September 26, 2017 10:15 AM

Section 230: Google's Shield and Its Sword

The irony of Google's riskless "net neutrality" campaign to impose competitive restrictions on other companies, we've noted here and here, is its claims that rules are necessary to prevent ISPs from engaging in the types of monopoly abuse that only it and a few other privileged platforms can profitably employ.  Google's current fight--against lawmakers' efforts to impose responsibility on websites that actively facilitate, promote, and profit from sex trafficking--contains a similar element of hypocrisy.  The principle that Google is fighting against--that websites should bear responsibility for the activities they promote/knowingly tolerate from 3rd parties--is a principle that Google itself has used to exclude competitors from its monopoly Android platform


Section 230 and SESTA

Section 230 of the Communications Decency Act ("Sect. 230") was passed to limit the potentially devastating effect on the Internet development resulting from potential liability of  Internet service providers held responsible for defamatory statements made by their users.  Sect. 230 states that no provider/user of an "interactive computer service" (i.e., a website that provides access to third party content) shall be "treated as the publisher or speaker of any information provided by [a third party]." 47 U.S.C. Sect. 230.  The scope of Sect. 230, as applied by the courts, is so vast as to be virtually unlimited; shielding websites, no matter how complicit they were in the content they distributed, from virtually any tort or state criminal law liability. See, e.g., criticisms here, here, and here.

The Stop Enabling Sex Traffickers Act of 2017 ("SESTA"), introduced by Sens. Rob Portman (R-OH) and Claire McCaskill this past summer, has nearly 30 bipartisan co-sponsors. Earlier this year, the two released a Staff Report of the Senate Permanent Subcommittee on Investigations describing the extent to which the website Backpage.com was actively involved in, and profiting from, the sexual exploitation of children throughout the world--all without any fear of legal consequences.  The proposed legislation would chip away--ever so slightly--at the broad immunity conferred on "information service providers" for the content of third party speakers under Section 230 of the Communications Decency Act.       

The prospect of losing any of its immunity has led Google to mobilize its academics and third parties to fight tooth-and-nail in its defense of Backpage.comYet, though it understands the importance of a website being able to distance itself from the speech of its users, Google recently removed another app, Gab.ai, ("Gab") from its Play Store because, Google claimed, the site did not display the ability to sufficiently control the speech of its users. 

Tolerance for Intolerance

Upstart social media site Gab.ai ("Gab") was founded in 2016 by a vocal Trump supporter and a Turkish Muslim who ardently opposed Trump's candidacy.  See, Complaint of Gab Ai Inc., v. Google, LLC, E.D. Pa. (filed Sept 14, 2017) ("Complaint") at paras. 7-17.  Concerned that Twitter seemed to be excluding speakers based on socially unpopular points of view, the two friends sought to create a more libertarian social media network.   

Gab's platform was made available to beta users on a private invitation basis in the second half of 2016, and was publicly released in May 2017.  Complaint para 10.  Gab "does not sell access to or otherwise 'monetize' its users' personal information."  Complaint 48.  Rather than selling advertising, Gab plans to support the service through paid "GabPro" premium memberships.

Gab is modeled off of Twitter, though it allows its users 300 characters, but Gab also includes some functions from Reddit, and unique features that "'provide people with the tools they need to create and shape their own experience.'" Complaint paras 19-29.  Thus, although Gab has developed a reputation as being more welcoming of "far right" and "conspiracy theory" types, its users can choose to exclude content that they do not wish to see.

Gab maintains community guidelines which prohibit "illegal pornography and terrorism; the posting of confidential information of others; communications calling for acts of violence; promotion of acts of self-harm or cruelty; the use of threatening language; and any other behavior that clearly infringes on the safety of another user or individual." Complaint at 31 (emphasis added).  Moreover, users must abide by its terms of service and privacy policy.  Gab's policies meet all formal requirements for distribution through the two leading app stores.

Gab's app was approved for distribution to Android users through Google's Play Store since its public launch in May. Gab quickly surpassed its founders' expectations and now has 268,000 users, including 3,000 paid accounts, and reached the $1.07 million SEC limit on "crowdfunded" offerings in only 38 days. Complaint 10, 53,and 55.

Intolerance for Tolerance

In the week following the recent Charlottesville tragedy, on August 17th, Google notified Gab that it had "'suspended and removed [Gab's app] from Google Play as a policy strike because it violates the hate speech policy.'" Complaint 138.  Gab contends that Google's purported justification was a cynical attempt to avoid press scrutiny at a time of national concern over extremist groups; and a mere pretext to eliminate a competitor with a business plan (no advertising, no sharing of user's personal information) that could only threaten, and never benefit, Google's advertising business.

