A balanced Section 230 review means creating rules that protect capital and free speech …

News, Analysis, and Opinion

On 15 October 2020, the chairman of the Federal Communications Commission, Ajit Pai, released the following statement:

“Members of all three branches of the federal government have expressed serious concerns about
the prevailing interpretation of the immunity set forth in Section 230 of the Communications Act.
There is bipartisan support in Congress to reform the law. The U.S. Department of Commerce
has petitioned the Commission to ‘clarify ambiguities in section 230.’ And earlier this week,
U.S. Supreme Court Justice Clarence Thomas pointed out that courts have relied upon ‘policy and
purpose arguments to grant sweeping protections to Internet platforms’ that appear to go far
beyond the actual text of the provision.

“As elected officials consider whether to change the law, the question remains: What does
Section 230 currently mean? Many advance an overly broad interpretation that in some cases
shields social media companies from consumer protection laws in a way that has no basis in the
text of Section 230. The Commission’s General Counsel has informed me that the FCC has the
legal authority to interpret Section 230. Consistent with this advice, I intend to move forward
with a rulemaking to clarify its meaning.

“Throughout my tenure at the Federal Communications Commission, I have favored regulatory
parity, transparency, and free expression. Social media companies have a First Amendment right
to free speech. But they do not have a First Amendment right to a special immunity denied to
other media outlets, such as newspapers and broadcasters.”

Twitter has recently been called out for apparently prohibiting its subscribers from sharing or “retweeting” an article in The New York Post that alleges that Robert Hunter Biden, son of Democratic presidential candidate Joseph R. Biden, attempted to engage in transactions from which his family would benefit including arranging a meeting in 2014 between then Vice-President Biden and an executive with a Ukrainian energy firm. Twitter, after an accumulation of press attention to their policy limiting redistribution of the article, decided to reverse its blocking action regarding tweets based on “hacked information.”

Twitter, and other internet companies that publish content posted by its subscribers have enjoyed protection from civil liability pursuant to 47 U.S.C. 230(c)(1) and (c)(2). The provisions read as follows:

(c)Protection for “Good Samaritan” blocking and screening of offensive material

(1)Treatment of publisher or speaker

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.

(2)Civil liabilityNo provider or user of an interactive computer service shall be held liable on account of—

(A)any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected; or

(B)any action taken to enable or make available to information content providers or others the technical means to restrict access to material described in paragraph (1).

The intent of Section 230 was to incentivize the development of the internet by encouraging the development of free speech on this advanced communications medium. Young internet companies might have been discouraged to harbor public speech on their platforms if they were to be held liable for untoward speech.

If they were to enjoy the protection from civil liability offered in return for their maintaining the internet as a public forum, they in turn could not, to steal a phrase from Mark Zuckerberg, act as the arbiter of speech. Restricting access to information on their platforms would call for a demonstration that the action was taken to restrict dissemination of information falling in the boxes created in 47 U.S.C. 230(c)(2).

Our general thesis is that where government chooses a capitalist model for management of a political economy, it promotes income growth by encouraging capital flow which it expects to lead to increased tax revenues and returns on and to capital. Government helps facilitate the energy in the political economy that investors draw from. If a Section 230 review reduces Twitter’s ability to attract, manage, and provide returns on capital to investors, then either Twitter’s business model is failing, government policy is failing, or Twitter business judgment combined with government action has led to failure.

If the stock market is any indication, equity investors may be wary of any actions taken against Twitter’s social media model. When the stock market opened on 14 October 2020, Twitter’s share price was $47.49. As news of Twitter’s actions regarding The New York Post article surfaced and spread, the market price fell, closing at $45.97.

By 11:00 am 15 October, Twitter’s share price had fallen to $44.53, but had climbed to $46.04 by close of the cash trade. Chairman Pai’s balanced tone in announcing a FCC review may have helped calm fears about Twitter.

Twitter’s actions may have given cannon fodder to the Trump administration’s position that Twitter and other social media companies are biased against conservative speech. Last July, the Administration filed, via the National Telecommunications and Information Administration, a petition seeking a rulemaking by the FCC clarifying how Section 230 is to be applied to social media companies like Twitter. The FCC will have to balance America’s “School House Rock” narrative on free speech, a narrative promoted on the premise that such freedoms encourage a more harmonious union among citizens, with the probability of extinguishing or severely a private company that follows an equally important although overlooked narrative that government promotes the generation of income, profit, and taxes by private actors who leverage private investor capital.

Only a balanced set of rules will bring proper reconciliation to the issue.

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