Katie McAuliffe

Circus at the Antitrust Hearing

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Posted by Katie McAuliffe, Laurel Duggan on Thursday, July 30th, 2020, 3:03 PM PERMALINK

Congressional hearings of tech CEOs Sundar Pichai (Google), Jeff Bezos (Amazon), Mark Zuckerberg (Facebook), and Tim Cook (Apple) devolved into an hours-long circus as Democrats used the opportunity to create reelection campaign fodder.

The purpose of this hearing was to investigate alleged anticompetitive behaviors of dominant tech companies. About 25% of the questioning was somewhat related to antitrust policy—and this is a generous estimate. The remainder of questions revolved around partisan talking points like online hate speech, YouTube radicalization, and conservative censorship.

Antitrust law under the consumer welfare standard is designed to protect consumers from harm by monopolistic companies, not to protect companies from each other. None of the companies called before the Antitrust Subcommittee can be considered monopolies. Each one of them competes with other companies, tech or otherwise, both small and large, for revenue. And they are not using their strong positions in the market to harm consumers. Rather, they have each been using their resources to provide better products and slash prices.

Representative Armstrong (R-N.D.) wisely noted the harms of sweeping expanses of government power targeting certain companies, rather than going through the Federal Trade Commission’s already existent enforcement authority under the consumer welfare standard that operates on a case by case basis:

“When we try to hurt large companies, we entrench large actors and lock out new, smaller competitors."

On the rare occasion that Democrats’ questions were related to antitrust, the line of questioning belied the entire premise of the hearing: that concentration in tech is harming consumers. Time and time again, members of Congress asserted that Amazon and Facebook’s competitive strategies were harming their competitors by driving down prices. But the purpose of antitrust is to protect consumers, not competitors.

The mere fact that Apple was called to testify tells us that the hearing is not about antitrust; the hearing is about anger. Anger at tech for a number of reasons, but mostly because they are big.

Apple is in no way a violator of competition policy. Their primary business is hardware and software, not advertising, not data. They only hold 20% of the smartphone market13% of the personal computer market, and 28% of the tablet market. Tablets are the only personal device market in which Apple is dominant, and their share of that market is shrinking. As for operating systems, Android has more than double the market share as compared to Apple.  

“Apple does not have a dominant market share in any market where we do business. That is not just true for iPhone; it is true for any product category." ~Tim Cook

Apple created the entire App environment. Rather than keeping it as a closed system, they allowed individuals to create Apps which, once in line with certain conditions that provide security and support, can be downloaded by anyone on the App store. Some have complained that Apple’s App store discriminates against Apps that are not its own, but that opinion can’t be held for very long after looking into Apple’s policies, which they are very transparent about.

If Apple is a gatekeeper, what we have done is open the gate wider. We want to get every app we can on the Store, not keep them off.” ~Tim Cook 

In a particularly misguided line of questioning, Rep. Cicilline (D-R.I.) harangued Jeff Bezos for Amazon’s treatment of third-party sellers. “You say Amazon is only focused on what’s best for the customer. How is that possible when you undercut your prices and compete directly with third-party sellers?” Rep. Cicilline sees a conflict of interest between hosting outside retailers and offering low prices to consumers. He somehow fails to see that the diversity of retailers on Amazon drives down their prices, making products cheaper for consumers. 

Rep Cicilline went on to accuse Amazon of a litany of abusive business practices against retailers on its own site. He, along with several other members of Congress, claimed that Amazon exploited the small businesses it hosts through predatory pricing, and claimed that these businesses had no option other than Amazon.

There are 1.7M small & medium-sized businesses selling in Amazon’s stores. 200,000+ entrepreneurs surpassed $100,000 in sales in our stores in 2019. We estimate that third-party businesses selling in Amazon’s stores have created over 2.2M new jobs. ~Jeff Bezos 

In reality, Amazon has to compete with all retail, including Target, Costco, Kroger and Walmart, in addition to numerous online platforms that host third-party retailers, including Etsy, Facebook Market, EBay and Google Shopping. Even if this wasn’t the case, Amazon would have no obligation to host retailers on its privately-owned platform, and retailers have no obligation to use their services.

Like any retailer, Amazon could have chosen to keep their stores a closed system, selling only their own products. Instead, they opened the platform to hundreds of thousands of third-party retailers, many of whom are small businesses.

20 years ago, we welcomed 3rd-party sellers into our stores & enabling them to offer their products alongside our own. We didn’t have to invite third-party sellers into the store. We could have kept this valuable real estate for ourselves.” ~Jeff Bezos

Rep. Raskin (D-Md.) complained that Amazon’s Alexa was a monopoly, since it holds a 60% share of the smart speaker market. But if you define any market this narrowly, you’ll find monopolies everywhere you look. If you define your neighborhood as a market, your local gas station is a monopoly. Of course, Alexa devices compete in a much broader market than that; the device competes with smartphones, tablets, and personal computers, all of which conduct most or all of the same functions.

Rep Jayapal (D-Wash.) and Rep. Neguse (D-Colo.) both incorrectly called Facebook a monopoly. Not only is Facebook not a monopoly, they are not even the dominant firm in their market—the largest social media platform is YouTube. Additionally, Facebook’s primary revenue source is advertising. They aren’t dominant in that market either; Google beats them out by a wide margin.

