Florida pension fund sues Elon Musk over Twitter deal

Elon Musk’s $44 billion buyout of Twitter is facing its first legal challenge. A Florida pension fund is suing Musk and Twitter, arguing that the deal can’t legally close until 2025 due to the billionaire’s stake in the platform. The proposed class-action lawsuit — filed today by the Orlando Police Pension Fund in the Delaware Chancery court— also declares that Twitter’s board of directors breached its fiduciary duties by allowing the deal to go through. In addition to Musk and Twitter, the lawsuit also named former Twitter CEO Jack Dorsey, current Twitter CEO Parag Agrawal and the company’s board as defendants.

In a message to Engadget, Tulane Law School’s Professor Ann M. Lipton says the lawsuit raises “some very novel issues” under Delaware corporate law. Under a law known as Section 203, shareholders who own more than 15 percent of the company can’t enter a merger without two-thirds of the remaining shares granting approval. Without this approval, the merger can’t be finalized for another three years.

The fund’s lawyers state that Musk initially owned roughly 10 percent of Twitter’s shares, which would seemingly not make Section 203 applicable. But, the fund argues, Musk formed a pact with Morgan Stanley (which owns 8.8 percent of shares) and former CEO Jack Dorsey (who has 2.4 percent) to advance the deal. The combined stake of these parties allegedly makes Musk and his allies in the takeover deal an “interested shareholder” under Section 203 — which, if the court agrees with the underlying reasoning presented in the case, means the merger must either be delayed or get approval shareholders representing at least two-thirds of the company’s ownership. 

“Section 203 is not often litigated, and so the issue of whether Musk’s relationship with these parties actually counts for statutory purposes is an unsettled question and it will be interesting to watch how it unfolds,” wrote Lipton.

More details of Musk’s highly complex $44 billion buyout of Twitter have been made public since the social media platform accepted the billionaire’s offer last month. The New York Times reported that Musk promised investors returns of nearly five to ten times their investments if the deal went through. Parts of the deal are being scrutinized, including its reliance on foreign investors and whether Musk bought shares in the company specifically to influence its leadership. But antitrust experts say the merger is unlikely to be blocked by the FTC. The agency will decide in the next month whether to quickly approve the merger or launch a lengthier investigation.

ISPs end fight against California net neutrality law

In a win for net neturality, ISPs agreed to end their legal challenge to a 2018 Californa law that bars providers from throttling service. Telecom groups and California Attorney General Rob Bonta today jointly agreed to dismiss the case, reportedReuters. 

It’s fair that say that luck hasn’t exactly been on the telecom industry’s side. Earlier this year, the 9th Circuit Court of Appeals refused to reconsider its ruling that California’s law be upheld. And last year, the US DOJ dropped its own lawsuit over the net neutrality law, which the agency had filed during the Trump administration.

“Following multiple defeats in court, internet service providers have finally abandoned an effort to block enforcement of CA’s net neutrality law. This is a win for California and for a free and fair internet,” wrote Bonta in a tweet.

After Trump-appointed FCC Commissioner Ajit Pai overturned the agency’s net neutrality rules in 2017, California’s legislature decided to enact its own law. The state’s net neutrality law, which went into effect in August 2018, expanded on previous federal rules by banning the use of “zero-rating” by ISPs in an anti-competitive manner. Zero-rating occurs when an ISP exempts any of its affiliated services from eating away at a customer’s data caps. For example, AT&T Wireless once exempted HBO Max from the data caps of its internet customers. The company dropped this practice last year, and blamed the impact of California’s law. Digital rights groups like Electronic Frontier Foundation have argued that zero-rating is hostile to consumers, especially those from low-income households.

Federal net neutrality rules that were blocked under the Trump administration have yet to be restored by the FCC under President Joe Biden. That’s because the five-member panel is currently short one member, which they’ll need in order to vote on net neutrality. The agency is awaiting the Senate confirmation of Gigi Sohn. But thanks to intense lobbying from telecom groups and a number of Republicans (and moderate Democrats) in Congress, Sohn’s confirmation is stalled at present.

Google’s ‘raters’ are pushing for $15 an hour

Part-time employees at RaterLabs — an AI vendor whose only known client is Google — are campaigning to qualify for the $15 hourly minimum wage the tech giant promised to its “extended workforce” back in 2019.

