Mark Zuckerberg paints a biting contrast between Facebook and Apple on privacy, saying his company has sacrificed business to protect users (FB, AAPL)

Mark Zuckerberg

  • Facebook CEO Mark Zuckerberg appeared to criticize Apple on Wednesday in the companies’ ongoing battle over privacy.
  • The social-networking company won’t set up data centers in countries with poor human-rights records, he said.
  • That stance has caused it to lose business, but it’s a “tradeoff we’re willing to make,” he said.
  • Zuckerberg didn’t mention Apple, but it seemed clear that he was contrasting Facebook with the iPhone maker.
  • Apple last year set up a data center in China so it could continue to offer its iCloud services there.

Facebook CEO Mark Zuckerberg on Wednesday took a thinly veiled jab at Apple by casting the social network as a defender of privacy that is willing to resist cooperating with governments that have poor human-rights records.

The comments, which were made in a lengthy blog post by Zuckerberg on Wednesday, made an implicit comparison between his company and Apple’s controversial practices in China and marked the latest flare-up in a long-running battle between the two tech giants over consumer privacy.

The social-networking company has sacrificed business to protect its customers, Zuckerberg said. Facebook has intentionally chosen not to put its servers in countries that have poor track records on human rights, even though those decisions have meant that it can’t offer its services in those places, he said.  

“That’s a tradeoff we’re willing to make,” Zuckerberg said. “I think it’s important for the future of the internet and privacy that our industry continues to hold firm against storing people’s data in places where it won’t be secure.” 

Zuckerberg didn’t mention Apple by name, but the contrast he was drawing between his company and the iPhone maker was clear to people who have been following the feud between the two. Last year, Apple set up a data center China to host the local version of its iCloud online services there in response to new laws. The data center is being operated by a Chinese company, which has raised alarms among privacy advocates concerned that it would allow the Chinese government to more easily get access to its citizens’ personal data.

Facebook, by comparison, has been blocked in China since 2009 and doesn’t have any data centers there.

The statement from Zuckerberg “is a massive shot across [Apple CEO] Tim Cook’s bow,” Alex Stamos, Facebook’s former cybersecurity chief, said in a tweet. “Expect to hear a lot about [iCloud] and China every time Cook is sanctimonious.”

Zuckerberg and Cook have been fighting about privacy

Cook has tried to position Apple as the tech industry’s paragon for privacy protection and has sought to compare his company’s practices with those of its rivals. Unlike Facebook, Google, and other online giants, Apple isn’t dependent on advertising and limits the amount of data it collects from users of its devices and services. It also emphasizes the security of its phones and services, including iMessage.

As part of his privacy push, Cook has repeatedly criticized Facebook’s privacy practices, particularly in the wake of the social-networking giant’s Cambridge Analytica scandal last year. Just last week, at Apple’s annual shareholder meeting, he again seemed to criticize Facebook, saying that the practice of collecting detailed information about consumers and using it to divide them from each other “should not exist.” 

Read more: Apple CEO Tim Cook hit out at companies like Facebook again: Anything that collects personal data and uses it against customers ‘should not exist’

For his part, Zuckerberg has bristled at the criticism and even ordered Facebook executives to ditch their iPhones for Android devices.

But both sides have notable shortcomings in their arguments. Facebook and Zuckerberg have repeatedly tried to court Chinese officials and have explored numerous ways of offering their services there. Apple, meanwhile, does collect some data on its users for services such as its Siri voice assistant and its Maps applications, and it gets billions of dollars in revenue each year from Google for making the search giant its default search service on the iPhone.  

SEE ALSO: Hey Apple, what happens on iPhones doesn’t stay there, and your ‘clever’ CES ad is promoting a dangerous illusion

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A video game about rape is testing the free-speech policies of the most popular PC gaming store

Rape Day Steam Screenshot

  • “Rape Day” is an upcoming indie video game about rape and murder during a zombie apocalypse.
  • The game is scheduled for an April release on Steam, the most popular platform for PC gaming. “Rape Day” is under review, but its Steam store preview page features images of sexual violence.
  • Steam sells thousands of games regardless of their content, including sexually explicit games, as long as they aren’t breaking the law. The company earns 30% of the revenue for each sale in the Steam store.
  • Many are calling for the game to be removed from the store for glorifying rape, but the creator of “Rape Day” says the game is within Steam’s rules and is not a danger to the public.

“‘Rape Day’ is a game where you can rape and murder during a zombie apocalypse.” That’s the no-frills description of “Rape Day,” a game scheduled for release next month on Steam, the most popular storefront for PC video games, and the most commonly used video game platform in the world.

