On this episode: The FTC bans most noncompete agreements, the implications of the TikTok “ban,” why a 2017 law is hitting startups with huge tax bills seven years later, and the return of net neutrality. Plus: the wunderkind hacker who ransomed Finland’s anxieties and secrets.
In a narrow vote, the US Federal Trade Commission banned almost all noncompete agreements, a staple of the tech industry for years.
Learn how a 2017 tax law is haunting startups in 2024.
Finnish hacker Aleksanteri Kivimäki exposed tens of thousands of confidential psychiatric records and tried to extort payment directly from the affected patients. Read more about it here or here.
It happened: President Biden signed the TikTok “ban,” setting a deadline for the platform’s parent company, China-based ByteDance, to divest the app within a year. And TikTok faces yet more hurdles ahead.
Net neutrality is back, baby. Here’s what that means.
[intro music plays]
Ryan Donovan Want to hear more from tech leaders shaping the future? Join Roblox founder and CEO, David Baszucki, as he sits down with visionaries that are advancing human connection and dives deep on the innovation happening at Roblox every day. Tune in to Roblox Tech Talks at corp.roblox.com/techtalks or listen wherever you get your podcasts.
Ben Popper Hello, everybody. Welcome back to the Stack Overflow Podcast, a place to talk all things software and technology. I am Ben Popper, Director of Content here at Stack Overflow, joined today by one of my colleagues and collaborators on the content team, our Senior Writer, Eira May.
Eira May How's it going?
BP Pretty good. Ryan and I discussed this story many months ago but I want to revisit it. In 2017 there were some big tax cuts that were put in place in the United States, and to pay for them in the future they said, “We're going to make some more money in these creative ways,” one of which was that companies can no longer amortize their R&D spend in the year that it occurs but have to spread it out over five years. The first time Ryan and I talked about this, I couldn't wrap my mind around what it meant. I knew that startups were saying it was bad, but I couldn't understand it.
EM So explain this to me. Can you explain this to me like I just recently reminded myself what amortized means?
BP So what this means is, you are a startup, you're a startup business of any kind, but let's say you're a software startup and you just raised some money and you have an app out and you have a few customers. In a year, you got a million dollars in revenue, but you also have five talented software developers, each of whom has a salary of $200,000, and so you also spent a million dollars, so your company is not profitable. In fact, there are probably other expenses you have besides your software developers, but let's just keep it simple for this example. In the past, when it came time to pay taxes you would say, “Well, I made a million dollars in revenue, but I spent a million dollars on R&D so I broke even so I don't know any taxes this year.” But now what you have to do is you have to break that million dollars you spent on R&D, which is your software developers, up over five years. So you have to say, “I got a million dollars from my customers. I spent a million dollars on my software developers, but I can only write off 200,000 of that, so I now owe taxes on $800,000 in income, despite having no profit.”
EM Right, starting to see the problem.
BP As you can see, that would clearly pose an issue. So it's unclear what's going to happen now. Congress in the United States I think recognized that this issue was unsustainable from the perspective of supporting small businesses in the United States, but as usual in our dysfunctional political world, some other things were attached to the bill to get rid of it and now people are arguing over those things which have nothing to do with this particular issue and so the bill has stalled out. And everybody was hoping and praying and assuming that they’re going to get this done before April 15th, so now startups are delaying paying their taxes, incurring some possible penalties and putting themselves in a fairly precarious situation, hoping that this will get worked out before the bill comes due. But it is a bad situation.
EM That doesn't really improve the overall picture that I've heard folks painting about the tech industry being a little precarious in terms of investment in jobs.
BP Right. So that's some pretty grim news for startups. Hopefully things will get worked out. In some positive news for startups, Eira, do you want to take this one since you shared the link? The US Federal Trade Commission has banned noncompete agreements, which for as long as I've lived, were a staple of Silicon Valley work. You would go to a big tech company with a high paying job in a certain division. You could not go work for one of their competitors for X number of years after you left, and so that obviously limited your options to get an offer from outside and then use that to argue for a raise. But tell me a little bit more about what's happening here.
EM So the FTC, which is the Federal Trade Commission, on Tuesday of this week voted narrowly to ban basically all noncompete agreements, which are just what you said– they’re agreements that prevent workers from leaving their employers to go work at a competitor or to start their own business as a competitor. And they're a fixture in Silicon Valley also across other industries. With one of my first copywriting jobs, I had to sign a noncompete agreement that I wouldn't go work for any of the other copywriting outfits in town. Just kind of wild to think about doing that for copywriters, but I guess I'll take it as a compliment. So this is a pretty game changing situation. The FTC is saying that probably about 30 million people, one in five Americans, are bound by noncompetes. A lot of those folks are in the C-suite of course, but a lot of them are not. Like I mentioned, it's not just people in executive roles who are often bound by noncompete agreements.
