DV Journal

The European Union, which has dismally failed to foster a business climate where tech companies can thrive, is now aiming to cripple America’s tech leaders, potentially landing a body blow to the broader U.S. economy. More distressing is that the EU is being aided and abetted in its regulatory attacks by the Federal Trade Commission.

The EU and the United States have often squared off on economic issues.

For 17 years, under four presidents, two Democrats and two Republicans, the EU and the United States were involved in a high-profile fight over aircraft manufacturing. The EU has strenuously objected to provisions in the Inflation Reduction Act, which President Biden championed. Other areas of disagreement have included agricultural products, steel, aluminum and even hard liquor.

But the mother of all EU attacks on U.S. businesses has been launched as the European Commission begins enforcing the Digital Markets Act and other measures against large U.S. tech companies. Except for one Chinese company, all the EU targets are from the United States: Alphabet (Google), Amazon, Apple, Meta (Facebook and Instagram), and Microsoft.

Among those raising protests toward the EU is a bipartisan group from the House of Representatives, 12 Democrats and 10 Republicans.

The group wrote to Biden on December 15, expressing “grave concern” as “the recent decisions by EU authorities pose serious potential damages to America’s competitiveness and security interests.” They also call out Europe’s parochial interests, saying, “The EU’s ‘digital sovereignty’ agenda has repeatedly applied one set of rules to American companies and a different, more favorable set of rules to European and foreign firms, including Russian and Chinese firms.”

Former president Barack Obama also warned against the EU’s abuse of power.

In 2015, Obama took the EU to task for having a dismal tech sector and trying to compensate for that by taking down America’s tech leaders. President Obama said, “We have owned the internet. Our companies have created it, expanded it, perfected it in ways that they can’t compete. And oftentimes what is portrayed as high-minded positions on issues sometimes is just designed to carve out some of their commercial interests.”

Unfortunately, the FTC, led by its stridently progressive chair, Lina Khan, has been working quietly with EU regulators instead of standing up for U.S. companies. Khan has made several trips to Europe to meet with regulators and address the International Competition Network, an international regulatory group.

The EU has the administration right where it wants it for taking on U.S. tech companies.

For example, on March 30, 2023, there was a meeting between Khan, the U.S. Justice Department’s Antitrust Division Assistant Attorney General Jonathan Kanter, and Margrethe Vestager, the executive vice president of the European Commission, which enforces EU rules.

Vestager said, “Today’s meeting has proven once again how fruitful it is to keep engaging in close cooperation between the European Commission and the US competition authorities.”

To keep the United States on the sidelines as the EU goes after U.S. companies is a win for Vestager and the EU. To get U.S. support is a hefty bonus.

The stakes are high. Companies that fail to comply with the EU’s Digital Markets Act can face fines of up to 10 percent of their global revenues, or more than $150 billion from the five companies. This could hobble those companies in the United States, leading to retrenchments and even layoffs with cascading tech sector effects. It could also lead to stock market drops that harm tech-oriented portfolios and the broader equity markets.

Pandering to the EU to go after U.S. companies makes no sense. It needlessly cedes national sovereignty with no tangible benefits for the United States.

It is time for the FTC to disclose its largely secretive discussions with EU regulators, as many in Congress have already demanded. Furthermore, the FTC should cease and desist all interaction with the EU until further notice.

A federal district judge in California has enjoined the state’s Age-Appropriate Design Code Act (AADCA). Putatively to protect children from online harms, this sweeping 2022 law imposes a potpourri of duties and restrictions on websites’ collection and handling of children’s data. It further incentivizes websites to verify each user’s age — a gross privacy violation. However, these provisions and others likely violate the First Amendment, Judge Beth Labson Freeman ruled.

Although advocated to address the discrete issue of children’s online safety, the AADCA (if permitted to take effect) would essentially reshape the internet for all users. And it would threaten not just online privacy but free speech. “Self-censorship is (the AADCA’s) self-professed aim,” alleges NetChoice, a trade group representing tech companies, which brought the case.

