This has been in the offing for weeks, with lots of reporting since Ajit Pai took over as FCC Chair about his intentions to dismantle net neutrality regulations, but today it finally become official with a speech by Pai outlining his proposed approach. For now, all that will happen is that the FCC will tomorrow publish a Notice of Proposed Rulemaking outlining plans to reclassify broadband services as Title I, and inviting public comment. The significance of that is that the 2015 reclassification of broadband as Title II was what enabled the agency to pass net neutrality rules which stood up in court, so reversing that decision would also remove the net neutrality regulations. What Pai didn’t do in his speech today was outline how net neutrality rules, which he says he broadly supports, would be enforced going forward, though reporting has suggested he favors handing enforcement to the FTC with providers drawing up voluntary codes of conduct. The providers themselves, meanwhile, have been piping up in praise of the proposal while reiterating their commitment to a version of net neutrality they can live with: not blocking or degrading competing traffic. Once again, how you feel about all this depends on what you think net neutrality should mean: if you agree with that basic definition from the providers, things should be fine, but if you think it should also mean no paid prioritization, no zero rating, and so on, then you’ll have a problem with how this plays out. Pai’s fundamental argument here is that the providers were largely self-regulating before the rules, and that they will be again. The counterargument is that the threat of rules was enough to keep the carriers in line without them, and with rules eliminated and no immediate prospect of their reintroduction, carriers would be emboldened to push the limits in a way they weren’t in 2015. Also, as I argued a few weeks back, though the proposal released tomorrow will be up for public comment, I wouldn’t expect it to change much in the face of even very strong negative feedback.
Alibaba is launching a program to help US businesses sell to Chinese consumers through its website. It’ll hold a conference in June at which it will offer training on all the ins and outs of doing business both through Alibaba specifically and in China generally, and all this is by way of fulfilling a promise CEO Jack Ma made to Donald Trump back in January. The US currently has a massive trade imbalance with China – exports from the US in 2015 were $161.6 billion, while imports were $497.8 billion – so rectifying that balance is a key priority for the US administration. But much of the current export volume to China is in categories that would be a poor fit for a platform like Alibaba – soybeans come top, both consumer and commercial vehicles are also major contributors, and much of the rest is made up by other commercial and industrial products. The US sells very few small consumer goods of the kind well suited to a platform like Alibaba, so any contribution made by Alibaba to reducing the trade deficit is going to be far more symbolic than material. In addition, the complexity of selling into China, where foreign-owned businesses are severely limited, will make it a fairly unappealing proposition for most US-based businesses relative to selling into the massive market on their own doorstep. I suspect this will be just another example of a Chinese tech company struggling to bring its model to the US (just as almost all US tech companies struggle going the other way).
via USA Today
Silicon Valley is (quietly) beginning to fight the Trump administration’s net neutrality plan (but probably won’t succeed) (Apr 12, 2017)
This was somewhat inevitable given the earlier fight about net neutrality, but it appears tech companies are starting to make their views known on FCC chair Ajit Pai’s plans to roll back net neutrality regulations and hand oversight to the FTC instead. So far, though, none of them are saying anything publicly, and I’m skeptical that we’ll see the same vocal fight over this as we did last time around on the part of the big companies. More to the point, I suspect even if we do it won’t make much difference. When Tom Wheeler came to the FCC many doubted that he would be tough on the ISPs he had previously represented as head of a cable lobbying group, and so he was particularly sensitive to criticisms of his policy along those lines. He also, of course, represented a Democratic administration which favored net neutrality rules. Pai, on the other hand, is a familiar figure with well-known views on net neutrality, who was in turn appointed by a president who backs his agenda. As such, even though Wheeler strengthened his stance on net neutrality as a result of public pressure, I can’t see Pai caving in the same way. We might see a slight moderation of the approach, and perhaps a slowdown in the transition to ensure the FTC is ready to pick up the gavel, but I can’t see any substantive change to the plan occurring because of opposition from big tech companies. Meanwhile, of course, this sets up yet another potential fight between the tech industry and the Trump administration, which may be another reason they choose to stay fairly quiet, given all the fronts on which they’re fighting.
The Trump administration no longer wants Twitter to reveal the owner of an anti-Trump account – Recode (Apr 7, 2017)
Just a quick update on yesterday’s item about the USCIS’s fight with Twitter over revealing who was behind an account critical of the administration. It appears the administration has now backed off and so the lawsuit Twitter filed has been ended as well. What I’d love to know is why – whether calmer heads prevailed and someone in the government realized this was a fight it couldn’t win, or something else happened. Either way, what would have been a big test for Twitter and the administration now won’t be.
