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Plight of Newspapers Generates Uncommon Bipartisan Unity

CORNELIA, Ga. — When a sport utility vehicle swerved out of its lane several weeks ago, slamming into a pickup truck and killing a teenager, a reporter from The Northeast Georgian raced to the scene. Within hours, the paper had posted the news on Facebook and updated it twice. It was shared by hundreds of people on the social network.

The fatal wreck consumed the town of Cornelia, Ga., nestled near the Chattahoochee National Forest about 90 miles northeast of Atlanta. The Northeast Georgian was the first to report the news, but unless the people who shared its story on Facebook follow a link to its website, either to see an ad or to subscribe to its twice-weekly print edition, the paper won’t get paid.

As with many small papers across the country, that business strategy is not working for The Northeast Georgian. The paper’s five employees do not just report and write. They also edit the articles, take photographs and lay out the newspaper.

“My grandmother used to say, ‘Honey, if you let them get milk through the fence, they’ll never buy the cow,’” said Dink NeSmith, chief executive of Community Newspapers Inc., which owns The Northeast Georgian and 23 other local papers.

But the tough economics facing small newspapers like Mr. NeSmith’s has generated rare bipartisan agreement in Washington.

Anger toward big technology companies has led to multiple antitrust investigations, calls for a new federal data privacy law and criticism of the companies’ political ad policies. Perhaps no issue about the tech companies, though, has united lawmakers in the Capitol like the decimation of local news.

Lawmakers from both parties blame companies like Facebook and Google, which dominate the online ad industry.

Senator Mitch McConnell, Republican of Kentucky and the majority leader, gave a big boost last week to a bill that may provide some papers a lifeboat. The proposal would give news organizations an exemption from antitrust laws, allowing them to band together to negotiate with Google and Facebook over how their articles and photos are used online, and what payments the newspapers get from the tech companies. (The bill is backed by the News Media Alliance, a trade group that represents news organizations including The New York Times Company.)

The proposal was sponsored by Representative Doug Collins, a conservative Georgia Republican whose district includes Cornelia. It was written by Representative David Cicilline, a liberal Democrat from Rhode Island. Senator John Kennedy, Republican of Louisiana, sponsored an identical version in the Senate. Prominent co-sponsors joined, including Democrats like Cory Booker of New Jersey and Amy Klobuchar of Minnesota, and Rand Paul, Republican of Kentucky.

For the politicians, the issue is personal. They see news deserts in places where one or two local newspapers used to track their campaigns and official actions, keep local police departments and school boards accountable, and stitch together communities with big layouts on Main Street holiday parades and high school sports stars.

“I am a free-markets guy and have fought against the idea that just because something is big it is necessarily bad,” Mr. Collins said. “But look, I’m a politician and live with the media and see its importance. These big, disruptive platforms are making money off creators of content disproportionately.”

Facebook and Google declined to comment about the legislation. Representatives of the companies say their businesses have spent hundreds of millions of dollars on programs to bolster local journalism. The companies also work with news organizations to promote their articles and videos, driving traffic to their websites.

Facebook recently announced partnerships with major news organizations, including The New York Times, The Wall Street Journal and CNN, that would see some of the publishers paid for the content they share.

“We know this is a challenging time for journalism,” Campbell Brown, Facebook’s vice president of global news partnerships, said in a statement. “And we are working closely with publishers to find new ways to address those challenges.”

A Google spokeswoman said, “Every month, Google News and Google Search drive over 24 billion visits to publishers’ websites, which drive subscriptions and significant ad revenue.”

Newspapers have faced devastating financial losses for years. One in five newspapers have closed since 2004 in the United States, and about half of the nation’s more than 3,000 counties have only one newspaper, many of them printing weekly, according to a report by the University of North Carolina published in late 2018. In the last year alone, Facebook and Google added tens of thousands of employees and reported billions of dollars in profits.

Take Mr. Collins’s district in northern Georgia. The Atlanta Journal Constitution, the state’s biggest newspaper, has cut its staff by half in the past eight years. In Mr. Collins’s hometown, The Gainesville Times, one of the biggest papers in its region, cut its weekly print publication schedule to five days from seven a year ago.

The demand for local news remains. One day shortly after the fatal car crash, all of the discussion at Fender’s Diner, a 1950s-inspired eatery in Cornelia, was about the victim and allegations that the woman behind the wheel of the S.U.V. had been drinking.

“I care more about the people who walk through my front door of my place and the issues that matter to them than anything going on in Washington,” said Bradley Cook, the owner of the restaurant.

Many local leaders say the power of local newspapers was on display recently in Jesup, in southeastern Georgia. One of Mr. NeSmith’s papers in the area, The Press Sentinel in Wayne County, discovered that an Arizona-based company backed by wealthy investors, including Bill Gates, had quietly applied to dump 10,000 tons of coal ash per day in Jesup.

The paper published more than 70 articles about the application, and Mr. NeSmith wrote several editorials. The attention led to public hearings, and the company, Republic Services, to delay its plans.

Many officials also say that without robust local coverage, they are constantly fighting against misinformation that spreads on social media. After the Board of Commissioners in Habersham County, Ga., proposed a bond issue to expand the county jail, speculation spread online about the motivations for the project and the burden for taxpayers, said Stacy Hall, the board’s chairman. Voters defeated the proposal in November.

“Disinformation on social media is our No. 1 problem,” Mr. Hall said. “There is a crisis in getting the facts — the basic facts that only community newspapers can provide.”

The proposed antitrust exemption for news organizations still faces hurdles. Congress passed few bills of note in 2019 — and it may pass even fewer this year, in the face of impeachment and the November election. Conservative think tanks and some consumer groups are pushing back on the bill, wary of giving any antitrust exemptions to businesses.

“Instead of trying to innovate and find solutions that way,” said Neil Chilson, a senior research fellow for technology and innovation at the Charles Koch Institute, “they are trying to make better deals with people with more money, and that doesn’t solve their basic business-model problems.”

Supporters of the legislation said it was not a magic pill for profitability. It could, they say, benefit newspapers with a national reach — like The Times and The Washington Post — more than small papers. Facebook, for instance, has never featured articles from Mr. NeSmith’s newspaper chain in its “Today In” feature, an aggregation of local news from the nation’s smallest papers that can drive a lot of traffic to a news site.

“It will start with larger national publications, and then the question is how does this trickle down,” said Otis A. Brumby III, the publisher of The Marietta Daily Journal in Georgia.

But the supporters say it could stop or at least slow the financial losses at some papers, giving them time to create a new business model for the internet.

“The tech industry platforms benefit from our news,” said Robin Rhodes, the executive director of the Georgia Press Association, which supports the proposal. “And we need to be on a level playing ground.”

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Facebook Says It Won’t Back Down From Allowing Lies in Political Ads

SAN FRANCISCO — Defying pressure from Congress, Facebook said on Thursday that it would continue to allow political campaigns to use the site to target advertisements to particular slices of the electorate and that it would not police the truthfulness of the messages sent out.

The stance put Facebook, the most important digital platform for political ads, at odds with some of the other large tech companies, which have begun to put new limits on political ads.