Yahoo Financereported that the quality raters whose sole job is evaluating Google’s search and ad results for accuracy don’t qualify for sick leave, PTO or other benefits the company provides for its TVCs (temporary workers, vendors and independent contractors). Google increased base pay following critical reporting of its treatment of TVCs in 2018 — the same year it was revealed the majority of Google’s workforce was not directly employed by the company.

A number of RatersLabs employees believe the work they do is vital enough to Google that they should receive the higher pay and benefits of their peers. Christopher Colley, who has worked for the Google vendor since 2017, told Yahoo Finance that he only earns $10 an hour, and hasn’t qualified for a raise over the five years he’s worked at RaterLabs. Colley is also part of the Alphabet Workers Union (AWU-CWA), a subgroup of the Communications Workers of America focused on organizing full-time and part-time workers of Alphabet.

“The raters work from home, use their own devices, can work for multiple companies at a time, and do not have access to Google’s systems and/or badges,” a Google spokesperson told Engadget. “As noted on the policy page, the wages and benefits policy applies to Alphabet’s provisioned extended workforce (individuals with systems and/or badge access to Google).”

Among the hurdles workers need to jump in order to qualify for the pay bump afforded to some TVCs is a minimum 30-hour workweek. As AWU-CWA was quick to point out, RaterLabs contractors are capped at only 26 hours.

Employee accounts on RatersLabs’ Indeed profile describe low morale, low pay and an unclear feedback process. “Reviews are monthly, with one bad review potentially costing you the job […] Guidelines can change the week before the review and you can be ‘graded’ based on them despite doing the work way before,” wrote a former RatersLab employee in January 2022. “The job is very flexible, pay is mediocre, and you have no chance for advancement.”

This isn’t the first time that Google’s army of raters have spoken out about low pay, no opportunities for advancement and subpar working conditions. In fact, RatersLabs was formed by the CEO of Leapforce, a company that also hired raters for Google search and ad products. Back in 2017, Leapforce raters spoke out about chaotic working conditions, resulting in at least three contractors being fired, two of whom claimed their separations from the company were acts of retaliation. As Ars Technicanotes, a number of Leapforce workers filed complaints with the National Labor Relations Board which were eventually resolved via settlement. Appen — which acquired Leapforce in May of 2017 — is also the parent company of RatersLabs.

NYC targets CEO Bobby Kotick in latest Activision Blizzard lawsuit

Activision Blizzard has been hit with another lawsuit, this time from New York City officials. The suit, which was first obtained by Axios, takes aim at CEO Bobby Kotick. It accuses him of being “unfit” to negotiate his company’s pending sale to Microsoft, citing his “personal responsibility and liability for Activision’s broken workplace.”

The suit was filed by the New York City Employees’ Retirement System and pension funds that represent police, teachers and firefighters. The plaintiffs, who own stock in Activision Blizzard, argue that the Microsoft deal allows “Kotick and his fellow directors a means to escape liability for their egregious breaches of fiduciary duty.”

Since last July, Activision Blizzard has been the target of multiple lawsuits. It has been accused of fostering a “frat boy” culture and some have made allegations of workplace harassment and discrimination. In March, a wrongful death suit was filed against the company. Activision Blizzard also said in a filing yesterday that it’s cooperating with a Securities and Exchange Commission investigation on “disclosures on employment matters and related issues.”

In November, The Wall Street Journal reported that Kotick was aware of many of the alleged instances of harassment and that he may have protected employees who were accused of misconduct. That report, and the alleged workplace problems, are said to have prompted the buyout. The companies announced the sale in January.

New York City claims the $68.7 billion Microsoft deal, which was valued at $95 per share, undervalues a company that was trading at close to that price before the California Department of Fair Employment and Housing sued it last summer and started a wave of litigation. The NYC plaintiffs are demanding access to various company documents, including those related to the pending takeover and details on the five other possible buyers that Activision mentioned in filings on sale talks.

Activision Blizzard shareholders last week overwhelmingly approved the Microsoft deal. The companies hope to close the merger by the end of June 2023, though they require approval from regulators in the US, UK, China, the European Union and some other markets. Should the sale go through, Kotick stands to make as much as $520 million.

Apple sues chip startup for alleged theft of trade secrets

Apple has accused a company of stealing its trade secrets. In a complaint filed Friday, the tech giant claims Rivos, a “stealth-mode” startup based out of Mountain View, California, led a recent “coordinated campaign” to poach employees from Apple’s chip design division.

