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The Technology 202

A newsletter briefing on the intersection of technology and politics.

PayPal faces backlash after floating fines for sharing misinformation

The Technology 202

A newsletter briefing on the intersection of technology and politics.

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Below:  The FTC narrows its lawsuit over Meta’s Within acquisition, and the Biden administration imposes tough rules over Chinese access to chips. First: 

PayPal faces backlash after floating fines for sharing misinformation

PayPal is facing blowback after proposing rules that would have allowed it to fine users $2,500 for promoting misinformation — which the online payment service has since called an error.

Over the weekend, several conservative outlets reported that the tech company updated its terms of agreement, under which PayPal can levy fines against users for violations, to include “the sending, posting, or publication of any messages, content, or materials” that “promote[s] misinformation.”

The update immediately sparked uproar online on the right, marking the latest instance that a major online payment service has faced heat over its moderation practices. 

Brendan Carr, Republican on the Federal Communications Commission:

Sen. Marsha Blackburn (R-Tenn.):

Christina Pushaw, spokesperson for Florida Gov. Ron DeSantis (R): 

The move drew a rare rebuke from PayPal’s former president, David Marcus, as well as Elon Musk, who has been sharply critical of social media companies’ moderation practices and floated changes to Twitter if he completes his deal to buy it.

The company said Saturday that the updated user agreement was sent out in error. 

PayPal spokesperson Justin Higgs said in an email that the updated user agreement, which was slated to go into effect Nov. 3, “included incorrect information related to company policy.”

Higgs added, “PayPal is not fining people for misinformation and this language was never intended to be inserted in our policy. Our teams have made appropriate updates to correct these inaccuracies and we apologize for any confusion this has caused.”

Higgs also pushed back on the notion that PayPal’s fines are new, saying that its user agreement “has long-stated that PayPal can take funds of up to $2,500 or local equivalent from an account for each violation of the Acceptable Use Policy.”

The outcry highlights how a growing segment of internet services beyond social media companies are facing scrutiny over their user policies. 

Last year, congressional Democrats pressed PayPal to ban users who are prolific promoters of covid-19 misinformation and to “stop people from profiting off their dangerous lies.” Further back, PayPal faced calls to boot off Infowars, a site known to peddle in conspiracy theories, and Gab, the fringe social network popular among white supremacists. It kicked both off in 2018.

While PayPal is seemingly an unlikely target compared with its Silicon Valley peers, the dust-up could lead to greater scrutiny for the company if Republicans retake the House or Senate. 

Sen. Tim Scott (R-S.C.), who recently co-sponsored GOP-led legislation targeting Google over allegations of bias in its email filtering practices, said Saturday his office is looking into the issue.

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The FTC narrowed its lawsuit over Meta’s acquisition of Within

The Federal Trade Commission asked a judge to let it remove some allegations about anticompetitive effects in the virtual-reality fitness app market from a lawsuit over Meta's purchase of VR app maker Within, Bloomberg News’s Leah Nylen reports

Such a change is “unusual,” especially in the realm of merger challenges that are normally expedited, Wayne State University Law School antitrust professor Stephen Calkins told Bloomberg News. 

A federal judge said he expects to rule on the FTC’s request for an injunction blocking the Within acquisition by the end of the year. An FTC judge is set to hold a separate trial on the merger in January. 

Meta has denied the FTC's allegations. The FTC’s case is “based on ideology, not evidence,” Meta argued to Bloomberg News, adding that the amended complaint doesn’t have the original complaint’s allegations that Meta’s popular game Beat Saber directly competes with Within’s Supernatural app. “The FTC now claims that Meta and Supernatural are not competitors, after previously claiming that they were,” Meta spokesperson Stephen Peters told Bloomberg News. “What remains of the FTC’s case are speculative claims that continue to lack support in either the facts or the law.”

U.S. government imposes tough restrictions on Chinese access to chips

The rules announced Friday aim to limit China’s access to advanced computer chips and equipment for making chips, with the Biden administration saying that the technology supports Chinese efforts to modernize its military and its development of weapons of mass destruction, Ellen Nakashima, Jeanne Whalen and Cate Cadell report.

“The administration said it was focusing solely on the chips, activities and entities of ‘greatest national security concern’ in China to minimize harm to the American chip industry — foundational to the U.S. economy — and disruptions to the global supply chain,” my colleagues write.

Under the new initiatives, the Biden administration is using a trade tool to stop chipmakers around the world from supplying advanced chips for Chinese use in artificial intelligence or supercomputing. It’s also barring American factories and Americans working abroad from supporting the development or production of such chips in China without a license.

Biden administration announces increased privacy checks for European data flows

The new executive order boosts privacy protections for data transferred between the United States and Europe in an attempt to address long-standing concerns about U.S. surveillance, I reported. It puts into practice a March deal between President Biden and European leaders, and adds checks on U.S. intelligence agencies’ collection of Europeans’ personal information. It also lets them seek redress if their data is unlawfully intercepted.

“U.S. and E.U. officials have sought for years to come to terms on a legal mechanism to replace Privacy Shield, a data pact that allowed businesses to safely transfer data across the Atlantic that was struck down by European courts in 2020 over U.S. surveillance concerns,” I wrote. “But a deal proved elusive, even as businesses clamored for clarity around the legality of data flows.”

The new pact still has to be ratified in Europe, which could take months. It’s not clear if it will withstand challenges in European courts. “At first sight it seems that the core issues were not solved and it will be back to the [Court of Justice of the European Union] sooner or later,” Austrian privacy activist Max Schrems said in a blog post. Schrems’s legal challenges ushered in the end of the Privacy Shield.

Rant and rave

Researchers are exploring the possibility of cyborg cockroaches, my colleague Pranshu Verma reports. Twitter users had thoughts. Our colleague Dan Lamothe:

Journalist Carl Quintanilla and director and writer Melissa Jo Peltier:

Editor Seth Fiegerman:

Inside the industry

How social media ‘censorship’ became a front line in the culture war (Will Oremus)

Twitter blocks — and then restores — Covid-19 vaccination post from Florida's surgeon general (Politico)

This is life in the metaverse (New York Times)

Chicago scientists are testing an unhackable quantum internet in their basement closet (Jeanne Whalen)

Global crypto markets face tougher rules under G-20 plan (Politico Europe)

Workforce report

Dutch employee fired by U.S. firm for shutting off webcam awarded 75,000 Euros in court (NL Times)

Trending

Kanye’s return to Twitter lasts one day as account is locked (Bloomberg News)

Daybook

  • Rep. Ro Khanna (D-Calif.) and MIT President L. Rafael Reif discuss U.S. innovation at a Washington Post Live event on Tuesday at 1:30 p.m.
  • Sen. Mark R. Warner (D-Va.) and Indiana Gov. Eric J. Holcomb (R) discuss the Chips and Science Act at a Washington Post Live event on Thursday at 1:30 p.m.

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