Case Study

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Case Studies

American or Australian Libel Law?

Mr. Joseph Gutnick, a prominent Australian businessman, was quite shocked when he came across some unflattering remarks about himself in an online article in :Barron’s

Some of Gutnick’s business dealings with religious charities raise uncomfortable questions. A investigation found that several charities traded heavily in stocksBarron’s promoted by Gutnick. Although the charities profited, other investors were left with heavy losses. . . . In addition, Gutnick has had dealings with Nachum Goldberg, who is currently serving five years in an Australian prison for tax evasion that involved charities.

In addition to tax evasion, Gutnick was accused of money laundering in that same article. Gutnick decided to file suit for libel. is owned by Dow Jones & Company, publisherBarron’s of the , which has its corporate headquarters in the United States. ButWall Street Journal Mr. Gutnick and his lawyers wanted to file the libel suit in his home country of Australia where the libel laws are quite strict. U.S. libel law puts the burden of proof on the alleged victim, but Australian law puts the burden of proof on the publisher.

Thus, Dow Jones sought to have the case heard in the United States, where Barron’s is written and disseminated. The company feared the precedent that would be set ifOnline

the case were heard in Australia. In the future, posting material online could leave them open to multiple lawsuits in many different jurisdictions. Accordingly, Dow Jones’ lawyers argued that the U.S. jurisdiction was the fairest place to hear this dispute. They also argued that Australian courts had no jurisdiction in this case.

But the High Court of Australia ruled that Gutnick could sue in his home state of Victoria, reasoning that this “is where the damage to his reputation of which he complains in his action is alleged to have occurred, for it is there that the publications of which he complains were comprehensible by readers.” According to Zittrain, the Australian High Court dismissed Dow Jones’ “pile on” argument “that Gutnick could next sue the company in Zimbabwe, or Great Britain, or China,” or wherever he read the allegedly libelous remarks. The court observed that Gutnick lived in Victoria and this was where the alleged harm occurred. It also noted that Dow Jones profited from the sale of toBarron’s Online Australians. Dow Jones eventually agreed to a settlement and issued a retraction.

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C o p y r i g h t 2 0 2 0 . J o n e s & B a r t l e t t L e a r n i n g .

A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w .

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Nonetheless, the Australian court’s ruling was unsettling for many in the publishing world. According to one lawyer for the publishing industry, “The problem is that rogue governments like Zimbabwe will pass laws that will effectively shut down the Internet.” On the other hand, doesn’t Gutnick have the right to be judged by the law of his own country where many of his fellow citizens read about his alleged transgressions?

Question Do you agree with the ruling in this case? Why or why not? Are Dow Jones’ fears unfounded or do they have some merit?

Case Studies

Google: The New Monopolist?

In 1998 the U.S. Department of Justice (DOJ) filed a major antitrust lawsuit against Microsoft for abusing its monopoly power against Netscape in the browser wars. The protracted case ended with a partial government victory, though it scarcely hurt Microsoft’s uncontested monopoly power in the operating system business. At the time, it seemed clear that, in the information age, monopoly was becoming the norm rather than the exception. This normalization of monopoly power began with the emergence of companies like Intel, Cisco, and Microsoft, which controlled critical ubiquitous software and hardware platforms. Concentration of power often depends on network effects, whereby a product’s value increases with the number of people who use it. While the power of Intel and Microsoft has waned over the years, there are some new potential monopolists, including Google, Facebook, and Twitter.

Hence it is not surprising that the U.S. and European antitrust officials have shifted their attention away from Microsoft to Facebook and Google. Google dominates the search engine business with a 78% global market share, despite Microsoft’s late entry into the market several years ago with its Bing search engine. Antitrust laws such as the Sherman Act do not necessarily make it illegal to be a monopoly. However, it is illegal for a company to abuse its monopoly power, to leverage that power in order to tilt the playing field against new competitors or competitors in related businesses to which the monopolist wants to extend its scope. Accordingly, Microsoft was accused of “tying” in violation of the Sherman Act, that is, combining its Internet Explorer browser with Windows so that it could gain control of the browser market.

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Google’s founders realized that the information delivered to users by a pattern of searches was the information needed to determine relevant ads. Search results could produce the ads that users were interested in seeing. Thus, while Google’s content and information is free, the company generates massive revenues from its innovative ad business. Google’s algorithms dramatically transformed the advertising industry and ushered in the “Google era” along with the company’s online dominance. Like Microsoft, Google was in a position to use its expanding monopoly power in one business (search engines) to gain market share in other online industries. The company could simply adjust its secret search engine algorithms to favor its own products or services and direct users to its own websites instead of those operated by competitors. Concerned with Google’s growing power and reach, the Federal Trade Commission (FTC), working in conjunction with the Department of Justice (DOJ), launched an investigation into Google’s practices. The FTC considered whether Google has rigged its search ratings to promote links to its own shopping, local, travel, and finance sites over those of rivals. Google’s own sites frequently showed up on the top spots of its search results. Search for a restaurant like “Capital Grille” in Dallas and it’s likely that you’ll be directed to Google Places, the company’s local business information page. Critics of Google say that given its large market share, the company should treat its own content in the same way that it treats the contents of its competitors.

