What you need to know ahead of the EU copyright vote

European Union lawmakers are facing a major vote on digital copyright reform proposals on Wednesday — a process that has set the Internet’s hair fully on fire.

Here’s a run down of the issues and what’s at stake…

Article 13

The most controversial component of the proposals concerns user-generated content platforms such as YouTube, and the idea they should be made liable for copyright infringements committed by their users — instead of the current regime of takedowns after the fact (which locks rights holders into having to constantly monitor and report violations — y’know, at the same time as Alphabet’s ad business continues to roll around in dollars and eyeballs).

Critics of the proposal argue that shifting the burden of rights liability onto platforms will flip them from champions to chillers of free speech, making them reconfigure their systems to accommodate the new level of business risk.

More specifically they suggest it will encourage platforms into algorithmically pre-filtering all user uploads — aka #censorshipmachines — and then blinkered AIs will end up blocking fair use content, cool satire, funny memes etc etc, and the free Internet as we know it will cease to exist.

Backers of the proposal see it differently, of course. These people tend to be creatives whose professional existence depends upon being paid for the sharable content they create, such as musicians, authors, filmmakers and so on.

Their counter argument is that, as it stands, their hard work is being ripped off because they are not being fairly recompensed for it.

Consumers may be the ones technically freeloading by uploading and consuming others’ works without paying to do so but creative industries point out it’s the tech giants that are gaining the most money from this exploitation of the current rights rules — because they’re the only ones making really fat profits off of other people’s acts of expression. (Alphabet, Google’s ad giant parent, made $31.16BN in revenue in Q1 this year alone, for example.)

YouTube has been a prime target for musicians’ ire — who contend that the royalties the company pays them for streaming their content are simply not fair recompense.

Article 11

The second controversy attached to the copyright reform concerns the use of snippets of news content.

European lawmakers want to extend digital copyright to also cover the ledes of news stories which aggregators such as Google News typically ingest and display — because, again, the likes of Alphabet is profiting off of bits of others’ professional work without paying them to do so. And, on the flip side, media firms have seen their profits hammered by the Internet serving up free content.

The reforms would seek to compensate publishers for their investment in journalism by letting them charge for use of these text snippets — instead of only being ‘paid’ in traffic (i.e. by becoming yet more eyeball fodder in Alphabet’s aggregators).

Critics don’t see it that way of course. They see it as an imposition on digital sharing — branding the proposal a “link tax” and arguing it will have a wider chilling effect of interfering with the sharing of hyperlinks.

They argue that because links can also contain words of the content being linked to. And much debate has raged over on how the law would (or could) define what is and isn’t a protected text snippet.

They also claim the auxiliary copyright idea hasn’t worked where it’s already been tried (in Germany and Spain). Google just closed its News aggregator in the latter market, for example. Though at the pan-EU level it would have to at least pause before taking a unilateral decision to shutter an entire product.

Germany’s influential media industry is a major force behind Article 11. But in Germany a local version of a snippet law that was passed in 2013 ended up being watered down — so news aggregators were not forced to pay for using snippets, as had originally been floated.

Without mandatory payment (as is the case in Spain) the law has essentially pitted publishers against each other. This is because Google said it would not pay and also changed how it indexes content for Google News in Germany to make it opt-in only.

That means any local publishers that don’t agree to zero-license their snippets to Google risk losing visibility to rivals that do. So major German publishers have continued to hand their snippets over to Google.

But they appear to believe a pan-EU law might manage to tip the balance of power. Hence Article 11.

Awful amounts of screaming

For critics of the reforms, who often sit on the nerdier side of the spectrum, their reaction can be summed up by a screamed refrain that IT’S THE END OF THE FREE WEB AS WE KNOW IT.

WikiMedia has warned that the reform threatens the “vibrant free web”.

A coalition of original Internet architects, computer scientists, academics and others — including the likes of world wide web creator Sir Tim Berners-Lee, security veteran Bruce Schneier, Google chief evangelist Vint Cerf, Wikipedia founder Jimmy Wales and entrepreneur Mitch Kapor — also penned an open letter to the European Parliament’s president to oppose Article 13.

In it they wrote that while “well-intended” the push towards automatic pre-filtering of users uploads “takes an unprecedented step towards the transformation of the Internet from an open platform for sharing and innovation, into a tool for the automated surveillance and control of its users”.

There is more than a little irony there, though, given that (for example) Google’s ad business conducts automated surveillance of the users of its various platforms for ad targeting purposes — and through that process it’s hoping to control the buying behavior of the individuals it tracks.

At the same time as so much sound and fury has been directed at attacking the copyright reform plans, another very irate, very motivated group of people have been lustily bellowing that content creators need paying for all the free lunches that tech giants (and others) have been helping themselves to.

But the death of memes! The end of fair digital use! The demise of online satire! The smothering of Internet expression! Hideously crushed and disfigured under the jackboot of the EU’s evil Filternet!

And so on and on it has gone.

(For just one e.g., see the below video — which was actually made by an Australian satirical film and media company that usually spends its time spoofing its own government’s initiatives but evidently saw richly viral pickings here… )

For a counter example, to set against the less than nuanced yet highly sharable satire-as-hyperbole on show in that video, is the Society of Authors — which has written a 12-point breakdown defending the actual substance of the reform (at least as it sees it).

A topline point to make right off the bat is it’s hardly a fair fight to set words against a virally sharable satirical video fronted by a young lady sporting very pink lipstick. But, nonetheless, debunk the denouncers these authors valiantly attempt to.

To wit: They reject claims the reforms will kill hyperlinking or knife sharing in the back; or do for online encyclopedias like Wikimedia; or make snuff out of memes; or strangle free expression — pointing out that explicit exceptions that have been written in to qualify what it would (and would not) target and how it’s intended to operate in practice.

Wikipedia, for example, has been explicitly stated as being excluded from the proposals.

But they are still pushing water uphill — against the tsunami of DEATH OF THE MEMES memes pouring the other way.

Russian state propaganda mouthpiece RT has even joined in the fun, because of course Putin is no fan of EU…

Terrible amounts of lobbying

The Society of Authors makes the very pertinent point that tech giants have spent millions lobbying against the reforms. They also argue this campaign has been characterised by “a loop of misinformation and scaremongering”.