The astoundingly broad AADCA regulates businesses (as defined by California statute) that host websites that are “likely to be accessed by children.” Legal minors are, of course, likely to access almost every type of website. The law provides websites two paths to avoid liability: extend to all users the law’s protections for children — which California self-admittedly designed to limit children’s access to certain content — or verify every user’s age.

Both options would likely chill speech. Applying speech-limiting children’s safety provisions to adults would “impermissibly ‘reduce the adult population … to reading only what is fit for children,’” Freeman reasoned. Alternatively, many websites implementing universal age verification would likely exclude children altogether to avoid further compliance costs. The judge writes that “the provision here would serve to chill a ‘substantially excessive’ amount of protected speech to the extent that content providers wish to reach children but choose not.”

Although she acknowledged the state’s interest in protecting children from online harm, Freeman correctly assessed that much of the AADCA likely cannot meet a moderately demanding level of scrutiny. California failed repeatedly to show that the law’s provisions would meaningfully protect children from online harms; in some instances, Freeman found that the law would, in fact, harm children and other users.

For example, the AADCA’s promotion of age verification impinges on all users’ privacy — directly contravening the law’s stated aims. To identify underage users reliably, websites must collect from all users either age-confirming documentation — e.g., a government-issued identification card — or biometric data such as a facial scan. (Some websites may outsource this to third parties.) “The … age estimation provision appears not only unlikely to materially alleviate the harm of insufficient data and privacy protections for children but actually likely to exacerbate the problem by inducing covered businesses to require consumers, including children, to divulge additional personal information,” Freeman wrote.

Likewise, provisions limiting websites from making certain targeted suggestions to minors fail to discriminate between protected and non-protected speech and would likely reduce young people’s access to beneficial content.

The law requires websites to document and report how their data practices could harm children and to create harm-mitigation strategies. It does not, however, require websites to act on those strategies. The reporting requirements “provide ‘only ineffective or remote support for the government’s purpose’ and do not ‘directly advance’ the government’s substantial interest,” Freeman concluded. Much else in the law fits this legally head-scratching mold.

Too many legislators in both major parties, although rightfully concerned for children’s safety, support astoundingly sweeping (and often unconstitutional)  regulatory schemes for the digital world. As with the AADCA, such proposals (when scrutinized) generally have little chance of achieving their objectives — at least not without also inflicting intolerable economic damage or constitutional violations. Over the past quarter century, courts have accordingly struck down several such laws.

More prudent policymakers would remember that noble intentions guarantee no good policy outcomes and that economic tradeoffs and constitutional norms apply as much in the digital world as in the physical one.

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D.C. insider publication Politico recently published a glowing, subscriber-only profile about a “British baroness writing American online safety laws.” But did the publication miss a major scoop in recounting the tale of how Beeban Kidron, a member of the House of Lords and film industry bigwig, succeeded in pushing California into passing its Age Appropriate Design Code law (AADC)?

It appears Kidron and/or her advocacy group 5Rights may violate the Foreign Agents Registration Act (FARA).

In its piece, Politico dubbed Kidron “one of the most important architects” of the AADC and “arguably the most important and effective driver of data privacy and social media rules in the United States.” She de facto wrote the British version of the AADC, which California copied after “Kidron first reached out in late 2021 to Democratic Assemblymember Buffy Wicks…”

“This was not a homegrown bill,” Wicks explained to Politico. “We borrowed this from another country.” A California Republican with whom Wicks partnered characterized Kidron as “instrumental in getting the bill passed.”

Politico reported Kidron “exercises outsized influence by working behind the scenes” and how she does it—through her non-profit. “This year, Kidron’s 5Rights Foundation pushed hard for other states like Maryland and Minnesota to follow the U.K.’s lead in passing their own kids-focused rulebooks.”

The publication cited Sen. Dick Blumenthal (D-Conn.) as saying Kidron “has enormous influence” and referenced Sen. Marsha Blackburn (R-Tenn.) meeting with her repeatedly over eight years, meetings relevant to federal legislation.

And a former advisor to former British Prime Minister Tony Blair is quoted saying Kidron “gets sh*t done” like no one else. Clearly, Kidron is a force to be reckoned with.

