One idea for regulating Google and Facebook's control over content - Axios
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One idea for regulating Google and Facebook's control over content

Paul Sakuma / AP

We reported this morning on the mounting pressure on major web platforms over their role in moderating content. A conservative activist named Phil Kerpen circulated a confidential memo earlier this year on the mechanics and politics of how to regulate the political neutrality of major web companies like Google and Facebook. Find the full text below.

Why it matters: Moves to turn these ideas into concrete policy or regulation haven't happened. But the memo is certainly getting attention, especially as major web platforms try to walk the fraught line of removing extremist content while also maintaining an open platform for free speech in the wake of the Charlottesville attack.

Worth noting: "The unpublished draft memo represents preliminary thoughts on complex issues," Kerpen said when contacted by Axios.

Confidential Strategy Memorandum: Layer-Neutral Net Neutrality And The Private Censorship Problem

Social media (Facebook, Twitter) and search (Google) companies with dominant market position represent themselves as politically neutral while systematically promoting liberal views and limiting or even banning conservatives. They do so while enjoying blanket liability protection and with the full approval of liberal elites. Far too many conservative media and intellectuals defend the politically biased practices of these companies on the basis that viewpoint discrimination by private entities is beyond the reach of government.

That view ignores the reality that basic network economics create a high bar to competition – a problem that's been with us since the railroads – and that incumbents with market power therefore pose a serious threat to free speech.

Worse, that view incorrectly assumes the political bias of these companies is a free-market phenomenon, when it is largely result of federal law that insulates these companies from a natural market constraint on being an active political player: legal liability for publishing false and malicious claims.

Section 230 of the Communications Decency Act includes a finding by Congress that "The Internet and other interactive computer services offer a forum for a true diversity of political discourse," but has enabled precisely the opposite by allowing sites to exercise editorial control without becoming legally responsible for user-generated content.

CDA 230's provision for "Good Samaritan blocking and screening of offensive material" is so broad, allowing sites to filter or block content that is "harassing, or otherwise objectionable," that it effectively gives carte blanche to promote an aggressive political agenda without any risk of legal consequence.

Moreover, the very companies that are now exploiting these liability protections and their enormous incumbent market power were the principal corporate proponents of imposing draconian regulation on ISPs via the FCC in the context of net neutrality, which morphed into Title II public utility regulation. The arguments they made in that context apply in every respect to themselves, as both critics and supporters of net neutrality regulation have long observed.

The Title II order is ticketed for imminent revocation under Republican FCC Chairman Ajit Pai, and deservedly so. It has had a profound negative impact on broadband investment and represents a dangerous precedent of a federal regulatory agency dramatically expanding its own power without authorization by Congress.

At the same time, however, the Internet ecosystem is not likely to be satisfied with going back to the old, unenforceable broadband statement given the battle-scars on all sides of the net neutrality fight. Stakeholders will seek bright line rules requiring transparency and prohibiting blocking and throttling from the place the debate always should have taken place: Congress.

The legislative process is likely to be led by the Senate Commerce Committee and its chairman, John Thune of South Dakota, who unfortunately may fear taking on powerful edge companies after receiving unexpected criticism from the right when he held important hearings on the systematic political manipulation of the "Trending News" feature by Facebook.

The Trump administration should urge Thune to think bigger than just the ISPs and make clear that they will provide robust cover from the right if he takes on the challenge of political bias from the edge.

Social media and search companies, and possibly others, should be subject to the same neutrality rules because they possess the same benefits of market power that come from enormous fixed costs as well as, in the case of social network platforms, the network lock-in effects of having a large user-base.

Putting everyone in the same boat has enormous advantages, ensuring the exercise is genuinely pro-consumer rather than devolving into the familiar attempt by the edge to seek regulatory predation of the core.

The most likely approach would be a supercharged transparency rule requiring clear disclosure of how traffic is treated, and clear specification of the standards used for limiting speech, including any possible viewpoint discrimination.

Platforms that represent themselves to the public as neutral would be subject to enforcement actions if they violate those representations through a consumer-protection framework.

Platforms that elect not to be neutral would be free to exercise editorial control, but would have to prominently disclose they are doing so – and would no longer be eligible for a section 230 safe harbor to shield them from the legal consequences of the material they choose to publish.

Critics will raise First Amendment objections, but their arguments will smack of hypocrisy if they supported the FCC neutrality rules for ISPs, which also provide a legal template.

