Thursday, February 25, 2010

Italian Judge Nails Google, Threatens Publishers. Motives?

A Prosecutor in Milan, Italy indicted 4 Google Executives: David Drummond (senior VP and chief legal officer), Arvind Desikan (London-based marketing manager), Peter Fleischer(global privacy counsel), and George Reyes (ex-CFO)--- all on charges of criminal defamation and violation of Italian privacy laws. All but Arvind were convicted.

The case arises from an incident in 2006 where Italian high school students from Turin, Italy taunted and bullied an autistic classmate, and then uploaded the video to "Google Videos".

Is this ridiculous or is it just me? Google did not create this content. Nor do they edit, recreate, or modify the user's content. They are simply a publisher. To create criminal liability for a company that publishers over 20 hours of videos a minute just doesn't make sense. Does Italy expect publishers to edit this content? To hold these guys liable even for defamation is outlandish, never mind criminal defamation.

In the United States this case would likely never have made it anywhere thanks to certain immunities granted by Congress through the Communications Decency Act, Section 230. Under the Act, immunity is granted to providers of "interactive computer services" -- defined as "any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server". Courts have interpreted this to include blogs, forums, hosting services, listservs, and related web based publishers. In short, the Act distinguishes internet publishers from print and traditional media publishers. Distributors bear to responsibility to edit content compared to traditional publishers, and thus traditionally, "publishing" behavior creates liability because of the power to control the (wrongful or illegal) content displayed. In its absence, online information providers would face increased risks of liability for trying to edit and remove defamatory third-party content than if they sat silent.

Many argue that Italy's policy's should reflect those of the United States and European Union laws regarding a provider's liability for third-party content. Defamation claims against providers under Section 230 are generally barred. Immunity also generally extends to claims for invasion of privacy, misappropriation and even negligent age verification procedures (Doe v. MySpace, 474 F.Supp.2d 843 (W.D. Tex. 2007).

However, even U.S. law may not provide sufficient protection for the specific allegations made against the Google Execs. Noteworthy, Section 230 immunizes web publishers engaged in traditional editorial functions, but expressly excludes criminal claims, communications privacy, and intellectual property claims. Thus, under U.S. laws, the criminal defamation claim would likely survive the Act. Believe it or not, criminal defamation is still on the books in many states, and is a statutory crime. However, criminal defamation requires actual malice, an element that would likely remain unmet against Google.

What's peculiar about the Italian Judge and the lead Prosecutor's decision, is that Google pulled the video within hours and also helped to nab the 4 students from video. Moreover, this decision comes down just as Italy issued a decree to make ALL video content on the web subject to Government control. And to add just a little more spice to this recipe for disaster: Italy's Prime Minister Silvio Berlusconi is the owner of the largest private TV conglomerate in all of Italy; the PM's company is also seeking around $800 million from Google for copyright infringement.

Hmmm...this is all starting to make a lot more sense. The issue is not based in Italian principles of human rights or respect. It's about money. If your private media conglomerate is threatened by free web-based media content, that means your ad receipts are going to drop. Do you want to be the one to compete with Google? Or would you rather use your PM power to channel media business down your pipe?

Noteworthy, the charges were sought by an advocacy group for people with Down Syndrome but the boy does not have the Down Syndrome.

Matt Sucherman - VP and Deputy General Counsel of Google - personal blog: http://googleblog.blogspot.com/2010/02/serious-threat-to-web-in-italy.html

Friday, February 19, 2010

The Art of the Smoke Screen

The Securities and Exchange Commission along with frustrated and defrauded shareholders of Bank Of America (past and present) await a Federal Court's ruling on a $150 million consent judgment stemming from an investigation of B of A's multi-billion dollar losses and bonuses cover-up. The single issue being litigated: concealment. That's right. Despite heavy handed SEC regulations and the plethora of alleged "safeguards" in place, the B of A's of the financial world somehow forget to disclose material information to shareholders. What's material? How about $15 billion in losses. Marginal. Right?

But you see, one must understand the sophisticated circuitry of a publicly traded company's financial smokescreen (e.g. magic - now you see it, now you don't).
If B of A didn't:
1. hide $15 billion in losses,
2. fire their former general counsel Timothy Mayopoulos for advising against the Merrill merger,
3. hide 7-figure bonus checks, and
4. ask, beg, and steal for $20 billion palm-grease in bailout funds in January 2009 to mitigate losses from the Merrill transaction...
...how could they have possibly successfully dooped shareholders into voting for the merger??

You see, the smokescreen was all necessary, because $50 billion is a lot of money to pay for a failing publicly traded investment bank, never mind paying $50 Bils for the additional 1 -4 above. After all, that's $50 Billion in OUR money that subsidized a FAILED merger. :)

So what's the remedy? Independent disclosure counsel? Independent compensation counsel? I thought Sarbanes Oxley took care of that? I thought it already costs $3-5 million to setup compliance measures, and several million a year after that to maintain safeguards.

But I suppose justice will be served --B of A may actually have to pay [drum roll] $150 million to shareholders and the big bad SEC. This is a beautiful microcosm of a much larger grand deception. Now, who's in for some insider trading? Anybody?

SEC Complaint filed against Bank of America Corp.: http://www.nylj.com/nylawyer/adgifs/decisions/011310sec_complaint2.pdf

NY Attorney General Andrew Cuomo's Complaint filed against Bank of America for Concealment: http://www.nylj.com/nylawyer/adgifs/decisions/020510complaint.pdf

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