Balkinization: Want to Kill Facebook and Google? Preserving Section 230 Is Your Best Hope

Want to Kill Facebook and Google? Preserving Section 230 Is Your Best Hope

Guest Blogger

New Controversies in Intermediary Liability Law

Eric Goldman

You probably feel antipathy towards Facebook and Google. Most people do. Yet, as incumbents with extraordinary amounts of wealth, it sometimes feels like Facebook and Google are impervious both to competition and regulation.

Indeed, regulators have limited tools to corral Facebook and Google in part due to 47 U.S.C. §230 (Section 230), which immunizes online services from many types of liability for third-party content they republish. This immunity supplements the First Amendment’s speech and press protections, but Section 230 does more than promote free speech. The immunity also plays a major role in economic and competition policy. Section 230 implicitly provides what amounts to a financial subsidy to online republishers. That subsidy, counterintuitively, may represent our best hope for dethroning the Internet giants.

Subsidy

Section 230’s immunity has established the legal foundation for the modern Internet. Virtually every major Internet service depends on Section 230 heavily to acquire, curate, and disseminate third-party content; and many of us engage with those services many times an hour. As a result, Section 230-protected services have generated an extraordinary amount of private and social economic benefits.

Section 230 is a flagship example of Internet exceptionalism, in effect, legally regulating the Internet differently than other media. Traditional legal doctrines of offline publishing usually hold publishers liable for any third-party content they choose to republish. Section 230 says the opposite; when third-party content is involved, the online republisher isn’t liable for it. Thus, the legal outcome depends on the medium: the exact same content, from the same author, can create liability for offline republishers and not for online republishers.

By immunizing online republishers from liability for third-party content, Section 230 frees republishers from the costs associated with protecting against such liability. In effect, Section 230 provides an implicit financial subsidy to all Internet republishers—including Internet giants like Google and Facebook—compared to offline republishers. Superficially, that makes no sense at all. The Internet giants are among the most valuable companies to ever exist. They seem like undeserving candidates for government-mandated privileges.

Yet, the wisdom of this policy becomes clearer when realizing that, even as Section 230 privileges the Internet giants, it also plants the seeds of their future destruction. Section 230’s subsidy reduces barriers to enter the online republishing marketplace, which, in turn, keeps the marketplace open for the next generation of startups that hope to usurp the current Internet giants.

Enhanced Competition

If the rules of offline publishing applied to the Internet, online republishers would implement effective measures to reduce their exposure for third-party content. Instead, due to Section 230’s immunity, online republishers of third-party content do not have to deploy industrial-grade content filtering or moderation systems, or hire lots of content moderation employees, before launching new startups. This lowers startup costs generally; in particular, it helps these new market entrants avoid making potentially wasted investments in content moderation before they understand their audience’s needs. Accordingly, startups do not need to replicate Google’s or Facebook’s extensive and expensive content moderation operations, nor do they need to raise additional pre-launch capital to defend themselves from business-crippling lawsuits over third-party content.

In a counterfactual world without Section 230’s financial subsidy to online republishers and the competition enabled by that subsidy, the Internet giants would have even more secure marketplace dominance, increased leverage to charge supra-competitive rates, and less incentive to keep innovating. In other words, without Section 230, the marketplace would ossify, and existing legal regulations would help lock in the incumbents.

Admittedly, it feels strange to tout Section 230’s pro-competitive effect in light of the dominant marketplace positions of the current Internet giants, who acquired their dominant position in part due to Section 230 immunity. At the same time, it’s likely short-sighted to assume that the Internet industry has reached an immutable configuration of incumbents. Internet history is filled with dominant players—Microsoft, Netscape, Yahoo, AOL, MySpace, and others—who were displaced by upstarts, often in unexpected ways by unanticipated competitors.

Similarly, Google and Facebook probably will not be dislodged by head-on competitors launching a comprehensive keyword-driven search engine or a mass-market general-purpose social networking service. Instead, they are likely to be dislodged by indirect competitors who address consumers’ needs through radically different technological or operational approaches.

Those disruptive innovators absolutely require legal immunity to grow big and popular enough to change consumer practices and gain consumer loyalty, without being swamped by lawsuits and the high costs of content moderation obligations. Section 230 is an essential piece to ensure that future Google- and Facebook-killers have a chance of emerging.

Conclusion

Focusing on the financial subsidy to the Internet giants fundamentally misunderstands Section 230. If you really want to stick it to Google and Facebook, you should fight to preserve Section 230’s competition-enhancing benefits. Otherwise, you are implicitly rooting to squelch the future competitive threats they should face, which only strengthens the Internet giants’ marketplace dominance.

Eric Goldman is a Professor of Law, and Co-Director of the High Tech Law Institute, at Santa Clara University School of Law. Before he became a full-time academic in 2002, he practiced Internet law for eight years in the Silicon Valley. His research and teaching focuses on Internet, IP and advertising law topics, and he blogs on these topics at the Technology & Marketing Law Blog [http://blog.ericgoldman.org]. You can reach him by e-mail at egoldman at gmail.com.

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