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Regulation - What is it Good For?

Can the FCC Regulate Facebook?

At the urging of FCC Chairman Ajit Pai, the FCC General Counsel Tom Johnson announced in a recent blog that he believes that the FCC has the authority to redefine the immunity shield provided by Section 230 of the FCC’s rules that comes from the Communications Decency Act from 1996.

Section 230 of the FCC rules is one of the clearest and simplest rules in the FCC code:  “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider“.

In non-legalese, this means that a web companies is not liable for third-party content posted on its platform. It is this rule that enables public comments on the web. All social media consists of third-party content. Sites like Yelp and Amazon thrive because of public post reviews of restaurants and products. Third-party comments are in a lot more places on the web such as the comment section of your local newspaper, or even here on my blog.

Section 230 is essential if we are going to give the public a voice on the web. Without Section 230 protections, Facebook could be sued by somebody who doesn’t like specific content posted on the platform. That’s dangerous because there is somebody who hates every possible political position.  If Facebook can be sued for content posted by its billions of users, then the platform will have to quickly fold – there is no viable business model that can sustain the defense of huge volumes of lawsuits.

Section 230 was created when web platforms started to allow comments from the general public. The biggest early legal challenge to web content came in 1995 when Wall Street firm Stratton Oakmont sued Prodigy over a posting on the platform by a user that accused the president of Stratton Oakmont of fraud. Stratton Oakmont won the case when the New York Supreme Court ruled that Prodigy was a publisher because the platform exercised some editorial control by moderating content and because Prodigy had a clearly stated set of rules about what was allowable content on the Prodigy platform. As might be imagined, this court case had a chilling impact on the burgeoning web industry, and fledgling web platforms worried about getting sued over content posted by the public. This prompted Representatives Rob Wyden and Chris Cox to sponsor the bill that became the current Section 230 protections.

Tom Johnson believes the FCC has the authority to interpret Section 230 due to Section 201(b) of the Communications Act of 1934, which confers on the FCC the power to issue rules necessary to carry out the provisions of the Act. He says that when Congress instructed that Section 230 rules be added to FCC code, that implicitly means the FCC has the authority to interpret the rules.

But then Mr. Johnson does an interesting tap dance. He distinguishes between interpreting the Section 230 rules and regulating companies that are protected by these rules. If the FCC ever acts to somehow modify Section 230, the legal arguments will concentrate on this nuance.

The FCC has basically been authorized by Congress to regulate common carriers of telecommunications services as well as a few other responsibilities specifically assigned to the agency.

There is no possible way that the FCC could ever claim that companies like Facebook or Google are common carriers. If they can’t make that argument, then the agency likely has no authority to impose any obligations on these companies, even should it have the authority to ‘interpret’ Section 230. Any such interpretation would be meaningless if the FCC has no authority to impose such interpretations on the companies that rely on Section 230 protections.

What is ironic about this effort by the FCC is that the current FCC spent a great deal of effort to declassify ISPs from being common carriers. The agency has gone as far as possible to wipe its hands of any responsibility for regulating broadband provided by companies like AT&T and Comcast. It will require an amazing set of verbal gymnastics to somehow claim the ability to extend FCC authority to companies like Facebook and Twitter, which clearly have zero characteristics of being a common carrier while at the same time claiming that ISPs are not common carriers.

Categories
Regulation - What is it Good For?

Can the FCC Regulate Social Media?

There has been a lot of talk lately from the White House and Congress about having the FCC regulate online platforms like Facebook, Twitter, and Google. From a regulatory perspective, it’s an interesting question if current law allows for the regulation of these companies. It would be ironic if the FCC somehow tried to regulate Facebook after they went through series of legal gyrations to remove themselves from regulating ISPs for the delivery and sale of broadband – something that is more clearly in their regulatory wheelhouse.

All of the arguments for regulating the web companies centers around Section 230 of the FCC rules. Congress had the nascent Internet companies in mind when the wrote Section 230. The view of Congress was that the newly formed Internet needed to be protected from regulation and interference in order to grow. Congress was right about this at the time and the Internet is possibly the single biggest driver of our current economy. Congress specifically spelled out how web companies should be viewed from a regulatory perspective.

There are two sections of the statute that are most relevant to the question of regulating web companies. The first is Section 230(c)(1), which states, “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

This section of the law is unambiguous and states that an online platform can’t be held liable for content posted by users. This would hold true regardless of whether a platform allows users free access to say anything or if the platform heavily moderates what can be said. When Congress wrote Section 230 this was the most important part of the statute, because they realized that new web companies would never get off the ground or thrive if they have to constantly respond to lawsuits filed by parties that didn’t like the content posted on their platform.

Web platforms are protected by first amendment rights as publishers if they provide their own content, in exactly the same manner as a newspaper or magazine – but publishers can be sued for violating laws like defamation. But most of the big web platforms don’t create content – they just provide a place for users to publish content. As such, the language cited above completely shields Facebook and Twitter from liability, and also seemingly from regulation.

