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White House Anti-Counterfeit Measure Could Strike at Amazon and eBay

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Pool photograph of Peter Navarro in Trump Tower by Albin Lohr-Jones

WASHINGTON, April 4, 2019 — The White House’s latest move to protect American industries and consumers from counterfeiting could potentially give President Trump an opening to hit back at some of his favorite targets.

National Trade Council Director Peter Navarro on Wednesday announced that the President had signed a Presidential Memorandum to combat “a very serious problem” — the trafficking of counterfeit goods through online marketplaces like Amazon, AliBaba, and eBay.

“President Trump has decided that it’s time to clean up this wild west of counterfeiting and trafficking,” said Navarro. 

Navarro told reporters that the administration’s strategy for combatting counterfeit goods would follow what is now a well-established process of using a Presidential Memorandum to order a study to determine what executive actions can be taken to accomplish a particular goal, followed by an Executive Order to implement the actions recommended by the study.

Consumers, he said, have a 50 percent chance of receiving counterfeit goods through online marketplaces like Amazon, citing data collected during a Customs and Border Protection operation. But shortly after that he admitted that administration officials “certainly don’t know with any certainty how much counterfeiting is going on,” from where the counterfeit goods are coming, or how they are making it into the United States.

Still, Navarro said sites operated by companies like Amazon represent the “central core” of the problem and suggested that the administration is looking for ways to punish them if counterfeit goods are sold through their platform.

“Right now these third-party online marketplaces, together with the ecosystem that supports them…have essentially zero liability when it comes to these counterfeit goods,” he said. “That simply has to stop.”

Making a third-party marketplace operator like Amazon financially liable if counterfeit goods are sold on its platform could potentially deal a huge blow to the company and would undoubtedly impact the bottom line of founder and CEO Jeff Bezos, whom the president has attacked in retaliation for his ownership of The Washington Post.

Trump frequently suggests that Bezos’ purchase of the venerable newspaper — which he often derides as the “Amazon Washington Post” or as a “Lobbyist Newspaper” — was meant to allow him to intimidate politicians and prevent the retail giant from being subject to regulation.

Asked whether there was a chance that Trump’s enmity for Bezos played a role in his decision to go after online marketplaces, Navarro replied that there was “absolutely zero” chance that Trump’s memorandum is a way of targeting Amazon.

A senior White House official who was contacted by BeltwayBreakfast explained that this latest use of executive  authority came to be as a response to “the numerous calls for help from American manufacturers hammered by counterfeiters.”

While the President cannot unilaterally change laws to make third-party marketplace owners liable for the goods sold on their platforms, the official said the study ordered by the memorandum would guide the administration’s next steps, including possible legislation.

An Amazon spokesperson that BeltwayBreakfast reached by email declined to address the possibility that Trump could once again be targeting Amazon, but noted in a statement that the company “strictly prohibits the sale of counterfeit products” and welcomes support from law enforcement.

The spokesperson added that the company “invests heavily in proactive measures to prevent counterfeit goods from ever reaching our stores,” and spends approximately $400 million each year to fight “counterfeits, frauds, and other forms of abuse” with tools that “ensure that over 99% of the products that customers view on Amazon never receive a complaint about counterfeits.”

“Bad actors that attempt to abuse our store do not reflect the flourishing community of honest entrepreneurs that make up the vast majority of our seller community,” the spokesperson said. “We estimate these businesses have created more than 900,000 jobs worldwide and they provide our customers with vast, authentic selection.”

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Andrew Feinberg covers the White House, Capitol Hill, and anything else you can think of for BeltwayBreakfast.com and BroadbandBreakfast.com. Andrew has reported on policy and politics in the nation's capital since 2007, and his writing has appeared in publications like The Hill, Politico, Communications Daily, Silicon Angle, and Washington Business Journal. He has also appeared on both daytime and prime radio and television news programs on NPR, Sirius-XM, CNN, MSNBC, ABC (Australia), Al Jazeera, NBC Digital, Voice of America, TV Rain (Russia) and CBS News. Andrew wishes he could say he lives in Washington, DC with his dog, but unfortunately, he lives in a no-dogs building in suburban Maryland.

