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Rice industry ‘resilient,’ posts productivity gains

THE rice industry increased its productivity during the pandemic, according to non-government organization Action for Economic Reforms (AER).

In its recent report, “The Rice Industry under the COVID Weather,” AER described the performance of the rice industry during the first and second quarters as “tempered growth.”

“Many industries have been negatively affected by the global health crisis but the rice industry has proven to be somewhat resilient,” AER said.

Citing data from the Philippine Statistics Authority, AER said production of palay, or unmilled rice, rose 7.1% to 4.13 million metric tons (MT) during the second quarter, the height of COVID-related quarantine measures.

AER added that rice production and yields rose even after less land was planted to the staple.

“The average productivity of 4.32 MT per hectare represents a 2.5% increase over the same period of the previous year. However, this is still a long way from the target of at least six MT per hectare,” AER said.

Meanwhile, AER said that good weather and better government support for the sector were behind the industry’s positive performance, but added that not all rice farmers have received aid.

“Some farmers who have yet to receive government support or have received support but after much delay, insist that this positive performance of the rice sector is simply due to good weather,” AER said.

“They concede that there was indeed growth, but negative sentiment prevails among those adversely affected by declining farmgate prices,” it added.

AER said it expects that interventions to resolve problems encountered by domestic producers will be implemented over the short and medium terms such as increased palay procurement by the National Food Authority and local government units, and direct cash transfers to small rice farmers.

“Lowered costs and improved productivity mean more competitive local farmers, which should redound to increased incomes. This can be achieved by diligently and expediently implementing the Rice Competitiveness Enhancement Fund (RCEF). Further, it must be complemented by other non-RCEF agriculture support interventions and institutional reform measures,” AER said.

It said cutting production costs and increasing productivity are the long-term goal. — Revin Mikhael D. Ochave

Auto parts workers seek aid package amid industry slowdown

assembly line (car/auto)

WORKERS from the auto parts industry have asked the government to allocate part of the auto incentives program budget to fund social amelioration initiatives for displaced workers, and opposed the industry’s request for an extension to comply with the program.

Toyota Motors Philippines and Mitsubishi Motors Philippines Corp. members of the government’s Comprehensive Automotive Resurgence Strategy (CARS) program, which offers fiscal support to car companies that domestically produce 200,000 cars for six years.

The automakers have initiated talks with the government to request an extension of their compliance period after the pandemic and the Taal volcano eruption caused a sales and production slowdown.

The Philippine Metalworkers Alliance (PMA) opposed the extension, claiming in a statement Monday that relief for the automakers would incentivize them to lay off workers and rely on imports rather than expand domestic production.

“While the economy is currently in a crisis, this alone should not be the basis for granting reprieve to companies under the CARS program,” PMA President Ruel Punzalan said.

“Unless the government wants to subsidize job losses especially under the current economic crisis, then there is no point giving in to the pressure from corporate interests to extend the grace period under the CARS program,” the statement said.

The group said that while there was a sales decline during the stricter lockdown, there have been signs of automotive recovery due to an uptick in transport equipment sales.

“To start repairing the injustice, allocating a portion of the budget for the CARS Program to provide social amelioration to those already displaced would be a good start,” Mr. Punzalan said.

Trade Secretary Ramon M. Lopez in a briefing Monday said that the job losses are connected to the recent industry decline.

He said that the social amelioration program can be proposed to the government and discussed, adding that the economy is being reopened to help increase car demand among the program’s participants.

PMA in August wrote letters to the Labor and Trade departments, asking them to strengthen the automotive supply chain and continue an investigation into potential safeguard measures on imported vehicles.

Last year, the group filed an application to the Trade department to initiate a safeguard measures probe, saying that there is a link between a surge in imports and a decline in domestic employment.

BusinessWorld asked the Chamber of Automotive Manufacturers of the Philippines, Inc. for comment but it had not replied at deadline time. — Jenina P. Ibañez

Lending firms warned against accessing delinquent borrowers’ phone, e-mail contacts

LENDING COMPANIES have been warned about possible privacy violations when they use an app to access a client’s contacts list to spread negative news about delinquent payments, the National Privacy Commission (NPC) said.

The NPC said that last year it received an unprecedented number of complaints about lending companies that accessed contact lists to tell family and friends of borrowers falling behind on payments.

“The online lending entities utilize the contact list from the borrowers’ mobile phones and disclose their unpaid debts to their family, relatives, friends and co-workers,” the NPC said in a statement Monday.

Under NPC’s Circular No. 20-01 signed on Oct. 14, lending and financing companies that have access to borrowers’ contact lists must dispose of the data securely.

The organizations are also banned from requiring permission to access personal information, including copying phone, e-mail and social media contacts.

“In all instances, online lending apps must have a separate interface where borrowers can provide character references and/or co-makers of their own choosing,” according to the circular.

Data permissions will only be allowed when necessary to determine creditworthiness and prevent fraud, and the online apps must prompt the data subject to turn off permissions once these objectives have been met.

The circular also required that personal data must be stored securely; that loan details be written in clear language; and that borrowers must be informed when loan processing activity involves automated processing and credit scoring. The institutions must also implement policies on retaining data for borrowers whose loan applications were denied or have fully settled their loans.

Violators may be fined or imprisoned under the Data Privacy Act.

“We remind online lending operators and businesses to take their customers’ data privacy seriously and deploy adequate security measures,” Privacy Commissioner Raymund E. Liboro said.

