Setting The Plate For Section 230 Hearing

The top Republican and Democrat on the Senate Commerce Committee seek to frame the 28 October hearing on Section 230 in the light they favor.

Before the Senate Commerce, Science, and Transportation Committee held its hearing today on 47 U.S.C. 230 (Section 230), both Chair Roger Wicker (R-MS) and Ranking Member Maria Cantwell (D-WA) sought to provide their slant on the proceedings. Wicker continued with the Republican narrative by suggesting social media platforms may be cooperating with the Biden Campaign, and Cantwell released a report on how these platforms have adversely affected local journalism to the detriment of American democracy.

Wicker sent letters to Facebook CEO Mark Zuckerberg and Twitter CEO Jack Dorsey that seem obliquely along the same lines as Senator Josh Hawley’s (R-MO) letter to the Federal Election Commission (FEC) claiming that the two platforms’ restriction on spreading the dubious New York Post story on Hunter Biden was an in-kind campaign contribution.

Wicker wrote to Zuckerberg and Dorsey

In the interest of fully disclosing any interactions with the candidates and their campaigns, I request that you provide the Committee with specific information regarding whether and how [Facebook/Twitter have] provided access to any data, analytics, or other information to either major political party, candidate, or affiliates thereof. This includes information related to advertising, post or page performance, engagement, or other data that might shape or influence decision-making by the candidate or campaign. In addition, please indicate whether this information is provided equitably to all candidates, and how decisions are made regarding what information is provided and to whom.

Clearly Wicker is after any indication that the Biden Campaign has received undue or extra help or information the Trump Campaign has not. Facebook taken millions in dollars of advertising from the two campaigns and from other parties. Twitter stopped accepting political advertising in late 2019. Consequently, it is likely there will be mountains of material to provide the committee. This inquiry may have been made in the interest of ensuring a fairly contested election. Or, perhaps Wicker and his staff have some inside information into the two platforms relations to the Biden Campaign. Perhaps the letter is meant as a fishing expedition in the hopes any such evidence will turn up.

Nonetheless, these letters may have the prophylactic effect of chilling any efforts Facebook and Twitter may take in the last week of the election lest they be hauled again before Congress to answer for their moderation and take down decisions regarding political and misinformation material. If it turns out the Trump Campaign has gotten advantageous treatment, it would be hard to see how Wicker and other Republicans would weave the fact of greater assistance to President Donald Trump into their perpetual campaign of decrying alleged but never proven anti-conservative bias.

But, as mentioned before, Wicker could attempt to portray any assistance provided to the Biden Campaign as an in-kind contribution as Hawley did after sharing of the dubious New York Post article was limited on the platforms even though there are clear exemptions for the media to federal laws and regulations on aid to campaigns.

Hawley claimed in a letter to the FEC that Twitter and Facebook have given the Biden Campaign an in-kind contribution by blocking the article in violation of federal campaign finance law. Hawley, however, was careful to couch his language in language suggesting that Twitter and Facebook’s actions (which he terms suppression) were in-kind contributions instead of outright asserting they are.

While Hawley quite accurately quotes the law on what constitutes a contribution (“[a] “contribution” includes “anything of value . . . for the purpose of influencing any election for Federal office”), he is apparently unaware of the regulations promulgated by the FEC to explicate gaps and unaddressed issues in the statute. FEC regulations shed further light on the issue at hand. Notably, in 11 CFR 100.71, the FEC’s regulations provide extensive exceptions to what is a contribution and provide “[t]he term contribution does not include payments, services or other things of value described in this subpart.” One such exception is found in 11 CFR 100.73, “News story, commentary, or editorial by the media,” which makes clear:

Any cost incurred in covering or carrying a news story, commentary, or editorial by any broadcasting station (including a cable television operator, programmer or producer), Web site, newspaper, magazine, or other periodical publication, including any Internet or electronic publication, is not a contribution unless the facility is owned or controlled by any political party, political committee, or candidate, in which case the costs for a news story.

