Policy

t-mobile,-at&t-oppose-unlocking-rule,-claim-locked-phones-are-good-for-users

T-Mobile, AT&T oppose unlocking rule, claim locked phones are good for users


Carriers fight plan to require unlocking of phones 60 days after activation.

A smartphone wrapped in a metal chain and padlock

T-Mobile and AT&T say US regulators should drop a plan to require unlocking of phones within 60 days of activation, claiming that locking phones to a carrier’s network makes it possible to provide cheaper handsets to consumers. “If the Commission mandates a uniform unlocking policy, it is consumers—not providers—who stand to lose the most,” T-Mobile alleged in an October 17 filing with the Federal Communications Commission.

The proposed rule has support from consumer advocacy groups who say it will give users more choice and lower their costs. T-Mobile has been criticized for locking phones for up to a year, which makes it impossible to use a phone on a rival’s network. T-Mobile claims that with a 60-day unlocking rule, “consumers risk losing access to the benefits of free or heavily subsidized handsets because the proposal would force providers to reduce the line-up of their most compelling handset offers.”

If the proposed rule is enacted, “T-Mobile estimates that its prepaid customers, for example, would see subsidies reduced by 40 percent to 70 percent for both its lower and higher-end devices, such as the Moto G, Samsung A15, and iPhone 12,” the carrier said. “A handset unlocking mandate would also leave providers little choice but to limit their handset offers to lower cost and often lesser performing handsets.”

T-Mobile and other carriers are responding to a call for public comments that began after the FCC approved a Notice of Proposed Rulemaking (NPRM) in a 5–0 vote. The FCC is proposing “to require all mobile wireless service providers to unlock handsets 60 days after a consumer’s handset is activated with the provider, unless within the 60-day period the service provider determines the handset was purchased through fraud.”

When the FCC proposed the 60-day unlocking rule in July 2024, the agency criticized T-Mobile for locking prepaid phones for a year. The NPRM pointed out that “T-Mobile recently increased its locking period for one of its brands, Metro by T-Mobile, from 180 days to 365 days.”

T-Mobile’s policy says the carrier will only unlock mobile devices on prepaid plans if “at least 365 days… have passed since the device was activated on the T-Mobile network.”

“You bought your phone, you should be able to take it to any provider you want,” FCC Chairwoman Jessica Rosenworcel said when the FCC proposed the rule. “Some providers already operate this way. Others do not. In fact, some have recently increased the time their customers must wait until they can unlock their device by as much as 100 percent.”

T-Mobile locking policy more onerous

T-Mobile executives, who also argue that the FCC lacks authority to impose the proposed rule, met with FCC officials last week to express their concerns.

“T-Mobile is passionate about winning customers for life, and explained how its handset unlocking policies greatly benefit our customers,” the carrier said in its post-meeting filing. “Our policies allow us to deliver access to high-speed mobile broadband on a nationwide 5G network via handsets that are free or heavily discounted off the manufacturer’s suggested retail price. T-Mobile’s unlocking policies are transparent, and there is absolutely no evidence of consumer harm stemming from these policies. T-Mobile’s current unlocking policies also help T-Mobile combat handset theft and fraud by sophisticated, international criminal organizations.”

For postpaid users, T-Mobile says it allows unlocking of fully paid-off phones that have been active for at least 40 days. But given the 365-day lock on prepaid users, T-Mobile’s overall policy is more onerous than those of other carriers. T-Mobile has also faced angry customers because of a recent decision to raise prices on plans that were advertised as having a lifetime price lock.

AT&T enables unlocking of paid-off phones after 60 days for postpaid users and after six months for prepaid users. AT&T lodged similar complaints as T-Mobile, saying in an October 7 filing that the FCC’s proposed rules would “mak[e] handsets less affordable for consumers, especially those in low-income households,” and “exacerbate handset arbitrage, fraud, and trafficking. “

AT&T told the FCC that “requiring providers to unlock handsets before they are paid-off would ultimately harm consumers by creating upward pressure on handset prices and disincentives to finance handsets on flexible terms.” If the FCC implements any rules, it should maintain “existing contractual arrangements between customers and providers, ensure that providers have at least 180 days to detect fraud before unlocking a device, and include at least a 24-month period for providers to implement any new rules,” AT&T said.

Verizon, which already faces unlocking rules because of requirements imposed on spectrum licenses it owns, automatically unlocks phones after 60 days for prepaid and postpaid users. Among the three major carriers, Verizon is the most amenable to the FCC’s new rules.

Consumer groups: Make Verizon rules industry-wide

An October 18 filing supporting a strict unlocking rule was submitted by numerous consumer advocacy groups including Public Knowledge, New America’s Open Technology Institute, Consumer Reports, the National Consumers League, the National Consumer Law Center, and the National Digital Inclusion Alliance.

“Wireless users are subject to unnecessary restrictions in the form of locked devices, which tie them to their service providers even when better options may be available. Handset locking practices limit consumer freedom and lessen competition by creating an artificial technological barrier to switching providers,” the groups said.

The groups cited the Verizon rules as a model and urged the FCC to require “that device unlocking is truly automatic—that is, unlocked after the requisite time period without any additional actions of the consumer.” Carriers should not be allowed to lock phones for longer than 60 days even when a phone is on a financing plan with outstanding payments, the groups’ letter said:

Providers should be required to transition out of selling devices without this [automatic unlocking] capability and the industry-wide rule should be the same as the one protecting Verizon customers today: after the expiration of the initial period, the handset must automatically unlock regardless of whether: (1) the customer asks for the handset to be unlocked or (2) the handset is fully paid off. Removing this barrier to switching will make the standard simple for consumers and encourage providers to compete more vigorously on mobile service price, quality, and innovation.

In an October 2 filing, Verizon said it supports “a uniform approach to handset unlocking that allows all wireless providers to lock wireless handsets for a reasonable period of time to limit fraud and to enable device subsidies, followed by automatic unlocking absent evidence of fraud.”