In USTA v. FCC the DC Circuit upheld so-called net neutrality regulation of broadband providers and laid out a roadmap for neutrality regulation without running afoul of the First Amendment:

If a broadband provider nonetheless were to choose to exercise editorial discretion—for instance, by picking a limited set of websites to carry and offering that service as a curated internet experience—it might then qualify as a First Amendment speaker. But the Order itself excludes such providers from the rules. The Order defines broadband internet access service as a "mass-market retail service"—i.e., a service that is "marketed and sold on a standardized basis"—that "provides the capability to transmit data to and receive data from all or substantially all Internet endpoints." That definition, by its terms, includes only those broadband providers that hold themselves out as neutral, indiscriminate conduits.

Search and social can, by the same logic, be required to enforceably identify themselves as neutral or non-neutral platforms.

Jack Dorsey of Twitter has said: "We think of it as an information utility and a communications network," making it functionally identical to the ISPs Twitter lobbied the FCC to regulate.

If Twitter is in fact an advocate for liberal views – as it appears to be – then it should be forced to say so clearly, as should Facebook and Google. And if they choose to be First Amendment speakers rather than neutral conduits, then they should be willing and able to defend the material they label as "fact checked" in court.

By simply proposing this framework, the Trump administration would make clear that the asymmetry of companies identified with conservative causes risking regulatory retaliation while companies identified with liberals are given a free pass is over.

Moreover, while the initial response will be indignation from the left as well as search and social companies – possibly including mass mobilization of site users, which is a potent political weapon – the focus on transparency, a core value of younger voters, as well as the hypocrisy of these companies supporting for ISPs precisely what they oppose for themselves puts these companies in an untenable position.

They are therefore likely to rely principally on the argument that regulation is unnecessary, to issue even stronger statements of political neutrality, and to actually improve their behavior to prevent regulation.

Rather than fighting a standalone rearguard action to defend rollback at the FCC, this approach puts us on offense on the net neutrality issue and assures a positive outcome whether or not the bill passes.


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Trump claims people only watching NFL for protests

From the president's tweets this morning: "Ratings for NFL football are way down except before game starts, when people tune in to see whether or not our country will be disrespected!... The booing at the NFL football game last night, when the entire Dallas team dropped to its knees, was loudest I have ever heard. Great anger...But while Dallas dropped to it knees as a team, they ALL stood up for our National Anthem. Big progress being made - we all love our country!"

Go deeper: The Cowboys took a knee as a team last night

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Venture firm IVP raises $1.5 billion for new fund

Illustration: Lazaro Gamio / Axios

Institutional Venture Partners has raised $1.5 billion for its sixteenth fund, Axios has learned. The final close came last Wednesday, although it's possible that IVP won't actually begin investing the money until early 2018.

Why it matters: IVP is one of Silicon Valley's most active late-stage venture firms, with a portfolio that includes such companies as Dropbox, Domo, Pindrop Security, The Honest Company, Slack and Tanium.

Scale: The firm has wide latitude in check sizes, able to go as small as $10 million and as large as $150 million. That means it can supplement later-stage deals with some earlier opportunities, like it did for Snapchat (where its cost basis was just $0.98 per share).

Exits: 37 year-old IVP has had more than 100 portfolio companies go public, but partner Dennis Phelps acknowledges that the overall pipeline is currently gummed up a bit. "A number of companies that planned to go public in Q4 of this year have paused, partially because there is still plenty of ability to raise capital in the private markets and partially because of the performance of high-profile companies like Snap and Blue Apron."

Consistency: $1.5 billion is only a slight increase over the $1.4 billion IVP raised for its fifteenth fund in 2015, and the new vehicle features the exact same group of general partners. Per Phelps: "If it ain't broke, don't fix it."

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VC: Not enough startups are building self-driving car software

Rebecca Zisser / Axios

Venture capitalist Reilly Brennan believes that self-driving cars are coming faster than most people expect, but that his peers aren't necessarily making the best funding decisions.

Too much: Companies selling dongles for car data. "There are 100 of those and there should probably be three," says Brennan, who last year co-founded transportation-focused Trucks Venture Capital. There are also too many "Uber for freight" companies, he adds.

Not enough: Startups working on decision-making systems. "There's around 24 of those companies; I would suggest there should be 125 to 200 of those companies."

Also, driver monitoring: "There's a lot of people focused on external sensors that are shooting laser beams out, and trying to make a map of what's outside the car, and I would suggest that there's a huge opportunity for taking that same type of thinking but doing it inside the cabin."

More Q&A with Brennan, who co-founded Trucks Venture Capital last year and previously was executive director for Stanford's automotive research program:

What is the most likely exit for these companies? Are they all going to be $1 billion exits? IPOs?

