Sometimes you just can't win for losing. Prodigy, for instance, recently lost a $200 million lawsuit because it didn't practice enough censorship--this, after its ears were soundly boxed in 1991 for too much censorship.
Four years ago, Prodigy screened 100,000 public messages per week for potentially offensive words or phrases. When word of the censorship leaked out, civil libertarians and Prodigy customers didn't censor their comments about infringements of First Amendment rights. Of course, Prodigy's checkered history regarding censorship didn't help, especially considering the company's 1989 decision to edit and eventually pull the plug on a public forum where religious fundamentalists and gay-rights activists were verbally battling.
Still, neither of these controversies went to the bottom line like this recent ruling. In this case, the investment bank Stratton Oakmont charged a Prodigy subscriber with making libelous statements about the bank. The bank claimed that Prodigy should have edited or deleted the remarks, since it was known to edit or delete other comments. Prodigy countered that, like the phone company or bookstore, it's a common carrier and not responsible for the contents of what it carries.
New York State Court Judge Stuart Ain sided with Stratton Oakmont, describing Prodigy as a publisher subject to the rules of libel because the online provider took steps toward censorship in the first place. "Prodigy's conscious choice, to gain the benefits of editorial control has opened it up to a greater liability than CompuServe and other computer networks that make no such choices," wrote Judge Ain. This was in line with a 1991 ruling in which a federal judge threw out a libel suit against CompuServe because that provider simply distributed--but did not edit--a newsletter that contained potentially libelous material.
And then there's Intel. Still smarting from a ton of bad publicity over defective Pentiums, the semiconductor giant came up with a thinly veiled philanthropy scheme to recoup some of its public-relations losses. Alas, The Wall Street Journal shellacked Intel for the plot--and on the front page, no less. At issue was Intel's "generous" offer to help finance and build a Rio Rancho, New Mexico, high school by guaranteeing $28.5 million in construction financing.
But the WSJ reports that there's nothing generous about the Intel offer. Through out-of-state land developers who were in cahoots with local government, Intel finagled lower corporate-income taxes, exemptions from property taxes and gross-receipts taxes on equipment purchases, taxpayer-funded employee recruitment and training, guarantees of rapid grants for permits, and deep discounts on everything from moving fees to employee utility deposits. Furthermore, the Sandoval County Commission will issue up to $8 billion in industrial-revenue bonds to finance Intel's plant expansion.
In the long run, however, Rio Rancho taxpayers will still have to pay for the school. The plan reportedly requires that the school district lease the high school for $1 a year for the 30-year life of the bonds, then buy the facilities when the bonds are paid off.
Granted, busing school kids up to 70 miles a day to already-overcrowded Albuquerque schools isn't necessarily safe or conducive to learning. However, the scenario that led to this less-than desirable situation was, to some extent, of Rio Rancho's own making. Since the late 1980s, developers had been pushing to secede from the Albuquerque district and build their own schools. With this kind of background noise, Rio Rancho understandably didn't get much sympathy from Albuquerque when it came to planning new schools. Into this mix strolled Intel which, with the help of a $114 million incentive package that included tax breaks, quickly put up a manufacturing plant and started cranking out microprocessors. As befits its roots in the orchards of the Santa Clara Valley, Intel knows when plums are ripe for picking.
When it comes time to pay the piper, a new generation of Rio Rancho taxpayers will be held accountable. The out-of-state developers will be gone, Intel will have other CISCs to fry, and taxpayers will be scratching their heads while digging deeper into their pockets.
Of course, until the Rio Rancho school issue came up, Intel had never suggested that philanthropy was part of its corporate mission. If the company really did care about the community, it might have followed the lead of Microsoft's Bill Gates, who in 1992 donated $6 million of his own money towards constructing an information-science building at Stanford University--an institution he has no affiliation with whatsoever. From his perspective, Gates simply wanted "to invest in the future of the industry" (okay, and get a nice tax deduction in the process). Or maybe Intel should look to HP's William Hewlett, who donated $15 million as part of a $50 million grant to the Bay Area School Reform Collaborative. Since Intel wants to promote its "benevolent" interest in education, maybe the company should study Gates' and Hewlett's unselfish acts and create a situation in which everyone wins all the time.
Jonathan Erickson
editor-in-chief
Copyright © 1995, Dr. Dobb's Journal