Hollywood v. Goliath

[rhoenix]

Tensions between Google and Mississippi Attorney General Jim Hood exploded into public view this week, as Google filed court papers seeking to halt a broad subpoena Hood sent to the company.

The Hood subpoena, delivered in late October, didn't come out of nowhere. Hood's investigation got revved up after at least a year of intense lobbying by the Motion Picture Association of America (MPAA). E-mails that hackers acquired from Sony Pictures executives and then dumped publicly now show the inner workings of how that lobbying advanced—and just how extensive it was. Attorneys at Sony were on a short list of top Hollywood lawyers frequently updated about the MPAA's "Attorney General Project," along with those at Disney, Warner Brothers, 21st Century Fox, NBC Universal, and Paramount.

The e-mails show a staggering level of access to, and influence over, elected officials. The MPAA's single-minded obsession: altering search results and other products (such as "autocompleted" search queries) from Google, a company the movie studios began referring to as "Goliath" in around February 2014. The studios' goal was to quickly get pirated content off the Web; unhappy about the state of Google's voluntary compliance with their demands and frustrated in their efforts at passing new federal law such as SOPA and PIPA, the MPAA has turned instead to state law enforcement.

The most controversial elements of SOPA/PIPA would have let content owners effectively shut down websites they said were infringing their copyrights or trademarks. This already happens—think of various peer-to-peer sites that no longer exist—but it usually involves drawn-out litigation. SOPA promised a faster-moving process that would have essentially made rights holders a website's judge, jury, and executioner.

To get the same results in a post-SOPA world, MPAA has hired some of the nation's most well-connected lawyers. The project is spearheaded by Thomas Perrelli, a Jenner & Block partner and former Obama Administration lawyer. Perrelli has given attorneys general (AGs) across the country their talking points, suggesting realistic "asks" prior to key meetings with Google. Frustrated with a lack of results, Perrelli and top MPAA lawyers then authorized an "expanded Goliath strategy" in which they would push the AGs to move beyond mere letter writing. Instead, they would seek full-bore investigations against Google.

If the AGs felt short on resources—well, Hollywood studios could help with that. Money from Sony and other Big Six studios was available to draft the actual subpoenas, to research legal theories to prosecute Google, to spread negative press about the search giant, and to reach out to other state AGs that might join with Hood.

This is how the project unfolded over the past year.

Late 2013: Ramping up

One chain of e-mails among the MPAA and studio lawyers bears the subject line "STATE ATTORNEY GENERAL PROJECT" and focuses on how Google could be pressured into altering its search results, demoting or removing so-called "rogue sites" that host high levels of copyrighted context.

Most notes on the project came from Vans Stevenson, the MPAA's VP of state legislative affairs; higher-level updates were written by MPAA general counsel Steven Fabrizio or took the form of memos written by Perrelli. Most information about the AG project was shared with a group of more than 30 lawyers, including several from the MPAA and RIAA, as well as each of the six big studios, but some were kept to just general counsels and their immediate confidantes.

"[Attorney] General Hood told me by e-mail today that his conversation 'with Google’s General Counsel did not go well,' and therefore he followed up with the letter that was sent yesterday," Vans Stevenson informed the group in November 2013. "Hood also said he was organizing a meeting during the NAAG [National Association of Attorneys General] meeting next week in New Orleans with his outside counsel Mike Moore, former MS Attorney General. Also attending that meeting will be MPAA/RIAA outside counsel Tom Perrelli and others, 'so we can discuss the next move,' Hood wrote.... I will keep you advised of further developments."

The e-mail includes a letter from Hood to Google general counsel Kent Walker. It was published earlier this week by The New York Times, which reported that most of the letter was actually written by Perrelli's law firm.

Several weeks later, a meeting took place between Google executives and Connecticut Attorney General George Jepsen. The same morning the meeting took place, MPAA's Perrelli was informed about it by two attorneys at the AG's office, who offered to send Google's presentation to Perrelli. Jepsen reached out to the MPAA, seeking demands that he could press against Google. Perelli wrote:

I talked this morning with the CT AG’s office [names redacted] about their meeting with Google. They indicated that it was purely a listening meeting, where Google went through the “standard” presentation of all the things that it does to protect privacy and stop unlawful conduct. They are going to send me the presentation that Google did and asked that we come up and give them a “rebuttal” at some point in the next few weeks (likely the first half of February)...