In many areas, we are behind our competitors. The fastest growing app is #TikTok, and the largest messaging app is iMessage.” ~ Mark Zuckerberg

To provide one example, the cost of online advertising has plummeted 40% in the last decade. If Google has monopolistic power in the advertising realm, why aren’t they raising prices? The obvious answer is that there is robust competition in online advertising. Google competes with Facebook, Twitter, Pinterest, Comcast, and countless others for ad revenue. 

“Competition in ads — from Twitter, Instagram, Pinterest, Comcast & others — has helped lower online advertising costs by 40% over the last 10 years, with these savings passed down to consumers through lower prices.” ~ Sundar Pichai 

Democrats were also hostile to acquisitions and mergers, which they claimed were harmful to both consumers and competitors somehow. Rep. Neguse questioned Zuckerberg about acquisitions, condemning how successfully Facebook had acquired and improved various products and services. Never mind that these acquisitions improved the apps’ privacy and security features while making more apps free to the public. If the success of American businesses makes Democrats uncomfortable, then by all means we should let them weaponize antitrust law to beat private businesses into submission.

Those who want to expand government power favor a narrow definition of tech markets because they have no real evidence in terms of demonstrable consumer harm or rising prices. It allows them to build an antitrust case out of bitterness, and little else.

The presence of four companies—all of which compete with each other—should be sufficient evidence that there is no risk of monopolization. Competition in tech—from hardware to software to advertising—is robust. 

Photo Credit: POMED


The 4th Amendment is a Right - No Need to EARN IT

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Posted by Katie McAuliffe, Laurel Duggan on Monday, July 27th, 2020, 2:44 PM PERMALINK

It is easy for those in power and the broader public to see new technologies—the telephone, email, cloud storage, or end-to-end encryption—as somehow exempt from the privacy laws which govern other communications. But as technologies become more widely used for business and personal communication, we all come to understand the need to protect our interactions from surveillance.

Encryption is not a force for evil. It is used by businesses across the country to prevent online attacks and theft. It is common practice for hackers to target retailers in the U.S. to steal customer data and access their bank accounts, but attacks like these are largely impeded by encryption. When hackers stole the banking information of millions of customers in Target’s infamous data breech, the victims’ bank accounts were protected because their PINs were encrypted.

Encryption also promotes innovation. Businesses and individuals have little incentive to create and discover if their intellectual property will simply be stolen by criminals or foreign actors.  Innovation requires protection of proprietary data.

Building in a systemic weakness, while it may make law enforcement’s job easier, does not make anyone safer. Creating backdoors for law enforcement to get around encryption would weaken the technology as a whole; backdoors can be exploited by criminals to access users’ personal data.

The tension between the Fourth Amendment and Law Enforcement goals is not new and is important to preserve. Officials claim that encrypted data is “warrant-proof,” but this misrepresents the purpose of a warrant. Search warrants allow law enforcement to search for evidence, but do not guarantee that they will find evidence supporting or leading to any conclusions.

Encryption doesn’t just protect us from criminals; it protects us from the prying eyes of the government. The FBI has waged a years-long battle against encryption, which it views as an impediment to investigations. The federal government has been intercepting electronic communications for as long as it has been possible; federal agents began wiretapping phone calls in the 1920s. It tends to take the government years to adjust to changes in communications technology; it took decades for the Supreme Court to place limits on warrantless electronic surveillance.

Following years of unsuccessfully pressuring tech companies to give the government a backdoor to encrypted data, Congress and the Department of Justice changed their strategy. A high profile letter sent by U.S. intelligence agencies and numerous international allies linked end-to-end encryption with child sexual exploitation, claiming that Facebook would be harming children by offering encryption on its messaging services.

Reframing the encryption debate around the most heinous crimes imaginable is dishonest; it posits that, because criminals use their privacy to exploit the most vulnerable people in society, no one has a right to privacy. This line of thinking also presupposes that Big Brother is unfailingly benevolent; the FBI will have a backdoor to all online communications, but not to worry: they will only spy on you if you deserve it.

In a misguided attempt to address the very real problem of online child exploitation, Senators Lindsey Graham (R-S.C.) and Richard Blumenthal (D-Conn) introduced the EARN It Act. The legislation has honorable goals, but in practice would limit the ability of tech firms to offer encryption to users. This would restrict the ability of all Americans—including survivors of abuse—to protect their privacy and personal safety while online.

After a firestorm of criticism from across the political spectrum, the Senate Judiciary Committee approved a manager’s amendment to the EARN It Act. The amendment resolves the aspects of the original bill that would have threatened encryption most seriously: businesses cannot be held liable simply for failing to take actions that would undermine encryption services, and offering encryption will not be automatic grounds for liability for child sexual abuse material (CSAM). Critics point out that the amendment provides only a defense against liability, not immunity; the threat of litigation will still be sufficient to discourage tech companies from providing secure end-to-end encryption.

The amendment removes the legal authority initially granted to the commission created in the bill; the commission’s standards will be recommendations, not legal requirements. It also extends the amount of time that providers can preserve the contents of a report, which will help with the development of algorithms made to detect CSAM. 

