All posts in “regulation”

UK looks to crack down on social media companies which don’t stop harmful content

The UK announces its plan to tackle harmful online content.
The UK announces its plan to tackle harmful online content.

Image: Shutterstock / Kullit Kuekkong

The UK is set to unveil new measures against the spread of harmful and violent content on the internet.

The Online Harms white paper, set to be released on Monday morning by the Department for Culture, Media and Sport, introduces a new independent regulator for social media companies, file hosting sites, and other companies which host content.

These companies will be required to ensure that they restrict the spread of harmful content on their platforms, and to abide by a mandatory “duty of care” statute.

These “online harms” are defined as content which is violent, encourages suicide, contains disinformation, is cyberbullying, or results in children accessing inappropriate material. 

The new regulator is looking to enforce these rules with threats of substantial fines, blocked access to sites, and the potential to impose liability on executives of these companies.

“The tech giants and social media companies have a moral duty to protect the young people they profit from,” Home Secretary Sajid Javid said in a statement.

The measures have been supported by child protection charities in the UK, such as the National Society for the Prevention of Cruelty to Children (NSPCC), which welcomed punishments for companies which fail to act.

“For too long social networks have failed to prioritise children’s safety and left them exposed to grooming, abuse, and harmful content,” NSPCC CEO Peter Wanless said in a statement.

Regulation of internet companies has been on the cards for governments around the world, given the Cambridge Analytica scandal and the spread of misinformation, the latter of which Singapore intends to rein in with its proposed fake news bill.

The livestream and the subsequent dissemination of the Christchurch terrorist attack video has sped up legislation in Australia, which last week rushed in laws threatening fines and jail time for companies which fail to “expeditiously” remove extreme violent content. 

These laws were criticised for the speed in which they were implemented, and the potential impacts it has on censorship. It’s these concerns which have been mirrored with the UK proposal by freedom of expression organisation, Index on Censorship.

“The online harms white paper will set the direction for future internet regulation,” Joy Hyvarinen, head of advocacy at Index on Censorship, said in a statement online on Friday.

The organisation said the UK’s “duty of care” element encourages companies to restrict and remove content, and a wide definition of “online harms” could hamper freedom of expression. 

“The era of self-regulation for online companies is over.”

“Index is concerned that protecting freedom of expression is less important than the government wanting to be seen as ‘doing something’ in response to public pressure,” Hyvarinen added. 

“Internet regulation needs a calm, evidence-based approach that safeguards freedom of expression rather than undermining it.” 

For the UK government, which has already signalled its intention to regulate internet companies, it doesn’t believe tech has done enough to combat harmful content.

“The era of self-regulation for online companies is over. Voluntary actions from industry to tackle online harms have not been applied consistently or gone far enough,” Digital Secretary Jeremy Wright said in a statement.

“Tech can be an incredible force for good and we want the sector to be part of the solution in protecting their users. However those that fail to do this will face tough action.

“We want the UK to be the safest place in the world to go online, and the best place to start and grow a digital business and our proposals for new laws will help make sure everyone in our country can enjoy the Internet safely.”

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Startup Law A to Z: Regulatory Compliance

Startups are but one species in a complex regulatory and public policy ecosystem. This ecosystem is larger and more powerfully dynamic than many founders appreciate, with distinct yet overlapping laws at the federal, state and local/city levels, all set against a vast array of public and private interests. Where startup founders see opportunity for disruption in regulated markets, lawyers counsel prudence: regulations exist to promote certain strongly-held public policy objectives which (unlike your startup’s business model) carry the force of law.

Snapshot of the regulatory and public policy ecosystem. Image via Law Office of Daniel McKenzie

Although the canonical “ask forgiveness and not permission” approach taken by Airbnb and Uber circa 2009 might lead founders to conclude it is strategically acceptable to “move fast and break things” (including the law), don’t lose sight of the resulting lawsuits and enforcement actions. If you look closely at Airbnb and Uber today, each have devoted immense resources to building regulatory and policy teams, lobbying, public relations, defending lawsuits, while increasingly looking to work within the law rather than outside it – not to mention, in the case of Uber, a change in leadership as well.

Indeed, more recently, examples of founders and startups running into serious regulatory issues are commonplace: whether in healthcare, where CEO/Co-founder Conrad Parker was forced to resign from Zenefits and later fined approximately $500K; in the securities registration arena, where cryptocurrency startups Airfox and Paragon have each been fined $250K and further could be required to return to investors the millions raised through their respective ICOs; in the social media and privacy realm, where TikTok was recently fined $5.7 million for violating COPPA, or in the antitrust context, where tech giant Google is facing billions in fines from the EU.

