Biden Cuts $35 Billion From New Broadband Plan To Appease The GOP

from the good-luck-with-all-that dept

As we've been noting, there's a long runway between the Biden Administration's vague but promising broadband plan and actual implementation. And there's millions of dollars and literally thousands of lobbyists hard at work trying to make sure that the plan, whatever it winds up looking like, doesn't disrupt the comfortable, status quo that is the regionally-monopolized and dysfunctional US broadband market.

I've already seen some evidence said lobbyists have had some success weakening plan language that would limit the amount of "overbuilding" (read: competition) to existing monopolized markets. 83 million Americans live under a broadband monopoly, and incumbent giants AT&T, Verizon, and Comcast want any and all spending focused exclusively on giving them subsidies for unserved areas, instead of building out vibrant competition in their existing footprints.

Activists are also growing annoyed with the fact that the Biden administration still hasn't fully staffed the FCC and appointed a new permanent boss, without which the agency can't reverse the net neutrality repeal, or most of the Trump FCC's butchering of the agency's consumer protection authority. Giving the Canadian Ambassadorship to a a top Comcast lobbyist appears to be happening at a quicker cadence.

Meanwhile, the Biden plan overall is already starting to shrink as his administration tries to get the 10 GOP voted needed to nab a 60 vote majority. As a result, the $100 billion plan is officially now a $65 billion plan, and shrinking:

"The White House informed Republicans of Biden's willingness to cut $35 billion from his broadband proposal in a memo on Friday. "We believe we can still achieve universal access to affordable high-speed Internet at your lower funding level, though it will take longer," the White House told Republicans, according to NPR. "Any funding agreement would need to be paired with reforms to ensure these investments create good jobs, promote greater competition, and close the digital divide."

Even with cuts there's still no evidence that the GOP is going to get on board.

While there are plenty of Democrats in close allegiance to the telecom sector, the modern GOP broadband platform as a whole is utterly indistinguishable from the goals of AT&T, Verizon, and Comcast in every respect. They oppose any meaningful oversight (be it net neutrality or privacy), oppose voter-approved community broadband, support absolutely every merger that comes down the road regardless of harm, and despite talking a lot about their breathless dedication to closing the digital divide, can rarely even admit that a lack of broadband competition and high consumer prices are real problems.

It's very unlikely that a party whose positions are utterly indistinguishable from telecom monopolists are going to bend on any of this, something Senator Ed Markey has been quick to make clear:

"Despite President Biden’s efforts to engage with Republicans, they have shown no willingness whatsoever to negotiate in good faith with Democrats to confront the intersecting crises we face. We need to make the investments now to help our country and communities rebuild and recover, as well to ensure that we never return to the status quo that left too many Americans behind and created the worsening climate crisis. Now is the time to go big, to go bold, and to go fast. This is not the time for half-measures, half-spending or foot-dragging."

Despite having broad public support (58% of voters support passing the entire infrastructure bill without GOP support), it seems extremely unlikely a broadband bill gets the necessary 60 votes unless it's butchered to the point of uselessness, which under-delivers and undermines the Democrat chances of re-election in 2022 and 2024 (another major reason for GOP opposition). That leaves killing the filibuster, or shoveling an infrastructure bill through via reconciliation rules, the former of which seems unlikely, and the latter of which is far from a given.

Filed Under: appeasement, broadband plan, budget, congress, fcc, infrastructure, investment, joe biden

Tennessee Lawmakers' Latest Attack On Section 230 Would Basically Ban All Government Investment

from the seems-counterproductive dept

We've been highlighting a wide variety of state bills from Republican-led legislatures that all attempt to attack Section 230. Nearly all of them are blatantly unconstitutional attacks on the 1st Amendment. Somewhat incredibly, the latest one from Tennessee might not actually be unconstitutional. That doesn't mean it's good. In fact, it's not just incredibly stupid, but demonstrates that the bill's authors/sponsors are so fucking clueless that they have no idea what they're doing. In effect, they'd be banning the state from investing any money it holds. To spite Section 230.

The bill -- which is House Bill 1441 and Senate Bill 1011 -- from Representative Tim Rudd and Senator Janice Bowling represent such a lack of understanding of how literally anything works that it should embarrass both elected officials and anyone who ever voted for either of them. The bill is pretty simple: it bans the state from investing in any entity protected by Section 230. The problem with this? Almost every single person and every single company is, in some way, protected by Section 230. So, in effect, the bill bans the state from investing any of its money.

