Digital Platforms

Why Canada’s C-18 Isn’t Working Out As Expected.

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Back at the end of June, Canada passed C-18, aka “The Online News Act,” a law designed to make Google and Facebook negotiate with news providers for linking to news. In theory, C-18 is based on the Australia News Media Bargaining Code, which Australia adopted in 2021. It also follows the EU adoption of Article 15 as part of its 2019 Copyright Directive — although supporters of this approach don’t seem to want to talk about Article 15 much. Supporters of the “free market” approach adopted by C-18, which requires Google and Facebook to enter into negotiations with news providers (defined in various ways) argue that the NMBC has been a huge success, forcing Goog and FB to pay $200 million AU and that this money has been spent on reporters and other news-producing stuff not just gone into the pockets of big news conglomerates as critics such as my employer Public Knowledge keep warning will happen. There is a fair amount of evidence to refute this rosy tale of success, but let us set that aside for the moment.

 

The supposed success of the AU NMBC is one of the biggest arguments in support of the Journalism Competition and Preservation Act and the California version. It was a major reason why supporters of Canada’s C-18 assured everyone that FB and Goog were bluffing when they said they would simply stop linking to news if Canada passed C-18. After all, they made the same threat in Australia and, other than a brief weekend when FB stopped linking to news in Australia, they ultimately went along with the AU NMBC. So hang in there, supporters of this approach keep telling Canada! Trust us, they’ll cave, because the AU NMBC is a huge success!

 

My employer Public Knowledge has an entire resource page devoted to what’s wrong with this approach in general and JCPA in particular. I’ve written about this a couple of times as well. So I won’t rehash the problems with JCPA too much below. Instead, I want to focus on one this argument that C-18 (and JCPA) are just like the amazingly awesomely successful Australia approach. After a bit of digging, I found two things:

  1. C-18 is not like the NMBC in some really critical ways. Which is why Goog and FB are not reacting the way they did to NMBC. Notably, the NMBC lets Goog and FB negotiate private deals not subject to any sort of review or mandatory arbitration. C-18 fixes these loopholes by requiring mandatory arbitration and transparency. Hence the very different reaction from Goog and FB.
  2. The claim that NMBC was a “success” comes from two primary sources: the officially mandated study by the Australian Government one year after adoption of the NMBC (available here) and a follow up report by Rod Sims, the guy who wrote the NMBC and pushed it through. As I will explain in a separate post, and as others have noticed before me (see here and here), the biggest beneficiary was News Corp, whose subsidiaries took in the bulk of the money (Crikey! I’m shocked!), followed by Nine Entertainment, the next largest media conglomerate. Next came AU’s major public broadcaster, which is the primary source of the “the money went to news production — really!” anecdote. After that, you got increasingly smaller deals for smaller outlets, with most outlets cut out altogether and no transparency into this because it relies on private deals.

So if your definition of success was “Goog and FB pay off the major outlets like they were basically doing, but with bigger buckets of loot going to Rupert Murdoch & friends,” then this worked totally great! In fact, this scheme works so much like the way the cable cartel and the broadcaster cartel negotiate with each other (including providing things like C-Span so they can threaten to take it away and squeezing out independent minority-owned networks in favor of vertically integrated ones) that it makes me want to weep tears of Cassandrafreude. Heck, it even includes an official report with unverified industry posting that only true believers can take seriously — just like the old FCC cable competition report!

 

As a result, as reported by Michael Geist, the Canadian government is now apparently trying to use its rulemaking to implement the act to bring this inline with what the AU NMBC actually does, make it possible for Goog and FB to make private payments to the politically powerful media to make this issue go away. Whether that will end up being enough at this point remains to be seen. I would hope that this serves as a valuable lesson in life for those trying to replicate the “success” of NMBC (like, maybe read the source material with a jaundiced eye that comes from 20+ years of reading similar FCC reports). More importantly, the idea that you can pass a law that actually fixes the problems with the NMBC and not have Goog and FB flip out is a delusion because it fails to understand the economics of any of this. Yes, there is a real problem with how online advertising works, but that requires real solutions that identify the real problems and addresses them. (There are some already out there, you can see Public Knowledge’s “Superfund for the Internet” here, FAQ here).

