New Controversies in Intermediary Liability Law
Eric Goldman
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.