Instead, Gab notes that Google well knew that Gab's app does not advocate "hate" (or any other) speech, but consists entirely of user-generated content ("UCG").  To the contrary Gab explains that it has always been compliant with Google's only formal policy for UCG-oriented apps: that such apps must "take additional precautions in order to provide a policy compliant app experience, requiring apps to define and prohibit objectionable content via terms of service, implement a system to report content, and block users." Complaint para 144.

Later, Google offered further justification (not provided to Gab) for its decision in an email to Ars Technica:

In order to be on the Play Store, social networking apps need to demonstrate a sufficient level of moderation, including for content that encourages violence and advocates hate against groups of people. This is a long-standing rule and clearly stated in our developer policies.

Complaint 140.  Gab notes, however, that this "moderation" requirement cannot be found anywhere in Google's developer policies. Gab also notes that Google would not, and does not, place any such requirement on other "social news" apps like Google+, YouTube, or its commercial partner, Twitter.  The only purpose of Google's arguing for such a requirement, Gab argues, is to raise the costs of entry, and to subject competitors to the risk of losing their Section 230 immunity.  

Policies Are Made for Exclusion Exceptions

Gab's contention that Google's policies are being unevenly applied is beyond dispute.  The most cursory search (via Bing) reveals that not only do other social news sites (e.g., Google's partner Twitter) not filter hate speech or pornography, but they actually sell access to the "hate speakers" to their advertisers.


Gab alleges that Google's "policies" exist only to be strategically applied to apps that compete with/offer little value to Google's other monopoly services.  Twitter's value to Google is obvious by virtue of the parties' relationship predicated on advertising-search "cooperation" (non-competition).  Gab, on the other hand, seems valuable only for features Google/Twitter want to copy--like the higher character limit (280) Twitter announced yesterday. Google--by virtue of its access to Twitter's "Firehose" of user data--knows that its partner either fails to moderate, or actively exploits, the hate speech of its own users. If this were really a concern for Google, Twitter would have been out of the Play Store long ago.

The most interesting thing is not that Google opportunistically applies its "social concerns" to exclude rivals.  Google is nothing if not brazen.  After all, this is the company that has its chief lobbyist blog about how much it cares about sex trafficking victims (in fairness, Google was recognized for a $3 million donation in 2013 to help NGO's better share information), while spending twice that much this summer fighting SESTA. 

Google Lobbying 2Q 17 v2.jpg


What is surprising, though (even for Google), is that Google would use the exact same justification to exclude a competitive app--moderation of speech--that it is telling Congress would ruin the Internet if it were applied to known bad actors.  The thing that hurt Gab the most may not have been so much the speech of its users, but the fact that that speech is unlikely to generate any profit for Google. After all, the Play Store is a business and curates its content accordingly.

google play v2.png

August 2, 2017 9:44 AM

Deconstructing the Internet Giant Myths On Net Neutrality

In the last post, we noted that the Internet giants' arguments, advocating for regulation of ISPs, best describe the only market power they know--their own.  According to the Internet giants, ISPs must be regulated even though the "harms" they identify are all things that Internet giants do with their market power.

On a daily basis, we now witness numerous examples of the Internet platform giants doing the exact thing that they consistently point to as "destroying the Internet" if performed by an ISP, e.g., blocking/throttling/discriminating against content.  When Twitter was recently admonished by members of Congress for openly blocking a link to AT&T's public policy website, it was hardly a "man bites dog" story.  

Previously, we looked at the "fast lane/slow lane" argument--and made clear that this has not, nor has ever been, a practice of ISPs, but is not only the underlying business model for Google and Facebook, it is also what allowed Google to dominate the search engine market. 
In this post, we're going to look at another common "hysterical doom" prophecy advanced by the tech giants' advocacy groups.  

"The Internet Will Become Like Cable TV & Squeeze Out New Content"

In this classic argument from the net neutrality crowd, they paint a scary future world where consumers pay for Internet access the same way that they select cable channel packages today.  They claim that, not only will consumers have to pay for existing free sites, but content from new entrants will not be easy to see unless the entrant also pays for placement.  Here's a common visual aid:
net neutrality cable2.jpg
 This alleged nightmare scenario requires the usual implicit convictions that: 1) ISPs are monopolies, and 2) "[t]hey're destined to screw up the internet."  This specific scenario, however, hinges on a contradictory, yet fundamental, belief unique to Silicon Valley: no one should pay for content, yet we can sell other people's content to advertisers at significant margins.

