GC at Tumblr: Legal Issues Faced by the Digital Publishing Platform

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Transcript

In-House Legal: GC at Tumblr: Legal Issues Faced by the Digital Publishing Platform – 8/20/2015

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Randy Milch: Hello, my name is Randy Milch and I’m the host of In-House Legal on the Legal Talk Network. I‘m honored and happy to have as a guest today, Ari Shahdadi, General Counsel of Tumblr. Ari is a leader in the technology area, is a computer scientist himself, and will bring great insights on the GC’s role in the high tech field. Ari has also thrived through a potentially traumatizing corporate event: selling your company and continuing on as GC of an independent subsidiary of a larger entity. Events that are often freighted with concern. Ari, welcome to In-House Legal.

Ari Shahdadi: Thank you, Randy. Happy to be here.

Randy Milch: So it’s wonderful to have you. Ari is in Silicon Alley, not Silicon Valley – we’ll get into the differences hopefully at some point on those two things. But Ari, when we start, why don’t you give us an indication of what Tumblr does? I think many people know, but some folks of the older generation may be a little bit confused or unclear.

Ari Shahdadi: I think we’re actually confused sometimes even now, so I’ll give you a little bit of the history. The site was launched in February 2007 by our founder, David Karp, and really launched as a pet project for him to have a place to post all the media that he wanted to post without the tyranny of the big blank box that most blog sites had. So extensively, the point was a publishing tool for him to make it really easy for him to publish out to the world lower cognitive overhead and the ability to post photos and music and video without the limits that most blogging platforms had. So he launched this thing solely as a pet project. He was a web developer at the time doing consulting work for a variety of companies here in the city. And then the thing took off. A bunch of designers and developers, friends of his, began using it, began sharing their blog URLs among each other, and then he attracted the attention of one of Union Square Ventures, which is as I sit down and read from my office, so one of the great BC firms here in New York. And Spar Capital in Boston. Both were early investors in Twitter, and they funded the feed round which created Tumblr Inc. in September of 2007. And since then, the site and the business have stayed the same but also changed, starting out as what we’d call early on the easiest way to blog. And now we view ourselves more as a media network for people to create and consume the creations of others, particularly on mobile that consumption experience is great. And the business is selling native advertising inside of that consumption experience. So similar to how Facebook and Twitter make money with advertising.

Randy Milch: It’s a fascinating thing and it’s amazing that these publishing platforms are being created every day and the great ones really contribute to the way society works now. And that’s a critical item that’s different for many people to understand, particularly in the legal profession and in general counsel’s offices how much publishing sites, social media generally, controls the way we behave in the public arena. Have you found that to be a significant issue for Tumblr guarding that aspect of the public arena?

Ari Shahdadi: It’s a complicated question. When I started here over four years ago, I had to get my hands around the nest of legal issues and also understand what the user behavior was that was driving all of the things that were happening. Fast forward four years, I think you’re absolutely right that sites like ours are really part of the fabric of people’s lives now. And they all serve different purposes, interestingly. I think you can think of Facebook as the white pages of the internet, a place where you connect with people that you know in real life. Twitter, for me, is a place where I get my news, a source of real time news information. I follow a lot of reporters and journalists. For people who aren’t me and don’t understand how to use it, Snapchat is a great way to communicate with your friends. So we sort of fit in a niche where you don’t necessarily want to be tied to your real life identity but you want to follow the things that really interest you. So if you like cycling or art, both those aren’t necessarily related to your name, your personal persona out in the world that you would find on Facebook. But I do think that all of these sites, including ours to some extent, are part of the social fabric now and there are some norms that have come up around that in terms of people’s behavior that are very interesting. And also it’s had an impact on how I do my job obviously.

Randy Milch: Obviously. Let’s step back a second. You said you came to Tumblr in 2011. Let’s go back a little bit further than that. You’re an MIT grad and the computer sciences, both on the undergraduate level and the graduate level. What led you out of computer science into the law?