So, basically, Google et al stand accused of spreading (even more) fake news with a self-interested flavor. Who’d have thunk it?!

Dollar bills standing on a table in Berlin, Germany. (Photo by Thomas Trutschel/Photothek via Getty Images)

The EU’s (voluntary) Transparency Register records Google directly spending between $6M and $6.4M on regional lobbying activities in 2016 alone. (Although that covers not just copyright related lobbying but a full laundry list of “fields of interest” its team of 14 smooth-talking staffers apply their Little Fingers to.)

But the company also seeks to exert influence on EU political opinion via membership of additional lobbying organizations.

And the register lists a full TWENTY-FOUR organizations that Google is therefore also speaking through (by contrast, Facebook is merely a member of eleven bodies) — from the American chamber of Commerce to the EU to dry-sounding thinktanks, such as the Center for European Policy Studies and the European Policy Center. It is also embedded in startup associations, like Allied for Startups. And various startup angles have been argued by critics of the copyright reforms — claiming Europe is going to saddle local entrepreneurs with extra bureaucracy.

Google’s dense web of presence across tech policy influencers and associations amplifies the company’s regional lobbying spend to as much as $36M, music industry bosses contend.

Though again that dollar value would be spread across multiple GOOG interests — so it’s hard to sum the specific copyright lobbying bill. (We asked Google — it didn’t answer). Multiple millions looks undeniable though.

Of course the music industry and publishers have been lobbying too.

But probably not at such a high dollar value. Though Europe’s creative industries have the local contacts and cultural connections to bend EU politicians’ ears. (As, well, they probably should.)

Seasoned European commissioners have professed themselves astonished at the level of lobbying — and that really is saying something.

Yes there are actually two sides to consider…

Returning to the Society of Authors, here’s the bottom third of their points — which focus on countering the copyright reform critics’ counterarguments:

The proposals aren’t censorship: that’s the very opposite of what most journalists, authors, photographers, film-makers and many other creators devote their lives to.

Not allowing creators to make a living from their work is the real threat to freedom of expression.

Not allowing creators to make a living from their work is the real threat to the free flow of information online.

Not allowing creators to make a living from their work is the real threat to everyone’s digital creativity.

Stopping the directive would be a victory for multinational internet giants at the expense of all those who make, enjoy and enjoy using creative works.

Certainly some food for thought there.

But as entrenched, opposing positions go, it’s hard to find two more perfect examples.

And with such violently opposed and motivated interest groups attached to the copyright reform issue there hasn’t really been much in the way of considered debate or nuanced consideration on show publicly.

But being exposed to endless DEATH OF THE INTERNET memes does tend to have that effect.

What’s that about Article 3 and AI?

There is also debate about Article 3 of the copyright reform plan — which concerns text and data-mining. (Or TDM as the Commission sexily conflates it.)

The original TDM proposal, which was rejected by MEPs, would have limited data mining to research organisations for the purposes of scientific research (though Member States would have been able to choose to allow other groups if they wished).

This portion of the reforms has attracted less attention (butm again, it’s difficult to be heard above screams about dead memes). Though there have been concerns raised from certain quarters that it could impact startup innovation — by throwing up barriers to training and developing AIs by putting rights blocks around (otherwise public) data-sets that could (otherwise) be ingested and used to foster algorithms.

Or that “without an effective data mining policy, startups and innovators in Europe will run dry”, as a recent piece of sponsored content inserted into Politico put it.

That paid for content was written by — you guessed it! — Allied for Startups.

Aka the organization that counts Google as a member…

The most fervent critics of the copyright reform proposals — i.e. those who would prefer to see a pro-Internet-freedoms overhaul of digital copyright rules — support a ‘right to read is the right to mine’ style approach on this front.

So basically a free for all — to turn almost any data into algorithmic insights. (Presumably these folks would agree with this kind of thing.)

Middle ground positions which are among the potential amendments now being considered by MEPs would support some free text and data mining — but, where legal restrictions exist, then there would be licenses allowing for extractions and reproductions.

 

And now the amendments, all 252 of them…

The whole charged copyright saga has delivered one bit of political drama already —  when the European Parliament voted in July to block proposals agreed only by the legal affairs committee, thereby reopening the text for amendments and fresh votes.

So MEPs now have the chance to refine the parliament’s position via supporting select amendments — with that vote taking place next week.

And boy have the amendments flooded in.

There are 252 in all! Which just goes to show how gloriously messy the democratic process is.

It also suggests the copyright reform could get entirely stuck — if parliamentarians can’t agree on a compromise position which can then be put to the European Council and go on to secure final pan-EU agreement.

MEP Julia Reda, a member of The Greens–European Free Alliance, who as (also) a Pirate Party member is very firmly opposed to the copyright reform text as was voted in July (she wants a pro-web-freedoms overhauling of digital copyright rules), has created this breakdown of alternative options tabled by MEPs — seen through her lens of promoting Internet freedoms over rights extensions.

So, for example, she argues that amendments to add limited exceptions for platform liability would still constitute “upload filters” (and therefore “censorship machines”).

Her preference would be deleting the article entirely and making no change to the current law. (Albeit that’s not likely to be a majority position, given how many MEPs backed the original Juri text of the copyright reform proposals 278 voted in favor, losing out to 318 against.)

But she concedes that limiting the scope of liability to only music and video hosting platforms would be “a step in the right direction, saving a lot of other platforms (forums, public chats, source code repositories, etc.) from negative consequences”.

She also flags an interesting suggestion — via another tabled amendment — of “outsourcing” the inspection of published content to rightholders via an API”.

“With a fair process in place [it] is an interesting idea, and certainly much better than general liability. However, it would still be challenging for startups to implement,” she adds.

Reda has also tabled a series of additional amendments to try to roll back what she characterizes as “some bad decisions narrowly made by the Legal Affairs Committee” — including adding a copyright exception for user generated content (which would essentially get platforms off the hook insofar as rights infringements by web users are concerned); adding an exception for freedom of panorama (aka the taking and sharing of photos in public places, which is currently not allowed in all EU Member States); and another removing a proposed extra copyright added by the Juri committee to cover sports events — which she contends would “filter fan culture away“.

So is the free Internet about to end??