However, the manager’s amendment brings a new set of problems to the table. It allows states to penalize companies with both civil and criminal liability. In addition to balkanizing the legal landscape for a business model that naturally crosses state lines, this would leave American tech businesses vulnerable to a firehose of destructive lawsuits. Endless litigation would likely lead to the end of America’s global leadership in tech. 

The amendment also revokes tech companies’ liability protection based on “actual knowledge” of the existence of CSAM. This is a step up from the “recklessness” standard in the earlier version of the bill, but it still creates perverse incentives that discourage tech companies from investigating CSAM. When knowledge triggers liability, companies will avoid learning about potential CSAM cases. This will lead to less, not more, action by tech companies to stop the spread of CSAM.

The ability to use privacy services provided by a private business is part of what makes our country great and distinguishes us from authoritarian countries like China, where the government is entitled to the private data of citizens. Efforts by the government to weaken encryption should raise red flags and inspire a continued effort to protect encryption.

Photo Credit: Jonathan McIntosh


Coalition Supports Digital Goods and Services Tax Fairness Act

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Posted by Katie McAuliffe on Tuesday, July 21st, 2020, 4:33 PM PERMALINK

Americans for Tax Reform has released a coalition letter with 19 signers supporting the Digital Goods and Services Tax Fairness Act. The full letter can be read below, and here.

 

Support S. 765 & H.R. 1725 the “Digital Goods and Services Tax Fairness Act of 2019”

Dear Majority Leader McConnell, Minority Leader Schumer, Speaker Pelosi, and Republican Leader McCarthy,  

We urge you to support the Digital Goods and Services Tax Fairness Act of 2019, introduced by Senators John Thune (R-SD) and Ron Wyden (D-OR) and Representatives Steve Cohen (D-TN) and John Ratcliffe (R-Texas) as S. 3581 and H.R. 7058 respectively. This legislation would set up a framework for states to prevent duplicative and discriminatory taxation on the digital economy, if and only if, a state chooses to tax such commerce.

It is important to clarify that this bill would not mandate any state to tax a digital good or service, nor would it establish any sort of national sales tax on digital commerce. The framework provides legal certainty for how and when state and local taxes can be applied to the digital economy. The state in which a customer legally resides would determine the tax status of the digital transaction. It would also eliminate confusion for consumers and businesses by ensuring the taxation of a digital song or software downloads is the same as the tax rates imposed on music or software CDs purchased at the local store.

Given the unique way digital commerce is transacted, it is currently possible for multiple states to claim the right to impose taxes on a given digital transaction, leaving the consumer potentially subject to multiple and duplicative taxes. Congress has previously addressed a very similar disruptive tax situation with the use of mobile phones by clearly identifying which state has the right to tax wireless services. The existing state laws governing interstate commerce are outdated to the point where they cannot adequately address the complexities that surface in digital sales. Considering how rapidly the digital market is growing, the need for this legislation is imperative to provide a clear roadmap for states to follow, if they so choose, to fairly impose taxes on digital goods and services in today’s new economy.

This bill would also prevent discriminatory state and local taxes that single out digital goods and services merely because they are transmitted over the internet. Right now, states can choose to impose higher tax rates on digital subscriptions than are imposed on physical subscriptions. For example, a state could tax an online newspaper subscription at 5% and a physical subscription at 3%. If a product is subject to tax collection, it should not matter whether it is received digitally. This type of tax discrimination unfairly penalizes people participating in the digital economy.

Accordingly, we urge you to enact the Digital Goods and Services Tax Fairness Act of 2019 before the end of this Congress.

 

Respectfully,

 

Grover G. Norquist

President

Americans for Tax Reform 

 

Lisa B. Nelson

CEO

ALEC Action

 

Steve Pociask

President / CEO

American Consumer Institute

 

Ryan Ellis

President

Center for a Free Economy

 

Andrew F. Quinlan

President

Center for Freedom and Prosperity

 

Curt Levey 

President

Committee for Justice

 

Matthew Kandrach

President

Consumer Action for a Strong Economy

 

Tom Shatz

President

Council for Citizens Against Government Waste

 

Katie McAuliffe

Executive Director

Digital Liberty

 

George Landrith

President 

Frontiers of Freedom

 

Mario H. Lopez

President

Hispanic Leadership Fund

 

Bartlett Cleland

Executive Director

Innovation Economy Institute

 

Andrew Langer

President

Institute for Liberty 

 

Seton Motley

President

Less Government

 

Pete Sepp

President

National Taxpayers Union

 

Karen Kerrigan

President & CEO

Small Business & Entrepreneurship Council

 

David Williams

President

Taxpayers Protection Alliance

 

James L. Martin

Founder & Chairman

60 Plus Association

 

Saulius “Saul” Anuzis

President

60 Plus Association

Photo Credit: Marco Verch


Coalition Opposes SCRIPT Act

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Posted by Katie McAuliffe on Wednesday, July 15th, 2020, 1:39 PM PERMALINK

Americans for Tax Reform has released a coalition letter with 16 signers opposing the SCRIPT Act. The full letter can be read below, and here

 

July 15, 2020

RE: Stopping Censorship, Restoring Integrity, and Protecting Talkies Act, SCRIPT Act, S. 3835

Dear Senators:

Conservatives and libertarians are rightly concerned about censorship. While we must be zealous in guarding our 1st Amendment rights at home, conservative and libertarian leaders are also right to be deeply concerned about totalitarian regimes around the world and the restrictions they impose on freedom of thought -- from the Great Firewall of China to social media censorship in the Middle East to Russian threats to freedom of the press.