Verizon said 60 days should be the minimum for postpaid devices so that carriers have time to detect fraud and theft, and that “a longer, 180-day locking period for prepaid is necessary to enable wireless providers to continue offering subsidies that make phones affordable for prepaid customers.” Regardless of what time frame the FCC chooses, Verizon said “a uniform unlocking policy that applies to all providers… will benefit both consumers and competition.”

FCC considers impact on phone subsidies

While the FCC is likely to impose an unlocking rule, one question is whether it will apply when a carrier has provided a discounted phone. The FCC’s NPRM asked the public for “comment on the impact of a 60-day unlocking requirement in connection with service providers’ incentives to offer discounted handsets for postpaid and prepaid service plans.”

The FCC acknowledged Verizon’s argument “that providers may rely on handset locking to sustain their ability to offer handset subsidies and that such subsidies may be particularly important in prepaid environments.” But the FCC noted that public interest groups “argue that locked handsets tied to prepaid plans can disadvantage low-income customers most of all since they may not have the resources to switch service providers or purchase new handsets.”

The public interest groups also note that unlocked handsets “facilitate a robust secondary market for used devices, providing consumers with more affordable options,” the NPRM said.

The FCC says it can impose phone-unlocking rules using its legal authority under Title III of the Communications Act “to protect the public interest through spectrum licensing and regulations to require mobile wireless service providers to provide handset unlocking.” The FCC said it previously relied on the same Title III authority when it imposed the unlocking rules on 700 MHz C Block spectrum licenses purchased by Verizon.

T-Mobile told the FCC in a filing last month that “none of the litany of Title III provisions cited in the NPRM support the expansive authority asserted here to regulate consumer handsets (rather than telecommunications services).” T-Mobile also said that “the Commission’s legal vulnerabilities on this score are only magnified in light of recent Supreme Court precedent.”

The Supreme Court recently overturned the 40-year-old Chevron precedent that gave agencies like the FCC judicial deference when interpreting ambiguous laws. The end of Chevron makes it harder for agencies to issue regulations without explicit authorization from Congress. This is a potential problem for the FCC in its fight to revive net neutrality rules, which are currently blocked by a court order pending the outcome of litigation.

Photo of Jon Brodkin

Jon is a Senior IT Reporter for Ars Technica. He covers the telecom industry, Federal Communications Commission rulemakings, broadband consumer affairs, court cases, and government regulation of the tech industry.

T-Mobile, AT&T oppose unlocking rule, claim locked phones are good for users Read More »

bytedance-intern-fired-for-planting-malicious-code-in-ai-models

ByteDance intern fired for planting malicious code in AI models

After rumors swirled that TikTok owner ByteDance had lost tens of millions after an intern sabotaged its AI models, ByteDance issued a statement this weekend hoping to silence all the social media chatter in China.

In a social media post translated and reviewed by Ars, ByteDance clarified “facts” about “interns destroying large model training” and confirmed that one intern was fired in August.

According to ByteDance, the intern had held a position in the company’s commercial technology team but was fired for committing “serious disciplinary violations.” Most notably, the intern allegedly “maliciously interfered with the model training tasks” for a ByteDance research project, ByteDance said.

None of the intern’s sabotage impacted ByteDance’s commercial projects or online businesses, ByteDance said, and none of ByteDance’s large models were affected.

Online rumors suggested that more than 8,000 graphical processing units were involved in the sabotage and that ByteDance lost “tens of millions of dollars” due to the intern’s interference, but these claims were “seriously exaggerated,” ByteDance said.

The tech company also accused the intern of adding misleading information to his social media profile, seemingly posturing that his work was connected to ByteDance’s AI Lab rather than its commercial technology team. In the statement, ByteDance confirmed that the intern’s university was notified of what happened, as were industry associations, presumably to prevent the intern from misleading others.

ByteDance’s statement this weekend didn’t seem to silence all the rumors online, though.

One commenter on ByteDance’s social media post disputed the distinction between the AI Lab and the commercial technology team, claiming that “the commercialization team he is in was previously under the AI Lab. In the past two years, the team’s recruitment was written as AI Lab. He joined the team as an intern in 2021, and it might be the most advanced AI Lab.”

ByteDance intern fired for planting malicious code in AI models Read More »

judge-slams-florida-for-censoring-political-ad:-“it’s-the-first-amendment,-stupid”

Judge slams Florida for censoring political ad: “It’s the First Amendment, stupid”


Florida threatened TV stations over ad that criticized state’s abortion law.

A woman holding an MRI displaying a brain tumor.

Screenshot of political advertisement featuring a woman describing her experience having an abortion after being diagnosed with brain cancer. Credit: Floridians Protecting Freedom

US District Judge Mark Walker had a blunt message for the Florida surgeon general in an order halting the government official’s attempt to censor a political ad that opposes restrictions on abortion.

“To keep it simple for the State of Florida: it’s the First Amendment, stupid,” Walker, an Obama appointee who is chief judge in US District Court for the Northern District of Florida, wrote yesterday in a ruling that granted a temporary restraining order.

“Whether it’s a woman’s right to choose, or the right to talk about it, Plaintiff’s position is the same—’don’t tread on me,'” Walker wrote later in the ruling. “Under the facts of this case, the First Amendment prohibits the State of Florida from trampling on Plaintiff’s free speech.”

The Florida Department of Health recently sent a legal threat to broadcast TV stations over the airing of a political ad that criticized abortion restrictions in Florida’s Heartbeat Protection Act. The department in Gov. Ron DeSantis’ administration claimed the ad falsely described the abortion law, which could be weakened by a pending ballot question.

Floridians Protecting Freedom, the group that launched the TV ad and is sponsoring a ballot question to lift restrictions on abortion, sued Surgeon General Joseph Ladapo and Department of Health general counsel John Wilson. Wilson has resigned.

