Big Tech’s Litigation Era

21:33And not law.

21:35Kara Swisher:Right. And so the perception kind of fuels the reality. So regardless of whether or not the deal was proved on its merits or not, there are suspicions out there. Plus he said it. Plus he said it several times. I can't wait till it changes. There's rumors have gotten promises. Now, it also, by the way, people don't realize the deal also still requires FCC approval because Paramount holds licenses for local television stations. A recent pro-public investigation found that two out of three FCC commissioners, Chairman Brendan Carr, whom I call a moron, and Commissioner Olivia Trustee, whom I don't, accepted luxury gifts from Paramount while FCC was reviewing or about to review major Paramount business decisions.

22:14Kara Swisher:Carr reportedly accepted honors gala tickets from CBS Paramount eight times since 2017, totaling over$75 ,000 in gifts. And it seems like the total value of the gifts might actually have been much more. Could anything come of these ethics complaints against these commissioners? Is it a problem? So the FCC already approves Skydance's control of the Paramount portion of it, and Paramount owns CBS and all that. Warner doesn't actually have any licenses. But first of all, there are some like edge satellites in this. And also as part of this process, there's some foreign money coming in. I don't expect the FCC to kick up a fuss, but this is a company that continues to do business with the FCC.

22:55And so if Brandon Carr wanted to put his foot in the gears of this and glimating it up, maybe he could, but I don't expect it. I think, you know, mainly right now, it's a court case, right?

23:07Kara Swisher:Right. It's a court case. He just has to be gone, essentially. So where is your over and under on this, where it's going to go? I mean, it obviously isn't good that it's going to take till June. I assume there'll be a settlement because they're, financially speaking, they're fucked if it keeps going, essentially. I mean, the economics collapse. If I had to put money on it, I would probably say that settlement too. I just can't imagine that this actually gets the trial. But I don't have the biggest conviction on it. You know, if it did get the trial, I wouldn't be shocked. These are parties that are really, you know, digging their heels in on some of this stuff.

23:42And, you know, I wouldn't want to play poker with Rob Hunter because it's hard to read him right now. He seems like he's going full tilt on this stuff. And then, as I said, the WGA has its own complicating factors. That's a really good point to me. But that being said, when I book my ticket to Oakland, it will be with the option to get a refund. Get a refund, right.

24:03Kara Swisher:Because just like with Justin Baldoni and Blake Lebb, they seem very angry until they settle, correct? Right. A lot of these things settle on the eve of trial, that's for sure.

24:15Kara Swisher:We'll be back in a minute.

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27:32Kara Swisher:Every episode we get a question from an outside expert. Here's yours. Hi, it's FCC Commissioner Anna Gomez here. As a lone Democrat at the FCC, I've spent a lot of time thinking about what's happening to local broadcasting as a result of media consolidation. Eric, I've been following your reporting at Puck, and I wanted to ask this question to you directly. Local broadcasting is going through a lot of change, and there's no shortage of ideas about how to help it survive and to stay competitive. For me, the priority is protecting localism, meaning real local journalism from stations rooted in their own communities.

28:08Kara Swisher:I don't think the answer is letting big national companies take over and call it local news. So what changes do you think could make local broadcasters stronger while keeping that local focus intact? Thanks, and I look forward to your answer. Yeah, I mean, this is a great question, and I totally agree that local public broadcasting is quite important and special and really just, you know, taken for granted. And I wish I knew the answer to this. What I do know, though, is that Brendan Carr's solution of just lifting ownership caps and letting the Sinclairs and next stars of the world kind of take over everything, defunding PBS and NPR, those solutions don't exactly seem to me like it's going to let that marketplace thrive.

28:57I would hope that there's lots of competition out there, that there's – I think we should cherish it. I really wish I had better answers for help.

29:04Kara Swisher:Talk about the case of Disney and the FCC going forward. Yeah. I mean, what Brandon Carr is doing, he's just like basically, you know, censorship regime right here. You know, doesn't like a joke. This is Jimmy Kimmel. He puts their licenses up for review. It's trying to kind of reinvigorate the fairness doctrine, which honestly was something that the Reagan administration decided that couldn't stand the test of time. So on the merits, I don't think that the FCC, I don't think Brendan Carr has much of a case. I think that the courts will agree with Disney on this. But there's a cost to just having this float out there and hanging over Disney's head and having this in hearing and taking discovery and all that.