 

I will pick apart the claim that the Australia NMBC worked– if by “worked” we mean actually fed money to small news organizations that dedicated the money to news production rather than simply funneled money to the biggest news media — in my next blog post. For now, I will focus on why Google and Facebook are reacting in such a radically different way to C-18 and why this isn’t just a bargaining tactic. Unlike the NMBC, the law actually designates Google and FB as entities subject to the law and therefore obligated to participate in the government supervised arbitration process. The NMBC — as explained below — does not designate Goog or FB to actually do anything, as long as they keep the big news producers happy.

 

More below . . .

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Gonzales v. Google Validates My Theory of Legislative Drafting — Be Really, Really Detailed and Longwinded.

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Every now and then, I do some legislative drafting. I tend to get pushback on my habit of including a bunch of legislative findings and statements of policy, and what some consider my over-detailed definitions. The usual challenge I get is “everyone knows what we’re talking about.” My response: “I’m not writing for us. I’m writing for some judge 25 years from now with no idea what we’re talking about or trying to do.”

 

Which brings me to Gonzales v. Google, the Supreme Court case in which the Justices will take their first shot at interpreting Section 230 of the Communications Act. Distill down the thousands of pages of briefs, brush away the policy arguments, and it all boils down to one question: “What did Congress actually mean when it said don’t treat online services as the ‘publisher of speaker’ of third-party content”? Does it mean (a) the plain English ‘don’t treat the provider of the online service as if that provider actually said the thing’ – so you can’t sue a provider of an “interactive computer service” (to use the actual statutory term) for anything relating to third party content; or (b) does it mean ‘this section provides only protection from liability as a ‘publisher’ under the common law’ – but feel free to impose liability as a common law distributor of third party content (or possibly for any other kind of liability outside the rather narrow common law universe of defamation)?

 

Because this question comes a lot, and because I expect lots of folks to follow the Gonzales case, I decided to run through the type of analysis courts typically engage in when trying to interpret what Congress meant and why courts can come up with wildly divergent explanations.

 

Yes, policy issues and outcome determination matter. But good judges at least try to figure these things out, and even bad judges (by which I mean those determined to reach a specific outcome no matter what the statute actually says) need to couch their opinions in the form of legislative analysis. This is why lawyers and scholars spend so much time on the subject.

 

So if you want to understand how this game works to follow the arguments in Gonzales v. Google, see below. Along the way, I’ll highlight how W. VA v. EPA may complicate things with its stupid ‘let’s look at what Congress didn’t pass’ analysis.

 

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Yes, Facebook Wants a Digital Regulator. It’s Still A Good Idea.

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This originally appeared on the blog of my employer, Public Knowledge.

Frances Haugen, the (hopefully first of many) Facebook whistleblower, made one thing abundantly clear this week in both her 60 Minutes interview and her Senate Hearing: The United States needs a specialized agency to oversee digital platforms. Antitrust enforcement alone is not enough. Breaking up Facebook would solve some problems, but without additional oversight it will also produce a bunch of smaller companies all running algorithms that maximize engagement regardless of the harm to society (something I have called the “Starfish Problem” — tear up a starfish and the pieces regenerate into lots of smaller starfish). Companies, Haugen warned, “will always put profits over people.” Haugen further emphasized that effectively regulating Facebook (and other digital platforms) requires specialized expertise about the sector. “Right now, the only people in the world trained to analyze these experiences are people who grew up inside of Facebook,” Haugen said. We don’t just need new laws, or to expand the Federal Trade Commission. As Haugen stressed multiple times, we need a specialized, sector-specific regulator to do the job right.