Surgeon general blocked from further action

Walker’s order granting the group’s motion states that “Defendant Ladapo is temporarily enjoined from taking any further actions to coerce, threaten, or intimate repercussions directly or indirectly to television stations, broadcasters, or other parties for airing Plaintiff’s speech, or undertaking enforcement action against Plaintiff for running political advertisements or engaging in other speech protected under the First Amendment.”

The order expires on October 29 but could be replaced by a preliminary injunction that would remain in effect while litigation continues. A hearing on the motion for a preliminary injunction is scheduled for the morning of October 29.

The pending ballot question would amend the state Constitution to say, “No law shall prohibit, penalize, delay, or restrict abortion before viability or when necessary to protect the patient’s health, as determined by the patient’s healthcare provider. This amendment does not change the Legislature’s constitutional authority to require notification to a parent or guardian before a minor has an abortion.”

Walker’s ruling said that Ladapo “has the right to advocate for his own position on a ballot measure. But it would subvert the rule of law to permit the State to transform its own advocacy into the direct suppression of protected political speech.”

Federal Communications Commission Chairwoman Jessica Rosenworcel recently criticized state officials, writing that “threats against broadcast stations for airing content that conflicts with the government’s views are dangerous and undermine the fundamental principle of free speech.”

State threatened criminal proceedings

The Floridians Protecting Freedom advertisement features a woman who “recalls her decision to have an abortion in Florida in 2022,” and “states that she would not be able to have an abortion for the same reason under the current law,” Walker’s ruling said.

Caroline, the woman in the ad, states that “the doctors knew if I did not end my pregnancy, I would lose my baby, I would lose my life, and my daughter would lose her mom. Florida has now banned abortion even in cases like mine. Amendment 4 is going to protect women like me; we have to vote yes.”

The ruling described the state government response:

Shortly after the ad began running, John Wilson, then general counsel for the Florida Department of Health, sent letters on the Department’s letterhead to Florida TV stations. The letters assert that Plaintiff’s political advertisement is false, dangerous, and constitutes a “sanitary nuisance” under Florida law. The letter informed the TV stations that the Department of Health must notify the person found to be committing the nuisance to remove it within 24 hours pursuant to section 386.03(1), Florida Statutes. The letter further warned that the Department could institute legal proceedings if the nuisance were not timely removed, including criminal proceedings pursuant to section 386.03(2)(b), Florida Statutes. Finally, the letter acknowledged that the TV stations have a constitutional right to “broadcast political advertisements,” but asserted this does not include “false advertisements which, if believed, would likely have a detrimental effect on the lives and health of pregnant women in Florida.” At least one of the TV stations that had been running Plaintiff’s advertisement stopped doing so after receiving this letter from the Department of Health.

The Department of Health claimed the ad “is categorically false” because “Florida’s Heartbeat Protection Act does not prohibit abortion if a physician determines the gestational age of the fetus is less than 6 weeks.”

Floridians Protecting Freedom responded that the woman in the ad made true statements, saying that “Caroline was diagnosed with stage four brain cancer when she was 20 weeks pregnant; the diagnosis was terminal. Under Florida law, abortions may only be performed after six weeks gestation if ‘[t]wo physicians certify in writing that, in reasonable medical judgment, the termination of the pregnancy is necessary to save the pregnant woman’s life or avert a serious risk of substantial and irreversible physical impairment of a major bodily function of the pregnant woman other than a psychological condition.'”

Because “Caroline’s diagnosis was terminal… an abortion would not have saved her life, only extended it. Florida law would not allow an abortion in this instance because the abortion would not have ‘save[d] the pregnant woman’s life,’ only extended her life,” the group said.

Judge: State should counter with its own speech

Walker’s ruling said the government can’t censor the ad by claiming it is false:

Plaintiff’s argument is correct. While Defendant Ladapo refuses to even agree with this simple fact, Plaintiff’s political advertisement is political speech—speech at the core of the First Amendment. And just this year, the United States Supreme Court reaffirmed the bedrock principle that the government cannot do indirectly what it cannot do directly by threatening third parties with legal sanctions to censor speech it disfavors. The government cannot excuse its indirect censorship of political speech simply by declaring the disfavored speech is “false.”

State officials must show that their actions “were narrowly tailored to serve a compelling government interest,” Walker wrote. A “narrowly tailored solution” in this case would be counterspeech, not censorship, he wrote.

“For all these reasons, Plaintiff has demonstrated a substantial likelihood of success on the merits,” the ruling said. Walker wrote that a ruling in favor of the state would open the door to more censorship:

This case pits the right to engage in political speech against the State’s purported interest in protecting the health and safety of Floridians from “false advertising.” It is no answer to suggest that the Department of Health is merely flexing its traditional police powers to protect health and safety by prosecuting “false advertising”—if the State can rebrand rank viewpoint discriminatory suppression of political speech as a “sanitary nuisance,” then any political viewpoint with which the State disagrees is fair game for censorship.

Walker then noted that Ladapo “has ample, constitutional alternatives to mitigate any harm caused by an injunction in this case.” The state is already running “its own anti-Amendment 4 campaign to educate the public about its view of Florida’s abortion laws and to correct the record, as it sees fit, concerning pro-Amendment 4 speech,” Walker wrote. “The State can continue to combat what it believes to be ‘false advertising’ by meeting Plaintiff’s speech with its own.”

Photo of Jon Brodkin

Jon is a Senior IT Reporter for Ars Technica. He covers the telecom industry, Federal Communications Commission rulemakings, broadband consumer affairs, court cases, and government regulation of the tech industry.

Judge slams Florida for censoring political ad: “It’s the First Amendment, stupid” Read More »

amazon-exec-tells-employees-to-work-elsewhere-if-they-dislike-rto-policy

Amazon exec tells employees to work elsewhere if they dislike RTO policy

Amazon workers are being reminded that they can find work elsewhere if they’re unhappy with Amazon’s return-to-office (RTO) mandate.