As a part of this justified vigilance, some have expressed concerns that China’s role in American filmmaking may result in censorship that extends even beyond China’s borders. This worry is most clearly expressed in S.3835, the SCRIPT Act, introduced by Senator Ted Cruz. 

The SCRIPT Act would sever all federal government cooperation for at least three years with any production company found by the Department of Commerce to have edited a film for any reason, no matter how innocuous, in order to exhibit it in China. 

While we share the Senator’s concern with reports about Chinese censorship of American films, we think this legislation will do more harm than good for two main reasons: first because the remedy suggested would have a negative effect on the interests of the US military, and second because the legislation itself uses as its remedy the application of a government penalty toward artists, which ironically would impinge at least on the spirit of our freedom of expression.

Filmmakers rely on cooperation with the government for basic production needs – not just access to fighter jets and battleships. For example, filming with drones is subject to Federal Aviation Administration rules, and filming on public lands requires permits from the Department of the Interior. These and other unglamorous – but commonplace and vital use cases – would be jeopardized by the SCRIPT Act.

The military’s involvement with Hollywood is not guaranteed. The DoD regularly denies requests from filmmakers to allow access to bases, training or equipment. However, sometimes the DoD does choose to assist in filmmaking and when it does, it is reimbursed for its time and provides valuable portraits of American military achievements that are both more realistic and engaging for audiences, while safeguarding classified or sensitive information. These accurate but vetted depictions, and the resulting favorable treatment of the US military, benefit our military recruitment and is conducive to fostering an American culture that looks favorably on military service. Withholding this cooperation for any reason would not be in the interests of the United States military.

It should also be considered that this bill itself ironically directs government action regarding the decisions filmmakers make on the cutting room floor. Bringing this coercion, however mild, and for whatever reason, to bear on this process from the United States seems ill-advised in our effort to tear down the walls of censorship erected by totalitarian regimes. 

China admits very few films into its market, but when it does, scenes that many Americans take for granted - plentiful grocery stores, assembled protests, university experiences, dinners out - present the benefits of democracy and capitalism in ways that are both understandable and relatable to international audiences. These scenes have been effective historically in influencing populations around the globe, for example in the former Eastern Bloc. 

These new regulations would handicap one of America’s leading export industries into all international markets, including regimes practicing censorship, to the benefit of their foreign competitors. Today, the U.S. film and television industry accounts for a $9.4 billion trade surplus, more than telecommunications, transportation, insurance, or health services. This policy would ultimately weaken America in the long-term economic competition with our international rivals.

Censorship internationally is a legitimate concern and we support efforts to address these issues. However, solutions should honor American free-market and limited government principles. It is China, after all, that routinely intrudes on the private dealings of business and suppresses private sector success.

We respectfully oppose the SCRIPT Act, and instead suggest lawmakers focus on stronger more direct solutions to the economic, cultural and geopolitical challenges represented by China and other totalitarian regimes.

 

Sincerely,

 

Grover Norquist

President

Americans for Tax Reform

 

Phil Kerpen

President

American Commitment

 

Krisztina Pusok

Director of Policy Research

American Consumer Institute

Center for Citizen Research

 

Andrew F. Quinlan

President

Center for Freedom and Prosperity

 

Jeffrey Mazzella

President

Center for Individual Freedom

 

Ashley Baker

Director of Public Policy

The Committee for Justice 

 

James Edwards

Executive Director

Conservatives for Property Rights

 

Matthew Kandrach

President 

Consumer Action for a Strong Economy

 

Thomas Schatz

President

Council for Citizens Against Government Waste

 

Katie McAuliffe

Executive Director

Digital Liberty

 

Hance Haney

Senior Fellow

Discovery Institute

 

George Landrith 

President & CEO

Frontiers of Freedom

 

Mario H. Lopez

President

Hispanic Leadership Fund

 

Tom Giovanetti

President

Institute for Policy Innovation

 

Brandon Arnold

Executive Vice President

National Taxpayers Union

 

David Williams

President

Taxpayers Protection Alliance

Photo Credit: Vincent Diamante

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ATR Supports Reconfirmation of Mike O'Rielly to FCC

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Posted by Katie McAuliffe on Tuesday, June 16th, 2020, 2:45 PM PERMALINK

​​​​​ATR President Grover Norquist has released a letter in support of the reconfirmation of Commissioner Michael O’Rielly to the Federal Communications Commission.

 

June 16, 2020

The Honorable Roger F. Wicker

Chairman United States Senate Committee

on Commerce, Science, and Transportation

555 Dirksen Senate Office Building

Washington, DC 20510

 

Re: Support of Nomination of Michael P. O’Rielly, Federal Communications Commission

Dear Chairman Wicker & Member of the Senate Committee on Commerce, Science and Transportation.