Facebook’s decision, telegraphed in recent months by executives, is likely to harden criticism of the company heading into this year’s presidential election.

Political advertising cuts to the heart of Facebook’s outsize role in society, and the company has found itself squeezed between liberal critics, who want it to do a better job of policing its various social media platforms, and conservatives, who say their views are being unfairly muzzled.

The issue has raised important questions regarding how heavy a hand technology companies like Facebook — which also owns Instagram and the messaging app WhatsApp — and Google should exert when deciding what types of political content they will and will not permit.

By maintaining a status quo, Facebook executives are essentially saying they are doing the best they can without government guidance and see little benefit to the company or the public in changing.

In a blog post, a company official echoed Facebook’s earlier calls for lawmakers to set firm rules.

“In the absence of regulation, Facebook and other companies are left to design their own policies,” Rob Leathern, Facebook’s director of product management overseeing the advertising integrity division, said in the post. “We have based ours on the principle that people should be able to hear from those who wish to lead them, warts and all, and that what they say should be scrutinized and debated in public.”

Other social media companies have decided otherwise, and some had hoped Facebook would quietly follow their lead. In late October, Twitter’s chief executive, Jack Dorsey, banned all political advertising from his network, citing the challenges that novel digital systems present to civic discourse. Google quickly followed suit with limits on political ads across some of its properties, though narrower in scope.

Reaction to Facebook’s policy broke down largely along party lines.

The Trump campaign, which has been highly critical of any attempts by technology companies to regulate political advertising and has already spent more than $27 million on the platform, largely supported Facebook’s decision not to interfere in targeting ads or to set fact-checking standards.

“Our ads are always accurate so it’s good that Facebook won’t limit political messages because it encourages more Americans to be involved in the process,” said Tim Murtaugh, a spokesman for the Trump campaign. “This is much better than the approaches from Twitter and Google, which will lead to voter suppression.”

Democratic presidential candidates and outside groups decried the decision.

“Facebook is paying for its own glowing fake news coverage, so it’s not surprising they’re standing their ground on letting political figures lie to you,” Senator Elizabeth Warren said on Twitter.

Ms. Warren, who has been among the most critical of Facebook and regularly calls for major tech companies to be broken up, reiterated her stance that the social media company should face tougher policies.

The Biden campaign was similarly critical. The campaign has confronted Facebook over an ad run by President Trump’s campaign that attacked Joseph R. Biden Jr.’s record on Ukraine.

“Donald Trump’s campaign can (and will) still lie in political ads,” Bill Russo, the deputy communications director for Mr. Biden, said in a statement. “Facebook can (and will) still profit off it. Today’s announcement is more window dressing around their decision to allow paid misinformation.”

But many Democratic groups willing to criticize Facebook had to walk a fine line; they have pushed for more regulation when it comes to fact-checking political ads, but they have been adamantly opposed to any changes to the ad-targeting features.

On Thursday, some Democratic outside groups welcomed Facebook’s decision not to limit microtargeting, but still thought the policy fell short.

“These changes read to us mostly as a cover for not making the change that is most vital: ensuring politicians are not allowed to use Facebook as a tool to lie to and manipulate voters,” said Madeline Kriger, who oversees digital ad buying at Priorities USA, a Democratic super PAC.

Facebook has played down the business opportunity in political ads, saying the vast majority of its revenue came from commercial, not political, ads. But lawmakers have noted that Facebook ads could be a focal point of Mr. Trump’s campaign as well as those of top Democrats.

Facebook’s hands-off ad policy has already allowed for misleading advertisements. In October, a Facebook ad from the Trump campaign made false accusations about Mr. Biden and his son, Hunter Biden. The ad quickly went viral and was viewed by millions. After the Biden campaign asked Facebook to take down the ad, the company refused.

“Our approach is grounded in Facebook’s fundamental belief in free expression, respect for the democratic process and the belief that, in mature democracies with a free press, political speech is already arguably the most scrutinized speech there is,” Facebook’s head of global elections policy, Katie Harbath, wrote in the letter to the Biden campaign.

In an attempt to provoke Facebook, Ms. Warren’s presidential campaign ran an ad falsely claiming that the company’s chief executive, Mark Zuckerberg, was backing the re-election of Mr. Trump. Facebook did not take the ad down.

Criticism seemed to stiffen Mr. Zuckerberg’s resolve. Company officials said he and Sheryl Sandberg, Facebook’s president, had ultimately made the decision to stand firm.

In a strongly worded speech at Georgetown University in October, Mr. Zuckerberg said he believed in the power of unfettered speech, including in paid advertising, and did not want to be in the position to police what politicians could and could not say to constituents. Facebook’s users, he said, should be allowed to make those decisions for themselves.

“People having the power to express themselves at scale is a new kind of force in the world — a Fifth Estate alongside the other power structures of society,” he said.

Facebook officials have repeatedly said significant changes to its rules for political or issue ads could harm the ability of smaller, less well-funded organizations to raise money and organize across the network.

Instead of overhauling its policies, Facebook has made small tweaks. Mr. Leathern said Facebook would add greater transparency features to its library of political advertising in the coming months, a resource for journalists and outside researchers to scrutinize the types of ads run by the campaigns.

Facebook also will add a feature that allows users to see fewer campaign and political issue ads in their news feeds, something the company has said many users have requested.

There was considerable debate inside Facebook about whether it should change. Late last year, hundreds of employees supported an internal memo that called on Mr. Zuckerberg to limit the abilities of Facebook’s political advertising products.

On Dec. 30, Andrew Bosworth, the head of Facebook’s virtual and augmented reality division, wrote on his internal Facebook page that, as a liberal, he found himself wanting to use the social network’s powerful platform against Mr. Trump.

But Mr. Bosworth said that even though keeping the current policies in place “very well may lead to” Mr. Trump’s re-election, it was the right decision. Dozens of Facebook employees pushed back on Mr. Bosworth’s conclusions, arguing in the comments section below his post that politicians should be held to the same standard that applies to other Facebook users.

For now, Facebook appears willing to risk disinformation in support of unfettered speech.

“Ultimately, we don’t think decisions about political ads should be made by private companies,” Mr. Leathern said. “Frankly, we believe the sooner Facebook and other companies are subject to democratically accountable rules on this, the better.”

Mike Isaac reported in San Francisco and Cecilia Kang reported from Washington. Nick Corasaniti contributed reporting from New York.

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Don’t Tilt Scales Against Trump, Facebook Executive Warns

SAN FRANCISCO — Since the 2016 election, when Russian trolls and a tsunami of misinformation turned social media into a partisan battlefield, Facebook has wrestled with the role it played in President Trump’s victory.

Now, according to a memo obtained by The New York Times, a longtime Facebook executive has told employees that the company had a moral duty not to tilt the scales against Mr. Trump as he seeks re-election.

On Dec. 30, Andrew Bosworth, the head of Facebook’s virtual and augmented reality division, wrote on his internal Facebook page that, as a liberal, he found himself wanting to use the social network’s powerful platform against Mr. Trump. But citing the “Lord of the Rings” franchise and the philosopher John Rawls, Mr. Bosworth said that doing so would eventually backfire.