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Culture War Comes to Silicon Valley as Sen. Josh Hawley Introduces Bill to Strip Immunity from Social Media

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Senator Josh Hawley (Drew Clark / Breakfast Media)

WASHINGTON, June 20, 2019 — Legislation authored by Sen. Joshua Hawley could signal the start of a new chapter of the culture war: Conservatives directly targeting Silicon Valley tech companies.

On Wednesday, Hawley, R-Mo., announced that he’d introduced the “Ending Support for Internet Censorship Act” (PDF), which would repeal a provision of the 1996 Telecommunications Act that granted online service providers immunity from liability for user-generated content posted on their websites.

The law, known as Section 230 of the Communications Decency Act, has increasingly come to be seen as generous – and perhaps overly generous – in encouraging robust online discussion. Many of the law’s most public beneficiaries – Facebook, Google, Twitter – are now the technology platforms that are America’s largest companies.

As a result, a growing group of tech critics are saying that Section 230 is no longer in the national interest.

Section 230 was included in the Telecom Act as a way of incentivizing websites concerned that they would be held liable for the comments of others. It was intended to reverse court rulings holding an online service provider liable for defamatory content posted by users when the tech company employed moderators to enforce terms of service rules.

Hawley’s mission against Facebook

Only six months into his first term, Hawley has garnered attention in conservative media circles by taking up the cause of conservative-identifying social media users. They claim that social media companies who ban or suspend the social networks’ rules against hate speech, threats, and harassment amounts to political censorship, even if done by a private sector actor.

(See our story last month, “Sen. Josh Hawley Accuses Facebook of Addiction and Calls Social Media Worth-Less,” which also touched upon Sen. Hawley’s views about Section 230.)

Now, Hawley says he wants condition providers’ immunity on their ability to convince four of five members of the Federal Trade Commission that they have not discriminated against conservatives when applying their terms of service.

The bill would only apply to platforms with more than 30 million active monthly users in the U.S., more than 300 million active monthly users worldwide, or more than $500 million in global annual revenue.

It would require these giant tech platforms to biannually provide the FTC with “clear and convincing evidence” that “their algorithms and content-removal practices are politically neutral.”

“With Section 230, tech companies get a sweetheart deal that no other industry enjoys: complete exemption from traditional publisher liability in exchange for providing a forum free of political censorship,” Hawley said in a statement.

“This legislation simply states that if the tech giants want to keep their government-granted immunity, they must bring transparency and accountability to their editorial processes and prove that they don’t discriminate.”

Tech industry lobbyists wonder whether they should take it seriously

But industry and legal experts savaged Hawley’s proposal as antithetical to the First Amendment and a throwback to policies long rejected by conservatives, including the Fairness Doctrine that required broadcasters using the nation’s radiofrequency spectrum to grant airtime to opposing views.

Computer & Communications Industry Association President Ed Black deplored the “ludicrousness” of Hawley’s proposal, which he called “an unbelievable disregard for the essence of the First Amendment and attempt to overlay a lens of partisan politics over the communications of millions of Americans.”

“If Congress is serious about tech companies doing more to remove hate speech and illegal content online, putting new restrictions on the legal protection that allows them to do that would be ill-advised,” Black said.

In a statement, TechFreedom President Berin Szoka said that the measure would effectively require internet companies to obtain a license from the FTC in order to operate. It would make them depend on the goodwill of FTC commissioners and the presidents who nominate them.

Szoka, who testified last year at a House Judiciary Committee hearing on conservatives’ allegations of political censorship, predicted that the biannual vote Hawley’s bill requires would turn into a “partisan bloodmatch” in which companies would be presumed guilty and have to prove their innocence.

“The bill would give politicians a gigantic regulatory hammer to use against big tech and transform the FTC overnight into the most politicized regulatory body in Washington,” he said. “Sadly, that seems to be the point.”

Szoka noted that Hawley’s bill would deter companies from making social networks “usable for normal people” by moderating content and combatting abusive behavior, extreme content and disinformation, and suggested such deterrence is meant to benefit Republicans.

“If, as social science research suggests, such harmful content seems to help Republicans energize their base more than it helps Democrats, even truly ‘neutral’ enforcement of terms of service will, on net, hurt the Right,” he said. “That which would explain why Republicans insist on framing content moderation as ‘censorship’ of their views.”