Some of these technologies that are directly related to the supply chain are probably in line for acquisitions by other large supply chain companies like Tier 1 suppliers or manufacturers. I would suggest those exits are measured in the $50 million to $300 million range.

Those tech commodities, which are related to decision making, vehicle-to-vehicle kind of communications and things that are super important in keeping a fleet in high utilization — those are really valuable to a fleet owner which might be sort of a higher level of M&A or potentially a small IPO.

And then you have companies that are trying to build new categories of business in autonomy, for example [Trucks VC portfolio companies] Starsky or May Mobility, I think the idea for those companies is they would become public companies."

Does that affect how you invest?

For some companies that have the opportunity to be really category-defining, we are less price sensitive.

What will most impact the adoption of self-driving cars?

Policy is really important in this space and there's a lot of enthusiasm from lawmakers. There's probably not as much knowledge as there is enthusiasm so some of the lawmakers are actively engaging with startups. Sen. Thune being one, Jeff Brandeis in Florida who puts on his own autonomous vehicle conference.

A lot of the narrative has been "Silicon Valley is gonna win this one and Detroit just doesn't know what it's doing."

I think people underestimate and overestimate unfairly on both sides. If you actually want to deploy a self-driving vehicle, the vehicle piece of it is really important for a number of reasons: People want to feel safe. Also, in the world of automating vehicles, utilization is really important. Kind of like with a Formula 1 car, you don't wanna waste time in the pits, you always want to be out on the road earning money. So vehicles that can execute on a really high-duty cycle, that are always on the road, are super durable, are really for the passengers make the experience really safe — that's an incredibly valuable part of an autonomous vehicle system.

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Software jobs grow at fast clip

Jacquelyn Martin / AP

The software industry directly accounts for 2.9 million jobs in the U.S., a 14.6% increase since 2014, according to a report out today by Software.org, the research arm of the software industry's trade group BSA. The average annual salary for software developers is $104,360, which is more than twice the annual average wage for all U.S. occupations, according to the report.

Why this matters: The software industry is growing as new technologies like artificial technology, self-driving cars, augmented reality and the internet of things — all of which rely heavily on software — continue to advance. Software-related jobs continue to be among the more lucrative jobs requiring STEM skills, a shortage of which puts such workers in high demand.

Just yesterday the Trump administration announced an initiative to expand students' access to computer science and STEM education. Increased training in these areas, particularly in the K-12 setting, is one way experts think students can be better prepared for the modern economy that is increasingly leaving many communities behind.

Go deeper: Silicon Valley no longer has a lock on software developer jobs.

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Puerto Rico in crisis

A man looks at the horizon early in the morning after the passing of Hurricane Maria, in Yabucoa, Puerto Rico. Photo: Carlos Giusti / AP

Puerto Rico remains without power and short on supplies after being slammed by Hurricanes Irma and Maria. Officials are having difficulty even communicating with outlying towns that were devastated by the storm, and the humanitarian crisis is growing.

After focusing for days, at least publicly, on NFL protests and other matters, President Trump tweeted about the crisis in Puerto Rico on Monday night — and seemed to blame Puerto Rico in part for its own misfortune.

Trump's tweets: "Texas & Florida are doing great but Puerto Rico, which was already suffering from broken infrastructure & massive debt, is in deep trouble....It's old electrical grid, which was in terrible shape, was devastated. Much of the Island was destroyed, with billions of dollars....owed to Wall Street and the banks which, sadly, must be dealt with. Food, water and medical are top priorities - and doing well. #FEMA"

What Puerto Rican officials have said

From Governor Ricardo Rosselló: "We are U.S. citizens that just a few weeks ago went to the aid of other U.S. citizens even as we're going through our fiscal downturn and as we were hit by another storm…Now, we've been essentially devastated. Complete destruction of the power infrastructure, severe destruction of the housing infrastructure, food and water are needed. My petition is that we were there once for our brothers and sisters, our other U.S. citizens, now it's time that U.S. citizens in Puerto Rico are taken care of adequately, properly."

From Manati mayor Jose Sanchez Gonzalez: "Hysteria is starting to spread. The hospital is about to collapse. It's at capacity," he said, crying. "We need someone to help us immediately."