They told me that AG Jepsen is interested in this area and wants to see if there is something reasonable and practical that he can do to be helpful. They understand the concerns that we have and largely agree with them, but want to be cautious here (consistent with the temperament of their boss). He is not afraid to tangle with Google, as he has on antitrust, but his approach is to look for a small number of reasonable things to demand of them and then to press them hard on it. They asked that we not “shoot the moon” on our asks.

I went through our issues and concerns and emphasized that the asks that we have are really things that Google has demonstrated it can do when it feels like it. I am going to send them the 4 white papers, per their request.

Perelli attached four Microsoft Word files to his update, entitled "Google can take action," "Google must change its behavior," "Google illegal conduct" and "CDA."

January 2014: Creating Google “asks”

On January 21, 2014, Google's Kent Walker met with 13 state attorneys general who wanted to know more about what Google could do to demote or delete pirated content from its search results. For the MPAA, it was a pivotal moment.

Before the meeting, Mississippi's Hood had already made clear he was going to push his counterparts in other states to take stronger action over movie piracy. He called Stevenson at the MPAA, asking for "fresh examples for his planned live 'search' demonstration of illegal site activity, including the availability of motion pictures only in theatrical release," according to an update Stevenson sent the group.

By the time the AGs meet with Google, they and their staffs had been heavily prepped by Perrelli. In the early morning of January 21, Perelli shared some of the impressions from those prep meetings:

1) The AGs are going to start the meeting by saying that they are frustrated that Google has not acted; they have had much better success engaging with Facebook and eBay, but feel Google is non-responsive. They want real change at Google that will stick – not just change that lasts for a short time after immense pressure is put on them.

2) The AGs are struggling with their asks. They understand that Google is likely to offer a few morsels, they know it won’t be sufficient, but they are unsure how to demand more. Some want to move to CIDs [civil investigative demands, like a subpoena], but I think the majority want to set a short date for some substantial change on a number of fronts (Search, YouTube, Autocomplete). I went over their likely asks again, but encouraged them not to commit to anything with Google in the meeting.

3) I walked away from these meetings thinking that we need to develop a different presentation for the AGs – how Google works. There was a real lack of understanding about Google, its services, its interactions with websites, etc. They don’t need more about the bad stuff you can get on the Internet; they need to understand better how Google makes money...

4) I spent more time with Hood after the meeting and, I hope, got him focused on the key issues and the asks. He really does care a great deal about piracy – and he doesn’t get sidetracked by some of the things that Microsoft prefers. He wants Google to delist pirate sites and he is going to ask them to do that tomorrow...

6) [Former Washington State AG] Rob McKenna was very helpful– and I talked to some of his clients at Microsoft and my take is that they are not particularly concerned about our advocacy on search. They see the bigger picture.

Later that day, Stevenson sent a report on the meeting. For more than two hours, led by Mississippi AG Hood, the AGs had confronted Google's Walker about the desired issue: "websites devoted to illegal IP activity." They challenged Walker to "delist and block those websites," wrote Stevenson. Google countered that it did not in fact know that every site on the MPAA hitist was in "devoted to illegal IP activity" but that it took action when this was clear. This did not go over well with either the MPAA, which continued to lobby the AGs to take action. As Stevenson put it after the meeting:

Our counsel Tom Perrelli and I spoke this evening. We will organize an outreach to all AGs and deputies that attended the meeting in person, as well as participated by phone, to get a more complete picture of the meeting and their feedback. Perrelli will also follow-up with AG Hood regarding the planned letter to Google and offer assistance.

It would take time, but this continued attention to Hood in particular did pay off.

February 2014: The “Goliath” Strategy

February 2014 saw a larger meeting at NAAG between Google and AGs from 40 different states. According to MPAA reports on that meeting, Google was even more forceful in rejecting the idea of "de-listing" sites. In Stevenson's telling, that didn't impress the AGs a bit. In a February 26 e-mail, he wrote [link added]:

All AGs that we talked with following the meeting except Mississippi Attorney General Jim Hood (D), co-chair of the NAAG IP Committee and in-coming NAAG President this summer, were stunned that Google executives took such an absolute stance and were unwilling to negotiate, other than “talk about” demoting certain sites that traffic in illegal products and services, including motion pictures and television programs. Nebraska Attorney General Jon Bruning (R), co-chair of the IP committee, expressed a common reaction among most AGs: “They were arrogant, unwilling to put anything on the table for discussion and in essence told us to pound sand.”

