Mar 27, 2019

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1 big thing: Cities are clipping Big Tech's wings

Illustration: Aïda Amer/Axios

Big Tech companies like Alphabet and Amazon are finding that the most active efforts to rein them in are coming not from Congress but from the cities they want to call home, Axios' David McCabe reports.

Why it matters: Major cities have experienced the bulk of the tech industry's growth. That's brought jobs and wealth, as well as gentrification and skyrocketing housing prices.

What's happening: “All the action is in the cities,” Bradley Tusk, a prominent campaign operative who now invests in and advises startups, tells Axios.

  • Activists, unions and lawmakers in New York managed to drive out Amazon’s HQ2, which they said would lead to gentrification in Queens.
  • Last year, Google pulled back on plans to develop a startup incubator in Berlin's Kreuzberg neighborhood after activists said it would lead to gentrification.
  • Toronto-ites have expressed privacy concerns about Alphabet subsidiary Sidewalk Labs’ proposed data-hungry smart city along the city’s waterfront. And critics assail its proposal to develop an even larger area of land in return for a cut of taxes once that first project is complete.
  • Seattle City Council passed a new business tax last year before reversing course under pressure from companies including Amazon.
  • City governments have also been at the forefront of pushing back against services bringing the sharing economy model to homes (Airbnb), cars (Uber and Lyft), and scooters (Bird and Lime).

The big picture: Some cities have existing political structures, including unions, that can mobilize against rapid corporate expansion. Many companies haven't needed the grassroots capability to combat that until now.

  • Kathy Wylde, the president of the business coalition Partnership for New York City, which has urged Amazon to reconsider pulling HQ2 out of Queens, argues that the backlash was driven by politically savvy forces like unions taking advantage of community anxieties.
  • “I think there are organized political interests,” she says. “I don’t think the communities are necessarily political, but they are fearful and resentful in some cases and don’t see a chance for themselves in the tech world because they don’t have those skills, their kids aren’t learning those skills in school.”

Yes, but: Many communities would vocally protect their values and priorities, regardless of the business interests involved.

What's next: The fight in Toronto remains in full swing. Keerthana Rang, a Sidewalk Labs spokesperson, writes in a statement that "robust public debate and discussion is what will enable us to present the best possible plan, after which it will be up to Toronto to decide whether to move forward and implement it."

  • Opponents see hope in other cities' success.
  • "It seems to me that if Big Tech gets kicked out of places like Berlin and gets kicked out of places like New York, Toronto should not be afraid to say no to proposals like the Sidewalk Labs proposal that Google is offering up here," says Thorben Wieditz, one of the organizers of the Block Sidewalk coalition against the project.

Go deeper: Read David's full story.

2. EU approves controversial copyright law

Photo: Jens Kalaene/picture alliance via Getty Images

The European Parliament signed off on a much-debated copyright law on Tuesday, Axios' Joe Uchill and David write.

Why it matters: The law has been criticized by major web companies as well as activists. They say that it will undermine basic principles of the internet that have allowed content to flow freely across the web.

Article 11 of the law, the so-called "link tax," would require sites like Facebook and Google to pay a fee when they summarize news stories and link to them.

  • Supporters believe this will stop Big Tech from unfairly profiting from the work of news organizations who have been hit hard by loss of revenue to digital platforms.
  • Opponents believe this may ultimately cause smaller sites, blogs and even the same news outlets the law is meant to protect to have to pay for the right to use links.

Article 13 of the law requires sites that distribute user-uploaded content — like YouTube or Facebook — to ensure that content doesn't violate copyright.

  • The problem, according to critics, is that to accomplish this on a large scale, sites like YouTube would have to rely on automated scanning algorithms, which would inevitably cause more legitimate content to be swept up in the dragnet.

What they're saying: Critics were dismayed. The Electronic Frontier Foundation said that the bloc had "abandoned common-sense and the advice of academics, technologists, and UN human rights experts."

The big picture: European lawmakers and regulators have taken the most aggressive action to rein in the giants of Silicon Valley.

  • EU Commissioner for Competition Margrethe Vestager has pursued antitrust cases against Google and a major tax case against Apple.

What's next: EU member states need to sign off on the Parliament's decision. Once they do that, they will have 2 years to add them to their own legal codes.

3. FTC seeks privacy info from broadband providers

The Federal Trade Commission issued orders to 7 U.S. broadband providers, demanding they hand over information about their privacy practices and how they monetize consumer data — including those practices the companies have chosen to keep under wraps, Axios' Shannon Vavra writes.

Details: The FTC wants to know what kind of personal information these companies — which include AT&T, Verizon, T-Mobile, Comcast and Google Fiber — are collecting from users and how they're using that data, such as if they are sharing it with third parties.

  • The FTC requested the companies also share whether consumers have a choice in the collection and use of their data, and whether users who opt-out of collection are punished.
  • In addition, the FTC wants to know to what extent the data collected is anonymized and protected from internal access.

Reality check: It remains to be seen whether the FTC will be able to take action based on these findings, such as issuing guidelines or privacy practice recommendations for telecommunication companies.

  • The companies can try to sidestep the request, as with a subpoena, but the FTC can file suit to obtain the information regardless, per Bloomberg.
4. Apple and Qualcomm each win a patent round

Two different U.S. International Trade Commission judges yesterday handed Apple and Qualcomm each a victory in separate patent cases, Bloomberg reports.

In the first case, the judge determined that Apple infringed on a Qualcomm patent and therefore some older iPhone models should be banned from U.S. import.

In the second case, handed down a few hours later, a judge rejected Qualcomm's claim that Apple had infringed on one of its patents for battery-saving.

Why it matters: This is one more inning in a broad legal dispute that spans cases in multiple venues in countries across the globe. The threat of an import ban — which the full ITC would have to approve — is more likely to make a difference to Apple than any potential fine.

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