“I find myself desperately wanting to pull any lever at my disposal to avoid the same result,” he wrote. “So what stays my hand? I find myself thinking of the Lord of the Rings at this moment.

“Specifically when Frodo offers the ring to Galadrial and she imagines using the power righteously, at first, but knows it will eventually corrupt her,” he said, misspelling the name of the character Galadriel. “As tempting as it is to use the tools available to us to change the outcome, I am confident we must never do that or we will become that which we fear.”

In a meandering 2,500-word post, titled “Thoughts for 2020,” Mr. Bosworth weighed in on issues including political polarization, Russian interference and the news media’s treatment of Facebook. He gave a frank assessment of Facebook’s shortcomings in recent years, saying that the company had been “late” to address the issues of data security, misinformation and foreign interference. And he accused the left of overreach, saying that when it came to calling people Nazis, “I think my fellow liberals are a bit too, well, liberal.”

Mr. Bosworth also waded into the debate over the health effects of social media, rejecting what he called “wildly offensive” comparisons of Facebook to addictive substances like nicotine. He instead compared Facebook to sugar, and said users were responsible for moderating their own intake.

“If I want to eat sugar and die an early death that is a valid position,” Mr. Bosworth wrote. “My grandfather took such a stance towards bacon and I admired him for it. And social media is likely much less fatal than bacon.”

The post by Mr. Bosworth, a former head of Facebook’s advertising team, provides an unusually candid glimpse of the debates raging within Facebook about the platform’s responsibilities as it heads into the 2020 election.

The biggest of those debates is whether Facebook should change its rules governing political speech. Posts by politicians are exempt from many of Facebook’s current rules, and their ads are not submitted for fact-checking, giving them license to mislead voters with partisan misinformation.

Last year, platforms like Twitter and Google announced restrictions to their political advertising tools ahead of the 2020 election.

Facebook and its chief executive, Mark Zuckerberg, have faced heavy pressure from Democrats and Republicans, including Mr. Trump’s campaign, not to restrict its own powerful ad platform, which allows political campaigns to reach targeted audiences and raise money from supporters. But other politicians, and some Facebook employees, including a group that petitioned Mr. Zuckerberg in October, have argued that the social network has a responsibility to stamp out misinformation on its platform, including in posts by politicians.

Mr. Bosworth said that even though keeping the current policies in place “very well may lead to” Mr. Trump’s re-election, it was the right decision.

Dozens of Facebook employees pushed back on Mr. Bosworth’s conclusions, arguing in the comments section below his post that politicians should be held to the same standard as other Facebook users. They debated whether Facebook should ban or remove posts by politicians, including Mr. Trump, that included hate speech or forms of misinformation.

One Facebook employee warned that if the company continued to take its current approach, it risked promoting populist leaders around the world, including in the United States.

A Facebook spokeswoman provided a statement from Mr. Bosworth in which he said that the post “wasn’t written for public consumption,” but that he “hoped this post would encourage my co-workers to continue to accept criticism with grace as we accept the responsibility we have overseeing our platform.”

Ultimately, the decision on whether to allow politicians to spread misinformation on Facebook rests with Mr. Zuckerberg. In recent months, he has appeared to stand firm on the decision to keep the existing ad policies in place, saying that he believes Facebook should not become an arbiter of truth. But he has also left himself room to change his mind. In November, a Facebook spokesman said the company was “looking at different ways we might refine our approach to political ads.”

Among those lobbying Mr. Zuckerberg is President Trump himself, who claimed on a radio show on Monday that Mr. Zuckerberg had congratulated him on being “No. 1” on Facebook during a private dinner.

Mr. Bosworth said he believed Facebook was responsible for Mr. Trump’s 2016 election victory, but not because of Russian interference or the Cambridge Analytica scandal, in which millions of Facebook users’ data was leaked to a political strategy firm that worked with the Trump campaign. Mr. Bosworth said the fallout from the Cambridge Analytica revelations — uncovered by The Times, working with The Observer of London and The Guardian — rightly changed the conversation around how Facebook should handle user data, and which companies should be given access to that data.

But, he said, Mr. Trump simply used Facebook’s advertising tools effectively.

“He didn’t get elected because of Russia or misinformation or Cambridge Analytica,” Mr. Bosworth wrote. “He got elected because he ran the single best digital ad campaign I’ve ever seen from any advertiser. Period.”

Mr. Bosworth, a longtime confidant of Mr. Zuckerberg’s who is viewed by some inside Facebook as a proxy for the chief executive, has been an outspoken defender of the company’s positions in the past.

In 2018, BuzzFeed News published a memo Mr. Bosworth wrote in 2016 justifying the company’s growth-at-all-costs ethos, in which he said the company’s mission of connecting people was “de facto good,” even if it resulted in deaths.

After the memo’s publication, a Facebook executive said the company wished it could “go back and hit delete” on Mr. Bosworth’s 2016 post.

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Lord of the Rings, 2020 and Stuffed Oreos: Read the Andrew Bosworth Memo

On Dec. 30, Andrew Bosworth, a longtime Facebook executive and confidant of Mark Zuckerberg, wrote a long memo on the company’s internal network.

In the post, titled “Thoughts for 2020,” Mr. Bosworth — who oversaw Facebook’s advertising efforts during the 2016 election and is now in charge of the company’s virtual and augmented reality division — admitted that President Trump’s savvy use of Facebook’s advertising tools “very well may lead to” his re-election. But he maintained that the company should not change its policies on political advertising, saying that doing so in order to avert a victory by Mr. Trump would be a misuse of power, comparing it to a scene from “The Lord of the Rings.”

Mr. Bosworth, who is seen by some inside Facebook as a proxy of sorts for Mr. Zuckerberg, also weighed in on a variety of issues that have vexed Facebook for the past few years, including data privacy scandals, Russian interference, political polarization and the debate over whether Facebook is healthy for society.

Here is the full post as written:

The election of Donald Trump immediately put a spotlight on Facebook. While the intensity and focus of that spotlight may be unfair I believe it isn’t unjust. Scrutiny is warranted given our position in society as the most prominent of a new medium. I think most of the criticisms that have come to light have been valid and represent real areas for us to serve our community better. I don’t enjoy having our flaws exposed, but I consider it far better than the alternative where we remain ignorant of our shortcomings.

One trap I sometimes see people falling into is to dismiss all feedback when they can invalidate one part of it. I see that with personal feedback and I see it happening with media coverage. The press often gets so many details wrong it can be hard to trust the veracity of their conclusions. Dismissing the whole because of flaws in parts is a mistake. The media has limited information to work with (by our own design!) and they sometimes get it entirely wrong but there is almost always some critical issue that motivated them to write which we need to understand.

It is worth looking at the 2016 Election which set this chain of events in motion. I was running our ads organization at the time of the election and had been for the four years prior (and for one year after). It is worth reminding everyone that Russian Interference was real but it was mostly not done through advertising. $100,000 in ads on Facebook can be a powerful tool but it can’t buy you an American election, especially when the candidates themselves are putting up several orders of magnitude more money on the same platform (not to mention other platforms).

