Hey there, What’s Next Readers! Talk about a week! On deck we have a look at the international legal implications of Google’s alleged re-entry into China. Plus: Some must-knows from the intersection of crypto and law, including a look at the 20 year-old student who managed to defraud investors of millions. And it looks like net neutrality could resurface in court — because of the Trump administration?
Google Crosses the Great Firewall — And U.S. Lawmakers
Google’s long-held motto “don’t be evil” was struck from its code of conduct earlier this year, and critics are citing its reported decision to relaunch in China as among the company’s gravest sins.
According to The Intercept, that launch comes in the form of an Android app. Flying under the banner ‘Project Dragonfly,’ the app allows Google search under the lens of China’s strict censorship laws, meaning Internet sans content involving protest, religion, democracy, human rights, and other topics blocked by the “Great Firewall”— basically anything deemed a no-go by the Chinese government.
And crossing “The Great Firewall” means crossing some U.S. lawmakers as well. Six senators from both sides of the political divide sent a letter to Google CEO Sundar Pichai, writing the move sets “a worrying precedent for other companies seeking to do business in China” while risking making Google “complicit in human rights abuses related to China’s rigorous censorship regime.”
This isn’t Google’s first foray into flattering the Middle Kingdom. From 2006 – 2010, the tech titan operated a censored version of its search engine in the country, though later brought it to a halt after being bogged down in controversy, citing government efforts at censorship, hacking and curbing free speech as motivations.
And in China, Google its setting its sights beyond search. The Information reports that the company is building out a news aggregator app that complies with China’s “strict censorship laws,” and has “been meeting with Chinese regulators to discuss the project” since last year.
But censorship laws aren’t the only ones Google would face upon re-entering the Chinese marketplace. The country’s controversial Cybersecurity Law — no walk in the park by American privacy standards — could prove thorny terrain for the company. Human Rights Watch described it as “regressive,” strengthening “censorship, surveillance, and other controls over the Internet,” while other critics have, as reported in South China Morning Post, noted it was “open to abuse.”
To get an idea of what such law portends for Google, I reached out to Kirkland & Ellis Hong Kong partner Cori Lable. She says that if Google were operating in China, it would mean “potentially having to share data with the Chinese government,” and thus greater governmental oversight of the platform and possibly its users. What’s more, as Wired reports, the law’s restriction on transferring data beyond China’s orders means easier reach for authorities.
Google has yet to speak up about whether Dragonfly is actually underway, though China seems to be ready with open arms. But, there are conditions. People’s Daily, the Communist Party’s media mouthpiece, emphasizes compliance with Chinese laws, mainly, and those that draw ire from US lawmakers and activists.
➤ Think Ahead: Given Google’s mum status over Dragonfly, it’ll be interesting to see how the company, already reeling from controversies like its major antitrust EU fines and data collection practices, will navigate queries from activists, lawmakers and the US public over contentions ranging from cyber to human rights. This isn’t totally new terrain; more than 10 years ago, Yahoo settled a US lawsuit over allegations helped in China’s prosecution of dissidents.
Protocol: 3 Things to Know from the World of Crypto
➤ Varsity Blues: Think you’ve got a tough week ahead? High school valedictorian Joel Ortiz may be used to them, but surely isn’t balking at the 28 counts of hacking, grand theft and identity theft stacked against him. The alleged cryptothief, accused of snagging $5M of digital currency from investors’ cellphones, is due in back in Santa Clara County Superior Court August 9 for a plea hearing. In case you missed the kerfuffle, Ortiz was arrested at LAX in July after plowing through $150,000 on parties, designer garb and other goodies, and is currently being held on $1M bail.
➤ Coin Control: Maybe the “wild west” is a stretch, but the crypto market’s been known to get messy. Digital Chamber of Commerce, which counts former SEC commissioner Paul Atkins as CEO, is trying to get a grip on the marketplace. Its Token Alliance issued a white paper as a guiding light, with contributors from big law firm O’Melveny and Perkins Coie among those authoring guidelines for growing the marketplace in a responsible fashion. Bitcoin Magazine’s Nick Marinoff has an on-point breakdown of the paper, explaining its dive into international regulations, trading principles and ongoing evolution.
➤ Regulatory Roadmap: The DCC isn’t the only crypto-kiddie on the block trying to rein in the crypto space. The Office of the Comptroller of the Currency is extending an invitation to fintech groups to apply for special national charters, potentially opening doors for them to issue currency and operate entirely free of bank interference. The move has its obvious proponents - Goodwin Procter’s Mike Whalen told Bloomberg it was “a game changer” for tech companies without national charters to maneuver a “50 state hodgepodge” of regulators. But it also has its contenders. New York DFS is among them, stating that the “idea that innovation will flourish only by allowing companies to evade laws that protect consumers, and which also safeguard markets and mitigate risk for the financial services industry, is preposterous.”
Net Neutrality Taken to the Supreme Court…by Trump?
That seems to be the case, but it’s far from black and white. The Trump administration, courtesy of attorneys at the FCC and DOJ, is asking SCOTUS to vacate a 2016 DC Circuit Court ruling upholding net neutrality.
So why would the administration take an axe to the decision when the rules were stricken from the books in 2017? Turns out they’re operating with an eye toward the future. As The Root’s Monique Judge writes, while the FCC’s repeal makes the 2016 case moot, a rush of lawsuits from state and lobbying groups mean the ruling could “come back and bite them in the ass, so to speak.” The FCC and DOJ acknowledge as much in their SCOTUS brief, noting “legal questions concerning the proper regulatory treatment of broadband services will be resolved in the pending challenges to the 2018 Order.”
The administration’s brief comes in aid of lobbying groups appealing to SCOTUS this past fall. The groups asked the Court to rule that the FCC under Obama “exceeded its authority” in reclassifying internet providers “in order to impose stricter regulations,” Ars Technica reports.
The DOJ and FCC spell out a variety of paths forward for SCOTUS to take. But one, it says, would be for the high court to grant the broadband industry’s earlier 2017 cert petition challenging the circuit court ruling and vacate the judgement, and then direct the lower court to “consider in the first instance” the new order repealing net neutrality.
A little extra fun fodder: Remember that DDoS attack the FCC blamed for jamming up online comments during the initial net neutrality debate? Turns out it’s moot, so to speak - FCC Chairmain Ajit Pai said the claims were based on “inaccurate information.” And who’s to blame? In Pai’s telling, it’s the Obama administration — former FCC CIO David Bray, to be exact.
➤ Think Ahead: Whether SCOTUS will, as Ars Technica puts it, “re-kill already-dead net neutrality rules” is tough to say. Incoming Justice Brett Kavanaugh surely opposes net neutrality, having argued that the rule undermines separation of governmental powers. Though that may not be enough for SCOTUS to take the time to kill what, at least at present, is already dead.
That’s it for this week! Stay tuned for What’s Next!