Hillary Clinton Doubles Down Her Attack On Silicon Valley: Wants A 'Solution' For Encryption & Clampdown On Free Speech

from the that-seems-pretty-dumb dept

A few weeks ago, we pointed out that Hillary Clinton had, unfortunately, joined in with other clueless politicians to call for "Silicon Valley" to "develop solutions" to the "concerns of law enforcement and counterterrorism professionals" on "encryption." Anyone who's followed the "debate" over encryption over the past year knows that asking Silicon Valley to "develop solutions" is James Comey's codewords for "create a backdoor for encryption" -- no matter how many times experts in encryption have explained to him that such a solution makes everyone less safe. After we and a few others wrote about Clinton's unfortunate and dangerous decision to throw her lot in with those who wish to backdoor encryption, one of her main tech advisers, Alec Ross, went a little ballistic, insisting she did not say what she clearly did say.

And, this weekend Clinton apparently decided to double down and then go even further -- even before President Obama suggested that he'd also support undermining encryption. First, on ABC's This Week, she repeated the argument that we just need "the best minds" to "come together" and "deal" with this issue.

STEPHANOPOULOS: How about Apple? No more encryption?

CLINTON: This is something I've said for a long time, George. I have to believe that the best minds in the private sector, in the public sector could come together to help us deal with this evolving threat. And you know, I know what the argument is from our friends in the industry. I respect that. Nobody wants to be feeling like their privacy is invaded.

But I also know what the argument is on the other side from law enforcement and security professionals. So, please, let's get together and try to figure out the best way forward.

But, again, that's like asking "the best minds" to come up with bullets that only kill bad people. Or books that only nice people are allowed to read. You're asking for an impossibility, and in doing so, you're making everyone less safe by undermining encryption -- which is the key to realistic computer security.

Even worse, when Clinton claims that she knows "what the argument is from our friends in the industry" she gets their argument wrong. It's not just about invading privacy. It's about the fact that she's asking for the impossible. It's not just about protecting the privacy of people from intruding government. It's about not weakening overall systems that will allow those with bad intent to do lots of damage. It's a ridiculous statement and Clinton appears to be getting just as bad technology advice as basically every other presidential candidate.

And, that wasn't her only ridiculous anti-tech statement on the weekend. She also said that Facebook, YouTube and Twitter should censor bad content online to somehow stop ISIS.

STEPHANOPOULOS: If you were in the Oval Office tonight, would you be announcing a new strategy?

CLINTON: Well, I think what -- that's what we'll hear from the president, an intensification of the existing strategy and I think there's some additional steps we have to take.

If you look at the story about this woman and maybe the man, too, who got radicalized, self-radicalized, we're going to need help from Facebook and from YouTube and from Twitter. They cannot permit the recruitment and the actual direction of attacks or the celebration of violence by this sophisticated Internet user.

They're going to have to help us take down these announcements and these appeals they get up.

I know that this view is one that many people agree with, but it's equally dangerous. First, it assumes that ISIS propaganda is apparently so powerful that no counter speech could possibly work against it, and thus it must be censored. But that's ridiculous on multiple levels. It overvalues the speech of ISIS and its supporters and the impact that it has (most studies have shown radicalization happens because of people individuals know in real life, not randos on the internet).

Really, though, exactly how are Facebook and Twitter and YouTube supposed to do this? How are they supposed to review every bit of content that everyone creates, and determine which bits are "good" and allowed and which are "bad" and not allowed? Clinton is asking for a fairy tale -- a world where (1) it's obvious what's good content and what's not and (2) one in which every bit of speech and communication is monitored and scored on such a non-existent scale. Both of these things are impossible. I don't know about you, but I prefer political candidates who focus on the possible, rather than fairy tales (I recognize this leaves me with basically almost no politicians to support, but occupational hazard, I guess...).

In a separate speech, given at the Brookings Institution, Clinton took this idea even further, calling on Silicon Valley to "disrupt ISIS," which is such a painful abuse of the term "disrupt" as to again raise questions about who is advising her on tech policy issues:

“We need to put the great disrupters at work at disrupting ISIS."

Disruption in the tech world is about making things cheaper and better, and reinventing markets. It's not about magically stopping bad people from using technology. This is still fairy tale thinking.

