Monthly Archives: January 2014

January 31, 2014 | ICYMI, News

ICYMI- Senate staff hears tech groups, PTO on weak software patents

The Hill
Senate staff hears tech groups, PTO on weak software patents
Posted January 31, 2014, 05:15 pm

Tech companies met with Senate staff Friday, arguing for and against expanding a patent review process to software patents.

As the Senate Judiciary Committee considers a patent reform bill from Chairman Patrick Leahy (D-Vt.), it is weighing proposals from other committee members, including one from Sen. Charles Schumer (D-N.Y.), which would create additional scrutiny for low-quality software patents.

Under a provision in the America Invents Act — the previous patent reform bill from Leahy that went into effect in 2011 — companies being sued for patent infringement can ask the Patent and Trademark Office to reevaluate the patent if the patent is for a “Covered Business Method,” relating to financial products.

Schumer and certain parts of the tech sector want to expand that review process to software patents to address low-quality software patents used by “patent trolls” to threaten and bring meritless lawsuits. Other lawmakers and tech companies have expressed concerns that the expanded review could weaken intellectual property rights overall.

Friday’s Judiciary staff briefing focused on existing methods to ensure patent quality and included two tech groups — the Application Developers Alliance and The Internet Association — arguing in favor of expanding the review process and IBM and the Association for Competitive Technology arguing against expansion.

According to attendees, representatives from the Patent and Trademark Office, including newly appointed Deputy Director Michelle Lee, also presented at the briefing and indicated the Obama administration’s support for expanding the patent review process to software patents.

Ultimately, the participants agreed that Congress needs to do something to address the problem of low-quality patents being used against innovators, presenters said.

“There was definitely common ground on the need to deal with the poor quality patents and patent trolls,” Jonathan Zuck, president of the Association for Competitive Technology, said, adding that many staffers appeared open-minded about the debate over whether to expand the existing patent review process to software patents.

“The real disagreement was about whether or not” expanding the current review process to software patents “is a viable way to do it,” Zuck, who argued against the patent review expansion, said.

“There’s a real reason for optimism” that the two sides can find a compromise to tackle the bad patents, said Tim Sparapani, vice president of government affairs at the Application Developers Alliance. Sparapani argued for expansion of the patent review process to software patents.

While there may be disagreement over the solution, “everyone agreed that we have a patent quality problem,” he said.


January 31, 2014 | ICYMI, News

ICYMI- Special Report: The Cybersecurity Struggle – The Big Picture: Obama’s Power Play

Special report: The cybersecurity struggle – The big picture: Obama’s power play
Posted 01/31/14 10:03 AM EDT

SPECIAL REPORT: THE CYBERSECURITY STRUGGLE — Tony and the team have tech’s take on a POLITICO deep-dive on the administration’s regulatory agenda: “Some of the most pressing technology issues in Washington — from the security of the country’s networks to the way government handles patents or hires tech experts — are being adjudicated predominately by the White House, an unavoidable go-it-alone approach in debates that matter to tech giants in Silicon Valley and profit-makers on Wall Street. Obama specifically set that tone in his State of the Union address, emphasizing he wouldn’t wait on Congress across a broad spectrum of issues — patents and broadband connectivity included. But Obama’s second-term mix of executive actions, policy directives and private-sector collaborations could fall short of what Capitol Hill would be able to do if both ends of Pennsylvania Avenue worked together.”

“That struggle is most apparent in cybersecurity, for which the president issued an executive order almost one year ago that has the government and industry collaborating on new, voluntary standards. Obama only gave it five words of attention in his speech Tuesday, when he stressed the need to ‘combat new threats like cyberattacks.’ But his administration still has been inching closer to new standards — and possibly new regulations…[And] that game of give-and-take applies to more than just cybersecurity — congressional inaction has prompted the Obama administration to fill major tech policy gaps, and sometimes the White House has built on existing law to pre-empt Congress to continue to legislate.” MORE:

–THE BIG PICTURE: Don’t miss Stephanie Simon’s full take on the Obama power play: “Americans heard President Barack Obama declare this week that he intends to bypass the gridlocked Hill to get things done on his own. What they didn’t hear: just how far he’s actually pushing his executive authority. An in-depth examination of the administration’s actions and plans, agency by agency, regulation by regulation, reveals an executive power play that’s broad and bold — and intensely ambitious. Far more than he let on in the State of the Union, the president has marshaled the tools of his office to advance policies, many unabashedly liberal, that push deep into everyday life for tens of millions of Americans.”

FIND THE ENTIRE SERIES, on the administration’s executive action and regulatory agenda, HERE

And join Marty Kady, POLITICO’s managing editor of policy, at at noon to discuss Pro’s comprehensive series.

TODAY: PATENT PLAYERS RUMBLE OVER CBM AT SENATE — Reps from IBM and the Association for Competitive Technology are pitching Senate Judiciary aides today on why expanding the controversial patent review program should not be a part of the upper chamber’s patent work. They’ll go up against reps from the Internet Association and the App Developers Alliance, who back expanding CBM beyond financial patents, like Sen. Chuck Schumer’s proposed to do. It’s all part of the Senate Judiciary Committee’s patent briefing series, which began as senators asked for more discussion before proceeding with legislation.

