If you asked one hundred people about how to fix various grievances with tech companies like Meta and Google, you might get one hundred different answers. Unfortunately, some of the debate has recently centered on a liability shield known as Section 230. Section 230 of the Communications Decency Act was enacted in the 1990’s and provides immunity to online platforms for content posted by third parties. This principle has been in place since the early days of the internet, and it has been crucial for the growth of the online ecosystem.
A pending case at the U.S. Supreme Court, Gonzales v. Google, could threaten this important keystone of the modern Internet by gutting Section 230 protections. While this case deals with extremely sensitive subjects around the spread of terrorism and radicalism online, its core issue is whether moderation and recommendation systems, or algorithms, are covered by Section 230.
The purpose of Section 230 is to promote the development of the internet and to encourage the free exchange of information. This was reflected in congressional statements at the time and the co-authors of Section 230, Senator Ron Wyden (D-OR) and Representative Chris Cox (R-CA) still confirm this notion and that recommendations were intended to be covered at the time of the law’s creation. This liability shield protects online platforms from being held legally responsible for content posted by users, which means that social media platforms, review websites, and other user-generated content sites aren’t held liable for posts by third party actors.
This protection is important for business growth because it allows online platforms to host user-generated content without fear of being sued for content they did not create. Without the protections of Section 230, online platforms would be forced to heavily moderate and censor user-generated content or risk being held liable for it. The negative economic impacts have been estimated at $440 billion in GDP and 4.25 million jobs if Section 230 is weakened or removed. And, if the European Union’s General Data Protection Regulation is any bellwether, then the firms hit the worst would be small businesses.
In addition, the protections of Section 230 have allowed for the development of innovative business models and online platforms. For example, review websites like Yelp and TripAdvisor have become popular sources of information for consumers looking for recommendations on restaurants, hotels, and other businesses. Even many food delivery companies include helpful information from other users. Without Section 230 protections, these platforms might not have been able to exist in the first place due to the high risk of liability for moderating user-generated content.
If the Supreme Court determines that content moderation is not covered by Section 230, a panoply of negative effects will happen. Without Section 230 protections, platforms may scale back or cease moderation and curation, which would make the Internet much less family-friendly and less usable for average Americans due to an overwhelming river of data. Other sites might do away with user-generated content completely and remove comment sections entirely to mitigate risk. Destroying Section 230 would also harm home-grown American companies that contribute a huge portion of the $520 billion in exports of digital services, and a trade surplus of $214 billion. The U.S. helped to create and maintains a competitive edge in the current digital age, based in large part on the careful design principles of this legislation and other regulatory approaches taken in the 1990s.
Without the protections of Section 230, small online businesses would likely be deterred from using online platforms to advertise and engage with customers, which could limit their ability to grow and compete in the digital marketplace. The largest firms will likely be able to comply with new regulation, since they have well-resourced compliance departments, teams of software engineers, and hordes of lawyers to fend off the spate of lawsuits that would arise.
Some lawmakers also are working on legislation to gut or even eliminate Section 230 due to their grievances with large tech companies. However, if these efforts are successful, what is allowed online will be dictated largely in the courtroom and with much less predictability than the current state of play. This will also serve to enrich trial lawyers and empower judges that may not share some of these lawmakers’ viewpoints on allowable content.
Overall, Section 230 and its protections on moderation have been crucial for the growth of online businesses and the free exchange of information on the internet. Striking down these protections would immediately upend the internet as we know it. Although NTU believes that this case will not succeed on the merits, this case should also remind lawmakers and other observers of the importance of Section 230 for its broad benefits to society and the American economy.