RD The executive role caveat is important because there is a carve-out exception for those. Those are still enforceable because it's assumed that those are negotiated noncompetes.
EM Right, and that makes sense to me. If you're coming in at a high level and you're negotiating your whole package of your compensation and your schedule and your areas of mastery, it seems like you would at that point fold in the noncompete into that conversation.
RD I think one of the first things I read about this is that we're going to get so many new indie games because of this.
EM Oh, wow.
RD Because all of the people working in the game community were not allowed to compete or start their own game.
BP Ooh, cool.
EM Good time to be a gamer.
RD There you go. But it does seem like this is a long time coming where it's like, “Oh, you can't work for anybody else vaguely related to us.”
BP There is a fascinating story in Bloomberg this week. It's about an infamous, I want to say, hacker wunderkind who's on trial for the largest crime in Finland's history. Yikes. Eira, do you want to tell me a little about this one?
EM Yeah. More bad news on the cybersecurity front. This is a hacker from Finland named Aleksanteri Kivimäki, although he went by Julius Kivimäki for most of his career. And essentially what happened was he breached a psychotherapy provider and stole tens of thousands of records from psychotherapy patients and then tried to individually extort the patients for money in exchange for keeping silent about the secrets they had spilled to their therapists. He initially tried to extort money directly from the company, but then that didn't work so he just started leaking the patient records and trying to extort folks individually. So he was just recently released from custody it looks like, but still banned from traveling anywhere.
BP What a scumbag. Not cool.
EM Very uncool, very uncool.
RD And I feel like, especially for Finland which is a notoriously, not antisocial but reticent country where if you have two people at a bus station, they will optimize to be as far apart as possible.
EM Maybe that's why they're also the happiest country across all of them. But actually this article is a long read in Bloomberg that I thought was a really worth-reading feature. And one of the points they made was that the sentence the prosecutors were seeking was so out of step with basically any other sentence that had been sought for similar crimes in Finland, not just because there really were no similar crimes up to this point, but because people felt that this was such a profound violation that there was a real need for some sort of justice.
RD It was personal. But I think one of the things that was interesting from the article is that it talks about hackers sort of falling into two different camps– the ones who go for money and the ones who go for fame. And Kivimäki was a weird hybrid of the two. He did both the ransomware and the extortion, but he also did this one, as he says, to amuse himself. He wanted this high-profile middle finger to Finland.
BP I feel like one thing that I kind of look for in a hacker, one of my things for my taste in hackers is more of a Robin Hood type. Can we steal from the rich here or from the big corporations? I don't know the details of the story but going after just your average Fin and spilling their dark secrets to the entire nation– not a huge nation, by the way. You may know some of these people. It seems cruel.
RD If you're going to spill secrets, spill the secrets that affect everybody, not just the one or two people.
BP Yeah, the corporate secrets.
EM There's so many worthy targets out there.
BP Important note. The Stack Overflow Podcast does not endorse crime of any kind or corporate espionage. This is an analytical and opinionated discussion only, just caveat emptor. So there is an interesting article on Wired– ads for AI boyfriends and girlfriends are swarming social media. And this is somebody who will hang out with you but who is not a real person.
RD There is a surprising amount of them. I remember looking at some listing of the top AI companies and five or six of them were girlfriend chatbots.
BP Interesting. Moving on– the US is on the verge of banning TikTok, an app that is used by like 130 million Americans, and I have personal experience with this. I used to work at DJI, which is the number one maker of consumer commercial drones in the world, and that's also true that they have the biggest market share in the US, and with that one there's a bill currently being moved through Congress that would ban sale of DJI as well to anyone working within government, state or federal. And I guess the interesting thing here is that they never are able to establish conclusive proof. It's always, “This might be leaking information and this could be leaking information, we feel.” But there's no smoking gun. It's just that the geopolitics are powerful enough that they overwhelm the counterargument, and it's pretty wild because now one of the most popular social media apps, and far and away the premier producer of this drone technology are going to be illegal in the world's biggest market.
RD Or sold to an American company.
BP Right, the divestment thesis.
RD And I think what this points to is the growing importance of data, and I think there is a discomfort of having the data that you produce and give to a social media company in the hands of countries.
