@noamcohen: Silicon Valley is Not Your Friend

Late last month, Mark Zuckerberg wrote a brief post on Facebook at the conclusion of Yom Kippur, asking his friends for forgiveness not just for his personal failures but also for his professional ones, especially “the ways my work was used to divide people rather than bring us together.” He was heeding the call of the Jewish Day of Atonement to take stock of the year just passed as he pledged that he would “work to do better.”

Such a somber, self-critical statement hasn’t been typical for the usually sunny Mr. Zuckerberg, who once exhorted his employees at Facebook to “move fast and break things.” In the past, why would Mr. Zuckerberg, or any of his peers, have felt the need to atone for what they did at the office? For making incredibly cool sites that seamlessly connect billions of people to their friends as well as to a global storehouse of knowledge?

Lately, however, the sins of Silicon Valley-led disruption have become impossible to ignore.

Facebook has endured a drip, drip of revelations concerning Russian operatives who used its platform to influence the 2016 presidential election by stirring up racist anger. Google had a similar role in carrying targeted, inflammatory messages during the election, and this summer, it appeared to play the heavy when an important liberal think tank, New America, cut ties with a prominent scholar who is critical of the power of digital monopolies. Some within the organization questioned whether he was dismissed to appease Google and its executive chairman, Eric Schmidt, both longstanding donors, though New America’s executive president and a Google representative denied a connection.

Meanwhile, Amazon, with its purchase of the Whole Foods supermarket chain and the construction of brick-and-mortar stores, pursues the breathtakingly lucrative strategy of parlaying a monopoly position online into an offline one, too.

Now that Google, Facebook, Amazon have become world dominators, the question of the hour is, can the public be convinced to see Silicon Valley as the wrecking ball that it is?

These menacing turns of events have been quite bewildering to the public, running counter to everything Silicon Valley had preached about itself.

Read the post on the New York Times

@gamoid: Google will permanently disable a control on its new $50 speaker after the gadget listened in on some users

Google is permanently disabling a feature on the forthcoming Google Home Mini smart speaker after a reviewer discovered that it was surreptitiously recording his conversations without his knowledge or consent.

The issue, Google says, was that the button on top of the device was faulty and would sometimes activate on its own. In response, Google acknowledged the bug and issued a software update that would disable that button for all users while it explored a long-term fix.

Now that change will be permanent.

Read the post on Business Insider

[Editor Charlie sez:  It’s not the first time…]

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“Google Wants to Make Creepy Bunny Rabbits to Talk to Your Kids” https://qz.com/410122/google-wants-to-make-creepy-bunny-robots-to-talk-to-your-kids/

Google’s Racketeering Challenge

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Eric Schmidt confers with some confused witnesses

According to a recent civil lawsuit, a plaintiff is suing Google for violating the racketeering laws (aka “RICO”).  (Attia et al v. Google et al, Cal. Sup. Ct. (Santa Clara) Case No. 1:14-cv-270143.)  I’ve been waiting for this since 2012 when it dawned on me one day that Google is running a criminal enterprise (see “Google’s Guide to RICO“).  So what does this RICO business mean?

If you’re even occasionally exposed to contemporary crime movies you’ll have heard of “RICO”.   The “RICO” statute is the acronym for the Racketeer Influenced and Corrupt Organization Act which allows a criminal prosecution against the leaders of an “ongoing criminal enterprise”, particularly where the leaders of that organization order others to commit crimes, often called “RICO predicates”.  The loophole was that leader didn’t do the crime, but ordered or assisted others in committing it.  (Recall the Senate hearings in The Godfather II, and see the first major RICO criminal case, US v. Scotto, 641 F.2d 47 (1980) for those reading along.)  You know, that thing that happened with those guys down at that place we used to go back in the day.

Often overlooked is the civil cause of action that may be brought either by the government or by private citizens under both the federal RICO statute and the 33 or so state law versions of RICO.  This allows private citizens who have been harmed by corrupt organizations to sue for treble damages and attorneys fees.  The Department of Justice civil RICO manual is also instructive for government action under the statutes:

Civil RICO, 18 U.S.C. § 1964(a), authorizes potentially intrusive remedies, including injunctive relief [typically sought by the government], reasonable restrictions on defendants’ future activities, disgorgement of unlawful proceeds, divestiture, dissolution, reorganization, removal from positions in an entity, and appointment of court officers to administer and supervise the affairs and operations of defendants’ entities and to assist courts in monitoring compliance with courts’ orders and in imposing sanctions for violations of courts’ orders.