One of the essential elements for such an action to be a contribution is control or ownership. I am fairly certain the Biden Campaign neither owns nor controls Twitter or Facebook. For if they do, they have been colossally inept in allowing President Donald Trump and his partisans to spread widely misinformation and lies about mail-in voting to name one such subject.

Moreover, the FEC and federal courts have long recognized the “press exemption” to what might otherwise be considered in-kind contributions or expenditures in violation of the law. This exemption includes websites and the internet. It would seem that Facebook and Twitter were acting in ways much more similar to how the traditional print media has. It is telling that Hawley and others have not pilloried the so-called liberal media for looking askance at the New York Post’s story and not taking it at face value to the extent they have covered it at all. Therefore, it seems like any value the Biden Campaign may have derived from social media platforms using 47 USC 230 in moderating content on their platform is not an in-kind contribution.

Cantwell released a report that she has mentioned during her opening statement at the 23 September hearing aimed at trying to revive data privacy legislation. She and her staff investigated the decline and financial troubles of local media outlets, which are facing a cumulative loss in advertising revenue of up to 70% since 2000. And since advertising revenue has long been the life blood of print journalism, this has devastated local media with many outlets shutting their doors or radically cutting their staff. This trend has been exacerbated by consolidation in the industry, often in concert with private equity or hedge funds looking to wring the last dollars of value from bargain basement priced newspapers. Cantwell also claimed that the overwhelming online advertising dominance of Google and Facebook has further diminished advertising revenue and other possible sources of funding through a variety of means. She intimates that much of this content may be illegal under U.S. law, and the Federal Trade Commission (FTC) may well be able to use its Section 5 powers against unfair and deceptive acts and its anti-trust authority to take action.

Cantwell detailed “Current and Suggested Congressional Considerations to Save Local News:”

• Providing COVID-19 Emergency Financial Relief
  • As discussed in this report, the COVID-19 pandemic has had a devastating impact on local media outlets around the country. Congress should provide immediate support to stabilize these critical community institutions because it is very difficult to recreate a functioning local newsroom once its unique blend of knowledgeable local reporters, editorial controls, and regional subscribers is lost.
  • Congress should renew the Paycheck Protection Program (PPP), created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, to continue to support jobs at local news outlets. It should also expand the PPP to make thousands more local newspapers, radio, and television broadcasters eligible for emergency federal support.
  • Congress should also consider targeted tax incentives and grants as at least a short-term bridge to enable local news entities to survive the current economic turmoil.
• Ensure Fair Return for Local News Content
  • Local news outlets create unmatched trusted content for local communities but, as discussed in this report, they are not being fairly compensated for their intellectual property by news aggregators, who are abusing their dominant positions in the marketplace.
  • Congress should consider requiring that news aggregation platforms enter into good faith negotiations with local news organizations and pay them fair market value for their content. Congress should also consider allowing local news organizations for a limited duration to collectively bargain for reuse of their content, provided there are strong controls in place to ensure that smaller publishers are not left behind.
• Level the Playing Field for Local News
  • As detailed in this report, news aggregation platforms are using their market power and data aggregation practices to disadvantage local news.
  • Congress has a long history of addressing market abuses that stifle innovation and harm consumers. Rules preventing unfair, deceptive, and abusive practices can stop platforms from taking local news content without financial payment and retaliating against local news by hiding or removing their content from search engines or social media feeds. Similarly, statutes that prohibit market manipulation in other industries can serve as models to ensure online advertising markets are transparent and not contrived to benefit a dominant firm. Federal privacy protections can also serve to empower consumers to provide more support to local news organizations that provide them with more trusted and relevant information. Each of these changes should be crafted in a way to promote competition and consumer welfare and spur growth and innovation in the digital economy.