Instead, the Russians worked to exploit existing divisions in the American public for example by hosting Black Lives Matter and Blue Lives Matter protest events in the same city on the same day. The people who shows up to those events were real even if the event coordinator was not. Likewise the groups of Americans being fed partisan content was real even if those feeding them were not. The organic reach they managed sounds very big in absolute terms and unfortunately humans are bad at contextualizing big numbers. Whatever reach they managed represents an infinitesimal fraction of the overall content people saw in the same period of time and certainly over the course of an election across all media.

So most of the information floating around that is widely believed isn’t accurate. But who cares? It is certainly true that we should have been more mindful of the role both paid and organic content played in democracy and been more protective of it. On foreign interference, Facebook has made material progress and while we may never be able to fully eliminate it I don’t expect it to be a major issue for 2020.

Misinformation was also real and related but not the same as Russian interference. The Russians may have used misinformation alongside real partisan messaging in their campaigns, but the primary source of misinformation was economically motivated. People with no political interest whatsoever realized they could drive traffic to ad-laden websites by creating fake headlines and did so to make money. These might be more adequately described as hoaxes that play on confirmation bias or conspiracy theory. In my opinion this is another area where the criticism is merited. This is also an area where we have made dramatic progress and don’t expect it to be a major issue for 2020.

It is worth noting, as it is relevant at the current moment, that misinformation from the candidates themselves was not considered a major shortcoming of political advertising on FB in 2016 even though our policy then was the same as it is now. These policies are often covered by the press in the context of a profit motive. That’s one area I can confidently assure you the critics are wrong. Having run our ads business for some time it just isn’t a factor when we discuss the right thing to do. However, given that those conversations are private I think we can all agree the press can be forgiven for jumping to that conclusion. Perhaps we could do a better job exposing the real cost of these mistakes to make it clear that revenue maximization would have called for a different strategy entirely.

Cambridge Analytica is one of the more acute cases I can think of where the details are almost all wrong but I think the scrutiny is broadly right. Facebook very publicly launched our developer platform in 2012 in an environment primarily scrutinizing us for keeping data to ourselves. Everyone who added an application got a prompt explaining what information it would have access to and at the time it included information from friends. This may sound crazy in a 2020 context but it received widespread praise at the time. However the only mechanism we had for keeping data secure once it was shared was legal threats which ultimately didn’t amount to much for companies which had very little to lose. The platform didn’t build the value we had hoped for our consumers and we shut this form of it down in 2014.

The company Cambridge Analytica started by running surveys on Facebook to get information about people. It later pivoted to be an advertising company, part of our Facebook Marketing Partner program, who other companies could hire to run their ads. Their claim to fame was psychographic targeting. This was pure snake oil and we knew it; their ads performed no better than any other marketing partner (and in many cases performed worse). I personally regret letting them stay on the FMP program for that reason alone. However at the time we thought they were just another company trying to find an angle to promote themselves and assumed poor performance would eventually lose them their clients. We had no idea they were shopping an old Facebook dataset that they were supposed to have deleted (and certified to us in writing that they had).

When Trump won, Cambridge Analytica tried to take credit so they were back on our radar but just for making [expletive] claims about their own importance. I was glad when the Trump campaign manager Brad Parscale called them out for it. Later on, we found out from journalists that they had never deleted the database and had instead made elaborate promises about its power for advertising. Our comms team decided it would be best to get ahead of the journalists and pull them from the platform. This was a huge mistake. It was not only bad form (justifiably angering the journalists) but we were also fighting the wrong battle. We wanted to be clear this had not been a data breach (which, to be fair to us, it absolutely was not) but the real concern was the existence of the dataset no matter how it happened. We also sent the journalists legal letters advising them not to use the term “breech” which was received normally by the NYT (who agreed) and aggressively by The Guardian (who forged ahead with the wrong terminology, furious about the letter) in spite of it being a relatively common practice I am told.

In practical terms, Cambridge Analytica is a total non-event. They were snake oil salespeople. The tools they used didn’t work, and the scale they used them at wasn’t meaningful. Every claim they have made about themselves is garbage. Data of the kind they had isn’t that valuable to being with and worse it degrades quickly, so much so as to be effectively useless in 12-18 months. In fact the United Kingdom Information Commissioner’s Office (ICO) seized all the equipment at Cambridge Analytica and found that there was zero data from any UK citizens! So surely, this is one where we can ignore the press, right? Nope. The platform was such a poor move that the risks associated were bound to come to light. That we shut it down in 2014 and never paid the piper on how bad it was makes this scrutiny justified in my opinion, even if it is narrowly misguided.

So was Facebook responsible for Donald Trump getting elected? I think the answer is yes, but not for the reasons anyone thinks. He didn’t get elected because of Russia or misinformation or Cambridge Analytica. He got elected because he ran the single best digital ad campaign I’ve ever seen from any advertiser. Period.

To be clear, I’m no fan of Trump. I donated the max to Hillary. After his election I wrote a post about Trump supporters that I’m told caused colleagues who had supported him to feel unsafe around me (I regret that post and deleted shortly after).

But Parscale and Trump just did unbelievable work. They weren’t running misinformation or hoaxes. They weren’t microtargeting or saying different things to different people. They just used the tools we had to show the right creative to each person. The use of custom audiences, video, ecommerce, and fresh creative remains the high water mark of digital ad campaigns in my opinion.

That brings me to the present moment, where we have maintained the same ad policies. It occurs to me that it very well may lead to the same result. As a committed liberal I find myself desperately wanting to pull any lever at my disposal to avoid the same result. So what stays my hand?

I find myself thinking of the Lord of the Rings at this moment. Specifically when Frodo offers the ring to Galadrial and she imagines using the power righteously, at first, but knows it will eventually corrupt her. As tempting as it is to use the tools available to us to change the outcome, I am confident we must never do that or we will become that which we fear.

The philosopher John Rawls reasoned that the only moral way to decide something is to remove yourself entirely from the specifics of any one person involved, behind a so called “Veil of Ignorance.” That is the tool that leads me to believe in liberal government programs like universal healthcare, expanding housing programs, and promoting civil rights. It is also the tool that prevents me from limiting the reach of publications who have earned their audience, as distasteful as their content may be to me and even to the moral philosophy I hold so dear.

That doesn’t mean there is no line. Things like incitement of violence, voter suppression, and more are things that same moral philosophy would safely allow me to rule out. But I think my fellow liberals are a bit too, well, liberal when it comes to calling people Nazi’s.

If we don’t want hate mongering politicians then we must not elect them. If they are getting elected then we have to win hearts and minds. If we change the outcomes without winning the minds of the people who will be ruled then we have a democracy in name only. If we limit what information people have access to and what they can say then we have no democracy at all.

This conversation often raises the alarm around filter bubbles, but that is a myth that is easy to dispel. Ask yourself how many newspapers and news programs people read/watched before the internet. If you guessed “one and one” on average you are right, and if you guessed those were ideologically aligned with them you are right again. The internet exposes them to far more content from other sources (26% more on Facebook, according to our research). This is one that everyone just gets wrong.