Back in May, Facebook V.P. of Global Public Affairs Nick Clegg wrote an op-ed also calling for the creation of a digital regulator. “Finally,” writes Clegg, “the U.S. could create a new digital regulator. Not only would a new regulator be able to navigate the competing trade-offs in the digital space, it would be able to join the dots between issues like content, data, and economic impact — much like the Federal Communications Commission has successfully exercised regulatory oversight over telecoms and media.”

How do these two diametrically opposed people arrive at the same recommendation? Does the fact that Facebook also says it wants a regulator automatically make it a bad idea? Given that Public Knowledge has repeatedly pushed for a sector-specific regulator since 2018, we obviously don’t think so. But if a sector-specific regulator is the right answer, why is Facebook also pushing for a digital regulator?

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Ohio Lawsuit to Declare Google a Common Carrier Not Obviously Stupid – But No Sure Deal Either.

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Yesterday, the Ohio Attorney General filed a lawsuit  asking an Ohio state court to declare Google a common carrier and/or public utility under the laws of Ohio and Ohio common law. (News release here; complaint here.) Here’s my hot take just from reading the complaint and with zero Ohio law research: It’s novel, and not obviously stupid. But it has some real obstacles to overcome.

 

I stress this because I expect most people will find this so mind boggling that they will be tempted to write this off. Don’t. It’s a novel application of traditional common carrier law, but that is how law evolves.

 

That said, I don’t think it’s a winner. But I would need to do some serious research on how Ohio common law has dealt with particular key elements of the common law, embodied in Ohio’s statute as serving the public “reasonably and indiscriminately.” Keep in mind I’m not saying that I think this is necessarily the right policy. Indeed, my colleague John Bergmayer at Public Knowledge has explained why treating digital platforms as common carriers could be a very bad idea.

 

A brief explanation of all this below . . . .

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Does the Amazon “Drone Cam” Violate the FCC’s Anti-Eavesdropping Rule? And If It Does, So What?

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Folks may have heard about the new Amazon prototype, the Ring Always Home Cam. Scheduled for release in early 2021, the”Drone Cam” will run a pattern of flight around your house to allow you to check on things when you are away. As you might imagine, given a history of Amazon’s Alexa recording things without permission, the announcement generated plenty of pushback among privacy advocates. But what attracted my attention was this addendum at the bottom of the Amazon blog post:

“As with other devices at this stage of development, Ring Always Home Cam has not been authorized as required by the rules of the Federal Communications Commission. Ring Always Home Cam is not, and may not be, offered for sale or lease or sold or leased, until authorization is obtained.”

 

A number of folks asked me why this device needs FCC authorization. In general, any device that emits radio-frequency radiation as part of its operation requires certification under 47 U.S.C. 302a and Part 15 of the FCC’s rules (47 C.F.R. 15.1, et seq.) In addition, devices that incorporate unlicensed spectrum capability (e.g., like Wi-Fi or Bluetooth) need certification from the FCC to show that they do not exceed the relevant power levels or rules of operation. So mystery easily solved. But this prompted me to ask the following question. “Does the proposed Amazon “Drone Cam” violate the FCC’s rule against using electronic wireless devices to record or listen to conversation without consent?

 

As I discuss below, this would (to my knowledge) be a novel use of 47 C.F.R. 15.9. It’s hardly a slam dunk, especially with an FCC that thinks it has no business enforcing privacy rules. But we have an actual privacy law on the books, and as the history of the rule shows the FCC intended it to prevent the erosion of personal privacy in the face of rapidly developing technology — just like this. If you are wondering why this hasn’t mattered until now, I will observe that — to the best of my knowledge — this is the only such device that relies exclusively on wireless technology. The rule applies to the use of wireless devices, not to all devices certified under the authority of Section 302a* (which did not exist until 1982).

 

I unpack this, and how the anti-eavesdropping rule might impact the certification or operation of home drone cams and similar wireless devices, below . . .

 

*technically, although codified at 47 USC 302a, the actual Section number in the Comms Act is Section 302. Long story not worth getting into here. But I will use 302a for consistency’s sake.

