Tag Archives: Company Legal & Law Matters

X lost a court battle after trying to claim ‘Twitter ceased to exist’

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X has lost a legal fight in Australia in which the company tried to avoid a $400,000 fine by claiming that Twitter no longer exists. The creative legal argument, first spotted by ArsTechnica, came amid a more than year-long dispute with Australia’s eSafety Commission.

The commission had asked the company, then known as Twitter, to provide details about its handling of child sexual exploitation on the platform last February. In its response, X failed to answer a number of questions and left “some sections entirely blank,” the commission said in a statement last year. As a result, the eSafety Commission slapped the company with a more than $415,000 fine for non-compliance.

It was an attempt to fight that fine that led to X’s claim that it shouldn’t be responsible since Twitter had “ceased to exist.” From the court filing:

X Corp submitted that, on and from 15 March 2023, Twitter Inc ceased to be a person, and therefore ceased to be a provider of a social media service. It was submitted that Twitter Inc therefore lacked capacity to comply with the notice, and that X Corp was not obliged to prepare any report in Twitter Inc’s place, as X Corp was not the same person as the provider to whom the notice was issued.

The argument isn’t exactly new for the Elon Musk-owned entity. CEO Linda Yaccarino has also repeatedly claimed that X is a “brand new company” in a bid to avoid scrutiny. She repeated the line multiple times earlier this year while testifying at a Senate hearing on child safety issues.

Australia federal Judge Michael Wheelahan, however, found the claim unconvincing, saying that X’s argument required “leaps in logic that were not supported by adequate explanation.” X didn’t immediately respond to a request for comment.

In a statement, eSafety Commissioner Inman Grant cheered the decision. “Had X Corp’s argument been accepted by the Court it could have set the concerning precedent that a foreign company’s merger with another foreign company might enable it to avoid regulatory obligations in Australia,” Grant said.

This article originally appeared on Engadget at https://www.engadget.com/social-media/x-lost-a-court-battle-after-trying-to-claim-twitter-ceased-to-exist-203030765.html?src=rss

EU court rules social networks can’t use personal data forever

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Once again, the European Union has issued a ruling preventing Meta from going too crazy with user information. The top court in the EU ruled that limits must be put in place for how long Meta and other social media networks can use people’s information for ad targeting strategies.

TechCrunch reported that the EU’s highest court sided with an earlier opinion published in April by a court adviser. The previous ruling also urged for limits on the amount of time companies could retain customers’ personal data for the purpose of targeting advertising.

The rulings referred its retention guidelines to the bloc’s General Data Protection Regulation (GDPR) established by the EU in 2018. Recital 65 of the GDPR establishes a person’s “right to be forgotten” and the right to rectification and erasure of personal data. Failure to comply with the GDPR could result in a 4 percent global annual turnover penalty, a number that could reach into the billions for a social media mega-corporation like Meta. Last year, Meta had to pay a $414 million fine (or approximately €390 million) for illegally requiring users of its social media outlets like Facebook, Instagram and WhatsApp to accept personalized ads.

The EU and Meta along with other big tech companies like Apple and Google have tangled over the use of personal data in relation to the Digital Markets Act. Meta is currently awaiting a fine ruling for violating the EU’s Digital Markets Act when it required users to pay to prohibit the company from collecting and sharing their personal data. Last year, the EU’s Court of Justice ruled that Meta needed to obtain consent before delivering personal ads to users in the region.

This article originally appeared on Engadget at https://www.engadget.com/social-media/eu-court-rules-social-networks-cant-use-personal-data-forever-193013206.html?src=rss

159 employees leave WordPress founder’s company after extortion lawsuit

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The feud between WP Engine and Matt Mullenweg, WordPress co-founder and Automattic CEO, recently came to a head when the web hosting service sued the latter, accusing him of "abuse of power, extortion and greed." In a new blog post, Mullenweg said his opponent's attacks on him and his company have been effective enough so that "a good chunk of [his] Automattic colleagues disagreed with [him and his] actions." As a response, he created a "buy-out package" that offered employees $30,000 or six months of salary, whichever is higher, if they resign. A total of 159 people, or 8.4 percent of the company, took the offer. 

Most of the employees who left came from the company's Ecosystem / WordPress business, while the rest came from the division working on apps like Tumblr and Cloudup. As TechCrunch notes, Mullenweg gave the event a positive spin and exclaimed that "the other 91.6 percent gave up $126 million of potential severance to stay!" 

