Policy – Page 37

Missouri AG’s legal war against Media Matters shot down by federal judge

media matters x, missouri attorney general, Policy / Kris Guyer / August 26, 2024

Stop right there —

Judge: Missouri AG’s actions chill speech about extremist content on Musk’s X.

Jon Brodkin – Aug 26, 2024 7: 58 pm UTC

Missouri Attorney General Andrew Bailey adjusts his necktie while in a Congressional hearing room — Enlarge / Missouri Attorney General Andrew Bailey arrives to testify at House Homeland Security Committee hearing on Wednesday, January 10, 2024.

Getty Images | Bill Clark

A federal judge ordered Missouri’s attorney general to halt an investigation into Media Matters for America, a nonprofit journalism organization that earned Elon Musk’s wrath when it published an article showing that Musk’s X platform placed advertisements next to pro-Nazi posts.

In March, Missouri AG Andrew Bailey issued an investigative demand seeking names and addresses of all Media Matters donors who live in Missouri and a range of internal communications and documents regarding the group’s research on Musk and X. Bailey also filed a lawsuit asking Cole County Circuit Court for an order to enforce the investigative demand.

Media Matters countered by suing Bailey in US District Court for the District of Columbia. Last week, US District Judge Amit Mehta granted a preliminary injunction that prohibits Bailey from enforcing the civil investigative demand and from pursuing the related lawsuit.

Mehta had issued a similar order against Texas Attorney General Ken Paxton a few months earlier. Mehta filed a memorandum opinion on August 23 describing the reasons for granting Media Matters’ request for an injunction against Bailey.

Media Matters demonstrated a likelihood of success in its claim that Bailey took retaliatory actions designed to deter speech, Mehta wrote:

The court already has held that Defendant Paxton’s announcement of an investigation and issuance of a CID [Civil Investigative Demand] demanding records relating to Media Matters’ organization, funding, and journalism would sufficiently deter a news organization or journalist “of ordinary firmness” from speaking again about X-related matters. Defendant Bailey has gone one step further. He has filed suit not only to enforce the Missouri CID, but he has asked a state court to sanction Media Matters with a civil penalty. Such action chills speech.

X did not deny basic premise of article

Media Matters has also “likely shown that their reporting was not defamatory and therefore was protected speech,” Mehta wrote. In its public response to the November 2023 Media Matters article, “X did not deny that advertising in fact had appeared next to the extremist posts on the day in question,” Mehta wrote. He continued:

X stated that it had served “less than 50 total ad impressions” next to the “organic content featured in the Media Matters article” (a mere fraction of the 5.5 billion ad impressions served that day), and it conceded that [Media Matters reporter Eric] Hananoki and one other person had seen advertisements of two of the brands identified in the article next to the extremist content. X called these “contrived experiences,” but did not deny the basic premise of the article: that X’s platform was delivering ads of major brands next to extremist content. Many other media outlets, as recently as April 2024, have published similar findings. These other stories corroborate Hananoki’s reporting and Plaintiffs’ belief in its accuracy.

Mehta’s ruling said that Bailey made it clear that “the true purpose of his investigation” was political. “Revealingly, Defendant Bailey expressly tied the investigation to the upcoming election” during an online interview with Donald Trump Jr., Mehta wrote.

“This is absolutely a new front in the fight for the war for free speech. This investigation is really critical and again especially as we move into an election cycle in 2024,” Bailey said during the interview.

Bailey’s lawsuit in Cole County Circuit Court claimed that “Media Matters has used fraud to solicit donations from Missourians in order to trick advertisers into removing their advertisements from X, formerly Twitter, one of the last platforms dedicated to free speech in America.” Bailey hasn’t provided good evidence for this claim, Mehta wrote.

Missouri Assistant Attorney General Steven Reed “never identifies what suspected fraudulent statements or omissions Media Matters made to Missourians for the purpose of soliciting donations,” Mehta wrote. “If he means to say that Media Matters’ defamatory reporting itself is the fraud, he nowhere links that content to Media Matters’ fundraising efforts. He does not claim, for example, that Media Matters used its reporting on X to solicit donations. In fact, the webpage on which the November 16 Article appeared made no express fundraising appeal. Nor did it include a donation link. Defamation is not fraud. It is thus likely that the false reporting-as-fraudulent fundraising justification for the investigation is pretext for retaliation.”

Bailey can appeal Mehta’s order. If the order stands, the preliminary injunction would stay in force until a final judgment in Media Matters’ case against Bailey.

Missouri AG’s legal war against Media Matters shot down by federal judge Read More »

Telegram CEO Pavel Durov awaits charges in France as firm denies law-breaking

pavel durov, Policy, telegram, telegram pavel durov / Paul Patrick / August 26, 2024

Telegram CEO Pavel Durov sitting on stage and speaking at a conference. — Enlarge / Pavel Durov, CEO and co-founder of Telegram, speaks at TechCrunch Disrupt SF 2015 on September 21, 2015, in San Francisco, California.

Getty Images | tSteve Jennings

After the arrest of Telegram CEO and co-founder Pavel Durov in France over the weekend, his detention was extended for up to four days while a judge decides whether he should face criminal charges.

“The detention of Durov, 39, was extended beyond Sunday night by the investigating magistrate who is handling the case, according to a source close to the investigation,” Le Monde reported. “This initial period of detention for questioning can last up to a maximum of 96 hours. When this phase of detention ends, the judge can then decide to free him or press charges and remand in further custody.”

Telegram “is accused of failure to cooperate with law enforcement over drug trafficking, child sexual content and fraud,” the BBC wrote. Telegram yesterday said it “abides by EU laws, including the Digital Services Act,” and that the platform’s “moderation is within industry standards and constantly improving.”

“Telegram’s CEO Pavel Durov has nothing to hide and travels frequently in Europe,” the company said. “It is absurd to claim that a platform or its owner are responsible for abuse of that platform. Almost a billion users globally use Telegram as means of communication and as a source of vital information. We’re awaiting a prompt resolution of this situation.”

Durov’s arrest warrant was issued by “France’s OFMIN, an office tasked with preventing violence against minors,” Le Monde wrote. The warrant is reportedly related to “a preliminary investigation into alleged offenses including fraud, drug trafficking, cyberbullying, organized crime, and promotion of terrorism.”