MEP Catherine Stihler, a member of the Progressive Alliance of Socialists and Democrats, who also voted in July to reopen debate over the reforms reckons nearly every parliamentary group is split — ergo the vote is hard to call.

“It is going to be an interesting vote,” she tells TechCrunch. “We will see if any possible compromise at the last minute can be reached but in the end parliament will decide which direction the future of not just copyright but how EU citizens will use the internet and their rights on-line.

“Make no mistake, this vote affects each one of us. I do hope that balance will be struck and EU citizens fundamental rights protected.”

So that sort of sounds like a ‘maybe the Internet as you know it will change’ then.

Other views are available, though, depending on the MEP you ask.

We reached out to Axel Voss, who led the copyright reform process for the Juri committee, and is a big proponent of Article 13, Article 11 (and the rest), to ask if he sees value in the debate having been reopened rather than fast-tracked into EU law — to have a chance for parliamentarians to achieve a more balanced compromise. At the time of writing Voss hadn’t responded.

Voting to reopen the debate in July, Stihler argued there are “real concerns” about the impact of Article 13 on freedom of expression, as well as flagging the degree of consumer concern parliamentarians had been seeing over the issue (doubtless helped by all those memes + petitions), adding: “We owe it to the experts, stakeholders and citizens to give this directive the full debate necessary to achieve broad support.”

MEP Marietje Schaake, a member of the Alliance of Liberals and Democrats for Europe, was willing to hazard a politician’s prediction that the proposals will be improved via the democratic process — albeit, what would constitute an improvement here of course depends on which side of the argument you stand.

But she’s routing for exceptions for user generated content and additional refinements to the three debated articles to narrow their scope.

Her spokesman told us: “I think we’ll end up with new exceptions on user generated content and freedom of panorama, as well as better wording for article 3 on text and data mining. We’ll end up probably with better versions of articles 11 and 13, the extent of the improvement will depend on the final vote.”

The vote will be held during an afternoon plenary session on September 12.

So yes there’s still time to call your MEP.

Highlights from the Senate Intelligence hearing with Facebook and Twitter

Another day, another political grilling for social media platform giants.

The Senate Intelligence Committee’s fourth hearing took place this morning, with Facebook COO Sheryl Sandberg and Twitter CEO Jack Dorsey present to take questions as U.S. lawmakers continue to probe how foreign influence operations are playing out on Internet platforms — and eye up potential future policy interventions. 

During the session US lawmakers voiced concerns about “who owns” data they couched as “rapidly becoming me”. An uncomfortable conflation for platforms whose business is human surveillance.

They also flagged the risk of more episodes of data manipulation intended to incite violence, such as has been seen in Myanmar — and Facebook especially was pressed to commit to having both a legal and moral obligation towards its users.

The value of consumer data was also raised, with committee vice chair, Sen. Mark Warner, suggesting platforms should actively convey that value to their users, rather than trying to obfuscate the extent and utility of their data holdings. A level of transparency that will clearly require regulatory intervention.

Here’s our round-up of some of the other highlights from this morning’s session.

Google not showing up

Today’s hearing was a high profile event largely on account of two senior bums sitting on the seats before lawmakers — and one empty chair.

Facebook sent its COO Sheryl Sandberg. Twitter sent its bearded wiseman CEO Jack Dorsey (whose experimental word of the month appears to be “cadence” — as in he frequently said he would like a greater “cadence” of meetings with intelligence tips from law enforcement).

But Google sent the offer of its legal chief in place of Larry Page or Sundar Pichai, who the committee had actually asked for.

Which meant the company instantly became the politicians’ favored punchbag, with senator after senator laying into Alphabet for empty chairing them at the top exec level.

Whatever Page and Pichai were too busy doing to answer awkward questions about its business activity and ambitions in China the move looks like a major open goal for Alphabet as it was open season for senators to slam it.

Page staying away also made Facebook and Twitter look the very model of besuited civic responsibility and patriotism just for bothering to show up.

We got “Jack” and “Sheryl” first name terms from some of the senators, and plenty of “thanks for turning up” heaped on them from all corners — with some very particular barbs reserved for Google.

“I want to commend both of you for your appearance here today for what was no doubt going to be some uncomfortable questions. And I want to commend your companies for making you available. I wish I could say the same about Google,” said Senator Tom Cotton, addressing those in the room. “Both of you should wear it as a badge of honor that the Chinese Communist Party has blocked you from operating in their country.”

“Perhaps Google didn’t send a senior executive today because they’ve recently taken actions such as terminating a co-operation they had with the American military on programs like artificial intelligence that are designed not just to protect our troops and help them fight in our country’s wars but to protect civilians as well,” he continued, warming to his theme. “This is at the very same time that they continue to co-operate with the Chinese Communist Party on matters like artificial intelligence or partner with Huawei and other Chinese telecom companies who are effectively arms of the Chinese Communist Party.

“And credible reports suggest that they are working to develop a new search engine that would satisfy the Chinese Communist Party’s censorship standards after having disclaimed any intent to do so eight years ago. Perhaps they did not send a witness to answer these questions because there is no answer to these questions. And the silence we would hear right now from the Google chair would be reminiscent of the silence that that witness would provide.”

Even Sandberg seemed to cringe when offered the home-run opportunity to stick the knife in to Google — when Cotton asked both witnesses whether their companies would consider taking these kinds of actions?

But after a split second’s hesitation her media training kicked in — and she found her way of diplomatically giving Google the asked for kicking. “I’m not familiar with the specifics of this at all but based on how you’re asking the question I don’t believe so,” was her reply.

After his own small pause, Dorsey, the man of fewer words, added: “Also no.”

 

Dorsey repeat apologizing 

‘We haven’t done a good job of that’ was the most common refrain falling from Dorsey’s bearded lips this morning as senators asked why the company hasn’t managed to suck less from all sorts of angles — whether that’s by failing to provide external researchers with better access to data to help them help it with malicious interference; or failing to informing individual users who’ve been the targeted victims of Twitter fakery that that abuse has been happening to them; or just failing to offer any kind of contextual signal to its users that some piece of content they’re seeing is (or might be) maliciously fake.

But then this is the man who has defended providing a platform to people who make a living selling lies, so…

“We haven’t done a good job of that in the past,” was certainly phrase of the morning for a contrite Dorsey.  And while admitting failure is at least better than denying you’re failing, it’s still just that: Failure.

