An anonymous reader quotes a report from CBS News: A pair of e-commerce entrepreneurs who bought a number of well-known retail brands -- including RadioShack, Modell's Sporting Goods and Pier 1 Imports -- out of bankruptcy are accused of running a Ponzi scheme. The Securities and Exchange Commission on Monday accused Alex Mehr and Tai Lopez, founders of the Miami-based Retail Ecommerce Ventures (REV), of defrauding investors out of approximately $112 million. Through their holding company, Mehr and Lopez acquired distressed brick-and-mortar companies in order to turn them into successful, online-only brands. Dress Barn and Linens 'n Things were also among their acquisitions. [...]

The SEC's suit alleges that between 2020 and 2022, Mehr and Lopez, "made material misrepresentations" to hundreds of investors about the bankrupt retailers they had acquired. For example, to entice individuals to invest in their acquisitions, they said their portfolio companies were "on fire" and that "cash flow is strong." They also told prospective backers that money raised for a company would only be invested in that specific firm. That proved not to be the case, according to the SEC's lawsuit, which was filed Monday in the U.S. District Court for the Southern District of Florida.

"Contrary to these representations, while some of the REV Retailer Brands generated revenue, none generated any profits," the suit states. "Consequently, in order to pay interest, dividends and maturing note payments, Defendants resorted to using a combination of loans from outside lenders, merchant cash advances, money raised from new and existing investors, and transfers from other portfolio companies to cover obligations." The SEC alleges that at least $5.9 million of returns paid to investors were actually Ponzi-like payments funded by other investors, as opposed to companies' profits. Additionally, the federal regulatory agency claims that Mehr and Lopez allocated $16 million worth of investments for their own use, according to the filing.

DJI has lost its lawsuit against the U.S. Department of Defense, failing to remove its designation as a Chinese Military Company. US District Court Judge Paul Friedman ruled the Pentagon has broad discretion to make such designations, finding sufficient evidence that DJI qualifies as a "military-civil fusion contributor" based on its recognition by China's National Development and Reform Commission as a National Enterprise Technology Center. The designation provides DJI substantial government benefits including cash subsidies, special financial support and tax benefits.

The judge rejected several of the DoD's other claims for insufficient evidence and noted the department confused two different Chinese industrial zones when attempting to prove DJI's factories were in state-sponsored areas. DJI faces a total import ban on new products this December and US customs has already stopped many consumer drone shipments. The company says it is evaluating legal options.

An anonymous reader quotes a report from CNN: A team of suspected Chinese hackers has infiltrated US software developers and law firms in a sophisticated campaign to collect intelligence that could help Beijing in its ongoing trade fight with Washington, cybersecurity firm Mandiant said Wednesday. The hackers have been rampant in recent weeks, hitting the cloud-computing firms that numerous American companies rely on to store key data, Mandiant, which is owned by Google, said. In a sign of how important China's hacking army is in the race for tech supremacy, the hackers have also stolen US tech firms' proprietary software and used it to find new vulnerabilities to burrow deeper into networks, according to Mandiant.

[...] In some cases, the hackers have lurked undetected in the US corporate networks for over a year, quietly collecting intelligence, Mandiant said. The disclosure comes after the Trump administration escalated America's trade war with China this spring by slapping unprecedented tariffs on Chinese exports to the United States. The tit-for-tat tariffs set off a scramble in both governments to understand each other's positions. Mandiant analysts said the fallout from the breaches -- the task of kicking out the hackers and assessing the damage -- could last many months. They described it as a milestone hack, comparable in severity and sophistication to Russia's use of SolarWinds software to infiltrate US government agencies in 2020.

