. over deepfake laws

2024 election, Artificial Intelligence, California, campaign ads, deepfake, disinformation, election deepfake, elon musk, fake ai videos, Gavin Newsom, misinformation, Policy / Rejus Almole / September 19, 2024

After California passed laws cracking down on AI-generated deepfakes of election-related content, a popular conservative influencer promptly sued, accusing California of censoring protected speech, including satire and parody.

In his complaint, Christopher Kohls—who is known as “Mr Reagan” on YouTube and X (formerly Twitter)—said that he was suing “to defend all Americans’ right to satirize politicians.” He claimed that California laws, AB 2655 and AB 2839, were urgently passed after X owner Elon Musk shared a partly AI-generated parody video on the social media platform that Kohls created to “lampoon” presidential hopeful Kamala Harris.

AB 2655, known as the “Defending Democracy from Deepfake Deception Act,” prohibits creating “with actual malice” any “materially deceptive audio or visual media of a candidate for elective office with the intent to injure the candidate’s reputation or to deceive a voter into voting for or against the candidate, within 60 days of the election.” It requires social media platforms to block or remove any reported deceptive material and label “certain additional content” deemed “inauthentic, fake, or false” to prevent election interference.

The other law at issue, AB 2839, titled “Elections: deceptive media in advertisements,” bans anyone from “knowingly distributing an advertisement or other election communication” with “malice” that “contains certain materially deceptive content” within 120 days of an election in California and, in some cases, within 60 days after an election.

Both bills were signed into law on September 17, and Kohls filed his complaint that day, alleging that both must be permanently blocked as unconstitutional.

Elon Musk called out for boosting Kohls’ video

Kohls’ video that Musk shared seemingly would violate these laws by using AI to make Harris appear to give speeches that she never gave. The manipulated audio sounds like Harris, who appears to be mocking herself as a “diversity hire” and claiming that any critics must be “sexist and racist.”

“Making fun of presidential candidates and other public figures is an American pastime,” Kohls said, defending his parody video. He pointed to a long history of political cartoons and comedic impressions of politicians, claiming that “AI-generated commentary, though a new mode of speech, falls squarely within this tradition.”

While Kohls’ post was clearly marked “parody” in the YouTube title and in his post on X, that “parody” label did not carry over when Musk re-posted the video. This lack of a parody label on Musk’s post—which got approximately 136 million views, roughly twice as many as Kohls’ post—set off California governor Gavin Newsom, who immediately blasted Musk’s post and vowed on X to make content like Kohls’ video “illegal.”

In response to Newsom, Musk poked fun at the governor, posting that “I checked with renowned world authority, Professor Suggon Deeznutz, and he said parody is legal in America.” For his part, Kohls put up a second parody video targeting Harris, calling Newsom a “bully” in his complaint and claiming that he had to “punch back.”

Shortly after these online exchanges, California lawmakers allegedly rushed to back the governor, Kohls’ complaint said. They allegedly amended the deepfake bills to ensure that Kohls’ video would be banned when the bills were signed into law, replacing a broad exception for satire in one law with a narrower safe harbor that Kohls claimed would chill humorists everywhere.

“For videos,” his complaint said, disclaimers required under AB 2839 must “appear for the duration of the video” and “must be in a font size ‘no smaller than the largest font size of other text appearing in the visual media.'” For a satirist like Kohls who uses large fonts to optimize videos for mobile, this “would require the disclaimer text to be so large that it could not fit on the screen,” his complaint said.

On top of seeming impractical, the disclaimers would “fundamentally” alter “the nature of his message” by removing the comedic effect for viewers by distracting from what allegedly makes the videos funny—”the juxtaposition of over-the-top statements by the AI-generated ‘narrator,’ contrasted with the seemingly earnest style of the video as if it were a genuine campaign ad,” Kohls’ complaint alleged.

Imagine watching Saturday Night Live with prominent disclaimers taking up your TV screen, his complaint suggested.

It’s possible that Kohls’ concerns about AB 2839 are unwarranted. Newsom spokesperson Izzy Gardon told Politico that Kohls’ parody label on X was good enough to clear him of liability under the law.

“Requiring them to use the word ‘parody’ on the actual video avoids further misleading the public as the video is shared across the platform,” Gardon said. “It’s unclear why this conservative activist is suing California. This new disclosure law for election misinformation isn’t any more onerous than laws already passed in other states, including Alabama.”

Creator of fake Kamala Harris video Musk boosted sues Calif. over deepfake laws Read More »