I write in support of Michael O’Rielly’s re-nomination to the Federal Communications Commission.

Since his first nomination in 2014, he has proven his commitment to American leadership in communications. He has a strong record of defending American interests globally and promoting economic development domestically, and his leadership will be essential to American efforts to win the race to 5G in the coming years. 

Free market principles and American leadership have been central to Commissioner O’Rielly’s work at the FCC. He has successfully pushed to make more C-Band spectrum commercially available, allowing the United States to come out ahead of China in the race to 5G. This is of vital importance both economically and in terms of national security. He also been a leader in many other spectrum proceedings, including TV white spaces, 6 GHz, 5.9 GHz, and 900 MHz.

Commissioner O’Rielly’s regulatory policy is grounded in Constitutional principles. He has promoted regulatory modernization efforts which emphasize economic freedom and limited government. Regulatory reform efforts have facilitated broadband expansion across the United States and allowed our industries to become globally competitive. The success of these efforts had been evident throughout the COVID-19 crisis, as our networks supported record internet traffic. Commissioner O’Rielly’s work in recent years set up our country for a rapid transition to telehealth, remote work, and distance learning.

While at the FCC, Commissioner O’Rielly has reduced waste and fought against corruption, abuse, and fraud. He demanded increased accountability from the International Telecommunication Union, shed light on states’ misuse of 911 funds, and drew attention to the abuse of the USF Lifeline Program.

Among the commissioner’s most important achievements at the FCC is his fight against the misuse of 911 funds by state governments. Several states habitually diverted money from 911 funds to pay for unrelated expenses in violation of the law. The abuse was egregious, with New Jersey diverting over 90% of its 911 funds to its general fund. Corruption on this scale damages public safety and erodes the public’s trust in our institutions. By shedding light on this issue, Commissioner O’Rielly has proven his commitment to fighting corruption and advancing government transparency.

Commissioner O’Rielly has proven himself to be a principled and effective leader. He has a vital role to play in the implementation of 5G and the modernization of communications regulation in the coming years. Americans for Tax Reform urges the reconfirmation of Commissioner O’Rielly to the FCC. 

 

Onward,

Grover Norquist
President, Americans for Tax Reform

 

Photo Credit: Gage Skidmore

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Further Hearings on Sohn’s FCC Nomination Are Required

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Posted by Katie McAuliffe on Wednesday, January 19th, 2022, 9:13 AM PERMALINK

Senator Roger Wicker is correct to call for further hearings on Gigi Sohn’s nomination to the Federal Communications Commission. There is still more information that needs to be discussed, such as the details of the Locast settlement and the conditions of recusal in FCC matters. 

Sohn spearheaded an FCC proceeding that would have enabled tech platforms to effectively steal and monetize television content without paying for usage rights. Just as a-la-cart television didn’t need direction from lawmakers. The set-top box regulations were clearly trounced by the market, as a myriad of streaming options for viewing content are currently available. However, this is just one instance where Sohn engaged in attempts to weaken intellectual property rights.  

Perhaps even more egregious, Sohn served on the board of Locast, a “non-profit” that was determined to be illegally retransmitting broadcasters’ content without their consent in violation of the Copyright Act. The case resulted in a permanent injunction that required Locast to pay $32 million in statutory damages. Sohn cannot be an impartial regulator of the broadcast industry after joining the Board of an organization that openly violated that industry’s copyrights.  

It is also interesting to note that her nomination was received in the Senate from the President that on the same day that the Locast settlement was announced, October 28, 2021. 

It has been reported that she is negotiating a recusal deal, but none of these details have been made public or shared with other senators on the committee. Further, we simply have to take Sohn’s word that she will recuse herself. These agreements have no force of law. It’s very problematic that someone who signed a $32 million settlement agreement with broadcasters now wants to regulate them. 

Further a recusal from ruling on broadcast licenses, retransmission or copyright relating to the parent companies of ABC, CBS, NBC and Fox, who filed suit against Locast, would severely limit her ability to do any of the primary work of the Commission. 

Americans for Tax Reform joined a coalition letter opposing her nomination over legitimate concerns regarding her ability to be impartial, which include hyper-partisan attacks on Republicans, interest in revoking broadcast licenses over viewpoints, doomsday predictions for the internet without Title II regulations. 

Photo Credit: "Gigi Sohn" by Joel Sage is licensed under CC BY-SA 2.0

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Coalition Opposes Sohn's Federal Communications Commission Nomination

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Posted by Katie McAuliffe on Tuesday, November 30th, 2021, 7:32 PM PERMALINK

A coalition of 19 center-right organizations sent a letter to the Senate opposing Gigi Sohn's nomination to serve as a Commissioner on the Federal Communications Commission.

Sohn has spent decades as a hyper-partisan activist, launching attacks against regulators and elected officials who do not share her views. All of which has been well documented on social media. The letter outlines her past positions and how, if confirmed, Sohn would work to instill policies that would crush innovation, silence conservative speech, and eviscerate intellectual property protections.  