But, more importantly, it encourages (or potentially threatens to mandate) that these content and communications platforms have to start proactively monitoring all speech online, and determining, on the fly, what speech is "good" and which speech is "bad." That's dangerous and will undoubtedly lead to much greater censorship -- including content that actually is useful in highlighting atrocities and dangerous activities online. We've seen this before. After US politicians pressured YouTube into removing "terrorist" videos, it resulted in videos being deleted from a Syrian watchdog group that was documenting atrocities.

Besides, these two separate issues seem totally contradictory. On the one hand, Clinton and other anti-encryption folks whine about not being able to see what terrorists are saying "because encryption." But then, at the same time, they're saying that when those same people talk about things publicly online -- in a way that's trackable -- we should shut them down.

It's almost like they have no strategy at all... except to try to throw the blame on technology companies.

Filed Under: disruption, encryption, free speech, going dark, hillary clinton, isis, james comey
Companies: facebook, google, twitter, youtube

NYC Judge: Taxis Must Compete With Uber, No Matter The Medallion Industry

from the bravo dept

If violence is the last refuge of the incompetent, as Issac Asimov's delightful line in Foundation tells us, then perhaps desperate lawsuits are the last refuge of the disrupted industry. There is simply no better example of this than the many groups affiliated with many city's taxi services and their many lawsuits against Uber. We've seen this dance play out in the past, with the disrupted industry flailing away in court, attempting to get the government and/or the law to protect its own business interests rather than competing with a disruptive newcomer. It almost never ends well for the old guard.

But it isn't just taxi companies themselves who have attempted to get into this mix against Uber. Take a case brought in Queens, for instance, in which Melrose Credit Union joined others in an effort to force Mayor de Blasio and New York's Taxi Commission to ground Uber on its behalf. Melrose Credit Union has most of its loan portfolio tied into medallion purchases, lending money to taxi companies in order that they could pay the once-expensive medallions. The problem, obviously, has been that taxis aren't making as much money as they used to because Uber is displacing them. As a result, taxi companies and drivers can't make enough to pay back the loans, the loans are defaulting, and Melrose Credit Union is freaking the hell out. They told as much to Queens Supreme Court Justice Alan Weiss. Weiss, as it turns out, was less than impressed.

“Any expectation that the medallion would function as a shield against the rapid technological advances of the modern world would not have been reasonable,” he wrote. “In this day and age, even with public utilities, investors must always be wary of new forms of competition arising from technological developments.”

In other words: compete or die. And those really are the options, no matter what other legal actions might be taken or verdicts rendered. The fact is that the progress of technology will indeed march on and will create more efficient ways of performing within any given industry. Attempting to stem that flow with trumped up legal actions and proclamations of the industry's destruction would only work in the short-term, if at all. In this case, the court ruled that de Blasio and the Taxi Commission aren't required to keep Uber drivers from picking up customers. And why should they be? If the public wants the service, Melrose Credit Union would deny them that service on the argument that it will lose money? Judge Weiss wasn't having that.

Judge Weiss made clear that that’s not his concern. “It is not the court’s function to adjust the competing political and economic interests disturbed by the introduction of Uber-type apps,” he wrote.

Indeed it isn't, nor is it the court's function to countermand the Taxi Commission's stance that Uber rides are pre-planned rides, instead of hailed fares off the street, and therefore don't require a medallion. If medallions become less valuable, that's a problem for the medallion money-men to endure, not the public.

Filed Under: cabs, competition, disruption, innovation, lawsuits, loans, medallions, new york, taxis
Companies: melrose credit union, uber

Announcing The Copia Institute: A New Business Network & Think Tank Exploring Ideas In Abundance

from the welcome dept

I wanted to drop a note to the Techdirt community about an exciting new project that we're launching one month from today: The Copia Institute, a new network of future-focused innovators. Copia is Latin for "abundance" -- and information abundance is the hallmark of our time, and the source of many of its biggest opportunities and toughest challenges. We're working collaboratively with everyday internet users, business experts and technology policy leaders to focus on the challenges and opportunities we face in this age of abundance.

Think of it as a think tank for the information era.

While following and writing about issues related to innovation, business models and policy, we've seen up close the amazing power of innovative startups and pioneering technologies to change the world in powerful ways. It's hard to remember what things were like just a decade ago -- before Facebook, iPhones, YouTube, Twitter, Airbnb and more. Our lives have changed in profound and exciting ways -- and such change will continue to advance rapidly in the future. It's inspiring, exhilarating and wonderful. But it also presents unique challenges. Innovation can upset existing industries. It can collide with outdated regulations that were originally designed to protect us but now serve as roadblocks that slow progress and weaken the innovative spirit. And, sometimes, it creates ethical challenges and questions that deserve deeper levels of consideration.

