ESPN Axes Long-Standing Reporters, But Not The Execs That Failed To See Cord Cutting Coming

from the forest-for-the-trees dept

For years ESPN has been the perfect personification of the cable and broadcast industry's almost-comic denial regarding cord cutting and market evolution. Long propped up by a system that forces consumers to buy massive bundles of largely-unwatched channels, ESPN has struggled with the rise of streaming alternatives and sleeker, "skinny" channel bundles. The sports network, which has lost 10 million viewers in just the last few years, has been trying to argue that these losses (which caused Disney stock to lose $22 billion in value in just two days at one point) are simply part of some kind of overblown, mass hallucination.

Surveys have shown that 56% of consumers would drop ESPN in a heartbeat if it meant a reduction in the $8 per subscriber the channel is believed to cost. But last year, ESPN exec John Skipper suggested that these departing customers weren't worth keeping anyway:

"People trading down to lighter cable packages. That impact hasn't leaked into ad revenue, nor has it leaked into ratings. The people who’ve traded down have tended to not be sports fans, and have tended to be older and less affluent. We still see people coming into pay TV. It remains the widest spread household service in the country after heat and electricity."

All is well! Nothing to see here! This narrative that cord cutters are somehow uneducated, too old, or otherwise not worth keeping (which isn't true) sits at the heart of cable and broadcast executive denial. And while execs like Skipper consistently insisted that everything was under control, former ESPN talent like Bill Simmons have noted that the cord cutting revolution came out of left field and surprised the hell out of the self-proclaimed worldwide leader in sports, which had spent years spending millions on SportsCenter set updates and licensing deals with nary a care in the world.

Instead of identifying market evolution and quickly adapting, ESPN did, instead, what any other legacy company would do. One, it began suing companies that tried to offer more innovative, disruptive cable TV packages that didn't include ESPN by default. Two, it began yelling at companies like Nielsen simply for showing company executives the truth: ESPN was losing subscribers at an alarming rate. In short, executives doubled down on bad behavior and denial, something fans had noticed for several years:

This week, some ESPN employees began paying the price. Including long-standing workhorse beat reporters like Ed Werder, who was among 100 on-air personalities and writers given pink slips this week.

In a memo posted to the ESPN website, Skipper proclaimed the staff reductions were necessary to "manage change" (something Skipper has shown himself incapable of doing while somehow remaining employed):

"A necessary component of managing change involves constantly evaluating how we best utilize all of our resources, and that sometimes involves difficult decisions...Dynamic change demands an increased focus on versatility and value, and as a result, we have been engaged in the challenging process of determining the talent—anchors, analysts, reporters, writers and those who handle play-by-play—necessary to meet those demands. We will implement changes in our talent lineup this week. A limited number of other positions will also be affected and a handful of new jobs will be posted to fill various needs."

That's great and all, but purging your on-air talent won't magically make executives like Skipper less myopic and more flexible. After losing an estimated 10,000 viewers per day, ESPN recently stated it will finally offer a standalone streaming service. But that won't solve ESPN's woes either. I'm told many of Disney/ESPN's contracts with cable providers contain provisions that prohibit cable providers from offering channel bundles without ESPN -- unless ESPN offers a standalone streaming service. In other words, even if ESPN adapts, it opens the door to new skinny, sport-free bundles without ESPN -- accelerating subscriber declines.

None of this is pretty, and were I a betting man I'd wonder if Disney/ESPN doesn't get swallowed up completely by a company like Verizon sometime in the next year. At that point you'd have to wonder if ESPN execs, like John Skipper (you know, the ones actually responsible for the channel's monumental implosion) might actually face something vaguely-resembling accountability.

Filed Under: business, cord cutting, predictions, sports
Companies: espn

Trump's Constant Whining About The NY Times Isn't Just Bad For The First Amendment

from the business-threats dept

We've already made it clear that we're quite concerned about how freedom of expression will fare under President Trump. He has a long history of threatening and/or suing those who cover him factually, but in a manner he dislikes. And while he hasn't (as far as I can tell) threatened to sue anyone since the election, he appears to have become somewhat obsessed with the NY Times. Since winning the election he's tweeted at least six times about the NY Times, insisting (incorrectly) that it was losing subscribers and (incorrectly) that it had "apologized" to readers for its Trump coverage. He also claimed (incorrectly) that it had said he hadn't spoken to foreign leaders -- when the actual article just said that his conversations with foreign leaders happened without State Department briefings (which is fairly stunning). Here's what the NY Times said:

One week after Mr. Trump scored an upset victory that took him by surprise, his team was improvising the most basic traditions of assuming power. That included working without official State Department briefing materials in his first conversations with foreign leaders.

