A new ruling could complicate Biden’s social media policies

A new gap is emerging in Washington’s social media efforts

Government efforts to interact with social media platforms took a major blow on Tuesday when a federal judge banned the Biden administration from communicating with tech companies about a wide variety of online content.

The 155-page ruling, which the administration is likely to appeal, raises questions about how the government is supposed to deal with platforms that reach billions of people. It also complicates the prospects of technology companies regulating the content their users post.

The pronounciation: Judge Terry Doughty of the U.S. District Court for the Western District of Louisiana said broad sections of the government, including the Department of Health and Human Services and the FBI, had no way of talking to social media companies that would lead to the “removal, removal , suppression or diminution” of content.

“If prosecutors’ allegations are true, this case is likely the most massive attack on free speech in United States history,” said Mr. Doughty, who was appointed by President Donald Trump.

It’s a win for the Republican attorneys general who sued the government, arguing that federal officials were trying to curtail users’ First Amendment rights. In their lawsuit, the plaintiffs cited emails and text messages in which, they claimedfederal officials had pressured tech executives to remove or censor posts about federal pandemic policies, articles about Hunter Biden, election security, and other issues.

Doughty also pointed to attempts to remove or downplay content by Robert Kennedy Jr., the anti-vaccine activist now challenging President Biden for the Democratic presidential nomination. Mr. Kennedy applauded the decision: “Happy Independence Day everyone!” he tweeted.

Doughty cited some exceptions in his ruling, including in cases involving crimes, threats to national security or foreign attempts to influence elections. And other government officials, including legislators, can still contact social platforms.

Critics of the ruling say it is too broad and problematic. especially since it applies to government efforts to encourage, not force, corporate action. “The government cannot be in violation of the First Amendment simply by talking to the platforms about their content moderation decisions and policies,” Jameel Jaffer of Columbia University’s Knight First Amendment Institute told The Times.

Experts are also concerned that disinformation will only increase on social platforms, which have already cut off their content moderation teams.

The order may have wider implications for technical regulation. Other Republican state officials have taken steps to ban internet platforms from removing certain political content, which legal experts say is likely to find its way to the Supreme Court.

Meanwhile, prosecutors in this case have argued that the Biden administration had threatened technology companies with floating moves to review the antitrust law or section 230 of the Communications Decency Act, the legal shield that protects online platforms from lawsuits over user content. (It is worth noting that the Trump administration Also made noise about rethinking Section 230.)

While there is little chance of Section 230 being overturned, Doughty’s ruling raises the prospect that any pressure to review technical regulations could be seen as undue pressure on technology companies.

HERE’S WHAT HAPPENING

Global temperatures set a record. Tuesday saw an average global temperature of 17.2 degrees Celsius (about 63 degrees Fahrenheit), the latest example of extreme weather events plaguing people from China to India and Texas. The return of the El Niño phenomenon is likely to lead to temperature increases, and climate officials urged more action to reduce fossil fuel use.

Investors are waiting for a short but busy week. This afternoon the Fed will publish the minutes of its rate-setting meeting last month. Markets will be watching how many central bank officials think multiple rate hikes are needed this year to curb inflation. On Friday, the Labor Department publishes monthly job figures; economists polled by Reuters have predicted that employers would add 225,000 new jobs last month.

A SPAC seeking to take Donald Trump’s media company public has settled with the SEC Digital World Acquisition Corporation said it would pay $18 million in fines and review its securities filings to resolve an investigation into its proposed merger with online platform parent company Truth Social. But it’s unclear whether Trump’s company wants to go through with the merger.

Illumina reportedly faces a record penalty from the European Union. The gene sequencing company could be fined up to $453 million, or 10 percent of sales, for completing the $8 billion acquisition of cancer detection company Grail despite an ongoing investigation into the deal, according to The Financial Times. (EU regulators ultimately opposed the deal.) Such a fine would be much higher than previously imposed by Brussels.

China is hedging its bets

Janet Yellen will land in Beijing on Thursday for her maiden trip to China as Treasury Secretary, the Biden administration’s latest effort to improve dialogue between the world’s two largest economies. Experts do not expect major breakthroughs, especially as the trade battle shows little sign of abating. But China’s faltering economy and Beijing’s focus on elections in the United States and Taiwan next year lead to a calculation by Chinese policymakers that it is still worth getting involved.