RICO remedies are ample and were intended to be applied against white collar criminals as well as organized crime bosses.  The statute was drafted by Professor G. Robert Blakey–remember that name–now the William J. and Dorothy K. O’Neill Chair in Law Emeritus at the University of Notre Dame School of Law.  As Professor Blakey told Time magazine:

“We don’t want one set of rules for people whose collars are blue or whose names end in vowels, and another set for those whose collars are white and have Ivy League diplomas.”

Or whose collars are white, have Ivy League diplomas and live in Silicon Valley.

According to reports, Professor Blakey is advising Mr. Attia in filing an amended complaint in Mr. Attia’s case against Google alleging RICO violations in addition to the core claims of bad behavior by Google against Mr. Attia (The Verge has a good summary of the pre-RICO filing here).

What is particularly interesting about the RICO filing is that it turns on the RICO intellectual property theft predicate (at p. 28):

1. Defendants [meaning Google and certain Google executives and affiliates] have a long history of theft of others intellectual property which continues to date and which constitutes a pattern of racketeering activity 

112.  Defendants have engaged in a pattern of racketeering activity, as defined in 18 U.S.C. § 1961(5), through the repeated, relentless, and purposeful theft of other companies’ IP and trade secrets. 

113. Defendants have engaged, and continue to engage, in a pattern of activity whereby Defendants: 1) seek out inventors; 2) promise such inventors that Google will invest in, partner with and/or seek to acquire a license for any proprietary inventions of the investor; 3) sign a non-disclosure agreement (NDA) with inventors; 4) upon inducing inventors to reveal trade secrets and other confidential information, Google disregards the NDA and misappropriates the trade secrets; and 5) Google then subsequently attempts to box-out the victim inventors from the market by filing numerous patent applications which result in the unauthorized disclosure of the inventors’ trade secrets and the subsequent granting of a monopoly on the technology by the issuance of the patent. Where no NDA is required, Google has simply copied and criminally stole other inventors’ copyrights….

115. Google, Inc. and its executives—among others—have repeatedly had criminal and anti-trust investigations brought against them by governments around the world for their repeated theft. For example:

• Google was fined $500 million by the U.S. government for its role in the promotion of piracy through illegal online pharmacies;

• In June of 2017, Google was hit with a $2.7 billion fine from the European Union for its anti-competitive conduct in skewing search results. Google is still under investigation for its conduct with regards to its AdSense and Android software and business model which may lead the company to face even further fines;

• The U.S. Federal Trade Commission concluded that Google “used anticompetitive tactics and abused its monopoly power in ways that harmed Internet users and rivals”;

• Google was charged by the FTC with engaging in deceptive privacy practices for stealing and publishing consumers email contact lists and was ordered to submit to regular independent privacy audits for the next 20 years;  and

• Google was investigated by numerous countries when it was learned that Google’s street-view illegally stole persons’ wifi information, passwords, names, addresses and emails among other personal information….

c. Theft of others intellectual property is the Google and Flux Factory Enterprise’s regular way of doing business 

153. Violations of RICO predicate acts (e.g. theft of trade secrets and criminal infringement of copyright) are the regular way of conducting Defendants’ businesses. The previous non-exclusive list of acts of racketeering evidences a pattern of racketeering, the acts of which are related, not isolated, and continue to date by threat of further operation of Defendants’ business and through Defendants continued use of already stolen trade secrets for profits. Based on all of the following, Defendants have demonstrated that their regular way of doing business is through racketeering (e.g. by theft of trade secrets and criminal infringement of copyright) such that they are liable for harm done to others by their acts of racketeering under the Federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961, et seq.