And continued failure has been a Twitter theme for so long now, when it comes to things like harassment and abuse, it’s starting to feel intentional. (As if, were you able to cut Twitter you’d find the words ‘feed the trolls’ running all the way through its business.)

Sadly the committee seemed to be placated by Dorsey’s repeat confessions of inadequacy. And he really wasn’t pressed enough. We’d have liked to see a lot more grilling of him over short term business incentives that tie his hands on fighting abuse.

Amusingly, one senator rechristened Dorsey “Mr Darcey”, after somehow tripping over the two syllables of his name. But actually, thinking about it, ‘pride and prejudice’ might be a good theme for the Twitter CEO to explore during one of his regular meditation sessions.

Y’know, as he ploughs through a second turgid decade of journeying towards self-awareness — while continuing to be paralyzed, on the business, civic and, well, human being, front, by rank indecision about which people and points of view to listen to (Pro-Tip: If someone makes money selling lies and/or spreading hate you really shouldn’t be letting them yank your operational chain) — leaving his platform (the would be “digital public square”, as he kept referring to it today), incapable of upholding the healthy standards it claims to want to have. (Or daubed with all manner of filthy graffiti, if you want a visual metaphor.)

The problem is Twitter’s stated position/mission, in Dorsey’s prepared statements to the committee, of keeping “all voices on the platform” is hubris. It’s a flawed ideology that results in massive damage to the free speech and healthy conversation he professes to want to champion because nazis are great at silencing people they hate and harass.

Unfortunately Dorsey still hasn’t had that eureka moment yet. And there was no sign of any imminent awakening judging by this morning’s performance.

 

Sandberg’s oh-so-smooth operation — but also an exchange that rattled her

The Facebook COO isn’t chief operating officer for nothing. She’s the queen of the polished, non-committal soundbite. And today she almost always had one to hand — smoothly projecting the impression that the company is always doing something. Whether that’s on combating hate speech, hoaxes and “inauthentic” content, or IDing and blocking state-level disinformation campaigns — thereby shifting attention off the deeper question of whether Facebook is doing enough. (Or even whether its platform might not be the problem itself.)

Albeit the bar looks very low indeed when your efforts are being set against Twitter and an empty chair.  (Aka the “invisible witness” as one senator sniped at Google.)

Very many of her answers courteously informed senators that Facebook would ‘follow up’ with answers and/or by providing some hazily non-specific ‘collaborative work’ at some undated future time — which is the most professional way to kick awkward questions into the long grass.

Though do it long enough and the grass can turn on you and start to bite back because it’s got so long and unkempt it now contains some very angry snakes.

Senator, Kamala Harrisvery clearly seething at this point — having had her questions to Facebook knocked about since November 2017, when its general council had first testified to the committee on the disinformation topic — was determined to get under Sandberg’s skin. And she did.

The exchange that rattled the Facebook COO started off around how much money it makes off of ads run by fake accounts — such as the Kremlin-backed Internet Research Agency.

Sandberg slickly reframed “inauthentic content” to an even more boring sound “inorganic content” — now several psychologic steps removed from the shockingly outrageous Kremlin propaganda that the company eventually disclosed.

She added it was equivalent to .004% of content in News Feed (hence Facebook’s earlier contention to Harris that it’s “immaterial to earnings”).

It’s not so much the specific substance of the question that’s the problem here for Facebook — with Sandberg also smoothly reiterating that the IRA had spent about $100k (which is petty cash in ad terms) — it’s the implication that Facebook’s business model profits off of fakes and hates, and is therefore amorously entwined in bed with fakes and hates.

“From our point of view, Senator Harris, any amount is too much,” continued Sandberg after she rolled out the $100k figure, and now beginning to thickly layer on the emulsion.

Harris cut her off, interjecting: “So are you saying that the revenue generated was .004% of your annual revenue”, before adding the pointed observation: “Because of course that would not be immaterial” — which drew a rare stuttered double “so” from Sandberg.

“So what metric are you using to calculate the revenue that was generated associated with those ads, and what is the dollar amount that is associated then with that metric?” pressed Harris.

Sandberg couldn’t provide the straight answer being sought, she said, because “ads don’t run with inorganic content on our service” — claiming: “There is actually no way to firmly ascertain how much ads are attached to how much organic content; it’s not how it works.”

“But what percentage of the content on Facebook is organic,” rejoined Harris.

That elicited a micro-pause from Sandberg, before she fell back on the usual: “I don’t have that specific answer but we can come back to you with that.”

Harris pushed her again, wondering if it’s “the majority of content”?

“No, no,” said Sandberg, sounding almost flustered.

“Your company’s business model is complex but it benefits from increased user engagement… so, simply put, the more people that use your platform the more they are exposed to third party ads, the more revenue you generate — would you agree with that,” continued Harris, starting to sound boring but only to try to reel her in.

After another pause Sandberg asked her to repeat this hardly complex question — before affirming “yes, yes” and then hastily qualifying it with: “But only I think when they see really authentic content because I think in the short run and over the long run it doesn’t benefit us to have anything inauthentic on our platform.”

Harris continued to hammer on how Facebook’s business model benefits from greater user engagement as more ads are viewed via its platform —  linking it to “a concern that many have is how you can reconcile an incentive to create and increase your user engagement with the content that generates a lot of engagement is often inflammatory and hateful”.

She then skewered Sandberg with a specific example of Facebook’s hate speech moderation failure — and by suggestive implication a financially incentivized policy and moral failure — referencing a ProPublica report from June 2017 which revealed the company had told moderators to delete hate speech targeting white men but not black children — because the latter were not considered a “protected class”.

Sandberg, sounding uncomfortable now, said this was “a bad policy that has been changed”. “We fixed it,” she added.

“But isn’t that a concern with hate period, that not everyone is looked at the same way,” wondered Harris?

Facebook “cares tremendously about civil rights” said Sandberg, trying to regain the PR initiative. But she was again interrupted by Harris — wondering when exactly Facebook had “addressed” that specific policy failure.

Sandberg was unable to put a date on when the policy change had been made. Which obviously now looked bad.

“Was the policy changed after that report? Or before that report from ProPublica?” pressed Harris.

“I can get back to you on the specifics of when that would have happened,” said Sandberg.