As it was in the House, CBM remains the thorniest topic for would-be patent reformers. BSA | The Software Alliance, IBM and Microsoft were among those signed on to a letter Thursday ( calling the expansion “not just ill-advised from a political standpoint, but from a policy perspective as well.” A gaggle of conservative groups, too, expressed disdain for the idea in a separate letter Thursday: CBM-backers’ have an ace up their sleeve, though: Support from President Obama, who reiterated his commitment to passing a reform bill during Tuesday’s State of the Union.

GOOD FRIDAY MORNING and welcome to Morning Tech, where we’ve not yet decided on our Super Bowl pick, but we have decided that this is going to be one of the more enjoyable big games of the last decade. Send us your take (come on, it’s Friday) at abyers@politico.comand @byersalex, and catch the rest of the team’s contact info after speed read.

**A message from the Innovation Alliance: The U.S. patent system is the foundation for America’s inventiveness, past, present and future. #patentsmatter  Learn more about protecting America’s inventors at: **

FACEBOOK USES DATA TO CHARM ADVERTISERS — The WSJ’s Reed Albergotti looks at Facebook’s 2013 earnings through the lens of their 2012 deals with data brokers: “Facebook posted record revenue and profit when it reported fourth-quarter financial results Wednesday, sending its stock to new heights and establishing it as a major force in the digital advertising industry…One little-discussed factor in those strong numbers: Facebook’s creative and sometimes tumultuous efforts behind the scenes to prove to the advertising industry that social networks can stand toe-to-toe with Google when it comes to return on investment.”

“Last year, Facebook refined its tools that allow advertisers to target users based not only on what they share with Facebook in their profiles and posts, but what those same people do with their wallets in brick and mortar stores…The information Facebook shares with its third-party partners is anonymous, the company says, to protect the privacy of users. The company uses a process by which the data is encrypted, so Facebook can’t see the detailed information it gets from partners and vice versa.”

NEW ON INSTAGRAM: @PENNYPRITZKER — She’s the first cabinet secretary to join the photo-sharing service, per an aide:

HOUSE GOP BRASS MAKES THE IMMIGRATION SELL — Seung Min Kim and Jake Sherman, from Maryland: “The House Republican leadership is trying to sell their colleagues on a series of broad immigration principles, including a path to legal status for those here illegally. Speaker John Boehner’s leadership team introduced the principles at their annual policy retreat here. Top Republicans circulated a tightly held one-page memo titled “standards for immigration reform” toward the tail-end of a day that include strategy conversations about Obamacare, the economy and the national debt…Embracing legalization is a modest change for Republican leaders — some of them signaled openness to the idea last year. For a Republican Party that advocated “self-deportation” as recently as 2012, it’s a massive shift.”

–TECH’S ALL SMILES: ITI’s Dean Garfield, in a statement: “The release of today’s standards mark an important step in the process in the House of Representatives toward reforming our nation’s broken, outdated immigration system. Congressional action on immigration reform this year is imperative for one simple reason: Immigration is innovation.”

OBAMA TAPS ROGERS AS NEXT NSA BOSS — POLITICO’s Phil Ewing and Darren Samuelsohn have the take: “Defense Secretary Chuck Hagel said he has designated Vice Adm. Mike Rogers as the new head of the NSA, and that the president has nominated Rogers to be the new head of U.S. Cyber Command. The NSA falls under the aegis of the Defense Department and as such Hagel can make Rogers’ appointment without congressional involvement. But the Senate must confirm Rogers to run CyberCom, a combatant command which means he’ll get a hearing…Changes at the top for the NSA come at a pivotal time for the Cold War-era agency, which was shaken to its foundations last year by the Snowden leaks. Each day’s headlines still bring a new installment in the drip-drip-drip of Snowden-related leaks about the once-secret workings of NSA’s electronic surveillance. For the new NSA director, the job requires trying to protect the country from another terrorist attack while also implementing a series of surveillance reforms that Obama demanded earlier this month during a speech at the Justice Department.”

APPLE, SAMSUNG SQUABBLE OVER POSSIBLE SALES BAN — Reuters’ Dan Levine: “ Samsung sought to defeat Apple’s bid for a permanent sales ban against some Samsung smartphones, arguing in court on Thursday that Apple’s request was an attempt to instill fear among telecom carriers and retailers that carry Samsung’s products. Apple’s request for the permanent injunction stems from the companies’ legal fight over various smartphone features patented by Apple, such as the use of fingers to pinch and zoom on the screen and design elements such as the phone’s flat, black glass screen…Koh had previously rejected such a sales ban, but the U.S. Court of Appeals for the Federal Circuit ordered her to reconsider in November.”

**A message from the Innovation Alliance: Our patent system was designed to foster and protect innovation at every level — let’s not let lopsided patent legislation become a disruption. The Innovation Alliance supports change that would improve patent quality without diminishing patent rights and the strength of the U.S. patent system. Proposed measures that would significantly weaken the foundation of our patent system raise concern. The Innovation Alliance represents innovators, patent owners and stakeholders from a diverse range of industries that believe in the critical importance of maintaining a strong patent system. Learn more at**


January 30, 2014 | ICYMI, News

ICYMI- OVERNIGHT TECH: Tech Groups to Debate Software Patents at Senate Staff Briefing

The Hill
OVERNIGHT TECH: Tech groups to debate software patents at Senate staff briefing  
Posted January 30, 2014, 05:45 pm

THE LEDE: Tech groups will meet with Senate Judiciary staff Friday to discuss the current legal opportunities to challenge low-quality patents as a part of the committee’s efforts to reform patent law.