Mullenweg called WP Engine a "cancer to WordPress" and accused the company of violating WordPress’ trademarks. He said they offered WP Engine the option to "pay a direct licensing fee, or make in-kind contributions to the open source project," but the company refused. WP Engine argued that its use of the WordPress trademark was legal. In response, the WordPress Foundation changed its trademark policy page to say that the "WP" abbreviation is indeed not covered by the WordPress trademark, but to please not use it "in a way that confuses people." It named WP Engine outright and even said that the company has "never once even donated to the WordPress Foundation, despite making billions of revenue on top of WordPress." The WordPress co-founder also banned WP Engine from accessing some of WordPress' plug-ins and themes, which broke a lot of the websites it's hosting. 

WP Engine accused Mullenweg of demanding eight percent of the company’s monthly revenue as royalty and of libel, slander, as well as of violations of the Computer Fraud and Abuse Act and IRS fraud. In a statement, Automattic's lawyer Neal Katyal said he stayed up all night reading the complaint and found the whole thing "meritless." He added that he's looking "forward to the federal court’s consideration of [the] lawsuit."

Update October 4, 2024, 1:57PM ET: We updated the post to attribute the quote at the end to Automattic's lawyer.

This article originally appeared on Engadget at https://www.engadget.com/general/159-employees-leave-wordpress-founders-company-after-extortion-lawsuit-133040801.html?src=rss

Texas is suing TikTok for allegedly violating its new child privacy law

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Texas Attorney General Ken Paxton has filed a lawsuit against TikTok claiming the company violated a new child privacy law in the state. It's set to be the first test of Texas’ Securing Children Online Through Parental Empowerment (SCOPE) Act since it went into effect just over a month ago.

Under the law, parts of which were struck down by a federal judge, social media platforms are required to verify the ages of younger users and offer parental control features, including the ability for parents to opt their children out of data collection.

Paxton alleges that TikTok’s existing parental control features are insufficient. "However, Defendants do not provide the parents or guardians of users known to be 13 to 17 years old with parental tools that allow them to control or limit most of a known minor’s privacy and account settings,” the lawsuit states. “For example, parents or guardians do not have the ability to control Defendants’ sharing, disclosing, and selling of a known minor’s personal identifying information, nor control Defendants’ ability to display targeted advertising to a known minor."

The lawsuit also argues that the app’s “Family Pairing” tool isn’t “commercially reasonable” because it requires parents to make their own TikTok account and because teens are free to deny their parents’ requests to set up the monitoring tool. TikTok didn’t immediately respond to a request for comment. The app already prohibits most targeted advertising to anyone younger than 18.

"We strongly disagree with these allegations and, in fact, we offer robust safeguards for teens and parents, including family pairing, all of which are publicly available," the company said in a statement shared on X. "We stand by the protections we provide families."

The lawsuit adds to TikTok’s growing legal challenges in the United States. The company is currently fighting a law that could result in a total ban of the app in the United States. It’s also facing a separate Justice Department lawsuit related to child privacy.

Update, October 3, 2024, 8:05 PM ET: This story has been updated to add a statement from TikTok. 

This article originally appeared on Engadget at https://www.engadget.com/big-tech/texas-is-suing-tiktok-for-allegedly-violating-its-new-child-privacy-law-235432146.html?src=rss

WordPress founder sued for alleged libel and attempted extortion

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The WP Engine web hosting service is suing WordPress co-founder Matt Mullenweg and his company Automattic. This follows a public feud over the WordPress trademark. The federal lawsuit accuses Mullenweg of “abuse of power, extortion and greed.”

This is the latest volley in an ongoing battle between WordPress and WP Engine, but it requires a bit of background. WordPress is the backend that powers a large chunk of the internet, around 40 percent of websites. Users can build a website from the ground up using WordPress or opt for an easier plug-and-play solution offered by third-party providers like WP Engine.

Mullenweg, who runs his own provider called Automattic, began loudly criticizing WP Engine back in September, calling it a “cancer to WordPress.” He said that the third-party provider’s name has confused customers into thinking it's actually part of WordPress. He also accused WP Engine of turning off certain features to save money.

WP Engine responded with a cease-and-desist letter and a request to withdraw the aforementioned comments, according to reporting by TechCrunch. It also said that its use of the WordPress trademark was legal under fair use. It went on to claim that Mullenweg threatened to take a “scorched earth nuclear approach” against WP Engine unless it agreed to pay “a significant percentage of its revenues for a license to the WordPress trademark.”

After this, the WordPress Foundation changed its Trademark Policy page and accused WP Engine of “never once” donating to the open-source arm of the foundation, “despite making billions of revenue on top of WordPress.” He went as far as to suggest that WP Engine covered up trademark abuse by editing websites. 