Other People's Content

The New York Times recently published an in-depth look at Yelp's 6 year fight against Google's search discrimination activities.  In addition to its claim that Google search put Yelp's competing local review service in the "slow lane" (often pushing Yelp off the customer's screen entirely), Yelp maintains that Google "scraped" (stole) its content to post at the top of the search results.   

Google's action against Yelp provides a sense of its dominant power in the market. Yelp, itself, is a huge Internet platform, the 33rd most visited web site in the U.S. and one of the top 200 in the world.  This demonstration of Google's Internet superiority, however, is not limited to large competitors  A recent article on Outline revealed the experience of CelebrityNetWorth.com, and how Google's practice of taking other people's content has far reaching consequences for smaller content creators. 

As the Outline article explains, CelebrityNetWorth.com was an advertiser on Google and paid the firm to be placed highly in response to search queries.  Despite this--and even denying Google permission to use its content in Google's Snippets program--Google, in 2016, started scraping the company's content to post above the search results.  Immediately, traffic to CelebrityNetWorth crashed by 65% and the site's owner had to fire half of his staff of 12. Google, though, isn't alone in the way that it parasitically preys on its own content suppliers.
 
Facebook, likewise, has profited handsomely from the content of others.  In 2015, the company launched its "Instant Articles" program, which was designed to keep readers on Facebook's site for longer.  According to the New York Times, many large publishers, by then dependent on Facebook for referrals to their sites, "agreed to the deal, despite concerns that their participation could eventually undermine their own businesses."

These concerns were not misplaced.  A year later, traffic to the news sites from Facebook had seen double digit declines of as much as 50%.  Recently, Inc. noted that Google and Facebook now have more ad revenue than every newspaper, magazine, and radio station combined.  In response to the rapid growth by these two Silicon Valley behemoths, news content creators recently banded together to seek an antitrust exemption in a last-ditch effort to fight the platform companies' predation with market power of their own. 

Could ISPs Make the Internet Like Cable TV?

It's worth noting that proponents of this dystopia never explain, step-by-step, how the ISP would be able to offer/sell such a service, much less--given the likely market responses--how this service could ever be profitable.  To better understand the likely consumer response, here is a quick review of virtual private network ("VPN") services.

A VPN service allows users to route their traffic, via a private, secure "tunnel" to a 3rd party server. The ISP does not know, nor can it control, the destination of a user's traffic after it is sent to a VPN.  Likewise, the user's destination point can only "see" the IP address of the VPN's server--which makes VPNs very popular among certain Internet users, such as those of Netflix
 
Although the best VPN services are used to protect user privacy, they are not usually free.   But, if you care more about avoiding the "net neutrality nightmares," than you do for your own privacy, Google's got your solution--because of course they always do.

In addition to the world's dominant search engine, the world's dominant mobile operating system, and the world's dominant online translation service, Google also has a dominant position in the web browser market--with its Chrome browser having a desktop share more than 4x higher than its closest competitor (Mozilla).   
chrome_browser4.png 

If you need verification of Google's dominance, go ahead and ask one of your kids what web browser their school computer must use.And, it just so happens that Google offers, as a Chrome browser extension, a "free" VPN service to Chrome users.    

What does that mean?  Well, any attempt by an ISP to adopt the "Internet access as cable TV strategy" would only succeed in making its Internet access even less profitable than its real cable TV service.  Keep in mind that while a D.C. Circuit decision makes clear an ISPs ability to offer a "curated" service under Title II regulation, no ISP has yet to offer such a service. 

*    *    *

While the Internet giants continue to actively promote an outdated myth, they know the truth;  consumers' should actually fear should the tech giants given that they have already turned the Internet into something a lot more like cable than cable.  While, the average cable customer watches just 17 channels; of the top 50 U.S. websites, almost none offer content and an advertising platform not already owned by an existing Silicon Valley Internet platform giant.  

These Internet platform owners are also some of the very richest people on the planet (#2 (but #1 last week) Jeff Bezos of Amazon, #5 Mark Zuckerberg of Facebook, and #'s 11/12 Larry Page and Sergey Brin of Google).  In terms of financial clout (market capitalization), the 4 largest tech giants are more than 3x larger than the 4 largest ISPs.