A new front has just opened up in the war between the Trump administration and the tech industry: Twitter is suing the government after it attempted to compel Twitter to reveal the identity of the people behind the @Alt_USCIS Twitter account. That account is allegedly maintained by employees of the US Citizenship and Immigration Service and has been highly critical of the Trump administration and its policies on immigration. In and of itself, that seems like no legal justification at all for unmasking the account’s owners, and that’s why Twitter is pushing back on free speech grounds. But the legal hook here may be that the account is using the name of the agency in its Twitter handle, and as such might just possibly be in contravention of trademark or copyright law, or anti-impersonation regulations. Regardless of the reasoning, this sets up yet another fight between the tech industry and the administration, though in fairness Twitter had resisted some earlier attempts by the Obama administration to get at the people behind accounts as well. It’s also an important test of one of the key tenets of Twitter’s value proposition as a free speech platform.
FCC and FTC Heads Outline Policy on Internet Privacy (Apr 5, 2017)
In an op-ed in the Post this morning, the chair of the FCC and acting chair of the FTC write up their views on the internet privacy debate that’s been roaring in online tech publications over the last few weeks. As I’ve said previously (and discussed in depth in last week’s News Roundup podcast), the reaction on this topic has been overblown, and understanding poor, though the major players on the other side haven’t really helped themselves. The major ISPs only began communicating on the topic after the congressional vote was over, and only now are the FCC and FTC chairs communicating clearly about the issue. But the reality is that this issue of internet privacy can only really be resolved by new regulation from the FTC, which will end up once again having responsibility for online privacy as it did until 2015.
This is a great summary of a critical element in the disconnect between the Trump administration and the tech industry. Through Trump has Peter Thiel in a liaison role and recently appointed Matt Lira to an advisory role around innovation, he has left largely unfilled the traditional home of science and technology policy-making within the White House, the Office of Science and Technology Policy. The article argues that this, in turn, has made it very difficult for the tech industry to make its voice heard inside the White House on issues such as the executive orders on immigration, which was the first major point of friction between the two. The contrast between the Obama and Trump administrations here couldn’t be more clear, and the big question is whether the current situation will change in time or whether this disconnect will continue.
Airbnb, Lyft, and 56 other tech companies file brief opposing Trump’s revised travel ban – The Verge (Mar 15, 2017)
Lots of big tech companies and some smaller ones filed an amicus brief opposing the original Trump executive orders on immigration back in January. This time around, it looks like it’s almost exclusively the smaller companies doing the same with the revised order issued this month – Alphabet, Amazon, Apple, Microsoft, and lots of other large companies are missing this time. I haven’t yet seen comment from any of these companies as to why, and it may simply be either a matter of timing, but it’s interesting to see this shift after the opposition to the order was so high profile the first time around. That could signify that the companies are in fact not opposed to this version of the order, or it could simply be a sign that they’re choosing to pick their battles and, having made their broad objections known earlier, are now lying low.
via The Verge
This didn’t get a ton of coverage on Wednesday, but it’s one of the first concrete statements we’ve seen from a major tech manufacturer that it is considering building new infrastructure in the US – all other reporting on this topic has either been unconfirmed by the company or has turned out to be something announced earlier. Samsung is fascinating in this context – unlike Apple and Amazon, it was never singled out for criticism during the campaign, and of course Trump himself uses a Samsung smartphone. But the company nevertheless seems keen to curry favor by building capacity in the US.
Apple, tech leaders will side with transgender youth in upcoming Supreme Court case – Axios (Feb 24, 2017)
This is a nice scoop for Ina Fried, who just moved from Recode to Axios. But more importantly, the news itself is a significant escalation of the comments several tech companies made this week about the Trump administration’s policy on transgender students and bathrooms in schools. This would now be the second time in as many months that several major tech companies find themselves on the opposite side of a high profile legal case from the new administration. What a massive turnaround from those first weeks after the election, when tech companies seemed afraid to say anything negative about the new US government.
This is really just an addendum to yesterday’s item about the amicus brief filed by (then) 97 tech companies, as some 30 additional companies added their names to the brief yesterday afternoon. Among them were some of the Elon Musk-controlled holdouts from the initial set, Tesla and SpaceX as well as a number of smaller companies which simply don’t seem to have been looped in to the initial effort. The remaining holdouts are increasingly conspicuous by their absence, though it remains more consumer- than enterprise-focused as a group (HP did sign on later in the day, but IBM, Oracle, and other enterprise heavyweights are still missing), and the telecoms carriers and cable companies are all missing as a group too.
Last week, Recode reported that several big tech companies were drafting a letter to the Trump administration on immigration, though I still can’t find confirmation that this letter has actually been sent. However, those tech companies and many others have now filed an official friend of the court brief in the lawsuit being brought against the administration by the states of Minnesota and Washington. This steps things up a notch, formally putting the 97 companies behind the brief on the other side of a court case from the administration. As with the early condemnations of the executive orders just over a week ago, Amazon is notable by its absence, as is Tesla (whose CEO Elon Musk has continued to sit on the advisory council Uber CEO Travis Kalanick vacated last week). Tesla’s absence is consistent with Musk’s overall stated strategy of trying to bring change from within, but Amazon’s absence may simply be due to the fact that it weighed in on the case separately earlier in the process (though Microsoft has participated at both stages).