“For the public, we hope this circular will help them keep an eye out for red flags while they are in the process of borrowing money from online lenders.” — Jenina P. Ibañez

Senate calls for rice, corn import curbs to prevent harvest season oversupply

NFA rice imports
REUTERS

SENATORS asked the Department of Agriculture (DA) to limit imports of staple foods during harvest season to address weak farmgate prices.

The DA was asked to set a staggered schedule for importing rice and corn and that will not overlap with the harvest season. A legislator also urged that poultry products be imported with an eye towards the state of domestic supply.

Gumawa ng schedule na kapag tatamaan ‘yung pagdating ng importation sa harvest time, ‘wag na ibigay ‘yun (permit) para wala tayong problema” with regard to farmgate prices, Senator Cynthia A. Villar said at an online hearing Monday.

Agriculture Secretary William D. Dar replied that the scheduling proposal should be made into a resolution by the Senate Committee on Agriculture and Food.

Ms. Villar was presiding over the hearing on the DA’s 2021 budget, which is worth P66.4 billion. The scheduling proposal was supported by Senators Juan Miguel F. Zubiri, Francis N. Pangilinan and Risa N. Hontiveros-Baraquel.

Senator Maria Imelda Josefa R. Marcos added that poultry products be imported to consider the domestic supply situation.

“Importation of basic commodities should at the very least be scheduled and staggered according to need,” she said.

“With regard to rice and corn, the BPI (Bureau of Plant Industry) is enjoined not to import during or immediately before the harvest seasons, particularly the main harvest season in September and October.” 

The Bureau of Animal Industry was asked to monitor the excess supply of chicken and also prohibit imports of poultry products when domestic supply is high.

Ms. Marcos said the Bureau of Fisheries and Aquatic Resources should also look into excessive imports of fish and possible smuggling at the Navotas fish port and elsewhere.

At the same hearing, Ms. Villar said the Rice Tariffication Law, or Republic Act No. 11203, will remain in place amid calls for its amendment.

The law, which lifted restrictions on rice imports, is part of the Philippines commitment to the World Trade Organization (WTO), she said.

“Meron tayong commitment sa WTO (We have a commitment to the WTO) that we will open up imports of rice with tariff and that has been postponed for a very long time, kaya ngayon, hindi na pwedeng i-postpone (and can no longer be put off),” she said. — Charmaine A. Tadalan

Rules for courts hearing IP cases in force by mid-Nov.

THE Revised Rules of Procedure for Intellectual Property Rights (IPR) cases will take effect on Nov. 16, the Supreme Court said, with aim of ultimately improving the investment climate to facilitate innovation.

“The 2020 IPR Rules are designed to foster a legal atmosphere that ultimately spurs creative activity and innovation, technology transfer, and foreign investment,” the Supreme Court said in a statement Friday.

A copy of the revised rules was published in newspapers over the weekend and on Monday.

The rules designate special commercial courts in Manila, Quezon City, Makati City, Pasig City, Baguio City, Iloilo City, Cebu City, Cagayan de Oro City, and Davao City, with the power to act on search warrant applications in IPR enforcement cases.

“Within their respective territorial jurisdictions, the special commercial courts shall have concurrent jurisdiction to issue search warrants,” according to the rules.

The judge has 10 days to evaluate the application and has the power to immediately dismiss cases in the absence of probable cause of suspected IPR violations. Also among the judge’s powers is the authority to issue arrest warrants or commitment orders once probable cause is established.

Judges are also given 60 days to decide on a case, less than the 90 days allotted previously, due to the increasing number of intellectual property rights-related cases and heavy caseloads of special commercial courts.

The court said under the rules, evidence is now required to be included in the complaint and answer. An answer to the complaint may be filed 30 days from service of summons while answers to counterclaims or cross-claims have a 15-day deadline counting from the receipt of the answer.

The court said the rules include an amended provision on substituted service of summons and allow extraterritorial service of summons compliant with international conventions to which the Philippines is a party.

The rules also allow use of teleconferencing or videoconferencing in taking depositions and in other modes of discovery.

The rule on order of destruction was also overhauled to include disposal of infringing goods, and specifying the method for their disposal, which now includes humanitarian donations.

“However, (goods) classified as hazardous shall only be subject to destruction,” it said. — Vann Marlo M. Villegas

Electronic Letter of Authority (eLA) right at your doorstep

It has been around 217 days or close to seven months, yet the COVID-19 pandemic is still with us in the form of quarantines and lockdowns of varying levels on most people except essential workers. Consequently, we have seen how operations have been disrupted for many businesses — a growing number of companies with office-based work, including our firm, have continued with and strengthened work-from-home (WFH) arrangements to keep things business as usual in these unusual times.

Because of fear of going out, most people have opted for online transactions. From the hype of 10.10 online shopping sales to the overwhelming options for door-to-door delivery of food, groceries, and packages — the goal is to bring people’s usual outdoor experience right to their homes.

This is nothing new for the BIR. In May 2019, the BIR issued Revenue Memorandum Order (RMO) No. 40-2019 prescribing the procedures for the proper service of assessment notices with the provisions of Section 3.1.6 of Revenue Regulations (RR) No. 18-2013. However, the regulations only cover the service of assessment notices (i.e. PAN, FLD/FAN, and FDDA).

On Oct. 6, 2020, the BIR issued RMC No. 110-2020, which provides detailed guidelines on the proper modes of service of an electronic Letter of Authority (eLA).

A Letter of Authority (LoA) is the authority given to the appropriate revenue officer assigned to assess functions pursuant to Section 6(A) of the National Internal Revenue Code (NIRC) of 1997, as amended. Without the LoA, the examination or assessment can be nullified.

