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After two days of bruising testimony before Congress, there’s never been more interest in regulating Facebook. In question after question this week, lawmakers seemed to take it as a given that new rules were needed to rein in Facebook, with proposals like the Markey-Blumenthal CONSENT Act (which would require opt-in consent for all data-sharing), taking center stage. At the same time, Congress doesn’t seem likely to act soon; most bills come from the Democratic minority, and both chambers are already settling into gridlock.
In both hearings, Zuckerberg insisted he wasn’t opposed to new legal restrictions on the platform, although he demurred when asked to support specific measures. But there was one moment when he showed more interest than usual: when Rep. Brian Schatz (D-HI) mentioned Yale Law professor Jack Balkin’s concept of an information fiduciary, Zuckerberg seemed to perk up.
“I think it’s certainly an interesting idea,” Zuckerberg said, “and Jack is very thoughtful in this space, so I do think it deserves consideration.”
Balkin’s idea is simple: we’re trusting services like Facebook with our data, and that trust should come with concrete legal responsibilities. To make that happen, Balkin proposes designating cloud providers as “information fiduciaries,” binding them an industry-wide code of conduct modeled after similar designations in law, medicine, and finance. In the abstract, the rule would require Facebook and other companies to not act against user’s interest, leaving courts to decide the penalties when they do. Crucially, Balkin’s fiduciary rule could be put in place by any number of agencies, including state-level legislatures, letting privacy advocates sidestep Congress entirely.
Balkin says it’s a much-needed course correction for the industry. “I don’t want these companies to crash and burn,” Balkin told The Verge. “For me, the most important balance that needs to be struck is ensuring that you can provide viable social media, without allowing particular business practices that are manipulative.”
Creating an “information fiduciary” designation could also be more effective than the other options currently facing Congress. Both the Markey-Blumenthal bill and the EU’s GDPR focus on the importance of user consent and making sure it’s as clear and informed as possible. In practical terms, that means telling users what data is being collected, and then getting them to click a box that says “I Accept.” Balkin says that approach is too easy for platforms to game. “It’s very easy to get consent from end users,” Balkin says. “They’ll just click and go. So consent-based reforms often look really great on paper but don’t have any practical effect.” Even if we add mandatory opt-ins for data collection (as in the Markey Bill) or clearer descriptions of how data is used (as mandated by the GDPR), there’s a good chance users will simply click through the warnings without reading them.
Balkin’s fiduciary approach would attack the problem from a different angle. Instead of counting on users to understand the data they’re sharing, it establishes up front that services are in a privileged position and bear the blame if things go wrong. In some ways, this is already how Facebook talks about its relationship with users. Over and over again this week, Zuckerberg talked about earning user’s trust, and how the platform only works when users trust Facebook with their data. Balkin’s fiduciary rule would put that trust in legal terms: establishing that Facebook users have no choice but to share data with Facebook, and as a result, requiring that the company be careful with that data and not employ it against the user’s interest. If Facebook failed to uphold those duties, they could be taken to court, although the nature of the proceeding and the potential penalties would depend on how the rule is written.
That might sound unusual, but it’s a surprisingly common concept in the law. Doctors already have a fiduciary duty to their patients, binding practitioners to recommend treatment based only on genuine medical needs. Lawyers have a similar fiduciary duty to their clients, restraining them from misleading a client for their own advantage. In each case, the point of the designation is to recognize an imbalance of power. Doctors know so much about medicine that patients can’t hope to keep up; the only option is to trust your doctor and put in place extra penalties for anyone who violates that trust. According to Balkin, we’re at the same disadvantage when we hand data over to Facebook and other tech companies.
Facebook doesn’t have any fiduciary duty to its users right now, but there are a number of ways to establish one. Congress could pass a federal law establishing Facebook’s fiduciary responsibilities, or a federal agency like the Department of Labor could use existing authorities to make the designation. In one recent example, the Department of Labor designated investment advisers as fiduciaries, a regulation that was subsequently rolled back by President Trump.
That might seem like a long shot with Congress in disarray and Trump more interested in rolling back regulations than adding new ones — but it could also happen at the state level. Privacy-focused states like New York and California could pass its own laws, which could be just as binding without conflicting with federal law. Like any regulation, the new rule would likely face a serious legal challenge — most likely on federal preemption or first amendment grounds — but Balkin has written extensively on how to navigate those challenges.
A fiduciary rule wouldn’t solve all the problems with Facebook. It wouldn’t address concerns about monopoly power. It also wouldn’t address deeper concerns about Facebook warping society at large, subverting democracy, or radicalizing groups through filter bubble effects. Those are genuinely hard issues, and there are few clear ideas about how to address them in law — even if Congress wanted to. Even if Balkin’s rule goes through, there will still be a lot of work to be done. But for the specific question of how tech companies handle our data, the idea of an “information fiduciary” could be the easiest way to add some legal weight to floating ideas about trust and privacy on platforms. As more and more personal information finds its way to the public sphere, Balkin’s model is one of the few ideas we have for protecting ourselves.
“There’s a sense in which this Cambridge Analytica scandal is just the tip of the iceberg,” Balkin says. “But it’s the kind of scandal that wakes people up. That’s why Mark Zuckerberg is spending a couple of days on Capitol Hill testifying. If there wasn’t a scandal, no one would have paid attention to the problem.”
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Another person peddling derogatory information about President Trump during the 2016 campaign; another potential payoff.
