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Uber executives are traveling the globe to reassure regulators that the company is changing the way it does business, after a massive data breach became the latest controversy to hurt the ride-service firm’s reputation.
Uber Technologies Inc is also continuing talks with Japan’s SoftBank Group over an investment, Brooks Entwistle, Uber’s recently appointed chief business officer for Asia Pacific, told Reuters on Monday.
Uber disclosed last week that it covered up an October 2016 data breach involving 57 million customers and about 600,000 drivers. The company said it paid two hackers $100,000 to destroy the stolen data and keep the matter a secret.
The revelation, made by Uber’s new CEO Dara Khosrowshahi in a blog post, prompted governments in countries including Britain, the United States, Mexico, Australia and the Philippines to launch probes into the breach and Uber’s handling of the matter.
The global backlash will test Uber’s new collaborative approach to regulators, a stark change from the rule-breaking culture created by former CEO Travis Kalanick.
“We have changed tacks in so many ways in dealing with regulators, dealing with governments,” Entwistle said in an interview in Tokyo, where he is meeting Japanese officials and potential business partners.
Nevertheless, Chicago Mayor Rahm Emanuel and Kimberly Foxx, the public prosecutor for Cook County, Illinois, said on Monday they filed a consumer fraud lawsuit against Uber for its failure to protect the data of its customers and drivers, accusing the company of violating local laws by failing to promptly disclose the breach.
“We are committed to changing the way we do business, putting integrity at the core of every decision we make, and working hard to regain the trust of consumers,” Uber said in a statement.
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Also on Monday, fresh questions came from U.S. lawmakers demanding an explanation for the company’s handling of the breach. Republican senators John Thune, Orrin Hatch, Jerry Moran and Bill Cassidy sent a letter to Khosrowshahi seeking answers about the data theft and cover-up, which they called “a serious incident that merits further scrutiny.” The senators requested a response from Uber by Dec. 11.
Hatch chairs the Senate Committee on Finance and Thune chairs the Commerce Science and Transportation Committee.
In a separate letter sent Monday, Senator Mark Warner, a Democrat and advocate of the technology industry including the on-demand sector that includes Uber, sent a letter to Khosrowshahi with detailed questions about Uber’s security systems and rationale for covering up the breach.
The disclosure of the 2016 data breach at a time when Uber is trying to bring in SoftBank as an investor has spurred speculation about the price of the deal.
SoftBank and Dragoneer Investment Group agreed on Nov. 12 to lead a group that would invest as much as $10 billion in Uber, people familiar with the deal previously told Reuters. The group plans to directly invest $1 billion to $1.25 billion at Uber’s current $69 billion valuation, and also buy at a lower valuation shares held by existing investors and employees. The goal is to take a 14 percent to 17 percent stake.
Uber has plans to disclose the pricing of the SoftBank deal in formal tender offers to existing investors early this week, sources told Reuters. It will likely take a few weeks for investors to decide whether to take the offer.
“The transaction is still underway and it’s an extraordinary validation that an investor like SoftBank would look at Uber,” Entwistle said.
Uber said on Friday it had informed SoftBank about the data breach prior to informing the public. However, “our information at the time was preliminary and incomplete,” a spokesman said. “We also made clear that our forensic investigation was ongoing.”
A person familiar with the matter said SoftBank had already factored any negative impact from the breach into its negotiations with Uber and did not expect the hack to have a significant impact on price.
However, a separate source familiar with the matter said SoftBank could still use Uber’s situation as leverage to secure better terms for the investment. The person said SoftBank has not yet made a final decision on whether to renegotiate.
A SoftBank spokesman declined to comment.
SoftBank has become a prolific investor in ride-hailing firms across Asia, including Southeast Asia’s Grab, China’s DiDi Chuxing and India’s Ola, leading to expectations it could drive consolidation in the region.
While Uber sold its business in China to DiDi last year, it remains committed to operating in the broader region for years to come, said Entwistle, who joined the company in August.
The firm has not given up on the Japanese market, which has barred non-professional drivers from offering taxi services, and is working on partnering with traditional taxi firms, he said.
Uber hopes the 2020 Tokyo Olympics could provide a venue to demonstrate the value of ride-sharing firms in a potentially lucrative market, he said.