According to Reuters, the first publication to report on the lawsuit, Apple alleges at least two former employees took gigabytes of confidential data with them to Rivos. Among the information those individuals allegedly stole are presentations that detail unreleased chip designs, reports Bloomberg.

“Apple has reason to believe that Rivos instructed at least some Apple employees to download and install apps for encrypted communications (e.g., the Signal app) before communicating with them further,” the company says in the complaint. We’ve reached out to Apple for comment.

Should the case move forward, it’s likely to draw a significant amount of attention, much like Waymo’s suit against Uber for stealing confidential information about its self-driving technology did in 2017. After years of litigation, that case ended with Uber agreeing to settle for $245 million, and with a court sentencing Anthony Levandowski, the engineer at the center of the dispute, to 18 months in prison before former President Donald Trump issued a pardon.

Lyft and Uber will cover legal fees of drivers sued under Oklahoma abortion law

Much like they did in Texas, Lyft and Uber have pledged to cover drivers sued under Oklahoma’s forthcoming SB1503 law. The so-called Heartbeat Act prohibits most abortions after six weeks of pregnancy – a timeframe before many women know they’re pregna…

Elon Musk must continue to have his Tesla tweets checked before posting

Elon Musk won’t be able to get out of his agreement requiring oversight of his tweets about the company, Bloomberg reported. A judge has rejected his request to drop the 2018 deal made with the US Securities and Exchange Commission (SEC) that required a company lawyer approve any Tesla-related tweets. The judge also denied Musk’s request to block an SEC subpoena related to possible insider trading. 

“Musk cannot now seek to retract the agreement he knowingly and willingly entered by simply bemoaning that he felt like he had to agree to it at the time but now — once the specter of the litigation is a distant memory and his company has become, in his estimation, all but invincible — wishes that he had not,” US District Judge Lewis Liman wrote.

Musk may wish it were otherwise, but he remains subject to the same enforcement authority — and has the same means to challenge the exercise of that authority — as any other citizen.

After Musk tweeted in 2018 that he had “funding secured” to take Tesla private at $420, the SEC sued saying that Musk had misled investors. The parties eventually settled, with Musk and Tesla agreeing to pay $20 million each and require lawyers to review Musk’s Tesla-related tweets. 

However, last month Musk asked a federal court to terminate the deal, saying he felt “forced” to sign the consent decree during a period when Tesla’s financial health was at risk. A self-described “free speech absolutist,” he also claimed through his lawyer that the deal impinged on his his First Amendment rights. 

The judge also denied Musk’s request to quash an SEC subpoena related to a Twitter poll he conducted asking users whether he should sell Tesla shares or not. Officials were concerned he might have told his brother Kimbal about the poll, leading the brother to sell 88,500 shares just a day before the November 6th, 2021 tweet. In response, Musk said that the Twitter poll in question was just meant to gather input and not a disclosure of information he’d have to report to the SEC.

“Musk may wish it were otherwise, but he remains subject to the same enforcement authority — and has the same means to challenge the exercise of that authority — as any other citizen,” Liman wrote. “Indeed, to conclude otherwise would be to hold that a serial violator of the securities laws or a recidivist would enjoy greater protection against SEC enforcement than a person who had never even been accused of a securities law violation.”

In response, Musk’s lawyer Alex Spiro said that the court’s ruling still means he can address SEC subpoenas on a case-by-case basis. “The court is simply saying we can move to quash these subpoenas when they are compelled,” he told Bloomberg. “Nothing will ever change the truth, which is that Elon Musk was considering taking Tesla private and could have — all that’s left some half decade later is remnant litigation which will make that truth clearer and clearer.”

European Union limits targeted advertising and content algorithms under new law

Following a marathon 16-hour negotiation session, the European Union reached an agreement early Saturday to adopt the Digital Services Act. The legislation seeks to impose greater accountability on the world’s tech giants by enforcing new obligations companies of all sizes must adhere to once the act becomes law in 2024. Like the Digital Markets Act before it, the DSA could have far-reaching implications, some of which could extend beyond Europe.

While the European Commission has yet to release the final text of the Digital Services Act, it did detail some of its provisions on Saturday. Most notably, the law bans ads that target individuals based on their religion, sexual orientation, ethnicity or political affiliation. Companies also cannot serve targeted ads to minors.