Reuters wrote that a police spokesman told the news agency “that Durov is under investigation by the national cyber crime and fraud offices for failing to cooperate over cyber and financial crimes on Telegram.” The New York Times reported that “Laure Beccuau, the Paris prosecutor, said in a statement that the arrest was part of an investigation opened on July 8 ‘against person unnamed’ on a raft of potential charges, including complicity in the distribution of child pornography and selling of drugs, money laundering, and a refusal to cooperate with law enforcement.”

The statement from Beccuau was released by French authorities in both French and English. It says Durov was questioned as part of an investigation into this “person unnamed.” The accusations against the unnamed person also include “web-mastering an online platform in order to enable an illegal transaction in organized group,” and “refusal to communicate, at the request of competent authorities, information or documents necessary for carrying out and operating interceptions allowed by law.”

Three of the charges being investigated are related to encryption, the French press release said. These include “providing cryptology services aiming to ensure confidentiality without certified declaration,” “providing a cryptology tool not solely ensuring authentication or integrity monitoring without prior declaration,” and “importing a cryptology tool ensuring authentication or integrity monitoring without prior declaration.”

Macron: Arrest not a political decision

Durov was born in Russia and also has citizenship in the United Arab Emirates and France. Telegram is based in the UAE.

The Russian embassy in France reportedly said it “immediately asked French authorities to explain the reasons for this detention and demanded that [Durov’s] rights be protected and that consular access be granted. Up to now, the French side is refusing to cooperate on this question.”

French President Emmanuel Macron wrote today that the French judicial system is acting independently. “The arrest of the Telegram president on French territory took place as part of an ongoing judicial investigation,” he wrote, according to a Google translation. “This is in no way a political decision. It is up to the judges to decide.” Macron also wrote that France is committed to “freedom of expression and communication.”

Telegram offers a mix of private messaging and social network features. It lets users create groups of up to 200,000 people, and its Channels feature allows the posting of public messages to audiences of any size. Telegram messages do not have end-to-end encryption by default, but the extra level of security can be enabled for one-on-one conversations.

“If you want to use end-to-end encryption in Telegram, you must manually activate an optional end-to-end encryption feature called ‘Secret Chats‘ for every single private conversation you want to have,” Matthew Green, a Johns Hopkins University professor and cryptographer, wrote. “The feature is explicitly not turned on for the vast majority of conversations, and is only available for one-on-one conversations, and never for group chats with more than two people in them.”

Telegram CEO Pavel Durov awaits charges in France as firm denies law-breaking Read More »

US sues RealPage, claims rental-pricing algorithm used by landlords is illegal

Policy, realpage / Kris Guyer / August 23, 2024

Rental-pricing software —

AG: Landlords use RealPage algorithm “to align their rents.”

Jon Brodkin – Aug 23, 2024 5: 41 pm UTC

US Attorney General Merrick Garland speaking at a news conference while standing behind a podium. — Enlarge / US Attorney General Merrick Garland speaks during a news conference in Washington, DC, on Friday, August 23, 2024.

Getty Images | Bloomberg

The United States today sued RealPage, alleging that the software maker distorts competition in rental housing by helping landlords collectively set prices.

“To ensure they secure the greatest value for their needs, renters rely on robust and fierce competition between landlords. RealPage distorts that competition,” said the lawsuit filed by the US government and eight state attorneys general. In a press release, the Justice Department said that “RealPage’s pricing algorithm violates antitrust laws.”

Attorney General Merrick Garland delivered remarks on the lawsuit. “When the Sherman Act was passed, an anticompetitive scheme might have looked like robber barons shaking hands at a secret meeting,” he said. “Today, it looks like landlords using mathematical algorithms to align their rents. But antitrust law does not become obsolete simply because competitors find new ways to unlawfully act in concert.”

RealPage’s commercial revenue management software “enable[s] landlords to sidestep vigorous competition to win renters’ business,” the lawsuit alleged. “Landlords, who would otherwise be competing with each other, submit on a daily basis their competitively sensitive information to RealPage. This nonpublic, material, and granular rental data includes, among other information, a landlord’s rental prices from executed leases, lease terms, and future occupancy. RealPage collects a broad swath of such data from competing landlords, combines it, and feeds it to an algorithm.”

Using that sensitive data, “RealPage provides daily, near real-time pricing ‘recommendations’ back to competing landlords,” the US said. The US alleges that these “are more than just ‘recommendations'” and that “RealPage monitors compliance by landlords to its recommendations.”

AG: Landlords “outsource their pricing decisions”

The US asked for a court order declaring “that RealPage has acted unlawfully to restrain trade in conventional multifamily rental housing markets across the United States.” The requested order would prohibit RealPage from continuing its allegedly anticompetitive practices and provide “relief necessary and appropriate to restore competitive conditions in the markets affected by RealPage’s unlawful conduct.”

RealPage recently argued that its software “benefits both housing providers and residents,” and “makes price recommendations in all directions—up, down, or no change—to align with property-specific objectives of the housing providers using the software.” Landlords don’t have to follow the recommendations, the company says.

The US said RealPage takes a more direct role in setting prices. RealPage “reviews and weighs in on landlords’ other policies, including trying to—and often succeeding in—ending renter-friendly concessions (like a free month’s rent or waived fees) to attract or retain renters,” the lawsuit said. Garland alleged that “a large number of landlords effectively agree to outsource their pricing decisions to RealPage by using an ‘auto accept’ setting, which effectively permits RealPage to determine the price a renter will pay.”

The RealPage algorithm “can serve as a mechanism for communication,” Diana Moss, director of competition policy at the Progressive Policy Institute, a public policy think tank, was quoted as saying by The New York Times. “That is as approachable and actionable under US antitrust as any form of communication we’ve seen in past cases in the non-digital era.”

The lawsuit was filed in US District Court for the Middle District of North Carolina. Six landlords in North Carolina provided information to the Justice Department. The states joining the lawsuit are North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington.

Software eliminates “guessing game” on prices

Garland said the investigation preceding the lawsuit took nearly two years. The lawsuit quoted landlords describing how they use RealPage:

One landlord observed that RealPage’s software “can eliminate the guessing game” for landlords’ pricing decisions. Discussing a different RealPage product, another landlord said: “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing.” A third landlord explained, “Our very first goal we came out with immediately out of the gate is that we will not be the reason any particular sub-market takes a rate dive. So for us our strategy was to hold steady and to keep an eye on the communities around us and our competitors.”