The focus on filter bubbles causes people to miss the real disaster which is polarization. What happens when you see 26% more content from people you don’t agree with? Does it help you empathize with them as everyone has been suggesting? Nope. It makes you dislike them even more. This is also easy to prove with a thought experiment: whatever your political leaning, think of a publication from the other side that you despise. When you read an article from that outlet, perhaps shared by an uncle or nephew, does it make you rethink your values? Or does it make you retreat further into the conviction of your own correctness? If you answered the former, congratulations you are a better person than I am. Every time I read something from Breitbart I get 10% more liberal.

What does all of this say about the nature of the algorithmic rewards? Everyone points to top 0.1% content as being acutely polarized but how steep are the curves? What does the top 1% or 5% look like? And what is the real reach across those curves when compared to other content? I think the call for algorithmic transparency can sometimes be overblown but being more transparent about this type of data would likely be healthy.

What I expect people will find is that the algorithms are primarily exposing the desires of humanity itself, for better or worse. This is a Sugar, Salt, Fat problem. The book of that name tells a story ostensibly about food but in reality about the limited effectiveness of corporate paternalism. A while ago Kraft foods had a leader who tried to reduce the sugar they sold in the interest of consumer health. But customers wanted sugar. So instead he just ended up reducing Kraft market share. Health outcomes didn’t improve. That CEO lost his job. The new CEO introduced quadruple stuffed Oreos and the company returned to grace. Giving people tools to make their own decisions is good but trying to force decisions upon them rarely works (for them or for you).

In these moments people like to suggest that our consumers don’t really have free will. People compare social media to nicotine. I find that wildly offensive, not to me but to addicts. I have seen family members struggle with alcoholism and classmates struggle with opioids. I know there is a battle for the terminology of addiction but I side firmly with the neuroscientists. Still, while Facebook may not be nicotine I think it is probably like sugar. Sugar is delicious and for most of us there is a special place for it in our lives. But like all things it benefits from moderation.

At the end of the day we are forced to ask what responsibility individuals have for themselves. Set aside substances that directly alter our neurochemistry unnaturally. Make costs and trade-offs as transparent as possible. But beyond that each of us must take responsibility for ourselves. If I want to eat sugar and die an early death that is a valid position. My grandfather took such a stance towards bacon and I admired him for it. And social media is likely much less fatal than bacon.

To bring this uncharacteristically long and winding essay full circle, I wanted to start a discussion about what lessons people are taking away from the press coverage. My takeaway is that we were late on data security, misinformation, and foreign interference. We need to get ahead of polarization and algorithmic transparency. What are the other big topics people are seeing and where are we on those?

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Data-Mining and Database Marketing Federal Trade Commission Google Inc Online Advertising privacy Uncategorized Video Recordings, Downloads and Streaming YouTube.com

4 Things to Know About YouTube’s New Children Privacy Practices

In September, Google agreed to pay a $170 million fine and make privacy changes as regulators said that its YouTube platform had illegally harvested children’s personal information and used it to profit by targeting them with ads. The penalty and changes were part of an agreement with the Federal Trade Commission and the attorney general of New York, which had accused YouTube of violating the federal Children’s Online Privacy Protection Act.

On Monday, YouTube said it was beginning to introduce changes to address regulators’ concerns and better protect children. Here is what you need to know about those changes.

YouTube said that, starting Monday, it would begin to limit the collection and use of personal information from people who watched children’s videos, no matter the age of the viewer. Federal law prohibits online services aimed at children under 13 from collecting the personal information of those young users without parental consent.

YouTube said it had also turned off or limited some features on children’s videos tied to personal information. These include comments and live-chat features, as well as the ability to save videos to a playlist.

YouTube will no longer show ads on children’s videos that are targeted at viewers based on their web-browsing or other online activity data. Instead, the company said, it may now show ads based on the context of what people are viewing.

YouTube said viewers who watched a video made for children on its platform would now be more likely to see recommendations for other children’s videos.

In September, YouTube said it would require all video producers on its platform to designate their videos as made for children or not made for children. In November, it introduced a new setting to help producers flag children’s content, a designation that signals YouTube to limit data collection on those videos. The video service said that it was also using artificial intelligence to help identify children’s content and that it could override a video producer’s categorization if its system detected a mistake.

YouTube is one of the most popular platforms for children. Some animated videos on YouTube channels aimed at younger children — like Cocomelon Nursery Rhymes and ChuChu TV — have been viewed more than a billion times.

The platform’s new limits on data-mining send a signal to other popular sites offering children’s content that they also may be subject to the federal children’s online privacy law. Musical.ly, a wildly popular video social network now known as TikTok, also had to pay a fine last year to settle F.T.C. charges that it had illegally collected children’s personal information.

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Amazon.com Inc Antitrust Laws and Competition Issues Computers and the Internet Delivery Services e-commerce Federal Trade Commission House Committee on the Judiciary Innovation Online Advertising Prices (Fares, Fees and Rates) Storage Uncategorized

Prime Power: How Amazon Squeezes the Businesses Behind Its Store

Image
Credit…Andrea Chronopoulos

Twenty years ago, Amazon opened its storefront to anyone who wanted to sell something. Then it began demanding more out of them.


SEATTLE — For tens of millions of Americans, it is so routine that they don’t think twice.

They want something — a whisk, diapers, that dog toy — and they turn to Amazon. They type the product’s name into Amazon’s website or app, scan the first few options and click buy. In a day or two, the purchase appears on their doorstep.

Amazon has transformed the small miracle of each delivery into an expectation of modern life. No car, no shopping list — no planning — required.

But to make it all work, Amazon runs a machine that squeezes ever more money out of the hundreds of thousands of companies, from tiny start-ups to giant brands, that put the everything into Amazon’s Everything Store.

In more than 60 interviews, current and former Amazon employees, sellers, suppliers and consultants detailed how Amazon dictates the rules for those businesses, sometimes changing those rules with little warning. Many spoke on the condition of anonymity, for fear of retaliation by Amazon.

Amazon punishes the businesses if their items are available for even a penny less elsewhere. It pushes them to use the company’s warehouses. And it compels them to buy ads on the site to make sure people see their products.

All of that leaves the suppliers more dependent on Amazon, by far the nation’s top online retailer, and scrambling to deal with its whims. For many, Amazon eats into their profits, making it harder to develop new products. Some worry if they can even survive.

“Every year it’s been a ratchet tighter,” said Bernie Thompson, a top seller of computer accessories who Amazon has highlighted in its marketing to other merchants. “Now you are one event away from not functioning.”

Tumi, the luxury bag maker, sold its products at wholesale prices to Amazon for years. But executives said Amazon sometimes misjudged consumer demand, keeping too few bags in stock, and regularly demanded more in marketing and other fees. Last year, Tumi decided to sell its bags to another company, which then listed the items on Amazon. The arrangement gave Tumi more control over inventory and better sales data.