Emily McPhie contributed reporting.

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China First?

Donald Trump Declares Another Emergency, Bans Huawei from U.S. Commerce for Trading With Iran

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WASHINGTON, May 15, 2019 – Exactly three months after invoking the National Emergencies Act to fund his wall along the U.S.-Mexico border, President Donald Trump is using emergency powers to enable the Department of Commerce to ban U.S. telecommunications equipment manufacturers from selling chips to the Chinese state-owned equipment manufacturer Huawei.

The administration blamed Huawei’s alleged trade with Iran as a reason for the designation.

The President on Wednesday signed an Executive Order declaring a national emergency with respect to foreign espionage using U.S. communication networks and prohibiting “any acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology or service” in which a foreign government holds an interest.

“The President has made it clear that this administration will do what it takes to keep America safe and prosperous, and to protect America from foreign adversaries who are actively and increasingly creating and exploiting vulnerabilities in information and communications technology infrastructure and services in the United States,” White House Press Secretary Sarah Huckabee Sanders said in a statement.

Shortly after the White House released the new Executive Order, the Commerce Department turned the authority granted it by Trump’s order into action with an announcement that the department’s Bureau of Industry and Security would add Huawei to its “entity list” of banned companies based on “information available to the Department that provides a reasonable basis to conclude that Huawei is engaged in activities that are contrary to U.S. national security or foreign policy interest.”

The Commerce Department statement blamed Huawei for engaging “in activities that are contrary to U.S. national security or foreign policy interest. This information includes the activities alleged in the Department of Justice’s public superseding indictment of Huawei, including alleged violations of the International Emergency Economic Powers Act, conspiracy to violate IEEPA by providing prohibited financial services to Iran, and obstruction of justice in connection with the investigation of those alleged violations of U.S. sanctions.”

“This action by the Commerce Department’s Bureau of Industry and Security, with the support of the President of the United States, places Huawei, a Chinese owned company that is the largest telecommunications equipment producer in the world, on the Entity List. This will prevent American technology from being used by foreign owned entities in ways that potentially undermine U.S. national security or foreign policy interests,” Commerce Secretary Wilbur Ross said in a statement Wednesday.

“President Trump has directed the Commerce Department to be vigilant in its protection of national security activities. Since the beginning of the Administration, the Department has added 190 persons or organizations to the Entity List, as well as instituted five investigations of the effect of imports on national security under Section 232 of the Trade Act of 1962.”

The Commerce Department’s action means that Americans will need a license from the department in order to sell or otherwise transfer technology to Huawei, which can be denied if the transfer would harm American interests.

Inclusion on the Entity List could be a massive blow to Huawei’s bottom line in favor of an American company like Qualcomm, as many mobile phones and other wireless devices require such chips.

The Commerce Department took a similar action with another Chinese manufacturer, ZTE, earlier this year, but rescinded the decision after Chinese President Xi Jinping made a personal request to President Trump to have the company removed from the Entity List.

Federal Communications Commission Chairman Ajit Pai also issued a statement in support of the action, saying that he “applaud[ed] the President for issuing this Executive Order to safeguard the communications supply chain.  Given the threats presented by certain foreign companies’ equipment and services, this is a significant step toward securing America’s networks.”

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Democrats in Congress Attempt to Reinstate Net Neutrality with Maneuver Against FCC

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Photo Courtesy Sen. Ed Markey

WASHINGTON, March 6, 2019 – On Wednesday, 46 House and Senate Democrats moved forward with legislation that would codify so-called “network neutrality” legislation into law, bypassing a court dispute over their repeal by the Trump administration Federal Communications Commission.

The Save the Internet Act of 2019 would once re-instate network neutrality rules using an approach similar to last year’s attempt to use the Congressional Review Act to disapprove of the FCC’s repeal of net neutrality.

Last year’s CRA passed the Senate, but was never brought up for a vote in the House by the then-Republican majority.