With Copia, we'll bring together innovators, internet users, policymakers and experts with diverse and distinct perspectives to discuss these issues. But we won't just talk, we'll act. We will work to resolve the issues of today while preparing to address the issues of tomorrow. We want to help innovators tackle issues early on -- and look where we, as a group, can develop creative ways to embrace opportunities that make the world a better place while minimizing downsides or negative consequences.

We're launching Copia with an Inaugural Summit on March 12-13th at the Tech Museum of Innovation in San Jose. We'll host stimulating brainstorming sessions on disruptive innovations and policy challenges, as well as a special tech industry General Counsels' roundtable to discuss principles of innovation.

We have an ambitious agenda, so stay tuned. We will share more details as the summit approaches, but until then, I look forward to seeing some of you there!

Filed Under: abundance, copia, copia institute, disruption, innovation, network, think tank
Companies: copia institute

New Orleans Cab Company Owner Calls Uber A 'Cyber-Terrorist Group'

from the like-Anonymous-on-wheels dept

Cab companies are still fighting Uber and Lyft, and each turf war seems to drag out the worst rhetorical devices and statements from these companies which have enjoyed long, monopolistic runs. Most have gone running to city legislators, hoping to add further regulatory hurdles to the upstart companies, asking for anything from limits on number of vehicles in service to rates considerably higher than cab companies charge.

But because you can only do so much arguing on behalf of an entrenched incumbent before you start sound like you truly loathe the public, taxi defenders are also finding creative ways to attack the new services in hopes of making them seem sketchier than cab companies themselves. In New Orleans, the argument took the form of a bunch of words tumbling out of a flustered cab company owner's mouth.

Owner of Liberty Bell Cabs in New Orleans, Tony Makhoul, called Uber a “cyber terrorist organization.”

Based on…? Well, the report at WDSU doesn't specify. [CAUTION: Autoplay in effect.] Apparently the fact that's its an app-based ride service was enough for Makhoul to float this claim during the city council's discussion. Presumably, Makhoul was using this metaphorically, presenting the company as a cyber-threat (because it's from the internet) to poor, downtrodden cab companies who have enjoyed years of uninterrupted success thanks to protective walls of regulation.

Makhoul previously showed his propensity for using words without regard for clarity or meaning in a statement made in July.

“It’s hypocritical, preposterous and indeed disgusting that we are entertaining Uber in our market today."

Those words may mean something subjectively to Makhoul but they don't make much sense to anyone else listening in. There's nothing "hypocritical" about considering a new entrant into a market, and the only thing that's preposterous and disgusting is the amount of resistance being deployed by incumbent service providers. But this is the same cab company owner that pushed back against the deputy director of the city's Taxi Cab Bureau for enforcing existing regulations -- like requiring credit card readers in all cabs and setting a limit on how many years the same vehicle could be in service.

But this one tops his previous wordsplosions. Uber -- which will be forced to charge the highest minimum fee in the nation ($15) as a concession to New Orleans' cab companies -- is here to destroy computers… by driving people in cars. Or destroy Makhoul's business… by providing customers with a competing service. Competition is the new terrorism. Inform the NSA.

Filed Under: competition, disruption, new orleans, taxis, tony makhoul
Companies: liberty bell cabs, lyft, uber

Disrupting The Misinterpretation Of Disruptive Innovation

from the the-innovator's-dilemma-dilemma dept

There's a lot of buzz and talk in various communities lately about a new New Yorker story by Jill Lepore, in which she seeks to dismantle Clayton Christensen's famed concept of "the Innovator's Dilemma" and its corresponding concept of disruptive innovation. It's no secret that I'm a big fan of the concepts put forth by Christensen, and five years ago, as part of a sponsored set of videos, I did a quick two-minute white board video explaining the concept. The concept of the Innovator's Dilemma and disruptive innovation became so big so fast that it has, reasonably, come under some attack of late. Part of this is just the inevitable backlash that comes with a popular idea. An even bigger part of it is that many have jumped onto the bandwagon without really understanding it. And, many of those are selling snake oil: the idea that companies can actually "beat" the innovator's dilemma. However, as we noted last year, the very reason why disruptive innovation is so disruptive is because the incumbents don't see it as innovation. Part of the problem with the concept of disruptive innovation is the idea that, when graphed out simply, it always feels like the incumbent can see what's coming. They just have to recognize the "cheaper, not quite as good" offering, and realize that it can disrupt their business.

