At Alphabet, There Are Only Two Shareholders Who Count

Google parent Alphabet’s annual shareholder meetings are a very civilized affair, with chairman Eric Schmidt playing host, sharing a vision of the better world the company is creating, followed by polite questions and proposals from shareholders.

Those shareholder proposals, however, are largely a false front—window dressing, if you will. Because as everyone at the meeting probably knows, there are only two shareholders who really matter at an Alphabet annual meeting, and their names are Larry Page and Sergey Brin.

That’s because Google founders Page and Brin control 51% of the votes, despite owning just 11% of the overall equity. Their voting control comes through their large ownership stake in Class B shares, which carry 10 votes each (Schmidt’s stake gives him 5% of the overall votes).

One by one, shareholder representatives stood up at the meeting in Mountain View, Calif. on Wednesday morning, including several from large investors such as Northstar Asset Management, which owns 7.2 million shares. They presented a range of proposals designed to try and force Alphabet to take action on a variety of issues.

A proposal from Arjuna Capital, for example, would have required that the company produce numbers related to the pay gap between male and female staff, an issue that is currently the subject of an investigation by the U.S. Department of Labor.

The department has alleged that there are “systemic compensation disparities against women” at Alphabet, but the company maintains that this is not the case. In the shareholder proxy document filed with regulators, it argued that shareholders should vote against the Arjuna proposal because it is “not in the best interests of the company and its stockholders.”

Another motion, also backed by Arjuna and several other institutional shareholders, proposed that the company be required to produce a report describing what kind of action it is taking to prevent the spread of “fake news” and misinformation through its networks.

Arjuna director Natasha Lamb told the meeting that such misinformation “has affected elections in the U.K, France and the U.S., and the confusion cuts across political lines—a study from Pew shows that 64% of Americans trust news on the Internet less than a year ago.” Steps the company has announced to take action, she said “are too little and too late.”

The investment fund presented an identical motion at Facebook’s recent annual meeting, and just like the proposal at Alphabet’s meeting, it was voted down—and for the same reason, since Facebook co-founder Mark Zuckerberg controls a majority of the votes in the company.

The motion from NorthStar was perhaps the most quixotic of them all: It proposed that Alphabet restructure its shares in order to give every shareholder a single vote.

A representative for the fund said that it’s easy to ignore voting-rights inequities when profits are up, but it “poses significant risk” to the company’s future performance. “It’s impossible for shareholders to have any meaningful input,” the NorthStar spokesman said. “We are very concerned about the governance risks of relying on two or three people.”

Just like all the other shareholder proposals, the Northstar motion was voted down.

Apple’s New Browser Blocks Auto-Playing Videos, Disables User Tracking

Most of the users watching Apple’s WWDC conference on Monday were probably interested in what the company’s new products can do, but at least some of the interest in Apple’s latest version of its Safari web browser was based on what it doesn’t do.

In a nutshell, the version of Safari that is rolling out with Mac’s new High Sierra operating system won’t display auto-playing videos on websites, something many web users hate. And it won’t allow websites to track users as they move across the web either.

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These new features may put Apple on users’ good side, since both autoplaying videos and user-tracking are seen as annoying and intrusive. But publishers and media companies aren’t likely to greet these new additions with open arms, and neither are advertisers.

Apple’s Craig Federighi said the upcoming version of Safari will block autoplay videos and will feature what he called “intelligent tracking prevention,” which will prevent websites from tracking your browsing data. “Now your browser history is your own,” he said.

Apple’s moves come on the heels of an announcement from Google that the next version of its Chrome web browser—which has about 60% of the market—will block certain ad types by default, including autoplaying video ads. In some cases, websites that have a lot of low-quality ads will have all their ads blocked, not just the ones that breach Google’s rules.

In Google’s case, the fact that the company is one of the world’s largest advertising entities and Chrome is the leading browser by market share makes some publishers and advertisers nervous.

Although the search giant points out that the definition of which ads are acceptable comes from an independent industry group called the Coalition for Better Ads, some believe that the default blocking of certain ads puts too much power in Google’s hands.

Apple doesn’t have a huge digital advertising business the way Google does, and its browser is the third or fourth player in the market based on recent estimates. So it would be harder to make the case that Apple’s choice to not show autoplaying videos is anti-competitive.

That said, however, Apple has a large and powerful user base of loyal fans, and the fact that it is using that power to remove certain forms of advertising—and tools that advertisers and publishers use, such as user tracking—is bound to set off alarm bells for some in the industry.

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Although it is a small player in relative terms, Apple sparked much of the current outcry about ad-blocking software when it enabled support for third-party ad blockers in iOS 9 in 2015.