As the name implies, “Rape Day” is centered on graphic depictions of sexual violence. As a digital-only release, the game has no official rating, but it would fall deep within the realm of ESRB’s “Adult Only” rating. Like other games with explicit sexual content, “Rape Day” is hidden from regular Steam search results unless the user has allowed those sorts of games to be shown.

Those without a Steam account cannot see the game at all, but when logged in, a search of the word “rape” alone will show that the game has been excluded from the results. Steam gives the player an option to reveal unfiltered search results and preview the game for themselves, if they’re of age. The preview page for “Rape Day” shows 25 screenshots of the game, which include nude women being sexually assaulted and held at gunpoint.

Rape Day Steam Screenshot

Members of the press and the larger video-game community have only recently become aware of “Rape Day,” but the game has been live on Steam for weeks and is scheduled for an April release. In the past, Steam’s policy has been to allow games as long as they work properly and don’t break the law.

A game called “Active Shooter” stirred controversy after the Parkland shooting last summer for its depiction of a school shooting. Steam eventually pulled the game before it was released, but also put out a statement saying that games that were viewed as problematic would be reviewed on a case-by-case basis to determine whether they violate international law.

“We’ve decided that the right approach is to allow everything onto the Steam store, except for things that we decide are illegal, or straight up trolling,” a company statement read last June.

Rape Day Steam Screenshot

With “Rape Day,” Steam is facing a new wave of criticism for profiting off a game that glorifies rape and sexual assault. While the game hasn’t been officially priced, Steam takes 30% of all sales made on the platform. The game is under review for its content, but is still available for preview and can be added to a user’s wish list.

Read more: A ‘school shooter’ video game has been removed from the biggest PC gaming platform, along with the person who made it

“Rape Day” is a visual-novel game, meaning players choose from options in a prewritten story to progress through the game. “Rape Day” isn’t animated either; each scene is told with a sequence of still images, with written dialogue and story choices. The game is more like a choose-your-own-adventure book with multiple paths, compared with a traditional video game in which a player controls their character.

Steam sells dozens of visual-novel games with a variety of sexually explicit content. The genre was popularized by Japanese developers who used the style to weave layered stories on top of basic dating simulator games. While some visual novels choose to emphasize the visual rather than the story, the genre has produced plenty of engaging games.

Chaos Child Light Novel

Indie developers can use the visual-novel format to create compelling mystery or romance games without spending a ton of extra time and money on animation and voice acting. Others developers who are more interested in capitalizing on players’ basic desires for raunchy content will use visual novels as a cheap vehicle for selling pornographic images with fictional characters.

On the preview page, the game’s creator, who goes by the handle “Desk Plant,” promises more than 500 images in total, more than 7,000 words of written story, and “evil choices.” While there are different story paths, Desk Plant says the game should take about an hour to complete. The project has been in development for two years.

On the site, Desk Plant describes “Rape Day” as a dark comedy and power fantasy. The creator compared the “Rape Day” to best-selling games like “Grand Theft Auto” and “Hitman” that glorify violence, stating that most people would not be influenced by its depictions of sexual assault. The “Rape Day” site includes a page linking to multiple studies that deny a link between video-game violence and real-life crimes.

“Most people can separate fiction from reality pretty well, and those that can’t shouldn’t be playing video games,” Desk Plant wrote. “The point of games is to do things, or experience things that you can’t or shouldn’t in reality. If games and movies were just like real life, they would be pretty boring.”

Active-Shooter (game)

Desk Plant said that “Rape Day” followed all of Steam’s policies and he disclosed the game’s offensive content before it was publicly listed in the store. The creator understands that Steam has the right to ban the game if it chooses, and will look for other ways to sell and distribute the game if that happens. If Steam bans Desk Plant from publishing other games in the future, the creator plans to start a new platform for pornographic video games.

“If both my game is banned and I am banned, then I will ensure that a content platform for all kinds of legal, quality porn games exist.” Desk Plant wrote on the “Rape Day” site. “I will ensure that it provides the stable foundation for the porn gaming industry to grow and flourish to be the billion dollar industry that basic biology would have it be.”

“Rape Day” puts Steam in a compromising position; the game unapologetically glorifies rape, and has little to offer in terms of actual gameplay. Even if Steam isn’t promoting the game, it would profit from every sale. While Steam has been reluctant to restrict content on the grounds of free speech, there’s not much moral wiggle room left in this situation.

More than 2,000 players are discussing “Rape Day” on the game’s Steam Community Hub, with clashing opinions on censorship, free speech, and the overall legitimacy of the game. We’ve reached out to Steam for further comment on the status of “Rape Day.”