The lawsuit said that “RealPage frequently tells prospective and current clients that a ‘rising tide raises all ships.’ A RealPage revenue management vice president explained that this phrase means that ‘there is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the industry down.'”

The US and states allege that RealPage violated Section 1 of the Sherman Act by unlawfully sharing information for use in competitors’ pricing, and by entering into vertical agreements with landlords to align pricing. RealPage is further accused of violating Section 2 of the Sherman Act through monopolization of the commercial revenue management software market.

RealPage, which is also facing a ban on its software in San Francisco, said the lawsuit is “devoid of merit and will do nothing to make housing more affordable.”

“We are disappointed that, after multiple years of education and cooperation on the antitrust matters concerning RealPage, the DOJ has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” RealPage said.

The White House issued a statement saying it has no comment on the lawsuit against RealPage, but that the Biden-Harris administration “continues to support fair and vigorous enforcement of the antitrust laws to prevent illegal collusion.”

US sues RealPage, claims rental-pricing algorithm used by landlords is illegal Read More »

Labor board confirms Amazon drivers are employees, in finding hailed by union

Amazon, amazon delivery, amazon drivers, California, labor laws, national labor relations board, nlrb, Policy, teamsters, unfair business practices, unfair labor practices / Rejus Almole / August 23, 2024

Driving a hard bargain —

“We are Amazon workers”: Delivery drivers celebrate labor board finding.

Ashley Belanger – Aug 23, 2024 5: 28 pm UTC

Amazon may be forced to meet some unionized delivery drivers at the bargaining table after a regional National Labor Relations Board (NLRB) director determined Thursday that Amazon is a joint employer of contractors hired to ensure the e-commerce giant delivers its packages when promised.

This seems like a potentially big loss for Amazon, which had long argued that delivery service partners (DSPs) exclusively employed the delivery drivers, not Amazon. By rejecting its employer status, Amazon had previously argued that it had no duty to bargain with driver unions and no responsibility for alleged union busting, The Washington Post reported.

But now, after a yearlong investigation, the NLRB has issued what Amazon delivery drivers’ union has claimed was “a groundbreaking decision that sets the stage for Amazon delivery drivers across the country to organize with the Teamsters.”

In a press release reviewed by Ars, the NLRB regional director confirmed that as a joint employer, Amazon had “unlawfully failed and refused to bargain with the union” after terminating their DSP’s contract and terminating “all unionized employees.” The NLRB found that rather than bargaining with the union, Amazon “delayed start times by grounding vans and not preparing packages for loading,” withheld information from the union, and “made unlawful threats.” Teamsters said those threats included “job loss” and “intimidating employees with security guards.”

Sean M. O’Brien, the Teamsters general president, claimed the win for drivers unionizing not just in California but for nearly 280,000 drivers nationwide.

“Amazon drivers have taken their future into their own hands and won a monumental determination that makes clear Amazon has a legal obligation to bargain with its drivers over their working conditions,” O’Brien said. “This strike has paved the way for every other Amazon worker in the country to demand what they deserve and to get Amazon to the bargaining table.”

Unless a settlement is reached, the NLRB will soon “issue a complaint against Amazon and prosecute the corporate giant at a trial” after finding that “Amazon engaged in a long list of egregious unfair labor practices at its Palmdale facility,” Teamsters said.

Apparently downplaying the NLRB determination, Amazon is claiming that the Teamsters are trying to “misrepresent what is happening here.” Seemingly Amazon is taking issue with the union claiming that an NLRB determination on the merits of their case is a major win when the NLRB has yet to issue a final ruling.

According to the NLRB’s press release, “a merit determination is not a ‘Board decision/ruling’—it is the first step in the NLRB’s General Counsel litigating the allegations after investigating an unfair labor practice charge.”

Amazon’s spokesperson, Eileen Hards, told Ars that the NLRB office confirmed to Amazon that it will be “dismissing most of the Teamsters’ more significant claims it filed last year in Palmdale.” That apparently includes dismissing the Teamsters’ claims that Amazon unlawfully terminated its contract with one of their DSPs and that Amazon had a legal obligation to honor the Teamsters’ contract with that DSP.

Next, the NLRB will determine if the “remaining allegations should be decided by an administrative law judge,” Hards said. After that, Amazon will have opportunities to appeal any unfavorable rulings, first to the Board and then to a federal appeals court, the NLRB confirmed to Ars.

Hards confirmed that Amazon still expects all the Teamsters’ remaining claims will be dismissed.

“As we have said all along, there is no merit to the Teamsters’ claims,” Hards told Ars. “If and when the agency decides it wants to litigate the remaining allegations, we expect they will be dismissed as well.”

But Hards declined to comment on the impacts of the NLRB’s determination that Amazon is a joint employer of the unionized delivery drivers.

One Amazon driver in Palmdale, Jessie Moreno, said that worker conditions for Amazon drivers could improve because of the determination.

“Amazon can no longer dodge responsibility for our low wages and dangerous working conditions, and it cannot continue to get away with committing unfair labor practices,” Moreno said. “We are Amazon workers, and we are holding Amazon accountable.”

Amazon drivers uniting “like never before”

The NLRB determination came following a complaint from 84 Amazon workers from Palmdale, California, who became the first Amazon delivery drivers to unionize in April 2023, represented by Teamsters Local 396.

While their DSP recognized the union, workers launched an unfair labor strike in June 2023 after Amazon allegedly “engaged in dozens of unfair labor practices in violation of federal labor law in an effort to quash workers’ organizing efforts,” the Teamsters said.

The picket line quickly expanded “to over 50 Amazon warehouses across 10 states,” the Teamsters said. Most recently, drivers in Skokie, Illinois, “launched their own unfair labor practice strike in June 2024,” right around the same time that “more than 5,500 members of the Amazon Labor Union in New York voted by an overwhelming 98.3 percent to affiliate with the Teamsters.”

In their blog, the Teamsters said that Amazon “has avoided responsibility for its drivers through its DSP subcontractor business model” since 2018, but drivers hope that yesterday’s NLRB determination could put an end to the dodgy tactic.

