Month: June 2017

Google parent Alphabet’s annual shareholder meetings are a very civilized affair, with chairman Eric Schmidt playing host, sharing a vision of the better world the company is creating, followed by polite questions and proposals from shareholders.

Those shareholder proposals, however, are largely a false front—window dressing, if you will. Because as everyone at the meeting probably knows, there are only two shareholders who really matter at an Alphabet annual meeting, and their names are Larry Page and Sergey Brin.

That’s because Google founders Page and Brin control 51% of the votes, despite owning just 11% of the overall equity. Their voting control comes through their large ownership stake in Class B shares, which carry 10 votes each (Schmidt’s stake gives him 5% of the overall votes).

One by one, shareholder representatives stood up at the meeting in Mountain View, Calif. on Wednesday morning, including several from large investors such as Northstar Asset Management, which owns 7.2 million shares. They presented a range of proposals designed to try and force Alphabet to take action on a variety of issues.

A proposal from Arjuna Capital, for example, would have required that the company produce numbers related to the pay gap between male and female staff, an issue that is currently the subject of an investigation by the U.S. Department of Labor.

The department has alleged that there are “systemic compensation disparities against women” at Alphabet, but the company maintains that this is not the case. In the shareholder proxy document filed with regulators, it argued that shareholders should vote against the Arjuna proposal because it is “not in the best interests of the company and its stockholders.”

Another motion, also backed by Arjuna and several other institutional shareholders, proposed that the company be required to produce a report describing what kind of action it is taking to prevent the spread of “fake news” and misinformation through its networks.

Arjuna director Natasha Lamb told the meeting that such misinformation “has affected elections in the U.K, France and the U.S., and the confusion cuts across political lines—a study from Pew shows that 64% of Americans trust news on the Internet less than a year ago.” Steps the company has announced to take action, she said “are too little and too late.”

The investment fund presented an identical motion at Facebook’s recent annual meeting, and just like the proposal at Alphabet’s meeting, it was voted down—and for the same reason, since Facebook co-founder Mark Zuckerberg controls a majority of the votes in the company.

The motion from NorthStar was perhaps the most quixotic of them all: It proposed that Alphabet restructure its shares in order to give every shareholder a single vote.

A representative for the fund said that it’s easy to ignore voting-rights inequities when profits are up, but it “poses significant risk” to the company’s future performance. “It’s impossible for shareholders to have any meaningful input,” the NorthStar spokesman said. “We are very concerned about the governance risks of relying on two or three people.”

Just like all the other shareholder proposals, the Northstar motion was voted down.

Most of the users watching Apple’s WWDC conference on Monday were probably interested in what the company’s new products can do, but at least some of the interest in Apple’s latest version of its Safari web browser was based on what it doesn’t do.

In a nutshell, the version of Safari that is rolling out with Mac’s new High Sierra operating system won’t display auto-playing videos on websites, something many web users hate. And it won’t allow websites to track users as they move across the web either.

https://twitter.com/JackMarshall/status/871782144993091585

These new features may put Apple on users’ good side, since both autoplaying videos and user-tracking are seen as annoying and intrusive. But publishers and media companies aren’t likely to greet these new additions with open arms, and neither are advertisers.

Apple’s Craig Federighi said the upcoming version of Safari will block autoplay videos and will feature what he called “intelligent tracking prevention,” which will prevent websites from tracking your browsing data. “Now your browser history is your own,” he said.

Apple’s moves come on the heels of an announcement from Google that the next version of its Chrome web browser—which has about 60% of the market—will block certain ad types by default, including autoplaying video ads. In some cases, websites that have a lot of low-quality ads will have all their ads blocked, not just the ones that breach Google’s rules.

In Google’s case, the fact that the company is one of the world’s largest advertising entities and Chrome is the leading browser by market share makes some publishers and advertisers nervous.

Although the search giant points out that the definition of which ads are acceptable comes from an independent industry group called the Coalition for Better Ads, some believe that the default blocking of certain ads puts too much power in Google’s hands.

Apple doesn’t have a huge digital advertising business the way Google does, and its browser is the third or fourth player in the market based on recent estimates. So it would be harder to make the case that Apple’s choice to not show autoplaying videos is anti-competitive.