SEE ALSO: A ‘school shooter’ video game has been removed from the biggest PC gaming platform, along with the person who made it

DON’T MISS: The world’s largest gaming service, Steam, is giving up on regulation and turning over 200 million users into guinea pigs

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Disgraced former Nissan Motor Co. Chairman Carlos Ghosn reportedly approved for $9 million bail

Carlos Ghosn

  • Disgraced former Nissan Motor Co. Chairman Carlos Ghosn was reportedly approved for bail by a Tokyo court on Tuesday. 
  • Bail has reportedly been set at $9 million (1 billion yen), according to Kyodo News.
  • Ghosn was arrested on November 19 and is facing multiple allegations of financial misconduct including underreporting his income and transferring more than $16 million in personal investment losses to Nissan. 

Disgraced former Nissan Motor Co. Chairman Carlos Ghosn was reportedly approved for bail by a Tokyo court on Tuesday, following his arrest last year over allegations of financial misconduct. 

Bail has been set at $9 million (1 billion yen), according to Kyodo News. Two other requests submitted by his legal team were previously denied. His release could come as soon as today, according to Associated Press.

Ghosn was arrested on November 19 and is facing multiple allegations of financial misconduct including underreporting his income and transferring more than $16 million in personal investment losses to Nissan. 

The former chairman has said that he acted “honorably and legally,” and he has maintained that he was “wrongly accused and unfairly detained.”

Read more: I have been wrongly accused and unfairly detained’: Ousted Nissan exec Carlos Ghosn makes his first public remarks on financial misconduct allegations in Tokyo court

Ghosn was once a prolific figure in the automotive industry, and is admired for helping save Nissan from the brink of bankruptcy in the late 1990s, which included a strategic partnership with the French automaker Renault in 1999. Mitsubishi joined the group in 2016, and two years later, the Renault-Nissan-Mitsubishi alliance under Ghosn’s leadership became the world’s largest automaker by sales.

Both Nissan and Mitsubishi booted Ghosn after the financial misconduct allegations came down. Nissan CEO and president Hiroto Saikawa publicly rebuked Ghosn.

Fellow Nissan executive and close aide Greg Kelly was arrested alongside Ghosn and was granted bail in December. Kelly has also denied the allegations, but is reportedly cooperating with Japanese authorities. 


Bryan Logan contributed to this report. 

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Facebook and Instagram launch their first lawsuit over fake accounts and likes from Chinese companies, following legal concerns (FB)

facebook ceo mark zuckerberg

  • Facebook announced Friday that the company, along with Instagram, have filed a federal lawsuit over the sale of fake accounts, likes, and followers.
  • Facebook is suing four companies and three people based in China who have sold and promoted fake accounts, likes, and followers on Facebook, Instagram, Amazon, Apple, Google, LinkedIn, and Twitter.
  • “By filing the lawsuit, we hope to reinforce that this kind of fraudulent activity is not tolerated – and that we’ll act forcefully to protect the integrity of our platform,” Paul Grewal, vice president and deputy general counsel at Facebook wrote in a blog post.

On Friday, Facebook and Instagram filed a lawsuit in the U.S. federal court over fake accounts on its platforms.

Facebook and Instagram have sued four companies and three people based in China who promoted the sale of these fake accounts, likes, and followers.

In addition to Facebook and Instagram, these companies sold fake accounts on Amazon, Apple, Google, LinkedIn, and Twitter, Facebook said. Business Insider has reached out to these companies for comment.

This lawsuit will ask the court to prevent these companies and people from creating and promoting the sale of fake accounts, likes, and followers on Facebook and Instagram. In addition, it will ask the court to stop them from illegally using their trademarks on their websites and from using Facebook-branded domain names to run their websites.

“By filing the lawsuit, we hope to reinforce that this kind of fraudulent activity is not tolerated — and that we’ll act forcefully to protect the integrity of our platform,” Paul Grewal, vice president and deputy general counsel at Facebook wrote in a blog post.

After backlash over the prevalence of fake news and accounts on Facebook and Instagram, Facebook has made moves in removing fake accounts within the U.S. and other countries. Over 600,000 Americans followed fake Instagram and Facebook accounts that were suspected to be linked to Russia. These were detected and removed just days before the 2018 midterms. 

Read more: Over 600,000 Americans followed fake Russia-linked Instagram accounts that were detected days before the midterms

In December, Facebook shut down fake news sites that spread false information about the Bangladesh opposition before the country’s elections.

Ahead of India’s elections, Facebook announced it would set up an “online search ad library” and require advertisers to disclose their identity and location for verification.

In January, Facebook announced it took down hundreds of accounts linked to Iran and Russia that spread false information. And just last month, Facebook removed pages and accounts that engaged in “coordinated inauthentic behavior” targeting people in Moldova, ahead of the country’s elections.