But Trump claimed something entirely different: And, yes, I know that there are some folks who just flat out hate the NY Times and think that it lies and such. And I've certainly complained my fair share about weak or misleading coverage by the NY Times over the years, but it's still problematic when a President or President-elect is directly attacking any publication. It creates serious chilling effects on reporters. And, it can be even worse than that. As Yashar Ali noted in a Twitter thread, attacking a company as "failing" has real consequences, especially one that is traded on the public markets, potentially harming all sorts of everyday investors. I'm guessing that many who just hate the NY Times won't care about this, but it is serious. There's a reason why Presidents don't go around attacking companies or saying that they're "failing" or that their business is in trouble. Because that has real consequences. I still don't think that journalists should be suing Trump for defamation, as some have suggested, but it would be nice if our President-elect recognized that going around and attacking the press -- even if he disagrees with its coverage -- is entirely inappropriate.

Filed Under: attacks, business, corruption, donald trump, first amendment, free speech, threats
Companies: ny times

Surprise: Now Even Australia's Biggest Business Organization Says It Has Doubts About TPP

from the anyone-still-support-it?-anyone??? dept

As Techdirt has reported, the few studies into the economic impact of TPP that exist show that there is likely to be vanishingly small benefit for most countries. The Australian Council of Trade Unions, representing 1.6 million workers in Australia, is not impressed with the deal, and has just called for TPP to be rejected, according to the Guardian:

"The TPP puts globalisation before Australian workers, threatens the fundamentals of our democracy and drives up health costs," [ACTU’s director of policy] Tkalcevic said. "By destroying thousands of Australian jobs and driving down wages we believe the TPP will lead to higher levels of inequality.

The TPP is a toxic combination of more power to multinationals ahead of democracy and globalisation ahead of Australian workers."

It would be easy to dismiss this as typical left-wing anti-big business rhetoric. But the same could hardly be said about the following:

Australia's biggest business organisation has distanced itself from claims the proposed Trans Pacific Partnership will create hundreds of thousands of jobs and be a "gigantic foundation stone" for Australia's future.

As The Sydney Morning Herald reports, when the Australian Chamber of Commerce and Industry (ACCI) spoke before a Parliamentary commission, it was particularly critical about the nature of the TPP deal, and the lack of in-depth, independent economic analysis:

ACCI argued the agreement did not mandate free trade and had not been assessed by an independent authority such as the Productivity Commission.

The business organization also criticized the opacity of the trade negotiations:

"With the exception of some relatively superficial information on the Department of Foreign Affairs and Trade website, it is difficult to know the detail of what is being negotiated in our national interest," [ACCI's director of trade] Mr Clark said.

It even went so far as to worry about "regulatory chill":

the chamber wanted the inquiry to note that the deal would "further complicate compliance and costs for business" and had not been subjected to an independent Australian economic analysis.

It should also be concerned about the potential for "regulatory chill" from the clauses that would prevent further liberalisation of Australia's intellectual property and labour laws after it had been ratified.

When a country's top business association offers criticism in more or less the same terms as anti-TPP activists, maybe it's time to think twice about ratifying a deal that still lacks any credible justification.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: australia, business, tpp, trade
Companies: acci, australian chamber of commerce and industry

DirecTV Faces RICO Class Action For Bungling Business Installs, Then Demanding $15,000 For Theft Of Service

from the thieves-and-liars dept

For several years now DirecTV (now owned by AT&T) has been the focus of a series of lawsuits focused on the NFL's Sunday Ticket exclusive arrangement. More specifically, the lawsuits have claimed that the exclusive arrangement violates antitrust law, resulting in a monopoly that charges often absurd prices to small businesses. Sports bars in particular have to shell out payments of up to $122,895 per year for NFL Sunday Ticket, while those same bars pay significantly less for Major League Baseball's comparable offering.