Let's dig in on the specifics. The bill is pretty short and sweet. Here's the key part:

On or after August 1, 2021, monies within the pooled investment fund must not be invested in any entity that receives immunity under Section 230 of the Communications Decency Act (47 U.S.C. § 230). Any monies from the fund that are invested in such an entity as of the effective date of this act, must be divested prior to August 1, 2021. Written notice of the divestment must be provided to any such entity at the earliest practicable time after the effective date of this act.

To be clear, this text would be inserted in Tennessee Code Title 9, Chapter 4, Part 6 which covers the disbursement and investment of state funds. Amusingly, Section 602 says that "It is the policy of the state of Tennessee that all funds in the state treasury shall be invested by the state treasurer to the extent practicable." The problem is that if this new law passes, there is almost no one who would be allowed to receive those funds, so "to the extent practicable" would be... non-existent.

Part of the issue, it seems, is that in their rush to attack "Section 230" neither Senator Bowling, nor Representative Rudd bothered to, you know, read Section 230. I'll cover the essential part for our discussion here today:

No provider or user of an interactive computer service shall be held liable...

No provider or user. Section 230 protects both the users and providers of an interactive computer service. So, basically any entity -- person or organization -- who uses an interactive computer service is protected under Section 230. And, based on the text of this bill, that means... just about anyone. If you use email, you're protected. So no entity that has email can receive investments from Tennessee state funds. No organization that has a website. I'm sure there might still be some neo-luddite organizations out there that don't use any computers at all, so perhaps the state of Tennessee will invest its funds in, like, a toy shop with an old fashioned cash register, and a rotary telephone or something. But that seems pretty limiting, and not a particularly good investment.

Obviously, this bill comes out of the very, very false belief that Section 230 only protects "big tech." That's a favored myth of Section 230 haters. Of course, that's never been the case. And you'd think that before writing legislation about it, someone who is elected to a state legislature would do the very least to actually read the law they're attacking. But, I guess that's too much to ask of Representative Tim Rudd and Senator Janice Bowling.

People of Tennessee, I beg of you: stop electing fools who are so focused on culture warrioring that they can't even be bothered to understand the bills they've introduced.

Filed Under: bad legislators, investment, investment funds, janice bowling, section 230, tennessee, tim rudd

In The Rush To Strengthen Antitrust Law, We Could Kill Useful Mergers And Acquisitions

from the be-careful-what-you-wish-for dept

Last week, Senator Amy Klobuchuar introduced a major antitrust reform bill, entitled the Competition and Antitrust Law Enforcement Reform Act. This isn't much of a surprise, as Democrats have made it quite clear that they seek to use antitrust much more aggressively than it's been used over the past few decades. I'm a big believer in the need for more competition, in general, but often worry that antitrust is not the best way to get there.

The bill will put more budget and power in the hands of the DOJ and the FTC, and also would change the legal standards for anticompetitive mergers, as well as put the burden on merging companies to prove that they are not violating antitrust, rather than as it stands now, with the burden being on the DOJ to show that the merger violates the law. Better funding the DOJ and the FTC on competition issues strikes me as a sensible move here (more the FTC than the DOJ, but no need to get that picky). However, a lot of the rest of the bill seems like it could have the opposite of the intended effect.

I get the thinking behind this, but as structured, it appears like it could have significant unintended consequences that actually decreases competition rather than increases it. In a lot of ways, the key thing this bill would do is to significantly reduce merger and acquisition activity. It has two main mechanism that would basically kill a significant number of deals:

• Update the legal standard for permissible mergers. The bill amends the Clayton Act to forbid mergers that “create an appreciable risk of materially lessening competition” rather than mergers that “substantially lessen competition,” where “materially” is defined as “more than a de minimus amount.” By adding a risk-based standard and clarifying the amount of likely harm the government must prove, enforcers can more effectively stop anticompetitive mergers that currently slip through the cracks. The bill also clarifies that mergers that create a monopsony (the power to unfairly lower the prices to a company it pays or wages it offers because of lack of competition among buyers or employers) violate the statute.
• Shift the burden to the merging parties to prove their merger will not violate the law. Certain categories of mergers pose significant risks to competition, but are still difficult and costly for the government to challenge in court. For those types of mergers, the bill shifts the legal burden from the government to the merging companies, which would have to prove that their mergers do not create an appreciable risk of materially lessening competition or tend to create a monopoly or monopsony. These categories include:
1. Mergers that significantly increase market concentration
2. Acquisitions of competitors or nascent competitors by a dominant firm (defined a 50% market share or possession of significant market power)
3. Mega-mergers valued at more than $5 billion