Instagram, which is owned by Facebook, has also seen its share of fake accounts. In November, Instagram announced it would crack down on accounts that use third-party apps to boost its popularity with fake likes and follows.

New York Attorney General Letitia James has also been cracking down on companies that sell fake followers and likes on social media, such as the now-defunct Devumi LLC and other companies owned by German Calas. This was the U.S.’s first settlement that regards these sales as illegally deceptive, Reuters reported.

“Inauthentic activity has no place on our platform. That’s why we devote significant resources to detecting and stopping this behavior, including disabling millions of fake accounts every day. Today’s lawsuit is one more step in our ongoing efforts to protect people on Facebook and Instagram,” Grewal wrote.

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Here's why the FTC's new tech task force probably won't break up Facebook or Google, according to industry insiders (FB, GOOGL, MSFT, AMZN)

mark zuckerberg

  • The Federal Trade Commission has announced a new task force meant to look at antitrust behavior in the technology market.
  • It’s the first major move by the FTC to address growing public concern over the size of tech companies like Facebook, Google, and Amazon.
  • The new task force will look at industry practices and conduct law-enforcement investigations. It also has the ability to look at both past and present mergers.
  • But industry insiders said they didn’t expect to see the FTC break up large tech companies, even if there is precedent set by its past actions in the hospital industry.

Big Tech got a big scare Tuesday when federal regulators launched a task force to patrol the market for signs of outsize power and to reexamine the validity of mergers that closed years ago.

The prospect that the likes of Facebook and Google could be forced to give up crown jewels acquired for billions of dollars — WhatsApp, in the case of Facebook, and YouTube or DoubleClick, for Google — is the most striking sign yet of the public’s unease with the corporations that dominate the internet age.

But while the Federal Trade Commission’s new Technology Task Force heralds a new era of scrutiny for an industry accustomed to hands-off treatment, industry insiders say the chances of mergers being reversed are highly unlikely.

“The idea of breaking up any company, particularly a company that doesn’t have easily separable assets like a tech company, that’s the nuclear option and it’s almost never used,” said Mark Ostrau, an antitrust lawyer with Fenwick & West.

Ostrau said what’s more likely is that the task force looks “more seriously” at new, technology-specific theories of what violates antitrust laws.

The unprecedented changes enabled by online technology, from retail to transportation, have upended long established industries and, some say, allowed newcomers to sidestep ground rules that no longer reflect the realities of the market.

Most recently, antitrust law in the US has focused on whether consumers have access to low-cost goods. So while a company like Walmart may have had a large share of a market, regulators weren’t concerned so long as there wasn’t price gouging.

Read more: US antitrust merger investigations neared record lows in 2018 even as scrutiny of Facebook, Google, and Amazon picked up

But since many of today’s largest tech companies offer free products to consumers, antitrust theorists will have to consider new issues, like whether consumers have the option to opt out of a service if they don’t like its privacy policies or whether network effects prohibit new competition from entering the market, Ostrau said.

josephjsimons hires

On the more obscure side, Ostrau said he also expected to see new developments in laws relating to anticompetitive price fixing through algorithms that enable competitors to automatically compare and adjust prices.

“That’s not so much a new theory,” Ostrau said, “but instead of clandestine face-to-face meetings, [companies are] achieving it through automatic algorithms.”

There’s precedent with Microsoft, CDK Global

The FTC’s move comes at a time when concern over data privacy and the concentration of advertising dollars have come into sharp focus. High-profile scandals such as Facebook’s Cambridge Analytica data leaks, as well as concerns over the content that gets shared on social media, have increased pressure on the government to act.

One of the most striking parts of the FTC’s announcement is that it will look at both “prospective merger reviews in the technology sector and reviews of consummated technology mergers.”

This indicated to some that the FTC could retroactively challenge past mergers, such as Facebook’s $19 billion WhatsApp acquisition in 2014 or Google’s $3.1 billion acquisition of DoubleClick in 2007.

One lawyer familiar with the FTC’s thinking said that in all likelihood the agency wouldn’t spend resources trying to break up formidable companies that will fight its decision in court.

The 2001 DC Circuit ruling on Microsoft’s antitrust case set the precedent against breaking up a company that grew organically, and a merger would need to be directly tied to anticompetitive conduct for a company to be broken up as a punishment, the person said.

bill gates

The FTC has recently prevented mergers in tech, but it’s rare.

CDK Global’s plan to acquire Auto/Mate, which was announced in May 2017, terminated in March 2018 after the FTC blocked the deal on antitrust grounds. In that case, the person said, it appeared that CDK Global wanted to acquire its emerging competition to squash it. This is most likely different from a situation like Facebook’s purchase of Instagram, which grew into a formidable player in social media once it was acquired, the person said.