Currently in front of the committee is a bill from Chairman Patrick Leahy (D-Vt.) aimed at curbing “patent troll” activity, or frivolous infringement lawsuits and threats of lawsuits based on low-quality patents. While most agree on Leahy’s bill as introduced, the tech industry is waiting to see which of the committee members’ contentious proposals get added to the bill.

One of those proposals comes from Sen. Charles Schumer (D-N.Y.), who wants to expand an existing review process at the Patent and Trademark Office to software patents. Friday’s staff briefing will focus on the current mechanisms for improving patent quality.

 According to people familiar with the briefing schedule, two groups in favor of creating an additional review process for software patents — the Application Developers Alliance and The Internet Association — will present, as well as two groups that are opposed — the Association for Competitive Technology and IBM.

Advocates of Schumer’s provision say current mechanisms don’t work and that the additional review process it would give would allow defendants the ability to challenge the weak patents often at the heart of patent troll cases. Opponents say it would weaken intellectual property rights overall.

The House companion bill — the Innovation Act, which passed that chamber last year — originally included a provision to allow for this additional scrutiny for software patents. House Judiciary Committee Chairman and Innovation Act author Bob Goodlatte (R-Va.) took that provision out of his bill after he faced significant backlash from certain parts of the tech industry.

Before Friday’s briefing, tech groups sent dueling letters to Leahy and Senate Judiciary Committee ranking member Sen. Chuck Grassley (R-Iowa), encouraging them to take sides on the issue.

A letter from opponents of the provision said expanding the existing review process to software patents “could inadvertently undermine many valid patents by giving infringers a new procedural loophole to delay enforcement.”

The letter points to the removal of that provision from the Innovation Act.

“The provision was removed because it had become clear that maintaining the measure was creating a roadblock to passing any legislation,” the groups wrote. “We believe the same is true in the Senate.”

In a contrasting letter, the Main Street Patent Coalition — which includes the Application Developers Alliance as well as national retail, restaurant and financial institution groups — encouraged Congress to “disarm trolls by improving patent quality and providing a way to fight bad patents.”

Congress should “expand inexpensive post-grant review opportunities so trolls think carefully before threatening Main Street with patents that never should have been approved,” the group wrote.

Tech firms raise glasses to Waxman: Rep. Henry Waxman’s (D-Calif.) announcement that he will retire at the end of the year sent ripples throughout Washington on Thursday, and the tech sector was no exception. Businesses and officials lauded the Energy and Commerce ranking member, who formerly served as the committee’s chairman, for his four decades in public office.

Federal Communications Commission (FCC) Chairman Tom Wheeler referred to Waxman’s “championing of American consumers” and said “his leadership will be missed.”

“We’ve all had a good working relationship with him at this agency. We look forward to continuing to have a good working relationship with the committee,” he added.

Michael Powell, head of the National Cable and Telecommunications Association, said in a statement that Waxman “has been a force for change during his tenure in Congress and he will be missed.”

Sprint also issued a statement after Waxman’s announcement. “Sprint is grateful for his years of dedicated service and appreciates his commitment towards fighting for fair competition and consumer choice,” the company said.

Net neutrality action coming ‘soon’: FCC Chairman Tom Wheeler said Thursday that he will “soon” be addressing a federal court’s decision to strike down the agency’s “net neutrality” rules, which kept Internet providers from blocking or slowing access to certain websites. Wheeler repeated his pledge to protect the open Internet, saying that he will be building on the net neutrality principles.

“What you will see in a relatively short time is us stepping out to put some more flesh around those basic principles,” he said.

Left-leaning and civil rights groups hope that Wheeler intends to reclassify Internet service providers as “common carriers” like traditional telephone service. If it did that, the FCC would be able to rewrite its net neutrality rules. Groups including the American Civil Liberties Union, MoveOn and ColorOfChange delivered a petition signed by more than 1 million people on Thursday urging it to reissue the rules.

“To adequately protect the public he represents from predatory business practices by the telecom and cable giants, Chairman Wheeler must take action now to reclassify Internet service providers as common carriers subject to the same rigorous anti-discrimination rules we enjoy when making a phone call, using electricity, or taking public transportation,” ColorOfChange Executive Director Rashad Robinson said in a statement.

Spokesman shifts commissions: Justin Cole has been a top spokesman at the FCC for more than a year. Now he will join the staff at the Federal Trade Commission (FTC) as the director of its public affairs office.

“I am very pleased to welcome Justin to our leadership team,” FTC Chairwoman Edith Ramirez said in a statement. “His knowledge and extensive communications experience will help us to advance the public’s understanding of the important work we do to protect American consumers.”

Before the FCC, Cole worked at Tata Communications and was a deputy editor for Fitch Ratings’s corporate communications. He also spent time as a journalist with Agence France-Presse and Dow Jones Newswires. He starts at the FTC on Feb. 10.


January 30, 2014 | ICYMI, News

ICYMI- TECH IBM, Microsoft, and Friends Renew Fight Against Patent-Troll Measure

National Journal
TECH IBM, Microsoft, and Friends Renew Fight Against Patent-Troll Measure
Posted January 30, 2014

A powerful coalition of large tech firms and other business stakeholders are rising up once again in opposition to a contentious patent-reform provision, as the Senate weighs a path forward on legislation to slay so-called patent trolls.