“The NLRB’s joint employer determination shatters that myth” that “DSP drivers are not official employees of Amazon” and “makes clear that through its DSP business model, Amazon exercises widespread control over drivers’ labor and working conditions, making Amazon the drivers’ employer,” the Teamsters said.

The Teamsters said that they are “confident” that “the NLRB’s regional determination for the Palmdale workers will extend to Amazon DSP drivers who unionize nationwide.” One union member and Amazon driver, Brandi Diaz, celebrated what she considered to be the US government recognizing that the DSP program is a “sham.”

“We wear Amazon uniforms, we drive Amazon vans, and Amazon controls every minute of our day,” Diaz said. “Amazon can no longer have all the benefits of their own fleet of drivers without the responsibilities that come with it. The time has come for Amazon drivers across the country to organize with the Teamsters and demand what we deserve.”

Drivers are currently fighting to increase wages and improve driver safety amid what they claim are unchecked dangerous conditions they must navigate as Amazon drivers. Moreno said that the NLRB determination was a significant step toward unionizing more drivers and ending Amazon’s allegedly unfair labor practices nationwide.

“We have been on strike to stop Amazon’s lawbreaking and we are winning at the NLRB, while we are uniting Amazon workers across the country like never before,” Moreno said.

Labor board confirms Amazon drivers are employees, in finding hailed by union Read More »

Ex-bank CEO gets 24 years after falling for crypto scam, causing bank collapse

crypto scam, Cryptocurrency, pig butchering, Policy / Kris Guyer / August 22, 2024

Breaking the bank —

Former bank CEO ignored warnings that he was being scammed while tanking bank.

Ashley Belanger – Aug 22, 2024 8: 05 pm UTC

A federal judge sentenced a 53-year-old Kansas man to more than 24 years in prison after the former bank CEO abused his trusted position to embezzle $47 million after falling for a cryptocurrency scam that he believed would make him wildly rich.

In a press release, the US Attorney’s Office said that Shan Hanes was driven by “greed” when directing bank employees to transfer millions in funds to a sketchy crypto wallet managed by still-unknown third parties behind the so-called “pig butchering” scheme.

Hanes was first targeted by scammers in late 2022, apparently when he got a message from an unidentified co-conspirator on WhatsApp, prosecutors said. After blowing through his own funds seeking promised profits, Hanes stole tens of thousands from a local church, then a local investor club, and finally his daughter’s college fund, NBC News reported. Then when all those wells dried up, he started stealing bank funds—all in the false hopes that sending more and more money to the scammers would somehow “unlock the supposed returns” on his crypto investments.

In total, Hanes made 11 wire transfers using bank funds between May 2023 and July 2023. But instead of getting rich quick, Hanes never realized any profits at all, the US Attorney’s Office said.

He pleaded guilty to one count of embezzlement by a bank officer after he singlehandedly caused the collapse of Heartland Tri-State Bank (HTSB) in Elkhart, Kansas, the press release said.

Because the bank was insured by the Federal Deposit Insurance Corporation (FDIC), the FDIC “absorbed the $47.1 million loss” after “Hanes’ fraudulent actions caused HTSB to fail and the bank investors to lose $9 million,” the US Attorney’s Office said. On top of those losses, Hanes’ fraudulent actions caused “catastrophic losses to bank customers who relied on the bank for the safekeeping of their savings,” the press release confirmed.

According to NBC News, Hanes missed at least one opportunity to realize that he was being scammed. After he asked for a $12 million loan from a neighbor, Brian Mitchell, his neighbor detected the scam and refused to lend the money.

“I said, ‘You’re in a scam, walk away,'” Mitchell told NBC News.

But Hanes didn’t walk away. Going the other direction, he directed bank employees to wire millions more to scammers after he got the warning from Mitchell. It wasn’t until Mitchell heard from a bank employee that Hanes had wired money out of the bank that Mitchell insisted on speaking to the bank’s board.

Days later, Hanes was fired, NBC News reported. But even then, Hanes never believed he was being scammed, reportedly telling Mitchell that he was still scheming to find a way to recover his make-believe profits right up to the moment he was arrested.

“He said … ‘If I just had another two months, I could get the money back,'” Mitchell told NBC News.

Law enforcement and government officials have warned that pig-butchering scams are growing increasingly common, urging people to “think twice” to avoid being victimized. Last year, the US Department of the Treasury’s Financial Crimes Enforcement Network issued an alert, which explained in detail how the scams commonly work and laid out red flags to watch out for.

Victims may never fully recover losses, DOJ says

A Kansas FBI agent, Stephen Cyrus, said in the press release that as CEO, Hanes violated “the trust and confidence of the community of Elkhart” by embezzling the funds.

Mitchell described Hanes’ deceptions and manipulations as “pure evil,” while Cyrus said that it was Hanes’ “job” and “the bank’s job” to “protect its customers and identify fraudulent scams—not to participate in them.”

In a court filing at sentencing, Hanes’ lawyer, John Stang, chalked up his client’s misdeeds to “bad choices,” reminding the court that Hanes had been deceived, too, by “an extremely well-run cryptocurrency scam.”

“He was the pig that was butchered,” Stang wrote. “Mr. Hanes’s vulnerability to the Pig Butcher scheme caused him to make some very bad decisions, for which he is truly sorry for causing damage to the bank and loss to the Stockholders.”

Hanes faced a maximum penalty of 30 years. While Judge John Broomes ordered him to serve less time than that, his sentence of more than 24 years is 29 months longer than prosecutors had requested, NBC News reported.

Right now, it’s unclear how or when victims will be repaid for losses. Broomes ordered “that restitution be finalized at a separate hearing within the next 90 days,” the US Attorney’s Office said.

In the community, people are still struggling to recover, Mitchell told NBC News, noting that some people lost up to 80 percent of their retirement savings. For at least one woman, retirement is impossible now, Mitchell said, and for another local woman, it has become difficult to pay for her 93-year-old mother’s nursing home.

US Attorney Kate E. Brubacher said that it’s hard to say when or if victims will be made whole again.

“Hanes is a liar and a master manipulator” who squandered away “tens of millions of dollars in cryptocurrency” while orchestrating “schemes to cover his tracks concerning the losses at the bank,” Brubacher said. “Many victims will never fully recoup losses to their life savings and retirement funds, but at least we at the Department of Justice can see that Hanes is held criminally responsible for his actions.”