December 1, 2021  

Dear Senators:  

We, the undersigned, represent a broad coalition of organizations who oppose the nomination of Gigi Sohn to serve as Commissioner at the Federal Communications Commission. If confirmed, Sohn would work to instill policies that would crush innovation, silence conservative speech, and eviscerate intellectual property protections.  

The FCC was created by Congress to be an independent regulator and it has broad power over the telecommunications, media, and technology sectors. The agency has been characterized by bipartisan cooperation and accountability to Congress.  

Sohn has spent decades as a hyper-partisan activist, launching attacks against regulators and elected officials who do not share her views. She implied that the ranking member of the Senate Commerce Committee is an industry puppet. She suggested that Republican senators are a threat to the country. She credits center-right news outlets with “destroying democracy” and “electing autocrats.” And she joined the board of an organization after it was sued by major broadcasters for violating the Copyright Act—a case that recently resulted in a $32 million judgment against her organization. Given these views, it is hard to believe that Sohn would give regulated entities a fair shake or operate in a bipartisan manner at the FCC.  

The FCC plays a critical role in protecting and upholding free speech and the First Amendment rights of regulated entities. Sohn’s willingness to use the FCC’s power to silence her opponents is disqualifying on its own.  Sohn has expressed interest in the FCC revoking hundreds of broadcast licenses from a particular broadcaster due in part to the editorial decisions that company has made. She supported a campaign by elected officials to pressure cable and streaming services to drop conservative news outlets. And she closely aligns with an organization who petitioned the FCC to investigate broadcasters whose COVID-19 coverage they disagreed with.

Her views on Title II are emblematic of her longstanding tendency to promote policies that over-regulate the industries in the FCC’s jurisdiction. Sohn was one the chief architects of the short-lived Title II common-carriage rules that she claimed were necessary to enforce net neutrality. The rules drove down broadband investment,  increased prices, and decreased the adoption of home Internet service. Sohn has made it clear that she not only wants to reinstate these rules, but wants to take them further, including a ban on “zero-rating,” the free wireless data services that are particularly popular among low-income users. She has also signaled a desire for the FCC to set the price of broadband service, a practice that would be more apt for the Soviet Union than the United States.

When the rules were being repealed by the prior administration’s FCC, Sohn encouraged the far-left activist campaigns that fueled hyperbolic and doomsday predictions about the destruction of the Internet. FCC commissioners received death threats and a bomb threat was called into the FCC moments before the vote to repeal the rules. Sohn works with and supports the organizations who engaged in the tactics and rhetoric that led to these ugly displays.

Throughout her career, Sohn has favored policies that undermine intellectual property rights protections. She spearheaded an FCC proceeding that would have enabled tech platforms to effectively steal and monetize television content without paying for usage rights. Sohn also served on the board of Locast, a “non-profit” that was determined to be illegally retransmitting broadcasters’ content without their consent in violation of the Copyright Act. The case resulted in a permanent injunction that required Locast to pay $32 million in statutory damages. Sohn cannot be an impartial regulator of the broadcast industry after joining the Board of an organization that openly violated that industry’s copyrights. 

As the decisive vote on controversial matters at the agency, Sohn would have the power and incentive to push the FCC towards government control of communications. Further, the Biden Administration has shown a willingness to mislead Senators when it comes to agency leadership, as demonstrated by the bait-and-switch the White House pulled with the Federal Trade Commission, when Chair Khan was elevated after being confirmed under false pretenses. The potential for Sohn to become chair of the FCC makes her nomination all the more concerning. 

Sohn’s confirmation would jeopardize investment and innovation, threaten free speech, and bring partisanship to the FCC. For these and other reasons, we urge Senators to reject Sohn’s confirmation. 

Sincerely,  

Grover G. Norquist
President
Americans for Tax Reform

Phil Kerpen
President
American Commitment
 
Krisztina Pusok, Ph. D.
Director
American Consumer Institute
Center for Citizen Research
 
Jon Schweppe
Director of Policy and Government Affairs
American Principles Project

 

Richard Manning
President
Americans for Limited Government

 

Jeffrey Mazzella
President
Center for Individual Freedom

 

Andrew F. Quinlan
President
Center for Freedom and Prosperity
 
Roslyn Layton, PhD
Co-Founder
China Tech Threat
 
Ashley Baker
Director of Public Policy
Committee for Justice

 

Matthew Kandrach
President
Consumer Action for a
Strong Economy
 
Elizabeth Hicks
U.S. Affairs Analyst
Consumer Choice Center
 
Katie McAuliffe
Executive Director
Digital Liberty
 
Seton Motley
President
Less Government
 
Tom Hebert
Executive Director
Opeb Competition Center
 
Adam Brandon
President
FreedomWorks
 
George Landrith
President
Froniters of Freedom
 
Jessica Anderson
Executive Director
Heritage Action for America
 
Tom Giovanetti
President
Institute for Policy Innovations
 
James L. Martin
Founder/Chairman
60 Plus Association
 
Saulius “Saul” Anuzis
President
60 Plus Association

 

Photo Credit: "Gigi Sohn, President & CEO of Public Knowledge" by Joel Sage licensed under CC BY 2.0

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Republicans are not Responsible for Rushing Through Biden’s Delayed FCC Nominations

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Posted by Katie McAuliffe on Tuesday, October 26th, 2021, 6:12 PM PERMALINK

It’s about 280 days into Biden’s Presidency and he has finally decided to designate Federal Communications Commission Acting Chair, Jessica Rosenworcel as permanent Chair.