“You’re not aware of when it happened?”

“I don’t remember the exact date.”

“Do you remember the year?”

“Well you just said it was 2017.”

“So do you believe it was 2017 when the policy changed?”

“Sounds like it was.”

The awkward exchange ended with Sandberg being asked whether or not Facebook had changed its hate speech policies to protect not just those people who have been designated legally protected classes of people.

“I know that our hate speech policies go beyond the legal classifications, and they are all public, and we can get back to that on that,” she said, falling back on yet another pledge to follow up.

Twitter agreeing to bot labelling in principle  

We flagged this earlier but Senator Warner managed to extract from Dorsey a quasi-agreement to labelling automation on the platform in future — or at least providing more context to help users navigate what they’re being exposed to in tweet form.

He said Twitter has been “definitely” considering doing this — “especially this past year”.

Although, as we noted earlier, he had plenty of caveats about the limits of its powers of bot detection.

“It’s really up to the implementation at this point,” he added.

How exactly ‘bot or not’ labelling will come to Twitter isn’t clear. Nor was there any timeframe.

But it’s at least possible to imagine the company could add some sort of suggestive percentage of automated content to accounts in future — assuming Dorsey can find his first, second and third gears.

Lawmakers worried about the impact of deepfakes

Deepfakes, aka AI-powered manipulation of video to create fake footage of people doing things they never did is, perhaps unsurprisingly, already on the radar of reputation-sensitive U.S. lawmakers — even though the technology itself is hardly in widespread, volume usage.

Several senators asked whether (and how comprehensively) the social media companies archive suspended or deleted accounts.

Clearly politicians are concerned. No senator wants to be ‘filmed in bed with an intern’ — especially one they never actually went to bed with.

The response they got back was a qualified yes — with both Sandberg and Dorsey saying they keep such content if they have any suspicions.

Which is perhaps rather cold comfort when you consider that Facebook had — apparently — zero suspicious about all the Kremlin propaganda violently coursing across its platform in 2016 and generating hundreds of millions of views.

Since that massive fuck-up the company has certainly seemed more proactive on the state-sponsored fakes front  — recently removing a swathe of accounts linked to Iran which were pushing fake content, for example.

Although unless lawmakers regulate for transparency and audits of platforms there’s no real way for anyone outside these commercially walled gardens to be 110% sure.

Sandberg’s clumsy affirmation of WhatsApp encryption 

Since the WhatsApp founders left Facebook, earlier this year and in fall last, there have been rumors that the company might be considering dropping the flagship end-to-end encryption that the messaging platform boasts — specifically to help with its monetization plans around linking businesses with users.

And Sandberg was today asked directly if WhatsApp still uses e2e encryption. She replied by affirming Facebook’s commitment to encryption generally — saying it’s good for user security.

“We are strong believers in encryption,” she told lawmakers. “Encryption helps keep people safe, it’s what secures our banking system, it’s what secures the security of private messages, and consumers rely on it and depend on it.”

Yet on the specific substance of the question, which had asked whether WhatsApp is still using end-to-end encryption, she pulled out another of her professionally caveated responses — telling the senator who had asked: “We’ll get back to you on any technical details but to my knowledge it is.”

Most probably this was just her habit of professional caveating kicking in. But it was an odd way to reaffirm something as fundamental as the e2e encrypted architecture of a product used by billions of people on a daily basis. And whose e2e encryption has caused plenty of political headaches for Facebook — which in turn is something Sandberg has been personally involved in trying to fix.

Should we be worried that the Facebook COO couldn’t swear under oath that WhatsApp is still e2e encrypted? Let’s hope not. Presumably the day job has just become so fettered with fixes she just momentarily forgot what she could swear she knows to be true and what she couldn’t.

Epic Games just gave a perk for folks to turn on 2FA; every other big company should, too

Let’s talk a bit about security.

Most internet users around the world are pretty crap at it, but there are basic tools that companies have, and users can enable, to make their accounts, and lives, a little bit more hacker-proof.

One of these — two-factor authentication — just got a big boost from Epic Games, the maker of what is currently The Most Popular Game In The World: Fortnite.

Epic is already getting a ton of great press for what amounts to very little effort.

The company is giving users a new emote (the victory dance you’ve seen emulated in airports, playgrounds and parks by kids and tweens around the world) to anyone who turns on two-factor authentication. It’s one small (dance) step for Epic, but one giant leap for securing their users’ accounts.

The thing is any big company could do this (looking at you Microsoft, Apple, Alphabet and any other company with a huge user base).

Apparently the perk of not getting hacked isn’t enough for most users, but if you give anyone the equivalent of a free dance, they’ll likely flock to turn on the feature.

It’s not that two-factor authentication is a panacea for all security woes, but it does make life harder for hackers. Two-factor authentication works on codes, basically tokens, that are either sent via text or through an over-the-air authenticator (OTA). Text messaging is a pretty crap way to secure things, because the codes can be intercepted, but OTAs — like Google Authenticator or Authy — are sent via https (pretty much bulletproof, but requiring an app to use).

So using SMS-based two-factor authentication is better than nothing, but it’s not Fort Knox (however, these days, even Fort Knox probably isn’t Fort Knox when it comes to security).

Still, anything that makes things harder for crimes of opportunity can help ease the security burden for companies large and small, and the consumers and customers that love them (or at least are forced to pay and use them).

I’m not sure what form the perk could or should take. Maybe it’s the promise of a free e-book or a free download or an opportunity to have a live chat with the celebrity, influencer or athlete of a user’s choice. Whatever it is, there’re clearly something that businesses could do to encourage greater adoption.

Self-preservation isn’t cutting it. Maybe an emote will do the trick.

Otto co-founder Lior Ron is back at Uber

Lior Ron, the co-founder of the controversial self-driving technology company Otto, is returning to Uber to head up its trucking logistics company, Uber Freight, TechCrunch has confirmed.

Both Ron and his co-founder and ex-Googler Anthony Levandowski went to Uber after it acquired Otto in August of 2016. However, Levandowski was fired from Uber after pleading the Fifth Amendment to his accused involvement in stealing Google’s self-driving car trade secrets for use in Otto’s technology. Ron exited Uber a month after the company settled with Google parent company Alphabet for $245 million over the dispute.