6. Larry Page, Sergey Brin, Google, Inc., and its associates have participated in a criminal enterprise 

154. Each Plaintiff is a “person” within the meaning of 18 U.S.C. §§ 1961(3); 1964(c).

155. Each Defendant is a “person” within the meaning of 18 U.S.C. §§ 1961(3) and 1962(c)….

168. Plaintiffs hereby incorporate in the pattern of racketeering shown in ¶¶ 112–153. This pattern of racketeering evidences an intent by Defendants to continuously conspire to make income from acts of racketeering (e.g. theft of trade secrets) and to invest and/or use those funds within the greater Google Enterprise.

169. Moreover, Google, the Individual Defendants, and Flux Factory, Inc., conspired with certain venture capital firms (Does 1, 2, and 3) in order to assist in the development of the Flux Enterprise.

Sound familiar?  I’m not a RICO expert, but the RICO portion of the complaint seems to be very well-pleaded and a systematic application of the law and facts.  It’s also important to remember that Eric Schmidt, Larry Page and Sergey Brin have absolute control over Google (and Alphabet, the holding company) through Google’s bizarre voting rules as explained by the Motley Fool:

Google prevents activist investors from pressuring the company to do anything via its share class system.

There are currently three classes of Google stock — A, B, and C shares. Everyday investors can only buy A or C shares on the open market. A shares (GOOGL) are entitled to one vote, while C shares (GOOG) are entitled to zero votes. The C shares split off the original class A shares last year during its 2 for 1 split. Google uses A shares to pay its employees and fund acquisitions. Meanwhile, B shares, which are entitled to ten votes each, are only owned by Google’s founders and their inner circle.

Simply put, B shares give Google’s top brass the power to defend against any shareholder revolt. Shareholders united against that plan at a previous meeting, casting 180 million votes in favor of the elimination of share classes. Larry Page, Sergey Brin, Eric Schmidt and others crushed the proposal with 551 million votes.

Not only does the voting structure mean that insiders can block any shareholder revolt, it also means that insiders are totally responsible for any of the company’s bad acts.  That may explain why Eric Schmidt essentially “took the 5th” under questioning by Senator John Cornyn about Google executives’ narrow escape from criminal prosecution for violating and conspiring to violate the Controlled Substances Act.  Schmidt later claimed neither he nor his legal team “understood” the Senator’s questions and were “confused.”

This is, of course, another reason why Google was sued by its stockholders after insiders authorized the payment of $500,000,000 of the stockholders’ money as a fine for the bad behavior of insiders such as Larry Page.  In fact, the U.S. Attorney for Rhode Island told the Wall Street Journal that Larry Page was directly implicated in profiting from illegal drug advertising–which may have something to do with why the RICO claim refers to the $500,000,000 fine.  That stockholder settlement has one bizarre requirement that may shed some light on the RICO claims:

2.7 Criminal Activity Reporting

Google’s General Counsel shall be responsible for reviewing every situation in which a  Google employee is convicted of a felony under U.S. federal or state criminal statutes in connection with his employment by Google and for reporting to the Board (or an appropriate committee of the Board) with respect to that violation. Presumptively, any employee convicted of a felony under a U.S. federal or state criminal statute in connection with his employment by Google shall be terminated for cause and receive no severance payments in connection with the termination. If the General Counsel determines that such termination is not warranted, he shall so recommend to the Board (or an appropriate committee of the Board), which will act upon his recommendation in its discretion.

Leave aside how strange it is to have such a requirement in the settlement of a shareholder lawsuit in the first place–if it turns out that any of the Google insiders have actually been or get convicted of felonies as part of the racketeering case, the shareholder settlement will require the company to terminate that insider’s employment and  that will be that.

Where does it go?  Before you laugh it off, remember this:  If you had told a room full of MBAs in the mid 1980s that in a few years time Master of the Universe Michael Milken would be in prison and Drexel Burnham Lambert would be bankrupt, you would have been laughed out of the room as a quixotic buffoon.  But on March 29, 1989, Michael Milken was charged with 98 counts of racketeering and fraud and was facing life in prison.  That’s right–racketeering under the RICO Act.  Milken copped a plea to six lesser included crimes of securities and tax fraud, paid a $600 million fine and served 22 months in a federal pen on a 10 year sentence.

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He’s still rich, just not as rich as he was.  But Drexel never would have claimed the “don’t be evil” brand.  Even though unlike Google and the drug case, Milken paid his fine himself.  Drexel’s stockholders didn’t pick up the tab.