Ex-bank CEO gets 24 years after falling for crypto scam, causing bank collapse Read More »

Google avoids “link tax” bill with deal to fund California journalism and AI

Google, google journalism, Policy / Paul Patrick / August 22, 2024

Google funding for news orgs —

Critics say Google got off easy as it agrees to pay $55 million into news fund.

Jon Brodkin – Aug 22, 2024 7: 20 pm UTC

Getty Images | Josh Edelson

Google has agreed to fund local journalism and an artificial intelligence initiative in California as part of a deal that would reportedly result in lawmakers shelving a proposal to require Google to pay news outlets for distributing their content. But the deal’s state financing requires legislative approval as part of California’s annual budget process and is drawing criticism from some lawmakers and a union for journalists.

Governor Gavin Newsom is on board, saying that the “agreement represents a major breakthrough in ensuring the survival of newsrooms and bolstering local journalism across California—leveraging substantial tech industry resources without imposing new taxes on Californians.” The deal “will provide nearly $250 million in public and private funding over the next five years, with the majority of funding going to newsrooms,” said an announcement by Assemblymember Buffy Wicks, a Democrat.

A “News Transformation Fund” would be created with funding from the state and Google and be administered by the UC Berkeley School of Journalism. The state would contribute $30 million the first year and $10 million in each of the next four years, according to a summary provided to Ars by Wicks’ office.

Google would contribute $55 million to the news fund over five years, consisting of $15 million the first year and $10 million in each of the next four years. The funds would be distributed to news organizations based on how many journalists they employ.

Google also agreed to provide $62.5 million over five years for a “National AI Innovation Accelerator.” Wicks’ office said the accelerator “will be administered in collaboration with a private nonprofit, and will provide organizations across industries and communities—from journalism, to the environment, to racial equity and beyond—with financial resources and other support to experiment with AI to assist them in their work.”

The “nearly $250 million” figure quoted by Wicks’ office includes a commitment from Google to continue funding the company’s existing journalism programs with $10 million annually for five years.

Union calls deal a “shakedown”

The Media Guild of the West union slammed the deal as a “shakedown” in a statement issued yesterday. The agreement is disappointing partly because it came “after two years of advocacy for strong antimonopoly action to start turning around the decline of local newsrooms,” the group said.

“The publishers who claim to represent our industry are celebrating an opaque deal involving taxpayer funds, a vague AI accelerator project that could very well destroy journalism jobs, and minimal financial commitments from Google to return the wealth this monopoly has stolen from our newsrooms,” the union said. “Not a single organization representing journalists and news workers agreed to this undemocratic and secretive deal with one of the businesses destroying our industry.”

Perhaps explaining why journalism and AI funding are part of the same agreement, Wicks’ office said the AI accelerator will “complement the work of the Journalism Fund by creating new tools to help journalists access and analyze public information.”

Google recently testified against pending legislation submitted by Wicks, known as the California Journalism Preservation Act. Google said the bill would “break the foundational principles of the open Internet, forcing platforms to pay publishers for sending valuable free traffic to them, which they choose to receive.” Google has called the bill a “link tax.”

Alphabet Chief Legal Officer Kent Walker praised the deal yesterday as “a collaborative framework to accelerate AI innovation and support local and national businesses and non-profit organizations.”

State funding faces opposition in Senate

Democratic State Senator Steve Glazer, who proposed a different bill aiming to fund local journalism, issued a statement criticizing the deal. “Google’s offer is completely inadequate and massively short of matching their settlement agreement in Canada in supporting on-the-ground local news reporting,” he said.

Glazer questioned why only Google was involved in the deal announcement, and not other tech companies. “There is a stark absence in this announcement of any support for journalism from Meta and Amazon,” Glazer said. “These platforms have captured the intimate data from Californians without paying for it. Their use of that data in advertising is the harm to news outlets that this agreement should mitigate.”

Senate President Pro Tempore Mike McGuire “questioned legislative support for the state’s share of the deal,” The New York Times wrote.

“We have concerns that this proposal lacks sufficient funding for newspapers and local media, and doesn’t fully address the inequities facing the industry,” McGuire, a Democrat, was quoted as saying. McGuire said the state Senate is “pursuing a global solution that would hold all of these companies accountable.”

News organizations have reported declines in Google referrals, a trend that may be worsened by how Google’s AI Overview feature displays search results.

Wicks’ announcement of the deal quoted several supporters in the publishing industry. “This is a first step toward what we hope will become a comprehensive program to sustain local news in the long term, and we will push to see it grow in future years,” the California News Publishers Association said.

There was also a supportive quote from OpenAI Chief Strategy Officer Jason Kwon: “A strong press is a key pillar of democracy, and we’re proud to be part of this partnership to utilize AI in support of local journalism across California. This initiative builds on our longstanding work to help newsrooms and journalists around the world leverage AI to improve workflows, better connect users to quality content, and help news organizations shape the future of this emerging technology.”

OpenAI is contributing technology to the agreement, but not any money, the summary from Wicks’ office said.

Google avoids “link tax” bill with deal to fund California journalism and AI Read More »

Telco fined $1M for transmitting Biden deepfake without verifying Caller ID

biden deepfake, fake biden robocall, Policy / Kris Guyer / August 21, 2024

Biden deepfake robocall —

Lingo Telecom signed calls with A-Level attestations despite not verifying them.

Jon Brodkin – Aug 21, 2024 8: 58 pm UTC

President Biden walking outdoors while holding a cell phone to his ear with one hand and holding another phone in his other hand. — Enlarge / President Joe Biden leaving the White House on August 16, 2024, in Washington, DC.

Getty Images | Anna Moneymaker

A phone company agreed to pay a $1 million fine for transmitting spoofed robocalls in which a deepfake of President Joe Biden’s voice urged New Hampshire residents not to vote. Lingo Telecom, which is based in Texas, agreed to a settlement with the Federal Communications Commission, the agency announced today.

Lingo Telecom “will pay a $1 million civil penalty and implement a historic compliance plan—the first of its kind secured by the FCC—that will require strict adherence to the FCC’s STIR/SHAKEN Caller ID authentication rules,” the FCC said. The settlement includes “requirements that the company abide by ‘Know Your Customer’ (KYC) and ‘Know Your Upstream Provider’ (KYUP) principles” that focus on vetting call traffic to ensure it is trustworthy, and “requirements that the company more thoroughly verify the accuracy of the information provided by its customers and upstream providers.”