Update: this tweet explains that Amazon was asked not to sign the amicus brief because it was a witness in the original case.
Uber has been by far the tech company hardest hit by the combination of its overall relationship with Trump and its response to the immigration actions last week, in some cases perhaps unfairly. But it was Travis Kalanick’s position on one of Trump’s advisory councils, and his apparent complete willingness to be close to the administration, which set the context for all that followed. Without his perceived indifference to what many others in the tech industry have seen as a deeply flawed administration, I suspect Uber’s actions over the past week wouldn’t have been seen in the same light, and as such his position on the advisory council was at least as much to blame as specific actions taken since last Friday. His departure from the council comes fairly late in the game, and so it’s not clear what difference it will make now – the narrative is fairly set at this point. But Uber has apparently lost 200,000 customers over this issue, and it’s a no-brainer that Kalanick would step down rather than continue hurting his business over this issue. It’s notable that Elon Musk remains on the council, and Tesla has also lost some Model 3 preorders over this, but he today defended his decision and stated his intention to continue to try to influence the situation from the inside rather than the sidelines. The fault lines in all this are fascinating to watch – we’re going to see lots more movement from tech companies as they seek to strike the right balance between constructive criticism and outright opposition to the administration and its policies.
via New York Times
Another big tech company starts looking into US manufacturing in the wake of Donald Trump’s election as president. There’s no official statement yet, and Samsung hasn’t been the target of direct attacks from Trump in the same way Apple has, but it’s apparently feeling the heat regardless. It’s interesting to see even non-US tech companies start to respond to Trump’s calls for more US manufacturing – we’ve seen this already in the car industry, but now we’re seeing it with LG and Samsung too. This is a sign of just how unpredictable US government policy has become over the last few weeks compared with the relative stability of prior years.
via Business Insider
The tech industry’s response to the Trump administration’s executive orders on immigration has predictably become a competitive dynamic, with Uber customers boycotting the company over a perceived weaker response to the situation than major competitor Lyft. This BuzzFeed piece does a nice job drilling down a bit and separating the rhetorical and practical responses of both companies to the immigration moves, which is more nuanced than the boycott implies. But this raises two other big points. Firstly, to what extent will a failure to stand up for certain causes start to be used as a weapon against companies? We’re already seeing both a backlash against Uber from those who oppose the immigration ban and a backlash against Starbucks from those who dislike its commitment to hire more refugees. No wonder tech companies have been reluctant to take a stand – after such a divisive election, there are large chunks of every company’s customers and potential customers on each side of the issue, and these issues are complex. Secondly, how interchangeable are Uber and Lyft really, to the extent that a temporary boycott might shift meaningful usage from one to the other in a permanent way? I’ve argued in the past that the nastiness that’s characterized competition between the two stems from their fundamental lack of differentiation, which makes them that much more vulnerable to perceived differences and makes them fight that much dirtier to get and keep customers.
The executive orders on immigration blew up over the weekend, with most major tech companies finding their voices in opposing some of the policies of the new administration. But this article argues that the next set of changes to immigration policy might actually hit big tech companies even harder, putting the administration back on a collision course with the industry. As noted in my comment from Saturday, the responses from tech companies have ranged from moral condemnations to mere declarations that the policies would be disruptive to their businesses – any change to work visas would sit in that second bucket for many big companies, and they’d be likely to push back.
Silicon Valley’s responses to Trump’s immigration executive orders, from strongest to weakest – The Verge (Jan 28, 2017)
This is a good summary of the responses from the tech industry so far to President Trump’s executive orders on immigration from Friday. It also does a nice job sorting the responses by strength – there’s quite a range in the responses, from those focusing narrowly on the practical impacts on employees of each company to those issuing broader moral condemnations of the policy. This certainly won’t be the last we hear on this topic. It’s notable that as of right now Amazon is one of the major holdouts among the big consumer tech companies.
via The Verge
Two politics stories today, as this one follows the Facebook story from earlier. This one also echoes an earlier story about big tech companies rethinking their political alliances both in the face of a possible shift to the right and now in the wake of an actual take over of both the executive and legislative branches by Republicans. It’s easy to see this as a swing from left to right, but I think it’s better seen as pragmatism about working with whoever is in power. The wrinkle is that Google had particularly strong ties with the Obama administration at multiple levels, and Eric Schmidt in particular was involved with the Clinton campaign, at least indirectly. Google / Alphabet arguably has the most to fear of the major tech companies from a backlash against tech companies based on their support for Democrats, and is clearly doing all it can to make nice now. Having said all that, the degree to which companies have to worry about such a backlash is surely much higher under this administration than any previous one.