29:53And I think that's basically what Brendan Carr is after is basically just to keep a dark cloud on this. And I don't think that this is particularly healthy because in the long run, the Democrats will retake power and they will try the same things towards Fox and towards next star in Sinclair. And so it's just not a great cycle. I mean, on the merits, the thing is so disastrous. I just wonder if it's some sort of like Trojan horse for getting rid of the FCC altogether. I mean, it just doesn't make much sense.

30:23Kara Swisher:I think he's surprised Disney's fighting back so hard. Is he surprised that Disney's fighting back so hard? I don't know. I think he loves the attention. He thinks he's ambitious. And the fact that Disney fights it makes him look good in front of Trump. It makes him seem like he's doing something. Ultimately, he's not going to cancel Disney's license. I don't see that happening. Disney will win this one. So let's shift to another topic. Speaking of President Trump, the defamation cases that you cover, as you call them one of his favorite pastimes, the nonprofit watchdog Citizens for Responsibility and Ethics in Washington reports that Trump has filed lawsuits and claims demanding over$70 billion since the second term candidacy announcement.

31:03Kara Swisher:Some of the more recent targets include the BBC, the New York Times and the Wall Street Journal. You recently wrote about the legal argument that may put the brakes on Trump's many defamation cases. I mean, he's after everything. Like there's one against how the Pulitzer Committee awarded their prizes. I mean, a lawsuit against the Wall Street Journal and his friend Rupert Murdoch over a birthday letter to Jeffrey Epstein, on and on. I mean, it's just ridiculous. I mean, like these lawsuits are, you know, terrible. What might put the brakes on this? I mean, better policing, I think, of jurisdiction.

31:38Right now he's filing everything in Florida because he sees that it's a favorable place for him. Anti-slap laws that make him pay if he loses, make him pay the opposing side's legal costs, tighter gatekeeping by judges at the front end of things. Those are things that I don't know would stop him. I don't think anything's going to stop him.

32:00Kara Swisher:But you wrote about the unitary executive theory and how it could actually prevent Trump from filing more lawsuits. Yeah, there's a theory out there that as president, because he's part of the government, that if you can't sue an officer in the government for defamation, they're immune, that it should go both ways, where as long as you're, you know, you have an office of the government, you can't really sue in your individual capacity. And therefore, you should be, you know, forbidden from basically suing. So there's some, you know, thoughts out there that could be one of the defenses that's next tested.

32:35Unfortunately, I don't think that that would be resolved before he gets out of office. So it might affect Don Jr. more than Don Sr.

32:43Kara Swisher:You also noted that the media outlets and the reporters should consider going on the offense in libel cases more often. This seems counterintuitive. Make a case for that. Well, a couple of things. First of all, I don't think that there's anyone who is under the bleeding gun like those in the media. I mean, our reputations are attacked. There's the suggestion that all we're doing is biased reporting, making up facts. This is libel per se. I think that there is like a case to be made that journalists can, should be collecting damages sometimes for kind of like the worst criticisms of their work.

33:19The other thing I think is that these libel laws and libel defenses are seen as kind of gifts to the media when really it's a First Amendment defense that's a gift to everyone. And people have forgotten that. And I think that by putting some of the critics of the media on the defensive, it might remind everyone, might remind courts about, you know, why we have some of these defenses. So I think that one of the ways that people who defend the media should be thinking more is going on the offense, litigate our reputation as much as our legal rights.

33:52Kara Swisher:What would that entail from a legal perspective? That would mean suing. If someone suggests that you made up a story to advance your career, it would mean, you know, putting that person in the defensive seat of the courtroom and, you know, trying to collect damages there. Look, I don't think that it's appropriate in all circumstances for journalists. It would, you know, open the door maybe to discovery of who their sources are. And so as a journalist, you have to be careful about those instances. And there are lots of considerations. But I think generally there might be more instances where journalists start thinking about going on the offense.

34:29And I don't know.