But a new lawsuit filed against DirecTV this week accuses the company of something notably different. Doneyda Perez, owner of Oneida's Beauty and Barber Salon in Garden Grove, has filed a RICO class action against DirecTV for intentionally selling businesses residential-class TV service, then hitting these customers with penalties of up to $15,000 several years later for failing to subscribe to business-class service. There's a lot to go through in this case, but before we start, it's at least worth pointing out that RICO class action cases are almost always ridiculous -- even if there does appear to be questionable behavior here.

Since at least 2013 customers have complained that DirecTV salesmen and installers visit what they clearly see are businesses, sell them residential TV service, and don't even mention that DirecTV offers anything else. Then, a few years later, "investigators" employed by DirecTV show up snooping around, without making it particularly clear who they are or what they're doing. This was documented in a different 2013 Dallas Morning News Story about the same practice:

"The man sitting at the counter at Zeke’s Kitchen restaurant in Garland is acting suspicious. He doesn’t want any food but takes a glass of water. He says he’s waiting on a friend, but no one shows up. He asks that the channel be changed on the restaurant TV. Then the man steps outside and begins taking pictures of the restaurant. When owner Brandon “Zeke” Roberson asks him what he’s doing, the man runs off. Roberson’s wife, Julie, thinks it’s suspicious enough that she makes a note of it on the restaurant office’s calendar: “Very strange acting man. Ran off when Brandon asked why he was taking pictures outside."

Only later do the businesses realize that the investigator works for DirecTV, which then demands huge payments for unpaid back bills from what are often small and struggling companies:

"The man is a fraud investigator for DirecTV, sent to find out if the Robersons are TV signal thieves. Did they sign up for a residential TV account but use it at their commercial establishment? In June, DirecTV cuts off the restaurant’s service. Then DirecTV’s collection lawyers notify the Robersons that they owe $15,000 in back bills. It’s the darkest day in the restaurant’s history. So much so that the couple have to close the place to catch their breath."

Their lawyers dig in only to find this is a pretty common occurrence nationwide, citing "hundreds" of similar occurrences -- something seemingly supported by this latest class action. While it's possible that poorly trained subcontracted installers are playing a role in not adequately informing businesses of their options (one installer admits as much), DirecTV consistently decides to pursue massive penalties anyway. And AT&T, which bought DirecTV for $69 billion last year, isn't exactly trying hard to make things right, informing the media this week that this is just an issue of "basic fairness":

"This is a matter of basic fairness for all of our customers,” AT&T said to FierceCable in a statement. “Businesses that are not paying commercial rates for programming are taking unfair advantage of neighboring businesses that do. We are confident these claims will be rejected."

So yes, it's just "basic fairness" to sell a business one class of service, then turn around and demand they need to shell out $15,000 because your salespeople and installers are at worst part of a plan to defraud paying consumers, and at best clueless about the product they're selling.

Filed Under: business, class action, nfl sunday ticket, residential, rico, satellite tv, shakedown
Companies: at&t, directv

US Chamber Of Commerce Actually Just US Chamber Of Our Highest-Paying Members

from the but-thanks-for-your-contributions! dept

The US Chamber of Commerce is an organization that's always carried a completely undeserved air of legitimacy. For one, its name makes it sound as though it's actually an extension of the federal government, rather than what it is: a lobbying group representing a variety of trade interests.

It also gains unearned legitimacy by its name being a reflection of thousands of local chambers of commerce, which are far more representative of its members than the national version. The US Chamber of Commerce continues to push for legislation and regulation that isn't aligned with the views of its membership as a whole, but rather just its most generous contributors.

The US Chamber of Commerce has seen members walk away because of its support of climate change deniers or its support of the tobacco industry. It also shed several members thanks to its efforts on behalf of unpopular IP-related legislation like SOPA and the PROTECT-IP Act.

If there's anything the US CoC is truly representative of, it's money -- whoever has the most of it speaks the "loudest." The Chamber of Commerce is basically the worst form of entertainment: "free-to-play" that wholeheartedly embraces "pay to win." It has its own "whales," and they're what's shaping its lobbying efforts, according to Barry Ritholtz.

According to Open Secrets, a site that tracks political lobbying and spending, during the past 18 years the Chamber has spent three times more than any other organization on behalf of industry ($1.2 billion versus $351 million by the No. 2 lobbying group, the National Association of Realtors).