ISPs v Tech Giants Mkt Cap.jpg 
This dominant economic power over Internet media has spillover effects in traditional media.  Last week, the media bias watchdog group FAIR reported that its "review of 190 articles from the New York Times, Wall Street Journal and the Bezos-owned Washington Post over the past year paints a picture of almost uniformly uncritical-ofttimes boosterish-coverage." The same article notes that none of the largest papers has written any critical, investigative pieces on Amazon/Bezos in almost 2 years.

Thankfully, though this general lack of scrutiny--by journalists employed by papers dependent on the biggest platforms--is not complete, even at the organizations criticized by FAIR.  Just this past weekend, the Post ran an excellent piece, asking if Amazon was not becoming "too big?"  Likewise, the editorial page of the Wall Street Journal--a publication not known for its skepticism toward big business--recently asked if it was not too late to control Google, Facebook, and Amazon?     

The evolution of the Internet and the ubiquity of VPN service have rendered the "Internet will be like cable" nightmare as about as scary as "the call is coming from inside the house" line sounds to anyone who came of age after 2000.  No, the scary story is not the one the Internet platform giants are shoving down your throat; it's the one they are hiding from the Internet consuming public.    

July 21, 2017 8:14 AM

Net Narcissism: Internet Giants Reflect Danger for an Open Internet

The Internet giants, and their lobbying groups, organized a "Day of Action" last week.  Internet users were urged to feel outrage, because, the tech giants threatened, unless the FCC steps in to micromanage your Internet service (which the FCC gave itself  authority to do 2 years ago), then the websites you love will be blocked/throttled/discriminated against unless you pay your Internet Service Provider ("ISP") more money.  

Of course, if your ISP wanted more money from you, it would be easier to just raise your rates; but they can't, because if they did, they know you would cancel your service.  The fact is that none of these dystopian threats make any sense, from the standpoint of your ISP; which is why net neutrality advocates offer threats instead of actual examples of harm.

So where do these scary, remote--yet strangely-not-impossible-sounding--stories come from?  To better understand, let's consider Oscar Wilde's uniquely wry twist on another, much older, myth.

Wilde's Narcissus

Most of us are familiar with the story of Narcissus, the beautiful youth so taken with his own beauty that he fell in love with the image of his reflection in a clear pool and stared at it until he died. Oscar Wilde's version comes from his poem, "The Disciple." 

When Narcissus died the pool of his pleasure changed from a cup of sweet waters into a cup of salt tears, and the Oreads came weeping through the woodland that they might sing to the pool and give it comfort.

And when they saw that the pool had changed from a cup of sweet waters into a cup of salt tears, they loosened the green tresses of their hair and cried to the pool and said, 'We do not wonder that you should mourn in this manner for Narcissus, so beautiful was he.'

'But was Narcissus beautiful?' said the pool.

'Who should know that better than you?' answered the Oreads. 'Us did he ever pass by, but you he sought for, and would lie on your banks and look down at you, and in the mirror of your waters he would mirror his own beauty.'

And the pool answered, 'But I loved Narcissus because, as he lay on my banks and looked down at me, in the mirror of his eyes I saw ever my own beauty mirrored.'
Tell Us About Yourself

Like both the pool and Narcissus, when the tech giants gaze into the Internet access market, they don't see the competition that is giving consumers ever higher speeds of bandwidth per dollar spent.  Instead, the tech giants see only their reflection, which is downright scary.  Thus, the dystopic "without net neutrality" scenarios offered by the tech giants' special interest groups don't sound totally crazy because every one of them is based on something that at least one of their sponsors has already done. Let's look at a classic.

The Classic "Fast Lane/Slow Lane" Nightmare

This one has been around since the FCC's first net neutrality rulemaking and is one of the tech activist/lobbyist favorites and was prominently promoted by last week's "Day of Action."  The story goes that without [net neutrality rules and/or Title II classification], the ISPs will favor their own (or affiliated) content, and everyone else (i.e., all the websites you like) will be confined to the "slow lane."

Fast Lane_Slow Lane2.jpg

Where Does It Come From?

Every single Internet platform giant prioritizes "its" content--meaning that of its advertisers. Google, of course, is the best known of these.  Last month, the EU antitrust authority hit the company with a $2.7 billion fine last month for using its dominant search platform (over 90% market share in Europe) to discriminate in favor of its own Google Shopping, and disadvantage those of unaffiliated, rival sellers.