Suffice it to say, regulation is not a low-stakes table game. In 2017 alone, according to Duff and Phelps, US financial regulators levied $24.4 billion in penalties against companies and another $621.3 million against individuals. Particularly in today’s highly competitive business landscape, even if your startup can financially absorb the fines for non-compliance, the additional stress and distraction for your team may still inflict serious injury, if not an outright death-blow.

The best way to avoid regulatory setbacks is to first understand relevant regulations and work to develop compliant policies and business practices from the beginning. This article represents a step in that direction, the fifth and final installment in Extra Crunch’s exclusive “Startup Law A to Z” series, following previous articles on corporate matters, intellectual property (IP), customer contracts and employment law.

Given the breadth of activities subject to regulation, however, and the many corresponding regulations across federal, state, and municipal levels, no analysis of any particular regulatory framework would be sufficiently complete here. Instead, the purpose of this article is to provide founders a 30,000-foot view across several dozen applicable laws in key regulatory areas, providing a “lay of the land” such that with some additional navigation and guidance, an optimal course may be charted.

The regulatory areas highlighted here include: (a) Taxes; (b) Securities; (c) Employment; (d) Privacy; (e) Antitrust; (f) Advertising, Commerce and Telecommunications; (g) Intellectual Property; (h) Financial Services and Insurance; and finally (i) Transportation, Health and Safety.

How to handle dark data compliance risk at your company

Slack and other consumer-grade productivity tools have been taking off in workplaces large and small — and data governance hasn’t caught up.

Whether it’s litigation, compliance with regulations like GDPR, or concerns about data breaches, legal teams need to account for new types of employee communication. And that’s hard when work is happening across the latest messaging apps and SaaS products, which make data searchability and accessibility more complex.

Here’s a quick look at the problem, followed by our suggestions for best practices at your company.

The increasing frequency of reported data breaches and expanding jurisdiction of new privacy laws are prompting conversations about dark data and risks at companies of all sizes, even small startups. Data risk discussions necessarily include the risk of a data breach, as well as preservation of data. Just two weeks ago it was reported that Jared Kushner used WhatsApp for official communications and screenshots of those messages for preservation, which commentators say complies with recordkeeping laws but raises questions about potential admissibility as evidence.

Mark Zuckerberg actually calls for regulation of content, elections, privacy

It’s been a busy day for Facebook exec op-eds. Earlier this morning, Sheryl Sandberg broke the site’s silence around the Christchurch massacre, and now Mark Zuckerberg is calling on governments and other bodies to increase regulation around the sorts of data Facebook traffics in. He’s hoping to get out in front of heavy-handed regulation and get a seat at the table shaping it.

The founder published a letter simultaneously on his own page and The Washington Post, the latter of which is an ideal way to get your sentiments on every desk inside the beltway. In the wake a couple of years that have come with black eyes and growing pains, Zuckerberg notes that if he had it to do over again, he’d ask for increased external scrutiny in four key areas:

  • Harmful content – He wants overarching rules and benchmarks social apps can be measured by
  • Election integrity – He wants clear government definitions of what constitutes a political or issue ad
  • Privacy – He wants GDPR-style regulations globally that can impose sanctions on violators
  • Data portability – He wants users to be able to bring their info from one app to another

The story of why the letter breaks down each doubles as kind of recent history of the social network. Struggles and missteps have defined much of Facebook’s last few years, with several controversies often swirling around the social network at once. Not every CEO gets asked to testify in front of Congress. Facebook houses and controls an incredible collection of data, playing a key role in everything from ad targeting and interpersonal relationships to news cycles and elections.

“Lawmakers often tell me we have too much power over speech, and frankly I agree,” Zuckerberg writes, three days after issuing a blanket ban on “white nationalism” and “white separatism.” He goes on to describe the company’s work with various governments, along with its development of independent oversight committee, before anyone can accuse the company of completely passing the buck.

“One idea is for third-party bodies to set standards governing the distribution of harmful content and to measure companies against those standards,” Zuckerberg writes, “Regulation could set baselines for what’s prohibited and require companies to build systems for keeping harmful content to a bare minimum.”

Zuckerberg goes on to encourage increased legislation around election tampering and political advertisements. Notably, the U.S. Department of Housing and Urban Development hit Facebook earlier this week with charges that its targeted ads violate the Fair Housing Act.

The op-ed rings somewhat hollow, though, because there’s plenty that Facebook could do to improve in these four areas without help from the government.

Facebook’s harmful content policies have long been confusing, inconsistent, and isolated. For example, Infowars conspiracy theorist Alex Jones was removed from Facebook but not from Instagram. Meanwhile, bad actors can just hop between social networks to spread problematic posts. Facebook should apply enforcement of its policies across its whole family of apps, publicly work through its logic for why it does or doesn’t remove things instead of having those discussions leak, and cooperate better with fellow social networks to coordinate blanket takedowns of the worst offenders.