“We are innovating and in some markets that will take longer and we realize that,” Entwistle said.
The company said its repair and restart plans have been reviewed by the federal Pipeline and Hazardous Materials Safety Administration with no objections, permitting a controlled return to service.
The pipeline oil leak was discovered early in the morning on Nov. 16 and an estimated 210,000 gallons of oil leaked into a grassy field about 20 miles south of the state line near Amherst in far northeast South Dakota.
As of a report late Monday, company spokesman Mark Cooper, who is at the site, said 172 people were working there and that 49,533 gallons of standing oil in the field has been vacuumed up and stored in oil tanker trucks.
Cooper said perhaps by later in the week, the process of excavating the contaminated soil would begin.
The soil will be sent to an accredited facility in Minnesota that can “dispose of the oil in an environmentally responsible manner,” said the company.
So far, the company also said their air-monitoring equipment at the site hasn’t detected any concerns and there have been no water issues, including after checking wells for local landowners. One area resident’s well was checked 1½ miles away and the company said test results were normal.
As for any cause of the leak, preliminary inspections of the damaged section will be completed on site by both TransCanada and PHMSA staff, then sent to Washington, D.C., for a complete investigation by the National Transportation Safety Board’s Metallurgical Laboratory, said Cooper.
He said there was no timeline that he was aware of as to when the cause might be determined.
Cooper said the damaged section of pipe was removed from the ground on Sunday.
An earlier, much smaller spill, on the Keystone pipeline in southeast South Dakota was found to be caused by a faulty weld on the pipe.
The company also said that they were continuing to evaluate the “most appropriate restoration methods for the site” with state, federal and local officials.
As part of the plans to get oil flowing again,TransCanada said it will operate the pipeline at reduced pressure starting Tuesday to ensure a safe and gradual increase in the volume of crude oil moving through the system.
The company said it was working with its customers and will continue working closely with them as it begins to return to normal operating conditions and will comply with any future PHMSA orders and requirements as a result of the oil spill to ensure the integrity of the pipeline.
The company also said they continue to appreciate the cooperation and support from local officials, emergency response personnel and commissioners in Marshall County, as well as the landowner who has granted permission to access land for assessment, repair and clean-up activities.
- The FCC will vote on a repeal of its net neutrality rules December 14.
- FCC Chairman Ajit Pai has argued that the rules need to be repealed because they’ve caused a decline in broadband investment.
- But Pai’s own data doesn’t back up this assertion.
Ajit Pai says the Federal Communications Commission needs to ditch its net neutrality rules because they’re hindering investment.
The rules the agency put in place in 2015 bar broadband providers from blocking, throttling, or offering preferential treatment to particular sites or services. Hampered by those rules, broadband companies are cutting back on investing in things like expanding their services to new customers or upgrading their networks, Pai, the FCC chairman, argues.
If that’s really what’s been happening, that would be terrible, especially in a country that’s become ever more dependent on the internet and one where the digital divide remains pronounced.
But there’s no evidence to prove Pai’s point. In fact, the data that Pai himself points to doesn’t show anything close to a marked decrease in broadband investment. Instead, it shows that while broadband investment has risen and fallen a little bit over the years, it’s essentially been flat since 2013.
And that’s if you believe the data Pai himself cites. A study in May by consumer advocacy group Free Press, which opposes the repeal of the rules, actually reported that broadband investment has increased since 2015.
The debate over broadband investment is coming to a head as the vote nears over repealing the rules. With Pai and his Republican allies outnumbering Democrats on the commission 3-2, his proposal is expected to sail through when the FCC votes on it on December 14.
Investment is a key point in the net neutrality debate
Broadband investment can take many different forms. It can mean building out high-speed wireless LTE networks so you have a zippy connection no matter where you are in the country. It can mean building wired broadband networks in rural areas that are underserved compared to urban and suburban regions. It can mean increasing the speed and bandwidth of existing connections so you can download files faster or stream ultra-high resolution videos with little lag time.
Regardless of the form it takes, broadband investment is generally considered a good thing, because it promises faster internet speeds and more access to more people. As such, it’s become a key point in the debate over net neutrality.
Those in favor of net neutrality have sought to show that the rules haven’t affected investment or have actually encouraged it, that they provide consumers positive benefits without any harms. By contrast, those opposing net neutrality, such as Pai, have tried to show how bad the rules are for consumers by pointing to investment declines.