Google's practice of "promoting" its customers over others essentially leaves businesses--web-based or not--with the false choice of paying to be a customer, or taking themselves off the Internet.  This false choice is made more evident in the context of the large and growing mobile Internet.  The New York Times, in a recent article describing Yelp's struggle to compete with Google, notes the observation of an analyst (who recommends buying Google stock, but not Yelp's),

[a]s the internet has migrated to mobile phones, Google has compensated for the smaller screen space by filling it with so many ads that users can have a hard time finding a result that hasn't been paid for.
Facebook, too, does the same thing--though it uses the word "advertiser" quite liberally.  In a recent Wall Street Journal essay, describing a number of market power abuses by the tech giants, Jonathan Taplin notes the controversy involving media buyers and Facebook over its ad billing.  Facebook advertisers are paying a handsome price to be in the fast lane because, as Taplin notes, "the 'viewability scores' for Facebook video ads are as low as 2% when compared with the standard used for TV ads." 

Do ISPs Favor Content? 

No.  As an initial matter, it's worth noting that the majority of web "content" is delivered over private networks and not the public Internet. However, even in situations where the ISP's broadband customers were using their Internet access to avoid purchasing high-margin pay-per-view video services from their cable ISPs (like adult video and WWE events), the ISPs did nothing to interfere with their Internet subscribers' choice of content. Of course, the web incumbents know this very well, as they invested in and built their businesses well before the FCC had any formal net neutrality rules.

*    *    *

Thomas Hazlett noted, 11 years ago, the paradox between the new public policy Google had started floating in 2005, and the actions that Google was taking in the market as it acquired YouTube, "[t]he internet really is not open - if, as Google hopes, it is doing it right."  Hazlett also wonders if Google's public policy might not have a lot to do with the fact that--at a time when it was only the 3rd ranked search engine on the Internet--Google itself benefited from an exclusive distribution agreement with an ISP (AOL).  

Perhaps the "close-the-door-behind-itself" aspect of Google's net neutrality policy is as good an explanation as any for the observation, in a recent Vox article that, "we haven't had a major new technology company in 10 years." Rules that prevent ISP's from offering innovative services to all customers--edge providers and retail end-users--don't just prevent the Internet from responding to consumer demand, they also ensure that the access network will continue to simply reflect and reinforce the images projected upon it by the tech giants.
June 19, 2017 12:48 PM

Rep. Marsha Blackburn Exposes Hypocrisy on Broadband Privacy

marsha blackburn.jpg
                                                     photo credit: Gage Skidmore Marsha Blackburn via photopin (license)

As noted previously, the FCC's "broadband privacy" rulemaking was really a shadow war, fought by third party advocacy groups funded by the Internet giants, like Google, Facebook, and others.  The recent legislative battle to repeal the FCC Privacy rules was no different.  Yet, within the past month, Rep. Marsha Blackburn (R-TN) "introduced the Balancing the Rights of Web Surfers Equally and Responsibly ("BROWSER") Act of 2017 to protect the online privacy of Americans."  In doing so, Blackburn has revealed what these previous "privacy" battles have been about: protecting the Internet giants' commercial advantage in the online advertising market. 

"Broadband Privacy" Is Not Online Privacy

Remember the flood of news stories fueled by interest-group-manufactured outrage about how Congress didn't care about your privacy online?   The ostensible basis for this outrage was that Congress used its authority under the 1996 Congressional Review Act to eliminate the Wheeler FCC's efforts to further advantage the biggest online advertisers (i.e., Google and Facebook) under the guise of "protecting" the privacy of ISP customers.  

Commonly omitted from those stories--and the legislative debate as well--was the fact that the FCC's "privacy" rules did not apply to consumers' information online, but only regulated the ISPs' use of this information (on a non-user-specific basis) to compete with Google/Facebook for online advertising revenue. Yet, at the first mention of using the CRA to repeal the FCC's ISP-specific rules, Rep. Frank Pallone (D-NJ) stated, "[c]onsumers should not have to worry about their financial, medical and other personal information begin shared without their permission." 

Likewise, after the Senate voted to repeal the Wheeler Commission's privacy rules (on March 23), Sen. Edward Markey (D-MA) issued this statement:

The American public wants us to strengthen privacy protections, not weaken them. We should not have to forgo our fundamental right to privacy just because our homes and phones are connected to the internet.

Reading these statements, one might reasonably assume that Congressman Pallone and Senator Markey care, generally, about protecting your personal information--regardless of who is collecting and selling that information.