Another thing that must be considered is the current state of FCC regulation. The courts have given the FCC wide latitude in interpreting its regulatory role. In the latest court ruling that upheld the FCC’s deregulation of broadband and the repeal of net neutrality, the court said that the FCC had the authority to deregulate broadband since the agency could point to Congressional laws that supported that position. However, the court noted that the FCC could just as easily have adopted almost the opposite position, as had been done by the Tom Wheeler FCC, since there was also Congressional language that supports regulating broadband. The court said that an agency like the FCC is only required to find language in Congressional rules that support whatever position they take. Over the years there have been enough conflicting rules from Congress to give the FCC a lot of flexibility in interpreting Congressional intent.

It’s clear that the FCC still has to regulate carriers, which is why landline telephone service is still regulated. In killing Title II regulation, the FCC went through legal gymnastics to declare that broadband is an ‘information service’ and not a carrier service.

Companies like Facebook and Google are clearly also information services. This current FCC would be faced with a huge dilemma if they tried to somehow regulate companies like Facebook or Twitter. To do so would mean declaring that the agency has the authority to regulate information service providers – a claim that would be impossible to make without also reasserting jurisdiction over ISPs and broadband.

The bottom line is that the FCC could assert some limited form of jurisdiction over the web companies. However, the degree to which they could regulate them would be seriously restricted by the language in Section 230(c)(1). And any attempt to regulate the web companies would give major heartburn to FCC lawyers. It would force them to make a 180-degree turn from everything they’ve said and done about regulating broadband since Ajit Pai became Chairman.

The odds are pretty good that this concept will blow over because the FCC is likely to quietly resist any push to regulate web companies if that means they would have to reassert jurisdiction over information service providers. Of course, Congress could resolve this at any time by writing new bills that would explicitly regulate Google without regulating AT&T. But as long as we have a split Congress, that’s never going to happen.

Categories
The Industry

Section 230 and the Internet

One of the most important laws affecting the Internet that you’ve probably never heard of is Section 230 of the Communications Decency Act of 1996. The law provides immunity from liability to anybody that publishes information generated by others.

It is this law that holds Facebook harmless for content posted by its users, or protects a newspaper that allows comments on its article. The law shields web companies from liability from things posted by their users. Without this law social media couldn’t exist since somebody would attack a company like Facebook over something they didn’t like posted by one of their billion users.

This law has already been tested a number of times by various lawsuits and the law has always prevailed. For example, AOL was sued a number of times in the early days of the web for carrying defamatory statements or false customer profiles – all posted by its users. There are similar laws in Europe and Australia.

But there is a current lawsuit attacking Section 230 that is getting traction in the courts – and this has web companies worried. The case is Hassel vs. Bird and is being adjudicated in San Francisco. In the case, Ava Bird hired Dawn Hassel as an attorney to support her in a slip-and-fall case. But then Bird basically disappeared and so Hassel dropped the case.

But Bird subsequently sued her lawyer for damages and also posted a defamatory and erroneous review about the lawyer on Yelp. The courts agreed with the lawyer and awarded her damages, and Hassel then asked the court to have the defamatory review removed from Yelp. And that’s where Section 230 came into play.

Yelp was not listed as a party to the case and is refusing to remove the bad review claiming that it would create a bad precedent and is violation of Section 230 rules. They argue that to remove the review would be to admit wrongdoing and would create a liability to Hassel. Yelp appealed the ruling, but the California appeals court sided with the first ruling and ordered Yelp to remove the review.

Yelp’s legal arguments center around the fact that they were not named as a defendant in the original suit. If they had been, they could have been heard in court before being ordered to take down the defamatory posting. They argue that they have been blindsided and never got their day in court.

Yelp is appealing the case to the California Supreme Court and has been supported in amicus briefs by the whole web industry from Google, Facebook, Twitter, Microsoft, and many other smaller web services along with numerous newspapers.

These companies all argue that user-generated content and social media are how Americans communicate today. By definition there are people that don’t like what other people have to say, certainly witnessed during this political season. And without the protection of Section 230, companies that allow user commentary and content would eventually be driven out of business by becoming embroiled in countless lawsuits.

From a practical standpoint you can understand the lawyer’s concern. She successfully won a case against somebody that defamed her, and yet part of that slander is still available to all on the Yelp site. But the flip side of that is that if Yelp agrees to take down the defamatory posting then they are open to suit by Hassel by having admitted some responsibility for the process.

It’s not hard to picture what happens if Yelp loses this case. Web companies will not be able to take a chance on negative information and a site like Yelp would probably delete all negative reviews – which would invalidate what they do for a living. And social media sites like Facebook probably couldn’t function at all, because almost everything posted there – from skinhead websites through pictures of puppies – offends somebody.

I’m sure that the average person doesn’t appreciate the underlying laws and precedents that allow the web to function the way it does today. If even one of these basic linchpins is removed then the whole thing could come tumbling down, or at worst could morph into something we wouldn’t recognize or like. I don’t think any of us want a web where the corporate lawyers at each web company decide what content is or is not safe for them to carry.