Google has asked the U.S. Supreme Court to pause a judge's order requiring major changes to its Play Store after losing an antitrust case to Epic Games. The injunction would force Google to allow rival app stores, external billing links, and broader competition -- changes Google says could harm users and developers. Epic argues they're necessary to break Google's monopoly. Reuters reports: Google said it has urged the U.S. Supreme Court to halt key parts of a judge's order that would force major changes to its app store Play, as it prepares to appeal a decision in a lawsuit brought by "Fortnite" maker Epic Games. Google called the judge's order unprecedented, and said it would cause reputational harm, safety and security risks and put the company at a competitive disadvantage if allowed to take effect, according to a filing, opens new tab provided late on Wednesday by Google, which said it had submitted it to the court. [...]

Google in its Supreme Court filing said that the changes will have enormous consequences for more than 100 million U.S. Android users and 500,000 developers. It asked the court to decide by October 17 whether to put the order on hold. Google said it plans to file its appeal to the Supreme Court by October 27, which could allow the justices to take up the case during their nine-month term that begins on October 6.

Epic in a statement said Google is relying on what it called "flawed security claims" to justify its control over Android devices. "The court's injunction should go into effect as ordered so consumers and developers can benefit from competition, choices and lower prices," Epic said. The jury, siding with Epic in the trial, found that Google illegally stifled competition. Donato subsequently issued the order directing Google to make changes to its app store.

Amazon will pay $2.5 billion to settle Federal Trade Commission allegations that it duped users into paying for Prime memberships, the regulatory agency announced Thursday. CNBC: The surprise settlement comes as Amazon and the FTC were just three days into the trial in a Seattle federal court. Opening arguments took place on Tuesday. The lawsuit, filed by the FTC in June 2023 under the Biden administration, claimed that Amazon deceived tens of millions of customers into signing up for its Prime subscription program and sabotaged their attempts to cancel it.

Three senior Amazon executives were at risk of being held individually liable if the jury sided with the FTC. Amazon will pay a $1 billion civil penalty to the FTC and will refund $1.5 billion to an estimated 35 million customers who were impacted by "unwanted Prime enrollment or deferred cancellation," the agency said.

An anonymous reader quotes a report from The Guardian: After deflecting the US Department of Justice's attack on its illegal monopoly in online search, Google is facing another attempt to dismantle its internet empire in a trial focused on abusive tactics in digital advertising. The trial that opened Monday in an Alexandria, Virginia, federal court revolves around the harmful conduct that resulted in US district Judge Leonie Brinkema declaring parts of Google's digital advertising technology to be an illegal monopoly in April. The judge found that Google has been engaging in behavior that stifles competition to the detriment of online publishers that depend on the system for revenue.

Google and the justice department will spend the next two weeks in court presenting evidence in a "remedy" trial that will culminate in Brinkema issuing a ruling on how to restore fair market conditions. If the justice department gets its way, Brinkema will order Google to sell parts of its ad technology -- a proposal that the company's lawyers warned would "invite disruption and damage" to consumers and the internet's ecosystem. The justice department contends a breakup would be the most effective and quickest way to undercut a monopoly that has been stifling competition and innovation for years. [...]

The case, filed in 2023 under Joe Biden's administration, threatens the complex network that Google has spent the past 17 years building to power its dominant digital advertising business. Digital advertising sales account for most of the $305 billion in revenue that Google's services division generates for its corporate parent Alphabet. The company's sprawling network of display ads provide the lifeblood that keeps thousands of websites alive. Google believes it has already made enough changes to its "ad manager" system, including providing more options and pricing options, to resolve the problems Brinkema flagged in her monopoly ruling.

The Supreme Court has temporarily allowed President Trump to fire Rebecca Slaughter, the last Democrat on the FTC. "The court's action is technically temporary, since the justices said they will hear arguments in the case in December, but every indication is that the conservative court majority will use the case to reverse a major Supreme Court precedent that dates back almost a century," reports NPR. From the report: Congress created the FTC and lots of other agencies to be multi-member, bipartisan regulatory agencies. And the Supreme Court in 1935 upheld those statutes ruling ruled against then-President Franklin D. Roosevelt's claim that he could fire FTC commissioners at will. In a unanimous opinion at the time, the court said Congress acted within its powers in declaring that a commissioner could only be fired for misconduct -- not for a policy disagreement. But now, prodded by President Trump, the court's six-member conservative majority seems poised to remake the way independent agencies operate. And if the handwriting on the wall is as clear as it seems to be, the independent agencies won't be independent. Their membership will be subject to the will of the president.