That said, however, Apple has a large and powerful user base of loyal fans, and the fact that it is using that power to remove certain forms of advertising—and tools that advertisers and publishers use, such as user tracking—is bound to set off alarm bells for some in the industry.

https://twitter.com/readDanwrite/status/871781907889106944

Although it is a small player in relative terms, Apple sparked much of the current outcry about ad-blocking software when it enabled support for third-party ad blockers in iOS 9 in 2015.

Ad-blocking in general, on both the desktop and mobile web, has been growing rapidly over the past couple of years, according to industry surveys. Users on mobile devices in particular are not happy with the time-consuming and intrusive ads that many sites rely on.

Publishers, meanwhile, argue that they have no choice but to use these annoying features, because Google and Facebook have taken over so much of the digital-advertising market.

According to one industry analyst, the two companies combined have about 75% of the $70-billion U.S. digital advertising market, and between the two of them, they accounted for virtually all of the growth in the industry last year.

Twitter users block other users on the platform all the time, in some cases because they are abusive and sometimes because they are just irritating. But is it different if the user doing the blocking happens to be the president of the United States?

The Knight First Amendment Institute says it is different, or at least that it should be. The Institute, a non-profit group associated with Columbia University, has sent a letter to the White House arguing that Trump is breaching the First Amendment rights of those he blocks.

It might seem laughable at first, and there are some First Amendment experts and supporters who appear to find it so, but the Institute believes it has a valid case.

According to the letter, written by Institute director Jameel Jaffer, the president’s Twitter account fits the legal definition of a “designated public forum,” and as such it can’t be closed to public access under the First Amendment.

In effect, the Institute argues that the law requires Trump make his account available to everyone regardless of whether they criticize him. It has said it is considering pursuing a case against the president on behalf of two users who were blocked by him.

“Though the architects of the Constitution surely didn’t contemplate presidential Twitter accounts, they understood that the President must not be allowed to banish views from public discourse simply because he finds them objectionable,” Jaffer said in a statement. “Having opened this forum to all comers, the President can’t exclude people from it merely because he dislikes what they’re saying.”

Not everyone is buying this argument, however. Ken White, a former assistant U.S. Attorney who writes legal commentary at Popehat and is a First Amendment expert, said that he found the idea of the Institute’s case “ridiculous.”

https://twitter.com/Popehat/status/872160527153340416

Ken Paulson, president of the First Amendment Center, told the Wall Street Journal that the Institute had a “novel and ambitious argument” that was clearly in the public interest. But he also described it as a “tough sell.”

Is the president’s Twitter account “a public forum where interactive free expression is expected or more like a newsletter, where the communication is all one way?” Paulson asked. Municipalities that establish Facebook pages and invite citizen input may be creating public forums, “but I’m not sure that Donald Trump’s brief bursts of opinion are the same thing.”

https://twitter.com/andy_sellars/status/872160254229917696

There a number of problems with determining whether Trump’s Twitter account is a public forum or not, and one of them stems from the fact that the law is far from settled on the question of what exactly constitutes a truly public forum.

The laws relating to free public access to government property were designed to protect the ability of demonstrators, protesters, etc. to speak their mind in public parks and other areas. The extension of this right to any “public forum” didn’t occur until a Supreme Court decision in 1972, and from that point things just got more and more complicated.

As University of Florida law professor Lyrissa Lydsky put it in a legal paper on the First Amendment and online forums that was published in 2011, the U.S. Supreme Court’s public forum and government speech doctrines are “lacking in coherence — to put it mildly.”

In a nutshell, there are several definitions for public forums, based in part on what the government’s intentions were in setting them up in the first place. A fully public forum, designed for what is described as “expressive activity,” can’t be censored. But a “limited public forum,” which has a specific purpose, can be restricted in a variety of ways.

To further complicate things, the government and its representatives are protected from First Amendment rules on such matters if what they are doing is defined by the court as “government speech.” If so, then feedback or input or access theoretically can be restricted.