But those claims that investment has decreased thanks to net neutrality seem to be rooted in anything but reality.
Taking a closer look at a complicated picture
They also ignore the complexity of the investment picture. Not all companies increase or decrease broadband investments at the same time. And declines in investment often are due to the completion of large projects, such as when AT&T finished its LTE rollout, rather than changes in government regulations.
This chart from Free Press gives a clearer picture of recent broadband investment than the FCC’s data and places it in the proper context. Even if overall investment may decline from one year to another, examining investments by individual companies can give you a better picture what’s really going on in the industry:
By the way, Free Press gathered all that data from the public records of the telecommunications companies, which just so happen to be the biggest cheerleaders of Pai’s effort to repeal the net neutrality rules. Those companies’ own data shows the rules haven’t had an impact on overall industry investment.
Pai’s ignoring the facts
During a conference call FCC officials held with reporters last week, I asked them about this discrepancy between Pai’s assertion that investment is declining and what the actual data shows. They dismissed my question, saying I had my facts wrong. But they didn’t offer any data that would prove Pai’s point.
Reached later, an FCC spokesperson simply pointed back to the USTelecom data posted above that Pai referenced previously. The spokesperson declined to make the chairman or anyone else on his staff available for an interview.
Pai’s FCC has ignored much of the data that contradicts his key rationale behind repealing net neutrality, Derek Turner, the author of the Free Press report on broadband investment, said in an email Monday.
“[The FCC] came into this with a preconceived notion, latched on to data that supported that notion, and ignored every single piece of conflicting evidence,” Turner wrote.
There are many ways to measure broadband investment. It’s easy to pick and choose numbers that can bolster either side of the argument about net neutrality.
But even when you look at the data that’s the most favorable to Pai’s position, it doesn’t prove net neutrality regulations have resulted in significantly lower broadband investment from telecom companies. At worst, investment has been flat since 2013. At best, it’s increased.
It’s a leap in logic on Pai’s part to use two years of cherry picked data to make the case that broadband is getting worse for Americans because of the net neutrality rules.
But it’s that leap in logic that’s likely to result in the repeal of those rules.
This column does not necessarily reflect the opinion of Business Insider.
KEYSTONE COMING BACK ONLINE: The Keystone pipeline will return to service on Tuesday, operators announced, nearly two weeks after spilling about 5,000 barrels of oil in rural South Dakota.
Keystone operator TransCanada said the pipeline will operate at reduced pressure “to ensure a safe and gradual increase in the volume of crude oil moving through the system.”
The company said federal pipeline safety regulators had signed off on plans for a “safe and controlled return to service.”
Keystone leaked 5,000 barrels of oil, or about 210,000 gallons, on Nov. 16, causing a section of the 2,147-mile pipeline to go offline. TransCanada said on Friday that it had cleaned up some 44,000 gallons of the oil spilled from Keystone in Marshall County, South Dakota.
Read more here.
Leaks top what TransCanada projected: Spills from Keystone have so far leaked more oil, more often than TransCanada predicted when they applied to build and operate the pipeline, Reuters reported Monday.
According to documents, TransCanada Corp. and a risk management company told regulators they estimated the risk of a Keystone leak of more than 50 barrels of oil was “not more than once every seven to 11 years over the entire length of the pipeline in the United States.”
In South Dakota, the firms estimated the pipeline would leak “no more than once every 41 years.”
The leak comes as TransCanada aims to secure the permits for its Keystone XL pipeline expansion. Nebraska regulators approved a plan allowing the pipeline to run through the state last week.
Read more here.
What lies ahead for KXL: While that approval was a key moment in the Keystone XL saga, it wasn’t the last word on the project.
And in a way, it raises more questions than answers about Keystone XL’s future.
Developers of the pipeline still need to secure federal permits for the project, and opponents are suing against it every step of the way. Because the route Nebraska approved is different from the one TransCanada proposed, greens have also raised questions about the validity of existing permits.
TransCanada is also conducting an economic review of the project to ensure it’s still viable, and opponents are gearing up for massive protests against the project as early as next spring.
For a look at what’s next for Keystone, read more here.