A few months later, Amazon gave Tumi an ultimatum: Stop selling through the middleman, or do not sell to the retailer’s 150 million customers at all.

“Some guy we had never talked to gave us a call and was like, ‘We have changed the rules,’ ” said Charlie Cole, who runs Tumi’s online business. He pushed back, but wasn’t successful.

“It was like talking to a brick wall,” he said. “They want to be able to control everything.”

Companies struggling to navigate Amazon’s growing chaos fill Facebook groups, private message boards and industry conferences. One session at a leading retail meeting next year is called “The Big Question: Is Selling on Amazon Worth the Hassle?” More than 12,000 people signed a petition on Change.org asking Amazon to alter an arcane rule on counterfeit products that they said could “destroy” an entire business.

Many sellers and brands on Amazon are desperate to depend less on the tech giant. But when they look for sales elsewhere online, they come up short. Last year, Americans bought more books, T-shirts and other products on Amazon than eBay, Walmart and its next seven largest online competitors combined, according to eMarketer, a research company.

“The secret of Amazon is we’re happy to help you be very successful,” said David Glick, a former Amazon vice president who left the company last year. “You just have to kiss the ring.”

Amazon says that its operation is so massive, the rules are necessary to give customers a quality experience. The company said the health of sellers was a top priority, and that it had invested billions of dollars to support them. It said that about 200,000 sellers surpassed $100,000 in sales in 2018, roughly a 40 percent increase from the year before.

“If sellers weren’t succeeding,” said Jeff Wilke, the chief executive of Amazon’s consumer business, “they wouldn’t be here.”

Jack Evans, a spokesman for the company, said that Amazon only succeeded when sellers succeed, “and claims to the contrary are wrong.” Merchants can choose the products they sell, how they are priced and how they fulfill the orders, he said.

The policy change that affected Tumi, Mr. Evans said, was to make sure that Amazon had the best prices and availability for popular products. He said that Tumi’s prices were high when it sold through the middleman.

Amazon has faced harsh criticism in the past for displacing Main Street brick-and-mortar retailers. Now, the diverging fortunes of Amazon and many of the companies selling products on its own site are at the heart of the antitrust scrutiny Amazon faces in Washington and Europe. Investigators at the Federal Trade Commission and the House Judiciary Committee are examining whether Amazon abuses its position as the central online connection between people making products and those buying them.

Amazon collects 27 cents of each dollar customers spend buying things its merchants sell, a 42 percent jump from five years ago, according to Instinet, a financial research firm. That does not include what companies pay to place ads on Amazon, a business that Wall Street considers as valuable as Nike.

The pennies add up. Last year, the profit from retail was so high that it surprised even some senior leaders close to the business, according to two of the people involved.

Thanks to the retail success, the company’s profit exceeded its own Wall Street projections by more than $3 billion.

Jeff Bezos, Amazon’s founder and chief executive, lumps the many parts of the company into two buckets, according to the two people close to the business. One bucket is investments, or bets on the future like Alexa, its virtual assistant. The other is contributors, or the profitable businesses that provide money for Amazon’s investments.

To him, the retail operation is a contributor that can be squeezed for cash.

Billions of dollars generated from selling products online go into investments like Alexa, which has 10,000 employees working on it, and the company’s expensive Hollywood productions. And still, Amazon’s consumer businesses, including Alexa and other pricey projects, produced $5 billion in operating profit last year.

The financial success stems from a big strategy shift that was underappreciated when Mr. Bezos made it two decades ago.

From the day the company started shipping orders in 1995, Amazon offered customers products the same way as traditional retailers like Target, buying them at wholesale and reselling them at a higher price. Four years later, Mr. Bezos and his team decided that Amazon would also let companies list items on the site for a cut of the sale, more like eBay and Alibaba. The change allowed Amazon to offer a wider variety of products.

“We want to try and build a place where people can come to find and discover anything that they might want to buy online,” Mr. Bezos said that year.

The decision eventually turned Amazon into the one-stop shop it’s known as today. Shoppers could find not only well-known brands like Tide detergent, but also obscure Christmas ornaments.

Initially, the move empowered sellers and gave them access to millions of customers. They could ship their products however they wanted. And they could set their own price.

Bit by bit, the sellers lost control.

When Amazon opened its doors to sellers, the fulfillment industry — for storing, packing and shipping online orders — was in its infancy. Many top sellers on Amazon ran their own warehouses.

Seeing a competitive advantage in offering faster delivery times, Amazon opened cavernous warehouses near major cities. Inside, workers navigated endless rows to pick products from bins and pack them into boxes.

The expansion left Amazon with extra space to fill, and the company turned to sellers. It pitched them on the idea of paying Amazon to store and ship their products, even those sold on other sites.

James Thomson, a Canadian with a doctorate in marketing, managed a team responsible for signing up sellers, leading them on tours of Amazon’s facilities near Reno, Nev., Phoenix and elsewhere. “Look how vast this is,” he recalled telling sellers. “Look at how we can easily absorb your 10,000 orders a month.”

“You do have a bigger warehouse than mine,” Mr. Thomson remembered them saying, “but I have good rates.”

Several years later, Amazon’s focus changed, and so did its pitch.

In early 2011, only a few million people were Prime members, paying $79 a year for unlimited two-day shipping. But Amazon knew those members spent far more on the site. Executives wanted more people to sign up for Prime, and they wanted to sell those customers even more stuff.

That year, Amazon began adding more perks to Prime. Most notable was unlimited video streaming of TV shows like “Mister Rogers’ Neighborhood” and movies like “The Girl With the Dragon Tattoo.”

As more people became members, products eligible for Prime shipping became more popular. Amazon reminded sellers that if they used the company’s warehouses, their items would be Prime eligible, too.

“That is what we were selling,” Mr. Thomson said.

It worked. The number of sellers using Amazon’s warehouses increased by 65 percent in 2013, according to a letter sent to investors. The company has since spent billions of dollars to continue building out its fulfillment network.

Mr. Bezos noted how intertwined sellers, warehouses and Prime had become in a note to investors in 2015. “At this point, I can’t really think about them separately,” he wrote.

Amazon has since flipped back and forth over whether outside sellers must use Amazon’s warehouses to sell Prime products. But for most types of goods, like pet supplies, cameras and baby gear, more than 85 percent of the top-selling items ship out of Amazon’s warehouses, according to Jungle Scout, which provides data to Amazon sellers.

Amazon handles packing and shipping for the most popular products sold on its site, even for products sold by outside sellers.