But that's wrong on multiple accounts. First, truly disruptive innovation usually is barely even on the radar of the incumbent players. It's not that they don't think it's disruptive, it's that they don't even see it as innovation or being in the same realm. Craigslist disrupted the newspaper business, and many in the newspaper business still don't realize that. Disruptive innovation doesn't always come neatly "up from the bottom" as the graphs show. They often come in orthogonally from a different dimension entirely.

Second, industries that are disrupted often face a whole bunch of potentially disruptive competitors -- and (in part because of the point above), it's very difficult to tell which one(s) will actually be disruptive. Economist Joshua Gans has a fantastic explanation of this, noting that disruptive innovation has to fulfill two criteria: perform "worse" than incumbent technology on certain metrics and also be on a fast path for improvement (though I don't agree with Gans' claim that the improvement has to be on those same metrics -- in many cases, I'd argue it's actually on the metrics the customers truly value, rather than the ones they claim to value, which are not always the same). The issue is that it's easy to pinpoint technologies that meet the first criteria, but nearly impossible to spot the ones that meet the second criteria. Thus, you end up with lots of potentially disruptive technologies, but actually spotting the actually disruptive technologies isn't so easy.

That's why Lepore's complaint about companies that tried to disrupt themselves and failed goes wrong.

Time, Inc., founded in 1922, auto-disrupted, too. In 1994, the company launched Pathfinder, an early new-media venture, an umbrella Web site for its magazines, at a cost estimated to have exceeded a hundred million dollars; the site was abandoned in 1999. Had Pathfinder been successful, it would have been greeted, retrospectively, as evidence of disruptive innovation. Instead, as one of its producers put it, “it’s like it never existed.”

Lepore isn't really attacking the nature of "the innovator's dilemma" or "disruptive innovation" at all. She's really -- rightfully -- attacking the idea that incumbents can successfully recognize and fight it off. In the history of technology innovation, the list of companies that have truly recognized and responded to disruptive innovation is a fairly short list. I can think of Intel flipping from making memory to making microprocessors and possibly IBM flipping from focusing mainly on big hardware to services (though, even that one's a bit fuzzy). There may be a few other stories here and there, but for the most part, big companies miss disruptive innovations by a long shot.

Beyond the reasons listed above, the other big reason why incumbents fail to react properly to disruptive innovation is that they overestimate their own ability to "catch up later," while missing the key reasons why a disruptive innovation is so successful. For years, for example, I've heard execs in the entertainment industry insist that when the internet was really important, then they could really start investing in an internet strategy. But, of course, by then, it's often too late, and they're playing catchup. Not only that, but they're playing catchup in a realm that they don't fully understand, often mimicking the superficial innovations they see, while completely missing the true innovations under the surface.

To be clear, Christensen may be a reasonable target here. As Tim Lee rightfully notes, Christensen himself has built up a pretty big and profitable consulting business trying to "help" big companies successfully navigate disruption. And there are hundreds to thousands of consultants out there pretending they can do the same thing. And, in some cases, those folks may have the right idea, in general. Hell, in the video above, I, too, am guilty of suggesting that companies can sometimes out-innovate disruptors. It's very tempting to believe that understanding this theory is useful in successfully avoiding the disruption wave. But, the combination of it being nearly impossible to figure out which disruptive innovation is really disruptive, combined with general corporate inertia, makes it nearly impossible to predict precisely which disruptive innovation matters.

But that doesn't (and shouldn't) take away from the importance of the underlying concept and trajectory of disruptive innovation as a whole. The fact that you can't precisely predict which innovations will be disruptive doesn't mean that there aren't any disruptive innovations, or that the theory isn't useful in understanding what's happening in the market. It's just not great as a predictor of "this company will beat that company" -- which is where Christensen himself often runs into problems.

But, in terms of understanding wider trends, where incumbent companies are likely to go wrong, and even in pinpointing opportunities for disruption, the concepts behind the Innovator's Dilemma are of massive importance. The lack of exact predictive power of "this technology will disrupt that incumbent in this way" doesn't rid the entire concept of value. Understanding disruptive innovation is a very powerful and very important tool in recognizing and understanding innovation trends. That doesn't mean it's useful in saying Startup A will definitely disrupt Incumbent B. More importantly, it doesn't mean Incumbent C will be able to recognize or prevent disruption to itself. But if that's what you're trying to do with it, you're using the tool wrong.

