With help from Leah Nylen
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— Copyright fight: A bipartisan Senate bill is the latest salvo in a decadeslong struggle between tech platforms and the music and movie industries over copyright rules.
— Retooling the merger microscope: Two former heads of the DOJ’s antitrust division expect regulators to challenge more vertical mergers moving forward, including in the tech industry.
— Scrutiny for SCOTUS pick: President Joe Biden’s pick to replace Supreme Court Justice Stephen Breyer may face questions this week on Section 230 and tech antitrust.
IT’S MONDAY, MARCH 21. Welcome to Morning Tech! It’s officially cherry blossom season in Washington, which is probably why I woke up with a huge headache on Saturday morning (despite not imbibing a drop Friday night). Thanks, allergies. At least the dog is happy!
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SENATE STARTS ELECTION-YEAR FIGHT OVER ONLINE COPYRIGHT: New bipartisan legislation from Sens. Thom Tillis (R-N.C.) and Patrick Leahy (D-Vt.), the chair of the Senate Judiciary subcommittee on intellectual property, would be the first major overhaul of online copyright law in nearly a quarter century.
The SMART Copyright Act (S. 3880), introduced on Friday, promises to pit tech platforms and independent content creators against the music and movie industries. But since it’s being rolled out just months before November’s election, its potential to pass this legislative cycle is doubtful at best — and Leahy’s retirement in January means Tillis will need to find a new cosponsor if the effort slips into next cycle.
— DMCA overhaul: The bill would make major changes to the Digital Millennium Copyright Act (H.R. 2281(105)), a 1998 law that updated copyright rules for the early internet age. Among other things, the DMCA provides tech platforms with “safe harbor” protections that shield them from lawsuits as long as they work to remove or block access to infringing materials — pirated movies or songs posted on YouTube, for example.
Those protections are similar to those found in Section 230 of the Communications Decency Act — and the DMCA’s “safe harbor” protections have garnered the same kinds of criticism Section 230 has received in recent years.
— Tech’s (other) legal shield under threat: Among other things, the legislation would create new legal liability for tech platforms if they interfere with or fail to accommodate new government-mandated measures designed to crack down on online piracy, to be created after the bill’s passage.
— A long campaign: The SMART Copyright Act is the culmination of a yearslong effort by Tillis to overhaul the DMCA — something the major tech platforms have successfully blocked in the past. And the tech industry, aided by independent video or music creators who at times run afoul of zealous copyright enforcement, is already gearing up to oppose this latest attempt.
“This bill is very dangerous,” said Joshua Lamel, the head of the Re:Create Coalition, which includes among its members tech lobbying groups like the Computer Communications and Industry Association and the Consumer Technology Association. In a Friday statement, Lamel said new government-mandated technical standards for copyright violations “will result in content filtering — stifling creativity, innovation and the flow of information.”
But the music and movie lobbies are excited about the new bill. Mitch Glazier, the head of the Recording Industry Association of America, said the SMART Copyright Act “will incentivize the development and adoption of effective tools to address online piracy while giving platforms clarity.” Patrick Kilcur, the Motion Picture Association’s head of U.S. government affairs, thanked Tillis and Leahy for their work to prevent “digital theft.”
— A path forward? The SMART Copyright Act is likely to face a difficult route to passage, in a Senate already bursting with last-minute legislative priorities to complete ahead of the midterm campaign season. There’s also so far been no companion bill introduced in the House.
But Tillis spokesperson Adam Webb said the senator “intends to work with Senator Leahy, [Senate Judiciary] Chair [Dick] Durbin (D-Ill.), and Senate leadership to ensure the SMART Copyright Act is enacted into law this Congress.” Webb said Tillis is encouraged that lawmakers from both parties “realize that big tech companies and platforms must do more to combat property theft.”
DOJ, FTC ZERO IN ON VERTICAL DEALS— The Biden administration’s antitrust agencies are conducting in-depth probes of vertical mergers — mergers between companies that manufacture products and those that distribute them — two former heads of the DOJ’s antitrust division told Leah.
Rick Rule, the assistant attorney general for antitrust under President Ronald Reagan, said such deals are getting attention when they “wouldn’t have gotten attention five years ago.” That dynamic, he said, may make it harder for tech companies looking to merge or acquire new firms to “anticipate what issues the government is going to take an interest in.”
— Rule would know: He and Deborah Garza, herself a three-time DOJ alum and acting AG for antitrust under President George W. Bush, authored the DOJ’s 1984 guidelines on vertical mergers. Those guidelines, which outline when the DOJ and FTC should challenge such deals, were weakened in favor of industry in a 2020 update issued by the Trump administration. The Biden administration withdrew that update in September, and the DOJ and FTC are now redrafting the guidelines.