Now, after some reportedly intense, month-long negotiations, Lior plans to return to Uber pending acquisition of Otto Trucking. The self-driving trucking company is a separate entity from Otto, and the deal to purchase Otto’s other units never fully closed, leading to continued negotiations.

Ron is an obvious pick to run Uber Freight as he helped “lay the groundwork” for the momentum the company has seen since its founding, according to Uber. He’s also managed to negotiate a deal with his employees in mind. The new deal would allow Uber Freight to be a standalone business within Uber and give Otto Trucking shareholders an equity stake in Uber Freight.

However, Levandowski will sell his shares in the freight company to an undisclosed VC firm, according to Bloomberg. Uber did not comment on which firm that might be. Meanwhile, Uber, which owns a majority stake in Freight, plans to double its investment in the company over the next year.

Google Pay rolls out support for peer-to-peer payments and mobile ticketing

Google is making several updates to Google Pay, its recently-rebranded service for all its different payments tools. Most of these updates were announced earlier this year, but now, Google says they’re actually going live in the app.

One of the additions is peer-to-peer payments. You could already pay or request money from a friend through Google Pay Send, but as of today, you can also do it into the main Google Pay app.

Gerardo Capiel, Director of Product Management at Google Pay, noted that this makes it easier to split the bill with your friends — if you bought something with Google Pay, you can tap on the purchase and then request payment from up to five people.

Since Google is basically combining two apps,  it sounds like Google Pay Send isn’t long for this world — as Capiel put it, “We want to basically bring everything into Google Pay,” but he said the timing is “TBD” on when Pay Send might be shut down.

The Google Pay app is also gaining the ability to save mobile tickets and boarding passes, to be found in a new Passes tab that will also include loyalty cards and gift cards. Ticketmaster and Southwest are supported at launch, and Google says it has plans to add Eventbrite, Singapore Airlines and Vueling.

Google pay

While some of Google Pay’s functionality (like the new Passes Tab) is limited to Android, Capiel said the goal is to support users on any platform. So you can also access Google Pay on the web and on an iOS app. Now Google says it’s making it easier to manage all your payment information across platforms, allowing users (for example) to update their payment info on the web and see it reflected in their app.

Looking ahead, Capiel said his team plans to add support for more ticketing partners, and also to launch the Google Pay app in more countries — particularly the ones where the service is already being used for online payments.

“We’re working to bring everything into the app,” he added. “Some things are a little trickier than others, for a number of reasons, but we will continue to make the experience as complete as possible.”

Trōv launches its on-demand personal property insurance services in the US

Trōv, the on-demand personal property insurance service, is launching in the U.S., the company announced today.

Trōv’s first port of call in the U.S. will be Arizona. The service is already available in the U.K. and Australia, where customers have signed up to insure items 1 million times since the company first launched its business.

A spokesperson for the company declined to comment on how many individuals have signed up for the service or how much they’ve spent on the policies.

Munich Re is serving as Trōv’s underwriting partner in the U.S. (and the rest of the world), and the company said it would look to roll out across the rest of the country over the course of the year.

As part of the rollout, Trōv is introducing a new service that will cut a customer’s premium payment as the object they’re insuring depreciates in value. The insurer makes these adjustments by comparing the item insured with the retail replacement value of a similar, newer item.

In addition to its geographic expansion, the company is expanding the types of items it’ll insure, from consumer electronics and photography gear to sports and musical equipment.

Trōv’s insurance policy is already approved in 44 states, and the personal property product is actually the company’s second service for the U.S. market.

Earlier this year the company launched Trōv Mobility in partnership with Waymo, the autonomous vehicle subsidiary of Alphabet (which owns Google). That product protects passengers in Waymo’s self-driving car service — which is preparing for launch later this year.

Insurance has been a hot business for startup investors, with companies like Cover launching with a similar, on-demand offering already operating in the U.S. Other competitors include companies like Lemonade and Hippo, which both offer homeowners or renters insurance for a modern home — including insurance for electronics, photography equipment and other possessions.

The largest buys of tech’s Big Five: a look at M&A deals

In startup land, the mandate is to get bought, go public or die trying.

And, as far as getting bought goes, one of tech’s Big Five could be a desirable acquirer. They have a lot of weight to throw around. Alphabet (the parent company of Google), AmazonAppleFacebook and Microsoft account for a titanic amount of market value — close to $3.9 trillion at time of writing. At least, that’s according to Crunchbase News’s dashboard of notable tech stocks.

When challenged by one another, these hulking behemoths of the tech sector more often fight than flee. And when challenged by a scrappy upstart, it is likely that they will gobble up the talent, technology and business of any aspiring competitor. It’s the circle of life.

And it’s those acquisitions we’re going to look at here.

Taken together, tech’s Big Five account for a relatively small portion of the overall M&A market. The chart below shows the number of acquisitions made by members of tech’s Big Five from 2007 through 2017. (For reference, Crunchbase records thousands of acquisitions per year.)

But what the Big Five lack in quantity is made up for in size. If you’ll forgive the big-game pun, acquisitions by Big Five account for a lion’s share of big deals in dollar terms.

So, for each of the Big Five, let’s see just how big some of those deals got. We base our analysis on Crunchbase data that, whenever possible, has been cross-checked with public news sources and regulatory filings. We’ll proceed from the most valuable (in market capitalization terms) to the least.

Apple

Despite being the most valuable among the Big Five, Apple’s acquisitions are not just among the smallest of the bunch, but also the least disclosed. In other words, out of the deals listed in Crunchbase and elsewhere, most of them don’t have dollar values attached to them. This may speak to Apple’s secretiveness and its tendency to build most of its products and services in-house.

Apple’s biggest M&A deal to date was its $3 billion buyout of Beats Electronics, which is perhaps best known for its flashy wireless headphones. But it’s not the headphones that caught Apple’s eye. Rather, it was its streaming service, which Apple CEO Tim Cook told ReCode’s Peter Kafka was “the first subscription service that really got it right.”

Including the Beats deal, here are the largest M&A deals we were able to find.

Amazon

It’s hard to find a business vertical Amazon isn’t somehow involved in. Web hosting? Check. White-labeled staples like batteries and paper towels? Check. Doorbells? Check. They apparently sell books online, too.