MICHIGAN, ENBRIDGE REACH DEAL ON LINE 5: Michigan Gov. Rick Snyder (R) and Enbridge Inc. reached a deal Monday for the company to increase safety precautions on its controversial Line 5 petroleum pipeline under the Straits of Mackinac.
The agreement means Enbridge can, for the time being, keep operating the line, despite intense scrutiny in recent years from regulators and environmentalists.
Line 5 is decades old, and regulators have said it is at risk of leaking due to corrosion, anchors, missing coating and other factors.
“Business as usual by Enbridge is not acceptable and we are going to ensure the highest level of environmental safety standards are implemented to protect one of Michigan’s most valuable natural resources,” Snyder said in a statement.
“The items required in this agreement are good strides forward. The state is evaluating the entire span of Enbridge’s Line 5 pipeline and its future, but we cannot wait for the analyses to be completed before taking action to defend our waterways.”
Read more here.
CPP FANS, FOES TO GATHER IN WEST VIRGINIA: Supporters and opponents of the Clean Power Plan are preparing for a two-day Environmental Protection Agency (EPA) hearing starting tomorrow on the Trump administration’s proposed repeal.
EPA head Scott PruittEdward (Scott) Scott PruittMy freedom is on the line to fight climate change, more will follow Sessions: DOJ prohibited from issuing guidance that creates new rules Overnight Regulation: Senators unveil bipartisan gun background check bill | FCC rolls back media regs | Family leave credit added to tax bill | Senate confirms banking watchdog MORE announced the Charleston, W.Va., hearing earlier this month, as part of an effort to show that the administration cares about the impact of the regulation on the coal industry and the areas that depend on it.
Expect interests on both sides to repeat the arguments that they’ve made in recent years about the rule, which envisioned a 32 percent cut in the power sector’s carbon dioxide emissions by 2030.
“The Clean Power Plan is literally a life-saver: It would prevent 3,600 premature deaths and 90,000 asthma attacks every year by 2030 and would also lower electricity bills by roughly 8 percent — the list of benefits goes on and on,” Mary Anne Hitt, director of the Sierra Club’s Beyond Coal campaign, wrote in an op-ed Monday in The Hill.
“By cleaning up air pollution and reducing dangerous emissions that threaten our climate, it gives our kids a fighting chance at a safe, sustainable future.”
The coal industry disagrees.
“The Clean Power Plan was intended to commandeer every state’s electricity grid under the suspicious auspices of addressing climate change. The EPA assigned each state, including West Virginia, a target for reducing emissions of carbon dioxide — for which reasonably available technology did not exist,” wrote West Virginia Coal Association head Bill Raney and National Mining Association head Hal Quinn in Charleston Gazette-Mail piece.
ClimateWire said nearly 300 people are planning to give testimony, and some groups have booked multiple speaking slots.
ON TAP TUESDAY I: The Senate Environment and Public Works Committee will hold a nomination hearing for three nominees for the Tennessee Valley Authority board of directors.
ON TAP TUESDAY II: Steven Winberg, the new assistant secretary for fossil energy at the Department of Energy, will speak at a Center for Strategic and International Studies event on carbon capture technology.
Starting Tuesday, check out The Hill’s new daily podcasts. Journalists Alexis Simendinger and Niv Elis provide a behind-the-scenes view of the latest breaking developments, drilling deep to get to the heart of what’s happening, and why it matters to you. Listen to AM View weekday mornings, PM View weekday afternoons, and Power Politics on the weekend.
FROM THE HILL’S OPINION PAGE:
Devin Hartman, the electricity policy manager at the R Street Institute, writes that Congress should get involved to stop a Department of Energy plan to prop up the coal and nuclear sectors.
AROUND THE WEB:
Former United Nations climate chief Christiana Figueres has signed on to advise Formula E, the international electric vehicle racing organization, Reuters reports.
Two firms are putting up solar panels inside the Chernobyl zone at an initial cost of around $1.2 million, Bloomberg reports.
A train carrying molten sulfur derailed in central Florida and local officials advised residents to stay indoors, NPR reports.
