State of the Net West Recap

By Eric Goldman

Yesterday, the High Tech Law Institute and the Advisory Committee to the Congressional Internet Caucus co-sponsored the Third Annual State of the Net West event at Santa Clara University. The featured participants were 3 members of Congress (Boucher, Goodlatte and Lofgren) and the White House CTO Aneesh Chopra, supplemented by 8 distinguished discussants. In a jam-packed morning, we covered a lot of interesting and important ground on broadband, privacy, antitrust, immigration and open government. This blog post recaps some highlights from the discussion.

Boucher on Broadband

Rep. Boucher emphasized the importance of broadband availability to economic activity and expressed concern that the US wasn’t keeping up with broadband deployment (he said, “we can do better”). He offered three policy proposals for ways the federal government could help:

* revise the Universal Service Fund to allow dollars to be spent on broadband deployment; and require USF fund recipients 5 years from now to be offering broadband or be cut off from USF

* federally preempt state laws prohibiting municipal broadband offerings (which about 25 states have)

* get the FCC to develop a broadband deployment plan

He expressed disappointment with the guidelines that NTIA and the Department of Agriculture have adopted to give away the $7.2B broadband fund that was part of the stimulus package. It appears he will be encouraging both entities to rethink their guidelines.

My colleague Al Hammond was the broadband discussant. Al made a number of good points, including noting that broadband deployment is both a rural and low-income issue (Boucher appeared to be focusing more on the former) and raising concerns about municipalities not playing fair and the FCC overcounting actual broadband availability.

Boucher on Privacy

Rep. Boucher also gave a preview of the privacy bill he is planning to introduce next month. He started off by saying he likes ad targeting, especially first party targeting (he said he buys items based on customized recommendations). So he wants to encourage “appropriate” ad targeting, not eliminate it. His bill is expected to contain the following elements:

* websites collecting data will be required to post a prominent privacy policy

* users can opt-out of first party targeted ads. This also includes data sharing necessary to enable first party ads

* websites that want to share data with unaffiliated third parties will need opt-in. However, behavioral ad networks can proceed on an opt-out basis if they allow users to see and edit their behavioral profile, except for sensitive information categories that would always be opt-in

* both the FTC and state AGs would have enforcement authority

To the extent that the mandatory privacy policy and opt-out options codifies existing industry practices, this proposal generally seems benign but not worth the effort–the costs of the inevitably poor statutory drafting outweighs any benefit we might get from regulatory codification. Requiring opt-in would likely eliminate third party behavioral ad networks, which (as I’ve discussed before) is more likely to be a detriment than a win.

I was especially intrigued by the proposal that behavioral networks can flip from opt-in to opt-out by letting users access a user profile. I need to see more details about Boucher’s thinking, but doesn’t this superficially sound crazy? The most obvious problem is authentication of the user before seeing his or her profile. How would this be done? The networks usually don’t know the identity of the specific individuals they are profiling, so they can’t authenticate identity. And just tying profile access privileges to a cookie or machine sounds like a recipe for disaster for all shared computers. Plus, a web interface seems to increase the security risks that the bad guys can see profiles they shouldn’t be able to see. On first blush, it sounds like this part of Boucher’s proposal may need a complete rewrite, with unknown consequences for the entire structure of his proposal.

Mike Hintze of Microsoft was the privacy discussant. He espoused Microsoft’s standard line that there should be a comprehensive privacy law.

In the Q&A, Boucher appeared willing to consider concurrent privacy enforcement authority by self-regulatory organizations, so long as they enforced the law’s minimum requirements. But any self-regulatory effort wasn’t a substitute for other aspects of his bill.

Lofgren on Antitrust

Rep. Lofgren said that if the Bush administration did too little on antitrust enforcement, the Judiciary committee is now concerned that Obama and Varney will do too much. Lofgren is particularly focused on the chilling effects of the mere threat of antitrust scrutiny, not just the actual successful prosecution in court of cases. Thus, an “informal” DOJ expression of interest can deter innovative activity by high tech companies.

She also expressed skepticism that antitrust laws remain effective at protecting technology markets, which are marked by fast innovation and low barriers to entry. (I believe her exact words were “traditional antitrust measures of marketplace behavior might no longer work.”) At minimum, any technology-related antitrust enforcement actions should be focused on improving innovation rather than trying to manage current marketplace prices.

Finally, she said that copyright restrictions should be considered in antitrust inquiries. Mike Masnick has more to say on this.

Michael Katz of UC Berkeley was the most colorful respondent. He shared Lofgren’s concern that antitrust law may be counterproductively squelching innovation, especially when companies try to capture antitrust enforcers to hassle competitors. He had especially harsh words for the FCC, calling it much less disciplined than the DOJ and observing how the FCC can blackmail companies using its leverage. He also complained that the FCC’s review of mergers takes too long, and as an example of their lack of discipline, the FCC will impose merger conditions that have nothing to do with the merger.

Tim Bresnahan of Stanford and my colleague Cathy Sandoval were the other respondents.