So should Donald Trump’s Twitter account be considered a public forum, a limited public forum, or a form of protected government speech?

Comments from press secretary Sean Spicer on Tuesday could be pertinent to such a case, because he said that Trump’s tweets are considered to be “official statements by the president.” That could support the argument that Trump is engaging in government speech, and therefore opposing viewpoints can be restricted without breaching the First Amendment.

Early Tuesday morning, President Donald Trump said he would continue to use Twitter even though “the fake MSM” doesn’t like it, saying the social network allows him to broadcast what he called “the honest and unfiltered message” about his government to Americans.

The FAKE MSM is working so hard trying to get me not to use Social Media. They hate that I can get the honest and unfiltered message out.

— Donald J. Trump (@realDonaldTrump) June 6, 2017

The President went on to criticize the “fake news” of media outlets such as CNN, NBC and the New York Times, saying if he had relied on those organizations, he would have had “zero chance of winning” the presidential election.

Sorry folks, but if I would have relied on the Fake News of CNN, NBC, ABC, CBS, washpost or nytimes, I would have had ZERO chance winning WH

— Donald J. Trump (@realDonaldTrump) June 6, 2017

It’s not the first time Trump has talked about how using social media allows him to get his message out to Americans directly. During an interview in January, he said he liked using the social network because he was “covered so dishonestly by the press.”

At the same time, however, that direct and unfiltered message has also caused problems for the president and his administration on a number of occasions.

To take just one example, courts in both Washington state and Hawaii used tweets that Trump posted about his proposed immigration ban to strike down the legislation, on the basis that his comments suggested the ban was targeted specifically at banning Muslims, which is unconstitutional.

Some legal experts have warned that his recent comments about the travel ban could cause similar complications as the case heads to the Supreme Court.

In a response to his Tuesday morning rant, the American Civil Liberties Union — one of the groups that has been fighting the immigration ban — suggested that it may use Trump’s tweets on the topic to help in that ongoing battle.

Yes, we may incorporate @realDonaldTrump's tweets about the ban into our Supreme Court argument.

— ACLU (@ACLU) June 5, 2017

Another receipt to save for when we see you in court. https://t.co/7WMe0XMkrS

— ACLU (@ACLU) June 6, 2017

There have been reports recently from a number of news outlets that members of Trump’s administration would very much like to filter his tweets by having his legal team look at them before they are sent out. But Trump apparently isn’t in favor of that kind of strategy.

Direct access to his Twitter account was reportedly taken away from the president for a brief period during the election campaign, because of concerns about the impact that his unfiltered tweets might have. During that time his tweets were edited by spokesman Hope Hicks.

According to a number of White House insiders, some of the tweets that appear on Trump’s personal account come from him, via his personal Android phone, while others are written by members of his staff and are posted from an iPhone.

Trump’s defense of his Twitter use comes just a day after one of his advisers, Kellyanne Conway, criticized the media’s focus on his individual tweets, referring to what she called its “obsession with covering everything [he] says on Twitter.”

A number of media observers have pointed out, however, that the tweets from Trump are essentially official communications from the president of the United States, just as press conferences or news releases are, and therefore they deserve to be covered.

CNN media analyst Brian Stelter said the president’s tweets are an important part of the public record of his administration, since they provide a glimpse into his emotional state and give his unfiltered perspective on the events going on around him.

What I said on @NewDay about Trump's impulsive tweets:

The emotional state of the president IS part of this story… https://t.co/fG7eUUu28S

— Brian Stelter (@brianstelter) June 6, 2017

As more than one journalist noted in response to Trump’s Tuesday morning rant, most of the media would probably love for him to continue tweeting, because it provides them with a real-time glimpse into his thought process and endless fodder for articles. Any pressure to stop doing so seems more likely to come from members of his own administration.

Fact Check: MSM eat up his tweets like Skittles. It's WH advisers, lawyers and Trump supporters who want him to stop tweeting. https://t.co/r6ZvJlTa8O

— Jake Tapper (@jaketapper) June 6, 2017

Google has confirmed that it intends to add a new feature to its Chrome web browser that will block certain types of ads from being seen by users, and in some cases could block all advertising on websites that don’t meet certain standards.