However, after the CRA was adopted by the House, and the FCC's ISP-specific rules were repealed, Sen. Markey pivoted away from consumers, and their general online privacy, and toward his most important constituents--the Internet giants.  Rather than work toward legislation that would create online privacy rights for consumers, Markey instead declares his intention "to introduce legislation that directs the FCC to reinstate strong broadband privacy rules." (Emphasis added)  On April 6th, Sen. Markey did exactly what he promised, and introduced legislation that would merely direct the FCC to impose its prior regulations on ISPs. 

Markey_bband privacy4.jpg

The PR Campaign: Chicken-Little Meets Michael Corleone

As FCC Chairman Pai noted, the FCC's 2015 rules were driven by "hypothetical harms and hysterical prophecies of doom."  This was fueled by the Internet giants that fought the CRA legislation by using their surrogate groups to successfully plant similarly-exaggerated, chicken-little stories through friendly media outlets, such as Motherboard and DSL Reports.   

The media frenzy they created essentially promoted hysterical speculation without regard for facts.  My personal favorite is "Internet Activists Plot 2018 Electoral Revenge Against Republican Sellouts," from Motherboard.  The article, cites the "usual" sources (the tech giants' third party advocacy groups), and prominently features a picture of House Communications & Technology Subcommittee Chair Marsha Blackburn (R-TN) as the putative target for this "electoral revenge" (which subsequently occurred when Silicon Valley-funded Fight for the Future put up a misleading billboard in Rep. Blackburn's district).

Like the Silicon Valley advocacy groups he loves to cite, Motherboard tech policy contributor, Sam Gustin really doesn't like Rep. Blackburn.  Whether through a subconscious desire to appeal to the sexist bias of its Silicon Valley idols, or purely unintentional, Motherboard's privacy articles provide a good illustration of what the NY Times calls "sexist political criticism" that uniquely plagues strong female politicians, through its practice of always introducing Blackburn by immediately putting her character/competency in question.

For example, in this article the Senate sponsor of the CRA repeal of the FCC broadband privacy rules, Sen. Jeff Flake (R-AZ) is introduced simply as "the Arizona Republican."  Rep. Blackburn, however, is introduced as "the Tennessee Republican who has received colossal sums of campaign cash from the telecom industry."  The reader is left to imply that Rep. Blackburn--as opposed to Sen. Flake--is either corrupt, or only interested in furthering her personal ambition; though she and Sen. Flake are described as doing the exact same thing.

Haters Gonna Hate

When Rep. Marsha Blackburn introduced the BROWSER Act (that would re-apply the FCC's rules to ISPs as well as the Internet giants), one would have expected the self-proclaimed "consumer online privacy" groups to immediately declare victory.  None of the Internet giants' big 3rd party advocacy groups (EFF, Free Press, New America's OTI) has even commented on privacy since Blackburn introduced her bill--except for this press release by Google-supported Public Knowledge, to "clarify" that it "did not support" Blackburn's bill, as a Boston Globe article had reported.  If you hadn't noticed so far, this issue was never really about consumers.  

Rather, as the Washington Post's Brian Fung explains, the issue was always about politics and money.  Ironically, to improve consumers' privacy rights online would be for Democrats to cede the privacy issue for the election.  Worse still, it would put Democrats on the wrong side of their core "Silicon Valley" constituency; the tech giants. Thus, Rep. Frank Pallone seems to have moved past his concerns about consumers' personal information, given that Rep. Blackburn has exactly 0 Democratic co-sponsors of her Browser Act.

Consequently, the tech giants' media outlets--so aggressively pro-privacy when it was just an ISP/Republican issue--have been largely silent on Blackburn's bill.  Motherboard's Gustin has written nothing on privacy since his "plotting revenge" article.  DSL Reports' Karl Bode--with his characteristic tin-foil hat logic (see, e.g., "AT&T Fools Entire Media With Giant Gigabit Fiber Bluff" arguing that AT&T's ultra-fast "Gigapower" Internet service is a PR hoax)--faults Blackburn for introducing a bill that "she knows won't pass."   Advocate journalist Bode quickly concludes that Blackburn, of course, knows that her bill won't pass because--back to Gustin's only biographical point--she's in the pocket of ISPs, and they won't like the bill, because they...and her...are just, you know, evil.

What Is Privacy Worth?

Google, and Facebook, et al., were mad enough, when Congress eliminated the regulatory barriers to entry that the Wheeler FCC had imposed on ISPs, but to give consumers any  control over the heretofore unfettered ability of the online ad giants to use and monetize personal consumer data was more than they could handle. So, the web giants now argue, according to the Business Insider, that if consumers are in control of their privacy, "Facebook won't be free."  