Ari Shahdadi: That’s a great question and I ask myself at least once a week, because sometimes it’s not clear. So I went to MIT and I thought I wanted to be a physicist and soon found myself gravitating towards computers and to software development and had a really wonderful five years burning all of that and did my masters thesis on a small sliver of artificial intelligence. So I’m always interested in all of the doom and gloom talk we hear now of AIs are going to supplant humanity, which seems to be a popular topic of conversation these days. I also graduated in the middle of the tech apocalypse in 2003. It was terribly hard for me and my peers to find a job. And lucky for us, Oracle corporation came and hoovered up a bunch of us. So I’d say like fifteen of us in my year and the year ahead of me ended up going to Oracle. So I was a software developer there for a few months and I was just not really that into it. And actually I think most of those fifteen people were gone within a year. So maybe that had more to do with Oracle than it did with me being a software developer. But I had a dear friend who was in law school also, had gone to MIT, and she told me that law firms were hiring for engineers to work on patent related things. At the time I had a more positive year of patent systems than I have now. And so I sent out – I think, if I remember correctly – about a hundred resumes saying, “Hey, I’m an engineer. If you have anything interesting for me to do let me know.” I maybe got five phone calls back and two or three actual interviews. And one of them turned into a job working in patent litigation, which is not a job I think that really exists for most engineers. I think a handful of firms now even do it but certainly back then, I didn’t know anybody else who was doing it. So I went to Fish & Richardson in Boston. That’s the other thing, I’m an East Coast guy, so moving back to the East Coast was a nice thing. I began working in patent litigation with no law degree, no legal background, learning it from the bottom up as an apprentice, essentially. So writing letters through document review. Obviously I couldn’t sign anything because I wasn’t a lawyer, but was substantially doing that kind of work and then decided this is fun, I like doing it, why don’t I go to law school. So I decided to go to Harvard and continue working. So that was the big thing for me was not having a lot of debt because I’ve already been in debt from undergrad and grad school. So I didn’t do any extra curriculars in law school, didn’t have a ton of friends in law school, but worked my way through and ended up going back to Fish & Richardson for another couple of years, including a trial in a case that I had worked on for six years. We lost horribly but got flipped on Jaymal and then got flipped again at the federal circuit. And that kind of convinced me that litigation was not the thing for me and so what I ended up doing was coming to New York, demoting myself from – I think at the time it was my fourth or fifth year – litigation associate to a first year corporate associate and began working here at Gunderson Dettmer learning corporate transactional law. And then from there stumbled forward on my face and got my job here at Tumblr. So I’ve really had several different careers, I think, over the past decade which has been a lot of fun.

Randy Milch: Well it seems that you’re a classic example of taking what some people would call risks and turning them into opportunities, because you were only at Gunderson Dettmer for a little over a year before you came to Tumblr?

Ari Shahdadi: Less than a year, I think it was ten months.

Randy Milch: So to go from first year associate to general counsel of Tumblr is quite a leap. It’s a great reward for taking the risk that you took and sort of teaches people of the importance of taking a few risks with their employment to try to figure out what they’re going to be happiest in. So let me ask you this. So you go to Tumblr, you’re there for a couple of years, and there’s a seminal event. Tumblr’s purchased by Yahoo. How did that happen to the extent that you can tell us and how did you navigate the internal aspects of selling your company – which many people are going to regard as a frightening and highly concerning event.

Ari Shahdadi: There’s an inside story that unfortunately I can’t tell as I would love to, but you’ve got to get a petering out of me, I guess. But really, the crux of it was our founder, David, building our relationship with Marissa Mayer who had taken an interest in the company and what we were doing. He felt really good about continuing to work with her and the possible synergies and advantages of working with Yahoo as a larger company as opposed to going on our own. At the time we had launched our first ad product just a few months before. Sorry, we had first launched our first ad product the year before, but then the next generation of our ad products are the core of what our business is are, which is the native sponsor so it’s been launched a few months before. We were finding that we don’t have the expertise to scale this ad business on the tech side – in particular, a number of synergies working with a larger company. And so really based on those atmospherics and David’s relationship with Marissa, he felt comfortable moving forward with the transaction. From my perspective, I was comfortable with it because David was comfortable with it. I trust him, he’s at times a better lawyer than I am and he’s probably better at everything than most people at times. And so really, at that point, and it was such a frantic thing because I think the whole thing front to back starts six weeks. So if you think about a billion dollar acquisition that takes six weeks, the time and pressure is crazy. So I didn’t have a lot of time to reflect. There was a lot more just running forward, working with the Yahoo team on diligence in particular, camering out the finer points of the deal. That was my first M&A transaction, so a lot of learning on my feet and also staged guidance from our outside counsel at Gunderson, Ward Breeze, and our investment banker, The Qatalyst. So we had a nice village of people helping us out, but it’s a bit of a blur because the whole thing went so quickly. But it was a great positive profit and we started at Yahoo in June of 2013.