The antitrust laws would need to change for a merger like Facebook and Instagram to be broken up over unrelated privacy concerns, the person said.

Whether or not the SEC wins its cases, Ostrau said technology antitrust law could move forward on momentum alone.

“There is some benefit in just opening the investigations and bringing the cases, even if the FTC doesn’t ultimately win or get a consent decree because it heightens the sensitivity to a particular area of conduct and has an effect on the industry,” Ostrau said. “To say, this is an area of potential concern, so we ought to tread carefully, whether or not there’s a case.”

Hospital mergers show a way forward

Microsoft isn’t the only antitrust case to set a precedent. Others, including the FTC, point to its past work on hospital mergers as a precedent for what could happen with technology.

The FTC said that its new Technology Task Force was modeled after the Merger Litigation Task Force, which was launched in 2002 to monitor mergers in the hospital space. That task force did in fact successfully challenge consummated mergers, including ProMedica Health System’s acquisition of St. Luke’s Hospital.

That acquisition closed in 2010, but the hospitals operated separately during the FTC’s investigation that launched in 2011 and ultimately required divestiture. ProMedica finally divested St. Luke’s in 2016.

While the FTC may consider this a success of its task force, not everyone is convinced that it went far enough.

“The impact is merely slowing down a bad trend, not stopping it or reversing it,” said Matt Stoller, a fellow with the Open Markets Institute, a think tank that opposes corporate monopolies. “I don’t think this new task force is meaningful. I think it’s a new seating arrangement inside the building and I don’t care about that.”

As for whether it’s too difficult to break up two companies that have already merged, Stoller said companies proved they could do it anytime they decided to sell one of their assets of their own volition.

“It’s not like building moon bases on Jupiter — this is stuff they do all the time,” he said.

SEE ALSO: Meet the jet-setting Goldman Sachs banker who led Qualcomm through a hostile takeover, got stuck in Trump’s trade war, and made magic happen across the semiconductor industry

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The SEC's claim that Elon Musk is in contempt of court is highly unusual, a former SEC lawyer says (TSLA)

Elon Musk

  • The Securities and Exchange Commission‘s allegation that Tesla CEO Elon Musk is in contempt of the federal court that approved a settlement between Musk and the agency is highly unusual, the former SEC senior counsel Thomas Gorman told Business Insider.
  • It’s particularly rare for the SEC to bring contempt proceedings against a corporate executive, rather than the operator of an illegal enterprise, such as a Ponzi scheme, Gorman said.
  • The most likely outcome is that Musk is sanctioned, fined, and given a stern warning about the consequences of disobeying his settlement with the SEC, Peter Haveles, a partner at Pepper Hamilton, said.

The Securities and Exchange Commission’s (SEC) allegation that Tesla CEO Elon Musk is in contempt of the federal court that approved a settlement between Musk and the agency is highly unusual, the former SEC senior counsel Thomas Gorman told Business Insider.

Being in contempt of court means either misbehaving in a courtroom or deliberately disobeying a court order (the SEC is accusing Musk of the latter). The SEC rarely brings contempt proceedings, Gorman said.

“There just aren’t very many of these cases around,” he said.

It’s particularly rare for the SEC to bring contempt proceedings against a corporate executive, rather than the operator of an illegal enterprise, such as a Ponzi scheme, Gorman said.

Read more: A judge just set a deadline for Elon Musk to defend himself against the SEC’s claims that he is in contempt of court

The SEC sued Musk in September, alleging that Musk made “false and misleading statements” in August about the possibility of taking the automaker private. Musk and the agency reached a settlement in September, under which Musk didn’t admit or deny the allegations in the agency’s lawsuit but stepped down as the chairman of Tesla’s board of directors for three years and paid a $20 million fine. The settlement also required Tesla to monitor Musk’s communications, including on platforms such as Twitter.

But in the months after the settlement, Musk criticized the SEC, saying in an interview with “60 Minutes” that he didn’t respect the agency. And, on February 19, Musk tweeted a projection about Tesla’s 2019 vehicle production that exceeded what the automaker had said in its most recent earnings letter.

Musk corrected the tweet, but the SEC said in a court filing on Monday that Musk had violated the terms of his settlement with the agency by not seeking or receiving approval from Tesla before publishing his tweet about vehicle production. The agency asked a judge to hold Musk in contempt of the federal court that approved the settlement.

But proving that Musk violated the terms of the settlement will be difficult for the SEC, which faces a burden of proof just below what is necessary for a criminal case, Gorman said.

“The SEC has to prove they’re right by clear and convincing evidence. It’s not enough to have a preponderance.”

The most likely outcome is that Musk is sanctioned, fined, and given a stern warning about the consequences of disobeying his settlement with the SEC, Peter Haveles, a partner at Pepper Hamilton, said.