The scale of the crisis

  • Government officials said Sunday a dam on the Western part of the island "will collapse at any time." Eastern areas, which were hit by the eye of the storm, could take years to recover.
  • Officials estimate it could take up to 6 months to restore power to the whole island.
  • Federal agencies have cleared the Port of San Juan for daytime operations, but accessing Puerto Rico is pretty difficult right now — airports and harbors are severely damaged and the whole island remains out of power. 11 ships have delivered 1.6 million gallons of water, 23,000 cots, dozens of generators and food, per the AP. Many hospital patients are being flown to the U.S. mainland for treatment.
  • The death toll is at least 10 in Puerto Rico, and 31 if you include other Caribbean islands, per the AP.
  • 1,360 of the island's 1,600 cell towers are down. 85% of phone and internet cables were knocked out.

Personal experiences

  • When locals see outsiders, the first thing they ask is "Are you FEMA?" per The Washington Post.
  • "Nothing's working, we don't hear from anyone…We feel abandoned," Toa Baja resident Johanna Ortega told USAToday.
  • Food at local grocery stores is "VERY LIMITED," San Juan resident Claudia Batista messaged Axios. Batista described the situation in San Juan as "desperate times," saying because of "all the material loss, people are losing control and patience and are stealing in other homes and assaulting people on the streets."
  • Some local responders in Juncos cleared streets with machetes since the town doesn't have enough chain saws. People are riding bikes and walking for miles to get to gas stations

What FEMA is doing

  • FEMA teams were in Puerto Rico earlier this month following Hurricane Irma, and as soon as Hurricane Maria's winds died down they launched search-and-rescue missions, per USAToday.
  • All of the 28 task force teams around the U.S. have been recruited to help, which is rare, per Karl Lee, a FEMA Incident Support Team member.
  • FEMA responders are using a San Juan hotel as a command center.
  • 4,000 U.S. Army Reserve members have also been deployed to the island. The Army Corps of Engineers dispatched the 249th Engineer Battalion, per CNN.

What Trump has said

Trump declared a major disaster in Puerto Rico and said all of the U.S. government is behind the relief efforts. White House adviser Tom Bossert and FEMA's chief are heading to Puerto Rico Monday, although a trip from Trump isn't expected for a while, per CNN.

  • Rosselló thanked Trump on Monday for having federal emergency assistance provided, per the AP, noting FEMA has done a "phenomenal job."

Trump's most recent tweets about Puerto Rico, from last week:

Take a look

How to help

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The back-and-forth: McCain was more subtle in critiquing Trump during a 60 Minutes interview Sunday. He said the two had very different upbringings, after noting that Trump had not apologized for saying he was not a war hero.

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Photo: Matt York / AP

Prior to the national anthem at their Monday Night Football matchup with the Arizona Cardinals, the entire Dallas Cowboys team, including owner Jerry Jones, took a knee. They then stood for the anthem.

Go deeper: How NFL teams have reacted to Trump's comments.

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From L-R, Stephen Miller, Reince Priebus, Steve Bannon. Photo: Carolyn Kaster / AP

Several current and former senior Trump administration officials occasionally used private email to conduct government business, the NY Times reports. The officials named: Steve Bannon, Reince Priebus, Ivanka Trump, Gary Cohn, Stephen Miller and Jared Kushner (Politico had previously reported Kushner sent or received about 100 emails about White House matters using his private address).

Why it matters: Trump railed against Hillary Clinton incessantly during the campaign for her use of private email as Secretary of State. Government officials are supposed to use their government accounts so their communications will be stored, and failing to do so can cause security risks.
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Trump lashed out at CNN for reporting that John Kelly opposed his NFL remarks. Photo: Evan Vucci / AP

President Trump lashed out at CNN on Twitter Monday evening, calling them "Fake News" for reporting that John Kelly was opposed to his comments at Friday's rally calling for NFL players who protest during the national anthem to be "fired." CNN reported that Kelly "was not pleased" with Trump's remarks, later updating the story to reflect Kelly's conversation with CNN reporter Jeff Zeleny, during which Kelly said he was "appalled" by the lack of respect for the flag.

"I believe every American, when the national anthem is played, should cover their hearts and think about all the men and women who have been maimed and killed," Kelly told Zeleny. "Every American should stand up and think for three lousy minutes." However, Zeleny noted that Kelly declined to say whether he felt Trump should have weighed in.

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Sen. Susan Collins said she opposes the Senate's health care plan. (AP Photo/Robert F. Bukaty, File)

Sen. Susan Collins officially said she will oppose the Senate's latest bill to repeal parts of the Affordable Care Act — yet another nail in the coffin for a bill that's moving further away from the 50 votes it would need to pass.

Why it matters: It would only take three "no" votes to kill the bill. And Collins' opposition makes it a total of four Republicans who say they won't vote for the bill — two moderates (Collins and Sen. John McCain) and two conservatives (Sens. Rand Paul and Ted Cruz).