Now, in all seriousness, Amazon’s $13.7 billion buyout of Whole Foods in June 2017 brought the online shopping giant squarely into the world of brick-and-mortar retail as well. And while the Whole Foods deal was Amazon’s biggest splurge to date, it’s certainly not alone in the company’s collection of commerce company buys. These include Amazon’s buyout of Quidsi (the parent company of Diapers.com and Soap.com, which was the first to offer the free two-day shipping for which Amazon Prime is famous), footwear and clothing retailer Zappos, and Middle Eastern e-commerce site Souq.com.

Alphabet

Of tech’s big five, Alphabet is the most acquisitive, and it makes the most corporate venture investments. It’s also the company with the most complicated corporate structure. Recall that Alphabet is the parent organization of Google, and it’s Google which has made the surpassing majority of Alphabet acquisitions.

But for all the resources Alphabet has put toward M&A, its acquisitiveness resulted in a rather mixed bag of results. Most glaring amongst its duds is its $3.2 billion buyout of Nest Labs and, relatedly, the $555 million spent on Dropcam (which would later be rebranded as part of Nest’s home security offering).

Nest reportedly failed to meet revenue expectations and seize a dominant position in the connected home market, ceding ground to incumbents like Honeywell. And there are plenty of scrappy upstarts nipping Nest’s heels in markets like home security, smart doorbells and smart locks.

This being said, then-Google’s YouTube deal is likely Alphabet’s best acquisition from an ROI perspective. Although Alphabet doesn’t break out YouTube’s revenue, some good estimates and public market comps suggest the video streaming unit could be worth a cool $100 billion.

Microsoft

Microsoft made news this week by announcing its acquisition of software version control and code hosting platform GitHub for $7.5 billion. And, at this point, it seems like Microsoft is timing announcements of its biggest deals just to dunk on Apple. Myke Hurley, a tech podcaster and the founder of Relay FM, observed on Twitter that Microsoft’s 2016 acquisition of LinkedIn and its GitHub deal were both announced on the opening day of Apple’s Worldwide Developers Conference.

Apart from cheeky timing, you will notice that Microsoft has made the largest M&A deals among tech’s Big Five.

Facebook

Of the Big Five companies in tech, Facebook’s M&A patterns seem to be the most binary. Its deals are either tiny or humongous. There isn’t much of a middle ground.

Some of Facebook’s biggest acquisitions present a case study of acquiring one’s way to nearly insurmountable market dominance. Although its acquisitions of Instagram and WhatsApp didn’t cause much of a stir at the time, today these deals are seen as a cautionary case for current and future antitrust regulators.

On a brighter note, though, Facebook’s M&A record is also a lesson in the “buy versus build” dilemma many companies face. It’s sometimes more expedient to buy a company (and, critically, its engineering team) than to build new features from scratch. For many of the smaller deals listed here, we can see that Facebook opted to buy.

The Big Five’s acquisitions in perspective

At the very top of the tech food chain, the Big Five are in a unique position, and not just as rainmakers for VCs seeking liquidity.

Alphabet, Amazon, Apple, Facebook and Microsoft are some of the most powerful companies operating today, and their acquisitions tell part of the story of how they got to prominent positions in the first place.

Although some acquisitions appear to come out of the blue, it’s important to remember that one doesn’t just buy a company for the heck of it. There’s a strategic motivation for these deals at the time they’re made. And when these deals are struck, they can telegraph the company’s future plans.

The well-funded startups driven to own the autonomous vehicle stack

At some point in the future, while riding along in a car, a kid may ask their parent about a distant time in the past when people used steering wheels and pedals to control an automobile. Of course, the full realization of the “auto” part of the word — in the form of fully autonomous automobiles — is a long way off, but there are nonetheless companies trying to build that future today.

However, changing the face of transportation is a costly business, one that typically requires corporate backing or a lot of venture funding to realize such an ambitious goal. A recent funding round, some $128 million raised in a Series A round by Shenzhen-based Roadstar.ai, got us at Crunchbase News asking a question: Just how many independent, well-funded autonomous vehicles startups are out there?

In short, not as many as you’d think. To investigate further, we took a look at the set of independent companies in Crunchbase’s “autonomous vehicle” category that have raised $50 million or more in venture funding. After a little bit of hand filtering, we found that the companies mostly shook out into two broad categories: those working on sensor technologies, which are integral to any self-driving system, and more “full-stack” hardware and software companies, which incorporate sensors, machine-learned software models and control mechanics into more integrated autonomous systems.

Full-stack self-driving vehicle companies

Let’s start with full-stack companies first. The table below shows the set of independent full-stack autonomous vehicle companies operating in the market today, as well as their focus areas, headquarter’s location and the total amount of venture funding raised:

Note the breakdown in focus area between the companies listed above. In general, these companies are focused on building more generalized technology platforms — perhaps to sell or license to major automakers in the future — whereas others intend to own not just the autonomous car technology, but deploy it in a fleet of on-demand taxi and other transportation services.

Making the eyes and ears of autonomous vehicles

On the sensor side, there is also a trend, one that’s decidedly more concentrated on one area of focus, as you’ll be able to discern from the table below:

Some of the most well-funded startups in the sensing field are developing light detection and ranging (LiDAR) technologies, which basically serve as the depth-perceiving “eyes” of autonomous vehicle systems. CYNGN integrates a number of different sensors, LiDAR included, into its hardware arrays and software tools, which is one heck of a pivot for the mobile phone OS-maker formerly known as Cyanogen.

But there are other problem spaces for these sensor companies, including Nauto’s smart dashcam, which gathers location data and detects distracted driving, or Autotalks’s DSRC technology for vehicle-to-vehicle communication. (Back in April, Crunchbase News covered the $5 million Series A round closed by Comma, which released an open-source dashcam app.)

And unlike some of the full-stack providers mentioned earlier, many of these sensor companies have established vendor relationships with the automotive industry. Quanergy Systems, for example, counts components giant Delphi, luxury carmakers Jaguar and Mercedes-Benz and automakers like Hyundai and Renault-Nissan as partners and investorsInnoviz supplies its solid-state LiDAR technology to the BMW Group, according to its website.