The Alphabet subsidiary says it wants to work with publishers to help them understand what kinds of ads will no longer be acceptable, and the standards being built into the browser come from an industry group rather than Google itself.

But that hasn’t stopped some from criticizing the idea, since Google controls a significant share of the digital ad market.

Word of the new feature first emerged in April, when the Wall Street Journal reported that Google had approached some publishing partners about its plans.

At the time, Cornell Law professor James Grimmelmann said that the idea of an ad blocker controlled by one of the world’s largest digital-advertising companies was almost certain to raise anti-competitive concerns in some circles.

If Google uses its 50%+ browser share to ship a product that blocks rivals’ ads but not Google’s own, my antitrust eyebrows go up.

— James Grimmelmann (@grimmelm) April 20, 2017

In a nutshell, Chrome will now include ad-blocking features that are turned on by default (although Google prefers to call it “filtering” rather than blocking). Ads that meet certain annoying criteria will not be shown, and if a website crosses a certain threshold of substandard ads, users won’t see any advertising at all.

Some of the ad types that will be blocked include pop-ups, videos that auto-play, and so-called “pre-stitial” ads that force readers to sit through a count down before they can see the page’s contents. Many leading publishers rely on some or all of these strategies to boost ad revenue.

To try and soften the blow somewhat, Google is also offering something called Funding Choices, which allows publishers to show users a note when their ads are blocked by third-party software. The note will give readers the option of either disabling their blocker or buying an ad-free pass or subscription of some kind for that site.

Google reportedly pays Eyeo, the German company that owns AdBlock—the leading ad-blocking software—to have its ads automatically whitelisted, so they are not blocked.

The company notes that the standards for what will be considered acceptable advertising under its new Chrome system have been developed by the Coalition for Better Ads, an industry group that includes advertisers and industry groups, media companies such as News Corp., as well as Google and Facebook.

The appeal of such a feature for users and publishers is obvious. The web has become a sea of popups, pop-unders, interstitials, auto-playing videos and other annoying behavior, and growing numbers of users have responded by installing ad-blocking software like AdBlock. Publishers lose revenue as a result, and no one is happy.

However, some media companies argue that they have no choice but to rely on such methods, because the bulk of the advertising business has been sucked up by Google and Facebook.

According to a recent estimate by Pivotal Research, not only do the two digital giants control over 75% of the $70-billion U.S. digital ad industry, last year they accounted for almost all of the growth that the industry saw compared to 2015.

Not only that, but Google’s Chrome browser has an estimated 58% share of the browser market, which makes it the leading player by far.

So in effect, what the company is rolling out is a system that will block ads by default for a majority of web users, based on standards that it and Facebook—two companies that control the bulk of the online advertising business—have a huge amount of control over.

Will it improve the web for users? Probably. But at the same time, it raises some significant questions about the extent of Google’s power over the advertising we see, and its increasing dominance when it comes to the ways in which publishers and media companies can make money.

Media companies and politicians aren’t the only ones who think Facebook needs to stop fake news from proliferating on the social network. Two institutional investors are also pressuring the company to do something to fix the problem.

Arjuna Capital and Baldwin Brothers are jointly presenting a proposal at Facebook’s annual shareholder meeting Thursday in ** that asks the company to take decisive action to inhibit fake news, and would require Facebook to be transparent about how it is doing so. The two investors plan to present a similar proposal at Google’s annual meeting next week.

“Fake news is not about spin or confirmation bias – It’s about fabrication,” Arjuna managing director Natasha Lamb said in a statement. “And when fabrication is disseminated so easily at scale, the way we have seen through social media, it represents a threat to our democracy.”

The resolution would require Facebook to “provide detailed information regarding the impact of current fake news flows and management systems on the democratic process, free speech, and a cohesive society.” It would also require the company to quantify the “reputational and operational risks from potential public policy developments” related to fake news.

Arjuna Capital is an investment firm focused on sustainable and impact investing. It and Baldwin hold a small number of Facebook shares, but are hoping to influence larger shareholders to put pressure on the company. The two have made similar efforts related to pay equity at several of the major technology companies, including Google and Facebook.