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An Ounce of Preventive Regulation is Worth a Pound of Antitrust: A Proposal for Platform CPNI.

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A substantially similar version of this blog was published on the blog of my employer, Public Knowledge.

 

Last year, Public Knowledge and Roosevelt Institute published my book, The Case for the Digital Platform Act, I argued there that we could define digital platforms as a distinct sector of the economy, and that the structure of these businesses and the nature of the sector combined to encourage behaviors that create challenges for existing antitrust enforcement. In the absence of new laws and policies, the digital platform sector gives rise to “tipping points” where a single platform or small oligopoly of platforms can exercise control over a highly lucrative, difficult-to-replicate set of online businesses. For example, despite starting as an online bookseller with almost no customers in 1994, Amazon has grown to an online e-commerce behemoth controlling approximately 40% of all online sales in the United States and enjoying a market capitalization of $1.52 trillion. Google has grown from a scrappy little search engine in 1998 to dominate online search and online advertising — as well as creating the most popular mobile application system (Android) and web browser (Chrome).

 

Today, Public Knowledge released my new paper on digital platform regulation: Mind Your Own Business: Protecting Proprietary Third-Party Information from Digital Platforms. Briefly, this paper provides a solution to a specific competition problem that keeps coming up in the digital platform space. Continuing accusations against Amazon, Google, and other digital platforms that connect third-party vendors with customers, that these platforms appropriate proprietary data (such as sales information, customer demographics, or whether the vendor uses associated affiliate services such as Google Ads or Amazon Fulfillment Centers) and use this data collected for one purpose to privilege themselves at the expense of the vendor.

 

While I’ve blogged about this problem previously, the new paper provides a detailed analysis of the problem, why the market will not find a solution without policy intervention, and a model statute to solve the problem. Congress has only to pass the draft statute attached from the paper’s Appendix to take a significant step forward in promoting competition in the digital marketplace. For the benefit of folks just tuning in, here is a brief refresher and summary of the new material.

 

A side note. One of the things I’ve done in the paper and draft statute in Appendix A (Feld’s First Principle of Advocacy: Always make it as easy as possible for people to do what you want them to do) is to actually define, in statutory terms, a “digital platform.” Whatever happens with this specific regulatory proposal, this definition is something I hope people will pick up on and recycle. One of the challenges for regulating a specific sector is to actually define the sector. Most legislative efforts, however, think primarily in terms of “Google, Facebook, Amazon, maybe Apple and whoever else.” But digital platforms as a sector of the economy includes not just the biggest providers but the smallest and everything in between. With all due respect to Justice Potter Stewart, you can’t write legislation that defines the sorts of actors covered by the legislation as “I know it when I see it.”

 

More below . . .

 

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Breaking Down and Taking Down Trump’s Executive Order Spanking Social Media.

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(A substantially similar version of this appeared first on the blog of my employer, Public Knowledge)

It’s hard to believe Trump issued this stupid Executive Order a mere week ago. Even by the standards of insanity known as the Trump Administration, the last week has reached heights of insanity that make a full frontal assault on the First Amendment with anything less than tear gas and tanks seem trivial. Nevertheless, given the vital importance social media have played in publicizing the murders of George Floyd, Ahmed Arbery, and too many others, how social media have broadcast police brutality against peaceful protesters to be broadcast live around the world from countless locations, and how social media has allowed organizers to to coordinate with one another, we need to remember how vitally important it is to protect these means of communication from being cowed and coopted by the President and others with power. At the same time, the way others have used social media to spread misinformation and promote violence highlights that we have very real problems of content moderation we need to address.

 

In both cases, Trump’s naked effort to use his authority to threaten social media companies so they will dance to his tune undermines everything good about social media while doing nothing to address any of its serious problems. So even though (as I have written previously) I don’t think the FCC has the authority to do what Trump wants (and as I write below, i don’t think the FTC does either), it doesn’t make this Executive Order (EO) something harmless we can ignore. Below, I explain what the EO basically instructs federal agencies to do, what happens next, and what people can do about it.