“It’s going to be the equivalent of hitting him across the head with a two-by-four in order to get his attention.”

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Pre-IPO companies like Uber and Airbnb could 'test the waters' with investors sooner under new SEC proposal


  • The Securities and Exchange Commission is taking new steps to help pre-IPO companies like Uber and Airbnb get feedback from institutional investors.
  • A new rule proposed Tuesday would let larger private companies consult with institutional investors before filing IPO paperwork with the SEC.
  • Currently, the rules let emerging growth companies talk with such investors about pricing and demand. But this excludes most companies with revenue over $1 billion, including many of the most valuable companies in Silicon Valley.

New rules proposed by federal regulators will let mega-startups like Uber and Airbnb seek early feedback about investor appetite for an initial public offering. 

On Tuesday, the Securities and Exchange Commission proposed a new “test the water” reform which would allow all pre-IPO companies to consult with qualified institutional buyers before filing paperwork to go public. 

These meetings give startups the chance to see if investors are actually interested in buying their stock before going through the work of filing with the SEC. And it helps institutional investors like Fidelity and T. Rowe Price the chance to see what’s coming up in the IPO pipeline while setting the tone on valuation and price. 

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It makes the process more informed,” said Edwin O’Connor, a capital markets lawyer at Goodwin. “So when [companies] are ready to go to market, they have heard the investors’ concerns and have the time to address it.”

Currently, the privilege to chat with investors only extends to the smaller emerging growth companies, which excludes most companies with annual revenue over $1 billion. These so-called EGCs, which make up the vast majority of IPO registrants, have been able to get feedback on price and demand since 2012, when the Jumpstart Our Business Startups Act, known as the JOBS Act, was signed into law.

Larger private companies with revenue of more than $1 billion, however, must file an S-1 registration statement in order to be allowed to seek feedback from institutional investors. That would change, if the proposed rules become law.

Everyone’s been waiting for this,” said Anna Pinedo, a securities lawyer at Mayer Brown. “It’s been much anticipated, so it’s great to see it out.”  

An outsized impact on tech

Such reform could have an outsized impact in tech, Pinedo said, where startups are waiting longer and growing larger before tapping the public markets.

Ride-hailing service Uber, which is expected to go public this year, brought in $11.4 billion in revenue in 2018. Airbnb, another 2019 IPO prospect, announced that it brought in more than $1 billion in revenue in one quarter alone in Q3 2018. Both have too much revenue to count as an EGC.

While Uber and Lyft would not directly benefit from the new rules, as each has already confidentially filed IPO paperwork with the SEC, the new rules could come in handy for other startups reportedly weighing an IPO, such as Airbnb and Palantir. Depending on how the 60-day public comment period goes, the new rules could take effect as soon the end of April. 

This reform won’t just impact pre-IPO unicorns, according to O’Connor. The proposal also gives public companies more flexibility when it comes to issuing new shares.

Currently, executives at public companies can chat with investors about raising more capital. But the banks underwriting these offerings can’t. The reform would change that to allow authorized representatives to “engage in oral or written communications with potential investors.” 

“[The reform] probably won’t move the needle much on IPOs because for private companies, most won’t need this,” O’Connor said. “But I think it will help companies raise money after they’re public. It might incrementally increase capital raising activity in the public markets.” 

Though the SEC will take comments for 60 days before making the reform official, both Pinedo and O’Connor said they don’t expect to see any opposition prevent this from happening.

“Lawyers’ industries groups and trade associations have been talking about extending the ‘test the waters’ for a couple of years now,” Pinedo said. “I doubt that there will be any opponents or natural critics for this.”

If one were too oppose to reform, it would be on behalf of the investors themselves. And while many SEC regulations are designed to prevent investors from being mislead by the companies issuing securities, the new reform only impacts institutional investors.

“These are sophisticated investors,” O’Connor said. “They can fend for themselves.”

SEE ALSO: $1 billion video conferencing startup Zoom has picked banks but is sitting in SEC purgatory ahead of a planned IPO

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A former Apple executive was just accused of insider trading by the SEC

Apple logo in crowd

  • Gene Levoff, who was Apple’s senior director of corporate law and corporate secretary until September, was accused of insider trading by the Securities and Exchange Commission.
  • The SEC’s lawsuit, filed Wednesday, accused Levoff of exploiting his positions to unlawfully trade Apple securities ahead of Apple’s quarterly earnings announcements.
  • It said Levoff engaged in insider trading on three occasions in 2011 and 2012 that resulted in him making about $245,000 in profit.
  • Levoff also profited and avoided losses of about $382,000 through illegal insider trading in 2015 and 2016, the lawsuit said.
  • “After being contacted by authorities last summer we conducted a thorough investigation with the help of outside legal experts, which resulted in termination,” an Apple spokesperson said in a statement.