Of course, Milken was being prosecuted criminally and Attia is a civil case.   Different proof standards, no doubt, and different remedies, but otherwise, making a civil RICO case and a criminal RICO case are not wildly different.

Watch this space.

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Content Creators Coalition (c3) Warns Congress About Artist And Songwriter Opposition To “Transparency in Music Licensing and Ownership Act”

PRESS RELEASE 

September 22nd, 2017

Content Creators Coalition (c3) Warns Congress About Artist And Songwriter Opposition To “Transparency in Music Licensing and Ownership Act”

Washington, D.C. – The Content Creators Coalition (c3) today sent the following letter to the leaders of the House Judiciary Committee warning that consideration of H.R. 3350, the so called “Transparency in Music Licensing and Ownership Act,” would spark a backlash in the artist community and could derail the Committee’s work to create a consensus copyright reform legislation:

The Honorable Bob Goodlatte, Chairman
The Honorable John Conyers, Jr., Ranking Member
House Committee on the Judiciary
2138 Rayburn House Office Building
Washington, DC 20515

Dear Chairman Goodlatte and Ranking Member Conyers:

As an artist and songwriter-run advocacy organization, we write to express our strong opposition to H.R. 3350, the “Transparency in Music Licensing and Ownership Act.”  Recognizing the importance of this issue to our constituents, this letter is signed by every member of our Executive Board.

The Content Creators’ Coalition (c3) strongly supports the Committee’s continual efforts to find consensus around broader copyright reform and to ensure that music licensing is more transparent, particularly to third party beneficiaries of recording contracts.  There is little dispute among stakeholders that music licensing, in particular the licensing of musical works, is needlessly opaque.  Publishers and record labels agree on this point, as do songwriters, performers and musicians, as well as music servicers and businesses who use music and musical works.  There is clearly an opportunity for the Committee to find consensus on these issues.

However, H.R. 3350 does not further efforts to reach consensus – instead, it represents a one-sided approach that would fail to simplify music licensing.  We are deeply concerned about the bill’s onerous registration system and financial penalty (forfeiture of statutory damages and attorneys’ fees) for songwriters or publishers who fail to register their works in a new database, created and run by the government.

As a matter of principle, an intellectual property right, like any other property right, should not be subject to forfeiture and the law should help creators understand and protect their rights – not create obstacles courses for them to navigate on pain of losing control over their creative work.  This bill, by contrast, actually incentivizes the appropriation of creators’ work based on technical or other often innocent shortcomings, removing key deterrents that should discourage music services from doing so.

The record keeping mandates in the bill are voluminous and incredibly vague. Terms like “catalog number” are undefined and could mean a number of things. Other requirements are intricate, time consuming and in many cases, appear impossible to satisfy.  How is an artist supposed to register every album on which one of her songs has been recorded, including recordings by other artists they may not even know about?  If these requirements are time consuming and uncertain for successful and well-known songwriters and publishers, they will be impossible for independent songwriters.

Most importantly, the bill also thwarts the Committee’s to create a consensus copyright reform legislation. Both the “Fair Play Fair Pay Act,” creating a terrestrial performance right in the United States, and the “CLASSICS Act,” have support from music creators and digital service providers.  While we respect the long standing and good faith efforts of Chairman Sensenbrenner to address these issues, H.R. 3350 only enjoys the support of businesses that use music and is so lopsided it would be a toxic “poison pill” in any copyright reform legislation effort.

We urge the Committee to reject H.R. 3350 and to press ahead at full speed with more genuine music licensing reform.  Thank you for considering our views.

Melvin Gibbs, President

John McCrea, Vice President

Tommy Manzi, Treasurer

Rosanne Cash

Tift Merritt

Matthew Montfort

Jeffrey Boxer, Executive Director

 

cc: The Honorable Daryl Issa
The Honorable Jerrold Nadler

@buzzfeedben: There’s Blood In The Water In Silicon Valley

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Before you think it can’t happen to Google or Facebook, remember–if you told a room full of MBAs in 1984 that in a few years time Drexel Burnham Lambert would be bankrupt and Michael Milken would be in prison, you would have been laughed out of the room.  And also remember–they almost got Google on violations of the Controlled Substances Act.  If you’re concerned, call your representatives at (202) 224-3121 and tell them you want an investigation into Google and its price fixing cartel the MIC Coalition.