Ritholz has taken a close look at the lobbying group and its funding, and how that "pay to win" process has resulted in the Chamber of Commerce actually being the Echo Chamber for a select few industries. First, he notes the Chamber is opposed to new rules governing employer-provided 401(k) plans.

On one side is the financial industry, which manages about $14 trillion in various retirement plans. The president’s Council of Economic Advisers estimated that more than 10 percent of the advice given is conflicted in some way. That bad advice causes a performance lag of about 1 percent, costing investors an estimated $17 billion a year. This is money that otherwise would go into retirement-saving accounts. Wall Street, of course, isn't happy about the change and the vehemence of the opposition to the new rules make me suspect the losses for investors -- and the profits for the financial industry -- are much bigger.

On the other side are the millions of small businesses that have potential liability as 401(k)-plan sponsors. The natural outcome of this change is that once the new rules take effect, businesses will be in a position to shift that liability to the fiduciary advisers. This is something they should welcome -- especially since 96 percent of the Chamber's member businesses have fewer than 100 employees. These are precisely the companies that will benefit from the change.

But that 96% of its membership is easily shouted down by the large brokerage houses running the retirement funds. The Chamber is thinking about suing the government over a rule that would benefit nearly 100% of the companies it claims to represent.

That's not the only issue the CoC has decided to favor its largest contributors over the bulk of its members. Its stance on climate change is fueled by subservience to its biggest benefactors.

Ignoring those companies opposed to the Chamber's stand on climate change is easy. Why? Money, of course. A third of the Chamber's revenue comes from just 19 companies, many of them in the energy industry.

The problem with this is that it's hardly representative of the group as a whole. While those of us familiar with the Chamber of Commerce's motivations won't find this surprising, it probably comes as news to many of its members, who have assumed their contributions meant they, too, would be represented. Worse, many legislators likely take the Chamber of Commerce at face value -- assuming its lobbying efforts represent the group as a whole, rather than a small minority of well-heeled industry leaders. Because it operates under such a benign name, its pay-to-play mechanizations remain obscured and it's often given a benefit of a doubt it certainly hasn't earned.

Filed Under: business, lobbying
Companies: us chamber of commerce

Of Course Tesla Wasn't Just Being Altruistic In Opening Up Its Patents: That's The Whole Point!

from the the-velocity-of-innovation dept

We, like many in the media, already wrote up the story about Elon Musk's announcement that Tesla was opening up all of Tesla's patents, promising not to bring any lawsuits against anyone who uses them in good faith. The "good faith" caveat has resulted in some head scratching and reasonable questions -- and we hope that Musk clarifies this position with a clearer explanation. Some have pointed out that with such vague language, it may really be more of an invitation to negotiate a licensing deal, rather than truly opening up the patents (though, I'd imagine anyone looking to challenge that has lawyers boning up on promissory estoppel). However, I wanted to address one of the "criticisms" that seemed to come out repeatedly about this move: that it wasn't a big deal because it's "not altruistic." That line was used over and over and over again in the press, almost always suggesting that people shouldn't be celebrating this move.

• LA Times: "Even if other competitors copy Tesla’s design, Tesla still gets to sell them batteries, and that’s pretty awesome. Tesla’s decision isn’t entirely altruistic."
• Seeking Alpha: "The general thinking is that somehow this move is altruistic for the benefit of the EV industry or that this has something to do with parallels like Mac OS X, Wikipedia, and crowdfunding. We disagree. This is simply a strategic move to rapidly expand and monetize the EV market. This move is hard-core strategy and really has nothing to do with altruism."
• NASDAQ: Elon Musk and Tesla: Altruistic or Ulterior Motive?
• Forbes: "Of course, Musk may have an ulterior motive in addition to his altruistic one."
• South China Morning Post: "Tesla’s apparent altruism with its patents is just smart business"
• ValueWalk: "Tesla Motors Inc's open source approach is far from altruistic."
• Harvard Business Review: "In sum, Elon Musk’s opening up of Tesla’s patent portfolio might be motivated as much by strategic necessity rather than by altruism."
• Market News Call: "Musk may not be successful running two industrial firms like online social media or cloud-focused firms, but he’s also not making decisions entirely out of altruism; he’s just using a non-traditional approach to creating value for his shareholders."
• Engineering.com: "I think he [Nikola Tesla] would approve of Tesla Motors’ decision to open its technology to the world, even if the motivation was more business than altruism."