Along with Rosenworcel’s Chair nomination, comes the nomination of Gigi Sohn, a long-time democratic advocate, not just for Title II net neutrality and a host of other socialist plans, but was also never shy about using Title II net neutrality as a method for federal broadband rate regulation.

Biden’s delayed nomination of Jessica Rosenworcel to FCC Chair that is a mere two months before her required departure from the FCC, does not create an artificially expedited timeline for Sohn’s confirmation. Nor should Republicans feel pressure to carry water for Biden and Senate Democrats slow process.

Even with the overall lag in nominations, the FCC was expected to be a key player in the administration’s assault on American free markets as outlined in Biden’s July 9 executive order on competition (which calls on the FCC to reimpose net neutrality) and shored up by the nomination of Federal Trade Commission Chair Lina Khan, who was initially nominated as Commissioner and only elevated to Chair after she was confirmed by the Senate.

It would seem that the Administration is not back-dooring its more progressive nomination, Sohn, to the FCC by first elevating Rosenworcel to the Chair position. However, Republicans should not take this as a comfort.

Though Rosenworcel, a long-time telecommunications professional on both the Hill and at the FCC, is seen as relatively moderate in the current environment, she would require Sohn’s vote to get through anything on her markedly progressive agenda, and a guarantee that items that could have passed in a bipartisan fashion will instead become part of a radical left-wing agenda.

Republicans are under no circumstances are responsible for both of these nominations to go through before the end of the year. Senate democrats will likely want to confirm Rosenworcel quickly because she is serving in a "holdover" period after her term expired last year. If she is not confirmed by the end of this year, she will have to leave the FCC until confirmation, something she experienced in 2016-17 as well. 

Due to the limited number of legislative days in the calendar, odds are against final Senate confirmation this year. That is a problem of Biden’s own making; not that of Senate Republicans.

Sohn’s nomination in particular should not be on an artificial rush. She is seen as a controversial figure and could require the Vice President's tie-breaking vote in the Senate. While serving as Senior Advisor to former FCC Chairman Tom Wheeler, she shepherded the Title II version of net neutrality that imposed burdensome regulations and cause broadband investment to decrease for the first time outside of a recession, supported price regulation on broadband, lead the FCC’s unlawful attempt to preempt state laws restricting municipal broadband, and pushed for asymmetric privacy rules on Internet service providers and tech companies that were later revoked with the Congressional Review Act.

The Biden Administration is looking to create an artificial time crunch to push through exceeding controversial nominations at the FCC. If Rosenworcel’s nomination had occurred by springtime, which appears to be customary looking at the history of nominations and confirmations from presidents Reagan through Trump (see list below), the FCC would not be on the brink of falling into de facto Republican control. Sohn’s confirmation should not be linked to Rosenworcel’s end of year deadline to leave the FCC.

Without Rosenworcel’s confirmation, democratic Commissioner Geoffrey Starks would set the agenda, but he would be up against a republican majority, likely leading to a continuation of the bipartisanship we are seeing at the FCC right now.

With Rosenworcel’s unexpectedly quick confirmation, the FCC could continue its bipartisan business as it has thus far. In fact, under Republican FCC Chairman Pai the majority of votes were bipartisan as well.

With Sohn’s confirmation alongside Rosenworcel’s, we will see the FCC devolve into partisan politics and continuations of policy’s that have already been shown not to work, Title II net neutrality being chief among those.

FCC Chair Days until Confirmation after Nomination, Reagan through Trump

Trump: Pai immediately designated as chair January 2017
Pai was re-nominated for another full term 3/7/2017, confirmed 10/2/2017 (209 days) 
Obama second term: Wheeler nominated 5/1/2013, confirmed 11/4/2013 (187 days)
Obama first term: Genachowski nominated 3/3/2009, confirmed 6/29/2009 (118 days)
W. Bush second term: Martin designated chair March 2005
Martin was re-nominated for another full term 4/25/2006, confirmed 11/17/2006 (206 days)
W. Bush first term: Powell immediately designated as chair January 2001
Clinton second term: Kennard nominated 7/25/1997, confirmed 10/29/1997 (96 days)
Clinton first term: Hundt nominated 6/3/1993, confirmed 11/19/1993 (142 days)
H.W. Bush: Sikes nominated 6/28/1989, confirmed 8/4/1989 (41 days)
Reagan second term: Patrick designated as chair 2/5/1987 
Reagan first term: Fowler nominated 3/14/1981, confirmed 5/15/1981 (61 days)
 

Photo credits: "FCC Commissioner Jessica Rosenworcel" by the Internet Education Foundation and "Gigi Sohn" by Joel Sage both licensed under CC BY 2.0


Senate Fails to Adopt Compromise Cryptocurrency Amendment

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Posted by Katie McAuliffe, Bryan Bashur on Monday, August 9th, 2021, 5:39 PM PERMALINK

Americans for Tax Reform was disappointed to see the Senate fail to adopt the compromise cryptocurrency amendment (No. 2656) filed by Senator Pat Toomey (R-Pa.) that would have significantly improved the tax reporting requirement provisions in the bipartisan infrastructure bill. 