IN CASE YOU MISSED IT:
Check out stories from Monday and the weekend …
-Keystone pipeline to restart operations on Tuesday
-Michigan gets deal to keep controversial oil pipeline running
-Keystone spills larger than company predicted before it was built
-44K gallons recovered so far from Keystone pipeline spill
–Five things to watch in the new Keystone fight
-Whitefish resumes repair work in Puerto Rico after being paid
Basically work is canceled Cyber Monday. USA TODAY
SAN FRANCISCO — Safely back in their office cubicles, Americans let their fingers do the shopping Monday, racking up $3.38 billion in online sales by the time the work day ended on the East coast.
Cyber Monday was easily on track to be the biggest online shopping day in U.S. history, with Adobe Analytics predicting sales of $6.6 billion. That’s up from $5.65 billion last year, a 16.5% increase.
The strongest surge in purchases was forecast between 8PM and 11PM in every time zone, when deliberating shoppers finally commit to what they’ve been loading into their online shopping carts all day and over the “Turkey 5” — the five shopping days starting on Thanksgiving and continuing through Cyber Monday. That surge rolls across the country as each U.S. region hits the witching hour for buying.
Shoppers “know the deals end at midnight so it’s the final rush,” said Tamara Gaffney, Adobe’s strategic insights engagement director.
Amazon likely took the biggest chunk of those sales. It is estimated to have a 42% share of all online sales, according to Slice Intelligence, a market research firm.
“The problem for everybody else is that Amazon has basically become a verb. It’s the reflex reaction to start on Amazon and then you go other places only if you can’t find what you want there,” said Bob Goodwin, consumer electronics practice lead at InfoScout, a consumer-behavior research company.
Walmart, though, is making serious inroads. Its prices on average are now just 0.3% more expensive than Amazon, according to Market Track, a data analytics company. Last year its prices were 3% higher, it says.
“With investments in buying online and pickup in-store, as well as the acquisitions of Jet, ModCloth, Moosejaw, and Bonobos, the most interesting story will be how much ground” Walmart has made up, said Ken Cassar, principal analyst with Slice .
Shopping is at hand, not desk
Cyber Monday started from the days when few people had a fast Internet connection outside of an office. Monday was the first work day after the Thanksgiving holiday, and the first time they could painlessly shop online. Retailers responded with special “cyber” deals.
That’s no longer the case on several levels — fast connections are the norm and people shop online at all hours at home. What’s more, they’re increasingly ditching computers as their primary shopping devices.
Mobile users now make up 53.3% of all visits to shopping websites, Adobe found. A full 44.6% of those were on a smart phone and another 8.7% on tablets.
One feature that’s helped drive this trend has been the ever-more-sophisticated ability of our phones to autofill information.
Instead of having to type in name, address, credit card info and more with big fingers on a small screen, more and more retailers are leveraging autofill to make the process easier and smoother.
“The retailers know full well that the wave of mobile shopping is coming” and they’re retooling their sites to be as user-friendly as possible, said Gaffney.
Smartphone traffic was up 21% year-over-year as of Monday morning while smartphone revenue was up 41%.
When it came to hitting the “buy” button, computers still play a role. Only about 40% of revenue comes from smart phones — or less than the percentage using phones to shop, said Gaffney.
Too much to scroll through
With the ongoing move by consumers to shop on their smart phones, the biggest retailers’ size and depth of products can be their downfall.
While people like one-stop shopping, trying to scroll through thousands of possible version of a particular item is not easy. “So the smaller retailers who are more boutique-like have a better chance,” she said.
This advantage will only last a few years though, she believes. In the future, big retailers will find ways to make themselves look smaller, delivering exactly what the customer wants “almost as if they were mind readers, but still giving you a huge catalog that you can choose from,” she said.
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(Reuters) – Elon Musk-led SpaceX has raised $100 million by selling shares, in an extension to a financing round earlier this year that raised up to $350 million, a regulatory filing showed on Monday.
SpaceX’s funding round in July had valued the rocket maker at about $21 billion, according to news reports.
In May, Space Exploration Technologies Corp launched its first satellite for the U.S. military with its Falcon 9 rocket, breaking a 10-year monopoly held by a partnership of Lockheed Martin (LMT.N) and Boeing (BA.N).
The Hawthorne, California-based company also has also outlined plans for a trip to Mars in 2022, to be followed by a manned mission to the red planet by 2024.
