[Ximena] You’re listening to the Berkeley Technology Law Journal Podcast. Here are some headlines about what’s been happening This Week in Tech Law. I’m Ximena Velazquez-Arenas.
[Diming] And I’m Diming Xu. Today we’ll be covering the Department of Justice’s antitrust suit against Google, Uber’s response to California’s Proposition 22, and the United States’ charges against Russian hackers in connection with several global cyberattacks that have occurred in the past few years.
[Ximena] On Tuesday, October 20th, the U.S. Department of Justice filed a lawsuit against Google alleging antitrust violations in furtherance of a market monopoly for its search and search advertising businesses.1 The suit is joined by the attorneys general of eleven states.2 The DOJ alleges that Google violated the Sherman Act by maintaining a monopoly over the search engine market through various practices, such as “exclusivity agreements that forbid preinstallation” of competing search services; entering into long-term, multibillion dollar agreements with mobile device manufacturers that designate Google as the default search engine on Apple’s products; and using its profits to “buy preferential treatment for its search engine.”3 The New York Times characterizes the lawsuit as “the government’s most significant challenge to a tech company’s market power in a generation . . . .”4
In the complaint, Attorney General William Barr wrote, “[t]wo decades ago, Google became the darling of Silicon Valley as a scrappy startup with an innovative way to search the emerging internet. That Google is long gone. The Google of today is a monopoly gatekeeper for the internet, and one of the wealthiest companies on the planet . . . .”5 According to the Wall Street Journal, Google’s search engine accounts for more than 90% of global search requests and 80% of search queries in the United States.6
Google responded to the lawsuit the same day the suit was filed, calling it “deeply flawed,” defending its business practices as similar to “countless other businesses,” and arguing that consumers ultimately hold the freedom to choose whether to use its products.7 Among the allegations, the DOJ claims that Google’s exclusionary practices harmed the search services market, and, in turn, negatively impacted competition and consumers.8 The DOJ characterizes Google’s alleged monopoly as lowering the quality of the product and threatening consumers’ privacy.9
The lawsuit emerges amidst public clashes on the timing of the suit between DOJ career lawyers and Attorney General Barr.10 The New York Times reported that most of the more-than-forty lawyers who had been working on the investigation opposed the imposed requirement to finish the investigation by end of September.11 These lawyers viewed the deadline as arbitrary and expressed concerns that it was a political play to bolster the Trump administration’s image in the weeks before the November 3rd presidential election.12 Several lawyers left the case this summer and others stated they would not sign the complaint.13 In spite of the tensions at the DOJ, there is bipartisan support for the DOJ’s suit, with a “coalition of 50 states and territories support[ing] antitrust action against Google.”14
Other states, including New York and Colorado, plan to complete their own investigations into Google in coming weeks.15 If the states decide to file complaints, they will likely attempt to consolidate them with the DOJ’s case.16 According to the New York Times, the DOJ’s lawsuit could “stretch on for years” and “set off a cascade of other antitrust lawsuits from state attorneys general.”17
[Diming] On November 3rd, Californians voted to pass Proposition 22, which allows rideshare and delivery drivers to remain independent contractors.18 This afforded a win for app-based companies such as Uber, Lyft, and Doordash in “one of the most closely watched ballot measure contests in the country.”19
Back in October, Uber CEO Dara Khosrowshahi expressed that Uber was considering “an overhaul of its business in California” should voters reject the state’s Proposition 22 in the November 3rd election.20 During the Wall Street Journal’s annual “Tech Live” conference on October 20th, Khosrowshahi said, “[w]e are looking at all our options . . . We will do our best to operate in California… Where in California we will operate is a question mark, and the size and scale of business will be a big question mark.”21 A number of app-based companies put their support behind Proposition 22 in order to prevent regulation of their employees under California’s Assembly Bill No. 5, often shortened to “AB-5.”22
AB-5 codified the decision in the California Supreme Court case Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal. 5th 903 (2018), where the court held that all workers “who perform services for a hirer” are presumed to be employees for the purpose of wages and benefits, unless an employer can prove the worker is an independent contractor using a three-part test known as the “ABC test.”23 AB-5 went into effect on January 1st, 2020,24 and it reclassified rideshare and food delivery drivers as employees, making them eligible for protections under California’s labor code.25 The intent of AB-5 is to restore these important protections to rideshare and food delivery drivers who were “exploited by being misclassified as independent contractors instead of recognized as employees . . . .”26
Proposition 22 makes it so that AB-5 does not apply to app-based rideshare and delivery drivers, automatically classifying these workers as independent contractors.27 Proposition 22 does, however, require rideshare and delivery companies to provide certain benefits not typically afforded to independent contractors, including an earnings minimum, a health insurance stipend, and rest breaks.28
The rideshare and food delivery companies argue that “the provision . . . enshrine[s] the freedom enjoyed by gig workers to choose their own hours.”29 Workers’ rights advocates warned, however, that Proposition 22 would “deny workers employee protections in perpetuity.”30 Proposition 22 requires a seven-eighths majority in each house of the state legislature to amend the law, making it extremely difficult to change in the future.31
