The Year Of Antitrust Fast Approaches While Section 230’s Upcoming Challenges Mount

The Developers Alliance 2020 Year End US Policy Update 

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New Kid On The Block

On December 14th, Nathan Simington, a former Senior Adviser to the National Telecommunications and Information Administration (NTIA) was sworn in as a Federal Communications Commissioner following an appointment by President Trump. Commissioner Simington will serve a 5-year term, back-dated to July 1st, 2019, when the previous term of former Commissioner Michael O’Rielly was scheduled to end. Simington’s appointment comes as Fmr. Commissioner O’Rielly was not re-nominated following public comments this summer about it being ill-advised to rescind Section 230 of the Communications Decency Act — comments that President Trump perceived as inconsistent with his administration’s agenda.

The Year Of The Antitrust Suits

In the last two months, there have been FIVE major antitrust suits against Facebook and Google, with no sign that the incoming Biden administration will slow down. On December 16th, nine Republican-led states filed a lawsuit against Google’s ad-tech market alleging manipulation of its ad-tools, algorithms, and other advertising products “to extract maximum profits for itself and unfairly exclude potential competitors.”

On December 17th, thirty-five states, D.C., Puerto Rico, and Guam filed a lawsuit against Google accusing them of unfair control and anticompetitive practices over the search and advertising markets, leading to harm of connected device companies and specialized search engines. This lawsuit is meant to “complement” the Department of Justice suit filed in October with eleven other Attorneys General against Google regarding their alleged stifling of competition due to the dominance of their search engine. States have asked Google to divest some of its acquired entities to remediate the antitrust issues.

On December 9th the Federal Trade Commission along with 48 attorneys general filed two separate lawsuits against Facebook alleging anti-competitive activities and holding monopoly power over the U.S. personal social networking market. The lawsuits focus specifically on the acquisitions of WhatsApp and Instagram which Facebook purchased at $19B and $1B, respectively. Facebook states that the claims are following a “revisionist history” given that the acquisitions were approved by the FTC. States are requesting a variety of remedies including that Facebook divest the apps, as well as banning the tech giant from making acquisitions over $10 million without notifying the complainant states.

House Democrats have proposed overhauling antitrust laws in order to make it easier to break up large tech companies and have released a report to this extent. The Developers Alliance in conjunction with other tech industry and startup organizations wrote a letter identifying some of our concerns with assumptions made on behalf of developers with regards to competition policy and antitrust reforms.

Amidst the increasing scrutiny of Apple who is being questioned whether the App Store is designed to unlawfully favor its own digital services, the iPhone maker announced it plans to reduce the amount of money small app developers pay to use the company’s online store. Finally, of course, the announcement of the #batterygate settlement. 

While the FTC is already on a roll with the tech world this month they announced that they are launching an inquiry into the data practices of nine major tech companies.

Section 230

Despite lame-duck feet stomping, Section 230 provisions were not included in any of the defense, stimulus, or relief bills that went out the door in the final days of 2020. Senator and current Senate Judiciary Chair Graham (R-SC) introduced legislation suggesting the repeal of Section 230 if Congress doesn’t take the steps to fix the issues held with it by 2023. Even Speaker Pelosi who indicated that she “(Doesn’t) like Section 230,” shied away from calls to repeal the legislation. Given the end of this congress, it is unlikely this bill will pass, however with Senator Graham winning his seat in the Senate this past election cycle it is a near-guarantee that he will continue championing for Section 230 reform in the coming Congress.

On November 17th the Senate Judiciary Committee held a hearing entitled Breaking the News: Censorship, Suppression, and the 2020 Election. Jack Dorsey, CEO of Twitter, and Mark Zuckerberg, CEO of Facebook were the two witnesses. Focusing on tech regulation and their role in the election, both CEOs indicated their readiness to work with Congress on regulation, including “Section 230 reform.” Both executives were hesitant toward a full Section 230 repeal, however, given the ramifications of the law. Dorsey stated that “amending the law solely through carve-outs will inevitably favor large incumbents with vast resources who may willingly embrace such changes as it would leave only a small number of giant and well-funded technology companies … For innovation to thrive, we must not entrench the largest companies further.”