Bonus reading: Check out disruptor Will Oremus applying the theory of disruptive innovation to dismantling Lepore's article directly.

Filed Under: clayton christensen, disruption, disruptive innovation, innovation, innovator's dilemma, jill lepore, predictive value

Taxi Drivers In Europe 'Protest' Uber, Creating Astounding Media Attention, Massive Jump In Signups

from the best-promotion-uber-could-get dept

As you may have heard, cab drivers across Europe did the European-thing to protest the rise of disruptive services like Uber: they went on strike, snarling traffic in many European cities. Uber long ago learned that every attack on its service is a fantastic promotional opportunity, but this "strike" may have been the best by far. In other words, it appears to have completely backfired on the strikers, with Uber signups in London jumping an astounding 850%. Basically, the "protests" have pissed off people at cab drivers and made them more aware of Uber. I don't see how that benefits the cab drivers.

In fact, Uber had been hovering around the 100th most popular app in the UK over the past few weeks, but it has suddenly jumped to number 3. This may be the least successful mass protest in history. Not only does it fail to accomplish any of its goals, it appears to have massively helped those it was targeted against. As the EU's Neelie Kroes points out, this is really part of a debate about the wider sharing economy, and the recognition that innovators are building new and disruptive services that are, quite frequently, much better for the public, even if they may be disruptive to existing businesses and employees.

But denying reality and trying to break the machines doesn't work. Ever. And, as in this case, sometimes it actually benefits those they're fighting against.

Filed Under: attention, cab drivers, disruption, europe, london, protests, streisand effect, taxi drivers, uk
Companies: uber

Airbnb Under Pressure, Agrees To Hand Over Data To NY's Attorney General

from the makes-ny-less-interesting-to-visit dept

As we've discussed a few times, NY's Attorney General, Eric Schneiderman, has been trying to go on a fishing expedition through Airbnb's records, looking for what he calls "illegal hotels." Of course, he's more or less admitted that he's doing this to protect big NYC hotels from being disrupted. Last week, Airbnb actually won in court, quashing Schneiderman's subpoena, though Schniederman just turned around and issued a new subpoena to deal with the deficiencies of the first one.

Recognizing that it was going to run into issues eventually, Airbnb has worked out a "settlement" with Schneiderman, in which it will provide anonymous data, but if Schneiderman finds information that he thinks indicates an "illegal hotel" he can go back to the company to get identifying information. Airbnb says it hopes that Schneiderman is really just focused on true large-scale abusers, many of which it has already removed from the system itself:

The Attorney General's Office will have one year to review the anonymized data and receive information from us about individual hosts who may be subject to further investigation. We believe the Attorney General's Office is focused on large corporate property managers and hosts who take apartments off the market and disrupt communities. We have already removed more than 2,000 listings in New York and believe that many of the hosts the Attorney General is concerned about are no longer a part of Airbnb.

As I've mentioned in the past, I've used Airbnb to find places to stay in NYC a few times now, and it's been an absolutely wonderful experience, significantly better and more convenient than staying in Manhattan hotels. The accommodations, location and service were all significantly better. At least two of the hosts whose places I've stayed at own multiple apartments and rent them out via Airbnb, and it seems ridiculous that they might be shut down because of this. Yes, there are specific "hotel" regulations in NYC, but it seems silly to apply most of them to these kinds of small businesses, where the platform and competition do a great job of keeping them honest. The hosts always seemed to go out of their way to make sure that staying at their apartments was a great experience worth coming back again in the future. Yes, it's possible that some people are somehow abusing the system, but it seems likely that plenty of small time entrepreneurs are going to get swept up in this effort to protect big hotels from disruption.

Filed Under: anonymous data, apartment rentals, disruption, eric schneiderman, illegal hotels, ny, nyc
Companies: airbnb

How The US Post Office Killed Innovative Digital Mail Because It Disrupted Junk Mailers

from the killing-innovation dept

Derek Khanna has yet another story of how politicians and incumbents have killed off an innovative service. Though, amazingly, unlike in other cases where the killing is hidden behind totally bogus claims of "public safety" or "consumer choice," this time the politicians appeared to be very direct in admitting that they wanted the service dead because it upset incumbents. It's the story of Outbox, a service that would take all of your snail mail and digitize it (and, in the process, dump and unsubscribe you from all that junk mail). It was created by two former Congressional staffers who had seen how nice a mail digitization system could be in Congress. People who used Outbox loved it. All your mail digitized in an easy to review manner -- while also removing all the junk mail you hated? It was a great service.