34:30Kara Swisher:To me, the CBS case was the perfect example. And, of course, they were sort of pressured into selling it to finish the deal. This was the 60 Minutes editing. And I know some of the people involved. And, you know, the executives settled, but the people quit over saying, I'm sorry. refused to say I'm sorry, which was their only ability to protect themselves, I think. But they couldn't control the company from settling. Yeah. I mean, a lot of people in, I'm sure a lot of newsrooms have been under the gun with, you know, suggestions like this. And so, yeah, I wouldn't So punching back is your... Punching back, exactly.

35:05Kara Swisher:Punching back legally. He's a classic bully, isn't he? Punch him in the nose and he backs off.

35:13Kara Swisher:We'll be back in a minute.

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36:26Kara Swisher:Get your tickets now for the Dog Stars. It's no surprise how fast civilization can disappear. Go! Out there. Kill or be killed. Jacob Alordi. There are people out there. They need our help. Josh Brolin. Shoot first and inquire afterwards. Margaret Qualley. Ow! Okay, tough guy. And Guy Pearce. Arm up! The Dog Stars, directed by Ridley Scott and theaters August 28th. Get tickets now. Rated R. Under 17, not admitted without parents. Let's shift to copyright litigation against AI companies starting with Disney. Last December, Disney announced a$1 billion investment in OpenAI allowing Sora, its now defunct video tool, to use Disney characters.

37:08Kara Swisher:as he didn't move forward with the investment after OpenAI pulled the plug on earlier this year. Talk about these approaches to AI and the licensing first. What does it tell you about it? Sora, by the way, was not very good for anyone who saw it. And I thought this investment was purely a marketing announcement that would go nowhere. But OpenAI has made several content licensing deals with major publishers, including News Corp and Axel Springer. The New York Times has ongoing lawsuits, though, against OpenAI and Microsoft and perplexity. And when I asked New York Times CEO Meredith Coppett-Levian about the lawsuits and why some publisher making deals with AI firms, she pointed to the New York Times content licensing deal with Amazon and said they're absolutely open to it.

37:47Kara Swisher:So talk a little bit about these cases and where they're going for publishers, especially the disjointed way publishers are working through their issues. And by the way, just this week, we have the Hollywood Studios making a deal with TikTok's owner and ByteDance and over AI and all that. And so a lot of times that there are threats made and there are settlements and they call them licensing, but it's really like the settlement of potential litigation. And the other thing I would point out is that these feed into each other because when you go into copyright litigation against AI companies, one of the things that gets analyzed when the question of like, is this fair use is, well, what's the market?

38:26Is the market being harmed? And if you can say, well, yeah, there's a big licensing market for training AI and all these other companies have made deals, but this company has not, that's powerful evidence. So it doesn't surprise me to see the publishers make deals. Also, it's big money. I mean, this is like a line item for OpenAI and allow these companies to do these licensing deals. But for the publishers, they're in a business that's tough.

38:54Kara Swisher:Why are they so disjointed? And is the lawsuit an effective way, such as the New York Times lawsuit, an effective way to do that? I mean, it's kind of a carrot and stick approach. If you don't make a deal with us, you know, we're going to sue you. I mean, that's a time-tested approach to doing these sort of deals, especially in copyright matters. Yeah, well, legal threats are settlement talks. But I also think that, you know, a lot of this stuff is really new. And so it's hard to kind of figure out what licensing parameters should be. For instance, you could say that the New York Times should sell with OpenAI, and maybe OpenAI wants to do it.

39:36But from OpenAI's perspective, is the New York Times about the same as any other publisher? Because we might think of the New York Times as being prestigious and more influential in how we appreciate the news. But when it comes to training data, the weights might be different. And so, you know, a lot of this licensing activity is very complicated in how it's approached.

40:00Kara Swisher:And again, it's all over the place. Yeah, I mean, all the AI companies have been sued. Why New York Times is picking on open AI in particular, I mean, I think has to do with, you know, they were the most visible company in the space. It was the path towards the big ticket damages. It was more of a text chat bot versus other AI systems, which were more visual in nature. There are a lot of different factors. But, you know, I think that New York Times has a few lawsuits out there, not just against open AI. Right now, I think we're talking about somewhere between 80 and 100 lawsuits in total. Yeah.