Thus, an eLA must be served to the concerned taxpayer by the Revenue Officers assigned or any BIR employee as duly authorized for this purpose by delivery of a notice through personal service to his registered or known address, or wherever the taxpayer may be found.

Taxpayers who are currently in a WFH setup might be wondering: “Can BIR serve the eLA at my residence or wherever I may be found in case our office is closed?

Technically, the answer is yes: a known address refers to a place other than the registered address where business activities of the party are conducted or place of residence.

In cases where personal service is not possible, such as when the concerned taxpayer or his authorized representative, or authorized officer in case of a non-individual taxpayer, cannot be found in the registered address, the eLA may be served either by substituted service or by mail.

In substituted service, the eLA may be left at the taxpayer’s registered address or where the business activities are conducted with his clerk or with a person having charge thereof. However, if the known address is the place of residence, substituted service can be made by leaving the copy with a person of legal age residing therein.

If no person is found at the party’s registered or known address, or when a party is found but refuses to receive the eLA, the ROs are to bring a barangay official and two disinterested witnesses (i.e. persons of legal age other than employees of the BIR) so that they may personally observe and attest to such absence or refusal, as the case may be.

Service by mail is to be done by sending copy of the eLA through registered mail by the Philippine Postal Corp. (PhlPost) with an instruction to the postmaster to return the mail to the sender after 10 days, if undelivered; through a reputable professional courier company (PCC); or through ordinary mail, if no registry or reputable courier is available in the locality of the taxpayer.

For eLAs served through personal or substituted service, the date of receipt, name and signature of the person acknowledging receipt or barangay officials/witnesses, as applicable, need to be indicated on the back of the duplicate copy of the eLA.

Personal service will be deemed complete upon actual delivery of the eLA to the taxpayer or his representative. Service by registered mail is considered complete upon actual receipt by the taxpayer or after five days from the date of receipt of the first notice of the postmaster, whichever date is earlier. Service by ordinary mail is considered complete upon the expiration of 10 days after mailing.

Service to the tax agent/practitioner, who is appointed or authorized by the taxpayer, is deemed service to the taxpayer.

Interestingly, the BIR has not yet included electronic mail (e-mail) through the official government e-mail address of the RO as substituted service of eLAs and assessment notices.

With all the foregoing guidelines, we drill down to the question of how the BIR will determine the taxpayer’s known address or the authorized representative and its known address to deliver the eLA.

The Tax Code provides that officers required by law to file the returns for domestic corporations are the President, the Vice-President, or other principal officers. They are considered automatic authorized representatives and may give authorization to other personnel to act on the taxpayer’s behalf. For the known address, BIR may refer to the taxpayer’s GIS, ITR and By-laws to identify where the authorized representatives can be found.

Admittedly, servicing eLAs somewhere other than the registered business address is quite unlikely to most of us. In addition, while these WFH and door-to-door delivery schemes are primarily for the advantage of keeping up business continuity, the BIR reiterates its intentions on the proper and flexible ways of notifying the taxpayers about examinations and assessments especially in these unusual times.

At the end of the day, it is truly rewarding to know that any online orders have been shipped with minimal risk of infection when the shipment arrives. But as a taxpayer, would you feel the same way if a knock at your door turns out to be an eLA?

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Gladys Mae M. Dimaya is a senior in charge of the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

World Series: Los Angeles Dodgers vs Tampa Bay Rays

WITH their season running dangerously short on time, the Los Angeles Dodgers went long on Sunday, doing what they do best with a pair of late home runs to advance to their third World Series in four seasons.

Cody Bellinger hit a go-ahead home run in the seventh inning, one inning after pinch-hitter Enrique Hernandez tied it with his own homer, and the Dodgers earned a 4-3 victory over the Atlanta Braves in Game 7 of the National League Championship Series (NLCS) at Arlington, Texas.

The team that led the major leagues with 118 home runs in the regular season saved two more for the clutch, finishing off an NLCS when they went deep 16 times. It helped Los Angeles to rally from a 3-1 series deficit as it won three consecutive elimination games.

Bellinger’s home run deep into the seats in right field came on a 2-2 sinker from Braves right-hander Chris Martin (0-1).

“He threw me some good pitches,” Bellinger said. “I fouled some of those off that I couldn’t see too well, and I saw one that I could drive. I just tried to put a good swing on it.

“I knew it right away. It was one of those where you just know. It felt pretty good.”

The Dodgers mixed and matched their pitching staff in Game 7, using four pitchers, including two rookies, before Julio Urias (4-0) finished off the victory with three perfect innings.

“You’re just doing anything you can to help your team win,” Dodgers shortstop Corey Seager said after he was named NLCS MVP with five home runs and 11 RBIs in the seven games. “But it wasn’t just me. Everyone grinded. We did what we could, move runners, we hit homers in big spots, man. We played awesome.”

Dansby Swanson hit a home run for the Braves, while rookie right-hander Ian Anderson went three innings at the outset, giving up his first runs of the postseason in four outings. The Braves were unable to reach their first World Series since 1999.

“It’s tough to explain the emotions,” Braves veteran Freddie Freeman said. “I don’t think we exceeded expectations. I think this is what we expected from ourselves to get to this point. We came up short, but everybody on this team, I think, can lay their head on their pillow tonight and know they gave it everything they absolutely had left in the tank.”

The Dodgers, who lost to the Houston Astros in the 2017 World Series before falling to the Boston Red Sox in the 2018 Series, now will take on the Tampa Bay Rays for the title in a best-of-seven series starting Tuesday at Arlington.