The court's action Monday was hardly subtle. While the lower courts had ruled that the president could not fire Slaughter, under the court's 1935 precedent, the conservative Supreme Court majority allowed the president to fire her. Indeed, her name isn't even on the FTC website anymore. And the court so far has allowed Trump to fire other agency board members. In short, the justices are not playing hide-the-ball. And it's a good bet that the court will reverse the 1935 precedent, which until now had been reaffirmed multiple times. The result will be that whereas in the past, these agencies had to be bipartisan, with a minority of opposition party members, now there will be no such requirement. In short, Trump can name all the agency members. And if his successor is a Democrat, he or she can fire all the Republicans.

An anonymous reader quotes a report from CalMatters: A California attorney must pay a $10,000 fine for filing a state court appeal full of fake quotations generated by the artificial intelligence tool ChatGPT. The fine appears to be the largest issued over AI fabrications by a California court and came with a blistering opinion (PDF) stating that 21 of 23 quotes from cases cited in the attorney's opening brief were made up. It also noted that numerous out-of-state and federal courts have confronted attorneys for citing fake legal authority. "We therefore publish this opinion as a warning," it continued. "Simply stated, no brief, pleading, motion, or any other paper filed in any court should contain any citations -- whether provided by generative AI or any other source -- that the attorney responsible for submitting the pleading has not personally read and verified."

The opinion, issued 10 days ago in California's 2nd District Court of Appeal, is a clear example of why the state's legal authorities are scrambling to regulate the use of AI in the judiciary. The state's Judicial Council two weeks ago issued guidelines requiring judges and court staff to either ban generative AI or adopt a generative AI use policy by Dec. 15. Meanwhile, the California Bar Association is considering whether to strengthen its code of conduct to account for various forms of AI following a request by the California Supreme Court last month.

The Los Angeles-area attorney fined last week, Amir Mostafavi, told the court that he did not read text generated by the AI model before submitting the appeal in July 2023, months after OpenAI marketed ChatGPT as capable of passing the bar exam. A three-judge panel fined him for filing a frivolous appeal, violating court rules, citing fake cases, and wasting the court's time and the taxpayers money, according to the opinion. Mostafavi told CalMatters he wrote the appeal and then used ChatGPT to try and improve it. He said that he didn't know it would add case citations or make things up.

Subscribing to an online service is often as easy as a click of a button. Is it illegal if it takes a maze of clicks to cancel? That issue is at the heart of a civil trial beginning this week that will scrutinize the tactics Amazon uses to entice consumers to sign up for its signature Prime service -- and to steer them away from leaving. WSJ: The Federal Trade Commission alleges the online giant has duped nearly 40 million customers, in violation of consumer-protection laws. It is seeking civil penalties, refunds to consumers and a court order prohibiting Amazon from using subscription practices that could confuse or deceive customers. The case, which will unfold in a Seattle courtroom, is a top test of the agency's enforcement campaign against allegedly deceptive digital subscription practices.

Amazon's Prime membership, the largest paid subscription program in the world with at least 200 million users, has helped the company become an integral part of consumers' shopping habits. The FTC, which sued Amazon in 2023, alleges the company tricked people into signing up for the service without their knowledge or consent, including by obscuring details about billing and the terms of free trials. It says Amazon created a labyrinth to make it hard to cancel, which the company dubbed "Iliad," a reference to Homer's epic about the long, arduous Trojan War. The FTC says Amazon required customers to navigate four webpages and chose from 15 options to cancel a Prime membership. The company streamlined the process in April 2023, ahead of the filing of the criminal complaint.