This statement calls to mind the laughably-superficial reasoning, by Public Knowledge President Gene Kimmelman, as to why the proposed AT&T/Time Warner combination should be regarded with greater suspicion than other firms also competing for consumers' leisure attention, like the Internet platform giants.  Kimmelman dismisses the Internet giants as "competitors" to traditional content, because "none of them charges me $200/month to access their online content." (See, 12/07/16 Senate Judiciary Committee Hearing  at 2:21:50-2:23:30)

Sen. Jeff Flake perceptively identifies the flaw in this logic, asking witness Mark Cuban if it matters who is actually "paying" when considering whether firms compete in the same market for consumers' attention.  Cuban succinctly observes that, "if you're not paying for content, you are the content." Hearing video at 2:23:44 (emphasis added).  Cuban's point is that online consumers are giving the platform giants something these companies can readily exchange for cash--their personal information. 

The Internet giants' argument (and that of their surrogate groups) rests on the notion that consumers' personal information is of little value, and therefore the content that the consumer receives from the platform giants is a great deal.  Yet, if the Internet giants' services are indeed valued more by consumers than the consumers value their own privacy, then what's the harm in letting consumers decide how they wish to pay--in terms of  cash or personal data--for these services?  

The beauty of Blackburn's bill is that it gives consumers the right to make that decision, and for this she deserves more credit than she's gotten.  Let's hope that at least some Democrats agree this is a choice that should be returned to consumers.


May 30, 2017 11:20 AM

Correcting the [Revisionist] History of Internet Regulation

The FCC's NPRM to re-examine its Net Neutrality rules was just adopted and, with it, the Internet giants' advocacy groups have launched a misinformation campaign.  Over the past couple weeks, a number of articles have appeared that float revisionist history in an attempt  to embarrass FCC Chairman Ajit Pai--who aims  to return Internet regulation to the "light touch" approach favored since the dawn of the commercial Internet (during the Clinton administration) until 2015.

First, the Washington Post (owned by web giant Amazon) offered an "analysis" entitled "The Trump administration gets the history of Internet regulations all wrong."  Then, the website Ars Technica took the Post's "analysis" as fact to deliver an article with the even-more-smugly-insulting title, "Ajit Pai accidentally supports utility rules and open access networks."   More recently, the website TechCrunch repeated many of the same mistaken facts, but divorced from the "gotcha" rhetoric in the first two articles. 

The contortions these writers have gone through to argue that Chairman Pai inaccurately described Clinton era Internet policy could have been avoided had they gone straight to the horse's mouth.  The Clinton FCC's Office of Plans and Policy conveniently published a "Working Paper," in July of 1999, which provides great detail on the agency's approach to Internet regulation.  The paper is entitled "The FCC and the Unregulation of the Internet." (emphasis added)   

Most of the inaccurate narratives in the advocacy referenced above essentially conflate Title II of the Communications Act of 1934, the Telecommunications Act of 1996 ("Telecom Act" or "the Act"), and pre-Telecom Act FCC service classifications.  Let's try to go through some examples in context.    

"Without government oversight, phone companies could have prevented dial-up Internet service providers from even connecting to customers." (Post)

"Those [Title II] rules kept phone companies from charging dial-up Internet providers extra or blocking their connections." (Post)

Not true. In 1980 the FCC commenced a series of rulemakings (the "Computer Inquiries")  in which it decided not to regulate--at all--the new "enhanced services" being created through the combination of computer and telephone services. Telephone services would continue to be subject to the existing web of FCC, DoJ, through the MFJ  (the settlement order resulting from the AT&T antitrust case), and state regulations that already applied to these services.

This meant that a call to an "enhanced service provider," like an ISP, was treated like a call to any other end-user.  No additional charges applied because dial-up service was a call to an unregulated end-user.  Aside from having no commercial incentive to block ISP customers (in those days, customers often bought an extra line just to access the Internet), a telephone company who refused to route an end-user's call to an ISP would have been in violation of numerous federal and state laws/regulations.

"The FCC regulated phone companies under Title II of the Communications Act of 1934, which mandates that the agency ensure that services like telephone networks treat all customers equally."
 