I recognize why everyone feels the need to do this -- especially those sites that claim to be focused on "investors," but it's also somewhat frustrating. Perhaps it's just because we've been writing about this issue for well over a decade, but of course this move is being done because it's good for business: but that's the point. We've become so stupidly brainwashed into believing that locking up and protecting everything is good for business that people seem positively shocked when a company does something that shows that's simply not true. Everyone feels the need to explain what a "crazy" idea it is that not hoarding information to yourself might actually be good for business.

And the worst may be in that first link up there, in which analyst giant Gartner completely destroys what little credibility it may have had when one of its analysts, Thilo Koslowski, pans the decision: "If you open up all your books to everyone, it means you all are fighting a war with the same weapons." Talk about someone admitting their own ignorance of how business and innovation actually works. Opening up your patents hardly means fighting a war with all the same weapons. Everyone still gets to innovate, and many of those innovations are not in the patents themselves.

A further Musk quote in a Business Week piece further outlines what's happening here:

"You want to be innovating so fast that you invalidate your prior patents, in terms of what really matters. It’s the velocity of innovation that matters."

This is a point that we've been trying to make for years: innovation is an ongoing process, and what matters most is not the single burst of inspiration, but the pace of that process -- which Musk more eloquently calls "the velocity of innovation." Patents on pieces of that ongoing process act as friction or toll booths in that process, slowing it down. Truly innovative companies know that they're going to keep innovating, and others copying what they're doing is the least of their worries.

Of course this move is about innovation and business and will be good for Tesla. But it's depressing that so many people automatically think that needs to be explained. We live in a dangerous world for innovation when a concept as simple as this seems so foreign to so many people. Even the fact that the idea that "doing good" and "building a good business" seem to be contradictory terms is troubling. Whether or not Musk is personally "altruistic" is beyond the point. Increasing the velocity of innovation for electric vehicles can be both good for Tesla and for the world, and that shouldn't be such a crazy idea.

Oh, and in case you haven't seen it yet, go check out what Tesla did to the wall where they used to hang their patents: Because, perhaps even worse than everyone trying to explain why this isn't "altruistic" are all the people still confused about Musk's All Our Patents Are Belong To You language...

Filed Under: altruism, business, electric cars, elon musk, innovation, patents, protectionism, sharing
Companies: tesla

Brazil Passed On Boeing For $4.5 Billion Fighter Jet Deal Because Of Concerns Over NSA Surveillance

from the costly... dept

We've pointed out a few times now, how the NSA seems unable to do basic cost-benefit analysis on its widespread surveillance. The NSA still seems to think that its surveillance is "costless" (perhaps beyond the $70 billion or so from taxpayers). However, as we've pointed out time and time again, distrust in US businesses thanks to the NSA's overreaching surveillance creates a very real cost for the economy.

And it seems to be growing day by day. Brazil, which has been one of the more vocal protesters concerning NSA surveillance, has just awarded a $4.5 billion contract for new fighter jets to Saab, rather than Boeing, which many expected to get the deal. And, Brazilian officials are making it clear that the NSA surveillance issue played a major role in throwing the contract from the Americans to the Swedes.

Until earlier this year, Boeing's F/A-18 Super Hornet had been considered the front runner. But revelations of spying by the U.S. National Security Agency in Brazil, including personal communication by Rousseff, led Brazil to believe it could not trust a U.S. company.

"The NSA problem ruined it for the Americans," a Brazilian government source said on condition of anonymity.

So, as someone asks in the article, did the NSA's spying on Brazil provide over $4 billion in benefits to the US? That seems unlikely. Maybe now, someone, somewhere within the US government will finally start to do a cost-benefit analysis on the NSA's surveillance that actually takes into account how people will react when it is inevitably revealed how far the spying goes.

Filed Under: benefit, brazil, business, cost, fighter jets, nsa, surveillance
Companies: boeing, saab

Vast Majority Of US Businesses Say Intellectual Property Is Not Important

from the of-course-not dept

This post is licensed CC-BY SA 3.0, and may be shared and reposted with attribution. Please include a link back to the original, which will contain the most up-to-date version.