And clearly, she and her organization, 5Rights, are actively seeking to influence legislation and stakeholder opinion on kids online. That puts 5Rights, if not Kidron herself, in clear danger of violating federal law—specifically FARA.

FARA requires agents of foreign principals—like Kidron, or 5Rights, which “is headquartered in London with an office in Brussels”—to register or face criminal sanctions.

Yet according to FARA database searches conducted on August 7, 2023, no FARA filings have been made by or in respect of 5Rights, or Kidron, or figures identified as working on their behalf on legislative initiatives.

If the FARA law sounds familiar, it should. During the federal court hearing last month over Hunter Biden’s plea deal, federal prosecutor Leo Wise confirmed to Judge Maryellen Noreika that Biden was under investigation over a potential FARA violation. According to the DOJ, a willful violation of FARA could result in five-year imprisonment, a $250,000 fine, or both.

In June 2022, 5Rights hired Nichole Rocha, a former staffer “from the California Assembly Privacy and Consumer Protection Committee” who previously “was counsel to the California Senate Judiciary Committee” as its head of U.S. Affairs. In that role, she “work[ed] closely with stakeholders to ensure that the bill was practically feasible from their perspective, without watering down the rights provided to children and youth.”

Rocha has advocated for the AADC in media, nationally, and in states like Nevada. In New Mexico, Maryland, and Minnesota, Rocha testified in support of the AADC. In Minnesota, 5Rights also submitted an FAQ document about AADC; the metadata of that document showed 5Rights Lobbyist Elizabeth Galicia created it. Neither Rocha, nor Galicia, nor 5Rights staffer Marisa Shea (who authored a column advancing 5Rights’ position in Maryland and works for 5Rights from Washington, D.C.) nor 5Rights’ California lobbying firm Capitol Connections has registered under FARA.

However, a search of California’s Fair Political Practices Commission database earlier this year did reveal Capitol Connections registered to lobby for 5Rights on the California AADC. That showed some willingness to engage in some public disclosure. But where California lobbying disclosure requirements might be the equivalent of high school football, FARA is the NFL. The DOJ doesn’t routinely comment on FARA matters, but one has to think they are looking at this.

British sources say it is possible Kidron and her group were just thoroughly unaware of U.S. law requiring registration since nothing comparable exists within the United Kingdom. However, it is somewhat embarrassing to have a baroness merrily proceeding with lobbying and advocacy while very possibly committing a federal crime. It is also noteworthy that the FARA unit of the Department of Justice has become much more active in recent years, famously targeting figures associated with everyone from President Joe Biden to former President Donald Trump to Florida Gov. Ron DeSantis.

But even if Kidron, 5Rights, or its staff comply with FARA and register, there is also something a little out of kilter with U.S. tradition where we see American politicians taking marching orders from a member of the British House of Lords. That is perhaps less galling where Democrats are concerned, given their demonstrated interest in borrowing from abroad where models for bigger government are concerned. The story is, or should be, different for Republicans who famously oppose things like federal courts looking at international or foreign law when deciding cases, and many of whom spent years flocking to conferences littered with tricorn hats and invoking America’s independence from Great Britain.

The story, of course, also should be different for Washington, D.C.-based policy reporters. Surely after the last few years, they should know that every time a foreign individual or entity is name-checked as advocating a particular policy unless it is literally a country’s embassy or president or prime minister, it is probably prudent to check the FARA database, and see if that person or entity complies.

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I considered repeating the usual New Year’s resolutions–eating better, exercising, listening more than talking, and reading that stack of unopened books. All worthy goals. But this year I am prioritizing personal data safety by reducing my exposure to electronic surveillance.

Most of us are concerned with how much electronic spying goes on in our lives. In most cases, however, the blame falls squarely on our shoulders. We want to be able to search online with quick, accurate results. We prefer ads (if we must see them) for things relevant to us.

Practically everyone reading this has decided (as I have) to keep an electronic tracking device in our back pockets, watching where we are at every moment, recording our personal data as we send and receive information.

Every selfie we take, every child’s birthday we record, contains metadata that details exactly where we were, down to the finest GPS locations, with timestamps. Our phones often know the name of the people or objects in our photos. (Look at your phone’s photo gallery and type in the search box ‘dogs’ or ‘kids’ as a test).