As for election integrity, Facebook made a big advance this week by placing all active and old inactive political ad campaigns into keyword-searchable Ad Library. But after pressure from news publishers who didn’t want their ads promoting politicized articles to be included beside traditional campaign ads, Facebook exempted them. Those ads can still influence the electorate, and while they should be classified separately, they should still be archived for research.

On privacy, well, there’s a ton to be done. One major area where it could improve is allowing people to more completely opt out of search, including by their phone number, to avoid stalkers. And better controls should be available for how Facebook uses your contact info when uploaded in the address books of other users.

Finally, with data portability, Facebook has been dragging its feet. A year ago, we published a deep dive into how Facebook only lets you export your social graph as a list of friends’ names which can’t be easily used to find them on other social networks. Facebook must make its social graph truely interoperable so users don’t lose their community if they switch apps. That would coerce Facebook to treat users better since leaving would actually be a viable option.

Taking these steps would show regulators that Zuckerberg isn’t just paying lip service in hopes of getting a more lenient sentence. It would demonstrate he’s ready to make change that serves society.

Instagram founders say losing autonomy at Facebook meant “winning”

Rather than be sore about losing independence within Facebook, Instagram co-founder Kevin Systrom told me it was an inevitable sign of his app’s triumph. Today at South By South West, Systrom and fellow co-founder Mike Krieger sat down for their first on-stage talk together since leaving Facebook in September. They discussed their super hero origin stories, authenticity on social media, looming regulation for big tech, and how they’re exploring what they’ll do next.

Krieger grew up hitting “view source” on websites while Systrom hacked on AOL booter programs that would kick people off instant messenger, teaching both how code could impact real people. As Instagram grew popular, Krieger described the “incredi-bad” feeling of fighting server fires and trying to keep the widely loved app online even if that meant programming in the middle of a sushi restaurant or camping retreat. He once even revived Instagram while drunk in the middle of the night, and woke up with no memory of the feat, confused about who’d fixed the problem. The former Instagram CTO implored founders not to fall into the “recruiting death spiral” where you’re too busy to recruit which makes you busier which makes you too busy to recruit…

But thankfully, the founders were also willing to dig into some tougher topics than their scrappy startup days.

Kevin Systrom and Mike Krieger (from left) drive to Palo Alto to raise their Series A, circa January 2011

Independence vs Importance.

“In some ways, there being less autonomy is a function of Instagram winning. If Instagram had just been this niche photo app for photographers, we probably would be working on that app for 20 year. Instead what happened was it got better and better and better, and it improved, and it got to a size where it was meaningfully important to this company” Systrom explained. “If this thing gets to that scale that we want it to get to which is why we’re doing this deal, the autonomy will eventually not be there as much because it’s so important. So in some ways it’s just an unavoidable thing if you’re successful. So you can choose, do you want to be unsuccessful and small and have all the autonomy in the world, or no?”

AUSTIN, TX – MARCH 11: Mike Krieger speaks onstage at Interactive Keynote: Instagram Founders Kevin Systrom & Mike Krieger with Josh Constine during the 2019 SXSW Conference and Festivals at Austin Convention Center on March 11, 2019 in Austin, Texas. (Photo by Chris Saucedo/Getty Images for SXSW)

Krieger followed up that “I think if you study . . . all the current companies, the ones that succeed internally eventually have become so important to the acquiring company that it’s almost irresponsible to not be thinking about what are the right models for integration. The advice I generally give is, ‘are you okay with that if you succeed?’ And if you’re not then you shouldn’t do the deal.” If the loss of autonomy can’t be avoided, they suggest selling to a rocket ship that will invest in and care for your baby rather than shift priorities.

Asked if seeing his net worth ever feels surreal, Systrom said  money doesn’t make you happy and “I don’t really wake up in the morning and look at my bank account.” I noted that’s the convenient privilege of having a big one.

The pair threw cold water on the idea that being forced to earn more money drove them out of the company. “I remember having this series of conversations with Mark and other folks at Facebook and they’re like ‘You guys just joined, do not worry about monetization, we’ll figure this out down the road.’ And it actually came a lot more from us saying “1. It’s important for us to be contributing to the overall Fb Inc . . . and 2. Each person who joins before you have ads is a person you’re going to have to introduce ads to.” Systrom added that “to be clear, we were the ones pushing monetization, not the other way around, because we believed Instagram has to make money somehow. It costs a lot to run . . . We pushed hard on it so that we would be a successful unit within Facebook and I think we got to that point, which is really good.”

But from 2015 to 2016, Instagram’s remaining independence fueled a reinvention of its app with non-square photos, the shift to the algorithm, and the launch of Stories. On having to challenge the fundamental assumptions of a business, “You’ve got maybe a couple years of relevance when you build a product. If you don’t reinvent it every quarter or every year, then you fall out of relevance and you go away.”