The calls made before New Hampshire’s presidential primary in January were orchestrated by Steve Kramer, a Democratic consultant who was working for a candidate running against Biden. Kramer was indicted on charges of voter suppression and impersonation of a candidate, and the FCC proposed a $6 million fine for Kramer. The calls inaccurately displayed a phone number associated with a prominent New Hampshire political operative.

The FCC originally proposed a $2 million fine for Lingo Telecom before settling for the $1 million penalty in a consent decree issued today. The consent decree resolves the FCC investigation into Lingo Telecom’s apparent violations of rules related to the STIR/SHAKEN Caller ID authentication system.

Telco didn’t verify calls

Lingo Telecom completed 3,978 calls to potential New Hampshire voters on January 21, 2024, on behalf of a customer called Life Corporation. Lingo Telecom signed those calls with A-Level attestations, which indicate that the phone company “is responsible for the origination of the call onto the IP-based service provider voice network, has a direct authenticated relationship with the customer and can identify the customer, and has established a verified association with the telephone number used for the call.”

Lingo Telecom did not actually verify the calls, the consent decree said:

Lingo Telecom explained that its policy was to assign A-level attestations to a customer’s traffic when the Company directly assigned Direct Inward Dialing (DID) numbers to a customer like Life Corporation. If one of these customers, like Life Corporation, also purchased Company Session Initiation Protocol (SIP) trunks that permits the customer to use numbers assigned by other carriers, Lingo Telecom allowed them to “receive an A-level attestation for traffic associated with… non-Lingo provisioned telephone numbers if the customer certified that it ‘will identify its customer and has a verified association with the telephone number used for the call.'”

Lingo Telecom told the FCC that it relied on the certification provided by Life Corporation, which had been a customer of Lingo Telecom for 16 years. “Lingo Telecom took no additional steps beyond those recited above to independently ascertain whether the customers of Life Corporation could legitimately use the telephone number that appeared as the calling party for the New Hampshire presidential primary calls,” the FCC said.

The consent decree states that, going forward, “Lingo Telecom may only apply an A-level attestation to a call if Lingo Telecom itself has provided the Caller Identity to the calling party associated with the Call.” The consent decree’s “Know Your Customer” provisions require Lingo Telecom to obtain more detailed information from customers, while the “Know Your Upstream Provider” provisions require it to obtain more detailed information from other telcos that it transmits calls for.

Lingo Telecom is also barred from accepting “payment in the form of cryptocurrency, gift cards, or cash to transmit or originate calls.” The consent decree is scheduled to be in effect for three years but can be extended by 12 months for each instance of noncompliance.

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Google can’t defend shady Chrome data hoarding as “browser agnostic,” court says

chrome browser, data privacy, Google, google chrome, Online Privacy, Policy / Kris Guyer / August 21, 2024

Chrome users who declined to sync their Google accounts with their browsing data secured a big privacy win this week after previously losing a proposed class action claiming that Google secretly collected personal data without consent from over 100 million Chrome users who opted out of syncing.

On Tuesday, the 9th US Circuit Court of Appeals reversed the prior court’s finding that Google had properly gained consent for the contested data collection.

The appeals court said that the US district court had erred in ruling that Google’s general privacy policies secured consent for the data collection. The district court failed to consider conflicts with Google’s Chrome Privacy Notice (CPN), which said that users’ “choice not to sync Chrome with their Google accounts meant that certain personal information would not be collected and used by Google,” the appeals court ruled.

Rather than analyzing the CPN, it appears that the US district court completely bought into Google’s argument that the CPN didn’t apply because the data collection at issue was “browser agnostic” and occurred whether a user was browsing with Chrome or not. But the appeals court—by a 3–0 vote—did not.

In his opinion, Circuit Judge Milan Smith wrote that the “district court should have reviewed the terms of Google’s various disclosures and decided whether a reasonable user reading them would think that he or she was consenting to the data collection.”

“By focusing on ‘browser agnosticism’ instead of conducting the reasonable person inquiry, the district court failed to apply the correct standard,” Smith wrote. “Viewed in the light most favorable to Plaintiffs, browser agnosticism is irrelevant because nothing in Google’s disclosures is tied to what other browsers do.”

Smith seemed to suggest that the US district court wasted time holding a “7.5-hour evidentiary hearing which included expert testimony about ‘whether the data collection at issue'” was “browser-agnostic.”

“Rather than trying to determine how a reasonable user would understand Google’s various privacy policies,” the district court improperly “made the case turn on a technical distinction unfamiliar to most ‘reasonable'” users, Smith wrote.

Now, the case has been remanded to the district court where Google will face a trial over the alleged failure to get consent for the data collection. If the class action is certified, Google risks owing currently unknown damages to any Chrome users who opted out of syncing between 2016 and 2024.

According to Smith, the key focus of the trial will be weighing the CPN terms and determining “what a ‘reasonable user’ of a service would understand they were consenting to, not what a technical expert would.”

The same privacy policy last year triggered a Google settlement with Chrome users whose data was collected despite using “Incognito” mode.

Matthew Wessler, a lawyer for Chrome users suing, told Ars that “we are pleased with the Ninth Circuit’s decision” and “look forward to taking this case on behalf of Chrome users to trial.”

A Google spokesperson, José Castañeda, told Ars that Google disputes the decision.

“We disagree with this ruling and are confident the facts of the case are on our side,” Castañeda told Ars. “Chrome Sync helps people use Chrome seamlessly across their different devices and has clear privacy controls.”

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Disney abandons Disney+ arbitration defense in restaurant allergy death case

disney+ arbitration, Policy / Paul Patrick / August 20, 2024

Getty Images | Gary Hershorn

Disney said it is abandoning its motion to compel arbitration in a case filed by a man who alleges his wife died from anaphylaxis after a restaurant at a Disney complex failed to honor requests for allergen-free food.

Disney’s motion to compel arbitration controversially cited the Disney+ streaming service’s subscriber agreement, which includes a binding arbitration clause. The plaintiff’s lawyer called the argument “absurd.”

Disney confirmed this week that it will withdraw the motion, which it filed on May 31.