The digital universe makes us easier to track. But we can reduce the risk of sharing too much personal data with some simple ‘data hygiene.’ One of the easiest things to do is to use safer web browsers and search engines. Opera and Brave provide good browser personal security.

I find Firefox has very secure options. It collects minimal personal data, has built-in malware protection, and can block sites from tracking you. It has an icon that can tell you if a site is attempting to record your data. Protecting your email address is becoming easier. Sites often sell our contact information to companies that then spam us. Apple, Firefox, and others allow you to fill out forms using an alias email address, so your real address cannot be shared with others. The Firefox version is free.

Web searches generate the most personal tracking problems. Instead of Google, you can try DuckDuckGo. Based in Pennsylvania, DDG eliminates the tracking software built into Google. I have found the quality of the search results to be just as good (and occasionally better) than Google. Change your search engine choice in your browser to see.

If you want to stay with Google, you can have your personal information removed from Google searches. Google is not obligated to remove your personal information, but you can make the request. You can manage how Google treats your data if you have a Google account. On the Google home page click on your name at the top, then select ‘Data and Privacy’. You will see a list of choices to help stop web tracking. (You may be surprised by the list of trackers you have!)

Want to learn more about deleting online tracking? The Delete Me blog page is a good place to learn how to hide your digital footprints. For protection from data hacking, the simplest thing to do is to enable ‘Automatic Updates’ on your devices. This ensures you will have the latest security software automatically. All devices have this option in their settings. Switching it on is free and reduces the possibility of data hacking.

The single most important thing you can do for data hygiene is to go to your most used websites and services and change your passwords. Everyone knows we should change passwords more often, but we rarely do it. Someday devices may use face or retina scans but until then, we have passwords. When passwords are stolen they can be offered for sale on ‘dark web’ sites. We all know people who have had their social media personalities hacked. Why wait? Update your passwords now.

Safari and Firefox have built-in password generators. If you use a password vault system these services will generate and remember passwords for you. If you make your own, avoid using the same password twice. Avoid using your street address, birthdate, or family names. For simple, safe passwords hyphenate small groups of words and numbers (Dress-1941-jumP-milk). The passwords can be stored in a vault like Apple Keychain or a password vault provider.

You cannot read that shelf of books in less than a few months, and changing your diet and exercising are worthy but difficult goals. But you can join me in resolving to make our personal data safer and more secure this week. Most of the cost is only a little time. If doing this prevents even one personal hack or data leak it will be one of the best resolutions, you can ever make.

Happy New Year!

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From a press release

Delaware County District Attorney Jack Stollsteimer Wednesday announced that as a result of a joint undercover sting operation, six men ranging in age from 24 to 56 have been arrested and charged with multiple counts of child sex-related crimes arising from their attempts to engage in unlawful sexual conduct with minors.

The sting, led by the Naval Criminal Investigative Service (NCIS), included assistance from the Federal Bureau of Investigation, members of the Internet Crimes Against Children Task Force (ICAC), as well as multiple municipal police departments. During the operation, which ran from December 8 to December 11, undercover agents assumed the identity of a minor on one of the websites or social media sites which are monitored by law enforcement for use by individuals who engage in the sexual exploitation of children.

“There can be no disagreement that the sexual exploitation of children is morally and legally wrong, yet in each of these cases, men — each of whom were repeatedly advised of the age of their intended sexual partner – engaged in online conversations of a sexually-explicit nature and arranged for a meet up to engage in sexual activity,” said Stollsteimer. “This is shameful conduct, and cannot be tolerated in a civilized society. This joint operation – which involved contributions from multiple law enforcement agencies – should send a signal to would-be predators that we have an army of dedicated members of law enforcement who work tirelessly to protect our children.”

The Accused:

Joseph Fahy

Joseph P. Fahy, 48, of Media is accused of traveling to Essington on December 8, 2022, to meet up with a person he believed to be a 14-year-old boy for sex. According to the complaint, Fahy and an undercover agent who was posing as the boy discussed sexual activity on a social media site prior to the planned meetup. Fahy was arrested on December 8 at the site of the proposed meetup. He has been arraigned on felony counts of attempted involuntary deviant sexual intercourse with a child (IDSI), unlawful contact with a minor, attempted corruption of minors, and criminal use of a communication facility. Bail was set at $250,000, and a preliminary hearing is scheduled before District Judge Jack D. Lippart on December 19, 2022.