Ad-blocking in general, on both the desktop and mobile web, has been growing rapidly over the past couple of years, according to industry surveys. Users on mobile devices in particular are not happy with the time-consuming and intrusive ads that many sites rely on.

Publishers, meanwhile, argue that they have no choice but to use these annoying features, because Google and Facebook have taken over so much of the digital-advertising market.

According to one industry analyst, the two companies combined have about 75% of the $70-billion U.S. digital advertising market, and between the two of them, they accounted for virtually all of the growth in the industry last year.

If Trump Blocks Someone on Twitter, Is That a First Amendment Issue?

Twitter users block other users on the platform all the time, in some cases because they are abusive and sometimes because they are just irritating. But is it different if the user doing the blocking happens to be the president of the United States?

The Knight First Amendment Institute says it is different, or at least that it should be. The Institute, a non-profit group associated with Columbia University, has sent a letter to the White House arguing that Trump is breaching the First Amendment rights of those he blocks.

It might seem laughable at first, and there are some First Amendment experts and supporters who appear to find it so, but the Institute believes it has a valid case.

According to the letter, written by Institute director Jameel Jaffer, the president’s Twitter account fits the legal definition of a “designated public forum,” and as such it can’t be closed to public access under the First Amendment.

In effect, the Institute argues that the law requires Trump make his account available to everyone regardless of whether they criticize him. It has said it is considering pursuing a case against the president on behalf of two users who were blocked by him.

“Though the architects of the Constitution surely didn’t contemplate presidential Twitter accounts, they understood that the President must not be allowed to banish views from public discourse simply because he finds them objectionable,” Jaffer said in a statement. “Having opened this forum to all comers, the President can’t exclude people from it merely because he dislikes what they’re saying.”

Not everyone is buying this argument, however. Ken White, a former assistant U.S. Attorney who writes legal commentary at Popehat and is a First Amendment expert, said that he found the idea of the Institute’s case “ridiculous.”

Ken Paulson, president of the First Amendment Center, told the Wall Street Journal that the Institute had a “novel and ambitious argument” that was clearly in the public interest. But he also described it as a “tough sell.”

Is the president’s Twitter account “a public forum where interactive free expression is expected or more like a newsletter, where the communication is all one way?” Paulson asked. Municipalities that establish Facebook pages and invite citizen input may be creating public forums, “but I’m not sure that Donald Trump’s brief bursts of opinion are the same thing.”

There a number of problems with determining whether Trump’s Twitter account is a public forum or not, and one of them stems from the fact that the law is far from settled on the question of what exactly constitutes a truly public forum.

The laws relating to free public access to government property were designed to protect the ability of demonstrators, protesters, etc. to speak their mind in public parks and other areas. The extension of this right to any “public forum” didn’t occur until a Supreme Court decision in 1972, and from that point things just got more and more complicated.

As University of Florida law professor Lyrissa Lydsky put it in a legal paper on the First Amendment and online forums that was published in 2011, the U.S. Supreme Court’s public forum and government speech doctrines are “lacking in coherence — to put it mildly.”

In a nutshell, there are several definitions for public forums, based in part on what the government’s intentions were in setting them up in the first place. A fully public forum, designed for what is described as “expressive activity,” can’t be censored. But a “limited public forum,” which has a specific purpose, can be restricted in a variety of ways.

To further complicate things, the government and its representatives are protected from First Amendment rules on such matters if what they are doing is defined by the court as “government speech.” If so, then feedback or input or access theoretically can be restricted.

So should Donald Trump’s Twitter account be considered a public forum, a limited public forum, or a form of protected government speech?

Comments from press secretary Sean Spicer on Tuesday could be pertinent to such a case, because he said that Trump’s tweets are considered to be “official statements by the president.” That could support the argument that Trump is engaging in government speech, and therefore opposing viewpoints can be restricted without breaching the First Amendment.

Trump: I’m Going to Keep Tweeting Even Though the Media Hates It

Early Tuesday morning, President Donald Trump said he would continue to use Twitter even though “the fake MSM” doesn’t like it, saying the social network allows him to broadcast what he called “the honest and unfiltered message” about his government to Americans.

The President went on to criticize the “fake news” of media outlets such as CNN, NBC and the New York Times, saying if he had relied on those organizations, he would have had “zero chance of winning” the presidential election.

It’s not the first time Trump has talked about how using social media allows him to get his message out to Americans directly. During an interview in January, he said he liked using the social network because he was “covered so dishonestly by the press.”

At the same time, however, that direct and unfiltered message has also caused problems for the president and his administration on a number of occasions.

To take just one example, courts in both Washington state and Hawaii used tweets that Trump posted about his proposed immigration ban to strike down the legislation, on the basis that his comments suggested the ban was targeted specifically at banning Muslims, which is unconstitutional.

