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California drops the hammer on gig giants


With help from Jeremy B. White, Zach Montellaro, Steven Overly and John Hendel

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— Pandemic complicates California’s Uber-Lyft offensive: The state filed a lawsuit against Uber and Lyft for allegedly misclassifying their workers, raising the stakes in the gig economy debate at a time the companies argue the drivers are using the apps as a financial lifeline.

— SCOTUS hears robo-case: The Supreme Court is hearing oral arguments by phone today for a major dispute over robocalls, a case that could have sweeping ramifications for political campaigns in 2020 and beyond.

— Ligado on deck: Top Pentagon officials will testify today at a Senate Armed Services hearing on the FCC’s approval of a 5G proposal by satellite company Ligado — a plan that has met significant pushback on the Hill.

IT’S WEDNESDAY; WELCOME TO MORNING TECH. I’m your host, Alexandra Levine. A friendly reminder that House Judiciary antitrust subcommittee Chairman David Cicilline will join us tomorrow at 9 a.m. ET for a virtual sit-down on how the pandemic is affecting Washington’s efforts to rein in big tech and the antitrust investigation in Congress. Register here to attend.

What’s happening in Washington’s tech circles? Drop me a line at [email protected] or @Ali_Lev. An event for our calendar? Send details to [email protected]. Anything else? Full team info below. And don’t forget: Add @MorningTech and @PoliticoPro on Twitter.

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GIG ECONOMY WAR ESCALATES AS CALIFORNIA SUES UBER, LYFT — California Attorney General Xavier Becerra and city attorneys from across the state took aim at Uber and Lyft on Tuesday, suing the tech giants for allegedly misclassifying drivers as independent contractors. The lawsuit charged that the companies are exploiting gig workers and eschewing their duties to fund safety nets like unemployment insurance and paid sick leave. These arguments have gained more traction and urgency as gig workers contend with high risk and few benefits during a pandemic, POLITICO’s Jeremy B. White reports from Oakland, Calif.

— What now?: Though they’ve so far been thwarted in court and the Legislature, the companies can still go to the voters — and that’s looking like it could be their only play. They’ll likely make the case to voters that a pandemic isn’t the time to foreclose options for income — an argument Uber previewed in warning that with the economy in freefall, “we need to make it easier, not harder, for people to quickly start earning.”

But gig companies’ contention that their workers are contractors hasn’t gained legal traction so far, and the state seeks to eviscerate that argument. The complaint calls the companies transportation providers and says “the fact that Uber and Lyft communicate with their drivers by using an app does not suddenly strip drivers of their fundamental rights as employees.” Uber has argued that it’s a technology company, not a transportation company.

Bottom line: A headline-grabbing legal battle could reshape what figures to be a monumental showdown between tech and labor. Companies have long emphasized that they’re offering the flexibility workers want; California’s suit seeks to dismantle that argument by excoriating Uber and Lyft for “an aggressive public relations campaign” advancing “the lie that driver flexibility and worker protections are somehow legally incompatible.”

SCOTUS HEARS ROBOCALL CASE — A case that could have a dramatic effect on campaigning, especially in the coronavirus era, is getting its day before the Supreme Court: Barr v. American Association of Political Consultants. The political consultants’ challenge hopes to overturn a ban on robocalls to cellphones, implemented under the 1991 Telephone Consumer Protection Act. Arguments will be held at 11 a.m.; you can tune into the audio on C-SPAN.

— The backstory: The consultants’ argument leans on an exemption that was carved into the law in 2015, which allows automated calls from government debt collectors. The consultants argued that this is an unconstitutional content-based restriction on speech and that the whole section in the TCPA on robocalls to cellphones should be struck.

An appeals court agreed that the restriction violated the First Amendment — but instead of tossing out the whole robocall ban, it severed the carve-out for debt collectors, resulting in both unhappy debt collectors and unhappy political practitioners.

Now, the high court will hear two questions: Is the robocall ban (or the debt carve-out) unconstitutional, and if so, how is that resolved?

— It’s not just about this case: The seemingly low-stakes case could have big, long-term implications for the Telephone Consumer Protection Act and a drastic downstream political effect, depending on how broad any eventual ruling may be.

There will also be a lot of attention paid to what would otherwise be a relatively obscure case because justices could issue a wider ruling that touches more broadly on First Amendment law and severability. The case could have “bigger ripple effects far beyond just political robocalls,” Amanda Shanor, a professor at the University of Pennsylvania Wharton School, told my colleague Zach Montellaro, citing future challenges to severability with the Affordable Care Act or a wide swath of regulations on First Amendment grounds. Or, she noted, it could be “a nothingburger” that is only narrowly tailored to the question of robocalling. (Read more in Shanor’s argument preview on SCOTUSBlog.)