But, the Postmaster General basically did everything possible to kill it. You really should read the full story, but it involves the Postmaster General calling Outbox's founders into his office. They thought that it might be about an opportunity to work together to provide the American public a much better service. But it wasn't:

When Evan and Will got called in to meet with the Postmaster General they were joined by the USPS's General Counsel and Chief of Digital Strategy. But instead, Evan recounts that US Postmaster General Patrick Donahoe "looked at us and said 'we have a misunderstanding. ‘You disrupt my service and we will never work with you.'" Further, "You mentioned making the service better for our customers; but the American citizens aren't our customers—about 400 junk mailers are our customers. Your service hurts our ability to serve those customers."

According to Evan, the Chief of Digital Strategy's comments were even more stark, "[Your market model] will never work anyway. Digital is a fad. It will only work in Europe."

While the USPS would not directly confirm this exchange (it also did not deny it), it did send Khanna a statement that pretty much confirms it, even if it tried to spin the way they explained it:

The Postal Service is focused on providing an essential service in our mission to serve the American public and does not view Outbox as supporting that mission. We do have concerns regarding the destruction of mail—even if authorized by the receiver—and will continue to monitor market activities to ensure protection of our brand and the value and security of the mail.

Khanna asked if any users had actually complained about signing up for Outbox and somehow having the "security of their mail" harmed. The USPS did not answer. Khanna also asked why the USPS wouldn't even give Outbox the option of continuing its service if they didn't "destroy" the physical mail. The USPS did not answer.

This story is shameful, but not unique. We see it all the time, though it's rare that politicians are so direct in admitting their real motives (though, as we've seen, some others have done so recently as well). But this is the constant struggle of disruption and innovation. Incumbents with business models that don't serve the public, don't look to make a better product. Rather they look for political ways to restrict competition and block innovation. The USPS destroying Outbox is just one in a long line of depressing examples.

Filed Under: corruption, disruption, innovation, junk mail, mail service, us postal service, usps
Companies: outbox

NY Attorney General Admits He's Targeting AirBnB To Protect The Big NY Hotels That Are Being Disrupted

from the protectionism-against-disruption dept

Over and over again in talking about innovative disruption, we talk about how incumbents turn to regulators and politicians to kill off that disruption. Usually, they don't admit it directly -- preferring to couch their language in talk about "safety" and protecting consumers -- even though many of these disruptive systems actually appear to be better for consumers. However, sometimes politicians are willing to just flat out admit that they're trying to protect incumbents from innovative upstarts. And that's what's now happened with NY's Attorney General, Eric Schneiderman.

Last fall, we wrote about how Schneiderman was demanding information on 15,000 AirBnB users in NY, claiming that he was hunting down "long-term illegal rentals." In a NY Times article highlighting how AirBnB users (from both sides of the market) are pushing back against Schneiderman's crusade against AirBnB, Schneiderman finally admits what everyone has known all along. He's doing this to protect the big NY hotels from getting disrupted. And yes, he sandwiches the claim between claims of "just enforcing the law" and "protecting" people, but the message is pretty clear. This is about protecting the incumbent hotels:

First he said that “we have a well-regulated and extraordinarily successful hotel sector” that is “one of our finest industries and contributes a lot to the economy.” Then, a bit later, he added, “We’re just looking in New York to enforce New York law, and also, frankly, to protect our hospitality industry that goes through a lot of trouble to have great hotels, to protect tourists, to provide services, and to protect the people in our residential housing.”

It is true that NY law prevents short-term apartment rentals (basically anything less than 30 days). But to pretend this is about protecting the public is just ridiculous. I've stayed at many hotels in NY and a few AirBnB places -- including some that likely fit Schneiderman's definition of an "illegal hotel." And, without question, the AirBnB experience every single time has been vastly superior to the hotel experience. It's not even close. Assuming Schneiderman allows it to exist, I'll continue to make use of AirBnB, and it's not just because it's usually cheaper (though it often is), but the overall experience is phenomenal. I get to stay in unique and interesting places in unique and interesting neighborhoods -- usually much more convenient for my travel needs. One AirBnB host I met owns three apartments, living in one (renting out the spare bedroom), but mostly focusing on full time renting out the other two. The service was great -- and much more personalized than any hotel I've ever stayed in.