Mullenweg also banned WP Engine from accessing certain resources, like some plug-ins and themes. WP Engine powers over 200,000 websites and this move allegedly broke a lot of them. In response, the company wrote that Mullenweg’s “unprecedented and unwarranted action interferes with the normal operation of the entire WordPress ecosystem, impacting not just WP Engine and our customers.”

On October 1, WP Engine announced that it had developed its own solution that allowed consumers to access all of the missing themes and plug-ins. It followed that with today’s lawsuit, which accuses Mullenweg of demanding eight percent of the company’s monthly revenue as a royalty payment. The suit also alleges that Mullenweg and Automattic participated in libel, slander, violations of the Computer Fraud and Abuse Act and IRS fraud.

“Matt Mullenweg’s conduct over the last ten days has exposed significant conflicts of interest and governance issues that, if left unchecked, threaten to destroy that trust,” WP Engine said in a statement. “WP Engine has no choice but to pursue these claims to protect its people, agency partners, customers and the broader WordPress community.” Mullenweg and Automattic have yet to respond to today’s developments.

This article originally appeared on Engadget at https://www.engadget.com/big-tech/wordpress-founder-sued-for-alleged-libel-and-attempted-extortion-152957987.html?src=rss

Judge blocks new California law barring distribution of election-related AI deepfakes

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One of California's new AI laws, which aims to prevent AI deepfakes related to elections from spreading online, has been blocked a month before the US presidential elections. As TechCrunch and Reason report, Judge John Mendez has issued a preliminary injunction, preventing the state's attorney general from enforcing AB 2839. California Governor Gavin Newsom signed it into law, along with other bills focusing on AI, back in mid-September. After doing so, he tweeted a screenshot of a story about X owner Elon Musk sharing an AI deepfake video of Vice President Kamala Harris without labeling it as fake. "I just signed a bill to make this illegal in the state of California," he wrote. 

AB 2839 holds anybody who distributes AI deepfakes accountable, if they feature political candidates and if they're posted within 120 days of an election in the state. Anybody who sees those deepfakes can file a civil action against the person who distributed it, and a judge can order the poster to take the manipulated media down if they don't want to face monetary penalties. After Newsom signed it into law, the video's original poster, X user Christopher Kohls, filed a lawsuit to block it, arguing that the video was satire and hence protected by the First Amendment. 

Judge Mendez has agreed with Kohls, noting in his decision [PDF] that AB 2839 does not pass strict scrutiny and is not narrowly tailored. He also said that the law's disclosure requirements are unduly burdensome. "Almost any digitally altered content, when left up to an arbitrary individual on the internet, could be considered harmful," he wrote. The judge likened YouTube videos, Facebook posts and X tweets to newspaper advertisements and political cartoons and asserted that the First Amendment "protects an individual’s right to speak regardless of the new medium these critiques may take." Since this is merely a preliminary injunction, the law may be unblocked in the future, though that might not happen in time for this year's presidential elections. 

This article originally appeared on Engadget at https://www.engadget.com/ai/judge-blocks-new-california-law-barring-distribution-of-election-related-ai-deepfakes-133043341.html?src=rss

US labor board accuses Apple of violating employees’ rights

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Apple has been in hot water with the National Labor Relations Board (NLRB) since 2022 when the company was accused of union-busting. It agreed to review its labor practices last January, but the NLRB determined that Apple had violated workers’ rights soon after. Today, the NLRB strikes again, accusing Apple of anti-union practices, denying employees the right to discuss wages and even signing illegal nondisclosure, noncompete and confidentiality agreements.

Truth be told, this is pretty much the same song and dance covered since 2022. These complaints originate from former Apple employees Cher Scarlett and Ashley Gjøvik. They claimed that Apple prohibited wage discussion and that CEO Tim Cook aimed to punish leakers, respectively. Gjøvik also alleged that it prevented staff from talking to reporters.

Apple provided a statement to Reuters, which first reported on this complaint. The company claims it always honors employees’ rights to discuss wages, hours and working conditions. Should Apple not settle the case, an administrative judge will hear it in January.

This article originally appeared on Engadget at https://www.engadget.com/big-tech/us-labor-board-accuses-apple-of-violating-employees-rights-164643503.html?src=rss

X can be ‘immediately’ unblocked in Brazil after it pays a $1.9 million fine

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X only has to pay one last fine in Brazil to get its services reinstated, according to Bloomberg and CNBC. Supreme Court R has ordered the company to pay 10 million Reais, or around $1.9 million, for its non-compliance with Brazil's court order for two days. Moraes added that the company's return "depends solely on the full compliance with Brazilian legislation and the absolute observance of the court orders in respect of national sovereignty." Specifically, Moraes fined X on September 19 for restoring its services in the country for some people despite a ban on the website. The judge also fined the company after X disregarded the ban for a second time on September 23 through Starlink. 