This morning at the last NAAG plenary session, both IP-Co Chairs Bruning and Hood issued a verbal public report about the Google meeting, including “Google’s lackluster responses” to the AGs questions at the meeting. Both briefly reviewed Google’s past and current “bad acts,” including facilitating human trafficking, illegal prescription and other illegal drug sites as well as movies and music.” Both said “Google came to the meeting basically under orders not to give an inch.”

[Attorney] General Bruning addressed options in light of the meeting and mentioned issuing Civil Investigative Demands (CID)s, litigation, and using the press to alert consumers to Google's “bad acts.” These options are generally expected to be considered by the AGs as part of a forward plan. Both Bruning and Hood pointed out that Google paid $500 million in a non-prosecution agreement with the Rhode Island United States Attorney for nurturing and helping to develop illegal prescription drug sites, who were advertising clients.

The following day, word came down from Perrelli that "the time for letter writing is over" and that "it is time to move to actually form an investigation." But it was Perelli and the studio lawyers—not the attorneys general—who intended to form the investigation's strategy, find states to participate, and partly fund it.

Perrelli's next "status report" was forwarded by Fabrizio on February 27 to general counsels at the Big Six movie studios, which begin referring to Google as "Goliath" at about this time. Fabrizio says it's time to discuss an "expanded Goliath strategy."

Google/Goliath "drew a line in the sand," Perrelli explained, and the company "essentially threatened the AGs with the possibility of attacking them as they attacked folks in DC during SOPA. The AGs did not like that. More AGs now think 'something must be done.'"

Still, the AGs were concerned about what an angered "Goliath" might do, as well as how costly an investigation might be. Even as "Goliath" had angered them, they "wouldn't mind a way out"—even Hood.

Google had, at least momentarily, taken a tough line, and the AGs were short on resources. That's where the MPAA could help out. It would be the studios, not public officials, who would initiate "discussions about resources, completion of CIDs, and construction of an investigative plan," proposed Perrelli.

"Some subset of AGs (3-5, but Hood alone if necessary) should move toward issuing CIDs before mid-May," he wrote. "That move should be met with broad expressions of support by AGs, even those not directly involved in the CIDs."

He continued:

In terms of outreach and action by us, I think we should:

a. Shore up Hood and try to get a small group (Hood, Bruning, Louie, a couple of others) focused on a clear timetable for CIDs

b. Draft the CIDs

c. Research state law to determine the best state to pursue litigation and communicate that to Hood so that he can try to get the right AGs on board

Perrelli's plan met with approval from the MPAA. By the end of April, the question wasn't whether they would move forward with funding an investigation of "Goliath"—it was simply a question of how much to spend.

The e-mails discuss different proposed amounts, but the most definitive budget comes in a missive that Fabrizio sent to the studio GCs on May 8. "Option 1" involved spending $585,000 annually, with $500,000 of that going to Jenner & Block, Perrelli's law firm, and another $85,000 to be spent on "comms." The "comms" spending would go towards keeping the media informed about AG actions against Google, "amplify negative Goliath news" and "seed media stories based on investigation and AG actions."

A larger budget proposed spending more than $1 million. It isn't clear from the e-mails which budget the group ultimately selected.

Late 2014: Moving to investigate

By summer's end, Hood was ready to move ahead with the MPAA's desired plan of issuing a civil investigative demand to Google, even though the company had agreed to build out a "trusted flagger" YouTube program to catch infringing videos and began tweaking its search algorithm to more aggressively demote pirate sites.

In an August 28 letter to AGs in all 50 states, Hood tested the waters to see how much support he might get. The letter described how Hood wanted the "trusted flagger" program to go further yet:

Over the summer, our investigators used and tested the trusted flagger program.

YouTube provides selected "power" users basic information about what YouTube deems improper and then gives them access to the bulk flagger portion of the website for videos that may contain content that would be in violation of YouTube's policies. Trusted flaggers then tag (or flag) the content they feel meets that criteria. Once the suspicious videos are flagged by trusted flaggers, then the YouTube enforcement team reviews the video and assesses whether or not it violates YouTube's terms.

