Saturday, December 13, 2014

Leaked Emails Reveal MPAA Plans To Pay Elected Officials To Attack Google

from the holy-fuck dept

Okay, it's no secret that the MPAA hates Google. It doesn't take a psychology expert to figure that out. But in the last few days, some of the leaks from the Sony Pictures hack have revealed the depths of that hatred, raising serious questions about how the MPAA abuses the legal process in corrupt and dangerous ways. The most serious charge -- unfortunately completely buried by this report at The Verge -- is that it appears the MPAA and the major Hollywood studios directly funded various state Attorneys General in their efforts to attack and shame Google. Think about that for a second.

There's a lot of background here that's important (beyond just the MPAA really hates Google). First, as you know, the MPAA has certainly not given up on its SOPA desire to get certain websites completely blocked. The leaked emails reveal a lot more about that (which we'll get to). Second, a year ago, the MPAA hired a pitbull of an anti-piracy lawyer in naming Steve Fabrizio its General Counsel. Fabrizio has spent the last decade and a half or so deeply involved in litigating a bunch of anti-piracy battles at both the RIAA and the MPAA/RIAA's favorite big law firm, Jenner & Block. This is not a guy you hire if you're looking to innovate. This is a guy you hire if you want to get into knock-down, dirty legal fights.

Third, there is the role of state Attorneys General. A recent NY Times article detailed how lobbyists have figured out ways to effectively "lobby" state Attorneys General to do their bidding. Frequently, this is around getting the state AGs to drop investigations (and potential lawsuits) against companies. The article is somewhat eye-opening, as it's hard to distinguish much of what's discussed from straight up bribery. There is talk of lavish events, travel and dinners all paid for by corporate lobbyists for state AGs, often followed soon after with dropped, or reduced investigations. In one case, an AG told staff not to start an investigation into a public company without first getting his approval. Campaign funding is a big part of it as well, as these lobbyists dump lots of money into AG campaigns. And it's no secret that the state Attorney General position is often seen as a stepping stone to a Governorship or US Senate job.

We've discussed in the past that state Attorneys General are often the biggest grandstanders, as their main goal in certain investigations seems to be about generating headlines for themselves, rather than any real legal basis. More than four years ago, we wrote about Topix CEO Chris Tolles' experience being hounded by state Attorneys' General so they could get a bunch of headlines out of something in which everyone admitted Topix wasn't actually doing anything illegal. Along those lines, we've noted that popular tech companies have increasingly been a target for state AGs -- because they're almost sure to generate headlines. We've also noted that state AGs have been pushing for changes to federal laws, like Section 230 of the CDA, to allow them to further go after big tech companies for things like actions of their users.

Not surprisingly, Google has been a popular target for some state AGs. In the past, we've written about state Attorneys General from Nebraska and Oklahoma blaming Google for videos made by users, and about Texas' Attorney General going after Google for supposed antitrust violations(based on the same claims that the FTC later dropped entirely). But the state Attorney General with the biggest chip on his shoulder for Google has absolutely been Mississippi Attorney General Jim Hood, who seemed to think that it was Google's fault that he could find counterfeit goods via search. A few months later, he was back blaming Google for infringement online as well.

This was no accident. What's come out of the Sony Pictures Leak is not just that the MPAA was buddying up to state Attorneys General, but that the MPAA was funding some of this activity and actively supporting the investigation. The leaked emails reveal that rather than seeing that NY Times article about corporate/AG corruption as a warning sign, the MPAA viewed it as a playbook. But not for preventing investigations but for encouraging and funding them. This appears to goway beyond that NY Times article. This isn't campaign donations or inviting AGs to speak at lavish events and paying for the travel. This is flat out paying AGs to investigate Google (even on issues unrelated to copyright infringement) and then promising to get extra press attention to those articles.