The Chinese economy has not fully recovered from Covid lockdowns. This is according to new data published on Wednesday activity in the service sector grew at the slowest pace in five months. That adds to a parade of weak data on lukewarm consumer spending, subdued exports and manufacturing. Chinese stocks are downalso, as hopes of a large-scale stimulus seem increasingly distant.

That is one of the reasons why China has been on a charm offensive with global business. It tried the meeting of the World Economic Forum last week in Tianjin. But that came after a crackdown on consulting and due diligence firms with Western connections, raising concerns about doing business in the country.

Ms Yellen’s visit follows a new round of tit-for-tat sanctions. China announced export restrictions on two metals used to make semiconductors on Monday. The Netherlands said that last week Dutch companies such as ASML, which makes machines critical to making chips, should seek government permission to ship some equipment abroad. Washington is also reportedly considering new measures Limit Chinese access to cloud computing technology.

But the Chinese are looking beyond the United States and 2023. “Beijing policymakers are hedging their bets”, Rana Mitter, director of the University of Oxford’s China Center, told DealBook. “They believe the Biden administration is using softer language, but in practice it is trying to contain China. They are therefore waiting to see what happens in the most important elections of 2024, and are also trying to enter into a warmer dialogue with the EU, the UK and other major trading states.”

The rivalry between Twitter and Meta heats up

This week promises to be tough for Elon Musk and Twitter. After the social network unexpectedly announced limits for viewing tweets — freezing power users and possibly hurt the company’s efforts to lure advertisers back — Meta will launch a rival app on Thursday that some have called a “Twitter killer.”

Users can use the app, Threads, a short message forum much like Mr. Musk. Its development stems from a long-standing desire by Mark Zuckerberg, who as Meta’s CEO helps oversee Facebook and Instagram, “to drive out Twitter and make it the central place for public conversation online,” reports The Times’ Mike Isaac.

For some within Meta, the tumult on Twitter since Mr. Musk took over the company last fall has been an opportunity to, in the words of an internal employee post last year, “GO FOR THEIR BREAD AND BUTTER”.

Advertisers will be watching closely. Meta is strong relationships with advertisers, and probably even more so after many fled Twitter amid unrest related to sudden policy changes Mr. Musk imposed. That whiplash on Twitter has created a challenge for Linda Yaccarino, who became CEO of the company last month and is tasked with reviving the platform’s advertising business.

Ms. Yaccarino’s work may have been complicated by the new tweet viewing limits, which may also affect Google’s ability to Show messages in search results — according to analysts.

(Mr. Musk said the new policy was temporary and intended to deter artificial intelligence companies from scrapping Twitter posts to train their services without adequate payment.)

• In case you missed it: Another According to Dana White of Ultimate Fighting Championship, who helps arrange the fight, the dust between Mr. Musk and Mr. Zuckerberg – a potential “cage match” – appears to be settling.

Blackstone’s Schwarzman is having a big payday

Last year was a dud for most investors, but CEO pay continued to rise.

Leader of the list of the most richly compensated was Steve SchwarzmanThe CEO of Blackstone, whose pay package was said to be a quarter of a billion dollars The Wall Street Journal. With $253 million, Mr. Schwarzman’s salary is slightly ahead of Alphabet’s Sundar Pichai ($226 billion).

In total, nine CEOs earned more than $100 million in 2022. That included some ongoing companies that didn’t perform as well for investors, such as Peloton’s Barry McCarthy ($168 million), whose shares fell about 77 percent last year, and Stephen Scherr of Hertz ($182 million), which emerged from bankruptcy in 2021 and whose stocks underperformed the S&P 500.

Restricted shares and options make up a large portion of executive compensation. A Blackstone spokesperson told The Journal that 30 percent of Mr. Schwarzman can be attributed to the private equity giant’s stock performance in 2021; last year, Blackstone shares fell about 40 percent.

Another bonus: Approximately $190 million of Mr. Schwarzman is pegged at “carry interest,” a common form of Wall Street pay with a relatively low tax rate. The Biden administration wanted to close the loophole in interest rates, but senior officials blamed it fierce lobbying in Washington by the private equity industry for thwarting those plans.

Options don’t always work. The package Mr. McCarthy received from Peloton consisted almost entirely of options with a strike price below Wednesday’s share price of $8.19. Cashing that in would cost him.

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