BSA | The Software Alliance and over a hundred other groups sent a letter to leadership of the Senate Judiciary Committee on Thursday warning that expansion of a patent-review program housed at the Patent and Trademark Office will “hurt America’s innovators—both small and large—and weaken America’s competitive advantage around the world, at a time when we can least afford it.”

The missive is endorsed by several large tech firms, including IBM, Microsoft, and Qualcomm, and it arrives a day before Senate Judiciary staffers are to sit down with key stakeholders for a briefing on the measure and other patent quality issues, the third of four such educational meetings that have been scheduled. Other signatories include groups representing American universities, telecommunications and pharmaceutical companies, and financial services.

The provision, known to patent wonks as “covered business method” review, would expand the patent office’s ability to reject certain infringement claims made on low-quality patents. Currently only financial services patents that are not technological in nature are eligible for such review, a mechanism that was adopted with the passage of the 2011 America Invents Act.

Many supporters of the review method expansion view it as the Excalibur necessary to win the war against patent trolls, the term du jour given to companies that purchase cheap patents and use them for profit by filing questionable infringement lawsuits, often against small software startups that struggle to afford legal representation.

But BSA and others contend that allowing the patent office to discard more patents considered poor in quality overcorrects a system enshrined in the Constitution that has been the envy of the rest of the world for 200 years. Expanding the review “would be to turn ill-advisedly and irrevocably in a new direction—discriminating against an entire class of technology innovation,” the groups write in their opposition letter.

Parts of the letter are nearly identical to one sent to the House Judiciary Committee in September, which led to the review expansion’s eventual removal by Chairman Bob Goodlatte, a Virginia Republican, in a manager’s amendment during the markup process. Goodlatte originally favored the expansion, but determined to get his Innovation Act passed in 2013 and avoid a messy fight, he left the measure on the cutting-room floor during committee markup.

Goodlatte quickly muscled his edited Innovation Act through the House, earning a sweeping 325-91 victory with strong support from both parties. The omnibus bill would require plaintiffs to be more specific in patent lawsuits, increase transparency of patent ownership, reduce the costs of discovery and protect end users, such as retailers or coffee shops. It additionally makes it easier for those who successfully defend themselves against patent trolls to recover legal costs, a process known as fee-shifting.

The letter touts its victory in killing review method expanison in the House, noting that “the provision was removed [from the Innovation Act] because it had become clear that maintaining the measure was creating a roadblock to passing any legislation. We believe the same is true in the Senate.

“Expanding the CBM program is not just ill-advised from a political standpoint, but from a policy perspective as well.”

Sen. Chuck Schumer has favored the CBM expansion, introducing a bill last year that would allow the review method for all industries and make it permanent. In December, the New York Democrat declared that “a patent-reform bill that does not address patent quality is like treating the symptom instead of the disease.”

“If anyone thinks they have valid patents, they shouldn’t be afraid of a preliminary proceeding,” Schumer said during a Judiciary hearing examining patent litigation. “The only people who are afraid of this are those who know their patents are invalid.”

Patent-litigation reform is capturing some renewed interest in Washington after a brief lull following the passage of the Innovation Act. On Tuesday, President Obama urged Congress to “pass a patent reform bill that allows our businesses to stay focused on innovation, not costly and needless litigation.”

Those 19 words may have been a fleeting nod to reformers, but the patent community took it as a reassuring sign that this time, at least, Congress and Obama agreed something needed to be done soon to curb the growing abuse of patent trolling, which by some estimates cost the economy tens of billions of dollars a year. The White House has endorsed Goodlatte’s Innovation Act and also urged expansion of covered business method review.

“It was a brief mention, but a strong mention,” said Michael Beckerman, president and CEO of the Internet Association. “This does need to be on a little bit of a quick timeline, by Senate standards, because this is an election year.”

Minority Leader Mitch McConnell, who resolutely remained sitting with his arms folded during much of the president’s speech, even leapt out of his seat to applaud the call for patent reform.


January 29, 2014 | News, Statements

State of the Union Addresses Trade Promotion Authority

The Internet Association reinforces need for 21st century trade agreements

Washington, D.C. — Tonight, Michael Beckerman, President and CEO of The Internet Association, released a statement recognizing President Obama’s State of the Union mention on Trade Promotion Authority:

“President Obama rightfully recognized that Trade Promotion Authority is necessary to open new markets. As a growing platform for trade and commerce, the Internet provides a pathway for American multinational corporations, small and medium sized businesses, and Internet users to reach new markets.

“To ensure that the U.S. remains a net exporter of Internet-related services and products, our nation’s trade policies must reflect protections under U.S. law that exist for online intermediaries.”

January 29, 2014 | News, Statements

State of the Union Addresses Need for Patent Reform

The Internet Association applauds the President’s commitment to fight patent trolls


Washington, D.C. — Tonight, Michael Beckerman, President and CEO of The Internet Association released a statement applauding President Obama’s State of the Union mention on patent reform:

“The days of patent trolls taking $80 billion a year out of our economy and terrorizing innovative and hard working businesses, are numbered. American businesses large and small are cheering the President’s call tonight. Abuse of the broken patent system by patent trolls hurt main street businesses, as well as the Internet industry.

“Congress must pass effective legislation that not only decreases patent litigation abuse, but also strengthens patent quality. The Internet Association remains steadfast in its commitment to fight patent trolls. We support the bipartisan efforts by Congress and the White House to end the harmful patent troll behavior that is impeding small business development and economic growth. We look forward to seeing quick movement from the Senate as they consider patent legislation.”