It was the first Game 7 of a postseason series with a pair of rookies starting, but neither lasted long. Dodgers right-hander Dustin May walked the first two batters of the game on eight pitches and gave up an RBI single to Marcell Ozuna in the opening frame, his only inning of the game.

Anderson gave up two runs on five hits, going the first 18 1/3 playoff innings of his career before giving up a run.

The Braves made it 2-0 in the second inning when Swanson hit a home run to left field off another Dodgers rookie, right-hander Tony Gonsolin.

The Dodgers got even 2-2 in the third inning on a two-run single from Will Smith, but the Braves went back on top after an RBI single from Austin Riley against Gonsolin. The Braves had runners on second and third in the fourth with nobody out, but Swanson and Riley both were thrown out in the same rundown to kill the threat.

“We made some mistakes. We shot ourselves in the foot a couple of times and it really hurt,” Braves manager Brian Snitker said. “In games like these when runs are so hard to come by, you pretty much have to play flawless baseball.”

After a pair of sparkling defensive plays earlier in the series, Dodgers right fielder Mookie Betts made another in the fifth when he leaped up against the right-field wall and appeared to rob Freeman of a home run.

Hernandez’s pinch-hit homer against left-hander A.J. Minter tied it in the sixth.

“We didn’t really go through any adversity (this season) until we fell down 3-1 in this series,” Hernandez said. “We battled, we tied our shoes and said that there is one goal, and the objective is still the same. We finally started playing like there was nothing to lose.” — Reuters

TNT halts Phoenix’s rise

By Michael Angelo S. Murillo, Senior Reporter

The TNT Tropang Giga remained unscathed in the PBA Philippine Cup after topping the Phoenix Super LPG Fuel Masters, 110-91, in their battle of unbeaten teams on Monday at the Angeles University Foundation Gym in Pampanga.

The Tropang Giga used a spirited run in the third quarter to swing the tide in their favor and built on it thereafter to record their fourth win in as many games in the ongoing Philippine Basketball Association tournament while sending the Fuel Masters to their first defeat in three matches.

The contest was nip-and-tuck right from the opening gate with both teams ending up knotted at 24-all at the end of the first quarter.

In the second canto, Phoenix had better traction led by Matthew Wright, outscoring TNT, 16-2, to build a 40-26 advantage midway into the period.

Tropang Giga regained some real estate after, coming to within six points, 44-38, three minutes later.

But the Fuel Masters were not to be denied control all the way to the halftime break, carrying a 54-45 edge.

TNT came out aggressive to begin the third quarter on the baton of Roger Pogoy.

It would unleash a 15-6 run early to level the count at 60-all by the 6:10 mark.

The Tropang Giga kept pouring it on after to complete the quarter turnaround and be ahead 75-68 heading into the final frame.

Poy Erram and Ray Parks Jr. got it going in the fourth canto, towing TNT to a 14-point advantage, 92-78, with 6:33 left on the clock.

Phoenix made a desperate attempt to claw its way back but TNT was not to allow them, eventually succumbing and bowing to the defeat.

Mr. Pogoy led the way for TNT in the win with 30 points with five rebounds. Mr. Erram had a double-double of 18 points and 15 boards to go along with three blocks.

Jayson Castro finished with 10 points for TNT and along the way he became the latest member of the 8,000-point club in the PBA. He is now the 32nd local and 35th player overall to achieve the feat in league history.

He is among six active players who hold such distinction, along with James Yap, Mark Caguioa, Arwind Santos, Asi Taulava and Alex Cabagnot. 

For Phoenix it was Mr. Wright who top-scored with 31 points. 

NEGATIVE RESULTS
Meanwhile, the league was happy to announce that teams inside the PBA bubble had negative results in the latest swab testing for the coronavirus done by the Clark Development Corp.

League commissioner Willie Marcial shared that the personnel of the 12 competing teams tested negative in the second round of testing held last week, which bodes well for the thrust of the league to complete its ongoing tournament in the former United States military base.

The PBA, however, made it clear that some players who entered late in the bubble are still scheduled to be swab-tested along with members of the PBA staff. 

Swab-testing is a key component in the league being allowed by the government to return to action after seven months because of the coronavirus pandemic.

Testing is scheduled every two weeks. The initial test was done on Sept. 28 and 29 when teams began arriving at the Clark Freeport.

Japan, Vietnam reach broad agreement on transfer of defense gear

HANOI — Japan and Vietnam agreed on Monday to strengthen security and economic ties, including an agreement in principle for Japan to export military gear and technology to the Southeast Asian nation, amid concerns about China’s regional assertiveness.

“It is a big step in the field of security for both countries that we reached an agreement in principle on the transfers of defence equipment and technology,” Japanese Prime Minister Yoshihide Suga told reporters after meeting his Vietnamese counterpart, Nguyen Xuan Phuc, in Hanoi.

“Vietnam, which is serving as ASEAN (Association of Southeast Asian Nations) chair this year, is key to realize a free and open Indo-Pacific,” Mr. Suga added.

The leaders also agreed on the importance of maintaining peace, security, and freedom of navigation and overflight in the South China Sea, and to settle disputes in a peaceful manner, Mr. Phuc said in a joint media appearance with Suga.

“Vietnam welcomes Japan, a global power, to continue to actively contribute to regional and global peace, stability and prosperity,” Mr. Phuc said.

Mr. Suga, who took office last month after Shinzo Abe quit because of poor health, is making his overseas diplomatic debut this week with a trip to the vital Southeast Asian nations of Vietnam and Indonesia.

Japan must balance its deep economic ties with China with security concerns, including Beijing’s push to assert claims over disputed East China Sea isles.