In September, Amazon told staff that they’ll have to RTO five days a week starting in 2025. Amazon employees are currently allowed to work remotely twice a week. A memo from CEO Andy Jassy announcing the policy change said that “it’s easier for our teammates to learn, model, practice, and strengthen our culture” when working at the office.

On Thursday, at what Reuters described as an “all-hands meeting” for Amazon Web Services (AWS), AWS CEO Matt Garman reportedly told workers:

If there are people who just don’t work well in that environment and don’t want to, that’s okay, there are other companies around.

Garman said that he didn’t “mean that in a bad way,” however, adding: “We want to be in an environment where we’re working together. When we want to really, really innovate on interesting products, I have not seen an ability for us to do that when we’re not in-person.”

Interestingly, Garman’s comments about dissatisfaction with the RTO policy coincided with him claiming that 9 out of 10 Amazon employees that he spoke to are in support of the RTO mandate, Reuters reported.

Some suspect RTO mandates are attempts to make workers quit

Amazon has faced resistance to RTO since pandemic restrictions were lifted. Like workers at other companies, some Amazon employees have publicly wondered if strict in-office policies are being enacted as attempts to reduce headcount without layoffs.

In July 2023, Amazon started requiring employees to work in their team’s central hub location (as opposed to remotely or in an office that may be closer to where they reside). Amazon reportedly told workers that if they didn’t comply or find a new job internally, they’d be considered a “voluntary resignation,” per a Slack message that Business Insider reportedly viewed. And many Amazon employees have already reported considering looking for a new job due to the impending RTO requirements.

However, employers like Amazon “can face an array of legal consequences for encouraging workers to quit via their RTO policies,” Helen D. (Heidi) Reavis, managing partner at Reavis Page Jump LLP, an employment, dispute resolution, and media law firm, told Ars Technica:

Amazon exec tells employees to work elsewhere if they dislike RTO policy Read More »

us-suspects-tsmc-helped-huawei-skirt-export-controls,-report-says

US suspects TSMC helped Huawei skirt export controls, report says

In April, TSMC was provided with $6.6 billion in direct CHIPS Act funding to “support TSMC’s investment of more than $65 billion in three greenfield leading-edge fabs in Phoenix, Arizona, which will manufacture the world’s most advanced semiconductors,” the Department of Commerce said.

These investments are key to the Biden-Harris administration’s mission of strengthening “economic and national security by providing a reliable domestic supply of the chips that will underpin the future economy, powering the AI boom and other fast-growing industries like consumer electronics, automotive, Internet of Things, and high-performance computing,” the department noted. And in particular, the funding will help America “maintain our competitive edge” in artificial intelligence, the department said.

It likely wouldn’t make sense to prop TSMC up to help the US “onshore the critical hardware manufacturing capabilities that underpin AI’s deep language learning algorithms and inferencing techniques,” to then limit access to US-made tech. TSMC’s Arizona fabs are supposed to support companies like Apple, Nvidia, and Qualcomm and enable them to “compete effectively,” the Department of Commerce said.

Currently, it’s unclear where the US probe into TSMC will go or whether a damaging finding could potentially impact TSMC’s CHIPS funding.

Last fall, the Department of Commerce published a final rule, though, designed to “prevent CHIPS funds from being used to directly or indirectly benefit foreign countries of concern,” such as China.

If the US suspected that TSMC was aiding Huawei’s AI chip manufacturing, the company could be perceived as avoiding CHIPS guardrails prohibiting TSMC from “knowingly engaging in any joint research or technology licensing effort with a foreign entity of concern that relates to a technology or product that raises national security concerns.”

Violating this “technology clawback” provision of the final rule risks “the full amount” of CHIPS Act funding being “recovered” by the Department of Commerce. That outcome seems unlikely, though, given that TSMC has been awarded more funding than any other recipient apart from Intel.

The Department of Commerce declined Ars’ request to comment on whether TSMC’s CHIPS Act funding could be impacted by their reported probe.

US suspects TSMC helped Huawei skirt export controls, report says Read More »

elon-musk-changes-x-terms-to-steer-lawsuits-to-his-favorite-texas-court

Elon Musk changes X terms to steer lawsuits to his favorite Texas court

“It is common for companies to include venue clauses in their terms of service directing what forum would hear any disputes filed against them. But the choice of the Northern District of Texas stands out because X is not even located in the district,” the Reuters article said.

X has filed multiple lawsuits in the Northern District of Texas. The case against Media Matters for America is being heard by US District Judge Reed O’Connor, who bought Tesla stock valued at between $15,001 and $50,000 in 2022. X sued Media Matters over its research on ads being placed next to pro-Nazi content on X.

O’Connor refused to recuse himself from the X case, despite Media Matters arguing that “ownership of Tesla stock would be disqualifying” for a judge because “an investment in Tesla is, in large part, a bet on Musk’s reputation and management choices.” O’Connor, a George W. Bush appointee, later rejected Media Matters’ argument that his court lacked jurisdiction over the dispute.

New financial disclosures show that O’Connor still owned Tesla stock as of early 2024, NPR reported on Wednesday. Filings show “that O’Connor bought and sold Tesla stock [in 2023], with his position in Tesla still totaling up to $50,000,” and that he “has not bought or sold Tesla stock in the first few months of 2024,” NPR wrote.

Professor questions ethics of forum clause

O’Connor was also initially assigned to Musk’s lawsuit alleging that advertisers targeted X with an illegal boycott. But O’Connor recused himself from the advertiser case because he invested in Unilever, one of the defendants. X has since reached an agreement with Unilever and removed the company from the list of defendants.

X’s new terms don’t guarantee that cases will end up before O’Connor. “The only place in the Northern District where you’re guaranteed to draw O’Connor is Wichita Falls. Elsewhere in the district, you could draw other judges,” Georgetown Law Professor Steve Vladeck wrote.