X's owner, Elon Musk, previously resisted Moraes' order to take down and freeze several accounts that were allegedly spreading disinformation on the platform. Musk saw it as censorship and opted to close its operations in the country instead of complying. In response, Moraes ordered the nation's internet providers to block the social media platform and to issue a new rule that anybody found to be accessing X through a VPN could face a daily fine of 50,000 Reais ($8,900). The court froze the Brazilian bank account of SpaceX’s Starlink internet service provider, as well. It ultimately withdrew 18.35 million Reais ($3.4 million) from Starlink's and X's account to settle previous penalties the Supreme Court had imposed on the social network.

A few days ago, however, X's lawyers reportedly filed a document in court naming the company's legal representative in Brazil, as Moraes had demanded. The website also removed the accounts the judge named in its initial directives and which he had identified as a threat to democracy, showing that it's now willing to comply with the court's orders. The New York Times reported back then that X had failed to submit all the necessary paperwork to get Brazil to lift its ban. Moraes' statement that the company can "immediately return to its activities" after it pays this fine suggests that X got that squared away, and Brazilian users may be able to access the website soon. 

This article originally appeared on Engadget at https://www.engadget.com/social-media/x-can-be-immediately-unblocked-in-brazil-after-it-pays-a-19-million-fine-110001546.html?src=rss

Three men charged in connection with the Trump campaign hack

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The US Department of Justice charged three Iranian nationals as part of an effort to hack into the emails and computers used by President Donald Trump’s campaign staff and other political connections.

The Washington Post reported that DOJ officials filed charges against Masoud Jalili, Seyyed Ali Aghamiri and Yasar Balaghi in an indictment filed Thursday in the US District Court for the District of Columbia. The indictment alleges the three men “prepared for and engaged in a wide-ranging hacking campaign” against current and former US officials, political campaigns and the media.

According to the indictment Jalili, Aghamiri and Balaghi’s "activity is part of Iran’s continuing efforts to [...] erode confidence in the US electoral process." They also face possible charges such as providing material support to a designated foreign terrorist organization, wire fraud and aggravated identity theft.

The suspects are accused of running a targeted hacking campaign committed in Iran over a four-year period. Their victims include current and former officials with the US State Department, the Central Intelligence Agency, the US Ambassador to Israel and an Iranian human rights organization.

Then last May, the three hackers successfully gained access to accounts belonging to Trump campaign officials. (Attempts to breach Biden campaign staff were, apparently, unsuccessful.) President Joe Biden’s campaign staffers as well as news outlets like The Washington Post and Politico received unsolicited emails from an AOL account owned by “Robert” that contained materials stolen from the Trump campaign. They included some internal poll results and the vetting dossier for Trump’s running mate Senator J.D. Vance.

Because of extradition laws, it's unlikely these hackers will be brought to justice on US soil.

This article originally appeared on Engadget at https://www.engadget.com/cybersecurity/three-men-charged-in-connection-with-the-trump-campaign-hack-191154617.html?src=rss

Valve cuts binding arbitration from its Steam user agreement

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If you booted up Steam in the last 24 hours, then you probably saw the pop up window asking you to agree to a new Steam Subscriber Agreement (SSA). Valve laid out the changes in an official blog post on the Steam Community forum, and notably, binding arbitration is no longer part of the SSA.

Binding arbitration is a requirement that disputes be resolved by a legal proceeding that takes place outside of courts. Instead of a judge, these disputes are overseen by an arbitrator, who is paid by the company for their service. You can imagine why there might be some conflict of interest inherent (or why companies love these things). Instead, the new SSA says customers should seek resolutions to any problems by first contacting Steam Support. If a solution can’t be reached, disputes will be referred to the court instead of individual arbitration.

Hauling a company into court wouldn't be all that notable on its own, except that in recent years with the rise of Terms of Service agreements, arbitration clauses have become ubiquitous. Next time you download an app, join a website or even sign a contract for a new job, take a look at the contract: more often than not, you just signed away your right to sue.

The new SSA also no longer has a class action waiver, which previously barred groups of similarly situated plaintiffs to sue jointly, which is also a major departure from other Terms of Service agreements.

Valve says these changes will have “limited impact” in some regions including the EU and UK, Australia, New Zealand and Quebec. The arbitration requirement in the SSA did not apply to these regions.

While these are positive developments for consumers, Steam curiously doesn’t list its reasons for making these changes. We’ve reached out to a Steam representative for comment and will update if we hear back.

This article originally appeared on Engadget at https://www.engadget.com/gaming/valve-cuts-binding-arbitration-from-its-steam-user-agreement-174529582.html?src=rss