On that first one -- changing the standard to "create an appreciable risk of materially lessening competition" seems potentially insurmountable for nearly any merger. Any merger decreases competition in some form, because (definitionally) it's removing one competitor from the market. But that doesn't mean that it's necessarily damaging to the market, to innovation, or to consumers. Say, for example, there's a market with 10 firms, and one of them is struggling and likely to go under. A merger between it and one of its more successful competitors technically "lessens" competition, but it might mean that that same firm doesn't go out of business at all. Or, it might mean that by combining two of the companies in the market that they can better compete with some of the others.

I recognize this becomes a very different story when the market is down to just a few players -- and that's certainly true of a few too many industries these days. But that's why the standard is set at the current "substantially lessen competition" not "creating a risk" that it might "materially lessen competition."

The second one, on the burden shifting is perhaps equally problematic. And, here, the real risk is in killing off new startup creation. When VCs invest in a startup, their hope is that the startup is their unicorn or rocketship -- becoming a multi-billion dollar market leader. These are the deals where VCs make all their money -- on the huge success stories, the 100x return investments. But only a very small percentage of investments are such hits. The second best result for a VC is to have the startup acquired for a decent gain. A 10x gain is nothing for them to write home about, though it's nice. A 2 to 3x gain is a failure in the world of VC, but it's better than... nothing at all.

So, for an investor to fund startups, it helps to know that the backup plan for companies that don't become billion dollar unicorns is that they can sell out to someone else, and at least get some return. But under this bill, the deal flow for those kinds of deals will dry up. The big companies that startups and VCs rely on for decent (but nothing special) exits go away. As a result, it makes VCs less interested in investing. Because the expected returns drop significantly. That means it's likely that they'll invest in fewer startups, thereby diminishing innovation and competition.

This is the exact opposite of the intention of this bill, but it (tragically, again) suggests how little regulators understand how startups, investments, and competition actually work.

And, of course, none of this even touches on the fact that we just had a DOJ and Attorney General in place who, it was revealed, deliberately used antitrust as a weapon against companies the president disliked. It's kind of amazing that not even a year after that was revealed, Democrats are quick to make it even easier for a future Bill Barr to have even more power to do that.

Yes, competition is important -- and there are certainly many industries that have become too consolidated. Indeed, I've been coming around to the belief that almost every "problem" people describe when talking about the tech industry (and a bunch of other industries) simply comes down to a lack of viable competition. But assuming that the only tool to increase competition is via antitrust, you run the risk of having exactly the wrong result. It can lead to a world in which you get less investment in startups and new competitors, since the risk becomes much greater.

Filed Under: acquisitions, amy klobuchar, antitrust, competition, investment, mergers, startups

Nikola's Bad Quarter: Company's Deal For General Motors Ownership Stake Goes Sideways

from the fallout dept

The trouble for Nikola Motor Company began only in September, a couple of months ago. That's when a hedge fund very publicly called out the company and its founder, Trevor Milton, for essentially fooling people with doctored video of its electric semi-truck product to get them to invest in the company. This led to rumors of federal investigations, the resignation of Milton, and the company idiotically trying to use copyright takedowns to silence its critics. All of this was likely in the service of trying to save a very public $2 billion deal with General Motors that was due to be closed upon in early December.

Well, what was Nikola's bad month is turning into a very bad quarter, as the General Motors deal has gone fairly sideways.

Nikola (NKLA) won’t have General Motors (GM) as an investor, at least for right now.

The electric truck maker said on Monday it has revised the terms of a prior deal with GM, and that the auto giant won’t be taking a stake in Nikola. The two companies will not work together to produce Nikola’s pickup truck, the Badger. Nikola’s shares were down more than 21% in pre-market trading.

The Badger was supposed to be a consumer pickup truck made in partnership with GM, utilizing GM's manufacturing and logistics operations alongside Nikola's electric batteries and drivetrain. But now, the general consensus is that this deal going under with GM has rendered the Badger completely dead.