For any of the federal districts in Texas, appeals would go to the conservative-leaning US Court of Appeals for the 5th Circuit.

Elon Musk changes X terms to steer lawsuits to his favorite Texas court Read More »

eu-considers-calculating-x-fines-by-including-revenue-from-musk’s-other-firms

EU considers calculating X fines by including revenue from Musk’s other firms

“After Breton resigned in September, he bequeathed his fining powers to competition and digital boss Margrethe Vestager. Decisions on the penalties and how they are calculated would ultimately lie with Vestager,” Bloomberg wrote. The European Commission would have the final say.

“The commission hasn’t yet decided whether to penalize X, and the size of any potential fine is still under discussion,” Bloomberg wrote, citing its anonymous sources. “Penalties may be avoided if X finds ways to satisfy the watchdog’s concerns.”

X says SpaceX revenue should be off-limits

Although X faces potential DSA fines, it will avoid penalties under the EU’s Digital Markets Act (DMA). The European Commission announced yesterday that X does 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.”

But documents related to the DMA probe of X raise the possibility of treating multiple Musk-led companies as a single entity called the “Musk Group” for compliance purposes. In a March 2024 letter to Musk and X Holdings Corp., “the Commission set out its preliminary views on the possible designation of Mr. Elon Musk and the companies that he controls (‘the Musk Group’) as a gatekeeper,” according to a document signed by Breton.

X has argued that it wouldn’t make sense to include Musk’s other companies in revenue calculations when issuing penalties. “X Holdings Corp. submits that the combined market value of the Musk Group does not accurately reflect X’s monetization potential in the Union or its financial capacity,” the document said. “In particular, it argues that X and SpaceX provide entirely different services to entirely different users, so that there is no gateway effect, and that the undertakings controlled by Mr. Elon Musk ‘do not form one financial front, as the DMA presumes.'”

We contacted X and SpaceX today and will update this article if they provide any comment.

EU considers calculating X fines by including revenue from Musk’s other firms Read More »

x’s-depressing-ad-revenue-helps-musk-avoid-eu’s-strictest-antitrust-law

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

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 »

student-was-punished-for-using-ai—then-his-parents-sued-teacher-and-administrators

Student was punished for using AI—then his parents sued teacher and administrators


Parents claim there was no rule banning AI, but school cites multiple policies.

Illustration of a robot's head on a digital background, to represent an artificial intelligence chatbot

A school district in Massachusetts was sued by a student’s parents after the boy was punished for using an artificial intelligence chatbot to complete an assignment. The lawsuit says the Hingham High School student handbook did not include a restriction on the use of AI.

“They told us our son cheated on a paper, which is not what happened,” Jennifer Harris told WCVB. “They basically punished him for a rule that doesn’t exist.”

Jennifer and her husband, Dale, filed the lawsuit in Plymouth County Superior Court, and the case was then moved to US District Court for the District of Massachusetts. Defendants include the superintendent, principal, a teacher, the history department head, and the Hingham School Committee.

The student is referred to by his initials, RNH. The lawsuit alleges violations of the student’s civil rights, including “the Plaintiff Student’s personal and property rights and liberty to acquire, possess, maintain and protect his rights to equal educational opportunity.”

The defendants’ motion to dismiss the complaint, filed last week, said RNH admitted “that he used an AI tool to generate ideas and shared that he also created portions of his notes and scripts using the AI tool, and described the specific prompt that he put into the chatbot. RNH unequivocally used another author’s language and thoughts, be it a digital and artificial author, without express permission to do so. Furthermore, he did not cite to his use of AI in his notes, scripts or in the project he submitted.”

The school officials’ court filing points to a section of the student handbook on cheating and plagiarism. Although the section doesn’t mention AI, it bans “unauthorized use of technology during an assignment” and “unauthorized use or close imitation of the language and thoughts of another author and the representation of them as one’s own work.”

“Incredibly, RNH and his parents contend that using AI to draft, edit and research content for an AP US History project, all while not citing to use of AI in the project, is not an ‘act of dishonesty,’ ‘use of unauthorized technology’ or plagiarism,” defendants wrote.

School: Policy bans AI tools unless explicitly permitted

The parents’ motion for a preliminary injunction points to the same section of the student handbook and says it was “silent on any policy, procedure, expectation, conduct, discipline, sanction or consequence for the use of AI.” The use of AI was thus “not a violation” of the policy at the time, they say.

School officials cite more than just the student handbook section. They say that in fall 2023, RNH and his classmates were given a copy of a “written policy on Academic Dishonesty and AI expectations” that says students “shall not use AI tools during in-class examinations, processed writing assignments, homework or classwork unless explicitly permitted and instructed.”

The policy quoted in the court filing also says students should “give credit to AI tools whenever used, even if only to generate ideas or edit a small section of student work.” According to defendants, students were instructed to “add an appendix for every use of AI” with the following information:

  • the entire exchange, highlighting the most relevant sections;
  • a description of precisely which AI tools were used (e.g. ChatGPT private subscription version or Bard);
  • an explanation of how the AI tools were used (e.g. to generate ideas, turns of phrase, identify elements of text, edit long stretches of text, build lines of argument, locate pieces of evidence, create concept or planning maps, illustrations of key concepts, etc.);
  • an account of why AI tools were used (e.g. procrastination, to surmount writer’s block, to stimulate thinking, to manage stress level, to address mismanagement of time, to clarify prose, to translate text, to experiment with the technology, etc.).

The incident happened in December 2023 when RNH and a classmate “teamed up for a Social Studies project for the long-running historical contest known colloquially as ‘National History Day,'” the parents’ motion for a preliminary injunction said. The students “used AI to prepare the initial outline and research” for a project on basketball legend Kareem Abdul-Jabbar and his work as a civil rights activist.