Laurence D. Tom, 47, of Philadelphia, also faces charges in the sting. An undercover agent posing as a 14-year-old female responded to an online sex ad, which led to an exchange of emails between the defendant and the undercover agent. In the emails,

Stephen Maghanoy-Taghap

the undercover agent disclosed multiple times that s/he was 14 years old. The defendant acknowledged understanding the agent’s age, and made sexual requests from the agent including fellatio, cunnilingus, sexual intercourse, and anal sex. The defendant made arrangements with the undercover agent to meet on December 10, 2022, at a location in Tinicum Township. Tom was arrested at that time, and has been arraigned on felony counts of attempted IDSI, unlawful contact with a minor, corruption of minors, and criminal use of a communication facility. Bail was set at $250,000 (10 percent), and a preliminary hearing is scheduled before District Judge Jack D. Lippart on December 19, 2022.

Stephen L. Maghandy-Taghap, 37, of Philadelphia, was arrested in the sting. An undercover agent posted an ad on an internet escort service. The defendant responded to the ad and asked about the agent’s “rate.” The agent responded that s/he was a 14-year-old female. Knowing that the intended target was 14 years-old, the defendant agreed to pay $100 for sex. Taghap was taken into custody on December 8 at the meetup site in Tinicum Township. He has been arraigned on felony counts of attempted trafficking in minors, attempted statutory sexual assault of a minor, unlawful contact.

Tyler Wilder

with a minor, corruption of minors, and criminal use of a communication facility. Bail was set at $250,000 and a preliminary hearing is scheduled before District Judge Jack D. Lippart on December 19, 2022.

Tyler A. Wilder, 30, of Glenmoore, Pa. On December 10 a member of ICAC, acting in an undercover capacity as a 14-year-old boy, began communicating with the defendant over the social media platform KIK. Despite expressing concern that he might get “in trouble,” the defendant exchanged a serious of explicit sexual messages with the undercover agent, and agreed to meet for the purpose of engaging in oral sex. Wilder was taken into custody on December 10 at the site of the proposed meetup in Tinicum Township. He has been charged with felony counts of attempted IDSI, unlawful contact with a minor, corruption of minors, and criminal use of a communication facility. Bail was set at $250,000 (10 percent), and a preliminary hearing is scheduled before District Judge Jack D. Lippart on December 19, 2022.

Daniel J. Thurman-Miller, 24, of Colorado Springs, Colo. faces multiple charges. Acting as a 14-year-old female, an undercover agent posted an ad on an internet escort service. The defendant responded to the ad, and asked to meet for the purpose of oral sex. A meetup was arranged for December 9, in Tinicum Township, at which time the defendant was taken into custody. Miller has been charged with felony counts of attempted IDSI, unlawful contact with a minor, corruption of minors, and criminal use of a communication facility. Bail was set at $250,000 (10 percent), and a preliminary hearing is scheduled before District Judge Jack D. Lippart on December 19, 2022.

Daniel Thurman-Miller

Andrew Chang, 56, of Upper Darby, was also charged. Acting as a 14-year-old female, an undercover agent posted an ad on an internet escort service. The defendant answered the ad and began a sexual conversation with the agent. The agent told the defendant that s/he was 14. Despite expressing concern about the agent’s age, Chang requested sexually explicit pictures, as well as a meetup for the purpose of engaging in various sex acts. Chang was taken into custody on December 10 in Tinicum Township. He has been arraigned on felony counts of attempted trafficking in minors, attempted IDSI, attempted statutory sexual assault of a minor, unlawful contact with a minor, corruption of minors, and criminal use of a communication facility. Bail was set at $250,000 (10 percent),  and a preliminary hearing is scheduled before District Judge Jack D. Lippart on December 19, 2022.