EV and hydrogen truck start-up Nikola's deal with General Motors has fizzled, the EV startup revealed, after several weeks of speculation about a deal that would have seen the Michigan auto giant produce the Nikola Badger truck. Nikola indicated that it had reached a non-binding memorandum of understanding with GM regarding collaboration on GM's hydrogen technology for large trucks, but that the pickup aimed at private consumers was not currently contemplated with GM backing. In fact, the Badger now appears entirely dead, with Nikola indicating that it will refund deposits for the EV truck.

For its part, Nikola is pointing to the deal with GM not being completely dead. Instead, the company is going to focus on producing semi-trucks that GM will make the fuel-cell technology for. The deal is now essentially a basic supply partnership, but the real impact of the change of deal terms is that GM has backed away from taking an ownership stake in Nikola.

But Dan Ives of Wedbush Securities writes in a new note that the “headline” from the new agreement is that GM won’t be taking a stake in Nikola — and that news “will be viewed as a clear negative.”

“This went from a game changer deal for Nikola to a good supply partnership but nothing to write home about and the Street will be disappointed accordingly along with lingering lockup worries,” Ives wrote.

All because the company's founder wanted to pretend like it had a produced a product that did something that it absolutely did not. It sure seems like it would have been better for the company overall if it had just told the truth.

Filed Under: badger, copyright, electric trucks, investment, trevor milton
Companies: general motors, nikola

More Evidence FCC Claims That Killing Net Neutrality Would Boost Broadband Investment Were Bullshit

from the someday-we-might-learn-something dept

Since the very beginning of the net neutrality debate, ISPs have repeatedly proclaimed that net neutrality rules (read: stopgap rules crafted in the absence of competition to stop giant monopolies from abusing their power) utterly demolished broadband sector investment. It was a primary talking point during the battle over the 2010 rules, and was foundational in the Ajit Pai FCC's arguments justifying their hugely unpopular and fraud prone repeal.

Time after time after time, big ISPs and the politicians paid to love them insisted that the rules had crushed sector investment, and repealing them would result in a massive spike in broadband investment. It was a line repeated again by Pai during an FCC oversight hearing in 2018 (for those interested he wasn't under oath, which applies only to Judiciary hearings):

"Under the heavy-handed regulations adopted by the prior Commission in 2015, network investment declined for two straight years, the first time that had happened outside of a recession in the broadband era...we now have a regulatory framework in place that is encouraging the private sector to make the investments necessary to bring better, faster, and cheaper broadband to more Americans."

The problem: a mountain of data continues to make it extremely clear that none of this was ever true.

Numerous studies, earnings reports, and CEO statements had already demolished the claim, yet like a relentless zombie, it simply refuses to die. To this day it remains a core talking point of the outgoing Ajit Pai FCC, most telecom lobbyists, and the absolute army of think tankers, consultants, and academics employed by incumbent telecom giants to pretend the U.S. broadband market is healthy and competitive.

This week, S&P Global took a closer look at U.S. network investment numbers and found, once again, that claims that repealing network neutrality boosted investment to be bullshit. In fact, the firm found that annual investment in fixed U.S. broadband networks is poised to have dropped 7 percent since 2016:

Granted the telecom sector has been in the U.S. government's driver's seat under the Trump administration. In just four short years the industry successfully had broadband privacy rules killed (thanks to GOP Senators), net neutrality rules killed, FCC authority over telecom monopolies kneecapped, and the sector received billions in tax breaks in exchange for doing absolutely nothing. The telecom sector even managed to convince most of DC that "big tech" monopolies are the only monopolies in tech worth worrying about. All in all, a pretty good four years for one of the least liked, least competitive sectors in U.S. industry.

All of this industry ass kissing would, to hear industry and loyal lawmakers tell it, boost network investment, increase employment, and drive more innovation and competition to market. None of that happened. Why? Because when you eliminate all meaningful oversight from a broken, monopolized sector, the companies involved simply double down on the same bad behaviors (layoffs, price hikes, less investment in infrastructure and customer support). Yet for whatever reason, we cling desperately to "free market" narratives that don't apply to a broken sector that sees little real competition and has an unrelenting political stranglehold on both state and federal leaders. No competition and no oversight means more of the same problems.