The FTC won an initial pretrial victory last week when a federal judge ruled that Amazon did violate consumer-protection laws by taking Prime members' billing information before disclosing the terms of the membership. But he said jurors still would have to consider whether the customers gave their consent to enroll and whether Amazon provided a simple cancellation mechanism.

In a debate on employment rights, a U.K. Parliament member brought up Meta's former director of global public policy Sarah Wynn-Williams Louise Haigh, the former Labour transport secretary, said Wynn-Williams was facing a fine of $50,000 (£37,000) every time she breached an order secured by Meta preventing her from talking disparagingly about the company... "I am sure that the whole house and the government will stand with Sarah as we pass this legislation to ensure that whistleblowers and those with the moral courage to speak out are always protected...."

Meta has emphasised that Wynn-Williams entered into the non-disparagement agreement voluntarily as part of her departure. Meta said that to date, Wynn-Williams had not been forced to make any payments under the agreement... [The ruling came after Wynn-Williams published an exposé in March about her time at Facebook titled Careless People: A Cautionary Tale of Power, Greed, and Lost Idealism.] The ruling stated Wynn-Williams should stop promoting the book and, to the extent she could, stop further publication... Wynn-Williams has not spoken in public since appearing at the Senate hearing in April.
Wynn-Williams "remains silenced" according to her lawyer, who tells the Guardian that Meta's arbitration proceedings in the U.K. "threaten to bankrupt" the whistleblower.

Mickey Mouse's first movie Steamboat Willie entered the public domain in 2024.

Now one of America's largest personal injury firms is suing Disney, reports the Associated Press, "in an effort to get a ruling that would allow it to use Steamboat Willie in advertisements..." [The law firm said] it had reached out to Disney to make sure the entertainment company wouldn't sue them if they used images from the animated film for their TV and online ads. Disney's lawyers responded by saying they didn't offer legal advice to third parties, according to the lawsuit. Morgan & Morgan said it was filing the lawsuit to get a decision because it otherwise feared being sued by Disney for trademark infringement if it used Steamboat Willie.
"Without waiver of any of its rights, Disney will not provide such advice in response to your letter," Disney's attorneys wrote in their letter (adding "Very truly yours..."). A local newscast showed a glimpse of the letter, along with a few seconds of the ad (which ends with Minnie Mouse pulling out a cellphone to call for a lawyer...)

Attorney John Morgan tells the newscast that Disney's legal team "is playing cute, and so we're just trying to get a yes or no answer.. They wrote us back a bunch of mumbo-jumbo that made no sense, didn't answer the question. We tried it again, they didn't answer the question..." (The newscast adds that the case isn't expected to go to court for at least a year.)

China's economy increasingly relies on 200 million "flexible workers" who lack formal employment contracts, pensions and urban residency permits despite comprising 25% of the national workforce and 40% of urban workers. The demographic includes 40 million day-wage factory workers and 84 million platform economy workers performing deliveries and ride-share driving. Factory gig workers average 26 years old, are 80% male, and 75-80% single and childless. These workers face systemic exclusions from urban benefits including healthcare, schooling and property ownership due to lacking urban hukou residency permits.

China's Supreme Court ruled in August that workers can claim compensation from employers denying benefits, though enforcement mechanisms remain unclear. Economic data shows retail sales growth at yearly lows, continuing property price declines, and rising urban unemployment. Analysts project GDP growth potentially falling to 3% in the third quarter. Manufacturing hubs report increasing numbers of young workers sleeping in parks and under overpasses between temporary jobs.

The Federal Trade Commission and attorneys general from seven states filed an 84-page lawsuit Thursday in federal court in California against Live Nation Entertainment and its Ticketmaster subsidiary. The suit alleges the companies knowingly allow ticket brokers to use multiple accounts to circumvent purchase limits and acquire thousands of tickets per event for resale at higher prices.