Rule and Garza — who are now forming a new boutique law firm, Rule Garza Howley, to advise companies on antitrust issues — spent years working closely with Jonathan Kanter, now the DOJ’s top antitrust official. Rule said Kanter “has a much more expansive view of antitrust” compared to past regulators.
— FTC limited on vertical mergers: For the time being, lawyers and companies still expect vertical mergers to survive scrutiny at the FTC. The reason for that is simple, said Rule — the agency’s 2-2 partisan split means it’s harder for FTC Chair Lina Khan to find the three votes needed for a challenge.
One very recent example of this phenomenon: Amazon’s acquisition of MGM Studios, a vertical merger that closed last week after an in-depth review by the FTC. Two people familiar with Khan’s decision to not challenge the merger told Leah she decided not to do so because she expected the agency’s two Republicans would oppose it.
— Tough fights ahead: Khan is likely to eventually receive an additional Democratic vote in the form of Alvaro Bedoya, whose nomination as FTC commissioner is awaiting a Senate floor vote. But this isn’t the first time vertical deals and labor issues have become major themes in Washington’s antitrust efforts, Garza said — and it doesn’t mean regulators will inevitably have the upper hand, even once the FTC is up to full strength.
Garza said the Biden DOJ and FTC — like regulators before them — may still struggle to convince skeptical judges.
“Courts are always going to be a backstop,” she said, pointing to the DOJ’s failed 2018 challenge of a merger between AT&T and Time Warner.
THE TECH QUESTIONS FACING JACKSON: In a series of confirmation hearings starting today, members of the Senate Judiciary Committee will question Ketanji Brown Jackson, Biden’s pick to replace Breyer on the Supreme Court — and while tech policy is not expected to be a major area of focus for either party, two issues in particular could come up:
— Section 230: Critics of the tech industry’s treasured liability shield often claim judges have interpreted Section 230 of the Communications Decency Act too broadly. It was a topic of discussion in Amy Coney Barrett’s confirmation hearing — which occurred around the same time that Justice Clarence Thomas first urged his colleagues to take up a case that would allow the court to weigh in on Section 230’s reach and scope. Thomas has since pushed twice more for the Supreme Court to probe Section 230.
Meanwhile, Democratic senators such as Richard Blumenthal (D-Conn.), who’s pursuing an overhaul of Section 230 via his and Sen. Lindsey Graham’s (R-S.C.) EARN IT Act (S. 3538), may also ask Jackson about the limits of Section 230’s liability protections for tech platforms.
— Tech antitrust: Barrett was also questioned by lawmakers, including Sen. Amy Klobuchar (D-Minn.), over the reach of the Sherman Act, the bedrock law of American antitrust jurisprudence, as well as her general views on U.S. antitrust law. Klobuchar is working to pass a significant overhaul of antitrust law that would directly affect tech industry through her American Innovation and Choice Online Act (S. 2992), and may look to see where Jackson stands on the effort.
D.C. ATTORNEY GENERAL MAY APPEAL AMAZON DISMISSAL— D.C. Attorney General Karl Racine is contemplating an appeal after his antitrust lawsuit against Amazon was thrown out by a just on the D.C. Superior Court.
“We believe that the Superior Court got this wrong,” Marrisa Geller, a Racine spokesperson, told Leah.
D.C. Superior Court Judge Hiram Puig-Lugo issued an oral ruling Friday to dismiss the suit, which alleges the e-commerce giant’s pricing policies have led to higher prices for consumers. The judge plans to issue a written decision at a later date. The dismissal came as a surprise, given that a Seattle federal judge last week let a similar antitrust suit against Amazon move forward. Amazon didn’t respond to a request for comment.
David Young is leaving Verizon after 33 years, where he most recently served as the company’s head of public policy. … Jessica Quinley is named by Federal Communications Commission Chair Jessica Rosenworcel as an observer in the National Telecommunications and Information Administration’s Commerce Spectrum Management Advisory Committee. Douglas Brake and Timothy May are tapped to participate in the FCC’s Technological Advisory Council and its Communications Security, Reliability, and Interoperability Council, respectively. … Grady Miller is the new chief marketing officer at National Research Group.
Let’s try this again: The New York Times wants to explain cryptocurrencies to you — and it promises it’ll make sense this time.
Double-edged sword: Teachers relied enormously on YouTube’s educational videos during the pandemic — and are now struggling with how to address the platform’s penchant for distraction as in-person classes resume, the Wall Street Journal reports.
So sorry to miss this: Telegram founder Pavel Durov said his app was banned in Brazil because the company was checking the wrong email address and didn’t see emails from a Brazilian court, according to The Verge (the ban has since been lifted).
Time to move? Reuters reports a South African court halted construction on Amazon’s new Africa headquarters after some indigenous groups protested its construction on sacred land.
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