A former Apple executive, Gene Levoff, has been accused of insider trading by the Securities and Exchange Commission.

A lawsuit filed Wednesday alleges that Levoff, formerly Apple’s senior director of corporate law and corporate secretary, “exploited his positions as a senior attorney and a member Apple’s Disclosure Committee to unlawfully trade Apple securities ahead of Apple quarterly earnings announcements.” CNBC first reported on the lawsuit.

The lawsuit said Levoff “violated the duty of trust and confidence he owed Apple and its shareholders” in two respects: “First, as head of the Corporate Law group at Apple, Levoff was responsible for ensuring compliance with the company’s insider trading policy and determining the criteria for those employees (including himself) restricted from trading around quarterly earnings announcements. At the same time, as a member of Apple’s Disclosure Committee, Levoff received material nonpublic information about Apple’s financial results.”

“After being contacted by authorities last summer we conducted a thorough investigation with the help of outside legal experts, which resulted in termination,” Apple told Business Insider in a statement.

The charges facing Levoff

The SEC’s lawsuit alleges Levoff traded on insider information on at least three occasions in 2015 and 2016, including in July 2015, when he “received material nonpublic financial data that showed Apple would miss analysts’ third quarter estimates for iPhone unit sales.”

It said Levoff profited and avoided losses of about $382,000 through illegal insider trading in 2015 and 2016.

Levoff is also accused of engaging in insider trading on three occasions in 2011 and 2012 that resulted in him making about $245,000 in profit.

Levoff, who was fired in September, was Apple’s director of corporate law from 2008 to 2013, when he was named senior director of corporate law. He also served on Apple’s Disclosure Committee from September 2008 to July 2018.

The lawsuit alleges that given Levoff’s role at Apple, which included providing legal advice on securities law and “devising, implementing and enforcing” Apple’s insider-trading policy, he either “knew or was reckless in not knowing” that the earnings materials and filings were material and nonpublic.

The lawsuit cited one example of Levoff’s role in enforcing such policies, detailing an email Levoff sent Apple employees on February 24, 2011, to notify them that a blackout period would begin on March 1.

“Remember, trading is not permitted, whether or not in an open trading window, if you possess or have access to material information that has not been disclosed publicly,” the first sentence of the email said, according to the complaint.

The lawsuit also said Levoff sent two such emails to employees “immediately prior to” engaging in insider trading in 2011.

Here’s the full document:

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Pennsylvania might slap a 10% tax on violent video games, but the industry says the proposed law is fundamentally flawed

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  • The Pennsylvania General Assembly is considering a bill that would place a 10% tax on video games with a Mature or Adults Only rating from the Entertainment Software Rating Board (ESRB).
  • Rep. Christopher Quinn first proposed the bill in October 2018, and it has been re-introduced for the 2019 legislative session with bi-partisan support.
  • Revenue generated by the tax would be used to fund school safety measures.
  • The Entertainment Software Association, which is responsible for the ESRB ratings, claims that the bill violates the first amendment by targeting video games based on their content.

Pennsylvania lawmakers are considering a bill that would slap a 10% tax on video games that are rated Mature or Adults Only by the Entertainment Software Rating Board (ESRB). Rep. Christopher Quinn submitted House Bill 109 to the state’s General Assembly on January 28th with bi-partisan support from Rep. Ed Neilson and and Rep. Carol Hill-Evans.

Revenue generated from the video game tax would be used to fund new safety measures in Pennsylvania’s public schools. Speaking to NBC10 in Philadelphia, Quinn said violent video games are a factor in real world violence, and the video game tax would help counteract their impact on society. 

“This bill does not prohibit violent video games, instead it simply provides a revenue stream — it tries to recoup some of the societal costs — to help make our schools safer by taxing an industry that has been shown to lead to violence,” Quinn said.

As you might expect, the $43 billion video game industry has a different perspective on the bill’s premise that video games lead to real world violence. And the game industry’s main lobbying group is also arguing that video games are a form of protected speech under the US Constitution. 

Here are the key issues that could determine whether Pennsylvania becomes the first state in the nation to tax violent video games:

SEE ALSO: Trump vs violent video games

SEE ALSO: ESRB cracks down on microtransactions

Many of the best-selling games of 2018 were rated mature.

Eight of the 20 best-selling video games of 2018 were rated M by the ESRB. Mature games are rated for players 17-years-old and up. The two best-selling games of 2018, “Red Dead Redemption 2” and “Call of Duty: Black Ops 4” (pictured above) were both rated M.