The parents’ motion alleges that RNH and his classmate were “unfairly and unjustly accused of cheating, plagiarism, and academic dishonesty.” The defendants “act[ed] as investigator, judge, jury, and executioner in determining the extreme and outrageous sanctions imposed upon these Students,” they allege. A hearing on the motion for preliminary injunction has been set for October 22.

Parents say it isn’t plagiarism

RNH and his classmate “receiv[ed] multiple zeros for different portions of the project” and a Saturday detention, the parents’ motion said. RNH was given a zero on the notes and rough draft portions of the project, and his overall grade on the final paper was 65 out of 100. His average in the “college-level, advanced placement course” allegedly dropped from 84 to 78. The students were also barred from selection for the National Honor Society.

“While there is much dispute as to whether the use of generative AI constitutes plagiarism, plagiarism is defined as the practice of taking someone else’s work or ideas and passing them off as one’s own. During the project, RNH and his classmate did not take someone else’s work or ideas and pass them off as their own,” the motion said. The students “used AI, which generates and synthesizes new information.”

The National Honor Society exclusion was eventually reversed, but not in time for RNH’s applications to colleges for early decision, the parents allege. The initial lawsuit in Plymouth County Superior Court was filed on September 16 and said that RNH was still barred from the group at that time.

“This fall, the district allowed him to reapply for National Honor Society. He was inducted Oct. 8, but the student’s attorney says the damage had already been done,” according to the Patriot Ledger. “Peter Farrell, the student’s lawyer, said the reversal happened only after an investigation revealed that seven other students disciplined for academic dishonesty had been inducted into the National Honors Society, including one student censured for use of artificial intelligence.”

The motion said the punishment had “a significant, severe, and continuing impact on RNH’s future earning capacity, earning potential, and acceptance into an elite college or university course of study given his exemplary academic achievements.” The parents allege that “Defendants exceeded the authority granted to them in an abuse of authority, discretion, and unfettered state action by unfairly and unjustly acting as investigator, judge, jury, and executioner in determining the extreme and outrageous sanctions imposed upon these Students.”

Now “a senior at the top of his class,” RNH is “a three-sport varsity student-athlete, maintains a high grade point average, scored 1520 on his SAT, earned a perfect score on the ACT, and should receive a National Merit Scholarship Corporation Letter of Commendation,” the motion said. “In addition to his high level of academic and athletic achievement, RNH has substantial community service hours including working with cognitively impaired children playing soccer with the Special Needs Athletic Partnership known as ‘SNAP.'”

School defends “relatively lenient” discipline

In their motion to dismiss, school officials defended “the just and legitimate discipline rendered to RNH.”

“This lawsuit is not about the expulsion, or even the suspension, of a high school student,” the school response said. “Instead, the dispute concerns a student, RNH, dissatisfied with a letter grade in AP US History class, having to attend a ‘Saturday’ detention, and his deferral from NHS—rudimentary student discipline administered for an academic integrity violation. RNH was given relatively lenient and measured discipline for a serious infraction, using Artificial Intelligence (‘AI’) on a project, amounting to something well less than a suspension. The discipline was consistent with the applicable Student Handbook.”

The defendants said the court “should not usurp [the] substantial deference given to schools over discipline. Because school officials are in the best position to determine when a student’s actions threaten the safety and welfare of other students, the SJC [Supreme Judicial Court] has stated that school officials must be granted substantial deference in their disciplinary choices.”

The parents’ motion for a preliminary injunction seeks an order requiring defendants “to immediately repair, restore and rectify Plaintiff Student’s letter grade in Social Studies to a grade of ‘B,'” and to expunge “any grade, report, transcript entry or record of discipline imposing any kind of academic sanction” from the incident.

The parents further request the exclusion of “any zero grade from grade calculations for the subject assignment” and an order prohibiting the school district “from characterizing the use of artificial intelligence by the Plaintiff Student as ‘cheating’ or classifying such use as an ‘academic integrity infraction’ or ‘academic dishonesty.'”

The parents also want an order requiring defendants “to undergo training in the use and implementation of artificial intelligence in the classroom, schools and educational environment by a duly qualified third party not employed by the District.”

Photo of Jon Brodkin

Jon is a Senior IT Reporter for Ars Technica. He covers the telecom industry, Federal Communications Commission rulemakings, broadband consumer affairs, court cases, and government regulation of the tech industry.

Student was punished for using AI—then his parents sued teacher and administrators Read More »

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FTC “click to cancel” rule seeks to end free trial traps, sneaky auto-enrollments


No more jumping through endless hoops to cancel subscriptions, FTC rule says.

It will soon be easy to “click to cancel” subscriptions after the US Federal Trade Commission (FTC) adopted a final rule on Wednesday that makes it challenging for businesses to opt out of easy cancellation methods.

“Too often, businesses make people jump through endless hoops just to cancel a subscription,” FTC chair Lina Khan said in a press release. “The FTC’s rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want.”

The heart of the new rule requires businesses to provide simple ways to cancel subscriptions. Under the rule, any subscription that can be signed up for online must be able to be canceled online. And cancellation paths for in-person sign-ups must be just as easy, offered either by phone or online.

In guidance released Wednesday, the FTC recommended that businesses keep “three guardrails in mind” to ensure cancellation methods comply with the law. First, customers cannot be required to talk to a live agent or chatbot to cancel if that wasn’t required for sign-up. Next, any phone cancellation methods cannot include charges and must be offered during normal business hours. And finally, canceling services in person must always be optional.

To comply with the rule, businesses offering “negative option marketing” such as subscriptions, automatic renewals, and free trial offers—to both consumers and other businesses—are prohibited from misleading customers. They must clearly disclose all terms of the deal prior to accepting payment, including explaining how much and how often customers will be charged, when free trials or promotions end, any deadlines to avoid charges, and, importantly, how to cancel.

“All this information should be clear, conspicuous, and available to your customers before they enroll. And certain key information related to charges and cancellation must appear right when and where the customer agrees to the negative option, every time,” the FTC said.