Of course the sagging investment, eroded regulatory authority, and tens of thousands of layoffs come just as a raging pandemic showcases how broadband (and objective federal leadership on broadband) is more essential than ever. And cocksure policy pundits or campaign-contribution-slathered lawmakers won't learn much of anything from the experience, because there will be absolutely no penalty whatsoever for pushing bullshit narratives or relentlessly kissing the ass of a broken, monopolized market.

Filed Under: ajit pai, fcc, investment, net neutrality

Massive Study Proves Once And For All That No, Net Neutrality Did Not Hurt Broadband Investment

from the ill-communication dept

The biggest study (pdf) ever of its kind has found that net neutrality rules had absolutely no impact on broadband investment whatsoever. The study took an incredibly detailed look at CAPEX data for more than 8,577 different companies (270+ of which were telecom providers) and concluded:

"The results of the paper are clear and should be both unsurprising and uncontroversial. The key finding is there were no impacts on telecommunication industry investment from the net neutrality policy changes. Neither the 2010 or 2015 US net neutrality rule changes had any causal impact on telecommunications investment."

Since the very beginning of the net neutrality debate, ISPs have repeatedly proclaimed that net neutrality rules (read: stopgap rules crafted in the absence of competition to stop giant monopolies from abusing their power) utterly demolished broadband sector investment. It was a primary talking point during the battle over the 2010 rules, and was foundational in the Ajit Pai FCC's arguments justifying their hugely unpopular and fraud prone repeal.

Time after time after time, big ISPs and the politicians paid to love them insisted that the rules had crushed sector investment, and repealing them would result in a massive spike in broadband investment. It was a line repeated again last year by Pai during an FCC oversight hearing (for those interested he wasn't under oath, which applies only to Judiciary hearings):

"Under the heavy-handed regulations adopted by the prior Commission in 2015, network investment declined for two straight years, the first time that had happened outside of a recession in the broadband era...we now have a regulatory framework in place that is encouraging the private sector to make the investments necessary to bring better, faster, and cheaper broadband to more Americans.

It didn't matter that several studies had shown this wasn't true. It didn't matter that journalists who had reviewed public earnings data found no evidence whatsoever to support the claim. It didn't even matter that CEOs for numerous ISPs were clearly on record telling investors the claim wasn't true. It was repeated over and over and over again by the telecom sector and loyal politicians like Pai in the hopes that repetition would somehow forge an alternative reality where what net neutrality opponents felt in their guts would become the indisputable truth.

Throughout the repeal, the Pai FCC repeatedly cited data from telecom lobbying firm US Telecom as gospel, at one point even directing reporters with questions directly to US Telecom lobbyists (that's bad, in case you're wondering). Last year, the group pushed a "study" proclaiming broadband investment had exploded in the wake of the repeal, somehow failing to even notice their study had a fatal flaw:

"Last year, telecom lobbying group US Telecom released a study it claimed showed that broadband investment had spiked dramatically in 2017 thanks to “positive consumer and innovation policies” and a “pro-growth regulatory approach” at the FCC.

The problem? The FCC’s net neutrality rules weren’t formally repealed until June of 2018.

The entire mess speaks plainly to how lobbyists and the lawmakers who love them use repetition, friendly media outlets, and massaged industry-sponsored lobbyist and economist analysis to construct alternate realities that support anti-consumer, anti-innovation policies (like say, letting lumbering, anti-competitive telecom giants do whatever the hell they'd like). As we've noted a few times, it's important to understand that the "net neutrality repeal" didn't just kill net neutrality rules, it all but obliterated the FCC's ability to hold ISPs accountable for much of anything, which was the entire point.

And while the industry may have scored a victory on the front end, the choices made could still come home to roost. Three different major FCC policy efforts have been shot down by the courts in as many months for failing to provide hard evidence actually supporting the decision. Given 23 state AGs have sued the FCC claiming the net neutrality repeal was similarly flawed, plenty of folks are curious if the FCC's net neutrality repeal will soon share a similar fate.

Filed Under: ajit pai, broadband, competition, fcc, investment, net neutrality, study

Giant Copyright Troll, Malibu Media, Sued By Investors

from the sketchy-companies-gonna-sketch dept

We've written a bunch of stories about Malibu Media, a copyright trolling operation. The company's founders, Colette Pelissier and Brigham Feld, like to claim that they're purveyors of "classy" pornography under the X-Art brand, but their business seems almost entirely focused on trolling practices. And its embrace of copyright trolling has resulted in some significant problems for the company over the years, as judges have very much caught on to the company's long history of sketchy practices.