“At Disney, we strive to put humanity above all other considerations,” Disney Experiences Chairman Josh D’Amaro said in a statement provided to Ars today. “With such unique circumstances as the ones in this case, we believe this situation warrants a sensitive approach to expedite a resolution for the family who have experienced such a painful loss. As such, we’ve decided to waive our right to arbitration and have the matter proceed in court.”

Disney has not yet submitted a filing to withdraw its motion to compel arbitration, but said it is in the process of doing so. A hearing on Disney’s motion to compel arbitration was scheduled for October 2, but the judge overseeing the case canceled that hearing in a notice posted today. The case is being heard in the 9th Judicial Circuit Court in Orange County, Florida.

Lawyer: Disney+ has nothing to do with restaurant

The lawsuit was filed by Jeffrey Piccolo, a New York resident, against Raglan Road Irish Pub and Restaurant and Walt Disney Parks and Resorts. The restaurant, owned by Great Irish Pubs Florida, is located at the Disney Springs shopping, dining, and entertainment complex in Lake Buena Vista. The family ate there in October 2023.

Piccolo’s lawyer, Brian Denney, wrote in a court filing that “there is simply no reading of the Disney+ Subscriber Agreement, the only Agreement Mr. Piccolo allegedly assented to in creating his Disney+ account, which would support the notion that he was agreeing on behalf of his wife or her estate, to arbitrate injuries sustained by his wife at a restaurant located on premises owned by a Disney theme park or resort from which she died. Frankly, any such suggestion borders on the absurd. Indeed, the Disney+ Subscriber Agreement was only between Mr. Piccolo and Disney+, not WDPR [Walt Disney Parks and Resorts] or any other Disney Affiliates.”

Denney provided Ars with a statement today. “Although Disney has withdrawn its motion, the arbitration clauses they relied upon in their motion still exist on their various platforms (i.e. streaming services; entrance tickets to Disney’s parks, etc.). This potentially puts other people injured by Disney’s negligence at risk of facing a similar legal challenge,” Denney said. “The right to a jury trial as set forth in the seventh amendment is a bedrock of our judicial system and should be protected and preserved. Attempts by corporations like Disney to avoid jury trials should be looked at with skepticism.”

Piccolo’s late wife, Kanokporn Tangsuan, was highly allergic to dairy and nuts. The lawsuit said that Tangsuan and her family advised the waiter of her severe food allergies. The waiter spoke with the chef and then confirmed to the family that the food would be allergen-free, the lawsuit said. Tangsuan and Piccolo “questioned the waiter several more times,” and the waiter “unequivocally assured them that the food would be allergen-free,” the lawsuit said.

Tangsuan, who was a medical doctor, began having severe difficulty breathing around 8: 45 pm and self-administered an EpiPen, the lawsuit said. She was rushed to a hospital but died.

“The medical examiner’s investigation determined that Kanokporn Tangsuan’s cause of death was as a result of anaphylaxis due to elevated levels of dairy and nut in her system,” the lawsuit said.

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Texas judge who bought Tesla stock won’t recuse himself from X v. Media Matters

elon musk x, Policy, x v media matters / Kris Guyer / August 19, 2024

A judge banging a gavel next to a scale, representing justice — Getty Images | SimpleImages

A federal judge who bought more than $15,000 worth of Tesla stock has rejected a motion that could have forced him to recuse himself from a lawsuit that Elon Musk’s X Corp. filed against the nonprofit Media Matters for America.

US District Judge Reed O’Connor of the Northern District of Texas bought Tesla stock valued between $15,001 and $50,000 in 2022, a financial disclosure report shows. He was overseeing two lawsuits filed by X and recused himself from only one of the cases.

Media Matters argued in a July court filing that Tesla should be disclosed by X as an “interested party” in the case because of the public association between Musk and the Tesla brand. O’Connor rejected the Media Matters motion in a ruling issued Friday.

O’Connor wrote that financial interest “means ownership of a legal or equitable interest, however small, or a relationship as director, adviser, or other active participant in the affairs of a party.” His ruling said the standard is not met in this case and accused Media Matters of gamesmanship:

Defendants failed to show facts that X’s alleged connection to Tesla meets this standard. Instead, it appears Defendants seek to force a backdoor recusal through their Motion to Compel. Gamesmanship of this sort is inappropriate and contrary to the rules of the Northern District of Texas.

Judge should exit case, law professor writes

O’Connor made the ruling three days after recusing himself from a similar lawsuit filed by X. In that case, X sued the World Federation of Advertisers (WFA) and several large corporations that it accuses of an illegal boycott. Antitrust law professors have described X’s claims as weak.

O’Connor didn’t explain why he recused himself, but it seems clear that it wasn’t because of his Tesla stock. O’Connor also invested in Unilever, one of the defendants in X’s advertising lawsuit. Since Unilever is directly involved in the case, that’s likely what drove O’Connor’s recusal decision.

Musk’s case against Media Matters is also related to X’s problem with advertisers fleeing the platform formerly named Twitter. Media Matters published research on ads being placed next to pro-Nazi content on X, and the lawsuit blames the group for X’s advertising losses.

The federal code of judges’ conduct says that “a judge shall disqualify himself or herself in a proceeding in which the judge’s impartiality might reasonably be questioned.” This includes cases in which the judge has a direct financial interest, and cases where the judge has “any other interest that could be affected substantially by the outcome of the proceeding.”

Harvard Law School Professor Noah Feldman argued that O’Connor should recuse himself from X v. Media Matters. While X and Tesla are legally separate entities, Feldman wrote in a Bloomberg Opinion piece last week that O’Connor should exit because of that “impartiality might reasonably be questioned” rule.

“The basic idea is that a judge should recuse himself if a reasonable person in possession of the relevant facts would believe that the judge has reason for bias. And there is good reason to think that this rule covers O’Connor,” Feldman wrote. “Because Musk is so closely identified with both X and Tesla, Tesla share prices are arguably affected by the performance of X.”

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Judge calls foul on Venu, blocks launch of ESPN-Warner-Fox streaming service

antitrust, competition, ESPN, Fox, Policy, sports, streaming, syndication, warner bros. discovery / Kris Guyer / August 17, 2024

Out of bounds —

Upcoming launch of $42.99 sports package likely to “substantially lessen competition.”