Besides SpaceX, Musk also leads electric car maker Tesla Inc (TSLA.O).
Reporting by Arjun Panchadar in Bengaluru; editing by Sai Sachin Ravikumar
White House budget director Mick Mulvaney said he ordered a 30-day hiring freeze and a delay of rule-making and other actions at the Consumer Financial Protection Bureau on his first day as boss of the consumer watchdog.
Whether he remains in charge that long remains unclear. A day earlier, the agency’s chief of staff Leandra English filed suit claiming she is the “rightful acting director” in the wake of former director Richard Cordray’s departure.
Leadership of the agency was thrown into doubt last Friday when Cordray stepped down as CFPB director and said English would temporarily replace him. A few hours later, Trump named Mulvaney, the Office of Management and Budget director and a longtime critic of the CFPB, to the job.
Both sides are pointing to the fine print in dueling federal statutes to claim authority over the job running one of the most controversial, and powerful, banking industry regulators. English filed suit late Sunday, asking for a temporary restraining order to prevent Trump from appointing Mulvaney acting director. U.S. District Judge Timothy Kelly, one of two newly confirmed Trump appointees on the D.C. court, took up the case Monday but rendered no decision.
Mulvaney and English even sent out dueling email messages to CFPB’s likely befuddled 1,600 employees. English said in her message, “I hope that everyone had a great Thanksgiving. With Thanksgiving in mind, I wanted to take a moment to share my gratitude to all of you for your service.” English ended the note with her claimed title: “Acting Director.”
Shortly after, Mulvaney, already in the director’s office, according to photos taken by his staff, responded with his own email.
“It has come to my attention that Ms. English has reached out to many of you this morning via email in an attempt to exercise certain duties of the Acting Director. This is unfortunate but, in the atmosphere of the day, probably not unexpected,” he said.
“Please disregard any instructions you receive from Ms. English in her presumed capacity as acting director.” Mulvaney also asked CFPB employees to report any additional professional communications from English to the general counsel’s office.
“I apologize for this being the very first thing you hear from me. However, under the circumstances I suppose it is necessary. If you’re at 1700 G Street today, please stop by the fourth floor to say hello and grab a doughnut.”
The battle for control of the agency threatens to slow down the Trump administration’s efforts to roll back financial regulations. While Trump has installed new leadership at the top of several other regulatory agencies, many of which have already taken a more business-friendly tone, the CFPB has continued to aggressively push rules that irked Wall Street. The agency has broad powers to regulate financial firms, from banks, credit card companies to payday lenders, and impose fines for wrongdoing.
“The agency has been an effective cop on the beat and the banks don’t want an effective cop on the beat,” said Sen. Elizabeth Warren (D-Mass.) after she and Sen. Charles E. Schumer met with English on Capitol Hill for less than a half an hour.
Schumer, the senate minority leader, said Trump had nominated a series of people devoted to terminate the agencies they were nominated to run. Mulvaney, he said, was “only the latest in a line of Trojan horse candidates .”
Schumer said he remembered that the Senate inserted language on succession at the CFPB that had been missing from the House version in order to “shield it” from lobbyists. “We purposely put that in in order to avoid putting a fox in charge of the henhouse.”
In a briefing with reporters, Mulvaney said he ordered a freeze on actions to help him get a handle on the bureau’s activities. He said he would spend three days a week working at the CFPB and three days a OMB.
He said President Trump told him he wants the budget director to fix the agency so that it “protects people without trampling on capitalism.” Mulvaney argued the agency has hampered lending with its tough rulemaking, which he said is not accountable to Congress.
“Elections have consequences for every agency,” he said, referring to Trump’s victory in November.
Mulvaney did not back down from his comments in a 2014 video interview with the Credit Union Times when he complained that it could be difficult even to have the CFPB return a phone call. “The place is a wonderful example of how a bureaucracy will function if it has no accountability to anybody.”
The agency is a “joke . . . in a sick, sad way,” he said at the time.
In the meantime, the legal limbo could threaten the validity of any decisions made by Mulvaney or English in the coming days, legal experts have said.
“People are being investigated by the CFPB all the time,” said Alan Kaplinsky, head of the Consumer Financial Services Group for law firm Ballard Spahr. But any firm thinking about settling with the agency now faces a significant question, he said. “Are you settling it with Mulvaney? Are you settling it with English?”