January 28, 2014 | ICYMI, News

ICYMI- Obama Touches on NSA, Patent Reform in State of the Union Address

IDG News Service
Obama touches on NSA, patent reform in State of the Union address
Posted January 28, 2014 10:47 PM ET

President Obama repeated his call to reform intelligence surveillance programs, saying U.S. intelligence agencies need the trust of people inside and outside the country, during his State of the Union speech Tuesday night.

Obama promised to work with Congress to reform surveillance programs, presumably those at the U.S. National Security Agency exposed in the past eight months by leaker Edward Snowden. “The vital work of our intelligence community depends on public confidence here and aboard, that privacy of ordinary people is not being violated,” Obama said.

The president’s remarks on surveillance reform were brief, but seemed to track with his call last week to reform NSA programs.

Obama also addressed a handful of other issues related to the tech industry. He called for patent reform, saying Congress needs to allow U.S. businesses to innovate instead of facing “costly and needless” patent lawsuits. Many lawmakers have pushed for legislation that would make it more difficult for so-called patent-assertion entities, firms that have patent lawsuits as their primary business models, to sue other businesses.

Michael Beckerman, president and CEO of the trade group The Internet Association, applauded Obama’s call for patent reform. “The days of patent trolls … terrorizing innovative and hard-working businesses are numbered,” he said by email. “American businesses large and small are cheering the president’s call tonight. Abuse of the broken patent system by patent trolls hurt main street businesses, as well as the Internet industry.”

Obama also called on Congress to pass immigration reform. Many large technology companies have called for more high-skill immigration visas, but Obama’s remarks focused largely on illegal immigration issues.

Obama also praised the U.S. Federal Communications Commission, Apple, Microsoft, Sprint and Verizon Communications for pushing for higher speeds of broadband in the nation’s schools. The companies will help to connect more than 15,000 schools to faster broadband within two years, he said.

FCC Chairman Tom Wheeler said the agency’s E-Rate program bring better broadband to schools.

“Harnessing the power of digital technology is central to improving our education system and our global competitiveness,” he said in a statement. “In the Internet age, every student in America should have access to state-of-the-art educational tools, which are increasingly interactive, individualized and bandwidth-intensive.”


January 28, 2014 | ICYMI, News

ICYMI- How a Silicon Valley Group Is Reaching Out to Republicans

Wall Street Journal
How a Silicon Valley Group Is Reaching Out to Republicans
Posted 12:20 pm Jan 28, 201

There’s plenty of talk right now about how Google and other tech companies are reaching out to Republicans, hoping to cover their right flank as Congress and regulators consider a host of issues related to their business.

Here’s an unreported nugget that shows just how seriously they’re taking it. Earlier this month, the Internet Association, a new-ish Silicon Valley lobbying group that counts Google, Facebook  and as members, held an event for more than 50 Republican campaign consultants at the Standard Hotel in New York.

The day-and-a-half meeting in the Meatpacking District was jointly paid-for by the tech companies and the National Republican Senatorial Committee and featured talks by Google and other Internet companies on how to use digital tools to reach voters.

“Protecting Internet freedom is something both Republicans and Democrats can rally behind, so it is only natural for Internet companies to build relationships with everyone,” said Michael Beckerman, chief executive of the Internet Association.

A person at one of the member companies said the event was intended to build relationships with Republicans — and also to try to sell them on their own digital tools.

Both sides could benefit from improved ties. The Internet Association’s members have defended the Federal Communication Commission’s “net neutrality” rules, which suffered a blow this month when a U.S. appeals court threw out the rules requiring broadband providers to treat all Internet traffic equally. Republicans have strongly opposed FCC efforts to reclassify broadband as a telecom service.

Meanwhile, the Republican Party acknowledges that it badly lagged Democrats during the past two presidential elections in reaching voters through the internet. It’s been looking to close that gap.

The Internet Association said it also planned to hold a similar session for Democratic campaign operatives in the future.

In case you missed it, here is Friday’s front page story reporting on how Google is funding a host of conservative groups, some of which oppose its policy stances on immigration, same-sex marriage and climate change.


January 28, 2014 | ICYMI, News

ICYMI- The secret libertarianism of Uber & Airbnb

The Secret Libertarianism of Uber & Airbnb
Posted Jan 28, 2014 08:00 AM EST

A new wave of technology companies claims to be expanding the possibilities of sharing and collaboration, and is clashing with established industries such as hospitality and transit. These companies make up what is being called the “sharing economy”: they provide web sites and applications through which individual residents or drivers can offer to “share” their apartment or car with a guest, for a price.

The industries they threaten have long been subject to city-level consumer protection and zoning regulations, but sharing economy advocates claim that these rules are rendered obsolete by the Internet. Battle lines are being drawn between the new companies and city governments. Where’s a good leftist to stand in all of this?

To figure this out, we need to look at the nature of the sharing economy. Some would say it fits squarely into an ideology of unregulated free markets, as described recently by David Golumbia here in JacobinOthers note that the people involved in American technology industries lean liberal. There’s also a clear Euro/American split in the sharing economy: while the Americans are entrepreneurial and commercial in the way they drive the initiative, the Europeans focus more on the civic, the collaborative, and the non-commercial.

