Further Reading, Other Developments, and Coming Events (31 August)

Today’s Further Reading, Other Developments, and Coming Events.

Coming Events

• On 10 September, the General Services Administration (GSA) will have a webinar to discuss implementation of Section 889 of the “John S. McCain National Defense Authorization Act (NDAA) for FY 2019” (P.L. 115-232) that bars the federal government and its contractors from buying the equipment and services from Huawei, ZTE, and other companies from the People’s Republic of China.
• The Federal Communications Commission (FCC) will hold a forum on 5G Open Radio Access Networks on 14 September. The FCC asserted
  • Chairman [Ajit] Pai will host experts at the forefront of the development and deployment of open, interoperable, standards-based, virtualized radio access networks to discuss this innovative new approach to 5G network architecture. Open Radio Access Networks offer an alternative to traditional cellular network architecture and could enable a diversity in suppliers, better network security, and lower costs.
• The Senate Judiciary Committee’s Antitrust, Competition Policy & Consumer Rights Subcommittee will hold a hearing on 15 September titled “Stacking the Tech: Has Google Harmed Competition in Online Advertising?.” In their press release, Chair Mike Lee (R-UT) and Ranking Member Amy Klobuchar (D-MN) asserted:
  • Google is the dominant player in online advertising, a business that accounts for around 85% of its revenues and which allows it to monetize the data it collects through the products it offers for free. Recent consumer complaints and investigations by law enforcement have raised questions about whether Google has acquired or maintained its market power in online advertising in violation of the antitrust laws. News reports indicate this may also be the centerpiece of a forthcoming antitrust lawsuit from the U.S. Department of Justice. This hearing will examine these allegations and provide a forum to assess the most important antitrust investigation of the 21st century.
• The United States’ Department of Homeland Security’s (DHS) Cybersecurity and Infrastructure Security Agency (CISA) announced that its third annual National Cybersecurity Summit “will be held virtually as a series of webinars every Wednesday for four weeks beginning September 16 and ending October 7:”
  • September 16: Key Cyber Insights
  • September 23: Leading the Digital Transformation
  • September 30: Diversity in Cybersecurity
  • October 7: Defending our Democracy
  • One can register for the event here.
• On 22 September, the Federal Trade Commission (FTC) will hold a public workshop “to examine the potential benefits and challenges to consumers and competition raised by data portability.”
• The Senate Judiciary Committee’s Antitrust, Competition Policy & Consumer Rights Subcommittee will hold a hearing on 30 September titled ““Oversight of the Enforcement of the Antitrust Laws” with Federal Trade Commission Chair Joseph Simons and United States Department of Justice Antitrust Division Assistant Attorney General Makan Delhrahim.
• The Federal Communications Commission (FCC) will hold an open meeting on 30 September, but an agenda is not available at this time.