“I want to express my heartfelt gratitude to NCIS Supervisory Special Agent George E. Ash and NCIS Special Agent Lisa Carroll for leading this effort to protect our nation’s children from online predators,” said Stollsteimer. “Numerous departments and agencies contributed to this operation, including the Ridley Police Department, the Lower Makefield Township Police Department, the Tinicum Township Police Department, as well as the Federal Bureau of Investigation, and we owe them all a debt of gratitude. I also want to specifically thank CID Detective Sergeant and PA ICAC Task Force Commander Ken Bellis, as well as Chief Simpkins of the Tinicum Township Police Department for their contributions to the arrests we announce today.”

The District Attorney and the Criminal Investigations Division ask anyone in Delaware County who observes suspicious activity call to 911 immediately and provide the most specific and accurate details possible to assist law enforcement agencies.

The District Attorney’s Office reminds readers that criminal charges are allegations and all defendants are presumed innocent until proven guilty.

Internet connectivity is essential in an increasingly digital world. That was no more evident than when the world shut down at the height of the coronavirus pandemic. The ability to be online and remain connected was not optional but vital to living during that time. Thus, it makes sense why policymakers and experts are trying to find ways to ensure internet connectivity is spread as far and as widely as possible today.

Unfortunately, many of those thought leaders have proposed tax hikes on big tech companies as a way of reaching this goal. The idea centers around a proposal outlined by Federal Communications Commission (FCC) Commissioner Brendan Carr in a May 2021 op-ed piece. Carr called for major tech companies to be forced to pay fees to fund the Universal Service Fund (USF) to fund internet infrastructure projects and to promote affordable access across the country. The proposal received some traction then and is still circulating, especially as opinions surrounding tech companies have become more polarized.

The argument goes that since a select few tech companies account for a disproportionately large amount of web traffic, they should have to “pay their fair share” to keep the internet up and running. Presently, traditional telephone services pay for that through fees that are imposed on consumers’ monthly telephone bills.

As with most arguments that rely on the “fair share” fallacy, that doesn’t tell the whole story. First, big tech companies are already investing in building out more internet to unserved parts of the country – and the world – precisely because of how much they rely on it. That sort of investment cannot just be hand-waved away because it’s not part of USF.

There is also no hard-and-fast way to ensure the tax on big tech companies will not get similarly passed on to consumers. Any time a tax is increased on a business, the company will have to compensate somewhere. That would likely involve price hikes in some, way, shape, or form. Not only would such a “big tech tax” damage existing investment and innovation from these companies, but companies would also undoubtedly respond by raising ad prices as well as the price of their various devices and services. All those costs inevitably reach the average consumer, contributing to the inflationary pain everyday Americans are already experiencing.

It is also important to note that funneling money into the USF may be for naught. The USF is on the verge of collapse. Contribution rates are falling and there is a reason policymakers in Congress and the administration are grasping for solutions. The USF – like other government programs – is in dire need of reform and simply throwing more money at will not immediately solve. Taking money away from innovators in the space is one of the more counter-productive solutions available.

Considering the volatility of the tech space, making the USF reliant on skimming big tech revenue could make the program even more unstable. For example, Meta’s market cap has taken a severe hit over recent months, losing billions in value in such a short period as the company’s revenue continues to take major financial hits. It would make very little sense to tie a vehicle like the USF to companies whose prospects can shift so drastically so quickly. It is a recipe for even more uncertainty in an already unstable program. Imagine tying the fate of the USF to companies like MySpace and Yahoo just a few years ago. The consequences would have been disastrous.

To make the plan viable, the government would have to actively prop up tech companies, creating another new “too big to fail” dynamic. Given the push to fund USF through big tech taxes likely stems out of a desire to rein in these tech companies, the proposal becomes even more counterintuitive. And, given how typical government bailouts work, the American taxpayer would be on the hook for even more cost because of government carelessness.

While delivering high-speed internet across the nation is an admirable goal, reactionary politics going after convenient political targets will never achieve that result. Policymakers need to take a sober-minded look at the USF and come up with reasonable ways to move forward, bearing in mind the interests of taxpayers as well, and potentially working with the companies who also have a clear stake in ensuring the longevity and proliferation of the internet to every corner of America.

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