The sharing economy invokes values familiar to many on the Left: decentralization, sustainability, community-level connectedness, and opposition to hierarchical and rigid regulatory regimes, seen mostly clearly in the movement’s bible “What’s Mine is Yours: The Rise of Collaborative Consumption“ by Rachel Botsman and Roo Rogers. It’s the language of co-operatives and of civic groups.

There’s a definite green slant to the movement, too: ideas of “sharing rather than owning” make appeals to sustainability, and the language of sharing also appeals to anti-consumerist sentiments popular on the Left: property and consumption do not make us happy, and we should put aside the pursuit of possessions in favour of connections and experiences. All of which leads us to ideas of community: the sharing economy invokes images of neighbourhoods, villages, and “human-scale” interactions. Instead of buying from a mega-store, we get to share with neighbours.

These ideals have been around for centuries, but the Internet has given them a new slant. An influential line of thought emphasizes that the web lowers the “transaction costs” of group formation and collaboration. The key text is Yochai Benkler’s 2006 book “The Wealth of Networks,” which argues that the Internet brings with it an alternative style of economic production: networked rather than managed, self-organized rather than ordered. It’s a language associated strongly with both the Left (who see it as an alternative to monopoly capital), and the free-market libertarian right (who see it as an alternative to the state).

Clay Shirky’s 2008 book “Here Comes Everybody” popularized the ideas further, and in 2012 Steven Johnson announced the appearance of the “Peer Progressive” in his book “Future Perfect.” The idea of internet-enabled collaboration in the “real” world is a next step from online collaboration in the form of open source software, open government data, and Wikipedia, and the sharing economy is its manifestation.

As with all things technological, there’s an additional angle: the involvement of capital.

While a wide variety of sites and companies now exist that consider themselves part of this economy, three industries lead the way: living space (Airbnb), transport (taxi alternatives Uber and Lyft and, in Europe, Blablacar), and casual work (TaskRabbit, Homejoy). Airbnb and Uber have each raised over $300M in investments, Lyft over $80M. All the big players are technology companies based in the venture capital-rich Bay area. The sector is growing astonishingly quickly with new investments every week, including such seemingly odd choices such as Google Ventures investing in taxi services (Uber) and housecleaning services (Homejoy).

The sharing economy is not a static object. If we want to understand its politics, we must look at the individual industries and companies within it. Such examinations clearly show that the entrepreneurial wing of this movement dominates more community-minded initiatives. This tension has led to rapidly changing business models, leaving the original ideas of community-based sharing farther and farther behind as sharing economy models have become attractive to large enterprises.

Take ridesharing. Europe’s Blablacar has stayed close to the idea of becoming the digital equivalent of the venerable student bulletin board, and provides a matching service for carpooling. The story in the US is different, however. Industry pioneer Zipcar was bought by Avis Budget Group. Ridesharing company Lyft started with an offering called Zimride, which was modelled on carpooling, but that business was sold to Enterprise Rent-A-Car in July 2013.

Lyft moved instead to offer something closer to an alternative taxi: they kept the language of sharing in the company slogan “Your friend with a car,” but Lyft is now clearly positioned as a source of income for its drivers, who increasingly look like employees who have to supply their own cars. Uber started off as tech-driven limo service, but has moved into the “sharing” space to cut prices.

Both Uber and Lyft have adopted controversial tactics like “surge pricing,” in which the price of a ride rises in busy times or during bad weather conditions in order to attract more drivers on the road, a move that places market incentives at the center of their business model. While Lyft originally called its fares “donations,” it has now abandoned the pretense. Over the course of two years, all elements of “sharing” have been effectively purged from these new transport companies.

Running errands is another major sector of the sharing economy, building on the sharing idea of “helping out your neighbors.” Assembling Ikea furniture is the most common chore for industry leader TaskRabbit, but despite raising over $30 million, the company has had its problems and has put more emphasis on its “TaskRabbit for Business” initiative. In short, it’s becoming a glorified temp agency, sliding rapidly from neighborliness to the most precarious of casual labour.

The Google-funded house cleaning service Homejoy is a partner of Peers, but its cleaners are, according to Forbes, people who need to show proof of employment to receive government assistance, recruited through municipal employment services. Meanwhile delivery giant DHL has launched its MyWays delivery service, powered by “people who want to deliver parcels and earn some extra money.” TaskRabbit and others call their workers “micro-entrepreneurs,” but that is a poor description of precarious piecework. The preferred phrasing of “extra money” harks back to women’s jobs of 40 years ago. And like those jobs, they don’t come with things like insurance protection, job security, benefits — none of that old economy stuff.

Leading the sharing economy pack is the hospitality industry: specifically Airbnb, which is facing off against Attorney General Eric Schneiderman and Democratic Senator Liz Krueger in what travel magazine Skift calls “the defining fight of the sharing economy … However New York City’s regulations shake out in this high-profile case, so will the rest of the nation and possibly the world over, at least in large cities.” The fight is important for Airbnb investors, too: the long-term valuation of the company depends on it establishing a business model that is accepted as legal in cities where it operates.

Many of Airbnb’s “hosts” are violating New York’s short-term rental laws or their own tenancy or co-op agreements, or both. In early skirmishes, individual hosts were taken to court, but after talks broke down, the Attorney General demanded a list of all 15,000 Airbnb hosts in the city. The company accused the Attorney General of a “fishing expedition.” The Electronic Frontier Foundation and the Internet Association (“representing the leading internet companies”) have stepped in on the side of Airbnb, pledging to “fight this tooth and nail.” Sharing economy group Peers has collected over 200,000 signatures on a petition to “save sharing in New York,” and Airbnb has released studies and produced videos to fight the suits. The end of the dispute is not in sight.