Other Developments

• A group of Democratic Senators wrote the Federal Communications Commission (FCC) “to express our profound frustration that the [agency] has failed to take forceful action to keep households connected during the COVID-19 pandemic.” They asserted that “[a]s millions of American families face unprecedented financial pressures and educational challenges, we urge the FCC to reverse proposed changes to the Lifeline program, take immediate steps to open its assistance to more households, and ensure that its services meet the pressing needs of families during this crisis.”
  • They claimed
    • Since the first weeks of [FCC Chair Ajit Pai’s tenure], the FCC has sought to block new broadband providers’ participation in the Lifeline program, curtail benefits in tribal areas, exclude existing carriers, rollback reforms for registering new carriers, make it harder for new applicants  to subscribe, prevent carriers from offering free in-person distribution of phones, reduce incentives to enroll subscribers, and add more barriers for participating carriers and subscriber. These proposals have been so extreme that they would lead to cutting off carriers serving almost 70% of Lifeline subscribers.
  • They urged Pai “to immediately take the following steps:
    • 1.) Take emergency measures to provide additional financial support to Lifeline providers during the pandemic to temporarily support unlimited mobile data and voice minutes, and notify Congress if additional funding is needed for such changes.
    • 2.) Extend all current FCC waivers on Lifeline usage and subscriber documentation requirements for at least a full year, until August 2021or when we have recovered from the pandemic.
    • 3.) Close the currently outstanding Lifeline proposed rulemakings that would create new obstacles for eligible households and add unwarranted burden on carriers.
    • 4.)Pause the scheduled changes to Lifeline program’s minimum service standards until the Commission studies such impacts on the market in its upcoming 2021 State of Lifeline Marketplace Report, to avoid disruptions to customers’ services.
    • 5.) Restore the monthly subsidy to $9.25 for plans offering voice services for subscribers who value voice over data-heavy plans and pause the planned decrease in contributions for voice support.
    • 6.) Work with states to increase the automated verification of state databases with the National Verifier program by the end of this year.
• New Zealand’s National Cyber Security Centre (NCSC) released a “General Security Advisory: ongoing campaign of Denial of Service (DoS) attacks affecting New Zealand entities” after four days of DoS attacks against New Zealand’s stock market coming from somewhere offshore. The NCSC recommended best practices the Australian Cyber Security Centre (ACSC) had published. The NCSC stated
  • [It] is aware of an ongoing campaign of DoS attacks affecting New Zealand entities.
  • The campaign has included the targeting of a number of global entities, predominantly in the financial sector. 
  • The NCSC strongly encourages all organisations in this sector to consider the risk to their organisation of DoS and ensure appropriate mitigations are in place.
• Senator Mark Warner (D-VA) letters to Dell, Apple, HP, Samsung, Google, Microsoft, Acer America, and ASUS USA asking the “companies to do what they can to help bridge the “homework gap” – the lack of reliable computer or internet access that prevents school-aged children from being able to do school work from home.” Warner’s letter is in response to the nationwide shortage of lost laptops and tablets facing families as many children will be starting school online this fall. Warner stated:
  • There are a range of actions your company can take, including educational product discounts, the provision of complimentary or donated computers (including for home lending programs many educational institutions operate), and the provision of refurbished or returned products in good working condition for school districts and higher education institutions to distribute to educators and students. While I understand the strains placed on the global supply chain, your prioritization of these matters would greatly assist struggling families at this challenging time.
• The United States Department of Defense (DOD) updated its list of ““Communist Chinese military companies” operating directly or indirectly in the United States in accordance with the statutory requirement of Section 1237 of the National Defense Authorization Act for Fiscal Year 1999, as amended.” The eleven companies from the People’s Republic of China (PRC) were added to the existing list sent “to Congress in June 2020,” some 20 years after Congress tasked the DOD with this responsibility. This action is most likely in response to a letter sent last year to fulfill this responsibility. Notably, any company on the list could be sanctioned by the President under the same authorities recently used against TikTok and WeChat.
  • In a September 2019 letter to Secretary of Defense Mark Esper, Senate Minority Leader Chuck Schumer (D-NY) and Senator Tom Cotton (R-AR) were joined by Representatives Ruben Gallego (D-AZ) and Mike Gallagher (R-WI) in asking whether the DOD has been updating a list of “those persons operating directly or indirectly in the United States or any of its territories and possessions that are Communist Chinese military companies” as directed by Section 1237 of the FY 1999 NDAA. They noted that China’s Communist Party has adopted a Military-Civilian Fusion strategy “to achieve its national objectives,” including the acquisition of U.S. technology through any means such as espionage, forced technology transfers, and the purchase of or investment in U.S. technology forms. Schumer, Cotton, Gallego, and Gallagher urged the Trump Administration “reexamine all statutory authorities at its disposal to confront the CCP’s strategy of Military-Civilian Fusion, including powers that have laid dormant for years.”
