Legal News for Tues 9/3 - Yelp Sues Google Over Search Ads, Shaq NFT Case, Musk vs. Brazil, Google California "Link Tax" Payoff

Minimum Competence

This Day in Legal History: The Allies Declare War on Germany

On September 3, 1939, the world witnessed a pivotal moment in legal and military history as the United Kingdom, France, New Zealand, and Australia officially declared war on Germany, marking the beginning of World War II for the Allies. This decisive action was a direct response to Germany's invasion of Poland just two days earlier, on September 1. The declarations were rooted in a series of mutual defense agreements and the moral imperative to counteract Nazi aggression, which threatened the stability of Europe and global peace.

The legal frameworks for these declarations were based on international treaties and commitments, most notably the Treaty of Versailles and the League of Nations Covenant, both of which sought to prevent such unilateral aggression. The declarations marked the start of a global conflict that would reshape international law, particularly in the areas of war crimes, human rights, and the rules of war.

As the conflict expanded, it underscored the limitations of interwar diplomacy and collective security measures, leading to significant legal and institutional changes after the war, including the establishment of the United Nations and the Geneva Conventions. September 3, 1939, thus stands as a day when legal commitments transformed into military action, shaping the course of the 20th century.

After the Justice Department's recent antitrust victory against Google, the tech giant is facing increased legal challenges, with Yelp filing a lawsuit alleging Google’s monopoly power in the local search advertising market. Yelp's complaint, filed in the U.S. District Court for the Northern District of California, follows a ruling by Judge Amit P. Mehta that confirmed Google’s monopoly in general search services and search ads.

This ruling is likely to encourage more private antitrust lawsuits from competitors and consumers, potentially leading to a wave of litigation against Google. While some companies may wait for the appeals process to conclude, others, like Yelp, are acting now, hoping to capitalize on Mehta’s findings.

Yelp's suit focuses on Google’s alleged "self-preferencing" in local search results, claiming that Google’s practices harm competitors by directing users to its own products and away from sites like Yelp. However, legal experts note that Yelp will need to prove that consumers were harmed by these practices, which could be challenging.

The DOJ case centered on general search markets, while Yelp’s claims are specific to local search advertising—a different market that might require different legal arguments. Despite these differences, the ruling against Google in the DOJ case could provide some advantage to future plaintiffs, though each case will need to address its unique circumstances.

Google in Tech Rivals’ Sights for Suits After DOJ Antitrust Win

A recent court ruling against Shaquille O’Neal highlights the increasing legal risks for celebrities who promote cryptocurrency and digital assets. The case involves O’Neal’s promotion of Astrals and Galaxy NFTs, which have been classified as securities by the U.S. District Court for the Southern District of Florida. The court found that O’Neal, by soliciting purchases of these tokens, could be considered a "seller" under securities law, making him liable for the tokens' loss in value following the collapse of the crypto platform FTX.

This ruling underscores the broader legal challenges facing other celebrities, such as Tom Brady and Gisele Bundchen, who have endorsed similar projects. The decision is significant as it expands the definition of solicitation to include public communications via social media and online platforms, not just traditional advertising.

With the law around digital assets still developing, this case serves as a cautionary tale for celebrities. Legal experts suggest that celebrities should seek legal advice before promoting such assets, as they could face significant liability under securities law. The case also sheds light on the ongoing uncertainty in how courts will treat digital assets and their promoters, potentially leading to more civil litigation in the future.

Shaq’s NFT Case Expands Legal Perils for Celebrity Promoters

Tensions between Elon Musk's companies and Brazil have escalated as the country’s telecom regulator, Anatel, threatened to sanction Musk's satellite broadband company, Starlink. This comes after Brazil's Supreme Court upheld a decision to ban the social network X (formerly Twitter) for failing to comply with local regulations, including naming a legal representative. President Luiz Inacio Lula da Silva supported the court's action, criticizing Musk's influence. Judge Alexandre de Moraes, who led the suspension of X, also ordered the freezing of Starlink's accounts, suspecting them of being used to pay fines owed by X.

In response, Musk hinted at retaliating by seizing Brazilian assets but did not specify how. Starlink, defying Moraes' order, refused to block access to X in Brazil, prompting Anatel to consider revoking its operating license. The conflict highlights a broader feud between Musk and Moraes over compliance with Brazilian laws, with critics accusing the judge of overreach and supporters praising his defense of democracy. The suspension of X, which remains inaccessible to most Brazilians, has sparked debates over freedom of expression and the role of tech companies in upholding legal obligations.

Starlink emerges as fresh battleground between Musk, Brazil | Reuters

Google has struck a deal to avoid a proposed "link tax" in California by agreeing to fund local journalism and an AI initiative, totaling nearly $250 million over five years. This includes $55 million from Google for a "News Transformation Fund," to be administered by UC Berkeley, and $62.5 million for a "National AI Innovation Accelerator."

In my column for Bloomberg this week, I critique the agreement between Google and California, where Google has committed over $172.5 million to support journalism and AI initiatives. While this might seem like a win for journalism, I see it as a temporary fix that sidesteps more substantial regulatory measures, such as a proposed "link tax" or a broader data tax. In my view, these ad-hoc arrangements fall short of providing the long-term support that journalism truly needs.

I believe a more effective solution would be to implement a comprehensive data tax on companies like Google, targeting the revenue they generate from user data used in advertising and the data they ingest for training AI models. This would ensure ongoing funding for journalism and better reflect the enormous influence these tech giants have in our digital economy.

The deal struck between Google and California may offer some short-term benefits, but I’m concerned that it might ultimately lean too heavily on taxpayer subsidies, given that much of Google’s contribution could be tax-deductible. In my opinion, a data tax would be a more equitable and sustainable approach, ensuring that tech companies contribute fairly to public goods like journalism.

I see the proposed data tax as a critical step toward creating a more balanced relationship between states and large tech companies, providing a more permanent solution that better supports journalism and other digital platforms.

Google–California Deal Falls Short Where a Data Tax Would Succeed

Google avoids “link tax” bill with deal to fund California journalism and AI | Ars Technica

This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit www.minimumcomp.com/subscribe