The New York dispute highlights issues that reappear in broader debates over the sharing economy. Advocates see a conflict between well-heeled incumbents and “regular New Yorkers” making a little extra money to get by in a tough world; the laws were written for a pre-internet landscape, and need to be updated to allow new industries to grow. Airbnb claims, “We all agree that illegal hotels are bad for New York, but that is not our community. Our community is made up of thousands of amazing people with kind hearts.”

On the other side, the dispute has drawn in not only the hotel industry but also, in a rare alliance, landlord and tenant groups. The Attorney General claims that illegal hotels are abusing Airbnb’s site, and Krueger complains that Airbnb is “actively recruiting tenants to list their apartments on their websites even though they are well aware they are putting residents at risk of eviction” by breaking laws and tenancy agreements. Some “online businesses have become highly profitable by ignoring state and local laws and ignoring the damage their business model has done to communities.”

Airbnb’s misrepresentation of their own business is at the root of the problem in New York. The company maintains that it is a community of regular New Yorkers, occasionally renting out a room. Its marketing material leans heavily on stories of individuals that conform to this archetype. One figure they use repeatedly is that 87 percent of their hosts “rent the homes in which they live.”

This is being economical with the truth. Information I collected from over 22,000 New York listing pages on the Airbnb web site (the bulk of their listings) paints a different picture. In October I scraped the Airbnb web site in order to evaluate Airbnb’s business. I estimate that almost half of Airbnb’s New York revenue comes from people with multiple listings, and almost three quarters of Airbnb’s business comes from whole-home rentals, where the host is absent during the rental period.

A second aspect to the sharing economy’s rise is the belief in the ability for individuals to establish trust through the Internet. Airbnb CEO Brian Chesky claims, “cities can’t screen as well as technologies can screen. Companies have these magical things called reputation systems.” New York University Business Professor Arun Sundarajan writes, “In the sharing economy, reputation serves as the digital institution that protects buyers and prevents the market failure that economists and policy makers worry about.”

Reputation systems are like the recommendation systems used by Netflix and Amazon, but instead of rating movies and books, participants rate each other, often using a familiar five-star system. But are these systems effective?

A basic requirement for effectiveness is that these systems discriminate among the users of the system, so we can identify more- and less-trustworthy individuals. Individual ratings of Netflix movies are spread relatively evenly from one star to five stars, and so provide some grounds for discrimination. But I collected a sample of over 400,000 ratings from the BlaBlacar web site and 49 out of every 50 ratings are the full five stars. In a sample of 35,000 listings on Airbnb, from cities in North America and Europe: over 91 percent of listings are rated at 4.5 stars or a perfect 5.

At the most basic level, these systems are failing to distinguish among the users of the system. The reasons are complex — a partial explanation for the uniformly high ratings is the danger of reputation-damaging retaliation and the human wish to avoid disagreeable disputes — but the failure to discriminate is clear. The failure is particularly important because a few bad experiences can have severe consequences: many of those old-style regulations were instituted in response to a few bad apples who threatened to ruin a whole industry.

Sharing economy companies talk a lot about reputation, but their actions show that their trust in decentralized, community-driven reputation is waning. Leading sharing economy companies are moving rapidly away from peer-to-peer reputation to centralized systems such as validation and background checks.

Airbnb is typical. It recently hired a 50-person “trust and safety team” headed by a former US Army intelligence office and a former government investigator. The use of a human team clearly doesn’t scale, so Airbnb is now turning to centralized analysis to solve its problems, saying, “We want to apply data to every decision. We want to be a very data-driven company.” On April 30 2013, asserting that “trust is the key to our community,” Airbnb introduced a “Verified ID program” which demands that you provide government-verified identification and permit the company to analyze your social networking presence or provide it with a video profile.

There is also a drive for more professionalism among hosts. Airbnb now lets hosts sell tours and activities. Chip Conley, the new “Head of Global Hospitality” for Airbnb, hired from the hotel industry, said in a September 2013 interview:

We’ll be introducing nine minimum standards around what we expect an Airbnb experience to be, whether it’s related to cleanliness or the basic amenities you expect, which is not currently the case. The idea that we create some amenities that you should expect — clean towels, clean sheets — that’s important.

In short, Airbnb is abandoning the idea that peer-to-peer reputation systems can solve the problem of trust, is moving away from the casual “air bed” mentality that gave it its name, and is resorting to traditional centralized systems of enforced minimum standards, documentary verification, and so on.

While the “sharing economy” is being pulled ever farther from actual sharing, it might not be a completely lost cause. These ventures could take actions that might help to restore some semblance of credibility to the “sharing economy” name. Ridesharing companies could limit income to remove insurance liability and taxation issues. For example, BlaBlaCar limits the money that any driver can earn on one ride so that it never exceeds the cost of the trip: this means the money is costsharing and not income, and so removes taxation issues and insurance clauses that forbid commercial use of a car.

Airbnb could limit hosts with multiple listings on their site. It’s difficult to keep up the image of occasional artisan renters when there are hosts called NY Furnished Rentals with over 200 listings on the site, and when “the top 40 Airbnb hosts in New York have each grossed at least $400,000 over the past three years.”