Cantwell’s report follows the House Judiciary Committee’s Antitrust, Commercial and Administrative Law Subcommittee’s “Investigation into Competition in Online Markets,” which also examined, in part, the effect of the digital dominance of Facebook and Google on the U.S. journalism industry. The Subcommittee asserted:

received testimony and submissions showing that the dominance of some online platforms has contributed to the decline of trustworthy sources of news, which is essential to our democracy. In several submissions, news publishers raised concerns about the “significant and growing asymmetry of power” between dominant platforms and news organizations, as well as the effect of this dominance on the production and availability of trustworthy sources of news. Other publishers said that they are “increasingly beholden” to these firms, and in particular, to Google and Facebook. Google and Facebook have an outsized influence over the distribution and monetization of trustworthy sources of news online, undermining the quality and availability of high-quality sources of journalism. This concern is underscored by the COVID-19 pandemic, which has laid bare the importance of preserving a vibrant free press in both local and national markets.

The Subcommittee recommended:

To address this imbalance of bargaining power, we recommend that the Subcommittee consider legislation to provide news publishers and broadcasters with a narrowly tailored and temporary safe harbor to collectively negotiate with dominant online platforms.

The Subcommittee noted:

In April 2019, Subcommittee Chairman [David] Cicilline (D-RI) and Doug Collins (R-GA), the former- Ranking Member of the Committee on the Judiciary, introduced H.R. 2054, the “Journalism Competition and Preservation Act of 2019.” H.R. 2054 would allow coordination by news publishers under the antitrust laws if it (1) directly relates to the quality, accuracy, attribution or branding, or interoperability of news; (2) benefits the entire industry, rather than just a few publishers, and is non-discriminatory to other news publishers; and (3) directly relates to and is reasonably necessary for these negotiations, instead of being used for other purposes.

Cantwell noted in her report “regulators across Europe and in Australia are taking steps to ensure that local publishers can continue to monetize their content and reach consumers.” She claimed “[p]artly in response to these regulatory actions, Google and Facebook have announced plans to provide limited compensation to a small slice of the news sector…[and [w]hether this compensation will be sufficient, or negotiated on fair terms, remains to be seen.”

In late July, the Australian Competition and Consumer Commission (ACCC) issued for public consultation a draft of “a mandatory code of conduct to address bargaining power imbalances between Australian news media businesses and digital platforms, specifically Google and Facebook.” The government in Canberra had asked the ACCC to draft this code earlier this year after talks broke down between the Australian Treasury and the companies. The ACCC explained:

The code would commence following the introduction and passage of relevant legislation in the Australian Parliament. The ACCC released an exposure draft of this legislation on 31 July 2020, with consultation on the draft due to conclude on 28 August 2020. Final legislation is expected to be introduced to Parliament shortly after conclusion of this consultation process.

This is not the ACCC’s first interaction with the companies. Late last year, the ACCC announced a legal action against Google “alleging they engaged in misleading conduct and made false or misleading representations to consumers about the personal location data Google collects, keeps and uses” according to the agency’s press release. In its initial filing, the ACCC is claiming that Google mislead and deceived the public in contravention of the Australian Competition Law and Android users were harmed because those that switched off Location Services were unaware that their location information was still be collected and used by Google for it was not readily apparent that Web & App Activity also needed to be switched off. Moreover, A year ago, the ACCC released its final report in its “Digital Platforms Inquiry” that “proposes specific recommendations aimed at addressing some of the actual and potential negative impacts of digital platforms in the media and advertising markets, and also more broadly on consumers.”

In mid-August, Google and the ACCC exchanged public letters, fighting over the latter’s proposal to ensure that media companies are compensated for articles and content the former uses.

• In an Open Letter to Australians, Google claimed:
  • A proposed law, the News Media Bargaining Code, would force us to provide you with a dramatically worse Google Search and YouTube, could lead to your data being handed over to big news businesses, and would put the free services you use at risk in Australia.
  • You’ve always relied on Google Search and YouTube to show you what’s most relevant and helpful to you. We could no longer guarantee that under this law. The law would force us to give an unfair advantage to one group of businesses – news media businesses – over everyone else who has a website, YouTube channel or small business. News media businesses alone would be given information that would help them artificially inflate their ranking over everyone else, even when someone else provides a better result. We’ve always treated all website owners fairly when it comes to information we share about ranking. The proposed changes are not fair and they mean that Google Search results and YouTube will be worse for you.
  • You trust us with your data and our job is to keep it safe. Under this law, Google has to tell news media businesses “how they can gain access” to data about your use of our products. There’s no way of knowing if any data handed over would be protected, or how it might be used by news media businesses.
  • We deeply believe in the importance of news to society. We partner closely with Australian news media businesses — we already pay them millions of dollars and send them billions of free clicks every year. We’ve offered to pay more to license content. But rather than encouraging these types of partnerships, the law is set up to give big media companies special treatment and to encourage them to make enormous and unreasonable demands that would put our free services at risk.