  • Unstated in this letter, however, is that the first part of Section 1237 grants the President authority to “exercise International Emergency Economic Powers Act (IEEPA) authorities (other than authorities relating to importation) without regard to section 202 of the IEEPA (50 U.S.C. 1701) in the case of any commercial activity in the United States by a person that is on the list.” Of IEEPA grants the President sweeping powers to prohibit transactions and block property and property interests for nations and other groups subject to an IEEPA national emergency declaration. Consequently, those companies identified by the DOD on a list per Section 1237 could be blocked and prohibited from doing business with U.S. entities and others and those that do business with such Chinese companies could be subject to enforcement actions by the U.S. government (e.g. the U.S.’s actions against ZTE for doing business with Iran in violation of an IEEPA national emergency).
  • The statute defines a “Communist Chinese military company” as “any person identified in the Defense Intelligence Agency publication numbered VP-1920-271-90, dated September 1990, or PC-1921-57-95, dated October 1995, and any update of those publications for the purposes of this section; and any other person that is owned or controlled by the People’s Liberation Army; and is engaged in providing commercial services, manufacturing, producing, or exporting.” Considering that the terms “owned” and “controlled” are not spelled out in this section, the executive branch may have very wide latitude in deeming a non-Chinese company as owned or controlled and therefore subject to the President’s use of IEEPA powers. Moreover, since the President already has the authority to declare an emergency and then use IEEPA powers, this language would seem to allow the President to bypass any such declaration and immediately use such powers, except those regarding importation, against any Chinese entities identified on this list by the Pentagon.
• District of Columbia Attorney General Karl Racine (D) filed suit against Instacart alleging the company “violated the District’s Consumer Protection Procedures Act and tax law by: 
  • Charging District consumers millions of dollars in deceptive service fees: Prior to 2016, Instacart’s checkout screen contained an option to tip workers, set as a default 10 percent of the consumer’s subtotal for groceries that users could adjust. In 2016, Instacart swapped the tip option for a service fee, which was also set to a default 10 percent and could be adjusted, and displayed it where the tip option used to be. Consumers paid the service fee believing they were tipping workers. In reality, the service fee was a second charge—on top of a delivery fee—imposed by Instacart to cover delivery costs and operating expenses. Additionally, Instacart failed to clearly disclose that service fees were optional and that consumers could choose not to pay them.
  • Misleading consumers about how service fees contributed to worker pay: When Instacart announced the new service fees, it told consumers that “100% of the variable service amount is used to pay all shoppers more consistently for each and every delivery, not just the last shopper to touch the order.” Instacart also stated that the company collected a service fee because “multiple shoppers may have been involved in a single order” and the “service fee is used to pay this entire set of shoppers.” In fact, the shoppers who fulfilled a consumer’s order were paid the same whether or not a consumer paid the service fee.
  • Failing to pay at hundreds of thousands of dollars in District sales tax: Under District law, Instacart is responsible for collecting sales tax on the delivery services it provides. The entire time Instacart has operated in the District, it has failed to collect sales tax on the service fees and delivery fees it charged users.
• Two large United States (U.S.) technology companies are facing class actions in the Netherlands and the United Kingdom (UK) that argue the companies’ use of third party cookies in order to sell real time bidding advertising violated the European Union’s General Data Protection Regulation (GDPR) by not obtaining the consent of people before their personal information is collected and processed. The suit against Oracle and Salesforce is being brought by The Privacy Collective, a European non-profit, that could result in damages of more than €10 billion.
• As part of its lawsuit against Google “for deceptive and unfair practices used to obtain users’ location data, which Google then exploits for its lucrative advertising business,” the Office of the Attorney General of Arizona released emails obtained during the course of discovery that may demonstrate the company’s knowledge that its interface and operating system were trying to frustrate a user’s desire to truly turn off location data.
• The eHealth Initiative & Foundation (eHI) and the Center for Democracy and Technology (CDT) released A Draft Consumer Privacy Framework for Health Data, “a collaborative effort addressing gaps in legal protections for consumer health data outside of the Health Insurance Portability and Accountability Act’s (HIPAA) coverage.” Feedback is welcome until 25 September.
  • The organizations asserted
    • The standards’ emphasis is on transparency, accountability, and the limitation on health data collection, disclosure, and use. Importantly, the standards:
      • (1) move beyond outdated notice and consent models,
      • (2) cover all health information, and
      • (3) cover all entities that use, disclose or collect consumer health information, regardless of the size or business model of the covered entity.
    • This proposal is not designed to be a replacement for necessary comprehensive data privacy legislation. Given that Congressional action to pass such a law is likely some time away, this effort is designed to build consensus on best practices and to do what we can now, in the interim, to shore up protections for non-HIPAA covered health data.