Last year, the USPTO released a widely cited report entitled “Intellectual Property and the U.S. Economy: Industries in Focus.” This report emphasized the importance of IP to the U.S. economy, claiming “the entire U.S. economy relies on some form of IP,” and estimating that “IP-intensive industries” accounted for 40 million American jobs and 35% of the U.S. GDP in 2010.

While many pro-IP groups hailed the report as demonstrating the importance of IP to the American economy, the report was widely panned by critics who pointed out that the definition of “IP-intensive industries” was so broad as to be meaningless. Indeed, according to the report, the number one IP-intensive industry by employment in the United States was… grocery stores. Although supporters of stricter IP regulation and enforcement continue to rely on the report to justify policies relating to copyrights and patents, the vast majority of the report’s purported economic benefits were attributed to trademarks.

USPTO’s report was released in March 2012, and received a lot of attention. Just one month prior, the National Science Foundation (NSF) released the findings of a survey on business use of intellectual property. While a few sites picked up on the NSF report last year, it received far less media attention than it deserved. Why? Perhaps because it turns out that if you actually ask, the vast majority of businesses report that intellectual property is not important to them.

Infojustice.org was among the few noting that the NSF’s findings directly contradict the USPTO report. The initial NSF report, published in February 2012, reported data from 2008. However, it has recently been updated to include data from 2009 and 2010.

But wait – surely I’m making all this up. If “IP-intensive” industries account for 40 million jobs and 35% of GDP, intellectual property must be very important to businesses. What’s this “vast majority,” then?

• In 2010, 87.2% of businesses reported that trademarks were “not important” to them.
• 90.1% of businesses reported that copyrights were “not important” to them.
• 96.2% of businesses reported that patents were “not important” to them.

If you still think I’m making these numbers up (and I wouldn’t blame you if you did), head on over to the NSF’s page describing the survey, results, and methodology. Note that these results are consistent across the three years of the survey, and the survey itself is a representative sample across the country.

According to the NSF, the Business Research and Development and Innovation Survey (BRDIS) “is an annual, nationally representative sample survey of approximately 43,000 companies, including companies in manufacturing and nonmanufacturing industries. The target population for BRDIS consists of all for-profit companies that have five or more employees and that perform R&D in the United States.”

If you examine the details, the survey results begin to make more sense. Larger companies tend to report intellectual property as being more important; businesses designated as especially “R&D active” also place more importance on various kinds of intellectual property.

Nevertheless, the results of this survey (now in its third year) are striking. Even when looking at a sector where one would expect heavy reliance on intellectual property, the results do not match expectations. For example, take one of the most copyright-dependent sectors we can imagine: “R&D active” software publishing. In 2010, 51.4% of respondents in this sector said copyright was “very important”; 34.6% said it was “somewhat important”; and 13.9% said it was “not important.” That is, only about half of respondents in a purportedly heavily copyright-dependent sector describe copyright as “very important” to their business.

In my mind, there are two ways of interpreting these data: either all the survey respondents are totally uninformed about what is going on in their businesses, or formal intellectual property protection is far less important to the vast majority of U.S. businesses than some would like us to believe.

Some additional highlights:

• 61.7% of businesses manufacturing computer and electronic products report that patents are “not important” to them.
• 96.3% of businesses with less than 500 employees report that patents are “not important” to them.
• 45.6% of businesses with 25,000 or more employees report that patents are “not important” to them.
• 53.6% of businesses classified in the information sector (NAICS code 51 – i.e., a sector we’d expect to rely heavily on copyright) report that copyrights are “not important” to them.
• Overall, businesses report that trade secrets are the most important form of intellectual property protection, with 13.2% of businesses calling trade secrets “very important” or “somewhat important.” Trademarks are a close second, with copyrights and patents significantly farther behind. Trailing in last place is sui generis protection for semiconductor mask works, although that is no surprise.

Filed Under: business, intellectual property

Why The Tech Industry Should Be Furious About NSA's Over Surveillance

from the it'll-hit-their-bottom-lines dept

We've already pointed out how some tech companies, including Yahoo!, Google and Twitter have fought back against overly intrusive attempts at government surveillance (though, they often lose), and there's been some discussion about how these companies are fighting to protect their users' privacy. There's a further reason why all of the tech industry should be speaking out against NSA surveillance. Beyond just being the right thing to do to protect your users' privacy, it's likely that it also improves their bottom line. We're already starting to see the fallout from the revelations of the NSA being able to scoop up data from various tech companies, and it's going to be harmful to their revenue.