By contrast, only a handful of games receive the Adult Only rating, which is usually reserved for sexually explicit content. Many retailers refuse to carry AO titles in stores, so game developers typically try to avoid the rating at all costs.

The Entertainment Software Association claims the video game tax would violate the constitution.

The Entertainment Software Association, the lobbying group that also oversees the ESRB ratings, stated that Pennsylvania’s proposed video game tax is an unconstitutional violation of the first amendment. The group argues that the tax singles out video games based on their content, violating the constitutional free speech rights of the game’s publishers. 

While the ability to tax violent games is not a matter of settled law, the game industry has one important U.S. Supreme Court decision in its favor. In 2011, a California law banning the sale of violent video games to children under age 18 was struck down in a decision by the Supreme Court. In its decision on Brown v. Entertainment Merchants Association, the court found that video game content was protected as free speech.

The video game industry is also pushing back against the bill’s claim that video games lead to real-world violence.

“Numerous authorities – including scientists, medical professionals, government agencies, and the US Supreme Court – found that video games do not cause violence,” The ESA wrote in a statement.

“We encourage Pennsylvania legislators to work with us to raise awareness about parental controls and the ESRB video game rating system, which are effective tools to ensure parents maintain control over the video games played in their home.”

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Medium, the blog site Jeff Bezos used to attack the Enquirer, won't say whether the post violated its rules — but it says Bezos won't get paid a dime (AMZN)

Jeff Bezos

  • Medium isn’t commenting on whether or not Jeff Bezos violated its terms of service with his astonishing post on Thursday.
  • The online publishing site also won’t say whether Bezos gave it a heads up before he published it.
  • But Medium did confirm that, no matter how many people like his post, he won’t get paid for it.

When Amazon CEO Jeff Bezos decided to accuse David Pecker, the CEO of National Enquirer’s parent company, of blackmail on Thursday, he chose an interesting way to do it: a post on Medium. 

Medium is a blogging media site founded by Evan Williams, one of the founders of Twitter. Bezos also tweeted about his blog post, to his 834,000 followers, so that’s a double score for technologies created by Williams and used by Bezos in this drama. (Just in case you haven’t been following closely: intimate photos and text messages between Bezos and the woman he was having an affair with were obtained by the Enquirer, which published some of the trove and threatened to publish others).

Read: Jeff Bezos’ investigator doesn’t think his phone was hacked. Here are all the other theories of how the National Enquirer got his private photos

Medium was a curious choice for Bezos to strike back at the Enquirer because Bezos owns the Washington Post. He certainly could have run an editorial there. And he runs Amazon which has Amazon Web Services, one of the biggest internet tech companies on the planet. It was more than capable of hosting his post, as well.

But, by choosing a neutral third-party blog-hosting site for his revelations and accusations, he clearly avoided some political, and perhaps legal, ramifications. His Medium post alleges that one of the reasons he wound up in this drama was because he owns the Washington Post, which has made him a political target of Donald Trump and the Saudis, who are not happy wth the Post’s coverage. And he said his role at Amazon had been used by Enquirer publisher AMI as a justification for some of its editorial decisions.

Did Bezos go too far in publishing the emails? 

Bezos held nothing back in his Medium post.  Not only did he explicitly accuse the Enquirer of extortion and blackmail, he published emails that he said proved it. He didn’t edit the emails to remove embarrassing details about his personal life. He also didn’t edit out all the sender’s phone numbers and email addresses.

And that’s caused an interesting sidebar in the drama, with some journalists wondering if Bezos violated Medium’s terms of service.

As Wired’s Louise Mtsakis pointed out, the post appears to violate Medium’s rules, which doesn’t allow “Posting copies of private communications between private individuals without the explicit consent of all parties to the communication.”

And Medium has definitely used this rule to take down posts before.

Medium had no comment on that when asked by Business Insider. It also wouldn’t say if Bezos gave the company a heads up that the post was coming or if it just showed up on their platform as a surprise.

But they did tell us that he will not get paid for the post. Medium pays writers based on how many claps they get. A clap is akin to a “like” button.

This post has already gotten 185,000 claps.

But alas, to qualify for payment, a writer has to join the partner program and has to put the post behind the paywall, where people pay to see it.

“Mr. Bezos is not in the Medium Partner Program and the story is not behind the metered paywall, so he does not earn any money from his post,” a spokesperson confirmed to Business Insider.

Medium has a complicated way of determining how much money each popular article earns but it says the highest amount paid for a story last month was $4,290.43. 

But even if Bezos breaks viewership and clap records, he’s not owed a dime.

With a net worth of $131.5 billion, Bezos, the world’s richest person, probably won’t mind. 

SEE ALSO: Amazon CEO Jeff Bezos accuses National Enquirer publisher of ‘extortion’ over naked photos in extraordinary blog post

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