That’s the impression left by new reports by the New Yorker and the Associated Press detailing a $30,000 payment made by the National Enquirer’s parent company to a former doorman, Dino Sajudin, who said he had heard rumors of Trump fathering a child with an employee.
As with American Media Inc.’s $150,000 payment to former Playboy Playmate Karen McDougal shortly before the election, the payment was made ostensibly for the rights to the man’s story. But like McDougal’s, the story also never ran, and the parallels with the McDougal and Stormy Daniels payments certainly raise questions about whether the payment was simply an effort to kill it to benefit Trump’s campaign — and whether there was any coordination between AMI and Trump attorney Michael Cohen or the Trump campaign.
Those deals have become a focus of federal investigators, who raided Cohen’s office, home and hotel room Monday. And if nothing else, the newest example builds the circumstantial case that something was afoot as Trump was trying to win the presidency.
Below are parallels between the Sajudin deal and what we knew already, along with some eyebrow-raising details.
Suspicions of ‘catch and kill’
Tabloids such as the National Enquirer frequently pay people for their stories, but Enquirer employees told the AP that they thought this was a clear case of “catch and kill” — paying for the rights to a story for the purpose of burying it.
Four employees told the AP that story was promising when it was shut down:
The Enquirer staffers, all with years of experience negotiating source contracts, said the abrupt end to reporting combined with a binding, seven-figure penalty to stop the tipster from talking to anyone led them to conclude that this was a so-called “catch and kill.” …
One former Enquirer reporter, who was not involved in the Sajudin reporting effort, expressed skepticism that the company would pay for the tip and not publish.
“AMI doesn’t go around cutting checks for $30,000 and then not using the information,” said Jerry George, a reporter and senior editor for nearly three decades at AMI before his layoff in 2013.
That’s similar to how Enquirer staff members described the McDougal case a few months ago to the New Yorker, which also quoted George and employees who asserted that Trump had veto power over stories:
Six former A.M.I. employees told me that [AMI Publisher and Trump friend David] Pecker routinely makes catch-and-kill arrangements like the one reached with McDougal. “We had stories and we bought them knowing full well they were never going to run,” Jerry George, a former A.M.I. senior editor who worked at the company for more than twenty-five years, told me. George said that Pecker protected Trump. “Pecker really considered him a friend,” George told me. “We never printed a word about Trump without his approval.” Maxine Page, who worked at A.M.I. on and off from 2002 to 2012, including as an executive editor at one of the company’s Web sites, said that Pecker also used the unpublished stories as “leverage” over some celebrities to pressure them to pose for his magazines or feed him stories.
$1 million penalties and big payments
This could be a pure coincidence, given that $1 million is such a round number, but it happens to be the penalty for violating the agreement between Cohen and Daniels, and the agreement between AMI and Sajudin.
And even if that is a coincidence, the fact that Sajudin faced such a stiff penalty for sharing what amounted to a rumor struck AMI employees as unusually severe. They also said it was unusual for him to be paid as much as $30,000 for a rumor that hadn’t been confirmed.
McDougal, similarly, said she was surprised by the scope of her agreement. Emails reviewed by the New Yorker suggested that AMI initially had little interest in the story but upped its offer substantially after Trump won the presidential nomination. “I knew that I couldn’t talk about any alleged affair with any married man, but I didn’t really understand the whole content of what I gave up,” McDougal said.
Cohen talked to the Enquirer and Sajudin
Cohen told the AP that he talked to the Enquirer about Sajudin’s account, but he said it had nothing to do with the payment:
He said he was acting as a Trump spokesman when he did so and denied knowing anything beforehand about the Enquirer payment to the ex-doorman.
This is plausible, but it’s also likely to gain the attention of investigators. Why, for example, did the Enquirer reach out to Cohen if it didn’t regard Sajudin’s story credible or worth reporting? Generally, reporters want to wait until after they confirm an accusation to contact the person who is being accused — both to avoid tipping them off and to avoid creating unnecessary drama over a story that might not amount to anything.
A suspicious new report in an Enquirer sister publication
The story wasn’t broken by the New Yorker and the AP but, rather, by Radar Online, a sister publication of the Enquirer, on Wednesday. But there is significant reason to think it was just trying to get ahead of the story.
Here’s how Ronan Farrow describes how Radar’s report surfaced:
On Wednesday, thirty minutes after The New Yorker contacted A.M.I. for comment about the payment to Sajudin, Radar Online, an A.M.I. publication, posted a story acknowledging the thirty-thousand-dollar payment but saying that the former doorman’s story was false.
Indeed, AMI’s Radar deciding to finally publish Sajudin’s account so soon after the company was contacted about it — and two years after the agreement with Sajudin was reached — suggests AMI didn’t like how the whole thing looked. It’s too much of a coincidence.
And Radar’s story is definitely more favorable to the Enquirer, both dismissing Sajudin’s account as false and suggesting that serious resources — four weeks worth of reporting — had been devoted to it. It also, notably, suggests that it didn’t want the Trump campaign to know about its story — suggesting no coordination:
Internal emails reviewed by Radar show The ENQUIRER jumped to publish the story, and feared tipping off the Trump camp.
The whole thing, in a lot of ways, seems to be devoted to undercutting the idea that this was a catch-and-kill situation and that the Enquirer was doing Trump’s bidding.
Even if it was doing Trump’s bidding, that wouldn’t mean that anything untoward happened. It’s possible that the stories were being used as leverage rather than as part of an agreement reached with Cohen or the Trump campaign. But the questions are only increasing — as is Cohen’s legal jeopardy.
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