Apparently those sketchy practices may go beyond its copyright trolling, as two of Malibu Media's investors are now suing the company, claiming that they lent the company money when it was short on cash, in exchange for 50% of its "net recovery" from the trolling operations, and a "50% interest" in the copyright of the porn X-Art created. So, how'd that work out?

In 2018 alone, continues the complaint, Malibu Media's litigation stampede generated over $2.8 million.

But the plaintiffs say they haven't seen any of the money and can't get an accounting. They further allege, "On information and belief, Defendants are shuttling assets and interests out of Malibu Media and into more obscure entities, including the shell entity holding companies: Click Here, Colette Holdings, Colette Properties, Colette Production, Inc., Colette Productions LLC, and/or Zo Digital."

Ah, shell companies and moving cash around. It appears that Malibu Media took all the wrong lessons from Prenda Law. Perhaps they'll find themselves in the same place in the end.

Filed Under: copyright trolls, investment, scams
Companies: malibu media, x-art

Don't Shoot The Message Board: A Data Driven Look At The Impact Of Section 230 On Innovation And The Economy

from the these-things-matter dept

Read our new report on intermediary liability »

We've obviously been talking a lot about Section 230 of the Communications Decency Act over the past few years -- and it is often credited as being the most important law for the internet. Jeff Kosseff's recent book calls it "the 26 words that created the internet," while David Post once declared that Section 230 probably "created a trillion dollars or so of value." We've talked a lot about how the real benefits of Section 230 are not to the internet companies themselves, but to the public's free speech rights, but over the last few years it's bugged me that there wasn't a better attempt to measure the actual economic impact of Section 230 and other intermediary liability regimes.

Today, in partnership with NetChoice, we're launching our new report: Don't Shoot the Message Board, that attempts to explore what the data shows concerning the economic benefits of Section 230. We chose the name because it's perfectly fitting. Section 230 was, literally, written and pushed by (then) Reps. Chris Cox and Ron Wyden in response to the awful ruling in the Stratton Oakmont case, which suggested that any company hosting a message board could be found liable for any of the content on that message board. Similarly, the common phrase is "don't shoot the messenger," which is very much about not blaming the party merely delivering the message, as opposed to creating or causing the message. Putting liability on intermediaries is very much about blaming the messenger for actions of someone else.

To provide some actual data for this debate, the report first compares a few different intermediary liability regimes to see what we can parse out. It starts with looking at the US vs. the EU. In the US, we have CDA 230 for most platforms, and DMCA 512 for copyright-related platforms. In the EU, they have the E-Commerce Directive (and soon they'll have the implementations of the Copyright Directive, but this report looks at the state of things before that). In many ways the intermediary liability in the E-Commerce Directive is much more similar to the DMCA in the US than CDA 230. Using a variety of datasets and comparison points, we found that CDA 230 appears to have resulted in significantly higher investment in US internet companies who rely on CDA 230. Our data suggests CDA 230 alone is probably responsible for two to three times more investment in the US than the EU. It also drove much higher levels of investment as companies in our sample were five times as likely to raise over $10 million in the US and nearly ten times as likely to raise over $100 million than their counterparts in the EU.

Tellingly, when comparing copyright-focused platforms, where the liability standards are similar (or, at least were similar, prior to the Copyright Directive), we found EU companies did much better compared to their American counterparts. In other words, it appears that different choices for liability regimes can have a major impact on the types of investment and how much is invested. One reason why many of the big music platforms may have come out of the EU, rather than the US, is that the US's decisions on intermediary liability no longer gave the US an advantage for those kinds of platforms. In short: the decision to offer fewer liability protections in the US drove those investment dollars elsewhere.

The paper also compares the DMCA and the CDA in the US alone, to see if there's a major difference in spurring investment -- and we found clear evidence that having these two different regimes resulted in much more investment focused on platforms that rely on CDA 230 (social media, communications platforms) as compared to content based platforms where the DMCA is of greater importance. There is obviously overlap, as many platforms rely on both laws, but when breaking out music companies vs. cloud computing, cloud storage, e-commerce and social media companies, we found over and over again that the latter received more investment, were more successful in the long run, more likely to have a successful exit and less likely to shut down. In other words, having the strong protections of CDA 230 seemed to help lead to more successful companies, and thus, more innovation.