Right after the initial NSA leaks came out, David Kirkpatrick quickly wrote about how the Obama administration appeared to be sacrificing the US internet industry in a weak attempt at trying to increase security (despite no evidence that it's actually done that). The global implications of the NSA spying aren't hard to figure out -- especially when looking at how many people around the globe use these services:

It's quite possible that Obama has undermined the effectiveness and attractiveness for political speech and protest of what have been the most potent communications tools for activism in history. Political and commercial opponents of the U.S. in every country as well as governments themselves will likely alert citizens to the potential that U.S. companies could pass their info back to US authorities. This will seriously conflict with these companies' aim to maintain their platforms as neutral global environments. It could dramatically slow their global growth.

[....] Do we really want to impair such powerful tools for spreading dialogue, political discourse, and U.S. values? Is it worthwhile to impair the extraordinary financial and commercial success of these great flagships for the American economy? Does Obama want Facebook et al just to be seen as tools of American power? That is certainly not the way the average user in Bolivia sees it. They see it as a tool of their own personal power, and they don't want governments interfering with that.

Further, he points out, this will likely drive users to foreign corporations, rather than American ones, as they strive to protect their privacy:

Don't believe there are not alternatives to the U.S. Net collossi. Companies worldwide are already relentlessly working on alternatives. The second largest search service worldwide is China's Baidu, with more than 8% of searches globally at the end of last year according to ComScore. Russia's Yandex is at close to 3%, more than Microsoft's own search product. In social networking, China's Tencent has had a stunning recent success with its WeChat product, which by some counts has over 450 million users worldwide, including many tens of millions outside China. Most major Chinese Internet companies have global ambitions.

Kirkpatrick was focusing more on the consumer side, and the importance of using these tools for open and free communication. But the same issues clearly impact the business side as well. As CFO.com recently, noted, companies are gong to be a lot less trusting of US-based cloud computing companies because of these leaks. Exposing the key info to governments is a real risk:

At the end of the day, if you have mission critical data and information in the possession of a third party service provider - Cloud or otherwise – the assumption that your provider will be in full control over their environments may be drawn unto doubt. As a CFO, it is prudent to consider your next steps very carefully to ensure that your intellectual property and trade secrets do not become the assets of others.

Given the suggestions that the US government has used this surveillance as a form of economic espionage, these fears seem quite well grounded. Foreign companies are now going to be a lot less interested in using the services of American companies.

And this isn't a theoretical problem either. Sweden just issued a ruling that bars the public sector from using Google's cloud services. Meanwhile, India is already telling companies that they need to setup local servers rather than make use of US servers if they want to do business in India.

This issue is important on a number of levels, but technology companies, who rely on a global audience, should be standing up and loudly protesting the NSA's broad surveillance, because it's going to hit their bottom lines hard. The administration and the NSA are directly making it difficult for US internet companies to be global enterprises, at a time when that's exactly what we need. Is it really worth sacrificing one of the few growing and dynamic industries that the US has these days, based on some vague and unproven claims that the government "needs" all of this info? It seems like a massive cost for almost no benefit.

Filed Under: business, cloud computing, espionage, free speech, global business, india, nsa, nsa surveillance, privacy, silicon valley, sweden, trust
Companies: google, yahoo

Center For Copyright Information Loses Company Status, Not Supposed To Conduct Business In The US

from the strike-one? dept

TorrentFreak has discovered that the Center for Copyright Information (CCI), better known as the company running the whole "six strikes" scheme in the US, somehow had its company status revoked last year for reasons unknown. However, this could have serious consequences:

“If entity’s status is revoked then articles of incorporation / organization shall be void and all powers conferred upon such entity are declared inoperative, and, in the case of a foreign entity, the certificate of foreign registration shall be revoked and all powers conferred hereunder shall be inoperative,” the DCRA explains.

It also may face penalties and fines. It appears that this may have just been a paperwork screwup, which does happen, but given the organization's overall mission, you would think that they would have been a lot more careful dotting their i's and crossing their t's.

Filed Under: business, cas, cci, copyright alert systems, registration, six strikes
Companies: ccia, center for copyright information