Another part of the law singles out recommendation algorithms. Online platforms like Facebook will need to be transparent about how those systems work to display content to users. They will also need to offer alternative systems “not based on profiling,” meaning more platforms would need to offer chronological feeds. Additionally, some of the largest platforms today will be required to share “key” data to vetted researchers and NGOs so those groups can provide insights into “how online risks evolve.”

“Today’s agreement on the Digital Services Act is historic, both in terms of speed and of substance,” said European Commission President Ursula von der Leyen. “It will ensure that the online environment remains a safe space, safeguarding freedom of expression and opportunities for digital businesses. It gives practical effect to the principle that what is illegal offline, should be illegal online.”

Under the DSA, the EU will have the power to fine tech companies up to six percent of their global turnover for rule violations, with repeat infractions carrying the threat of a ban from the bloc. As The Guardian points out, in the case of a company like Meta, that would translate into a single potential fine of approximately $7 billion.

The DSA differentiates between tech companies of different sizes, with the most scrutiny reserved for platforms that have at least 45 million users in the EU. In that group are companies like Meta and Google. According to a recent report, those two, in addition to Apple, Amazon and Spotify, collectively spent more than €27 million lobbying EU policymakers last year to change the terms of the Digital Services Act and Digital Markets Act. The laws could inspire lawmakers in other countries, including the US, as they look to pass their own antitrust laws.

“We welcome the DSA’s goals of making the internet even more safe, transparent and accountable, while ensuring that European users, creators and businesses continue to benefit from the open web,” a Google spokesperson told Engadget. “As the law is finalized and implemented, the details will matter. We look forward to working with policymakers to get the remaining technical

Amazon workers in New York accuse the company of retaliatory firings

An independent group of Amazon workers called Amazonians United is accusing the e-commerce giant of firing four workers in Queens because they “supported a labor organization.” According to BuzzFeed News, the group filed charges with the National Labor Relations Board on April 14th, arguing that the company fired the workers for “protesting terms and conditions of employment.” The group also said that Amazon made the move to “discourage union activities.”

Workers at Amazon’s warehouses in Long Island City and Woodsland staged a walkout back in March to demand a pay raise of $3 an hour and the reinstatement of their 20-minute rest breaks. A Motherboard report about the protest noted that the workers were earning around $15.75 to $17.25 an hour and that Amazon had shortened their rest breaks from 20 to 15 minutes. Workers at the Queens facilities also joined a petition that circulated in December demanding better inclement weather policy and the right to keep their phones with them in case of emergency. 

As a labor organization, Amazonians United collectively fights for better policies that benefit workers without being an official union. It successfully fought for workplace policy changes and pay raises in the past. In this particular case, the National Labor Relations Board (NLRB) still has to review the group’s complaint before it decides if it has any merit. Just a few days ago, the NLRB successfully convinced a judge to order Amazon to reinstate Staten Island warehouse worker Gerald Bryson. The judge sided with the labor board and agreed with its argument that the company fired Bryson in retaliation for participating in a COVID-19 safety protest back in 2020.

Judge dismisses most claims in Sony gender discrimination lawsuit

A gender discrimination lawsuit against Sony has run into significant hurdles. Axios has learned that judge Laurel Beeler dismissed 10 of plaintiff Emma Majo’s 13 claims due to multiple issues. Majo didn’t provide enough evidence to make a case in some instances, Beeler said, while in others she incorrectly asserted that promotions and demotions constituted harassment.

Majo first sued Sony in November over allegations of institutional discrimination. The former PlayStation security analyst accused Sony of firing her for discussing sexism she reportedly encountered at the company. Sony tried to have the suit tossed out due to both vague details and a lack of corroborating claims, but the case gathered momentum in March when eight other women joined in and raised the potential for class action status.

The judge will still allow three claims surrounding wrongful termination and violations of whistleblower protections, however, and she rejected Sony’s attempt to block any chance of class action status. As the other claims were dismissed without prejudice, Majo is free to revisit them if and when she can better support them.

Sony denied Majo’s discrimination allegations, but it also said in March that it would take the women’s complaints “seriously.” As it stands, the partial dismissal clearly isn’t what the company wanted — it still has to face potentially grave implications, and may be pressured to join companies like Activision Blizzard in reforming its internal culture.