Some legal experts have warned that his recent comments about the travel ban could cause similar complications as the case heads to the Supreme Court.

In a response to his Tuesday morning rant, the American Civil Liberties Union — one of the groups that has been fighting the immigration ban — suggested that it may use Trump’s tweets on the topic to help in that ongoing battle.

There have been reports recently from a number of news outlets that members of Trump’s administration would very much like to filter his tweets by having his legal team look at them before they are sent out. But Trump apparently isn’t in favor of that kind of strategy.

Direct access to his Twitter account was reportedly taken away from the president for a brief period during the election campaign, because of concerns about the impact that his unfiltered tweets might have. During that time his tweets were edited by spokesman Hope Hicks.

According to a number of White House insiders, some of the tweets that appear on Trump’s personal account come from him, via his personal Android phone, while others are written by members of his staff and are posted from an iPhone.

Trump’s defense of his Twitter use comes just a day after one of his advisers, Kellyanne Conway, criticized the media’s focus on his individual tweets, referring to what she called its “obsession with covering everything [he] says on Twitter.”

A number of media observers have pointed out, however, that the tweets from Trump are essentially official communications from the president of the United States, just as press conferences or news releases are, and therefore they deserve to be covered.

CNN media analyst Brian Stelter said the president’s tweets are an important part of the public record of his administration, since they provide a glimpse into his emotional state and give his unfiltered perspective on the events going on around him.

As more than one journalist noted in response to Trump’s Tuesday morning rant, most of the media would probably love for him to continue tweeting, because it provides them with a real-time glimpse into his thought process and endless fodder for articles. Any pressure to stop doing so seems more likely to come from members of his own administration.

Google Going Ahead With Controversial Ad Blocking Plans

Google has confirmed that it intends to add a new feature to its Chrome web browser that will block certain types of ads from being seen by users, and in some cases could block all advertising on websites that don’t meet certain standards.

The Alphabet subsidiary says it wants to work with publishers to help them understand what kinds of ads will no longer be acceptable, and the standards being built into the browser come from an industry group rather than Google itself.

But that hasn’t stopped some from criticizing the idea, since Google controls a significant share of the digital ad market.

Word of the new feature first emerged in April, when the Wall Street Journal reported that Google had approached some publishing partners about its plans.

At the time, Cornell Law professor James Grimmelmann said that the idea of an ad blocker controlled by one of the world’s largest digital-advertising companies was almost certain to raise anti-competitive concerns in some circles.

In a nutshell, Chrome will now include ad-blocking features that are turned on by default (although Google prefers to call it “filtering” rather than blocking). Ads that meet certain annoying criteria will not be shown, and if a website crosses a certain threshold of substandard ads, users won’t see any advertising at all.

Some of the ad types that will be blocked include pop-ups, videos that auto-play, and so-called “pre-stitial” ads that force readers to sit through a count down before they can see the page’s contents. Many leading publishers rely on some or all of these strategies to boost ad revenue.

To try and soften the blow somewhat, Google is also offering something called Funding Choices, which allows publishers to show users a note when their ads are blocked by third-party software. The note will give readers the option of either disabling their blocker or buying an ad-free pass or subscription of some kind for that site.

Google reportedly pays Eyeo, the German company that owns AdBlock—the leading ad-blocking software—to have its ads automatically whitelisted, so they are not blocked.

The company notes that the standards for what will be considered acceptable advertising under its new Chrome system have been developed by the Coalition for Better Ads, an industry group that includes advertisers and industry groups, media companies such as News Corp., as well as Google and Facebook.

The appeal of such a feature for users and publishers is obvious. The web has become a sea of popups, pop-unders, interstitials, auto-playing videos and other annoying behavior, and growing numbers of users have responded by installing ad-blocking software like AdBlock. Publishers lose revenue as a result, and no one is happy.

However, some media companies argue that they have no choice but to rely on such methods, because the bulk of the advertising business has been sucked up by Google and Facebook.

According to a recent estimate by Pivotal Research, not only do the two digital giants control over 75% of the $70-billion U.S. digital ad industry, last year they accounted for almost all of the growth that the industry saw compared to 2015.

Not only that, but Google’s Chrome browser has an estimated 58% share of the browser market, which makes it the leading player by far.

So in effect, what the company is rolling out is a system that will block ads by default for a majority of web users, based on standards that it and Facebook—two companies that control the bulk of the online advertising business—have a huge amount of control over.

Will it improve the web for users? Probably. But at the same time, it raises some significant questions about the extent of Google’s power over the advertising we see, and its increasing dominance when it comes to the ways in which publishers and media companies can make money.