Although radar and even LiDAR are old hat by now, there continues to be innovation in sensors. According to a profile of Oryx Vision’s technology in IEEE Spectrum, its “coherent optical radar” system is kind of like a hybrid of radar and LiDAR technology in that “it uses a laser to illuminate the road ahead [with infrared light], but like a radar it treats the reflected signal as a wave rather than a particle.” Its technology is able to deliver higher-resolution sensing over a longer distance than traditional radar or newer LiDAR technologies.

Can startups stack up against big corporate competitors?

There are plenty of autonomous vehicle initiatives backed by deep corporate pockets. There’s Waymo, a subsidiary of Alphabet, which is subsidized by the huge amount of search profit flung off by Google . Uber has an autonomous vehicles initiative too, although it has encountered a whole host of legal and safety issues, including holding the unfortunate distinction of being the first to kill a pedestrian earlier this year.

Tesla, too, has invested considerable resources into developing assistive technologies for its vehicles, but it too has encountered some roadblocks as its head of Autopilot (its in-house autonomy solution) left in April. The company also deals with a rash of safety concerns of its own. And although Apple’s self-driving car program has been less publicized than others, it continues to roll on in the background. Chinese companies like Baidu and Didi Chuxing have also launched fill-stack R&D facilities in Silicon Valley.

Traditional automakers have also jumped into the fray. Back in 2016, for the price of a cool $1 billion, General Motors folded Cruise Automation into its R&D efforts in a widely publicized buyout. And, not to be left behind, Ford acquired a majority stake in Argo AI, also for $1 billion.

That leaves us with a question: Do even the well-funded startups mentioned earlier stand a chance of either usurping market dominance from corporate incumbents or at least joining their ranks? Perhaps.

The reason why so much investor cash is going to these companies is because the market opportunity presented by autonomous vehicle technology is almost comically enormous. It’s not just a matter of the car market itself — projected to be over 80 million car sales globally in 2018 alone — but how we’ll spend all the time and mental bandwidth freed up by letting computers take the wheel. It’s no wonder that so many companies, and their backers, want even a tiny piece of that pie.

Google beats expectations again with $31.15B in revenue

Alphabet, Google’s parent company, reported another pretty solid beat this afternoon for its first quarter as it more or less has continued to keep its business growing substantially — and is growing even faster than it was a year ago today.

Google said its revenue grew 26% year-over-year to $31.16 billion in the first quarter this year. In the first quarter last year, Google said its revenue had grown 22% between Q1 of 2016 and Q1 of 2017. All this is a little convoluted, but the end result is that Google is actually growing faster than it was just a year ago despite the continued trend of a decline in its cost-per-click — a rough way of saying how valuable an ad is — as more and more web browsing shifts to mobile devices. Last year, Google said it recorded $24.75 billion in the first quarter.

Once again, Alphabet’s “other bets” — its fringe projects like autonomous vehicles and balloons — showed some additional health as that revenue grew while the losses shrank. That’s a good sign as it looks to explore options beyond search, but in the end it still represents a tiny fraction of Google’s overall business. This was also the first quarter that Google is reporting its results following a settlement with Uber, where it received a slice of the company as it ended a spat between its Waymo self-driving division and Uber.

Here’s the final scorecard:

  • Revenue: $31.16 billion, compared to $30.36 billion Wall Street estimates and up 26% year-over-year.
  • Earnings: $9.93 per share adjusted, compared to $9.28 per share from Wall Street
  • Other Revenues: $4.35 billion, up from $3.27 billion in Q1 last year
  • Other Bets: $150 million, up from $132 million in Q1 2017
  • Other Bets losses: $571 million, down from $703 million in the first quarter last year
  • TAC as a % of Revenue: 24%
  • Effective tax rate: 11%, down from 20% in Q1 2017

In the end, it’s a beat compared to what Wall Street wanted, and it’s getting a very Google-y response. Investors were looking for earnings of $9.35 per share on $30.36 billion in revenue. Google’s stock is up around 2% in extended trading, which for Google is adding more than $10 billion in value as it races alongside Microsoft and Amazon to chase Apple as the most valuable company in the world by market cap. Google jumped as much as 5% in extended trading, though it’s flattened out

Google’s traffic acquisition cost, or TAC, appears to also remain stable as a percentage of its revenue. This is a little bit of a sticking point for observers for the company and a potential negative signal for investors as more and more web browsing shifts to mobile. It’s ticked up very slowly over the past several years, but is now sitting at around 24% of its total revenue.

Google, at its core, is an advertising company that is going to make money off its billions of users across all of its properties. But as everything goes to mobile devices, the actual value of those ads is going to drop off over time simply because mobile browsing has a different set of behaviors. Google’s business has always been to offset that cost-per-click with a growing number of impressions — and, indeed, it seems like the status quo is sticking around for this one.

While Google’s advertising business continues to chug along, that diversification of revenue streams is going to be increasingly important for the company as a hedge against any potential threats to its advertising income. Already there is some chaos when it comes to what’s happening with user data following a massive scandal where information on as many as 87 million Facebook users ended up with a political research firm, Cambridge Analytica. That backlash centered around user privacy may end up tapping Google, which dominates most of how information travels across the web with Gmail and Search among its other products.

But that still comes at a pretty significant cost. It’s made major investments into tools like Google Cloud (or GCP), but tucked into the earnings report is a line item that shows its “purchases of property and equipment” more than doubled year-over-year to around $7.3 billion, up from $2.5 billion in the first quarter this year. Of course this can encompass a ton of things, but Google still has to actually buy servers if it’s going to run a cloud platform that can compete with AWS or Microsoft’s Azure.

All that feeds into its “other income” stream, which grew from $3.2 billion in Q1 last year to $4.35 billion in the first quarter this year. Amazon’s cloud business is already more than a $10 billion business annually, and that first-mover advantage has served it well as it began a huge shift to how businesses operate on cloud servers. But it also exposed a massive business opportunity for Google, which continues to invest in that.

A closer look at Waymo’s new self-driving Jaguar I-PACE

Waymo teamed up with Jaguar Land Rover to develop the first electric, fully self-driving premium car. Alongside five other models — including a small car, an SUV, the Pacifica minivan, the firefly prototype, and a semi-truck — the premium I-PACE’s large, fast-charging battery is a good fit for Waymo’s forthcoming self-driving ride service.

Waymo hopes to grow its I-PACE fleet to 20,000 over the next couple of years.