In its response, the ACCC asserted:

• The open letter published by Google today contains misinformation about the draft news media bargaining code which the ACCC would like to address. 
• Google will not be required to charge Australians for the use of its free services such as Google Search and YouTube, unless it chooses to do so.
• Google will not be required to share any additional user data with Australian news businesses unless it chooses to do so.
• The draft code will allow Australian news businesses to negotiate for fair payment for their journalists’ work that is included on Google services.
• This will address a significant bargaining power imbalance between Australian news media businesses and Google and Facebook.

Google has since published a follow up letter, claiming it does not oppose the draft code but rather wants a few changes. Google also dodged blame for the decline of media revenue, asserting “the fall in newspaper revenue over recent years was mainly the result of the loss of classified ads to online classifieds businesses.” Google trumpeted its 1 October decision to “to pay a number of publishers to license their content for a new product, including some in Australia, as well as helping train thousands of Australian journalists.” As announced by Google and Alphabet CEO Sundar Pichai, Google will pay some media outlets up to $1 billion over the next three years  “to create and curate high-quality content for a different kind of online news experience” for its new product, Google News Showcase. Pichai claimed:

This approach is distinct from our other news products because it leans on the editorial choices individual publishers make about which stories to show readers and how to present them. It will start rolling out today to readers in Brazil and Germany, and will expand to other countries in the coming months where local frameworks support these partnerships.

This decision was not well-received everywhere, especially in the European Union (EU), which is in the process of implementing an EU measure requiring Google and Facebook to pay the media for content. The European Publishers Council (EPC) noted:

The French Competition Authority decision from April considered that Google’s practices were likely to constitute an abuse of a dominant position and brought serious and immediate damage to the press sector. It calls on Google, within three months, to conduct negotiations in good faith with publishers and press agencies on the remuneration for their protected content. Google’s appeal in July seeks to get some legal clarity on parts of the decision.

Moreover, the European Union (EU) Directive on Copyright in the Digital Single Market is being implemented in EU member states and would allow them to require compensation from platforms like Facebook and Google. The EPC claimed:

Many are quite cynical about Google’s perceived strategy. By launching their own product, they can dictate terms and conditions, undermine legislation designed to create conditions for a fair negotiation, while claiming they are helping to fund news production.

Incidentally, earlier this month, a French appeals court ruled against Google in its fight to stop France’s competition authority to negotiate licensing fees for the use of French media. And, earlier today, Italy’s competition authority announced an investigation “against Google for an alleged abuse of dominant position in the Italian market for display advertising.” The agency asserted:

• In the key market for online advertising, which Google controls also thanks to its dominant position on a large part of the digital value chain, the Authority questions the undertaking’s discriminatory use of the huge amount of data collected through its various applications, preventing rivals in the online advertising markets from competing effectively. More specifically, Google appears to have engaged in an internal/external discriminatory conduct, refusing to provide its competitors with Google ID decryption keys and excluding third-party tracking pixels. At the same time, Google has allegedly used tracking elements enabling its advertising intermediation services to achieve a targeting capability that some equally efficient competitors are unable to replicate.
• The conducts investigated by the Authority may have a significant impact on competition in the various markets of the digital advertising value chain, with wide repercussions on competitors and consumers. The absence of competition in the intermediation of digital advertising, in fact, might reduce the resources allocated to website producers and publishers, thus impoverishing the quality of content directed to end customers. Moreover, the absence of effective competition based on merits could discourage technological innovation for the development of advertising technologies and techniques less intrusive for consumers.

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