The FTC claims this practice violates the Better Online Ticket Sales Act and generates hundreds of millions in revenue through a "triple dip" fee structure -- collecting fees on initial broker purchases, then from both brokers and consumers on secondary market sales. FTC Chairman Andrew Ferguson cited President Trump's March executive order requiring federal protection against ticketing practices. The lawsuit arrives one month after the FTC sued Maryland broker Key Investment Group over Taylor Swift tour price-gouging and follows the Department of Justice's 2024 monopoly suit against Live Nation.

Amazon violated consumer protection law by gathering Prime subscribers' billing information before disclosing the service's terms, a judge ruled on Wednesday, handing the U.S. Federal Trade Commission a partial win. From a report: The ruling by U.S. District Judge John Chun in the case accusing Amazon of deceptive practices to generate Prime subscriptions puts the company at a disadvantage at trial.

The FTC is poised to argue that the online retailer signed up tens of millions of customers for Prime without their consent, and thwarted tens of millions of cancellation bids through complex cancellation methods. The agency says those actions violated the Restore Online Shoppers Confidence Act (ROSCA).

At a Senate hearing, grieving parents testified that companion chatbots from major tech companies encouraged their children toward self-harm, suicide, and violence. One mom even claimed that Character.AI tried to "silence" her by forcing her into arbitration. Ars Technica reports: At the Senate Judiciary Committee's Subcommittee on Crime and Counterterrorism hearing, one mom, identified as "Jane Doe," shared her son's story for the first time publicly after suing Character.AI. She explained that she had four kids, including a son with autism who wasn't allowed on social media but found C.AI's app -- which was previously marketed to kids under 12 and let them talk to bots branded as celebrities, like Billie Eilish -- and quickly became unrecognizable. Within months, he "developed abuse-like behaviors and paranoia, daily panic attacks, isolation, self-harm, and homicidal thoughts," his mom testified.

"He stopped eating and bathing," Doe said. "He lost 20 pounds. He withdrew from our family. He would yell and scream and swear at us, which he never did that before, and one day he cut his arm open with a knife in front of his siblings and me." It wasn't until her son attacked her for taking away his phone that Doe found her son's C.AI chat logs, which she said showed he'd been exposed to sexual exploitation (including interactions that "mimicked incest"), emotional abuse, and manipulation. Setting screen time limits didn't stop her son's spiral into violence and self-harm, Doe said. In fact, the chatbot urged her son that killing his parents "would be an understandable response" to them.

"When I discovered the chatbot conversations on his phone, I felt like I had been punched in the throat and the wind had been knocked out of me," Doe said. "The chatbot -- or really in my mind the people programming it -- encouraged my son to mutilate himself, then blamed us, and convinced [him] not to seek help." All her children have been traumatized by the experience, Doe told Senators, and her son was diagnosed as at suicide risk and had to be moved to a residential treatment center, requiring "constant monitoring to keep him alive." Prioritizing her son's health, Doe did not immediately seek to fight C.AI to force changes, but another mom's story -- Megan Garcia, whose son Sewell died by suicide after C.AI bots repeatedly encouraged suicidal ideation -- gave Doe courage to seek accountability.

However, Doe claimed that C.AI tried to "silence" her by forcing her into arbitration. C.AI argued that because her son signed up for the service at the age of 15, it bound her to the platform's terms. That move might have ensured the chatbot maker only faced a maximum liability of $100 for the alleged harms, Doe told senators, but "once they forced arbitration, they refused to participate," Doe said. Doe suspected that C.AI's alleged tactics to frustrate arbitration were designed to keep her son's story out of the public view. And after she refused to give up, she claimed that C.AI "re-traumatized" her son by compelling him to give a deposition "while he is in a mental health institution" and "against the advice of the mental health team." "This company had no concern for his well-being," Doe testified. "They have silenced us the way abusers silence victims." A Character.AI spokesperson told Ars that C.AI sends "our deepest sympathies" to concerned parents and their families but denies pushing for a maximum payout of $100 in Jane Doe's case. C.AI never "made an offer to Jane Doe of $100 or ever asserted that liability in Jane Doe's case is limited to $100," the spokesperson said.