The chances of the proposal getting enough votes to pass at Facebook’s annual meeting are extremely small, since CEO Mark Zuckerberg controls a majority of the votes by virtue of owning multiple-voting shares. But the firms are hoping the company will take action anyway if enough individual shareholders raise the issue and make it clear they think it’s important.

“If Facebook maintains a platform of confusion and distortion it will lose the trust of its users, in which case they will simply move on to the next thing, and that’s what concerns long-term investors,” said Lamb. “Right now, we think the issue is being fumbled.”

Michael Frerichs, the treasurer for the state of Illinois–which is an investor in Facebook–is also supporting the Arjuna and Baldwin proposal.

“We need internet platforms to step up and acknowledge their corporate responsibilities,” Frerichs said in a statement. “With more and more citizens being subjected to systematic deception and manipulation online, the proliferation of fake news represents a major threat to our democratic institutions.”

Facebook’s role in distributing fake news, hoaxes and misinformation has been criticized by media analysts as well as political entities like the European Union, who have pressured the company to do more to solve the problem. On Wednesday, former Secretary of State Hillary Clinton blamed Facebook for the role that fake news played in her failed presidential campaign.

Co-founder and CEO Mark Zuckerberg initially dismissed the idea that fake news was a significant problem, or that Facebook had any responsibility to eradicate it, but more recently the company has taken steps to try and halt the spread of hoaxes and misinformation.

Facebook has partnered with a number of third-party fact-checking organizations to flag fake news on the network, and has also tried to remove some of the financial incentives for publishing such content by banning certain sites from using its ad services. The company has advised shareholders to vote against the Arjuna and Baldwin Brothers proposal.

In the world of crypto-currencies — the most famous of which is Bitcoin — the hottest trend is what’s being called an “initial coin offering,” in which companies offer crypto-currency tokens to their supporters as a way of crowdfunding their efforts.

How hot is it? On Thursday, a startup called Brave launched a coin offering to fund its next-generation web browser and raised the equivalent of $35 million in about 30 seconds, according to CoinDesk, a site that covers crypto-currency news.

Brave is the brainchild of Brendan Eich, the co-founder of the Mozilla Foundation and former CEO of its for-profit arm, Mozilla Corp. The browser is designed so that users can direct micropayments to the web publishers they like using crypto-currency.

“We are pleased with the sale, and we’re looking forward to disrupting digital advertising and building a user-centric platform for supporting the Web,” Eich told CoinDesk.

The Brave browser’s payment system uses what are called Basic Attention Tokens, whose value is based on the crypto-currency known as Ethereum, a popular alternative to Bitcoin. Eich has said his company plans to release the code behind the tokens as open source, so that anyone can build publishing systems or services that use them for payment.

Although the use of crypto-currencies puts a new spin on it, the history of micropayments for content is littered with failures, including a litany of strange-sounding digital would-be payment systems such as Beenz and Flooz.

That said, however, some appear to be extremely interested in Brave’s tokens. The coin offering was so popular that some would-be investors complained they had no chance to even make a bid. A single investor bought almost $5 million worth in a single trade, CoinDesk said.

Only about 130 people were able to buy tokens in the offering, and five buyers got close to half of all the available supply, according to a Bitcoin exchange that analyzed the sale.

Initial coin offerings are seen by some as an alternative to traditional share offerings. Instead of equity, backers get tokens that can be converted into units of a crypto-currency like Bitcoin or Ethereum. Crypto-currencies generate value through a process called “mining,” which involves the computation of complex mathematical formulas.

Regulators have said they are looking into initial coin offerings to see if they should be treated the same as equity offerings, but for now they are largely unregulated.

Investor Balaji Srinivasan said in a recent essay that he believes crypto-currency tokens could eventually generate more money for the technology industry than all of the Internet-related equity offerings that have taken place to date. He called the token economy “a Kickstarter on steroids.”

Kik, a Canadian company that makes a popular messaging app, said recently that it is launching its own crypto-currency called Kin with an initial coin offering. Like the tokens that Brave sold, Kik’s currency will be based on Ethereum.