That last launch was inspired by wanting to offer prismatic identity where people could share non-highlights that wouldn’t haunt them. But also, Systrom admits that “Honestly a big reason why was that for a long time, people’s profiles were filled with Snapchat links and it was clear that people were trying to bridge the two products. So by bringing the two products [Feed and Stories] into one place, we gave consumers what they wanted.” Though when I asked anyone in the crowd who was still mad about the algorithm to hiss, SXSW turned into a snake pit.

Regulating Big Tech

With Systrom and Krieger gone, Facebook is moving forward with plans to more tightly integrate Instagram with Facebook and WhatsApp. That includes unifying their messaging system, which some say is designed to make Facebook’s apps harder to break up with anti-trust regulation. What does Systrom think of the integration? “The more people that are available to talk with, the more useful the platform becomes. And I buy that thesis . . . Whether or not they will in fact want to talk to people on different platforms, I can’t tell the future, so I don’t know” Systrom said.

AUSTIN, TX – MARCH 11: Josh Constine, Mike Krieger and Kevin Systrom speak onstage at Interactive Keynote: Instagram Founders Kevin Systrom & Mike Krieger with Josh Constine during the 2019 SXSW Conference and Festivals at Austin Convention Center on March 11, 2019 in Austin, Texas. (Photo by Chris Saucedo/Getty Images for SXSW)

Krieger recommended Facebook try to prove users want that cross-app messaging before embarking on a giant engineering challenge of merging their backends. When I asked if Systrom ever had a burning desire to Instagram Direct message a WhatsApp user, he admitted “Personally, no.” But in a show of respect and solid media training, he told his former employer “Bravo for making a big bet and going for it.”

Then it was time for the hardest hitting question: their thoughts on Presidential candidate Senator Elizabeth Warren’s proposal to regulate big tech and roll back Facebook’s acquisition of Instagram. “Do we get our job back?” Systrom joked, trying to diffuse the tension. Krieger urged more consideration of downstream externalities, and specificity on what problem a break up fixes. He wants differentiation between regulating Facebook’s acquisitions, Amazon white-labeling and selling products, and Apple’s right to run the only iOS App Store.

Acquisition vs Competition

“We live in a time where I think the anger against big tech has increased ten-fold — whether that’s because the property prices in your neighborhood have gone up, whether it’s because you don’t like Russian meddling in elections — there are a long list of reasons people are angry at tech right now and some of them I think are well-founded” Systrom confirmed. “That doesn’t mean that the answer is to break all the companies up. Breaking companies up is a very specific prescription for a very specific problem. If you want to fix economic issues there are ways of doing that. If you want to fix Russian meddling there are ways of doing that. Breaking up a company doesn’t fix those problems. That doesn’t mean that companies shouldn’t be broken up if they get too big and they’re monopolies and they cause problems, but being big in and of itself is not a crime.”

attends Interactive Keynote: Instagram Founders Kevin Systrom & Mike Krieger with Josh Constine during the 2019 SXSW Conference and Festivals at Austin Convention Center on March 11, 2019 in Austin, Texas

Systrom then took a jab at Warren’s tech literacy, saying “part of what’s surprised me is that generally the policy is all tech should be broken up, and that feels to me again not nuanced enough and it shows me that the understanding of the problem isn’t there. I think it’s going to take a more nuanced proposal, but my fear is that something like a proposal to break up all tech is playing on everyone’s current feeling of anti-tech rather than doing what I think politicians should do which is address real problems and give real solutions.”

The two founders then gave some pretty spurious logic for why Instagram’s acquisition helped consumers. “As someone who ran the company for how many years inside of Facebook? Six? There was a lot of competition internally even and I think better ideas came out because of it. We grew both companies not just one company. It’s really hard question. What consumer was damaged because it grew to the size that it did? I think that’s a strong argument that in fact the acquisition worked out for consumers.” That ignores the fact that if Instagram and Facebook were rivals, they’d have to compete on privacy and treating their users well. Even if they inspired each other to build more engaging products, that doesn’t address where harm to consumers has been done.

Krieger suggested that the acquisition actually spurred competition by making Instagram a role modeI. “There was a gold rush of companies being like ‘I’m going to be the Instagram of X . . . the Instagram of Audio, the Instagram of video, the Instagram of dog photos.’ You saw people start new companies and try to build them out in order to try to achieve what we’ve gotten to.” Yet no startup besides Snapchat, which had already launched, has actually grown to rival Instagram. And seeing Instagram hold its own against the Facebook empire would have likely inspired many more startups — some of which can’t find funding since investors doubt their odds against a combined Facebook and Instagram

As for what’s next for the college buddies, “we’re giving ourselves the time to get curious about things again” Krieger says. They’re still exploring so there was no big reveal about their follow-up venture. But Systrom says they built Instagram by finding the mega-trend of cameras on phones and asking what they’d want to use, “and the question is, what’s the next wave?”