The 1,000 top-selling

products in each category

Orders sold and fulfilled

by outside sellers

Kitchen/dining

Pet supplies

Camera/photo

Beauty/personal care

Computers/accessories

Orders sold

and fulfilled

by Amazon

Orders fulfilled

by Amazon

for outside

sellers

Clothing, shoes/jewelry

Video games

Home/kitchen

Toys/games

Musical instruments

Cell phones/accessories

Tools/home improvement

Industrial/scientific

Patio, lawn/garden

Grocery/gourmet food

Sports/outdoors

Automotive

Arts, crafts/sewing

Health/household

Appliances

Electronics

Office products

Percentage of total

sales within each group

The 1,000 top-selling products in each category

Kitchen/dining

Pet supplies

Camera/photo

Beauty/personal care

Computers/accessories

Orders fulfilled

by Amazon

for outside

sellers

Orders

sold and

fulfilled

by outside

sellers

Orders sold

and fulfilled

by Amazon

Clothing, shoes/jewelry

Video games

Home/kitchen

Toys/games

Musical instruments

Cell phones/accessories

Tools/home improvement

Industrial/scientific

Patio, lawn/garden

Grocery/gourmet food

Sports/outdoors

Automotive

Arts, crafts/sewing

Health/household

Appliances

Electronics

Office products

Percentage of total sales within each group

Source: JungleScout

By Karl Russell

Amazon has surpassed DHL to become the largest provider of fulfillment and other logistics services in the world, according to The Journal of Commerce, a trade publication.

Many sellers say that the company charges fair rates to fulfill Amazon orders. But they say Amazon is charging them higher prices for other services. For example, because the warehouses operate near capacity, the company charges several times more than competitors to store items before they ship out.

The costs can be several times higher for sellers who use Amazon to ship orders made on other websites. Amazon charges $13.80 for one-day shipping on a T-shirt bought on a site other than Amazon, versus $3.68 when bought on Amazon.

In addition, Amazon had let sellers pay $1 to ship an order in a plain brown box without the company’s smile logo. But in 2016, the company said it would use only Amazon boxes. Sellers were told they could take their product back from Amazon’s warehouses if they wanted. “Return or disposal fees will apply,” it wrote to sellers.

Amazon says that its logistics services are optional and a great value. Sellers who choose to use it “enjoy high-quality fulfillment services that customers want,” the company told Congress’s investigators this year.

The company says it offers lower costs on Amazon orders because it makes other money from them, including commissions and advertising, that it does not get for sales made on other websites.

Shoppers on other sites turn away when products are not available in two days or less, said Karl Siebrecht, co-founder of Flexe, a start-up that connects retailers with a network of fulfillment centers.

“It’s new browser,” he said. “Amazon.com. Click. Buy. Done.”

This summer, Brandon Fishman, the founder of VitaCup, a start-up that infuses coffee with vitamins and nutrients, saw a promising opportunity.

Zulily, an e-commerce site that offers low prices in exchange for slower shipping, wanted to list VitaCup’s products 30 percent off for a short time. It was a chance for Mr. Fishman, whose 35-employee company gets the majority of its sales through Amazon and its own site, to reach new customers.

But Amazon’s software noticed the lower price and removed the bright “Buy Now” and “Add to Cart” buttons from its site. When those buttons are gone, shoppers get a bland text link that says, “Available from these sellers” and they must make more clicks to purchase an item. Those extra clicks are often the difference between success and failure for a seller.

Mr. Fishman’s Amazon sales tumbled, and he emailed Zulily to quickly take down the listing.

“I have told them about my rage many times,” Mr. Fishman said of Amazon. “It has not changed them.”

Amazon has pushed to keep prices low since the day it opened. That has become trickier as more sales came from outside sellers. According to antitrust law, each seller of goods should determine what to charge on its own. To avoid problems, an in-house lawyer is typically present when internal Amazon teams discuss pricing, according to two former employees.

In 2017, Amazon began reducing prices to match competitors; if the new price was lower than the one requested by the sellers, Amazon paid the difference. The company also alerted companies if their products were cheaper elsewhere.

Still concerned about news reports that prices on Amazon weren’t always the lowest, the company tried another approach, the one that hit VitaCup: removing the Buy Now and Add to Cart buttons when its software detected lower prices. When those buttons disappear, sales tumble as much as 75 percent, sellers say.

Executives at Amazon intended this as a tool to lower prices. The company has told Congress that the buttons amount to an endorsement, saying it only displays them on “offers that it is confident will present a great experience for its customers.”

But many brands raise their prices elsewhere to avoid losing the buttons. Or they decide to list their product only on Amazon. That is what happened to a health care supply company that worked with Jason Boyce, who advises online sellers.

“My client cut off Walmart — Walmart! — because it was hurting their Amazon business,” Mr. Boyce said. “If that’s not monopoly power, I don’t know what is.”

Amazon said in statement that sellers “have full control of their own prices both on and off Amazon,” and that the company helps them maximize sales by advising them how to earn the Buy Now and Add to Cart buttons.

The Zulily experience frustrated Mr. Fishman. But he boiled over after another move by Amazon.

One morning in June, Mr. Fishman opened his Amazon app and typed “VitaCup” into the search bar at the top of the screen. On the results page was an ad for Amazon’s own line of coffee.

He had been paying Amazon almost $200,000 a month for ads. Mr. Fishman posted a screenshot on LinkedIn and raged.

“I have a major problem with this!!!” he wrote.

For years, the question of whether Amazon should push ads on its site generated fierce debate among senior managers and executives inside the company, according to eight current and former Amazon employees. In memos and fiery meetings, they disagreed on what was best for a company that preached obsession with serving customers.

One camp believed that ads would erode customer trust, because shoppers expected Amazon to show them popular products with strong reviews and a good price.

The other camp saw ads as a cash machine Amazon could tap to drive down prices and fund new innovations for customers. The financial potential was obvious. When people shop online, they more often turn to Amazon than Google to start their search, according to multiple studies. And every brand wants to get in front of them.

Workers eventually got word that Mr. Bezos had settled the debate, according to two senior employees. Mr. Bezos said that Amazon had two options: Sell ads, and use the cash for investments. Or shun ads, and get beaten by competitors.

Ads soon appeared at critical locations, in particular on the page that pops up after a customer types a product into Amazon’s search bar. Some ads were rectangular blocks across the top of the page, and the top several products listed in the search results were ads disguised as a regular listing, aside from the word “Sponsored” in light gray. Combined, they have at times filled almost the entire first screen.

Mr. Wilke said the internal hesitation to ads was overcome by the results.

“It turned out they worked,” he said. “And by worked, I mean the ads help customers find what they’re looking for. And the reason we know that is cause they buy more stuff.”

But it added another cost for companies. Ranking high is essential to driving sales on the site. Competitors raced to place ads to ensure a prominent spot.

Out of antitrust concerns, company lawyers prohibit employees and advertising companies it works with from bragging that Amazon is where most people search for products online, according to two people who were warned about this.

Quartile, among the largest of a new breed of companies that help brands navigate Amazon advertising, tested the importance of the ads last year. It stopped running ads for 750 popular products. Immediately, sales shrank by 24 percent.

The effect then cascaded. That’s because the fewer recent sales a product has, including sales driven by ads, the lower it ranks on the site. At the end of 10 weeks, sales of the products without ads had tumbled 55 percent.

“It’s increasingly pay-to-play,” said Melissa Burdick, a 10-year Amazon veteran who now advises major consumer brands.

Amazon said its ads were optional and the majority of sellers built their businesses without them.

John Denny, who ran e-commerce for the drink company Bai, said brands used to believe that if they had a great product, it would show up in the search results, and sales would follow.