Vietnam and other ASEAN members, many of which have territorial feuds with China in the South China Sea, are wary of alienating a big economic partner and reluctant to become entrapped in an intense confrontation between the United States and China.

China claims swathes of Vietnam’s exclusive economic zone, as well as the Paracel and Spratly Islands.

Japan, which ended a decades-old ban on overseas arms sales in 2014 to help strengthen the nation’s military and lower the cost of home-built military equipment, has been in talks with Vietnam, Indonesia and Thailand on deals to allow such exports to those nations.

Mr. Suga’s visit also coincides with Japan’s efforts to diversify its supply chains and reduce reliance on China by bringing production home or moving it to Southeast Asia.

Vietnam is a popular choice for Japanese firms. Half of the 30 Japanese firms that used a 23.5 billion yen government programme to diversify supply chains in Southeast Asia targeted Vietnam, which has aggressively courted such investment.

Mr. Suga said the two countries had agreed to bolster their cooperation to mitigate the impact of the coronavirus pandemic.

“We agreed on restarting ‘business track’ travel as well as passenger flights between the two countries today,” Mr. Suga said.

Mr. Suga also said that Japan would help Vietnamese “trainees” working in Japan, many of whom are struggling as the COVID-19 (coronavirus disease 2019) outbreak hits Japanese companies. — Reuters

Billionaire Dyson sells Singapore’s priciest penthouse

SINGAPORE — British billionaire James Dyson, the inventor of the bagless vacuum cleaner, and his wife are selling their three-storey Singapore penthouse about a year after buying it for a reported S$74 million ($54 million).

Perched atop Singapore’s tallest building, the Tanjong Pagar Centre, the five-bedroom “super penthouse” is equipped with a 600-bottle wine cellar.

“An offer has been accepted on the Wallich penthouse,” said a spokesman for Mr. Dyson’s firm. He declined further comment on the family’s personal properties or affairs but said Mr. Dyson would continue to maintain a home in the wealthy Asian city-state.

The Business Times newspaper, which first reported the sale, said an offer of S$62 million was accepted for the penthouse, or a drop of more than 15% from Mr. Dyson’s purchase price.

The apartment, which also includes a pool, jacuzzi, and a private garden with city views, was once valued at S$100 million, making it the city-state’s most expensive penthouse.

The buyer is Indonesian-born tycoon Leo Koguan, the paper said. The US citizen is chairman and co-founder of infotech provider SHI International, which counts Boeing and AT&T among its 20,000 customers, business magazine Forbes says.

The Dysons’ other home in Singapore is a luxury property on a plot of land with an infinity pool and an indoor waterfall.

The billionaire has moved his company’s head office to Singapore from Britain to be closer to its fastest-growing markets. Last year, he scrapped plans to build an electric car in Singapore as not being commercially viable.

“Dyson remains fully committed to expanding its research and development footprint and other operations in Singapore,” the spokesman added. — Reuters

The ‘Good Censors’

WHEN TALKING among themselves, Silicon Valley big shots sometimes say weird things. In an internal presentation in March 2018, Google executives were asked to imagine their company acting as a “Good Censor,” in order to limit the impact of users “behaving badly.”

In a 2016 internal video, Nick Foster, Google’s head of design, envisioned a “goal-driven ledger” of all users’ data, endowed with its own “volition or purpose,” which would nudge us to take decisions (say, about shopping or travel) that would “reflect Google’s values as an organization.”

If that doesn’t strike you as weird — like dialogue from some dystopian science-fiction novel — then you need to read more dystopian science fiction. (Start with Yevgeny Zamyatin’s astonishingly prescient We.)

The lowliest employees of big tech companies — the content moderators whose job it is to spot bad stuff online — offer a rather different perspective. “Remember ‘We’re the free speech wing of the free speech party’?” one of them asked Alex Feerst of OneZero last year, alluding to an early Twitter slogan. “How vain and oblivious does that sound now? Well, it’s the morning after the free speech party, and the place is trashed.”

And how.

I don’t know if, as the New York Post alleged last week, Democratic presidential nominee Joe Biden met with a Ukrainian energy executive named Vadym Pozharskyi in 2015. I don’t know if Biden’s son Hunter tried to broker such a meeting as part of his board directorship deal with Pozharskyi’s firm, Burisma Holdings. And I am pretty doubtful that the meeting, if indeed it happened, was the reason Biden demanded that the Ukrainian government fire its prosecutor general, Viktor Shokin, who was investigating Burisma. I am even open to the theory that the whole story is bunk, the e-mails fake, and the laptop and its hard-drive an infowars gift from Russia, with love.

What I do know is that if I read the story online and found it compelling, I should have been able to share it with friends. Instead, both Facebook and Twitter made a decision to try to kill the Post’s scoop.

Andy Stone, the former Democratic Party staffer who is now Facebook’s policy communications manager, announced that his company would be “reducing” the “distribution” of the Post story. Twitter barred its users from sharing it not only with followers but also through direct messages, locking the accounts of people — including White House Press Secretary Kayleigh McEnany — who retweeted it.

This is not an isolated incident. In May, Twitter attached a health warning to one of President Trump’s Tweets. There was uproar at Facebook when Chief Executive Mark Zuckerberg declined to follow Twitter’s lead. Days later, Facebook was pressured into taking down 88 Trump campaign ads that used an inverted red triangle (a Nazi symbol) to attack antifa, the far-left movement. In August, Facebook removed a group with nearly 200,000 members “for repeatedly posting content that violated our policies.” The group promoted the QAnon conspiracy theory, which is broadly pro-Trump. Earlier this month, the company deleted all QAnon accounts from its platforms.