Under the “click to cancel” rule, businesses must also get consumers’ informed consent before issuing charges and maintain records of consent for a minimum of three years. Those records could be in the form of a ticked checkbox or a signature, the FTC said, noting the agency offers “some flexibility on what that proof looks like.”

“Don’t try to distract people with other information,” the FTC said. “Get proof of consent and maintain it for at least three years.”

That provision is designed to end unfair and deceptive practices that the FTC found, such as inadequate disclosures about free trials or sneaky auto-enrollments. Those “practices have been a persistent source of consumer harm for decades,” the FTC’s notice on the final rule said, “saddling shoppers with recurring payments for products and services they never intended to purchase nor wanted to continue buying.”

The FTC confirmed that some provisions of the final rule will go into effect within 60 days, but most will take effect after 180 days. Violators risk civil penalties and other forms of consumer redress that weren’t previously available under the FTC act, the notice in the federal register said.

Some frustrated individual commenters asked for stiff penalties, the FTC’s notice said.

“There needs to be a substantial penalty when a service is requested to be cancelled, but the charges continue,” one commenter urged the FTC. “I dropped my TV service from Comcast three months ago and they continue to charge me. Every time I need to re-contact them, I waste an hour.”

FTC made few concessions to critics

More than 16,000 comments were submitted during proposed rulemaking, including concerns raised by cable firms who worried that the FTC’s rule might make it so easy to cancel a subscription that customers miss out on benefits, including deals often offered to retain their business.

At that time, Michael Powell, CEO of The Internet & Television Association (NCTA), defended using live agents to process cancellation requests. He warned that “a consumer may easily misunderstand the consequences of canceling,” incurring unexpected costs in situations like “canceling part of a discounted bundle” that “may increase the price for remaining services.”

Powell further argued that the rule could raise costs for customers, alleging that the FTC had significantly underestimated compliance costs that “could easily exceed $100 million for initial implementation by” the cable industry alone.

But the FTC strongly disagreed with some estimates of compliance costs. For example, in the notice in the federal register, the FTC noted that “because NCTA members who enroll consumers online already, clearly, have websites, the Commission rejects the notion that adding ‘click to cancel’ functionality to websites that already include an order path for enrolling, and likely also include functionality for registering a payment mechanism for automated billing, would cost $12–$25 million.”

Ultimately, the FTC disputed the NCTA’s data and rejected the notion that the rule would “require building online cancellation systems virtually from the ground up and expensive ongoing recordkeeping requirements across all services,” pointing any concerned commenters to “the detailed cost-benefit analysis” of the rule provided in the federal register notice.

There were only a few major changes to the final rule following the public commenting period. Notably, the FTC dropped a provision that would have required businesses to send annual reminders about recurring charges, as well as another prohibiting promotions or deals offered during the cancellation process in efforts to retain customers without customers opting in to seeing those offers.

The FTC said that it’s only dropped these provisions for now, noting that the Commission plans to keep the record “open on these issues” and may seek additional comments.

Exemptions available but seem unlikely

Perhaps of greatest interest to businesses, the FTC also added “a provision allowing requests for exemptions.” But those will likely be reserved for businesses already complying with the rule, the FTC said, while explaining that each request for exemptions will be weighed individually.

“Because such decisions are highly fact dependent, the Commission must consider exemptions, even of larger groups, on an individualized basis pursuant to the FTC’s Rules of Practice,” the FTC’s notice said.

Some businesses may qualify for recordkeeping exemptions, the FTC said, but only if “it is technologically feasible to make it impossible for customers to enroll without providing unambiguously affirmative consent.”

“Sellers must either maintain records of each consumer’s unambiguously affirmative consent or demonstrate they satisfy the technological exemption provision,” the FTC’s notice said.

The Commission specifically confirmed that it will not be granting “blanket exemptions to sellers who contract with third parties while offering subscription services.” While some businesses claimed this leaves them on the hook for cancellations they cannot process, the FTC found that “an exemption for all sellers who contract with third parties to manage aspects of their negative option programs would effectively nullify the Rule by incentivizing less than legitimate sellers to contract with actors engaged in deceptive practices to maximize negative option enrollments and frustrate cancellation with impunity.”

“A seller cannot evade its responsibility to deal honestly with consumers by contracting with a third party who does not,” the FTC’s notice said.

Official: FTC rule “may not survive legal challenge”

The final rule narrowly passed by a vote of 3–2, with commissioner Melissa Holyoak providing a dissenting statement accusing the agency of rushing the rule to score political points for the Biden administration ahead of the presidential election.

Vice President Kamala Harris will likely continue Biden’s war on “junk fees” if elected, Reuters reported, and Holyoak claimed that Khan pushed for the rule’s adoption to help follow “through on a campaign pledge made by the Chair’s favored presidential candidate.”

According to Holyoak, the final rule is deeply flawed, “improperly generalizing” unfair and deceptive practices “from narrow industry-specific complaints and evidence to the entire American economy.” She argued that the FTC only based the rule on 35 cases, which is allegedly not enough to establish that harmful practices are “prevalent.”

“Whatever the merits of the past cases, the Majority does not remotely come close to explaining how the evidence in those limited cases are similar to the myriad contexts an economy-wide rule would inevitably apply to,” Holyoak suggested.

She also claimed that “if similarity among complaints and cases only at the highest level of generality constitutes the ‘prevalence’ sufficient to ground an economy-wide rulemaking, then a ‘prevalence’ determination is in fact no meaningful guardrail on the Commission’s conduct at all.”

In the press release, the FTC discussed the wide reach of harms, noting that it “receives thousands of complaints about negative option and recurring subscription practices each year,” with the number “steadily increasing over the past five years.”

But Holyoak insisted that the final rule is such an overreach that it “may not survive legal challenge.”

“The Chair has put political expediency over getting things right,” Holyoak said, raising “the possibility that foreordained outcomes and political goals curtailed considering the rulemaking record with an open mind and without prejudgment, as law requires.”