Google’s practices became more obvious when it entered the lucrative $110 billion online travel business in 2011. Google conspicuously placed its own travel service atop services such as Expedia, Orbitz Worldwide, Inc., and Priceline. A search such as “Memphis to Omaha” yields a “Google-powered interactive chart” of the least expensive airfares between these two cities, and a Google flight tool links exclusively to the airlines’ websites. Further down on the list are links to the top travel websites such as Expedia. Similarly, in the past, a user’s search for a hotel might return a dozen or so conspicuous links to online travel agencies and hotel operators. But more recently the search most prominently displayed a Google shopping services page with reviews, hotel photos, and an offer to book a room.

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Google also favors its own comparison shopping services, known as Google Shopping. When someone initiates a product-related search such as “electric heater,” or “toaster,” Google returns ads above the organic search results that link directly to retailer sites (such as Target or Walmart) where those items can be purchased. The picture ads appear at the top of the first page under a title, such as “Shop for electric heaters on Google.” The businesses featured in those ads pay Google each time a user clicks on their ad. Other comparison shopping sites like Nextag operate in the same way, but those sites, which also have links to retailers, are often demoted in the search results, even though they may offer better deals. Google claims that it gives its own content preference because users prefer links that send them directly to a company’s website rather than a link to a comparison shopping site.

The FTC eventually concluded that while Google definitely favored its own shopping and travel services, its sincere desire to improve search results for consumers made it difficult to justify filing suit against the company. But Google hasn’t been so fortunate in Europe. In April 2015, the European Commission of the EU charged Google with abusing the power of its search engine to favor its own comparison shopping and travel services. Two years later, after negotiations failed, the European Union’s antitrust regulator fined Google $2.7 billion.

As Google increases its stake in online commerce, it will continue to struggle with its dual role in cyberspace as a search engine facilitating commerce and as a marketplace competitor. Google’s core business principles include “Don’t be evil.” Google has interpreted this principle to mean that it would always deliver unbiased and neutral organic search results. But is Google faithful to its principles when it uses its power in the search engine market to gain advantage in other markets such as comparison shopping?

Questions Is Google’s monopolization of search the same potential threat to social welfare as Microsoft’s monopoly of PC operating systems? Should Google be prohibited from competing in other online businesses as long as it remains the dominant search engine platform? How do you assess the European Commission’s case against Google? If you were hired as Google’s attorney, how would you defend the company’s practices?

Case Studies

Social Media: Good or Bad for Democracy?

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The philosopher Martin Heidegger spoke of the relentless drive of technology as the world and its objects become victim to humanity’s calculations and designs. But technology’s indeterminacy implies an uncertain future since we cannot predict where this drive will take us. A recent evolution of information technology has been social networking. Social networking fuses together the multimedia world described by Marshal McLuhan with virtual reality, and it displaces the real world with an artificial one. The person now dwells more extensively in an environment of texting, selfies, chats, Instagram photos, newsfeeds, and blogs. There was some apprehensiveness about the power of social media well before the immense popularity of Facebook and Twitter became a reality. But few could have foreseen that social media would also become a means for spreading misinformation and magnifying political partisanship.

Techno optimists once argued that social media had the potential to become a great stimulus for democracy because it amplified the powers of free speech. When Facebook and similar platforms first appeared, many sincerely hoped that they would give voice to the marginalized in society. People with different and unconventional viewpoints could locate each other and mobilize to advance their interests. But while these results have been realized to some extent, these sites have also become purveyors of “fake news” along with vast amounts of disinformation. The term “fake news” has been popularized by President Donald Trump, but it was coined by Buzz Feed’s Craig Silverman. For some, the proliferation of all this “fake news” and other forms of online abuse has wiped away the great promise of the internet as a force for semiotic democracy.

During the 2016 presidential election there was considerable disinformation on the web, along with heavy manipulation of information about the two presidential candidates, Hilary Clinton and Donald Trump. This abuse wasn’t supposed to happen on this democratizing technology, at least not on this scale. But decentralized networks with no controls can become powerful tools in the hands of extremists and opportunists. News sites appeared printing sensational stories that were neither vetted nor verified. For these sites, which sought eyeballs to attract ads and generate revenues, there was little incentive to avoid misinformation and the diffusion of propaganda.

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Consider the “fake news” entrepreneurs in Macedonia who created a number of pro-Trump websites. They adroitly imitated actual news sites and disseminated very partisan news stories that attracted Trump supporters. Their website domain names included

and . The sites published pro-Trump storiesworldpoliticus.com trumpvision365.com aimed at his supporters in the United States. These young Macedonians had no interest in advancing the candidacy of Mr. Trump. Rather, their sole interest was in attracting readers, since the volume of readers on their websites translated into greater advertising dollars. They also recognized that the best way to generate online traffic was to get their stories about the Trump campaign to spread on Facebook. Most of the websites had Facebook pages with hundreds of thousands of followers. The more sensational the content, the more attention the story got among Facebook followers. And as Facebook engagements increased, so did their readers who were attracted by their outlandish propaganda stories. For example, within a week a spurious story from , “Hillary ClintonConservativestate.com in 2013: I Would Like to See People Like Donald Trump Run for Office; They’re Honest and Can’t Be Bought,” generated 480,000 reactions, comments, and likes on Facebook. Virtually all of the stories on these websites made false and misleading claims.