Instead of enacting statutory prohibitions against paid prioritization, blocking and throttling of internet traffic by service providers, thereby writing network neutrality principles into what President Lyndon Johnson once called “the books of law,” the Save the Internet Act would declare that repeal order adopted by the FCC in December 2017 “shall have no force or effect,” and would prohibit the agency from reissuing any rule that is “substantially the same” as the one which repealed the 2015 rules, unless specifically authorized by an act of Congress.

If signed into law by President Donald Trump, the Save the Internet Act would literally turn back the regulatory clock by restoring the network neutrality regulations which were in effect on the last day of the Obama administration.

The similarities between this latest legislative effort to restore the Obama-era network neutrality rules and last year’s Congressional Review Act resolution go beyond the legislation’s text. The bill’s lead sponsors are Rep. Mike Doyle, D-Penn. and Senator Edward Markey, D-Mass., the duo behind the attempt to use a Congressional Review Act resolution to undo what was one of FCC Chairman Ajit Pai’s top priorities.

“Net neutrality ensures that when you pay your monthly bill to your internet service provider, you can able to access all content on the web at the same speed as your neighbor or big corporations,” said Markey, who has been a passionate advocate of strong network neutrality protections since the George W. Bush administration.

Markey called the Save the Internet Act a “clear and simple” piece of legislation, meant to “overturn the Trump FCC’s wrongheaded decision and restore strong net neutrality protections.”

Like last year’s Congressional Review Act resolution, this year’s Markey-Doyle team-up has the support of Democratic leadership in both the House and Senate.

Supported by House Speaker Nancy Pelosi

“It is an honor to join Democrats from both sides of the Capitol to introduce this strong legislation, which honors the will of the millions of Americans speaking out to demand an end to the Trump assault on net neutrality,” said House Speaker Nancy Pelosi, D-Calif. “Democrats are proudly taking bold action to restore net neutrality protections: lowering costs and increasing choice for consumers, giving entrepreneurs a level playing field on which to compete, helping bring broadband to every corner of the country, and ensuring that American innovation and entrepreneurialism can continue to be the envy of the world.”

Chris Lewis, Vice President of consumer advocacy group Public Knowledge, hailed the Markey-Doyle bill as “a simple, consensus approach to restoring strong net neutrality protections” with support from “a diverse and broad array of industry, nonprofit, racial justice, and other organizations.”

FCC Commissioner Geoffrey Starks said he was “pleased” with the proposed legislation.

“I continue to believe that the FCC’s 2015 Net Neutrality rules were the right approach and the bill introduced today takes us back in that direction—a direction that will empower the FCC to keep the internet open as a gateway to opportunity for students, job seekers, consumers, creators, and businesses,” said Starks, a Democrat and the newest member of the FCC.

Narrow CRA-like approach potentially on shaky legal ground

Representatives from Markey’s office did not respond to BroadbandBreakfast.com’s inquiry as to why Democrats were trying to restore old regulations rather than codify net neutrality protections into statutory language.

One longtime telecom industry observer suggested that the “simple, consensus approach” spoken of by Public Knowledge’s Lewis may be on shaky legal ground.

According to Berin Szoka, president of free-market think tank TechFreedom, the one-page bill is “a total sham, a fraud that cynically manipulates concern about net neutrality in a way that is carefully calculated to maximize Democrats’ political advantage instead of actually doing anything to protect net neutrality.”

Szoka suggested that Democrats, who managed to peel away three Senate Republican votes during last year’s CRA effort, are setting themselves up to use the copycat Markey-Doyle bill as a political bludgeon in hopes of gaining those Senate seats after the 2020 election.

He also noted that regardless of motivations, the legal basis on which the Democrats’ bill would revive the 2015 network neutrality rules is potentially shaky.

“Rarely, if ever, has such a short bill raised so many obvious legal problems,” Szoka said, noting that the Congressional Review Act — the authority on which the Save the Internet Act is based — allows Congress to strike down rules issued by regulatory agencies like the FCC, but not the orders by which an agency interprets provisions of a statute.

“Simply reviving a defunct regulatory order isn’t legislation, and probably wouldn’t stand up in court when challenged,” he said, adding that the bill is likely dead-on-arrival in the Republican-controlled Senate.

(Screenshot of Sen. Ed Markey courtesy MSNBC.)

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