40:39Kara Swisher:No, none of these AI copyright cases have made it to trial in the US yet, though. And last month, Anthropic reached a$1.5 billion settlement with authors who accused the company using pirated books to train its claw chatbot. It works out to$3 ,000 per book they stole. Should we expect more settlements or will any go to trial? Both. I think that there will be lots of settlements. And what's the difference? Whether or not it goes to trial or not. Trials are big. The stakes are large. Juries get involved. You know, it will be influential in how the next generation perceives these legal threats, how seriously they take them.

41:15I think that the exposure is something that a lot of the tech companies want to avoid. But at some point, they are going to take their chances. They're going to look at the demand and say, that's just unreasonable. Like YouTube did. Yeah. We like the fact pattern here, and we're going to take this as the test case. I think that some of these cases are nearing the summary judgment phase and what the judges decide will be influential in the calculus about whether to take it to trial. Also, keep in mind that it isn't just binary. It isn't like, is training legal versus is training illegal? It's where did you acquire the data in the first place?

41:56How do you warehouse the data? How are you weighting your models? What does the output look like? And these AI companies can win on four of the five of the issues and then lose on the fifth issue and decide that that's the issue that they want to take up. Meanwhile, we have at least one case, the Westlaw case, which has to do with legal head notes and all that. That's on appeal right now in the Third Circuit. It could maybe get to the Supreme Court next year. There are going to be things like Supreme Court decisions that impact the calculus on whether it goes to trial. Now, I expect that we will see at least one trial in 2027.

42:36Kara Swisher:Of a big one. One of the things that reminds me of during the YouTube days, when I was covering Google in the early days, I was around when they did the book stuff. They just tired them out. They tired the publishers out ultimately and got what they wanted. And I'll never forget walking around Google with Larry Page and they had a room full of televisions. They were taping all of television to get closed caption searching and they didn't have any deals with any of the television companies. You just did it. Yeah. And the other thing I would point out is that, you know, the plaintiffs have to decide to deal too.

43:08For instance, you know, you talk about that$1.5 billion deal that Anthropic made with book authors, but some book authors like John Carreau and they didn't want to take the deal. They don't want to take the$3 ,000. And so they opted out of the settlement and they're pursuing their own claims right now. So how do you settle with them? And so maybe those will be the cases that end up at trial.

43:29Kara Swisher:But then you have to go through them. Their theory is to tire you out with all their money, right? That they will ultimately beat you down. That's what happened with YouTube. It really did. They cheated until they didn't cheat. And then, you know, everyone's happier now. I guess same things with Napster, same, you know, it's kind of their patented way. Let's go to the most important thing for me, social media addiction litigation and a new lawsuit against Netflix, by the way. Section 230, broadly speaking, protects platforms for being held liable for content posted by their users. It's long been the focal point of legal theories about the responsibilities of these platforms.

44:02Kara Swisher:But now plaintiffs are succeeding in addiction litigation against Meta and YouTube with a different tag, product design liability. It's at the center of another landmark trial against Meta that began this week, which is quite troublesome, I think. Talk about this legal strategy and your thoughts on it. We'll get to how it's expanding beyond social media companies at the moment. Yeah, let me put it this way. I mean, there are ways in which I feel comfortable with what's going on and other ways that make me uncomfortable. And when you think about, you know, social media, and the way it's given to the users, you can think of it two ways.

44:38One is, it's like a cigarette. It's compulsive. addictive it harms you and that's you know basically what all these plaintiffs are trying to show that you know the playbook kind of rhymes with the old nuisance suits against tobacco makers right which took a long time for people on the other hand the social media companies they do have some benefits it is speech and i guess the question is is it like you know those rap albums from the 1980s that Tipper Gort tried to ban. And so even stuff like algorithms is just editorial curation in digital form. And so the question is, how much of this do we see as product design and how much of it do we see as speech?

45:26And when we look and we break down the features like infinite scroll or autoplay or notifications, does that go more towards design elements or does that go more towards editorial curation and how a newspaper decides what goes in the op-ed page or a parade organizer decides who marches with you? And so these are tough questions and we're, you know, getting to these trials.