At the very least, Airbnb can make the rules clear for their hosts, many of whom are confused about who qualify as “amazing people with kind hearts” and who are “unscrupulous slumlords [making] a quick buck.” They could also stop burying cautions in a 10,000-word terms-of-service contract that takes half an hour to read, carefully limiting the company’s liability.

In a spirit of collaboration, if they are genuinely concerned about New York tenants, Airbnb could work with tenants’ associations and other providers. If Lyft and Uber are actually interested in the welfare of drivers, they could work with taxi driver unions such as the New York Taxi Workers Alliance. (Oh, and stop taking their own drivers’ tips.)

Finally, there is the petition-organizing, council-lobbying group Peers. Until now, its efforts have all been in support of the VC-funded heavyweights: Airbnb and the new transit corporations. As sharing economy companies move away from sharing to a new model of piecework they need to re-investigate their own principles. A good start might be to provide a set of principles that “sharing economy” organizations would have to adopt to partner with the organization — something like the co-operative movements Rochdale Principles, few of which are compatible with the privately-owned, centralized sites that characterize the industry.

The chances of the adoption of any of these recommendations are slim. Taking a modest supporting role in reviving the supposed spirit of the sharing economy is incompatible with the hubris of leading large companies, and most of these suggestions would compromise the revenue growth that investors are looking for.

The “sharing economy” has seen a rapid slide away from collaborative sharing towards further deregulated and precarious employment — the direct consequence of venture capital funding and the growth imperatives that come with that money. Such a project won’t bring us any closer to the more equitable society we want to see any time soon.


January 27, 2014 | ICYMI, News

ICYMI- State Of The Union 2014: The Issues Technology And Science Sectors Will Be Watching For?

International Business Times
State Of The Union 2014: The Issues Technology And Science Sectors Will Be Watching For?
January 27 2014 2:32 PM

Technology and science might not take center stage in President Barack Obama’s 2014 State of the Union address on Tuesday, but they’ll likely have very strong supporting roles. Here are a few of the key issues that the science and technology sector will be watching for:

Immigration reform: Technology companies who want to hire more highly-skilled foreign engineers will probably take heart from the president’s speech on Tuesday.

President Obama is expected to call for immigration reform this year – as he did in last year’s State of the Union. In 2013, the U.S. Senate approved a plan for undocumented immigrants to attain citizenship through a 13-year path, but it was rejected by the House of Representatives. This year, though, the political prospects for an immigration bill might be brighter – Obama wants to pass a major piece of domestic legislation, and Republican leaders want to burnish the party’s image among non-white voters.

Patent reform: Last November, the White House hosted a meeting on the U.S. patent system attended by tech companies and advocates, focused specifically on combating “patent trolls” that profit primarily from infringement lawsuits. The House has already passed a bill that would tighten the pleading standards for patent suits and make it easier to challenge the validity of patents; Obama might seize the opportunity to call on the Senate to follow suit.

“It’s something that [Obama] can hang his hat on,” Internet Association CEO Michael Beckerman told Politico. “The bill that passed the House aligned very closely with his legislative principles. It’s an issue that helps jobs, the economy, all those great things, the internet sector, restaurants, everybody.”

Climate change: The National Oceanic and Atmospheric Administration dubbed 2013 the fourth-warmest year since extensive global surface temperature records began in 1880. But while climate change is discussed more and more in the media, addressing it remains a relatively low priority for the public at large (it came in second-to-last in importance on the laundry list of issues offered to voters in a Pew survey conducted earlier in January, pulling just ahead of global trade issues).

The president signaled his prioritization of climate change last year when he introduced new emissions standards for coal-fired power plants. Plus, a “senior administration official” told Talking Points Memo earlier this month that “a very high priority” was to “use his executive authority to curb climate change and spur the use of clean energy.” Environmentalists and science advocacy groups like the Union of Concerned Scientists will be cheered if the president finds space in his speech to hammer the issue home.

“There are a few moments each year when the president can traditionally command our attention when it comes to important issues,” UCS energy and climate director Angela Anderson wrote. “Taking climate seriously — and talking about it publicly — can go a long way toward helping the nation understand the facts and the risks that come with a warming world. Eventually Congress will come around. But for now, the president’s continued public commitment to climate action can help plant seeds that state and local leaders can cultivate to strengthen our resilience and spur innovation and investment in a clean energy solutions.”

Science education: The presidential guests at the State of the Union can also signal some planks of the platform that that will be laid out on Tuesday. Spurring children’s interests in science has long been a favorite topic for Obama, and one of First Lady Michelle Obama’s guests at the president’s speech will be Joey Hudy, a 16-year-old from Arizona who unveiled an “extreme marshmallow cannon” at the 2012 White House science fair:

But lines in speeches can only go so far. The Los Angeles Times points out that ideas in the state of the union are rarely realized within a year, let alone before the end of a presidency. Many of the high-profile proposals from the 2013 State of the Union — minimum wage increases, gun control, and even a bipartisan-approved idea for preschool expansion — have yet to get a thorough hearing in Congress.


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Washington, DC – Internet Association Senior Vice President of Global Government Affairs Melika Carroll issued the the following statement in support of the Children and Media Research Advancement (CAMRA) Act: “Internet companies care deeply about the safety and well-being of their users and welcome scientific research on this important issue funded through the CAMRA Act. Read more »

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