Further Reading

• “Big Oil Faded. Will Big Tech?” By Shira Ovide – The New York Times. This piece suggests that the so-called Big Tech companies may someday wane as many energy companies like Exxon are currently doing. The interesting point is made that a company or field’s preeminence can rapidly disappear and it can seem dominant until it is not. And this frequently happens for reasons that do not seem apparent or related. Ironically, Exxon essentially got pushed out of the Dow Jones Industrial Average because Apple had to split its stock because of its surging valuation. Another tech company, Salesforce, will replace Exxon.
• “Apple wants to stop advertisers from following you around the web. Facebook has other ideas.” By Peter Kafka – Recode. Apple will extend a feature from Safari to its next iOS for iPhones where users will soon be asked whether they want to allow apps to track them across the web and other apps in order to deliver them targeted, personalized advertising. To no great surprise, it is being assumed many users will say no, diminishing a prime mode by which companies reap data and show people advertisements that are intimately tied to what they read and watch online. Consequently, advertisers will be less willing to spend dollars on more general ads and income will be depressed for the two major players in this market: Facebook and Google. Facebook has already declared it will not use Apple’s device identifier unique to every iPhone or Apple Watch, meaning users downloading the Facebook app will not get the choice of whether to say no to the companies tracking them. It is not clear how well this workaround will mitigate the projected loss in ad revenue for Facebook, but it does represent the latest chapter in the fight between the two companies. Facebook has lined up with Epic Games, maker of Fortnite, in its suit against Apple regarding App Store policies. It is very likely Apple sees this change to iOS 14 as a means of burnishing its reputation as being more concerned about its users privacy than competitors in Silicon Valley, which it can afford to be considering it does not earn most of its revenue the same way Facebook does, and curry favor in Washington and Brussels where it is facing antitrust scrutiny.
• “Want a Free Amazon Halo Wearable? Just Hand Over Your Data to This Major Insurance Company” By Emily Mullin – OneZero. Amazon has teamed with insurer John Hancock to offer a wearable health and fitness tracker that will be used to collect personal data on wearers that is designed to nudge them into better behaviors and better health. This is not the first such pairing, and it raises a host of policy issues, for healthier people would be poised to reap benefits not available to less healthy people. Some insurers are offering modest amounts of cash or gift cards for exercising regularly or other benefits that would not go to less healthy people. These sorts of programs are similar to employee health and wellness programs that were enshrined in the “Patient Protection and Affordable Care Act” that studies have suggested do not work very well. Additionally, companies like Amazon and John Hancock will be collecting and processing all sorts of very sensitive personal information, making them likely targets of hacking operations. Also, there are privacy implications, for these wearable devices will likely allow companies to know the most intimate details of wearers’ lives.
• “TikTok Deal Is Complicated by New Rules From China Over Tech Exports” By Paul Mozur, Raymond Zhong and David McCabe – The New York Times; “TikTok Is Said to Wrestle With Two Competing Offers” By Mike Isaac – The New York Times; “China’s new tech export restrictions further cloud US TikTok sale and raise the risk of protectionism” By Coco Feng, Tracy Qu and Amanda Lee– South China Morning Post; “China puts drones and laser tech on restricted export list after US tightens rules” By Sidney Leng – South China Morning Post; “TikTok Chief Executive Kevin Mayer Resigns” By Mike Isaac – The New York Times.In a surprise announcement from two agencies late last week, the People’s Republic of China changed its export control rules for the first time since 2008 to likely have leverage over TikTok’s sale to a United States (U.S.) entity. Ostensibly, the changes are “to regulate technology exports, promote scientific and technological progress and economic and technological cooperation, and maintain national economic security,” but the inclusion of “personalised information recommendation service technology based on data analysis” and “artificial intelligence interactive interfaces” likely point to ByteDance’s app, TikTok. In fact a researcher with the PRC Ministry of Commerce was quoted as asserting “[t]he time to publish the new update of the export control list has been expedited due to the TikTok sale.” Moreover, the PRC’s timeline for deciding on whether an export license is needed is the same as the Trump Administration’s second executive order directing ByteDance to divest TikTok. Incidentally, these changes are probably in response to tighten of U.S. export controls against the PRC, which could set off retaliatory moves. In any event, Beijing will now have to approve any sale of TikTok operations in the U.S. Also, Walmart has apparently joined forces with Microsoft in preparing a bid on TikTok in competition with Oracle which threw its proverbal hat into the ring last week. And, new TikTok CEO Kevin Mayer stepped down in a surprise move citing ByteDance’s changed circumstances.
• “Trump aides interviewing replacement for embattled FTC chair” By Leah Nylen, Betsy Woodruff Swan, John Hendel and Daniel Lippman – Politico. The Trump Administration may be trying to force out Federal Trade Commission Chair Joe Simons or merely interviewing replacements if he steps down next year should President Donald Trump still be in the White House next year. Given the reports that Simons has resisted pressure from the White House to comply with the executive order on Section 230 by investigating social media platforms, Simons has likely not won any new fans at 1600 Pennsylvania Avenue. Having said that, removing an FTC Commissioner is much harder than other top positions in the U.S. government, and the FTC is designed to be insulated from political pressure. However, Commissioners are politicians, too, and carefully gauge the direction the wind is blowing. That being said, Simons has also sent out signals he will step down next year and return to private practice, so the interviewing of possible successors may be entirely normal in an Administration that usually does not operate normally.

© Michael Kans, Michael Kans Blog and michaelkans.blog, 2019-2020. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Michael Kans, Michael Kans Blog, and michaelkans.blog with appropriate and specific direction to the original content.

Image by Gordon Johnson from Pixabay