45:52Kara Swisher:Where do you see it heading? Obviously, public opinion is against these companies. It's moving very heavily against it. And, you know, they are simied by Section 230, which I doubt will be overturned. It would be disaster. It would be the Lawyer Employment Act of all time if they overturned Section 230. It's almost impossible to do so from what I understand from various experts. What is the move? Product liability has to be the move. Although Section 230 is not going away and isn't being repealed, there was an important decision by the Ninth Circuit a couple of weeks ago that says that basically it's not immunity, it's a defense.

46:27So that means that these cases against tech companies, against social media companies will continue to flow. There will be these product design and nuisance suits that put a huge amount on the line. The case that's beginning this week in Oakland, the one that's being brought by a few states against Meta. I mean, they want, I think,$1.4 trillion, which is the market cap of Meta. They want structured changes to how the platforms run. And so I see a lot of these cases ticking on. There'll be appeals. There'll certainly be some settlements as well. But this is going to be in the background for years and years to come.

47:07Kara Swisher:Years ago, I interviewed Mark Benioff, and he said they're like cigarette companies. And he's changed not that particular opinion. But when you think about that, that did take a long time. And ultimately, it didn't kill the cigarette companies, but it certainly put them in a line of decline, right? It seems to me that a lot of this, especially around the lawsuits around data centers around this, is all of the same feeling of these people need some rules. Yeah, I would say that there are a lot of similarities, but there are also some differences, and we should keep in mind the differences too. Cigarettes were addictive and they hurt everyone who touched them.

47:43As far as social media goes, I think some people are okay with using social media and some people bear the brunt of it. Some features are probably good for society to have and other features are not. So, you know, it's easy to take a look at this stuff and say at large, oh, you know, the tech companies, they're all evil and they should all go away.

48:07Kara Swisher:It's not exactly go away. It's let's see some controls, right? Right, right. And so that's the answer to it. Like age verification, things like that. Like let's have some rules, which you have none of. Right. There should be disclosures, common sense rules, Stuff like age gating, if they can think of it and make it reasonable, I don't see why they would resist it. At some point, hopefully we'll get to a point where some of this stuff can exist without constant litigation, but we're not at that point yet. That's because they wouldn't cooperate in the first place. They wouldn't do anything in the first place.

48:46Kara Swisher:But in May, this is an interesting case, which is related. Texas Attorney General Ken Paxton filed a lawsuit against Netflix, alleging the streamer is spying on users, including children, profiting from their data and using, quote, dark patterns to keep kids engaged. What's Netflix's defense here? Because it's a broader issue and the limits of the product liability argument when it's applied to a streamer, because this could go a lot of directions. Well, first of all, Netflix's response is that Ken Paxton doesn't know what the hell he's talking about. He doesn't understand the system or it's just junk science in his complaint.

49:22But pushing past that, the point that I've made is that there's not a huge jump to be made when moving from social media to how digital entertainment operates. We're still talking about algorithms and deciding which content gets first on your scroll, what gets recommended to you. So if you're going to make the case that Facebook or Instagram is addictive, someone can easily make the case that Netflix is doing the same thing.

49:49Kara Swisher:Or Peacock or whoever. Right. I guess their response would be, well, this is even more connected to speech. There's even broader First Amendment considerations here. We're not just pushing third-party speech out there and organizing stuff. We're actually producing our own content and all that. And if you stop us, you're really endangering the First Amendment. You're giving the state the ability to control what you see. And so the First Amendment implications are pretty broad here. Is that the same thing with Facebook, the defenses they should have? Or were they in these? I'm using Facebook overall because it's a bunch of different product liability laws, including with kids and chatbots.

50:33Yeah, I certainly think that Facebook has a First Amendment defense that they're pushing. It's not just Section 230. They are saying that this is our speech, which is kind of funny. In some ways, they say it's someone else's speech, but it's also our speech. And so, yeah, courts have to deal with that. And that's something that's going to come up at the trial in the next few weeks. It's going to come up in the appeals down the line. A lot of this is very unsettled. I mean, the Supreme Court nods to this a few years ago. In some of their cases, they were like, well, if the algorithm is doing the heavy lifting here, is it actually speech or is it not?

51:12And that's a question that really hasn't been settled yet.