“Those days are over,” Mr. Denny said. “There are no lightning strikes on Amazon any more.”

A decade ago, Mr. Thompson, a former Microsoft software developer, recognized a big market for computer accessories like computer docking stations and cables. He started Plugable and betted big that depending on Amazon would turn his idea into a business.

It worked. In 2016, Mr. Bezos highlighted Mr. Thompson when talking about the success of sellers in his annual letter to investors. Amazon posted a video about Plugable on its website to attract new sellers.

“He has a history of good performance metrics, and an absence of things like safety and authenticity complaints,” Chris McCabe, a former Amazon fraud investigator, said in an interview.

But in the last couple of years, as rules shifted and his profit shrank, Mr. Thompson began warning people that working with Amazon had become increasingly difficult.

He took his concerns to Amazon this summer, giving a 20-slide presentation to a senior executive at the company’s Seattle headquarters. On slide No. 6, Mr. Thompson laid out his nightmare: Amazon cutting off sales of his best seller, a laptop docking station that is frequently one of the 100 most popular electronics products on the site.

His plea to the executive was simple. “No surprises,” he said.

He got surprised.

One Sunday in July, he got an email saying that Amazon had removed the docking stations. Amazon said it was because of complaints that Plugable’s products had not matched the condition described on the site.

Other docking stations, including one made by Amazon, filled the void online.

Mr. Thompson scrambled, contacting two high-level managers he knew and his account manager, who Amazon charges him $5,000 a month to have. None of them could fix it.

He and other staff members dug through customer feedback and returns. They found only outstanding reviews, said Gary Zeller, one of Mr. Thompson’s deputies.

“There was nothing borderline about it,” Mr. Zeller said.

After four days and at least $100,000 in lost sales, the listing went back up. Mr. Thompson said he still did not understand what ignited the problem.

Amazon declined to comment on Plugable. Mr. Wilke said that the company’s future depended on policing the site without harming well-meaning merchants.

“We have a strong incentive to be as accurate as possible in identifying bad actors, make very few mistakes when we’re wrong, on giving second chances to people who make an honest mistake,” he said.

Mr. Thompson is now looking for new ways to make money. But Amazon accounts for roughly 90 percent of electronics sales online, according to market research. His business at Walmart and eBay, the next largest online retailers, are less than 5 percent of his revenue.

In September, Plugable hired two people to sell directly to corporations.

“We really built the company on Amazon,” Mr. Thompson said. “We have no regrets about doing that. But today our focus has to be getting diversification off Amazon.”

He said he understood what he was up against.

“We are dealing with a partner,” he said, “who can and will disrupt us for unpredictable reasons at any time.”

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Backpage.com Child Abuse and Neglect Human Trafficking Law and Legislation Online Advertising Prostitution Regulation and Deregulation of Industry Sex Crimes Uncategorized

Stamping Out Online Sex Trafficking May Have Pushed it Underground

WASHINGTON — To combat the ills of the internet, federal lawmakers have increasingly focused on a decades-old law that shields tech companies like Facebook and YouTube from liability for content posted by their users.

Last year, lawmakers approved chipping away at the law, voting overwhelmingly to hold tech platforms accountable when people use their sites for sex-trafficking schemes. They have since floated other changes as well, like making Facebook or other platforms liable when opioids are sold on their sites.

But now, as the real-world effects of the sex-trafficking change take hold, some experts and politicians say the results are not all positive. And even some lawmakers who have championed a crackdown on Big Tech are now calling to revisit the change. On Tuesday, Senators Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts, two of the tech industry’s loudest critics, joined 11 other lawmakers in backing a federal study of its effects.

Law enforcement officials say that it is sometimes more difficult to track traffickers, because the law pushed them further underground. Advocates say that sex workers now face higher safety risks. The removal of sites advertising sex hinders their ability to vet their clients, the advocates say, and is pushing more of them onto the streets.

The renewed focus on the 2018 measure illustrates the difficulty of regulating the internet, including changes to Section 230 of the Communications Decency Act, the 1996 law that enshrined platforms’ widespread immunity for what their users post. Even when lawmakers reach a consensus that a change is necessary — as was the case with sex trafficking — the ramifications can be wider than many expect.

“It’s really a good test case as we’re looking at other types of carve-outs to Section 230,” said Jeff Kosseff, an expert on the Section 230 protections. Lawyers across the country have also fought to limit the protections, arguing they don’t apply in cases where a digital product is defective. A set of anti-trafficking lawsuits in Texas threatens to chip away at the protections as well.

When lawmakers approved the Fight Online Sex Trafficking Act last year, it was hailed as a way to catch up to the reality that the bartering of children and adults had moved from the streets to the web. It came after alarming allegations emerged about how Backpage, a classifieds site, may have been playing a role in trafficking.

Advocates for sex workers warned ahead of the vote in Washington about some of the potential downsides of the law. But they struggled to break through to lawmakers, who were hearing testimony from groups representing trafficking survivors.

“It misunderstands the way that trafficking works, if you think that making it less visible reduces the occurrence,” said Kate D’Adamo, an advocate for sex workers’ rights.

Their concerns have found a broader audience in recent months, even bubbling up on the presidential campaign trail. During a CNN town hall with the Democratic candidates this fall, for example, a questioner asked Senator Amy Klobuchar of Minnesota, who had voted for the bill, what she would do to “counteract the negative impact this law has had.”

Representative Ro Khanna, a Democrat of California who was one of the few votes against the bill last year, said he believed Congress should have heard more about those concerns. He helped write the new legislation to study the law after hearing more from sex worker advocates.

“They didn’t hear the perspective of the impact it’s having on sex workers,” he said of his colleagues. “This is a cautionary tale that we have to be very deliberate, thoughtful, inclusive in how we regulate the internet.”

Mr. Khanna said that if a study of the law showed harm to sex workers, he hoped it would bolster the case for a repeal of the 2018 law.

Many supporters of the 2018 law say it has had a positive effect on the internet, and has helped curb sex trafficking. They note that no site has cropped up to replace Backpage, which was taken down as part of a federal criminal case before the law passed.

Senator Richard Blumenthal, a Democrat from Connecticut who sponsored the 2018 law, said in a statement that the sex trafficking carve-out was written to “change tech industry practices,” and that it had succeeded.

Any website that closed down because of the law, he said, “did so because it was knowingly facilitating sex trafficking or it was misled by critics of the law.”

But sex worker advocates point to changes on Craigslist, the classified site, and Reddit, the discussion board. Both sites removed swaths of content that referred to sex because the companies found it too difficult to tell whether people featured in the posts were being trafficked. Craigslist shuttered its personals section, for example, and Reddit closed forums called “Escorts” and “SugarDaddy.”

“Any tool or service can be misused,” Craigslist said in a statement at the time, explaining its decision to remove some ads in response to the law. “We can’t take such risk without jeopardizing all our other services.”

The company did not respond to recent requests for comment.

Mr. Kosseff said the moves by Craigslist and other sites demonstrated that even minor changes to Section 230 could alter the venues for speech online.

“Now, whether that’s good or bad, that really depends on what your goals are,” he said.