A key legal flaw, Holyoak claimed, is that the rule prohibits any misrepresentations of a negative option, not just those relating to “deceptive terms.” That means businesses risk civil penalties for any material fact deemed misleading, which she alleged “fails to meet” the level of “specificity” required for FTC rulemaking. That seeming textual oversight “will no doubt invite serious legal challenge on this basis,” Holyoak predicted.

Should any portion of the rule be struck down through a legal challenge, the FTC included a provision on severability, allowing the remainder of the rule to remain in force.

Too soon to guess impact on subscription prices

According to Holyoak, the broad final rule “tilts the playing field in ways that are likely to pervert business incentives,” perhaps leading businesses to stop offering negative option billing models, “even when businesses and consumers could derive significant value from them.”

“Even honest businesses will have reason to reconsider the use of negative option billing now that it means subjecting themselves to potential civil penalties for misreading Commission tea leaves,” Holyoak said.

Further, she alleged that consumers could be harmed if the rule preempts state laws or potentially increases transaction costs for businesses that potentially stop offering cheaper negative option billing. Businesses could also pass on to customers the costs of legal fees incurred in efforts to obtain an exemption, Holyoak suggested.

“Raising the transaction costs will reduce a business’ sales and the utility consumers derive from these services. In other words, in our good intentions, we may harm the consumers and competition we are supposed to protect,” Holyoak warned.

But while Holyoak seems sure that consumers could be harmed by the rule potentially limiting negative option billing and spiking subscription costs, the FTC argued that “consumers cannot realize these benefits when sellers make material misrepresentations to induce consumers to enroll in such programs, fail to provide important information, bill consumers without their consent, or make cancellation difficult or impossible.”

At least one individual customer the FTC notice cited insisted that the rule was necessary to end a wide range of abusive charges draining the wallets of many Americans.

“Implementing this consumer-protection rule has the potential to save American consumers millions of dollars and prevent unscrupulous companies from using byzantine cancellation procedures to squeeze unwarranted funds out of their customers,” the commenter said.

Photo of Ashley Belanger

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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fcc-republican-opposes-regulation-of-data-caps-with-analogy-to-coffee-refills

FCC Republican opposes regulation of data caps with analogy to coffee refills

Simington argued that regulating data caps would harm customers, using an analogy about the hypothetical regulation of coffee refills:

Suppose we were a different FCC, the Federal Coffee Commission, and rather than regulating the price of coffee (which we have vowed not to do), we instead implement a regulation whereby consumers are entitled to free refills on their coffees. What effects might follow? Well, I predict three things could happen: either cafés stop serving small coffees, or cafés charge a lot more for small coffees, or cafés charge a little more for all coffees.

Simington went on to compare the capacity of broadband networks to the coffee-serving capacity of coffee shops. He said that tiered coffee prices “can increase overall revenue for the café,” which can be invested “in more seats, more cafés, and faster coffee brewing.”

Simington is against rate regulation in general and said that regulation of usage-based plans (aka data caps) is just rate regulation with a different name. “Though only a Notice of Inquiry, because it is the first step down a path toward further rate regulation, I can’t support the item we’ve brewed up here. I dissent,” Simington wrote.

Carr: Data-capped plans “more affordable”

Carr’s statement said, “I dissent from today’s NOI because I cannot support the Biden-Harris Administration’s inexorable march towards rate regulation and because the FCC plainly does not have the legal authority to do so.”

Carr pointed to the recent 6th Circuit appeals court ruling that blocked the Rosenworcel FCC’s attempt to reinstate net neutrality rules under Title II of the Communications Act. Judges blocked enforcement of the net neutrality rules until the court makes a final ruling, saying that broadband providers are likely to win the case on the merits.

Carr said the FCC is “start[ing] down the path of directly regulating rates… by seeking comment on controlling the price of broadband capacity (‘data caps’). Prohibiting customers from choosing to purchase plans with data caps—which are more affordable than unlimited ones—necessarily regulates the service rates they are paying for.”

FCC Republican opposes regulation of data caps with analogy to coffee refills Read More »

spacex-tells-fcc-it-has-a-plan-to-make-starlink-about-10-times-faster

SpaceX tells FCC it has a plan to make Starlink about 10 times faster

As for actual speeds in 2024, Starlink’s website says “users typically experience download speeds between 25 and 220Mbps, with a majority of users experiencing speeds over 100Mbps. Upload speeds are typically between 5 and 20Mbps. Latency ranges between 25 and 60 ms on land, and 100+ ms in certain remote locations.”

Changing satellite elevation angles

Another request would change the elevation angles of satellites to improve network performance, SpaceX said. “SpaceX seeks to lower its minimum elevation angle from 25 degrees to 20 degrees for satellites operating between 400 and 500 km altitude,” SpaceX told the FCC. “Reducing the minimum elevation angle in this way will enhance customer connectivity by allowing satellites to connect to more earth stations directly and to maintain connections with earth stations for a longer period of time while flying overhead.”

Meanwhile, upgrades to Starlink’s Gen2 satellites “will feature enhanced hardware that can use higher gain and more advanced beamforming and digital processing technologies and provide more targeted and robust coverage for American consumers,” SpaceX said.

SpaceX is also seeking more flexible use of spectrum licenses to support its planned mobile service and the current home Internet service. The company asked for permission “to use Ka-, V-, and E-band frequencies for either mobile- or fixed-satellite use cases where the US or International Table of Frequency Allocations permits such dual use and where the antenna parameters would be indistinguishable.”

“These small modifications, which align with Commission precedent, do not involve any changes to the technical parameters of SpaceX’s authorization, but would permit significant additional flexibility to meet the diverse connectivity and capacity needs of consumer, enterprise, industrial, and government users,” the application said.

SpaceX tells FCC it has a plan to make Starlink about 10 times faster Read More »