Can We Give Back Our $600 Checks To Save The Meme Accounts?

Congress finally has passed an omnibus spending bill and coronavirus rescue package — and POTUS has finally signed it. Hidden in the bill Congress included the controversial yet bipartisan CASE Act, which makes illegal streaming for profit a felony. The legislation is meant to address how copyright holders get paid for infringement claims. While the CASE Act seeks to curb online copyright infringement some groups say that its passage means some internet users could be fined up to $30,000 simply for sharing memes. The relief and spending bill did not prevent the U.S. from including fixes for the tech liability shield in future trade deals. 

Patent Reform

Additionally in the omnibus is the Trademark Modernization Act of 2020. The bill provides “new mechanisms for opposing and canceling trademark registrations at the PTO and by making it easier to secure an injunction…authorizes a third party to submit evidence to the PTO to oppose an application for a federal trademark registration…establishes a procedure for any party to petition the PTO to expunge a registration for a trademark that has not been used in commerce…(and) establishes a procedure for any party to petition the PTO to reexamine any trademark registration on such nonuse grounds.” The tech industry has fought back against the bill citing its “negative impacts on small- and medium-sized businesses, creators, libraries and their patrons, students, teachers, educational institutions, religious institutions, fan communities, internet users, and free expression.”

The U.S. Patent and Trademark Office is considering changes to its patent review procedures regarding challenges to low-quality patents. Many in the tech community are less than enthused about these proposals. Developers Alliance board member Todd Moore submitted comments on behalf of the Developer community indicating support for the existing IPR system and expressing concerns developers have with discretionary patent denials.

Sen. Thom Tillis’s (NC-R) office is looking at revisiting patent reform again in 2021. Sens. Tillis and Coons (DE-D) have been seeking to reform Section 101 of the Patent Act for a while to no avail. The Developers Alliance has weighed in on patent reform matters in both the U.S. and EU. We will continue to monitor the negotiations for future legislative reforms that may impact developers.

Other Tech Highlights From The Omnibus Spending Bill Include

Federal Trade Commission and the Department of Justice’s antitrust divisions received an increase in funding for 2021, with an additional $20 million and $18 million to their budgets respectively. While a sizable increase, the amounts were less than the agencies requested, especially in light of the increased lift these agencies have had due to the big-ticket tech cases they have been handling.

The FTC in conjunction with the Department of Commerce is being tasked with joint studies on quantum computing, blockchain technology, and how artificial intelligence can be used to detect and thwart deceptive online content including deep fake technology.

Moving On…

Biden’s team has been keeping an eye on international data flow, with an expectation that this could be an area his team hopes to find a legislative win on early in his administration — and something that could be seamlessly paired with his foreign trade agenda. The tech world sees the President-Elect’s team sending feelers out in the private sector on this area as a positive thing in light of the fallout of the now-defunct U.S.-EU Privacy Shield.

Additionally, the data privacy conversation continues with Senators discussing an appetite for bipartisan federal privacy legislation in the next congress, and civil rights and privacy advocacy groups calling for the incoming Biden Administration to make it a top priority. 

More Than The Tax Lady Seeking Her Cut

The neverending priority list for the Biden administration includes sorting out the digital tax predicament U.S. companies operating in France have found themselves in. The French government indicated they are looking for the Biden Administration to clarify America’s stance on tax in regards to the retaliatory taxes the Trump administration promised on French goods following OECD’s inability to come to an agreement on digital taxation. France passed a law in 2019 placing a 3% digital services tax on revenues deemed to have been generated in France by digital companies; the Trump administration stated they believe this was unfairly targeting US-based tech companies as they will be the most strongly impacted by the provision.

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By Sarah Richard

Developers Alliance Policy Counsel & Head of US Policy

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