Randy Milch: It sounds like many of the senior folks who were at Tumblr were also comfortable with the move because of the CEO’s approach, and I guess that many of them are still there. It sounds like it’s a very independent subsidiary of Yahoo and it really does much of the stuff. You’re just selling many of the items you did before changed much before you merged with your larger parent.

Ari Shahdadi: I would say some things definitely changed, but from at least from the perspective of my role, the only thing that changed was that rather than hiring outside counsel, I now have continued to use Yahoo’s legal department as the outside counsel on a lot of things. And that’s been a wonderful relationship because they feel like they know what’s going on and they feel involved and their legal team learns about our product and our business and how we do things. And obviously, I don’t have to spend money on outside counsel. So I think I have like one or two outside counsel left in very sort of narrow subject matter areas and have not had to do much of the expense management I had to do the two years prior. So in that sense, it’s actually been a very different – still positive – but very different job.

Randy Milch: I can’t imagine you overly miss outside counsel, just as to slice up your day. There’s some benefits but certainly it can be trying at times to deal with them.

Ari Shahdadi: One of the things I loved about the first two years was the journey I went on to find the right outside counsel for the company. And then when I did, it actually was a pleasure to work with them and also I never had to deal with people that I thought were scamming me on bills because I had gone through such a long journey to find the right people. My approach was rather than to have one or two firms that I gave most of the work to to find really great specialists. I’ve got a long list that got along with other people in the company that they would have to work with. So I had a halo of any one moment between five to ten specialist firms working in different areas, like the real estate person, the copyright person. And in that sense, these people were all mentors to me and I learned a lot from them. So I did not have the usual painful experience that most in-house counsel do of dealing with outside counsel and having to scrutinize bills and things like that.

Randy Milch: Sounds like you’ve worked that out very well. What’s in your bailiwick now? Were subject areas seeded to Yahoo or are all the usual subject areas still in your bailiwick, the difference only being that your outside counsel is now mostly in-house lawyers at Yahoo?

Ari Shahdadi: From a legal perspective, anything that touches Tumblr, as one of the Yahoo lawyers I work as captain of the ship and they provide appropriate advice. There are a few areas where I feel that their judgement should override in those various that are of sort of paramount risk importance to Yahoo. But in most cases, I’m still the final decision maker and I still report to David rather than into Yahoo’s legal department. But the nice thing is that over time – and this is not a result of the acquisition, it’s just you’re in the same company for long enough – I have other completely not related to legal areas that I also have received. So I have our community management team and our trust and safety team. In the aggregate, those two teams are the ones that interact directly with our users on a daily basis. So trust and safety team receive all inbound complaints about things that are happening on the site and our community management team does all the support functions for our users and also a lot of proactive outreach on issues and communication about new features and things like that. So those teams together are about thirty people. And then I have our public policy function which for the past the years has been nascent but super important. Particularly to David and to me, but also to our community where we will go out and actually do forward facing advocacy on particular issues that we think are important to the community and try to represent their voice out in the world. So the legal stuff has been great, actually. I had the most fun doing the other thing which has been a fun part of the evolution of the job.

Randy Milch: That’s frequently the case. Let me take a minute and we’ll go for a short break.

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Randy Milch: Welcome back to the second segment of In-House Legal on the Legal Talk Network. Today, we’re with Ari Shahdadi, the general counsel of Tumblr. We’ve been talking about Ari’s journey from MIT to Tumblr. Now, Ari, if we can, let’s turn a little bit to some of the particular legal issues that you find and non legal issues, as you know that some of that stuff is more fun that you’ve found at Tumblr. So, it’s essentially a digital publishing site. I take it that that brings with it some of the usual digital content related issues like piracy and copyright and those sort of items. Have those been from a day to day legal perspective? Do those take up a significant amount of your time and how do you handle them?