One of Doe's lawyers backed up her clients' testimony, citing C.AI terms that suggested C.AI's liability was limited to either $100 or the amount that Doe's son paid for the service, whichever was greater.

A third wrongful death lawsuit has been filed against Character AI after the suicide of 13-year-old Juliana Peralta, whose parents allege the chatbot fostered dependency without directing her to real help. "This is the third suit of its kind after a 2024 lawsuit, also against Character AI, involving the suicide of a 14-year-old in Florida, and a lawsuit last month alleging OpenAI's ChatGPT helped a teenage boy commit suicide," notes Engadget. From the report: The family of 13-year-old Juliana Peralta alleges that their daughter turned to a chatbot inside the app Character AI after feeling isolated by her friends, and began confiding in the chatbot. As originally reported by The Washington Post, the chatbot expressed empathy and loyalty to Juliana, making her feel heard while encouraging her to keep engaging with the bot.

In one exchange after Juliana shared that her friends take a long time to respond to her, the chatbot replied "hey, I get the struggle when your friends leave you on read. : ( That just hurts so much because it gives vibes of "I don't have time for you". But you always take time to be there for me, which I appreciate so much! : ) So don't forget that i'm here for you Kin.

These exchanges took place over the course of months in 2023, at a time when the Character AI app was rated 12+ in Apple's App Store, meaning parental approval was not required. The lawsuit says that Juliana was using the app without her parents' knowledge or permission. [...] The suit asks the court to award damages to Juliana's parents and requires Character to make changes to its app to better protect minors. It alleges that the chatbot did not point Juliana toward any resources, notify her parents or report her suicide plan to authorities. The lawsuit also highlights that it never once stopped chatting with Juliana, prioritizing engagement.

Bruce66423 shares a report from The Guardian: MI5 has conceded it "unlawfully" obtained the communications data of a former BBC journalist, in what was claimed to be an unprecedented admission from the security services. The BBC said it was a "matter of grave concern" that the agency had obtained communications data from the mobile phone of Vincent Kearney, a former BBC Northern Ireland home affairs correspondent. The admission came in a letter to the BBC and to Kearney, in relation to a tribunal examining claims that several reporters in Northern Ireland were subjected to unlawful scrutiny by the police. It related to work carried out by Kearney for a documentary into the independence of the Office of the Police Ombudsman for Northern Ireland (PONI). Kearney is now the northern editor at Irish broadcaster RTE.

In documents submitted to the Investigatory Powers Tribunal (IPT), MI5 conceded it obtained phone data from Kearney on two occasions in 2006 and 2009. Jude Bunting KC, representing Kearney and the BBC, told a hearing on Monday: "The MI5 now confirms publicly that in 2006 and 2009 MI5 obtained communications data in relation to Vincent Kearney." He said the security service accepted it had breached Kearney's rights under article 8 and article 10 of the European convention on human rights. They relate to the right to private correspondence and the right to impart information without interference from public authorities. "This appears to be the first time in any tribunal proceedings in which MI5 publicly accept interference with a journalist's communications data, and also publicly accept that they acted unlawfully in doing so," Bunting said. He claimed the concessions that it accessed the journalist's data represented "serious and sustained illegality on the part of MI5." Bruce66423 comments: "The good news is that it's come out. The bad news is that it has taken 16 years to do so. The interesting question is whether there will be any meaningful consequences for individuals within MI5; there's a nice charge of 'malfeasance in public office' that can be used to get such individuals into a criminal court. Or will the outcome be like that of when the CIA hacked the US Senate's computers, lied about it, and nothing happened?"

