Jun 25, 2020

Axios Login

Ina Fried

Happy 25th birthday to CNET, where I worked from 2000 to 2010. I recently wrote an essay reflecting on the decade I spent there.

Back to the present, today's Login is 1,633 words, a 6-minute read.

1 big thing: Facebook faces trust crisis as ad boycott grows

Illustration: Aïda Amer/Axios

What started out as a few whispers about advertisers pulling Facebook ads has turned into a growing boycott of the social network over its content moderation policies — a situation the company is now describing as a "trust deficit," Axios' Sara Fischer reports.

Why it matters: Given Facebook's size, the boycott likely won't hurt the company's bottom line in the short term, but it turns up the political pressure on Facebook ahead of the 2020 election and underscores the company's challenges managing its public image.

Driving the news: In a call with more than 200 advertisers Tuesday, Facebook's head of trust and safety policy Neil Potts "acknowledged that the company suffered from a trust deficit," according to the Financial Times. A source familiar with the meeting confirmed the comment.

  • After a handful of outdoor companies like North Face, REI and Patagonia said they would stop advertising on Facebook and Instagram last week, several other advertisers have joined the movement, including Ben & Jerry's, Eileen Fisher, Eddie Bauer, Magnolia Pictures, Upwork, HigherRing, Dashlane, TalkSpace and Arc'teryx.

Heavyweights in the ad industry have also begun pressing marketers to pull their dollars.

  • On Tuesday, Marc Pritchard, chief brand officer at Procter & Gamble, one of the largest advertisers in the country, threatened to pull spending if platforms didn't take "appropriate systemic action" to address hate speech.
  • In an email obtained by the Wall Street Journal last Friday, digital ad agency 360i urged its clients to support the ad boycott. 

Yes, but: Procter & Gamble and other leading marketers make these types of broad-based threats regularly to pressure tech companies to do better at everything from content moderation to ad measurement.

  • Facebook's current crisis resembles YouTube's ad boycott in 2018 over its content moderation policies. After roughly a year, many of the advertisers that boycotted the company, including big names like Procter & Gamble, had returned.
  • And YouTube, whose owner Google broke out its ad revenue for the first time in February, is still an advertising powerhouse, bringing in roughly $15 billion annually.

Our thought bubble: Facebook's ad platform is still so powerful that it will be hard to get a huge coalition to boycott the brand for an extended period of time.

  • But the boycotts are still a public relations problem for Facebook, which could use all of the industry support it can get leading up to the election.

The big picture: The boycotts are a result of pent-up frustration from lawmakers and marketers over Facebook's content moderation policies, which many feel don't go far enough in helping to curb hate speech and harmful content online.

  • That frustration reached a tipping point during the recent Black Lives Matter protests, as Facebook refused to fact check or moderate posts from President Trump that many argued incited violence against protesters.
2. Momentum builds against tech's liability shield

Illustration: Sarah Grillo/Axios

Congress' efforts to revise the legal shield that protects online platforms from lawsuits over user posts and content moderation entered a new phase this week, with members of both parties pushing fresh remedies to address the situation, Axios' Kyle Daly and Margaret Harding McGill report.

The state of play: For a while, this debate looked to be splintering along partisan lines, with President Trump calling for its repeal on Twitter and claiming it lets tech companies censor conservatives. But changing the law will depend on winning support from both sides of the aisle.

Driving the news: This week has seen several instances of Republicans and Democrats pushing to soften or add conditions to the legal protections online platforms have under Section 230 of the Communications Decency Act of 1996.

  • Sens. Brian Schatz (D-Hawaii) and John Thune (R-S.D.) teamed up Wednesday to introduce a measure creating a federal civil law carveout so platforms can't use Section 230 as a defense in cases brought by the Justice Department. Their "PACT Act" would also force platforms to lay out their content moderation policies and let users appeal takedowns, account bans and other moderation decisions.
  • On the Senate Judiciary Committee's agenda Thursday is a possible vote on another effort to change Section 230, the EARN IT Act. (Next week is more likely, due to a procedural quirk in how the panel considers legislation, but it appears to be moving forward regardless.) The bipartisan bill threatens online platforms with losing their Section 230 immunity if they fail to meet government-set standards for preventing child sexual exploitation.
  • Members of the House Energy and Commerce panel from both parties called for updating Section 230 during a Wednesday hearing. Top E&C Republican Greg Walden, according to his opening statement, is working on legislation he hopes will be bipartisan that would amend the law to impose moderation transparency requirements on companies making more than $1 billion in annual revenue.

Context: Tinkering with Section 230 is one of the few levers that lawmakers are willing to grasp to change the behavior of Silicon Valley's giant companies.

  • Republicans, including Trump, want companies like Facebook and Twitter to ease up on action against conservatives' accounts. Democrats, including Nancy Pelosi and Joe Biden, are pushing tech to take a firmer hand on curbing misinformation and hate speech.
  • For a time, those divergent goals looked likely to doom efforts to pass any changes to 230. But the overlap between the parties' views on the law now appears to be growing.

