A22 Economy & Business


Move confirmed at House hearing, but


speech concerns remain BY CECILIA KANG


Under pressure from law en- forcement and Congress, Craig- slist said Wednesday it had per- manently taken down its adult services ads on its highly popular classified site intheUnitedStates. The move is the first of its kind


for a company that has become not only a place to buy used furniture and find apartments, but also a symbol of a free-speech, no-limit Internet. Craigslist yield- ed to the complaints of advocacy groups who say the firm’s Web sites are being widely used in the global sex trade of women and children. The San Francisco company complied, but not without hint- ing at what the actions of govern- ment officials could portend for


EZ SU


KLMNO Adult ads permanently offU.S. sites, Craigslist says


the future of theWeb. After state lawenforcement of-


ficials asked Craigslist to elimi- nate adult ads earlier this month, the company replaced those list- ings with a single word: “cen- sored.” It later dropped the label, but not before prompting pro- tests from free-speech advocates. Craigslist officials, who testi-


fied Wednesday at a House Judi- ciary subcommittee hearing on child sex trafficking, did not ad- dress calls to shutter adult servic- es ads on some Craigslist sites outside the United States, where they continue to run. Still, the company’s decision


was applauded by advocacy groups that said Craigslist had become a massive online market- place for sex predators. These groups and state law


enforcement officials said they focused on Craigslist because it is the largest classified site in the world. They added that other, smaller online ventures should be pushed to follow Craigslist’s lead. “Web sites escape liability


when an ad on their site results in rape, prostitution and even death,” Rep. Jackie Speier (D-Ca- lif.) said. “Our priorities are out of balance,andperpetrators are tak- ing advantage.” Ernie Allen, president of the


National Center for Missing and Exploited Children, noted that each year about 100,000 boys and girls become prostitutes. “Inter- net services have made it possible to pimp these kids, offering them to prospective customers with lit- tle or no risk,” he testified. But Craigslist officials warned


that blocking the ads would push the sex trade further into the shadows. “Those who formerly posted adult services ads on Craigslist will now advertise at countless other venues,” said Wil- liam “Clint” Powell, a director of customerserviceandlawenforce- ment at Craigslist. Though they were invited to the hearing, the company’s chief executive, Jim Buckmaster, and its founder, CraigNewmark, did not attend. Unlike most of Craigslist’s clas-


sifieds, which are free, the firm charged for adult ads, which gave it the ability to hand over credit card information to law enforce- ment when crimes occurred. Craigslist had made about $30 million off adult listings so far this year, saidareport released before the hearing by the Ad-


“Speech in the form of postings that incite violence against children is not protected speech.” —Rep. Christopher H. Smith (R-N.J.)


vanced InteractiveMedia Group. Powell noted in his testimony


that in a White House meeting earlier in the summer, Obama administration officials said they considered Craigslist to be amod- el compared with “the countless other venues that currently host unmoderated adult content, do notassist lawenforcementanddo not engage in best practices.” Craigslist is shielded by the


Telecom Act of 1996, which ab- solves it of liability for the content onits sites.Somelegalexperts say, for instance, that Craigslist could not be held liable for the actions of aNewEnglandmanwho killed a woman he had contacted through the site. But some lawmakers ques-


tioned whether the need to pro- tect children overrides the need to protect free speech. “Speech in the form of postings that incite violence against children is not protected speech,” Rep. Christo- pher H. Smith (R-N.J.) said. kangc@washpost.com


THURSDAY, SEPTEMBER 16, 2010


WTOrules against subsidies to Boeing


Trade court’s decision


is latest chapter in battle with rival Airbus


BY DANA HEDGPETH Theworld’s toptrade court said


in a preliminary ruling Wednes- day that Chicago-based Boeing, the giant defense contractor, ben- efited from illegal subsidies from theU.S. government, according to officials in Congress, defense in- dustry analysts and company ex- ecutives who were briefed on the confidential findings. Details of the decision by the


World Trade Organization were delivered to officials at the Office of the U.S. Trade Representative in Washington and European Union officials in Geneva. A final ruling is expected in several months. The WTO’s ruling is part of a


long-running disagreement be- tween Boeing and its European rival, France-based Airbus, over government subsidies. The two companies are themajor compet- itors for an estimated $35 billion contract to build new aerial refu- eling tankers for the U.S. Air Force. Three months ago, the WTO said that Airbus, which is a unit of European Aeronautic De- fence and Space (EADS), had an unfair advantagewhenit received billions in low-interest govern- ment loans to develop aircraft. The Pentagon has said the


WTO’s findings are not a factor in its procurement decisions. But analysts said the rulings could affect future funding for develop- ment of new aircraft for both companies in the lucrative aero- spacemarket. “Boeing got its hand slapped,


but what happened to Airbus in the previous decision was like getting its hand cut off,” said Lo- ren Thompson, a defense indus- try consultant. (Thompson said he is not a paid adviser to EADS, Airbus or Boeing.) “Boeing can live without the subsidies the WTO identified. The amount of moneywe’re talking abouthere [a few billion dollars] is like three weeks of sales for Boeing. But it is not clear that Airbus can live without the subsidies. They could be in trouble.” In the most recent case before


the WTO, the European Union claimed that Boeing received about $20 billion in tax breaks, research aid and other subsidies from U.S. government agencies, including NASA, the Defense De- partment and state governments. In Wednesday’s ruling, the WTO found that the subsidies were worth only a fraction of that amount, according to those who were briefed on the findings but spoke on the condition of ano- nymity because they weren’t au- thorized to talk about the ruling. Boeing said the WTO’s ruling


rejected “the vastmajority of Eu- rope’s claims.” “Nothing in today’s public re-


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ports on the European case against the U.S. even begins to compare to the [billions] inillegal subsidies that theWTOfoundlast June that Airbus/EADS has re- ceived,” the company said. EADS said in a statement that


the trade court had found Boeing tobe “thebeneficiary of anti-com- petitive and illegal subsidies.” Some members of Congress


used the WTO decision to advo- cate for their favored tanker com- petitor. Sen. Richard Shelby (R-Ala.),


who supports Airbus because the companyhas saiditwouldconsid- erbuildingamanufacturingplant in his state if it won the tanker competition, said Boeing sup- porters can “no longer rationally claim that this trade dispute is one-sided.” Sen. PattyMurray (D- Wash.), a Boeing supporter, said the subsidies that were the sub- ject ofWednesday’s ruling “aren’t comparable with the market-dis- torting, prohibited subsidies that Airbus has been found to use.” Ministers in France said the


ruling “condemns massive subsi- dies to Boeing that violate WTO rules,” according to the Associat- ed Press.


hedgpethd@washpost.com


“Boeing can live without the subsidies the WTOidentified. . . . But it is not clear that Airbus can.” —Loren Thompson, consultant


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