 

More below . . . .

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A Slew of Minor Corrections On My Political Advertising Post From the Dean of Public Interest Telecom.

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There is an expression that gets used in the Talmud to praise one’s teacher that goes: “My Rabbi is like wine and I am like vinegar,” whereupon the Rabbi actually doing the talking quotes some superior wisdom from his teacher.

 

When it comes to FCC rules governing political advertising, Andrew Jay Schwartzman is like wine and I am like vinegar. Andy knows this stuff backward and forward. So after my recent blog post on Facebook political advertising, Andy sent me a very nice note generally complimenting me on my blog post (always appreciated), but pointing out a bunch of things I either got wrong or could have said more clearly. As Andy observed in his email to me, they don’t actually impact the substance. But in the spirit of transparency, admitting error, and generally preventing the spread of misinformation, I am going to list them out here (a la Emily Ruins Adam Ruins Everything) and correct them in the actual post.

 

List of my goofs below . . . .

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Political Advertising In Crisis: What We Should Learn From the Warren/Facebook Ad Flap.

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[This is largely a reprint from a blog post originally posted on the Public Knowledge blog.]

The last week or so has highlighted the complete inadequacy of our political advertising rules in an era when even the President of the United States has no hesitation in blasting the world with unproven conspiracy theories about political rivals using both traditional broadcast media and social media. We cannot ignore the urgency of this for maintaining fair and legitimate elections, even if we realistically cannot hope for Congress to address this in a meaningful way any time soon.

 

To recap for those who have not followed closely, President Trump has run an advertisement repeating a debunked conspiracy theory about former Vice President Joe Biden (a current frontrunner in the Democatic presidential primary). Some cable programming networks such as CNN and those owned by NBCU have refused to run the advertisement. The largest social media platforms — Facebook, Google, and Twitter — have run the advertisement, as have local broadcast stations, despite requests from the Biden campaign to remove the ads as violating the platform policy against running advertising known to contain false or misleading information. The social media platforms refused to drop the ads. Facebook provided further information that it does not submit direct statements by politicians to fact checkers because they consider that “direct speech.”

 

Elizabeth Warren responded first with harsh criticism for Facebook, then with an advertisement of her own falsely stating that Zuckerberg had endorsed President Trump. Facebook responded that the Trump advertisement has run “on broadcast stations nearly 1,000 times as required by law,” and that Facebook agreed with the Federal Communications Commission that “it’s better to let voters — not companies — decide.” Elizabeth Warren responded with her own tweet that Facebook was “proving her point” that it was Facebook’s choice “whether [to] take money to promote lies. You can be in the disinformation-for-profit business or hold yourself to some standards.”

 

Quite a week, with quite a lot to unpack here. To summarize briefly, the Communications Act (not just the FCC) does indeed require broadcast stations that accept advertising from political candidates to run the advertisement “without censorship.” (47 U.S.C. §315(a).) While the law does not apply to social media (or to programming networks like NBCU or CNN), there is an underlying principle behind the law that we want to balance the ability of platforms to control their content with preventing platforms from selectively siding with one political candidate over another while at the same time allowing candidates to take their case directly to the people. But, at least in theory, broadcasters also have other restrictions that social media platforms don’t have (such as a limit on the size of their audience reach), which makes social media platforms more like content networks with greater freedom to apply editorial standards. But actual broadcast licensees — the local station that serves the viewing or listening area — effectively become “common carriers” for all “qualified candidates for public office,” and must sell to all candidates the opportunity to speak directly to the audience and charge all candidates the same rate.

 

All of this begs the real question, applicable to both traditional media and social media: How do we balance the power of these platforms to shape public opinion, the desire to let candidates make their case directly to the people, and the need to safeguard our ability to govern ourselves? Broadcast media remain powerful shapers of public opinion, but they clearly work in a very different way from social media. We need to honor the fundamental values at stake across all media, while tailoring the specific regulations to the specific media.