The bottom line: Rewriting decades of settled law around online speech still looks unlikely — but a little less so.

Editor’s note: This story has been corrected to state that Rep. Greg Walden is working on the transparency legislation, not Rep. Susan Brooks, who was reading Walden’s opening statement at the hearing on his behalf.

3. Google will start paying publishers

Illustration: Lazaro Gamio/Axios

In a major departure from its longstanding practice of not paying publishers directly to distribute their work, Google executives tell Sara that the search giant is creating a licensing program to pay publishers "for high-quality content" as a part of a new news product launching later this year.

Why it matters: Regulators around the world have been threatening Google with broad-based policies that would force it to pay publishers on policymakers' terms. Google aims to get ahead of that threat by introducing its own payout terms, while also strengthening its relationship with the embattled publishing community.

Details: The new program, to be announced in full later this year, consists of two aspects:

  1. Google will pay select publishers to distribute their work — whether video, audio, images or text — as a part of a new news product, details of which have not been made public.
  2. Google will also offer to pay for free access for users to read paywalled articles on a publisher’s site where available, to help those publishers grow their audiences.
"We've heard loud and clear that we need to do more to support publications around world. Today's news is part of that solution."
Google VP Brad Bender

Google has already signed partnership agreements with local and national publications in Germany, Australia and Brazil, and plans to expand to other countries in the next few months.

For now, all Google is saying about the new product is that it is an "enhanced" storytelling experience that will exist in Google News and "Discover," its curated list of articles that appears on Android phones.

The big picture: Regulators around the world, encouraged by news industry interest groups, have been pushing to introduce legislation that would require tech giants like Google and rival Facebook to pay publishers directly for their work.

  • Google has resisted the idea, and has even threatened to pull Google News out of Europe should the EU impose such policies.
  • But perhaps realizing that the trend is inevitable, Google seems to be taking a more forward-leaning approach towards paying publishers, to be able to at least do so on its own terms.
4. Home-sharing startup battles with San Francisco

Startup Globe, which lets customers rent someone else's empty home by the hour, is clashing with San Francisco officials, who say it's violating regulations, Axios’ Kia Kokalitcheva reports.

Driving the news: In a letter to San Francisco Mayor London Breed and California Gov. Gavin Newsom, Globe co-founder and CEO Manny Bamfo argues that his company's business is helping alleviate challenges residents face during the current pandemic.

  • He also asks to work with city and state regulators to essentially green light Globe's business model to preempt future such disputes.

Background: In late May, the San Francisco City Attorney's office informed Globe that its business is violating the ongoing shelter-in-place order as well as the city's short-term rental rules. Globe says it responded on June 9.

  • "Globe's operations not only violate San Francisco's current health order, but also the City's short-term rental rules," City Attorney's Office deputy press secretary Meiling Bedard said in a statement to Axios this week.

"What really prompted this was the customers — we had several customers reach out to us and say, 'I don't want to be cooped up with my husband,'" Bamfo tells Axios.

  • "Yeah there's the COVID-19 crisis, but there was also another crisis which is that we as humans are not designed to be cooped up this way."
  • Bamfo also says that the company has been following the same public health guidelines as home-sharing and hotel businesses, along with the CDC's guidelines for disinfecting community facilities, requiring hosts to clean their homes for each booking.
  • The company also believes it's exempt from short-term rental regulations because guests do not stay overnight, and city officials have affirmed this exemption in the past.

Go deeper: Read Globe's full letter here.

5. Take Note

On Tap

Errata

  • In yesterday's Login we wrote that the leadership of the Open Technology Fund had been fired by Trump's newly appointed leader of the U.S. Agency for Global Media, but in fact Libby Liu, the head of the OTF, resigned after she learned of the changes planned at the agency.

Trading Places

  • The Electronic Frontier Foundation has added tech executive Anil Dash and open-source software advocate James Vasile to its board of directors.
  • SoftBank CEO Masayoshi Son announced he's stepping down from the board of Chinese e-commerce giant Alibaba.

ICYMI

  • Google will limit how long it hangs on to some user information, automatically deleting certain data after 18 months. (Axios)
  • In an updated indictment, Julian Assange was charged with conspiring with "Anonymous"-affiliated hackers. (Axios)
  • Apple has acquired enterprise management software maker Fleetsmith. (Fleetsmith blog)
  • Slack is launching Slack Connect, a new tool to take on email by letting people in different organizations connect directly. (TechCrunch)
  • Sonos is laying off 12% of its workforce and initiating executive pay cuts as it seeks to cut costs amid the pandemic. (The Verge)
  • Apple is re-closing some of its stores as coronavirus infections surge. (Bloomberg)
6. After you Login

A Virginia judge determined on Wednesday that Twitter can't be sued over the comments of a fictitious cow, as part of a defamation suit brought by Rep. Devin Nunes' (R-Calif.).

Nunes did not immediately respond to a request for comment. Reached via Twitter, the make-believe bovine declined to make any utterances.

Ina Fried