The last thing I want is for NY's Attorney General to "protect me" from that.

Filed Under: disruption, eric schneiderman, hospitality, innovation, new york, nyc, protection
Companies: airbnb

California Car Dealers Go Crying To DMV About Tesla's Website

from the (no)-sympathy-for-the-devil dept

Auto dealers have been dealing with disruption just about as well as any other legacy industry has. Instead of attempting to compete, dealers have chosen to respond to Tesla's refusal to cut them in on the middleman action by throwing up as many regulatory roadblocks as possible. Sadly, this antagonistic attitude toward both their competition and the car-buying public somehow makes sense to them, and they seem very willing to bury both the upstart and their last remaining shreds of goodwill at the same time.

In many states, the usual course of action for car dealers is to lobby for protective legislation. Many states have already hooked up car dealers and made it illegal for manufacturers to sell vehicles directly to the public. The remaining states that haven't are being pressured to follow suit.

However, Tesla's direct sales are completely legal in California. Rather than mount an attempt to push protectionist legislation through, the auto dealers have decided instead to attack Tesla's direct sales website, accusing the company of deceptive marketing and pricing. (via Slashdot)

The association's letter to the California DMV (PDF) complains Tesla violates several sections of various Federal and California codes and regulations:

"Tesla fails to provide required information and shatters the notion of comparison finance shopping by including the potential availability of incentives, gas savings, and tax savings into final payment quotes for prospective customers. This scheme is most blatantly demonstrated by the general ―$580 per month after gas savings advertisement found on several of its internal web pages."

It also notes that Tesla's quoted new-car prices net out a $7,500 Federal income-tax credit for purchase of a plug-in electric car. According to the California dealers, just 20 percent of all car shoppers qualify for that credit--and the group attributes that statistic to the Congressional Budget Office.

The complaint also attacked the way Tesla calculates resale value of its cars, the financial value of savings in commute time by using HOV lanes, and the methods used to calculate the savings of powering a car with electricity versus gasoline.

The letter (which runs nine pages alone and includes 11 pages of exhibits) also takes issue with Tesla's widely criticized "cost calculator" and its usage of "net pricing" to show potential buyers a pretty much unattainable ticket price. The letter includes screenshots of Tesla's website, some of which include tons of fine print that would seem to indicate that the rosy picture being painted above, which utilizes all possible incentives and rebates, actually comes with several catches.

But while the letter goes long on "deceptive pricing" and "arbitrary numbers," it conveniently ignores the fact that auto dealers have long held a monopoly on those tactics as well. The reputation of car salesmen ranks somewhere between lawyers NSA officials and Ponzi scheme operators. For most people, buying a car is a process is roughly on par with going in for a full body wax -- you're just hoping to escape with as little pain and bleeding as possible. (Escaping with any dignity intact is out of the question...)

Everything Tesla's being accused of has been the standard operating procedure for countless car dealers around the nation. That doesn't make Tesla right, but it hardly makes the car dealers -- who are fiercely defending their profitable "gatekeeper" status -- look like the lesser of two evils.

This seems to be a whole lot of effort to be expending in order to grab a percentage of a higher-end niche market. The auto dealers would be better off approaching their "benefactors" (especially the Big Three) and asking them why they're not producing highly desirable, groundbreaking products at bonus-spiking profit margins. Instead, they'd rather approach the situation in the worst way possible -- attacking an upstart with a righteous fury that's completely oblivious to the obvious hypocrisy of the accusations.

Certainly Tesla should conform with applicable laws, but its website -- which to most people will still look like amazing prices attached to pages of fine print -- is pretty much similar to any car dealer's online cost calculator. People who think they're going to get the low monthly payment (and low percentage rate) splashed across TVs and newspapers (and websites) are rarely surprised to find out they don't qualify for the promotional rates. What the auto dealers are pointing to as the epitome of deception in this letter is really nothing more than "another day at the office" at nearly every sales operation anywhere: if something looks too good to be true, it probably is. And most consumers are able to see through these advertising tactics without the help of protectionist laws, just as surely as they'll recognize the auto dealers' "concern" for what it truly is: self-interested and desperate flailing.

Filed Under: california, car dealers, disruption, dmv
Companies: tesla