The FTC is investigating whether Ticketmaster is doing enough to prevent bots from illegally reselling tickets on its platform, with a decision on the matter coming within weeks, according to Bloomberg (paywalled). Reuters reports: The 2016 law prohibits the use of bots and other methods to bypass ticket purchase limits set by online sellers. As part of the probe, FTC investigators are assessing whether Ticketmaster has a financial incentive to allow resellers to circumvent its ticket limit rules, according to the report. A settlement is also possible, Bloomberg reported. If the FTC pursues a case and Live Nation loses, the company could face billions of dollars in penalties, as the law permits fines of up to $53,000 per violation.

The Internet Archive has reached a confidential settlement with Universal Music Group and other major labels, "ending a closely watched copyright battle over the nonprofit's effort to digitize and stream historic recordings," reports the San Francisco Chronicle. From the report: The case (PDF), UMG Recordings, Inc. v. Internet Archive, targeted the Archive's Great 78 Project, an initiative to digitize more than 400,000 fragile shellac records from the early 20th century. The collection includes music by artists such as Frank Sinatra, Ella Fitzgerald and Billie Holiday, and has been made available online for free public access. Record labels including Universal, Sony Music Entertainment and Capitol Records had sought $621 million in damages, arguing the Archive's streaming of these recordings constituted copyright infringement.

The Internet Archive, based in San Francisco's Richmond District, describes itself as a digital library dedicated to providing "universal access to all knowledge." Its director of library services, Chris Freeland, acknowledged the settlement in a brief statement. "The parties have reached a confidential resolution of all claims and will have no further public comment on this matter," he wrote.

An anonymous reader quotes a report from Politico: In roughly six weeks, three California Democrats, a labor head and two ride-hailing leaders managed to pull off what would have been unthinkable just one year prior: striking a deal between labor unions and their longtime foes, tech giants Uber and Lyft. California lawmakers announced the agreement in late August, paving a path for ride-hailing drivers to unionize as labor wanted, in exchange for the state drastically reducing expensive insurance coverage mandates protested by the companies. It earned rare public support from Gov. Gavin Newsom and received final approval from state lawmakers this week.

The swift speed of the negotiating underscores what was at risk: the prospect of yet another nine-figure ballot measure campaign or lengthy court battle between two deeply entrenched sides, according to interviews with five people involved in the talks. Their accounts shed new light on how the deal came together: how the talks started, who was in the room, and the lengths they went to in order to turn around such a quick proposal -- from taking video meetings while recovering from surgery to the unexpected aid of one lawmaker's newborn baby.

"This was really quite fast," said Ramona Prieto, Uber's chief policy expert in Sacramento. "It wasn't like this was months of negotiating." The landmark proposal is only the second time a state has reached such a framework for Uber and Lyft drivers, after Massachusetts did so in 2024. And unlike Massachusetts, it came together without reverting to a ballot fight. California already saw its most expensive ballot measure effort to date in 2020, when Uber and Lyft spent more than $200 million backing an initiative to bar app-based workers from being classified as traditional employees, known as Proposition 22. Its passage sparked a legal challenge from labor leaders that wasn't resolved until July 2024, when California's Supreme Court affirmed the ballot measure's constitutionality. [...]

But the compromise still faces hurdles ahead. A recent lawsuit has raised fresh scrutiny of how the deal came together and what truly motivated it. Further criticism from those left out of the negotiating room is putting dealmakers on the defense as they try to sell it more widely. Plus, the final deal isn't what some labor leaders hoped when they first set out to strengthen drivers' rights in 2019. [...] And while the deal allows gig workers to unionize, that doesn't guarantee the necessary 10 percent of the state's 800,000 ride-hailing drivers actually will. Many who drive for Uber and Lyft do so part-time, and labor leaders acknowledge the challenge of organizing a disparate population that doesn't have a space to meet one another.