Uber previously said it planned to cut off work for around 158,000 drivers and raise fares to meet higher business costs in California should the ballot measure fail.32 Proposition 22 was “the most expensive” ballot initiative in California’s history, with top executives of Uber, Lyft, and DoorDash characterizing the proposition as essential for the survival of their businesses.33 The fight to pass the ballot initiative became even more urgent for the companies following a ruling from the California First District Court of Appeal on Thursday, October 22nd.34 The court ruled that Uber and Lyft must treat their California drivers as employees under California labor laws after the California state attorney general and city attorneys of San Francisco, Los Angeles, and San Diego sued in May to enforce existing labor laws, including AB-5.35
Politicians in California and nationwide expressed opposition to the ballot initiative leading up to the November 3rd election. Shamann Walton, a member of San Francisco’s Board of Supervisors, said during a video press conference that “[Proposition 22] is a wolf in sheep’s clothing type of bill . . . . Prop. 22 is anything but an equity initiative.”36 Vice President-elect Kamala Harris, a U.S. Senator for California, tweeted in July, “[w]e cannot allow giant gig corporations to exempt themselves from providing essential protections and benefits for their workers. I urge Californians to join me in standing with these essential workers by voting NO on Prop 22.”37 Still, despite these strong oppositions, Proposition 22 passed with 58% of voters voting in favor of the measure at the time the Associated Press called the race.38
[Ximena] According to the Washington Post, on Monday, October 19th, the DOJ unsealed criminal charges against six Russian intelligence officers in connection with cyberattacks that caused billions of dollars in damages in 2015, 2016, and 2017.39 The officers charged were members of Russia’s main intelligence agency, the same agency “previously charged in connection with efforts to interfere in the 2016 U.S. presidential campaign.”40 Justice Department officials have characterized the actions as the “single most disruptive and destructive series of cyberattacks ever attributed to one group,” and say the indictment is an effort to “pull the veil back on how Moscow has sought to punish or retaliate against detractors of the Russian Federation . . . .”41 Russian officials responded to Monday’s events by dismissing the charges as an attempt to “discredit Moscow . . . .”42
The Washington Post reports that the alleged hacker group, called Unit 74455 or the “Sandworm Team” by cybersecurity researchers, first attacked Ukraine in late 2015 through a series of malware attacks deployed against the country’s electric grid, causing mass power outages.43 This attack was strategically orchestrated to turn off essential electrical utilities in the middle of frigid winter temperatures.44
The cyberattacks on Ukraine’s electric grid persisted through 2016.45 Late in 2016, the Sandworm team targeted Ukraine’s Ministry of Finance and State Treasury Service.46 This malware attack infiltrated computer systems, encrypting files and simultaneously rendering computer systems inoperable and covering its own digital steps.47 Then, on the eve of Ukraine’s Constitution Day in 2017, a national holiday commemorating Ukraine’s independence from the Soviet Union in 1991, the Sandworm team deployed a series of malware attacks through a software called “NotPetya.”48 The NotPetya malware was designed to spread to networks connected to the originally attacked network, thus spreading like a digital wildfire across connected global computer networks, including networks in the United States.49
[Diming] According to the Wall Street Journal, NotPetya “cost businesses around the world billions of dollars” by “destroy[ing] data and invad[ing] corporate networks mainly through a corrupted software update from a small firm in Ukraine. The attack crashed many systems world-wide and altered basic administrative data that made recovering downed computer systems difficult.”50 On Monday, October 19th, U.S. authorities highlighted that the alleged damages to just three companies in the United States totaled about $1 billion in losses.51
The Sandworm team is also suspected of interfering in other elections around the world.52 Shortly before the 2017 presidential election in France, the Sandworm team leaked a large trove of the emails of French President Emmanuel Macron, who was a presidential candidate at the time, in an attack that “resembled the hack-and-leak of Democratic emails during the 2016 U.S. presidential election.”53
In the announcement of the charges against the hacker group on October 19th, U.S. Assistant Attorney General for National Security John Demers stated “[t]oday’s charges illustrate [sic] how the Sandworm team’s election activities were but one part of the work of a persistent, sophisticated hacking group busy sabotaging perceived enemies or detractors of the Russian Federation, regardless of the consequences to innocent bystanders or their destabilizing effect.”54
Cybersecurity experts warned that Americans should be on guard for similar attacks in the United States leading up to the November 3rd elections, specifically, “the release of stolen, altered or wholly fraudulent materials intended to change an election by embarrassing their targets.”55 According to the Wall Street Journal, the Russian intelligence officers named in the indictment are unlikely to ever be extradited to the United States.56
[Ximena] Thank you for listening! The BTLJ Podcast is brought to you by Podcast Editors Andy Zachrich and Haley Broughton. Today’s episode was written by Ximena Velazquez-Arenas and Diming Xu, and was produced by Ibrahim Hinds. Our Executive Producer is BTLJ Senior Online Content Editor Allan Holder. BTLJ’s Editor-in-Chief is Emma Lee.
[Diming] We are committed to bringing you interesting news at the intersection of technology and the law. If you enjoyed our podcast, please support us by subscribing and rating us on Apple Podcasts, Spotify, or wherever you listen to your podcasts.
[Ximena] If you have any questions, comments, or suggestions, write us at email@example.com.
[Diming] The information presented in today’s episode does not constitute legal advice and is only up-to-date as of Tuesday, November 9th. This podcast is intended for academic and entertainment purposes only.