Ari Shahdadi: Yeah, I think you’ve identified the crux of the issues, at least early on, I had to really get my head around. So Tumblr ultimately is a user-generated content site where an intermediary for our users to publish things all over the world. And so there are certain core content regulations for UDC sites that you have to make sure you are very scrupulously following. And on top of that there are just the normal site policy issues. What are the norms that you are going to enforce in your network, regardless of the legal background. So the first one, really, that I focus on – and I still to this day focus on because it’s so important – is copyright. So we are bound by the safe harbor provisions of the Digital Millennium Copyright Act, the DMCA, and have a really fringent process to responding to those notices, providing information to rightsholders and users under the law and then allowing users to cancel out or notify should they wish, and building that system. And making sure that system runs well has been a big part of my job and continues to be from an oversight perspective. So now our trust and safety team, which is one of my teams, does the day to day processing of those notices. And actually, hopefully next week or the week after, we’ll be publishing our first copyright and trademark transparency report which will finally give everyone some of the numbers behind that for the past six months. It’s something I’ve been wanting to do for a long time but we just didn’t have the data collection ability until this year. But that’s been a key thing. I think the other two areas that are important to think about, one is TD230. So in the mid 90’s, the Communication Decency Act was passed and it has a provision that allows intermediaries like Tumblr to essentially enforce their policies without worry of gaining first party legal liability for picking and choosing between content. And so a lot of the claims that you might think that we could have levied against us, for example, defamation. It’s sort of the economical example. Like if you feel like one of our users has posted something defaming you, we Tumblr actually have immunity from liability. And it’s a strong immunity. I think it’s one of the smartest laws for platforms that Congress has passed, intentionally or not, which means we don’t get frivolous lawsuits from people. They actually have to go after the user in particular, and there’s plenty of mechanisms for them to do that. And then trademark which is a much murkier area. There is no notice in takedown regimes in trademark law in the US, and so all platforms have to deal with it in a bit of a more fuzzy way. But I would say that’s the area where we see the most abusive notice where people are trying to stifle speech with weak or bogus trademark claims. And then other than that, we deal with all the typical site policies. We’ve had an effort for several years, for example, to tamp down on self harm content which is something that among teenagers online is a big issue. On the other end of it, we’re now in the middle of talking to government agencies about terrorist content. So the UK in particular is very concerned about content that advocates in favor of terrorist organizations or organizations like ISIS. So we are in the middle of that debate. Not only with those government agencies but also with ourselves and with other platforms to figure out what we should be doing to balance freedom of political speech with concerns of these governments that don’t want this content out there.

Randy Milch: But I take it that something like an ISIS horrific beheading video would find no place on a Tumblr platform.

Ari Shahdadi: Absolutely not, and actually we’re fortunate that we’ve had a policy against gore in general for the entire time that I’ve been here. And so those videos immediately get removed. I think the classic things that we may have a disagreement on with these government agencies, particularly in the UK – I have to bring up some examples. But there are these sort of like, literally they’re anime characters saying how great the Islamic state is and talking about all the good things they do and there are no incitements to violence, no recruiting efforts, it’s just propaganda. So from our point of view, when we view these, they tend to look like core political speech rather than incitements to violence or recruiting efforts or things like that. And so that’s the place where I think we’re trying to find a balance between the interests of governments and tamping the speech down. And at the same time, what the essence of core political speech is.

Randy Milch: It’s a complicated issue. Let me ask: do you have human beings? You must get a huge torrent of data every day. Do you have human beings that do this? Have you been able to mechanise that to some respect for all these issues? For the copyright issues, for the political speech issues or the gore issues. Are these done by humans or by machines?

Ari Shahdadi: It’s a great question. So we’ve taken an approach that I think is somewhat unique in our little industry which is that I don’t feel comfortable having machines do any of these things automatically. There’s so much nuance and Sony educates that – and you see it all the time on other platforms where automated takedowns will occur and they’ll take down something that clearly, they shouldn’t have taken down. So we have humans looking at everything but we can call them cyborgs to some extent. Because what we do is we arm them with really powerful tools to enhance their ability to do things quickly with the accuracy of a human being and the thoughtfulness and are of a human being but to be able to do it super efficiently. So compared to the industry benchmarks that I’ve seen, our team is twice as efficient on a per agent basis. So if you count the number of – we call them tickets – requests that come in, my team on a per agent basis processes twice as much as the average team in their space, and I really attribute that. One, it’s good training. I can pat myself on the back all I want, but really, we’ve done a good job of giving them the right tools for the job to do the work quickly and also to be thoughtful about it and make sure the interests of our users are represented, not just the people who are writing in to get stuff taken down.

Randy Milch: It’s interesting, this whole takedown and other copyright issues has taken a number of terms with some of the bigger players. We had Mike Fricklas, the general counsel of Viacom on earlier, and we went over the Viacom versus Youtube/Google fight. Now I saw that YouTube is complaining about Facebook for its use of content. So how do you think this is going to end? Do you think there’s going to be much development in the law or is this just competitive sniping at this point about you’re using my materials and you shouldn’t type of stuff?