Grover Norquist, President of Americans for Tax Reform, stated:

Cryptocurrencies should never have been put up as a pay-for in the infrastructure package. It was creative accounting in the part of the White House to try and pay for part of their spending spree. Now an entire industry which should be thriving in America is threatened by IRS agents and requirements to access private information.

It is very concerning that senators could not agree to common sense language on cryptocurrencies. It’s clear legislation, especially on emergent technologies, should go though regular order rather than being hidden in a massive package.

This afternoon, Sen. Toomey asked for unanimous consent to include the amendment in the infrastructure package. This afternoon, Sen. Toomey asked for unanimous consent to include the amendment in the infrastructure package. Unfortunately, objections by other senators prevented the amendment from being adopted. In particular, Senator Bernie Sanders (I-Vt.) blocked the amendment because it would have been paired with Senator Richard Shelby’s (R-Ala.) amendment to increase defense spending. 

The compromise amendment was an agreement between Senators Toomey, Cynthia Lummis (R-Wyo.), Rob Portman (R-Ohio), Mark Warner (D-Va.), and Kyrsten Sinema (D-Arizona) to narrow the definition of a broker for digital assets for reporting tax information to the Internal Revenue Service (IRS). While not perfect, the amendment was a significant improvement from the language in the base text of the package. 

We encourage members of the House of Representatives to fix the language in the base text and look forward to working with them in this endeavor. The last thing the United States government needs to do is regulate the cryptocurrency market to the point where the industry leaves the United States entirely.

Photo Credit: John Williams

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Crypto’s Taxing Predicament

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Posted by Katie McAuliffe, Bryan Bashur on Friday, August 6th, 2021, 2:07 PM PERMALINK

The fight over the cryptocurrency tax reporting provision in the bipartisan infrastructure bill just got a lot more interesting. 

After Senator Rob Portman (R-Ohio) publicly announced he supported a vote on Senator Wyden (D-Ore.), Toomey (R-Pa.), and Lummis’ (R-Wyo.) amendment (No. 2498), he switched gears and filed his own amendment with Senator Warner (D-Va.). Industry leaders and trade associations such as the Blockchain Association, Coinbase, and Coin Center have publicly supported the changes in Wyden-Lummis-Toomey but oppose Portman-Warner. 

As currently drafted, the infrastructure bill would jeopardize the cryptocurrency and blockchain industry’s future in the United States. 

The provision titled “Enhancement of Information Reporting for Brokers and Digital Assets” would likely lead to a host of unintended consequences, not only for the technology’s ability to operate in the United States but also for the privacy rights of all Americans. The last thing the United States government needs to do is regulate the cryptocurrency market to the point where the industry leaves the country entirely. Totalitarian regimes such as the Chinese Communist Party have already kicked out Bitcoin miners much to the benefit of states like Texas who welcome all kinds of business. 

The cryptocurrency language in the bill was hastily thrown together in an act of desperation to pay for its large expenditures. The Congressional Budget Office’s announcement that the bipartisan bill would increase the federal deficit by $256 billion over 10 years underscores the lawmakers’ desire to shore up additional revenue, much to the dismay of the cryptocurrency ecosystem. 

The Joint Committee on Taxation estimated that the language in the bill would raise approximately $28 billion in revenue. ​This is curious since cryptocurrency brokers already report to IRS, so its hard to see where JCT is deriving these new numbers from.​

The Wyden-Lummis-Toomey Amendment addresses a significant concern in the underlying bill. The amendment removes the obligation of network participants, such as miners and software developers, who don’t have—and shouldn't have—access to customer information to report tax information to the Internal Revenue Service. It does so without affecting the reporting obligations placed on brokers and traders of digital assets.

On the other hand, the Portman-Warner Amendment excludes proof-of-work mining and blockchain validators. However, the amendment makes no mention of software developers, node operators, and aggregators thus requiring them to report to the IRS. ​Interestingly, singling out proof-of-work only exempts one technology and does not allow blockchain technology to continue to innovate in the US. These technologies are changing, and the newer proof-of-stake technology is more energy efficient but would not be exempt in the Warner-Portman amendment. It's surprising that the White House and Democrats would put these kinds of limitations on the ability of technologies to become more energy efficient.

The White House has signaled their support for Portman-Warner in an effort to maximize revenue and crack down on digital asset tax avoidance. Unfortunately, this is par for the course for an administration that is obsessed with regulating digital assets all in the name of “investor protection”. 

Tomorrow, the Senate is expected to vote on both of these amendments. What the Senate should not do is be complacent and vote down both of the amendments. ​The Wyden-Lummis-Toomey amendment is best suited to clarify the definition of brokers for crypto purposes without unnecessarily exposing Americans' private information; however, allowing the language in the base text to pass without any changes will undoubtedly require numerous individuals in the cryptocurrency ecosystem to suddenly hand over information to the IRS that they do not possess. 

 

Photo Credit: QuoteInspector.com

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