“It’s going to create absolute chaos. You are not going to be able to settle anything,” he said.
Spencer S. Hsu, Steven Mufson and Thomas Heath contributed to this report.
The Washington Post wants to talk to CFPB employees about the news today. To contact a reporter, please email firstname.lastname@example.org, or reach out via Twitter or Signal.
Several major companies suspended their advertising campaigns on YouTube on Friday after learning their ads were displayed on videos that appeared to sexualize children.
In distancing themselves from YouTube, the companies cited the service’s seeming inability to police its content so their ads don’t appear in offensive videos. The companies included Deutsche Bank, German supermarket chain Lidl, sportswear company Adidas, candy makers Mars and Cadbury, and alcohol company Diageo, which produces Smirnoff vodka, Captain Morgan rum and Crown Royal whiskey.
The suspension was in response to an article published in the Times of London last week, which said the companies’ advertisements appeared on videos showing children in various states of undress, according to the Wall Street Journal. Some of these videos, for example, featured “young girls filming themselves in underwear, doing the splits, brushing their teeth or rolling around in bed,” according to the London Times.
While some of the videos appeared to be uploaded by the children themselves, the comments sections were filled with sexual remarks — including statements encouraging the children to perform sexual acts on camera.
RELATED VIDEO: YouTube to crack down on videos showing child endangerment
A Mars representative told Business Insider the company was “shocked and appalled” that its advertising appeared with “such exploitative and inappropriate content.” Likewise, a Lidl spokesperson told Reuters such content is “completely unacceptable” and that YouTube’s policies were “ineffective.”
The video service, owned by Google, says that it forbids videos or comments that sexualize children. Its official policy states that posting such content “will immediately result in an account termination.” Regardless, one video showing a prepubescent girl in a nightgown racked up more than 6.5 million views and a number of lewd and sexual comments, the Times reported. Advertisements for several large brands ran with this video.
“There shouldn’t be any ads running on this content and we are working urgently to fix this,” a YouTube spokesman said on Friday, according to Reuters.
Johanna Wright, YouTube’s vice president of product management, said in a statement the company will be taking an “even more aggressive stance” against videos aimed at sexualizing or harming minors.
But policing content and ensuring that advertising doesn’t run with offensive clips has been a long-running problem for the video service.
YouTube released a similar statement in March, when several companies including Coca-Cola, PepsiCo, Walmart, Dish Network, Starbucks and General Motors stopped advertising after learning that their ads were running alongside videos featuring racist and anti-Semitic content.
YouTube also issued a statement in June, when the United Kingdom’s major political parties pulled their commercials from YouTube after they appeared with videos that promoted “extremist ideology,” the Wall Street Journal reported.
The problem YouTube faces is twofold.
First is the overwhelming amount of content constantly being generated. Users watch 1 billion hours of video each day on the site. The Guardian reported that 300 hours of video are uploaded every minute.
YouTube uses a combination of human and automated watchdogs to look for offensive content, but much of that content is often overlooked. There simply aren’t enough humans to monitor so much video, and many claim the protective algorithms in place often don’t work.
“They work by correlating patterns within the content — such as the use of particular word combination or image elements — that have previously been flagged by human content moderators as benign violations of the platform content policies,” Ansgar Koene, senior research fellow at the University of Nottingham’s School of Computer Science, told Wired. “The algorithms are therefore incapable of detecting novel types of violations.”
The second problem is how the ads are disseminated. Companies have three choices when placing their advertisements, according to the Wall Street Journal. They can be paired with a specific type of content, a particular set of keywords or a certain demographic profile. YouTube then automatically plays the ads with the corresponding videos.
But these categories can be misleading. The videos of young girls that attracted sexualized comments were not, on their face, sexual. So if a company requested its ad play with family-friendly content, for example, there’s a good chance it could have ended up on one of these videos.
“We have to accept that under the current model of rapid, instant publishing, content moderation will never be completely perfect,” Koene told Wired. “If we really want to block all content that violates the platform rules, then we would have to move to a model where platform users submit content they want to publish to an editor for approval, as we do when publishing in journals. This would transform the current Web 2.0 platforms into traditional media channels.”
Travis M. Andrews is a Washington Post writer.