Longer term yields tick up; Twitter’s Dorsey, Facebook’s Zuckerberg to testify before Senate.

As of 7:55 am 17 November 2020, U.S. Treasury rates and Federal Funds rates are as follows:

3-month: .08%

6-month: .08%

12-month: .11%

2-year: .18%

10-year: .88%

30-year: 1.64%

Fed Funds Rate: 0.08%

Federal Reserve Target: 0.25%

Prime Rate: 3.25%

Source: Bloomberg

Major political/legal event in the United States

President Trump nominates Joseph Barloon to the US Court of International Trade

Yesterday, President Donald Trump sent the name Joseph L. Barloon to the United States Senate as a nominee for a seat on the United States Court of International Trade.  Mr Barloon currently serves as general counsel to the United States Trade Representative and serves as the acting deputy USTR for China Affairs.

Source: Executive Office of the President

Facebook, Twitter CEOS to testify before Senate sub-committee

Today, Facebook chief executive officer Mark Zuckerberg and Twitter chief executive officer Jack Dorsey will testify before the U.S. Senate Committee on the Judiciary.  The leaders and founders of the two social media giants will be asked questions about censorship during the 2020 general election.

Source: United States Senate Committee on the Judiciary

Section 230: America is about trade. Information should be subject to markets …

Opinion

Alton Drew

I see a lot of waste in America. For an example, just take a look at e-mails exchanged within and between corporate departments. It is hard to believe that American MBA holders are racking up e-mail threads with one or two liners that effectively amount to suggesting changes in a word or adding a period to a sentence. About 25% percent of this e-mail exchange usually entails Worker One telling Worker Two that Worker One is going on vacation and will be out of touch. Ironically, Worker One makes it a point somewhere during his two-week vacation to a place he will likely never visit again to send a picture from the beach where he is sitting with a laptop across his thighs.

Americans stay busy for the sake of being busy or worse, spend a lot of time looking busy. This busy-body, chatty-catty approach to production is adding to the noise in the work place that may be drowning out the true information, the true surprise. True information should have us bolting out of our folding recliners on the beach and doing backflips on the sand. I am not seeing this and at times wonder if Americans have the capacity to provide any more surprise moments.

Some may argue that the internet is one of those surprise moments and I would remind them that the surprise is now an echo reverberating from over fifty years ago. The internet has now become a commodity, the advanced communications platform supporting more than just voice communications. Today I can review documents to determine their level of confidentiality and privilege from my home office. I can use my computer screen to watch news programming, movies, or television shows accessed from content delivery networks operating on the internet. I can meet with colleagues and receive updates on case progress or to simply have a virtual happy hour via video services on the internet.

But I still see more waste than value. I don’t see an increase in value, just tasks that were done one way in analog being done another way in digital. Social media, the internet’s most recognized application, has torn the scab off of American narcissism. The “democratization of information content” promised by internet proponents is devolving into 25-year old women and men taking Instagram booty shots, hoping against all odds to be the next sexy sensation, in a digital world crawling with other sexy sensations.

Democratization of the internet has made data that was always available but harder to find easier to find but of less value. Inaccessibility made the hunt fun. A search premium that captured the inaccessibility variable created a lucrative business for the information broker or trader. Information should be subject to market forces. The internet in general and social media in particular are destroying the market mechanism for trading information.

Social media in particular has introduced severe imbalances in the information markets where a social media subscriber’s information is acquired under the rule of discovery, swimming around unbound like Moby Dick waiting for Captain Ahab to put a spear in him. This problem could be resolved by making social media and other interactive computer access services or internet portals bear the burden of liability where the capture and use of information results in harm to the subscriber and third parties that are exposed to it.

Removing the liability shield provided by Section 230 of the Communications Act of 1934 as amended by the Communications Decency Act of 1998 would force interactive computer access services to provide the public with a business model that better replicates the interchange one should see in a market.

On a base market tier, for example, an interactive computer access service would offer a subscriber access to its posting services in exchange for use of the subscriber’s data and permission to edit subscriber content where publication of the content violated community mores of decency or would otherwise expose the interactive computer access service to claims of defamation or liability.