At the end of her talk, Lofgren praised the Google Book Search settlement, saying that in some ways it lowers barriers to entry. She also said she was grateful that Google appears to have found a back-door way to liberate orphan works given that she wasn’t able to pass an orphan works bill. I’m all in favor of orphan works reform, but a class action settlement seems like a weird way to get there.

Chopra on Open Government

Aneesh Chopra is the new White House CTO, a role that never existed before, which puts Chopra at Obama’s elbow on all technology issues. This was Chopra’s first Silicon Valley trip since he undertook his new role. His first talk was on Tuesday night at a Churchill Club event; we were his second. Lots of people were very interested in learning more about him. He was the big draw for the press, and we got an unprecedented number of walks-in based in part (we think) on his talk. He was also mobbed before and after his talk–everyone seemed to want a piece of his attention (then again, I’d love to have a chance to kick some stuff around with him one-on-one myself!).

It’s easy to see why Chopra sparks such curiosity. My impressions were that he was genuinely affable, smooth without being slick, substantive without being bookish, a big fan of crowdsourcing and an even bigger fan of assessment and measurement of outcomes.

He started off by discussing the importance of technology and how the US’s rate of technological performance is lagging against other countries. He then identified three ways to “turn the ship around”:

1. invest in innovation building blocks, such as a smart/secure infrastructure, more R&D and improved workforce expertise

2. healthcare reform, especially improvements to the information technology side of healthcare delivery

3. an improved education system, including distance learning and more emphasis on lifelong learning

He then discussed open government issues and gave examples of ways technology can facilitate participatory governance.

Goodlatte and Discussants on Immigration

Rep. Goodlatte laid out the Republican’s high tech agenda, which includes:

* skilled workforce, including immigration reform

* patent reform

* trade issues

* taxation, including efforts to define when activity in a state triggers tax obligations

* net neutrality (don’t regulate but improve antitrust enforcement)

* privacy (opt-out except for sensitive information)

The panel then drilled down on immigration reform. I was really excited to have this panel because workforce issues are so central to the Silicon Valley’s “secret sauce” and yet I couldn’t recall a time that the HTLI had sponsored a discussion about them. Obviously immigration issues are age-old and are well-trodden, but I nevertheless found the discussion helpful–with the one caveat that everyone on the panel agreed with everyone else, so there was a lot of preaching to the choir. I learned an interesting factoid that both Reps. Goodlatte and Lofgren were formerly immigration attorneys, so they have some front-line domain expertise in this area.

First discussant was AnnaLee Saxenian of UC Berkeley. She talked about how skilled immigrants have fueled innovation in this country. She gave a number of stats in support of this, including that a majority of Silicon Valley engineers are foreign-born, and a high percentage of technology entrepreneurs and patent applicants are foreign-born individuals. She also noted that foreign-born skilled works create net new jobs and also help build better ties to their home country.

We benefit from the best and the brightest from around the world, who come to the US because of our higher education system and historically have chosen to stay. However, she is concerned about this retention because of bureaucratic barriers. She is also concerned that companies, frustrated by their lack of access to development talent, will offshore their R&D.

Finally, she pointed out that immigration discussions kludge together the issues of skilled and low-skilled workers, even though their issues are very different.

Keith Wolfe of Google reinforced many of AnnaLee’s points from Google’s specific experiences.

My colleague Deep Gulasekaram was the last discussant. He pointed out that free marketplaces may require free movement of labor, which isn’t consistent with our current immigration policy. He raised concerns about state and local anti-immigration policies and the negative consequences of tying foreign workers to specific jobs (by linking their visa to the job).

Rep. Lofgren added a few remarks:

* Obama told her that it’s time for comprehensive immigration reform. [This led to a polite back-and-forth between Lofgren, who favors comprehensive reform, and Goodlatte, who would settle for piecemeal immigration reform]

* Immigration reform is not a substitute for educating the US workforce

* We should give permanence to people we want to keep (i.e., not keep them on some treadmill with the possibility of a forced exit, which prevents their long-term life planning)

* We need to address the family of skilled immigrants, not just the immigrants themselves

More Coverage of the Event

* ABC 7 News

* KCBS radio

* Zusha Ellison of the Recorder

* Joyce Cutler of BNA (BNA subscription required)

* Mike Masnick

* Joel West

* Colette Vogele

* Warren’s Washington Internet Daily also ran a story (not web-linkable) “Boucher Promises Online Privacy Bill Draft Soon”

* The extensive Twitter discussion at hashtag #sotnw. Twitterers included @ipolicy, @caminick, @persistance, @miss_eli, @techpolicygirl, @cathygellis, @mmasnick, @nextgenweb, @marianmerritt, @larrymagid, @christinela, @mblatkin, @seangarrettnow, @vogelelaw (who didn’t always use the hashtag–we will try to publish a standardized hashtag at future events). Whew! Apologies if I missed anyone. I can’t recall seeing more Twitterers in an audience–everyone seemed to have their Twitter page up constantly. As usual, I didn’t turn on my computer at the conference (I take notes by hand and blog them later), so my comments seem woefully out-of-date already!

We plan to post the event audio soon so you can listen for yourself. I’ll announce the audio posting at my Twitter account when it’s live.

UPDATE: Audio now available: Download (item 27) or Stream

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