51:14Kara Swisher:And that ultimately these cases do go to the Supreme Court, presumably. Oh, yeah. Correct. All of them. Which is the one you think makes them most vulnerable? Probably this one kicking off this week, right? Oh, yeah. Yeah, I mean, there's also one in Tennessee that's going on right now. But yeah, this case, I mean, it's hard to be the trillion dollar case that has these stakes. But, you know, just behind it, there's a case brought by a consolidated school districts around the nation. There are cases against other social media companies. TikTok was smart enough to try to like settle its way of the California one, but it's just going to go on and on.

51:51And now that the plaintiffs' bar have found product design as a way to at least beat 230 on the front end of things, not have their cases quickly dismissed, it incentivizes them to come up with similar theory.

52:05Kara Swisher:This is like money to be made here. What is the Tennessee case? Tennessee is a nuisance case, similar. Kind of thing, which I think they're going to be caught in litigation. This is not good for them. And by the way, for people who don't know, Netflix has also been hit by a number of high-profile defamation lawsuits for shows, including Baby Reindeer, When They See Us, and Inventing Anna. The last two were settled. But Netflix's defamation case when making shows about real people, is that a plaintiff's attorney opportunity? Not really. I mean, the funny thing, most people don't realize this, but if you add up all the defamation lawsuits from like Fox News and New York Times, those are symbolically important.

52:42But Netflix is the defendant in more cases than any of them. Why? Because they love the docudrama fictionalization of true events. Basically, they say, okay, we're going to take something that actually happened but make up stuff. And once you get that, it collides with an area of law, which makes it tough to say false things about people. So if you identify a docudrama and it's about you and it's telling audiences stuff that you didn't actually do and harms your reputation, yeah, they're going to sue over it. And so Netflix finds themselves in an incredible amount of a number of these cases. And some of them they've won, but others they've struggled with.

53:24And so they're making lots of interesting law on this topic. I see them as probably like the most important libel defendants going these days. Really? Interesting.

53:34Kara Swisher:All right. So we've covered a lot of ground today, but looking ahead, what do you think will be the most consequential cases, stories in the next year in media that people should pay attention to or should be paying more attention to? If you pick out tech, media, you know, any of these, because you write about so many esoteric cases too that suddenly you make me think are actually really important, including ownership of people who've died, things like that. Is there any cases that you're like, hey, this is going to matter? that are completely under the radar? Or ones that you think are the most important one.

54:06I think that competition is a big issue these days in just so many different kinds of forms, whether it's the challenge to a merger or challenge to the way that non-competes work in the workplace. Even these copyright cases against the AI are essentially competition cases. Copyright gives you an exclusive right to leverage your own works, your creative authorship. It's supposed to incentivize you to create. And here are these tech companies out there saying you can't have a monopoly over this stuff like journalism. And so I think all this is important.

54:41Kara Swisher:And is there any unusual case you think is coming that people should pay attention to? I'm always on the lookout for these unusual cases. I think the Justin Baldoni thing settled, but that was kind of unusual. Yeah, it was a fun one. It had to do with how PR works and how employment works and kind of post Me Too era. And yeah, speech in its kind of purist form and like whether you can complain about the powers that be and whether the repercussions there. I think that was incredibly useful. This has been really interesting, Eric. I will keep reading your stuff and look for more strange and weird cases.

55:19Kara Swisher:But I do think you're correct. This is the time of litigation against tech companies coming forward. I've never seen so much activity in so many different areas. So lawyers will always have a job, as always. Hopefully I'll have one too. You will. Anyway, thank you so much. My pleasure.

55:43Kara Swisher:Today's show was produced by Nishat Kerwa, Michelle Eloy, Catherine Millsop, Megan Burney, Madeline LaPlante-Duby, and Kaylin Lynch. Special thanks to Dave Shaw, Lissa Soep, Eamon Whalen, Jim Mackle, and Manolo Moreno. Our engineers are Fernando Arruda and Rick Kwan, and our theme music is by Trackademics. If you're already following the show, may all your mergers and acquisitions be forever blessed. If not, you're stuck with a$650 million quarterly ticking fee. Go wherever you listen to podcasts, search for On with Kara Swisher and hit follow. Thanks for listening to On with Kara Swisher from Podium Media, New York Magazine, the Vox Media Podcast Network, and us.

56:21Kara Swisher:We'll be back on Monday with more.

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