The spread of propaganda, misinformation, and disinformation has become an epidemic in cyberspace and threatens to strike at the heart of the democratic process. Disinformation is the deliberate communication of false or misleading information, while misinformation is the communication of information without an intent to deceive. Often those who disseminate misinformation have evidence that is indirect or obscure. Democracies depend heavily on accurate and objective information so voters can make informed choices. Fake news misleads voters and contributes to the further polarization of political parties. According to one political strategist, fake news disseminated on social media is “the biggest political problem facing leaders around the world.” This hyperbolic statement reflects the inability of governments to deal with fake news narratives except through draconian measures that are anathema to democracy.

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But fake news is not the only problem that bedevils social media. As the leading social media platform, Facebook found itself at the center of multiple controversies that involved the 2016 U.S. presidential election. In March 2018, the British newspaper, the ,Observer along with the first revealed that a researcher had gained access to theNew York Times personal data of Facebook users for Cambridge Analytica, a consulting firm hired by the Trump campaign. The researcher, Alexander Kogan, created a Facebook app and invited Facebook users to take a survey and download the app that harvested their Facebook data along with the data of their Facebook friends. That data included names, birth dates, and location data as well as lists of every Facebook page they ever liked. And these data were downloaded without their knowledge or consent and added to a massive database being assembled for Cambridge Analytica. This political data firm has particular expertise in developing persuasive ads using “psychographic” techniques to manipulate voter preferences. By examining behavioral data such as what people “liked,” it was possible to map out personality traits that could become the basis for targeted ads. The personal data of 87 million users had been mined in this way, and Facebook was aware of this activity since December 2015. However, it said nothing to its users or to U.S. regulators until the media published this story. Facebook has claimed that Cambridge Analytica collected these data under false pretenses. The scandal led to many questions about how Facebook monitors the apps deployed to collect its user information and whether data should ever be made available for psychological profiling for political purposes.67

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Facebook has also been an unwitting catalyst for violence in vulnerable parts of the world. Facebook entered Myanmar, a country unfamiliar with the digital world, and was unprepared to deal with its deep political and social divisions. Facebook seemed unaware of how its platform could be manipulated and abused by extremists who could easily sway a naïve population. In this country, Facebook the internet, since most users only had mobilewas phones with Facebook already installed. Buddhist extremists wasted no time in using social media to spread disinformation in order to inflame ethnic tensions against the Muslim Rohingya minority. One of the country’s leading Buddhist monks ignited a deadly riot when he disseminated a fake news story of a rape and warned of a “Jihad against us.” According to one NGO, Facebook’s platform was used for a “campaign of hate speech that actively dehumanize[d] Muslims.” By March 2017 a million Muslims had fled Myanmar into Bangladesh. Facebook monitors missed many posts full of disinformation that helped to spark this ethnic cleansing. Moreover, when the tragedy intensified, Facebook was quite slow to react and remove hateful content, despite repeated warnings from multiple sources. It also did little to prevent fake accounts from being created. Zuckerberg himself recognized the company’s tardiness, as the people of Myanmar wondered why a company with Facebook’s resources could not have reacted more expediently.

In his defense to this series of crises, Zuckerberg has insisted that fakes news is much less common than people imagine. He attributes the company’s mistakes and missteps to an excessive optimism and a lack of awareness of how some Facebook customers misuse their service. But some analysts are quick to point out that while this explanation has some merit, it ignores the company’s fixation on rapid growth and an unwillingness to heed warnings from outsiders.

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The company has made some concessions. For many years Facebook did not disclose the sources of funding for political ads. But now users can find out on Facebook who paid for a political ad and whom the ad targeted. The company is also considering ways to “impose friction” to impede the spread of disinformation and misinformation. (Perhaps pop-ups with warnings such as “Do you really want to share this item?”). However, it is exceedingly difficult to control election propaganda or slow down the spread of disinformation, short of draconian censorship measures. With 2.7 billion people using Facebook’s services, monitoring content is the most difficult challenge facing the company. Yet fake news is a threat to liberal democracy, and Facebook must find a way to deal with users who share these false or barely credible news posts. On the other hand, it is perilous to have a small group of social media companies determine what kinds of political speech people will see. Hence the social media world faces a paradox: a greater emphasis on truthful news and communications will lead to limits on free speech, while too much speech opens the door for flows of disinformation and reckless propaganda. How can social media strike the right balance between these two competing objectives?

Questions In your estimation how serious is the problem of “fake news” or disinformation in cyberspace? What are some of the moral and social problems involved in using disinformation to generate website traffic? Be specific and refer to the theories of .Chapter 1 What policy changes would you recommend for Facebook that might help it remedy some of its past lapses and problems? What can be done about harmful, misleading content, election protection, privacy or data protection?

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REFERENCES

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