Christopher Grimes, Financial Times – Aug 17, 2024 3: 15 am UTC

Texas losing to Alabama in the 2010 BCS championship — Gina Ferazzi via Getty

A US judge has temporarily blocked the launch of a sports streaming service formed by Disney’s ESPN, Warner Bros and Fox, finding that it was likely to “substantially lessen competition” in the market.

The service, dubbed Venu, was expected to launch later this year. But FuboTV, a sports-focused streaming platform, filed an antitrust suit in February to block it, arguing its business would “suffer irreparable harm” as a result.

On Friday, US District Judge Margaret Garnett in New York granted an injunction to halt the launch of the service while Fubo’s lawsuit against the entertainment giants works its way through the court.

The opinion was sealed but the judge noted in an entry on the court docket that Fubo was “likely to succeed on its claims” that by entering the agreement, the companies “will substantially lessen competition and restrain trade in the relevant market” in violation of antitrust law.

In a statement, ESPN, Fox and Warner Bros Discovery said they planned to appeal against the decision.

Venu was aimed at US consumers who had either ditched their traditional pay TV packages for streaming or never signed up for a cable subscription. “Cord cutting” has been eroding the traditional TV business for years, but live sports has remained a primary draw for customers who have held on to their cable subscriptions.

Fubo TV was launched in 2015 as a sports-focused streamer. It offers more than 350 channels—including those carrying major sporting events such as Premier League football matches, baseball, the National Football League and the US National Basketball Association—for monthly subscription prices starting at $79.99. Its offerings included networks owned by Disney and Fox.

ESPN, Fox and Warner Bros said Venu was “pro-competitive,” aimed at reaching “viewers who currently are not served by existing subscription options.”

Venu was expected to charge $42.99 a month when it launched later this month. It “will feature just 15 channels, all featuring popular live sports—the kind of skinny sports bundle that Fubo has tried to offer for nearly a decade, only to encounter tooth-and-nail resistance,” Fubo said in a court filing seeking the injunction.

Venu was expected to aggregate about $16 billion worth of sports rights, analysts have estimated. It was not expected to have an impact on the individual companies’ ability to strike new rights deals.

Analysts had questioned its position in the marketplace. Disney plans to roll out ESPN as a “flagship” streaming service in August 2025 that will carry programming that appears on the TV network as well as gaming, shopping and other interactive content. Disney chief executive Bob Iger said he wants the service to become the “pre-eminent digital sports platform.”

Fubo shares rose 16.8 percent after the ruling, but the stock is down 51 percent this year.

Judge calls foul on Venu, blocks launch of ESPN-Warner-Fox streaming service Read More »

ISP to Supreme Court: We shouldn’t have to disconnect users accused of piracy

cox copyright infringement, cox sony, Policy / Rejus Almole / August 16, 2024

A pair of scissors cutting an Ethernet cable.

A large Internet service provider wants the Supreme Court to rule that ISPs shouldn’t have to disconnect broadband users who have been accused of piracy. Cable firm Cox Communications, which is trying to overturn a ruling in a copyright infringement lawsuit brought by Sony, petitioned the Supreme Court to take up the case yesterday.

Cox said in a press release that a recent appeals court ruling “would force ISPs to terminate Internet service to households or businesses based on unproven allegations of infringing activity, and put them in a position of having to police their networks—contrary to customer expectations… Terminating Internet service would not just impact the individual accused of unlawfully downloading content, it would kick an entire household off the Internet.”

The case began in 2018 when Sony and other music copyright holders sued Cox, claiming that it didn’t adequately fight piracy on its network and failed to terminate repeat infringers. A US District Court jury in the Eastern District of Virginia ruled in December 2019 that Cox must pay $1 billion in damages to the major record labels.

Digital rights groups such as the Electronic Frontier Foundation (EFF) objected to the ruling, saying it “would result in innocent and vulnerable users losing essential Internet access.” The case went to the US Court of Appeals for the 4th Circuit, which vacated the $1 billion damages award in February 2024 but upheld one of the major copyright infringement verdicts.

Specifically, the appeals court affirmed the jury’s finding that Cox was guilty of willful contributory infringement and reversed a verdict on vicarious infringement. The vicarious liability verdict was scrapped “because Cox did not profit from its subscribers’ acts of infringement.”

Cox wants ruling on contributory infringement

On the contributory infringement charge, appeals court judges indicated that their hands were tied in part by Cox’s failure to make a key argument to the District Court. Proving “contributory infringement by an Internet service provider based on its subscribers’ direct infringement” can be achieved by showing “willful blindness,” the court said.

“Cox did not argue to the district court, as it does now on appeal, that notices of past infringement failed to establish its knowledge that the same subscriber was substantially certain to infringe again… Because Cox did not press this argument in the district court, it is forfeited for appeal,” the appeals court said. In District Court, Cox argued that copyright infringement notices sent to the ISP were too vague.

The Supreme Court held in MGM v. Grokster, in 2005, that “One who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, going beyond mere distribution with knowledge of third-party action, is liable for the resulting acts of infringement by third parties using the device, regardless of the device’s lawful uses.”

In its Supreme Court petition yesterday, Cox said that circuit appeals courts “have split three ways over the scope of that ruling, developing differing standards for when it is appropriate to hold an online service provider secondarily liable for copyright infringement committed by users.”

Cox asked justices to decide whether the 4th Circuit “err[ed] in holding that a service provider can be held liable for ‘materially contributing’ to copyright infringement merely because it knew that people were using certain accounts to infringe and did not terminate access, without proof that the service provider affirmatively fostered infringement or otherwise intended to promote it.”

The case raises one other major question, Cox told SCOTUS:

Generally, a defendant cannot be held liable as a willful violator of the law—and subject to increased penalties—without proof that it knew or recklessly disregarded a high risk that its own conduct was illegal. In conflict with the Eighth Circuit, the Fourth Circuit upheld an instruction allowing the jury to find willfulness if Cox knew its subscribers’ conduct was illegal—without proof Cox knew its own conduct in not terminating them was illegal.

Justices should rule on whether the 4th Circuit “err[ed] in holding that mere knowledge of another’s direct infringement suffices to find willfulness,” Cox said.

ISP to Supreme Court: We shouldn’t have to disconnect users accused of piracy Read More »