Big Tech’s Biggest Trial

Plus: Philip Morris can’t get the Marlboro Man out of the Kremlin ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

February 23, 2023

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TOGETHER WITH

Good morning.

That cowboy hat never did fit quite right…

Elon Musk declared California to be Tesla’s home again, or at least one of its homes, during a tour of the automaker’s new Palo Alto engineering headquarters with Governor Gavin Newsom on Wednesday. Musk, who made quite the show of moving his electric car company to Texas in 2021 over disagreements about state Covid restrictions, was clear that the new Golden State facility was at least a partial homecoming, telling reporters “We’re a California-Texas company.”

Morning Brief

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Section 230 is again facing scrutiny.

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Butting out is hard to do, cigarette maker says.

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Bill Gates is all in on brewskis.

Tech

Twitter, Google Stand Trial in Marquee SCOTUS Cases

It’s a big week for Big Tech… maybe its biggest ever.

On Wednesday, Twitter found itself before the Supreme Court arguing it cannot be held liable for a terrorist attack that may have been organized in part on its platform. Just a day earlier, Google was the center of a court case also stemming from victims of a terrorist attack allegedly linked to content posted on YouTube. Both cases have been viewed as challenging the protected-status status quo of internet platforms under Section 230.

Breaking the “Backbone of the Internet”

Both cases center on tragedies. In Twitter v. Taamneh, family members of one of the 39 victims slain in a 2017 shooting at an Istanbul nightclub carried out by an Islamic State extremist are suing Twitter for allegedly allowing similar extremist groups to use the platform for recruitment, general fundraising, and inciting violence. The plaintiffs in Gonzalez v. Google, meanwhile, are family members of an American college student who was one of over 100 people killed in a string of terrorist attacks in Paris in 2015. The family is accusing Google of recommending extremist recruiting videos on YouTube.

Both cases, and Google’s in particular, intersect with and challenge Section 230’s protections for internet platforms, the longstanding rule that grants websites legal immunity for hosting potentially illegal content posted on to their site by outside users (i.e., the owner of a blog cannot be held liable if a commenter posts libelous comments in their comment section). Without Section 230, YouTube, for example, would be liable for the content of the roughly 270,000 hours worth of video uploaded each day.

While Section 230 has long been upheld in courts to provide almost blanket protection to internet sites and platforms, both cases are presenting unique challenges to the statute:

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The scope of the argument in the Twitter case hinges on language in anti-terrorism legislation passed in 2016 that allows terrorism victims to seek compensation from entities that “aid and abet” terrorism, like, say, a bank that provides a loan to terrorist groups. Social media platforms, the plaintiffs argue, should fall under that category, Section 230 be damned.

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In the Google case, the plaintiffs argue that YouTube’s video recommendation algorithm falls outside the protections of Section 230. In other words, while YouTube cannot be held liable for merely hosting illicit content, it could still be held liable for promoting or recommending illicit content.

Middle Ground: “Courts often like to reach middle ground decisions,” Jared Carter, assistant professor at Vermont Law School, told The Daily Upside. “[SCOTUS] could create a carveout” to hold social platforms accountable for the content they recommend. “Maybe that’s a third way.” If so, creating carveouts to 230 in instances pertaining to terrorism wouldn’t be dissimilar to the ones created in 2018 legislation intended to curb online sex trafficking. The rulings of both cases are expected sometime before July.

– Brian Boyle

Tobacco

Philip Morris Wants to Leave Russia But Just Can’t

(Photo Credit: Julia Engel/Unsplash)

The Marlboro Man is stuck in Russia.

Philip Morris CEO Jacek Olczak told the Financial Times Wednesday the tobacco giant has been trying for nearly a year to sell off its Russia operations and leave the country, but if it comes at a major loss to shareholders, he’d rather just “keep this whole thing.”

Smoke If You Got ‘Em

After Vladamir Putin invaded Ukraine, more than 1,000 global companies began suspending activity in Russia or selling off their assets and withdrawing from the country entirely. No more flying to Russia via Delta. Good luck finding any new Nikes or Adidas in St. Petersburg. And you know what they call a Quarter Pounder with Cheese in Moscow? They call it a Grand De Luxe ever since McDonald’s sold its operations to a Siberian chain. Paying taxes to a warmonger just ain’t a good look.

But moving out often comes at a nontrivial cost. According to Moscow’s Center for Strategic Research – a public policy think tank that is not government operated – by October of 2022, international corporations had lost roughly $240 billion as a result of cutting back or pulling out of the country. Competing tobacco company Imperial Brands took a $463 million hit after selling its Russian operations to a local partner. British American Tobacco, which is also trying to sell, said it might take till 2024 before the Lucky Strike maker can fully exit Russia without too much pain.

It’s a “bloody complex” process Olczak told The Wall Street Journal last year:

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In 2022, Russia and Ukraine accounted for 8% of Philip Morris’ revenue, totaling $31.7 billion, the FT reported, and the company has $2.5 billion worth of assets in Russia. But right now, the Kremlin dictates company valuations, and western companies can’t sell to parties under US and EU sanctions, so options are very limited.

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Plus, there’s the safety concern. As soon as businesses announce scaling back, Russian authorities start issuing summonses and threats of arresting corporate employees who have criticized the government, WSJ reported. Philip Morris has already quietly moved a few non-Russian employees out of the country.

Not as empty as you’d think: Philip Morris is the norm rather than the exception, too. While it may seem like there was a mass exodus of western companies from Russia, most have stuck around whether that was because the exit process was too tough or they just didn’t want to go. According to the International Institute for Management Development in Switzerland, less than 9% of EU and G7 groups operating in Russia had left by the end of last year.

–Griffin Kelly

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Wealth

Bill Gates Buys Stake in Heineken Parent Company

Don’t be surprised if your Windows laptop starts suggesting you crack open an ice-cold beer while it does yet another update.

Former Microsoft CEO/World’s Richest Man Bill Gates has bought a 3.76% stake in the company that owns Heineken beer, a regulatory filing reported on Wednesday revealed.

Bad Boy Billy

The $936 million investment is slightly out of character with the rest of Gates’ portfolio, which tends to be more in line with his philanthropic save-the-planet persona. His investment in vaccines both personally and via his charitable foundation is longstanding. At the end of last year, he invested in brain-computer interface startup Synchron along with fellow gazillionaire Jeff Bezos.

Gates is also heavily invested in agriculture; he’s the largest private farmland owner in the US and in January he backed a climate startup that hopes to reduce the amount of methane produced by livestock.

So why beer, and why now?

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The beer market isn’t looking quite as hale and hearty as it once did, but Heineken announced plans last week for a big marketing push to give its premium products some buzz.

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This isn’t the first time Gates has bet on cerveza — in 2007 he bought up 3% of a Mexican brewery called Femsa. The stake was worth $392 million.

Brad in Brussels: While Gates hoovers up stock in a Dutch brewer, current Microsoft president Brad Smith is next door in Belgium lobbying EU regulators to let the company buy Activision Blizzard, an acquisition that has already raised antitrust eyebrows in the UK. He managed to win over gaming giants Nintendo and Nvidia to his cause, but that’s mostly window dressing as the real competitor most likely to be hard-hit is PlayStation. Time for some tech giant Smash Bros.

– Isobel Asher Hamilton

Extra Upside

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One small step: NASA’s looking to replace their 1970s space suit designs.

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Start a victory garden: UK grocers are limiting the sale of fruits and vegetables.

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