Not exactly.  As noted, the FCC, the DoJ (through the MFJ), and state regulators all regulated some aspect of telephone companies' provision of local telephone services.  While Title II certainly applied to these services, Title II did not "require that . . . telephone networks treat all customers the same." It does, however, require that all services be available to similarly-situated customers on similar terms and conditions.  See 47 U.S.C. Sect 202(a)
 
"In 1999, the FCC used its authority under that section [Title 2] of the law to enact "line-sharing" rules that forced phone companies to let competitors offer DSL over their existing telephone networks. . . ."  (Post)  

Sort of, but needs clarification. This statement conflates the general common carrier obligations of Title II under the 1934 Act with the additional specific obligations Congress imposed on incumbent local exchange carriers ("ILECs") under the Telecommunications Act of 1996 ("the Act").  In exchange for the ability to provide long distance voice service, ILECs had to undertake additional obligations to open the local exchange market to competition.  See 47 USC Secs 251 (c) and (d).   

One of the specific, ILEC-only, obligations imposed by the Telecom Act was the duty to make available for lease, on an "unbundled" basis, certain network elements ("UNEs").  One of these UNEs, ordered by the FCC in its 1999 UNE Remand Order, was the high frequency portion of a local loop--which was already being used by another LEC to provide voice service to the customer--in order to facilitate the provision of ADSL service. This UNE was also referred to as "line-sharing," but is not synonymous with "unbundling."

"The line-sharing (or "unbundling") requirements remained in place throughout the four years of President George W. Bush's first term in the White House." Finally, in August 2005 . . .  the FCC voted to eliminate the line-sharing requirements on phone providers. Bush's FCC had previously decided not to impose line-sharing requirements on cable Internet service . . . ." (Ars Technica)

Needs clarification. This statement reflects confusion and a lack of understanding regarding two things: 1) the FCC's decision in 2002 not to classify cable modem service as a Title II service, and 2) the effect of the FCC's unanimous decision to apply that same classification to wireline broadband Internet access service in 2005. First, the Commission's 2002 cable modem classification was about whether to apply the general, 1934 Act, common carrier obligations to cable modem service. 

The FCC had no authority under the Telecom Act to impose line-sharing, or any other unbundling obligations, on cable companies.  Thus, it is incorrect to state that the FCC "had previously decided not to impose line-sharing requirements on cable Internet service."

Finally, when the FCC unanimously changed the classification of wireline broadband service in 2005 (consistent with its previous classification of cable modem service), the line-sharing UNE was no longer available by operation of law.  However, competitors providing a telecommunications service, such as voice, and DSL service could (and still can) lease the entire local loop as a UNE. 

"[the FCC's line sharing decision] gave customers a choice of broadband providers that today's users might find bizarre. A consumer guide that ran in The Washington Post's Sunday Business section in 2003 featured 18 DSL services available here."  (Post)

Misleading.  Readers will mistake the number of providers in the Post's guide with their competitive effect in the market.  If we look at the FCC's early "broadband" reports, which define "high speed" Internet access service as at least 200kbps downstream (less than 1% of the current FCC definition of broadband), we can see the relative significance of various technologies/competitors in the market.*   
 
Broadband technologies 2000-2005.jpg
The underlying data, which I didn't include in this chart, shows that the CLECs' share of ADSL services in RBOC markets was generally around 5% from December 2000 through December of 2005 (I was unable to find the FCC report with the December 1999 data).  See, e.g., Table 6 of the Report for the data as of 12/31/05.  

However, even this number dramatically overstates the CLECs' importance in the broadband market, as it was evolving.  For example, as of the end of 2005, ADSL's total share (all ILECs + CLECs) of the market for services between 2.5mbps and 10mbps in one direction was only 16%.  See Report at Table 5. Aside from the fact that this "heyday" of "broadband" competition affected very few consumers back then, it's even harder to see how advocates could seriously argue that a return to this era would help any consumers now.
____

Future net neutrality advocacy pieces will, no doubt, continue to offer their own versions of the Internet giants' revisionist regulatory history.  But, as they do, they would do well to sticking with subjective interpretations of the "inconvenient truth" instead of simply making up facts that better suit their contrived narratives.  As that great Democratic Senator from NY, Daniel Patrick Moynihan once said: "Everyone is entitled to his own opinion, but not his own facts."


*Comparing CLECs with RBOCs (vs. all ADSL, or all high-speed service providers) offers a more accurate depiction of CLECs' role in the market (than CLECs/ADSL or CLECs/ADSL + Cable Modem)  because: 1) CLECs were concentrated in the urban areas served by the RBOCs, and 2) the RBOCs had to demonstrably to comply w/the FCC's unbundling rules in order to be able to enter the long distance market.