To back up these findings, we looked at a variety of countries where a major change -- either from a key court ruling or changes in the law -- created a sudden shift in intermediary liability protections, and then did a before-and-after analysis of the impact on investment and startups in those markets. Once again, the findings were more or less what we expected. When a country strengthened the protections for intermediaries, investment went up, the number of startups increased and there was greater innovation. When a country removed or weakened such protections, investment dropped. Noticeably.

I should note that there were some exceptions to this rule -- and that happened mostly where there wasn't an existing strong startup ecosystem (such as Argentina). There, when intermediary liability laws were strengthened, there was little evidence of a sudden influx of investment. So, that suggests that strong intermediary liability protections are important, but not the only important thing, in driving greater innovation and investment.

As we note in the paper, this is not meant to be the definitive look at these issues. There are many, many different factors and variables that play into the startup and innovation ecosystems. However, there was so little data on the direct impact of things like Section 230 that we thought it would be helpful in furthering the debate to at least have some data-driven research into the impact.

At a time when politicians around the globe are suddenly increasingly interested in weakening intermediary liability protections, they should at least consider what that might do to investment, innovation and jobs. Our new report suggests weakening such protections may very well be "shooting the message board."

Filed Under: cda 230, data, dmca 512, don't shoot the message board, e-commerce directive, eu, innovation, intermediary liability, investment, section 230, studies, us

AT&T Lays Off Thousands After Nabbing Billions In Tax Breaks And Regulatory Favors

from the ill-communication dept

Back in November of 2017 AT&T promised that if it received a tax break from the Trump administration, it would invest an additional $1 billion back into its network and employees. At the time, CEO Randall Stephenson proclaimed that "every billion dollars AT&T invests is 7,000 hard-hat jobs." Not "entry-level jobs," AT&T promised, but "7,000 jobs of people putting fiber in ground, hard-hat jobs that make $70,000 to $80,000 per year."

Yeah, about that.

The Trump tax cut resulted in AT&T getting billions in immediate tax relief, and roughly $3 billion in tax savings annually, in perpetuity. Yet when it came time for AT&T to re-invest this money back into its network and employees, AT&T actually did the opposite and began laying them off in droves. Unions claim AT&T has laid off an estimated 23,000 workers worldwide since the Trump tax plan, with investors and executives unsurprisingly pocketing the savings. This week, the word came down that AT&T would be laying off thousands more as it wraps up fiber deployment:

"Leaked internal documents confirmed most of the 1,800 planned job cuts. One AT&T surplus declaration shows that more than 900 of the surplus jobs come from the company's Southeast division in Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee. This document attributes most of the cuts to "economic" reasons and some to "technological/operational efficiency."

While AT&T had been deploying fiber as per a 2015 DirecTV merger condition (something the Trump FCC tried to credit to killing net neutrality), the company recently finished up those obligations, and now has returned to the default state of most US telcos: skimping on fiber upgrade investment thanks to limited competition. There's been nary a peep from Trump INC, because fattening investor and executive wallets, unless you're new here or exceedingly gullible, was the entire point. Objective experts say the cuts uniformly failed to deliver any of the numerous investment and employment promises made by Trump INC.

Of course this is a shtick AT&T has been engaging in for decades now under both political parties. AT&T will promise a universe of jobs and network investment if it gets "X" (X=killing net neutrality, a tax break, eliminating consumer protections, approving a new merger, passing a law AT&T wrote), but then bails on following through. Nobody in the government much cares because AT&T's among the wealthiest and most politically powerful companies in the world and turning a blind eye is politically helpful. Nobody in the press much cares because covering failed AT&T promises on the tech policy front doesn't get hits, and most journalists are too young to remember the last forty times we've gone through this.

While the press likes to suggest that the Trump administration is "at odds" with AT&T because his DOJ sued to block AT&T's attempted merger with Time Warner, that had more to do with pleasing Rupert Murdoch and angering CNN than any real disdain for AT&T. AT&T's largely been a loyal ally to the Trump administration ever since one of its lobbyists paid Michael Cohen $600,000 for additional access to the President, and if you step back and really try to calculate the billions AT&T has gleaned from Trump and Ajit Pai's apathetic tenures so far, you'll quickly get a nasty headache.

Filed Under: broadband, competition, fiber, infrastructure, investment, layoffs, tax breaks
Companies: at&t