Ari Shahdadi: Well, I think we’re converging. I’m generally an optimist, although maybe sometimes people inside Tumblr wouldn’t think so because I have to say no to some things sometimes. I think we’re converging on a good place. We’re great friends with Viacom and have a really positive working relationship with them and care dearly about rightsholders. David’s focus has always been on creators. So we don’t want any of the copyright infringement activities that are happening any more than the rights holders do. And we continue to work with them to make sure that anything that they don’t want on the site is taken down very quickly. And I think that every legitimate actor on the platform side feels the same way and wants to do the same thing. And I think you’re seeing that since the Viacom v Youtube lawsuit, you’re not getting these big disputes among platforms and rights holders. At the same time, I think there are efforts from the movie studios and the record labels to have more comprehensive things happen. And we actually just filed an amicus brief in the MovieTube case. The details of which somewhat escaped me, but the key point is that there’s an order that purports the defined Tumblr, Flickr, several other platforms to make sure that certain content is taken down without actually  being partied to the case. So some of the things like that do happen. At the same time, my understanding and my feeling is that they’re focused on these sort of havens for piracy, and we just want to make sure there are no unintended consequences for those of us who really are doing the right thing. And the efforts that they’re pushing for in the court, I don’t think legislative efforts like SOPA PIPA are going to come back, although I could be wrong. But I think we’re doing a really good job of limiting a problem and converging on a place where everyone’s generally happy – at least I hope so – but we’ll have a few fires here and there. But on the main I think we’re in a fairly good place. Certainly we feel like we’re in a good place here, and when I talk to people at the other platforms, I think generally they feel the same way. The Facebook YouTube issue’s an interesting one because my understanding is what’s happening is that users are taking what they would normally embed as a YouTube embed and then reuploading it to Facebook and then therefore the YouTube creator doesn’t get the credit. And to the same extent, if that happens to us, we will take the reuploaded thing down entirely. So the complains with Facebook I think are related to how they have designed their product rather than a purely legal one. But I assume that Facebook actually will resolved that. They’re very thoughtful about things like this and I’m hoping it doesn’t turn into a bigger issue.

Randy Milch: I just thought it was interesting from a turnabout fair play sort of concept. So let me ask you this: you’re developing, essentially, these public policy issues that play out across your product. How do you as the general counsel and the person who’s dealing with so many of these public policy issues, how does the discussion take place within Tumblr? Do you lead it? Do one of the business folks lead it? Do they see it as what’s this going to do to my ad revenue sort of aspect? How does it play out in Tumblr to get these decisions made?

Ari Shahdadi: Most of the big things that we’ve been involved in originate with me and my team. So I think if I were to put a mission statement on what my teams do as a whole, it’s to advocate for and defend our users. So we try to do the best we can to identify the things that are worrying them now and those are things that they’re talking about on the site. Or issues that we see coming that may have an impact on them. And we focus particularly on entrepreneurs, inventors, creators; the people for whom David built the site for in the first place. So when we identify one of these issues, we try to get a pulse on how we can get our users involved. And so everything that we’ve done, to some extent, we’ll find a position and what we think is the right thing to do and we will advocate for that. But we will also give our users a way for them to express how they feel if they want to. And so what tends to happen internally is I will talk to David about that, we’ll surface that to our leadership team. Although ultimately, really, these issues also come from David himself and how much he cares. I can’t tell you how important it is for a founder and CEO to engage, to enable us to do all of these wonderful things that I think we’ve been able to do. Certainly without his support we wouldn’t have been able to do those. And once David’s on board and he thinks it’s the right thing to do, we’ll talk to the leadership team about it. But doing the right thing from our perspective is always overridden commercial concern. So the two big things we’ve done a lot around have been SOPA PIPA back when that was an issue and then net neutrality the last year. In both cases, commercial concerns were absolutely raised. In both cases we decided to move forward in spite of what the risk profile may be there, because we felt it was the right thing to do. And hope that people would understand that we were moving with our conscience rather than our business minds, and I think people did.

Randy Milch: You’ve been inordinately successful I think in both aspects. You and I discussed net neutrality in detail. In other instances we don’t have time unfortunately, today, to go over that fertile ground, but maybe we’ll do so in another half hour. But Ari, I want to thank you very much for spending time with me today on In-House Legal. It’s been a great and informative half hour and I very much appreciate you taking the time to do it.

Ari Shahdadi: Thank you Randy, I really appreciate it.

Randy Milch: And I would like to thank all of you who have listened to our podcast today. For all of you listeners who would like more information about what you’ve heard today, please visit www.LegalTalkNetwork.com. Or you can also follow us on iTunes, RSS, Twitter, and Facebook. That brings us to the end of our show. I’m Randy Milch, thank you for listening and please join us next time for another great episode of In-House Legal.
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