On a prime market tier, the subscriber would pay the interactive computer access provider for the privilege to post content, grant the interactive computer access service the right to collect and use certain subscriber proprietary information, and accept damages stemming from claims of liability or defamation brought by a third-party.

One upside to this approach would be the reduction in noise occurring on the internet as a result of the democratization of content. Fewer subscribers over all would post content that raises the specter of liability. Depending on the tier of services offered, interactive computer services would be free to edit content that did not meet their platform guidelines while protecting themselves from third-party liability or receive a premium from subscribers that can be used to insure the interactive computer access service from claims of liability or defamation.

Information should flow freely, like the bulls of Pamplona, but the markets should discipline their exchange. Government, as a facilitator of markets, can encourage more market behavior for information by repealing Section 230 and allowing contract to regulate the market between interactive computer access services and subscribers.

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.

Will regulating social media benefit content providers in the African Diaspora?

Late last May, President Donald Trump stepped up his battle with social media by issuing an executive order intended to prevent the censure of political speech expressed on platforms such as Twitter and Facebook.  Mr Trump allegedly saw the last straw when Twitter showed the nerve to fact check the President by attaching a number of links to some of Mr Trump’s tweets.  He didn’t like that.

Mr Trump is not alone in his frustration with social media.  Other Republicans and conservatives have complained in recent years about what they deem as bias against conservative political viewpoints and alleged liberal political positions taken up by executives at the social media companies.

To combat the alleged bias, Mr Trump issued an executive order that would call for the Federal Communications Commission to issue rules that clarify portions of the Communications Decency Act of 1996 (47 USC 230).  The Act excludes Twitter, Facebook, and other interactive computer services from civil liability where they exercise good faith in removing and otherwise not accepting certain harmful content.  Taking censorship action beyond the scope of the “Good Samaritan” exceptions would paint them as publishers and cost them their protection from civil liability claims.

Specifically the Act reads 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 liability. No 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).[1]

Mr Trump would like rules that clarify the interaction between section (c)(1), exemption from treatment as a publisher, and section (c)(2), exemption from liability of a publisher, of the Communications Decency Act.  My issue is whether Mr Trump’s proposed path of action in any way hinders the ability of the African Diaspora community to exchange ideas and content for commercial purposes?

Maya Dollarhide defines social media as a:

” …. computer-based technology that facilitates the sharing of ideas, thoughts, and information through the building of virtual networks and communities. By design, social media is internet-based and gives users quick electronic communication of content. Content includes personal information, documents, videos, and photos. Users engage with social media via computer, tablet or smartphone via web-based software or web application, often utilizing it for messaging.”

A high percentage of adults within the African Diaspora use social media.  According to Pew Research, 69% of African American adults use at least one social media site compared to 73% of whites.  Whites and blacks appear on par when it comes to social media usage.

When it comes to commercial reasons for using social media, 29% of consumers use social media platforms to research or buy products and services.  Although the “social” or lately the “political” component of social media gets a lot of attention these days, there is a marketing component to social media where these networks allow for businesses to engage with their customers.  Social media provides a relatively lower cost alternative to traditional media marketing mechanisms.  A well done social media campaign can have information go “viral” about goods or services, and send this information instantaneously around the globe.

We have to be mindful that the drafting and implementation of rules to be used to keep social media companies in compliance with the Communications Decency Act may not come to pass depending on the outcome of this fall’s election.  Should Mr Trump lose in November, the Democratic victor will likely put in place a Democratic chairman and along with his or her Democratic colleagues squash the idea of going forward with any rules that give the impression that the Commission has entered the business as social media speech police.

Even if Mr Trump wins and a Republican majority remains in place at the Commission, I believe the Commission will craft very narrow rules in order to prevent any First Amendment violations.  More importantly, rules that keep social media companies from acting as editors benefit the global exchange of commercial information between members of the African Diaspora.

While I doubt that it is ever in the best interest of Facebook to edit or alter purely commercial communications, advertisements, etc. between an African American wholesaler in Atlanta, Georgia and potential retail distributors and/or end users in Accra,  Ghana, added protections that keep communications unimpeded cannot hurt.

The narrower the rules, the better it is for our self-interests.