ORACLE’S WHISTLEBLOWER CAMEO — Vaccine expert Dr. Rick Bright filed a formal complaint Tuesday concerning his removal as director of the Biomedical Advanced Research and Development Authority. He alleges the Trump administration “ignored his early warnings about the coronavirus pandemic and steered contracts based on political connections,” as POLITICO’s Sarah Owermohle writes. One tech company appears multiple times in the complaint: Oracle.

— Bright says administration officials rushed to encourage the use of a malaria drug called hydroxychloroquine despite concerns about insufficient testing in coronavirus patients in order to “accommodate” donations of medicine from drugmaker Bayer and of software tools from Oracle. POLITICO and others reported that Oracle’s billionaire co-founder, Larry Ellison, helped persuade Trump to pursue the unproven treatment, while offering to build a database to track patients and their side effects. Oracle did not reply to a request for comment.

— Trump has been known to have a close relationship with Oracle executives. CEO Safra Catz was part of the president’s transition team years ago and has since sat on multiple advisory councils, including the most recent group of corporate leaders tapped to guide him on reopening the economy. Ellison not only joined Catz on that same panel but has donated money to the president, most recently hosting a fundraiser in February to support Trump’s reelection campaign.

TODAY: PENTAGON TAKES A WHACK AT LIGADO Top Pentagon officials will testify this afternoon before Senate Armed Services about the FCC’s recent approval of satellite company Ligado Networks’ plans for a 5G network, which the Pentagon and the panel’s bipartisan leadership say will scramble the nation’s GPS signals. The FCC and Ligado (who weren’t invited to offer testimony) say they’ll be able to coordinate with other airwaves occupants to prevent GPS problems. The issue has left top Trump administration officials at odds.

— Expect panel chairman Jim Inhofe (R-Okla.) to throw some shade at the FCC. “What I’m most upset about is the failure of the interagency process behind this decision,” he plans to say in his opening remarks. “The FCC may not be in this committee’s jurisdiction, but the effects of its decision sure are.”

— Defense Secretary Mark Esper disparaged the FCC approval in a letter Friday to Inhofe, saying the commissioners “relied upon Ligado-funded test results” and “could compromise national security.” An FCC spokesperson challenged these assertions, telling John that the commission “is required to make decisions based on sound engineering principles and physics, not unsupported assertions designed to spread fear.” The spokesperson said the Defense Department’s argument was based on the wrong metrics.

— Ligado, too, accuses the defense industry of eleventh-hour alarmism. “It is unfortunate that some continue to push this politically,” Ligado CEO Doug Smith told John. “Once you take away all the rhetoric and all the politics, all the science and math unequivocally supports the FCC’s decision.” Competition-focused trade group Incompas, which counts Ligado as a member, derided the “false, misleading” opposition.

LAWMAKERS EYE REVAMP OF FCC SUBSIDIES — A bipartisan group of House lawmakers scored praise from rural telecom companies Tuesday for introducing legislation that would expand which companies contribute to the FCC’s Universal Service Fund — the pot of billions of dollars used to subsidize telecom service for low-income Americans and rural communities, among others. These lawmakers propose having broadband companies pay in, rather than relying on what they call the current outmoded setup, relying on support from just traditional phone providers.

Dennis Wharton, the longtime executive vice president of communications for the National Association of Broadcasters, will retire on July 1, staying on as a senior adviser. He has worked for the trade group since 1996, before which he was Washington bureau chief for Variety, where he reported on legislation and regulation of broadcasting, cable and Hollywood movie studios. Michelle Lehman, the group’s executive vice president of marketing, will lead its newly formed public affairs department.

Josh Kallmer, executive vice president of policy at the Information Technology Industry Council, is joining Zoom later this month as head of global public policy and government relations, Cristiano reports for Pros.

ICYMI: A warehouse worker from an Amazon facility on Staten Island has died of the coronavirus, The Verge reports.

Meanwhile: Amazon has reiterated its commitment to pay sick leave to workers who test positive for the coronavirus, but a warehouse worker who met that criteria said he’s been waiting more than a month for the promised sick pay, BuzzFeed News reports.

Competition corner: Sen. Elizabeth Warren “is drafting a bill that would call on regulators to retroactively review about two decades of ‘mega mergers’ and ban such deals going forward,” Bloomberg reports.

More tech workforce layoffs: Airbnb announced plans to lay off 25 percent of the company, co-founder and CEO Brian Chesky said Tuesday.

Eyeballs watching emoji: “Welcome back to the office. Your every move will be watched.” via WSJ

For your radar: Lyft, Square and PayPal report earnings today.

Tips, comments, suggestions? Send them along via email to our team: Bob King ([email protected], @bkingdc), Heidi Vogt ([email protected], @HeidiVogt), Nancy Scola ([email protected], @nancyscola), Steven Overly ([email protected], @stevenoverly), John Hendel ([email protected], @JohnHendel), Cristiano Lima ([email protected], @viaCristiano), Alexandra S. Levine ([email protected], @Ali_Lev), and Leah Nylen ([email protected], @leah_nylen).

TTYL and go wash your hands.



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