The blinding rise of Donald Trump over the past year has masked another major trend in American politics: the palpable, and perhaps permanent, turn against the tech industry. The new corporate leviathans that used to be seen as bright new avatars of American innovation are increasingly portrayed as sinister new centers of unaccountable power, a transformation likely to have major consequences for the industry and for American politics.

That turn has accelerated in recent days: Steve Bannon and Bernie Sanders both want big tech treated as, in Bannon’s words in Hong Kong this week, “public utilities.” Tucker Carlson and Franklin Foer have found common ground. Even the group No Labels, an exquisitely poll-tested effort to create a safe new center, is on board. Rupert Murdoch, never shy to use his media power to advance his commercial interests, is hard at work.

“Anti-trust is back,

baby,” Yelp’s policy chief, Luther Lowe, DM’d me after Fox News gave him several minutes to make the antitrust case against Yelp’s giant rival Google to its audience of millions….

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So Facebook should probably ease out of the business of bland background statements and awkward photo ops, and start worrying about congressional testimony. Amazon, whose market power doesn’t fall into the categories envisioned by pre-internet antitrust law, is developing a bipartisan lobby that wants to break it up. Google’s public affairs efforts are starting to look a bit like the oil industry’s. These are the existential collisions with political power that can shake and redefine industries and their leaders, not the nickel-and-dime regulatory games Silicon Valley has played to date.

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Uncle Sugar and some witnesses

Read the post on Buzzfeed

@FranklinFoer: How Silicon Valley is erasing your individuality

[Editor Charlie sez:  Remember that most of these companies are in the MIC Coalition cartel that is colluding to destroy songwriters, and royalty deadbeat Facebook refuses to license at all.]

Until recently, it was easy to define our most widely known corporations. Any third-grader could describe their essence. Exxon sells gas; McDonald’s makes hamburgers; Walmart is a place to buy stuff. This is no longer so. Today’s ascendant monopolies aspire to encompass all of existence. Google derives from googol, a number (1 followed by 100 zeros) that mathematicians use as shorthand for unimaginably large quantities. Larry Page and Sergey Brin founded Google with the mission of organizing all knowledge, but that proved too narrow. They now aim to build driverless cars, manufacture phones and conquer death. Amazon, which once called itself “the everything store,” now produces television shows, owns Whole Foods and powers the cloud. The architect of this firm, Jeff Bezos, even owns this newspaper.

Along with Facebook, Microsoft and Apple, these companies are in a race to become our “personal assistant.” They want to wake us in the morning, have their artificial intelligence software guide us through our days and never quite leave our sides. They aspire to become the repository for precious and private items, our calendars and contacts, our photos and documents. They intend for us to turn unthinkingly to them for information and entertainment while they catalogue our intentions and aversions. Google Glass and the Apple Watch prefigure the day when these companies implant their artificial intelligence in our bodies. Brin has mused, “Perhaps in the future, we can attach a little version of Google that you just plug into your brain.”

More than any previous coterie of corporations, the tech monopolies aspire to mold humanity into their desired image of it.

Read the post on The Washington Post

@andreworlowski: Google, propaganda, and the new New Man

Google has begun to infuse American TV and movies shows with propaganda – “good propaganda”, the company insists. However, it’s unlikely to please two groups who rarely agree on anything: those who think Google isn’t diverse enough, and conservatives who fear its political and media power.

So far, Google’s “interventions” have so far been limited to making computer geeks appear more attractive. For example, following Google’s advice, a greater proportion of programmers portrayed will be women, rather than guys in hoodies. Shows apparently benefitting from the Google touch include Halt and Catch Fire, and the sitcom Silicon Valley. And expect more of the usual homilies to “learn to code” – another more subtle form of indoctrination.

President Obama was kept up to date on the efforts. White House logs show that he met both Google’s co-ordinator, media program manager Julie Ann Crommett, and the academics Google funded to study the initiative, Professor Stacy Smith at USC Annenberg, a prominent commentator on gender issues.

Diversity campaigners and conservatives have good reason to be wary when Google inserts itself in the business of mass communication. Let’s take each case in turn.

Read the post on The Register