BP There is something about net neutrality here.
RD FCC votes to restore net neutrality rules.
BP But what is that?
RD So net neutrality is that an internet provider has to treat all traffic the same. You can't say that Netflix gets faster traffic but Hulu is slowed down, because then you're just letting them bribe you to get faster traffic.
BP Right. That obviously seems like on the face of it makes sense, and I do remember when I was at The Verge there were discussions around this. As the telecom and internet service providers buy up entertainment companies and offer packages to people, you have this much data every month that you're allowed for free, but it doesn't count against your data usage if you stream XYZ apps. That was the one where I sort of was like, “Yep, that makes sense. It's anticompetitive in the market.” It's a little harder to imagine something being throttled here or there just because of its size. But why do we have to reauthorize this? Can’t we just keep it around?
RD Well, it is stopping business innovation. It is stopping businesses from innovating ways for them to make money privileging or speeding up traffic for certain companies. Whether that is a good thing is up for discussion. I think it is awful. But it also opens up that you could throttle or block traffic that you don't like. If there is a news story against your provider or against your company, you could potentially throttle or block that site.
BP I got it, I got you. I think what I was looking at was a little bit different. These are both interesting large questions about how the internet and data is governed. This is a separate thing. It says we have four days left until it's passed, although I'm not that sure that's true, but it's an executive order taking additional steps to address the national emergency in respect to significant malicious cyber-enabled activities. And what it basically says is that if you have an internet infrastructure as a service provider, it's too easy for foreign governments to come in, utilize that, steal intellectual property or sensitive data, and then peace out. And so now if you are one of these providers, which I assume lots of large cloud companies would fall under this umbrella, you're required to verify the identity of foreign users to the government, which seems extremely difficult. With things moving at the speed and scale of cloud computing, this is not going to be easy.
RD It's just going to be shell companies upon shell companies. Maybe it'll lead to better visibility of the shell companies. I know that's something that allows for some shadier actions in a lot of areas.
BP Oh, that was another thing I read, Ryan. Now is the time if you can to buy up any stock in a VPN company since the TikTok ban will inevitably just mean all these mobile users are spoofing their IP address so it looks like they're outside the United States.
RD That’s right. Who's doing mobile VPN?
EM That's a good tip there for you investors.
BP For you investors out there, this is not financial advice.
EM Yeah, does not constitute financial advice.
BP No, we don't endorse crime and we don't give out financial advice. We're just having a discussion.
RD Oh, man.
[music plays]
BP All right, everybody. It is that time of the show. We want to shout out some users who came on Stack Overflow and helped to spread some knowledge. Congrats to Bucket, awarded a Lifeboat Badge for providing an answer. “How to calculate decimal(x, y) max value in SQL Server.” Bucket helped out, great answer with a score of 20 or more, and 30,000 people have benefited from that knowledge. So appreciate it, Bucket, and enjoy your Lifeboat Badge. Speaking of which, we have at least one potential guest coming up on the Stack Overflow Podcast who wrote in, so we appreciate folks who are writing in and we want to take your suggestions. And another one that I thought was interesting was folks working at places that have a ton of software but are not typically considered to be tech. What is it like to be a software engineer in a fairly complex and highly regulated industry like the world of hospitals, but you're not getting lionized, you're not featured in a Silicon Valley book or whatever. Probably a good chunk of the users of Stack Overflow come from that world and so we want to represent those people and hear their voices, so excited to get into that topic.
RD We had a guest last week that came from a listener suggestion. The SQLite episode.
BP Oh, great. So we'll stick that in the show notes. If you didn't catch it, a great chat about SQLite with a professor of the subject. Who was that person?
RD The creator of the software.
BP All right, very cool. As always, I am Ben Popper, Director of Content here at Stack Overflow. Find me on X @BenPopper. Like I said, shoot us an email, podcast@stackoverflow.com with topic suggestions or ideas for guests or if you want to come on. And if you like the show, leave us a rating and a review.
RD I'm Ryan Donovan. I edit the blog here at Stack Overflow. You can find it at stackoverflow.blog, and if you want to reach out to me with podcast or article ideas, you can reach me on X @RThorDonovan.
EM And I'm Eira May. I'm a writer and editor also at Stack Overflow. If you have suggestions for topics we can cover on the podcast, you can always email us at podcast@stackoverflow.com or you can find us on Twitter. I am there @EiraMaybe.
BP Awesome. All right, everybody. Thanks for listening, and we'll talk to you soon.
[outro music plays]