Based on our review, I intend to make the following three suggestions to Google: 1) YouTube should consider temporarily removing the video until it has been reviewed by YouTube staff. Currently, when the trusted user flags a questionable video, it remains up and accessible on YouTube. 2) YouTube should consider giving the trusted user a status report when the video is flagged showing that the video will be reviewed by YouTube and, if the video is removed, the date and time of its removal. At the time of our test, when videos are flagged, no notice is given to the user if and when the video is removed.

Hood explained that he planned to issue a civil investigative demand to Google in the near future. "I suggest setting up a working group for those interested so our office can share any information we receive with you," Hood told the other AGs.

MPAA knew that Hood was going to issue his CID to Google sometime the week of October 20th. But just days before it was coming, the movie group had an unexpected falling out with Google. Google had released its "How Google Fights Piracy" report, describing how it would be more aggressive about demoting sites linked to piracy in its search results. In response MPAA issued what it viewed as a simple "wait and see" statement—not wanting to sound too positive about Google's new features, lest it jeopardize the investigation it knew was on the way.

"We were... sensitive to the fact that that Mississippi AG Hood is expected to issue a CID to Google sometime this week (that information is naturally very confidential)," Fabrizio wrote to the studio lawyers on October 20. "We did not want an unduly favorable statement by us to discourage AG Hood from moving forward."

The MPAA statement issued this statement:

Everyone shares a responsibility to help curb unlawful conduct online, and we are glad to see Google acknowledging its role in facilitating access to stolen content via search. We look forward to examining the results of Google's algorithm changes to see if they reduce the appearance in search results of stolen content and the sites that profit from it.

But Google was furious, and the company allegedly threatened to cut off its communication with MPAA altogether. In a defensively worded e-mail, Fabrizio explained:

Google’s head of policy, Adam Kovacevich, called Laura Nichols, our head of Comms, to say that “at the highest levels [they are] extremely unhappy with our statement.” They conveyed that they feel as if they went above and beyond what the law requires; that they bent over backwards to give us a heads up and in return we put out a “snarky" statement that gave them no credit for the positive direction. Apparently, Google really detests the gatekeeper references (“Google has a role/responsibility online…”). Kovacevich relayed that Google will no longer “speak or do business” with the MPAA. Kovacevich claimed that at least three individual studio GCs conveyed to Google that the studios were very happy about the new features. Accordingly, per Kovacevich, from now on Google will deal with the studios, not MPAA.

We believe Google is overreacting — and dramatically so. Their reaction seems tactical (or childish). Our sense is that this will blow over and that, following the issuance of the CID by AG Hood (which may create yet another uproar by Google), we may be in a position for more serious discussions with Google.

On October 21, Hood issued his CID to Google as the MPAA expected he would. The New York Times published published Hood's CID to Google in an article on the MPAA's lobbying of attorneys general, published Wednesday. It requests a huge volume of information on how Google treats a vast array of illicit material online, from illegal pharmaceuticals to pirated movies.

On October 23, Vans Stevenson wrote to the group alerting them that the CID had issued and saying that Nebraska and "at least three other states" were considering creating their own subpoena. The leaked Sony e-mail cache cuts off at October 29, and there's no further mention of the investigation.

For Google, the MPAA's close involvement with an investigation they view as punitive has been a bridge too far. The company's official statement on the matter came yesterday, in the form of a blog post by company GC Kent Walker entitled "The MPAA's Attempt to Revive SOPA." Walker describes a "coordinated campaign to revive the failed SOPA legislation through other means." The MPAA is "an organization founded in part 'to promote and defend the First Amendment and artists' right to free expression" wrote Walker. "Why, then, is it trying to secretly censor the Internet?"

Asked about the "Attorney General Project," MPAA spokeswoman Kate Bedingfield told Ars the group uses "voluntarily initiatives, policy solutions, and legal actions" to protect members' creative works. "When wrongdoing is taking place online, we work with and support appropriate law enforcement officials, including the Attorneys General, as do many other industries."

As for Google's blog post today, Bedingfield said it was an attempt to deflect from its own conduct, and investigations that include "illicit drug purchases, human trafficking and fraudulent documents as well as theft of intellectual property."

Today's lawsuit seeking to have the CID quashed suggests that the Google's pushback against both the MPAA and the state AGs will intensify. The battle between Hollywood and Google has been brewing for years, but in the wake of the Sony hack, it may have reached a historic new low.

Discuss.