Here's the Verge's summary of a key email (which the Verge doesn't even seem to realize why it's so damning):
May 8, 2014: Fabrizio to group. "We’ve had success to date in motivating the AGs; however as they approach the CID phase, the AGs will need greater levels of legal support." He outlines two options, ranging from $585,000 to $1.175 million, which includes legal support for AGs (through Jenner) and optional investigation and analysis of ("ammunition / evidence against") Goliath. Both options include at least $85,000 for communication (e.g. "Respond to / rebut Goliath's public advocacy, amplify negative Goliath news, [and] seed media stories based on investigation and AG actions.").
"Goliath" is the MPAA's rather transparent "codename" for Google. CID stands for a "civil investigative demand" -- which is a form of an administrative subpoena, demanding information from a company, related to an investigation.

What seems to come out from these emails is that the MPAA, in coordination with the major Hollywood studios, agreed to willfully pay tons of money indirectly to state AGs (and Hood in particular) to get them to investigate Google (using the time and labor of the MPAA's favorite law firm -- and the one that Fabrizio just left). That goes way beyond anything discussed in that NY Times articles, and certainly smacks of serious illegality. It's difficult to see how this isn't bribing a public official to attack a company they dislike.

Not only that, but it shows that the MPAA and the studios were aware of Hood's plans well before they happened, suggesting that he or his office has been coordinating with Hollywood on their plans and that the specific CIDs are actually written by the MPAA's lawyers themselves:
A report from the previous February suggests that the Goliath group drafted civil investigative demands (similar to a subpoena) to be issued by the attorneys general. "Some subset of AGs (3-5, but Hood alone if necessary) should move toward issuing CIDs before mid-May," the email says.
And, more recent emails (from just in October) show that they know that another CID is apparently coming and that the MPAA intends to use that CID for negotiating leverage against Google. This follows a claim that Google was pissed off at the MPAA for mocking its recent search algorithm changes to further push down sites that may link to infringing materials (it's not like we didn't warn everyone that the MPAA wouldn't be satisfied with Google's changes). Either way, the MPAA's Fabrizio brushes off concerns that Google has, telling the studios not to worry, that Google should be more willing to talk after Hood sends out his next CID:
After a dispute over Google’s most recent anti-piracy measures in October, Fabrizio suggested further action may be yet to come. "We believe Google is overreacting — and dramatically so. Their reaction seems tactical (or childish)," the email reads. "Following the issuance of the CID [civil investigative demand] by [Mississippi attorney general Jim] Hood (which may create yet another uproar by Google), we may be in a position for more serious discussions with Google."
While the Verge report is focused on the "sexy" topic of the MPAA having an "anti-Google' (er... "Goliath") working group, the real story here is that it appears that this infatuation with taking down Google has extended to funding state politicians in their investigations and attacks on Google, even when it's on totally unrelated issues (the initial CID was about counterfeit drugs -- which is an issue that the MPAA likes to mock Google over by totally misrepresenting some actual, but historical, bad behavior).

And beyond that, the MPAA is showing that part of its plan is to fund "media stories based on" the Attorneys General investigations. Remember, so much AG activity these days is driven by what's going to get them into the headlines. Setting aside nearly $100,000 from the MPAA to get a state AG some headlines for an investigation paid for by the MPAA, using administrative subpoenas written by the MPAA... all designed to attack a company they don't like (which actually has done pretty much exactly what they'd been asking for in downranking sites that lead to infringing works), is really stunning.

I get that it's natural to dislike a company or organization that has undermined your business model. It happens. But there are different ways to respond to it. One is to innovate and compete. Another is to use the legal process to throw hurdles in their path. This is the distinction between "market entrepreneurs" and "political entrepreneurs" that Andy Kessler has described. What the MPAA appears to have done in the last few months, however, certainly suggests that the organization, with the help of the major studios, went beyond just lobbying and political pressure, to actually funding elected officials to try to attack a company they didn't like. And, at the very least, this also has to raise serious questions about Mississippi Attorney General Jim Hood and who he takes orders from. Is he really "protecting" the people of Mississippi? Or is he focused on gobbling up Hollywood's money and promotion?

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