Google has been doing the same sort of thing. In June, it excluded the website ZeroHedge from its ad platform because of “violations” in the comments sections of stories about Black Lives Matter.

The remarkable thing is not that Silicon Valley is playing a highly questionable role in the election of 2020. It is that the same was true in 2016 and, despite a great many fine words and some minor pieces of legislation, Americans did nothing about it.

Far from addressing the glaring problems created by the rise of the network platforms that now dominate the American (and indeed the global) public sphere, we largely decided to shut our eyes and ears to them. In the past 10 months, I’ve read as many op-ed articles and reports about this election as I can stand. I’m staggered by how few even mention the role of the internet and social media. (Kevin Roose’s work on the conservative dominance of Facebook shared content is an honorable exception.) You would think it was still the 1990s — as if this contest will be decided by debates on television, newspaper endorsements, or stump speeches, and accurately predicted by opinion polls. (Actually, make that the 1960s.)

Yet the new role of social media is staring us in the face (literally). The number of US Facebook users was 240 million in 2019, more than 72% of the population. Adults spend an average of 75 minutes of each day on social media. Half that time is on Facebook. Google accounts for 88% of the US search-engine market, and 95% of all mobile searches. Between them, Google and Facebook captured a combined 60% of US digital-ad spending in 2018.

The top US tech companies are now among the biggest businesses on earth by market capitalization. But their size is not the important thing about them. Earlier this month, the House Judiciary Committee’s Antitrust Subcommittee released the findings of its 16-month long investigation into Big Tech. The conclusion? “Apple, Amazon, Google and Facebook each possess significant market power over large swaths of our economy. In recent years, each company has expanded and exploited their power of the marketplace in anticompetitive ways.”

Cue years of antitrust actions that will enrich a great many lawyers and have minimal consequences for competition, like the ultimately failed attempt 20 years ago to prevent Microsoft from dominating software.

An antitrust action against Amazon is doomed. Consumers love the company. It has measurably reduced the prices of innumerable products as well as rendering shopping in bricks-and-mortar stores an obsolescent activity. Good luck, too, with breaking up Google. Even the much less trusted Facebook (according to polls) will be hard to dismantle, without a complete transformation of the way the courts apply competition law. It’s free, for heaven’s sake. And there are network effects on the internet that can’t be wished away by judges.

Is it stupidity or venality that has convinced America’s legislators that antitrust is the answer to the problem of Big Tech? A bit of both, I suspect. Either way, it’s the wrong answer.

The core problem is not a lack of competition in Silicon Valley. It is that the network platforms are now the public sphere. Every other part of what we call the media — newspapers, magazines, even cable TV — is now subordinated to them. In 2019, the average American spent six hours and 35 minutes a day using digital media, more than television, radio, and print put together.

Not only do the big tech companies dominate ad revenue, they drive the news cycle. In 2017, two-thirds of American adults said they got news from social media sites. A Pew study showed that, at the end of 2019, 18% of them relied primarily on social media for political news. Among those aged 30 to 49, the share was 40%; among those aged 18 to 29, it was 48%. The pathologies that flow from this new reality are numerous. Antitrust actions address none of them.

“I thought once everybody could speak freely and exchange information and ideas, the world is automatically going to be a better place,” Evan Williams, one of the founders of Twitter, told the New York Times in 2017. “I was wrong about that.” Indeed, he was.

Subject to the most minimal regulation in their country of origin — far less than the TV networks in their heyday — the network platforms tend, because of their central imperative to sell the attention of their users to advertisers, to pollute national discourse with a torrent of fake news and extreme views. The effects on the democratic process, not only in the US but all over the world, have been deeply destabilizing.

Moreover, the vulnerability of the network platforms to outside manipulation has posed and continues to pose a serious threat to national security. Yet half-hearted and ill-considered attempts by the companies to regulate themselves better have led to legitimate complaints that they are restricting free speech.

How did we arrive at this state of affairs — when such important components of the public sphere could operate solely with regard to their own profitability as attention merchants? The answer lies in the history of American internet regulation — to be precise, in section 230 of the 1934 Communications Act, as amended by the 1996 Telecommunications Act, which was enacted after a New York court held the online service provider Prodigy liable for a user’s defamatory posts.

Previously, a company that managed content was classified as a publisher, and subject to civil liability — creating a perverse incentive not to manage content at all. Thus, Section 230c, “Protection for ‘Good Samaritan’ blocking and screening of offensive material,” was written to encourage nascent firms to protect users and prevent illegal activity without incurring massive content-management costs. It states:

1. No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

2. No provider or user of an interactive computer service shall be held liable on account of any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing or otherwise objectionable.

In essence, Section 230 gave and still gives websites immunity from liability for what their users post (under-filtering), but it also protects them when they choose to remove content (over-filtering). The idea was to split the difference between publisher’s liability, which would have stunted the growth of the fledgling internet, and complete lack of curation, which would have led to a torrent of filth. The surely unintended result is that some of the biggest companies in the world today are utilities when they are acting as publishers, but publishers when acting as utilities, in a way rather reminiscent of Joseph Heller’s Catch-22.

Here’s how Catch-22 works. If one of the platforms hosts content that is mendacious, defamatory or in some other way harmful, and you sue, the Big Tech lawyers will cite Section 230: Hey, we’re just a tech company, it’s not our malicious content. But if you write something that falls afoul of their content-moderation rules and duly vanishes from the internet, they’ll cite Section 230 again: Hey, we’re a private company, the First Amendment doesn’t apply to us.