 

Until Congress gets off its butt and actually passes some laws we end up with two choices. Either we are totally cool with giant corporation making the decision about which political candidates get heard and whether what they have to say is sufficiently supported and mainstream and inoffensive to get access to the public via social media, or we are totally cool with letting candidates turn social media into giant disinformation machines pushing propaganda and outright lies to the most susceptible audiences targeted by the most sophisticated placement algorithms available. It would be nice to imagine that there is some magic way out of this which doesn’t involve doing the hard work of reaching a consensus via our elected representatives on how to balance competing concerns, but there isn’t. There is no magic third option by which platforms acting “responsibly” somehow substitutes for an actual law. Either we make the choice via our democratic process, or we abdicate the choice to a handful of giant platforms run by a handful of super-rich individuals. So perhaps we could spend less time shaming big companies and more time shaming our members of Congress into actually doing their freaking jobs!!

 

(OK, spend more time doing both. Just stop thinking that yelling at Facebook is gonna magically solve anything.)

I unpack this below . . .

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Can Trump Really Have The FCC Regulate Social Media? So No.

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Last week, Politico reported that the White House was considering a potential “Executive Order” (EO) to address the ongoing-yet-unproven allegations of pro-liberal, anti-conservative bias by giant Silicon Valley companies such as Facebook, Twitter, and Google. (To the extent that there is rigorous research by AI experts, it shows that social media sites are more likely to flag posts by self-identified African Americans as “hate speech” than identical wording used by whites.) Subsequent reports by CNN and The Verge have provided more detail. Putting the two together, it appears that the Executive Order would require the Federal Communications Commission to create regulations designed to create rules limiting the ability of digital platforms to “remove or suppress content” as well as prohibit “anticompetitive, unfair or deceptive” practices around content moderation. The EO would also require the Federal Trade Commission to somehow open a docket and take complaints (something it does not, at present, do, or have capacity to do – but I will save that hobby horse for another time) about supposed political bias claims.

 

(I really don’t expect I have to explain why this sort of ham-handed effort at political interference in the free flow of ideas and information is a BAD IDEA. For one thing, I’ve covered this fairly extensively in chapters five and six of my book, The Case for the Digital Platform Act. Also, Chris Lewis, President of my employer Public Knowledge, explained this at length in our press release in response to the reports that surfaced last week. But for those who still don’t get it, giving an administration that regards abuse of power for political purposes as a legitimate tool of governance power to harass important platforms for the exchange of views and information unless they promote its political allies and suppress its critics is something of a worst case scenario for the First Amendment and democracy generally. Even the most intrusive government intervention/supervision of speech in electronic media, such as the Fairness Doctrine, had built in safeguards to insulate the process from political manipulation. Nor are we talking about imposing common carrier-like regulations that remove the government entirely from influencing who gets to use the platform. According to what we have seen so far, we are talking about direct efforts by the government to pick winners and losers — the opposite of net neutrality. That’s not to say that viewpoint-based discrimination on speech platforms can’t be a problem — it’s just that, if it’s a problem, it’s better dealt with through the traditional tools of media policy, such as ownership caps and limits on the size of any one platform, or by using antitrust or regulation to create a more competitive marketplace with fewer bottlenecks.)

 

I have a number of reasons why I don’t think this EO will ever actually go out. For one thing, it would completely contradict everything that the FCC said in the “Restoring Internet Freedom Order” (RIFO) repealing net neutrality. As a result, the FCC would either have to reverse its previous findings that Section 230 prohibits any government regulation of internet services (including ISPs), or see the regulations struck down as arbitrary and capricious. Even if the FCC tried to somehow reconcile the two, Section 230 applies to ISPs. Any “neutrality” rule that applies to Facebook, Google, and Twitter would also apply to AT&T, Verizon, and Comcast. 

 

But this niggles at my mind enough to ask a good old law school hypothetical. If Trump really did issue an EO similar to the one described, what could the FCC actually do under existing law?

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