Remember the “good censor”? Another influential way of describing the network platforms is as the “New Governors.” That creeps me out the way Zuckerberg’s admiration of Augustus Caesar creeps me out.

For years, of course, the big technology companies have filtered out child pornography and (less successfully) terrorist propaganda. But there has been mission creep. In 2015, Twitter added a new line to its rules that barred promoting “violence against others… on the basis of race, ethnicity, national origin, religion, sexual orientation, gender, gender identity, age, or disability.” Repeatedly throughout the Trump presidency — for example, after the violence in Charlottesville, Virginia, in 2017 — there have been further modifications to the platforms’ terms of service and “community standards,” as well as to their non-public content moderation policies.

There is no need to detail all the occasions in recent years when mostly right-leaning content was censored, buried far down the search results, or “demonetized.” The key point is that, in the absence of a coherent reform of the way the network platforms are themselves governed, there has been a dysfunctional tug-of-war between the platforms’ spasmodic and not wholly sincere efforts to “fix” themselves and the demands of outside actors (ranging from the German government to groups of left-wing activists) for more censorship of whatever they deem to be “hate speech.”

At the same time, the founding generation of Silicon Valley entrepreneurs, most of whom had libertarian inclinations, have repeatedly yielded to internal pressure from their younger employees, schooled in the modern campus culture of “no-platforming” any individuals whose ideas they consider “unsafe.”  In the words of Brian Amerige, whose career at Facebook ended not long after he created a “FB’ers for Political Diversity” group, the company’s employees “are quick to attack — often in mobs — anyone who presents a view that appears to be in opposition to left‑leaning ideology.”

The net result seems to be the worst of both worlds. On the one hand, conspiracy theories such as Plandemic flourish on Facebook and elsewhere. On the other, the network platforms arbitrarily intervene when a legitimate article triggers the hate-speech-spotting algorithms and the content-moderating grunts. (As one of them described the process, “I was like, ‘I can just block this entire domain, and they won’t be able to serve ads on it?’ And the answer was, ‘Yes.’ I was like, ‘But … I’m in my mid-twenties.’”)

At a lecture at Georgetown University in October 2019, Zuckerberg pledged “to continue to stand for free expression” and against an “ever-expanding definition of what speech is harmful.”  But even Facebook has had to ramp up the censorship this year. The bottom line is that the good censors are not very good and the new governors can’t even govern themselves.

Two years ago, I wrote a lengthy paper on all this with a well-worn title, “What Is to Be Done?” Since then, almost nothing has been done, beyond some legislative tinkering at the margins. The public has been directed down a series of blind alleys: not only antitrust, but also net neutrality and an inchoate notion of tighter regulation. In reality, as I argued then, only two reforms will fix this godawful mess.

First, we need to repeal or significantly amend Section 230, making the network platforms legally liable for the content they host, and leaving the rest to the courts. Second, we need to impose the equivalent of First Amendment obligations on the network platforms, recognizing that they are too dominant a part of the public sphere to be able to regulate access to it on the basis of their own privately determined and almost certainly skewed “community standards.”

To such proposals, Big Tech lawyers respond by lamenting that they would massively increase their clients’ legal liabilities. Yes. That is the whole idea. The platforms will finally discover that there are risks to being a publisher and responsibilities that come with near-universal usage.

In recent few years, these ideas have won growing support — and not only among Republican legislators such as Senator Josh Hawley. In the words of Judge Alex Kozinski in Fair Housing Council v. Roommate.com (2008), “the internet has outgrown its swaddling clothes and no longer needs to be so gently coddled.” He was referring to Section 230, which gives the tech giants a now-indefensible advantage over traditional publishers, while at the same time empowering them to act as censors.

While Section 230 protects internet companies from liability over removing any content that they believed to be “obscene, lewd, lascivious, filthy, excessively violent, harassing or otherwise objectionable,” successive court rulings have clearly established that the last two words weren’t intended to permit discrimination against particular political viewpoints.

Meanwhile, in Packingham v. North Carolina (2017), the Supreme Court overturned a state law that banned sex offenders from using social media. In the opinion, Justice Anthony Kennedy likened internet platforms to “the modern public square,” arguing that it was therefore unconstitutional to prevent even sex offenders from accessing, and expressing opinions, on social-network platforms. In other words, despite being private companies, the big tech companies have a public function.

If the network platforms are the modern public square, then it cannot be their responsibility to remove “hateful content” (as 19 prominent civil rights groups demanded of Facebook in October 2017) because hateful content — unless it explicitly instigates violence against a specific person — is protected by the First Amendment.

Unfortunately, this sea change has come too late for root-and-branch reform to be enacted under the Trump administration. And, contemplating the close links between Silicon Valley and Senator Kamala Harris, I see little prospect of progress — other than down the antitrust cul-de-sac — if she is elected vice-president next month. Quite apart from the bountiful campaign contributions Harris and the rest of Democratic Party elite receive from Big Tech, they have no problem at all with Facebook, Twitter and company seeking to kill stories like Huntergate.

In 1931, British Prime Minister Stanley Baldwin accused the principal newspaper barons of the day, Lords Beaverbrook and Rothermere, of “aiming at … power, and power without responsibility — the prerogative of the harlot throughout the ages.” (The phrase was his cousin Rudyard Kipling’s.) As I contemplate the under-covered and overmighty role that Big Tech continues to play in the American political process, I don’t see good censors. I see big, bad harlots.

BLOOMBERG OPINION

Kid Stories for Serious APEC Folks: The Eagle, Heaven and Ocean

Kid (K): Grandpa, can you listen to the story I read today?

Grandpa (G): Oh yeah? OK, we have 10 minutes before your nanny tucks you to bed. What is this story you are so eager to tell me?

K: A long, long time ago, an eagle was getting tired flying and flying. He had no land to rest in. There was only Heaven and Ocean.

G: (to himself: Hmmm. Sounds like my meeting tomorrow.) And so what did the eagle do?

K: He made Heaven believe Ocean was going up, up and up (with all the gestures of a fully awake child)… and drown Him (slides in the sofa as if overwhelmed with water).

G: Whoah!

K: And then the eagle went to tell the Ocean, “Heaven is going to throw rocks at you!”

G: Really? That’s clever of the eagle.

K: Yes, yes. You guessed right! When Heaven threw rocks on Ocean, soon there was land!

G: And the eagle can take his rest!

K: But… but… will Heaven and Ocean like that?

G: Why do you ask dear?

K: Because… Heaven may get mad at the eagle someday, (looking worried) and throw rocks at him while he is resting on land…. and mad Ocean can also rise, rise, rise … (more assertive now) so the eagle has no land to rest his wings!

G: Why do you say that?

K: (furtively glancing at Grandpa) Is it… ok… for the eagle to let Heaven and Ocean fight, fight, fight… so the eagle will get only what he wants? Is … there … another way?

G: (disturbed) Time for you to get to bed now.

K: (Pleadingly) But… Grandpa?

G: (thinking China’s mandate from Heaven, and so many countries along the Pacific Ocean now threatened by North Korea’s provocative missile tests directed at US military allies)… Go ask your nanny… Your Mom and Dad will be home also any minute now.

The eagle story is drawn from one of the creation myths in a handsome volume of folktales from the Asia-Pacific, Water in the Ring of Fire, edited by Carla M. Pacis (Osnofla Books, 1996); it is a Philippine story retold by Susie Baclagon-Borrero with illustrator Adriano Natividad. The book was designed for the 18 member economies of Asia Pacific Economic Cooperation (APEC) in 1996 with an APEC Foundation grant to CASA San Miguel of Pundaquit arts fame.

Alfonso C. Bolipata, the publisher, quotes Harold Goddard in his foreword, “The destiny of the world is determined less by the battles that are lost or won, than by the stories it loves or believes in.” Indeed, children can “create a more aware and fuller human being for an enriched humanity” — grandfolks who do business with “head, hand, and heart” and genuinely care for their own grandkids’s future.

Bolipata notes that the challenge of APEC is balancing the water and fire in the region — too much fire-not enough water, or too much water-not enough fire — thoughts that grandfolks think are no childsplay. In November 1996, “water” was from the developing member economies pleading for assistance (economic-technical or ecotech cooperation) before the “fire” of trade and investment liberalization espoused by the advanced countries.

With APEC being the most wired region in the world in 1996, its eco-tech cooperation succeeded most memorably in its critical endorsement of the Information Technology Agreement (ITA) to the inaugural meeting of World Trade Organization (Singapore, early December), only a few weeks after the Subic Summit chaired by President Fidel V. Ramos (in late November). ITA fast tracked the digital revolution and e-commerce for the global markets we know today. Fun for kids!

Likely, the November 2020 economic leaders summit, if it is held at all, is going to be online, a cheaper and safer alternative. But then, APEC is so far off-course from its original avowed goal of complete trade and investment liberalization in 2020, moved to earlier targets during surprising economic downturns.

BERRIES OF THE MEDICINE WOMAN
The coronavirus situation is one other such surprise now. Except in tourism and health goods and services discussions, rare were the dangers of pandemics cited in 1996 APEC meetings. But one story in Water in the Ring of Fire has a kid’s viewpoint that APEC grandfolks can muse about to humanize their policy deliberations. A Canadian story (Michele Jamal’s “Deerdancer,” 1995) was re-told by a pediatrician who has, since 1996, won six gold prizes in the Palanca Prize for Children’s Literature.

Dr. Luis P. Gatmaitan brings to life (with illustrator Isabel Roxas) a shaman healer of maladies whose village elders were envious of the people’s adulation. Rumored to be a witch disguised as human, she was hunted and hung from a forest tree upside down. An old man discovered red dots and clots in a bush where the berries cried “Eat me. Eat me.” Tracing the voice up the tree, he saw the shaman strapped high up, blood dripping, and ran to the village where people had fallen ill.

One elder said it was impossible that the medicine woman was alive — she was left by his group to die.

The curious people rushed to the forest but found nobody up the cedar tree. The berries still

begged “Eat me, eat me”; the villagers ate them — and were miraculously healed! Kidstuff. Not for grandfolks? Not quite!

“Before long, aged with wisdom, the people realized that the medicine woman and the berries symbolized the soul and the living blood of Mother Earth … (who) responded to people’s cruelty by healing them with her blood.” They embarked on a mission to preserve the earth and protect its bounty.

APEC 1996 in Manila in fact launched the first-ever Meeting of its Environment Ministers. Whether they still seriously listen to and learn from the stories of their grandkids, bureaucrats’ concern for their own blood may create magic. Will they link the coronavirus to the cruelty we inflict on our only planet now? That’s a future tale for APEC kids to tell grandfolks. n

This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.

 

Federico “Poch” M. Macaranas is a member of the MAP CEO Conference Committee, Chair of the 1996 Senior Officials Meeting of APEC in Manila/Subic and is Adjunct Professor at the Asian Institute of Management (AIM).

map@map.org.ph

fmmacaranas@hotmail.com

http://map.org.ph

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