ICYMI: Expert Panel Concerned Upcoming Supreme Court Decision Could Harm Internet Users, Free Expression, and Digital Economy

Section 230 of the Communications Decency Act of 1996 is widely regarded as “the most important law in tech.” Within it, a short but mighty clause – often referred to as “the 26 words that created the internet” – was written to foster innovation, competition, and economic growth in a new and rapidly burgeoning digital ecosystem. For the first time ever this spring, Section 230 is being reviewed by the Supreme Court, who may rule to limit the law’s liability protections for companies that host third-party content online, opening the floodgates for litigation against any company that allows user-generated digital content. Economists, policy experts, and Supreme Court Justices themselves are appropriately concerned: could narrowing Section 230 crash the digital economy?

The CCIA Research Center hosted experts in economics and tech policy from the Technology Policy Institute, University of Maryland, and neighborhood social networking service Nextdoor to discuss the economic implications of an adverse ruling in Gonzalez v. Google with POLITICO tech policy reporter Rebecca Kern. The takeaway was clear: reducing liability shields for companies that allow user-generated content on their sites could A.) Reduce competition and innovation in digital markets, B.) Reduce the economic benefits of the internet as a whole, and C.) Harm internet users, consumers, and free expression.

Panelists Sarah Oh Lam (Senior Fellow, Technology Policy Institute), Ginger Zhe Jin (Professor of Economics, University of Maryland), and Laura Bisesto (Global Head of Policy, Privacy & Regulatory Compliance, Deputy General Counsel, Nextdoor) highlighted the following potential consequences of a Supreme Court decision to narrow Section 230:

A.) Reduced competition & innovation in digital markets

• Ginger Zhe Jin (Professor of Economics, University of Maryland):

“Section 230 and immunity protections for digital service providers is a backbone of Internet services, and we would not see as much innovation and content and new products and services without Section 230…a narrowing of Section 230, especially in the form of Supreme Court judging on a particular case, rather than a federal law, would have the danger of reducing the incentive for future innovations, and also make the current internet services not as viable.”

“I’m sort of worried that startups may not have enough resources to develop new products or services – they could not even be able to survive or even try to enter the market because they anticipate very high uncertainty and lawsuit cost. In that sense, it is going to harm the competition in the market.”

• Sarah Oh Lam (Senior Fellow, Technology Policy Institute):

“The purpose of our [Supreme Court amicus brief] filing was to bring an economist point of view to the justices and clerks on the court…we wanted to just highlight the importance of targeted advertising to the digital economy, how free services such as email, search and video content are powered by advertisement revenues, and how targeting is really a two way flow of data between the user and the server…I think they need to understand what [narrowing Section 230] would mean and how broad a change would would affect not just the big websites, but small websites.”

• Laura Bisesto (Global Head of Policy, Privacy & Regulatory Compliance, Deputy General Counsel, Nextdoor):

“There’s been nearly 30 years of Section 230, 27 years, and it’s allowed incredible American businesses to grow, that you had these very niche areas. And of course, everyone focuses on the big tech platforms that really are all encompassing, but they forget a lot about these small midsize companies that have these niche offerings that are highly competitive, successful businesses.”

“There’s really unintended consequences for the smaller players. We want our community to be able to moderate for this civility standard and what matters locally. And so we’re really worried about that impact and ultimately the competitive nature of our platform because of [Section 230 protections for civility standards and community-led content moderation] going away.”

B.) Reduced economic benefits of the internet

• Ginger Zhe Jin:

“If the narrowing of Section 230 will provide the narrowing because of algorithm use, I can imagine big or small firms could have two reactions: one is you just completely give up algorithm use, and that would probably make you safe in this Section 230 protection because you’re not using algorithms. However, this could be very difficult for consumers to find what they want, which would undermine the viability of the internet businesses themselves. The other reaction could be they’re going to tweak the algorithm in a way to minimize their liability.

This could mean that they over-censor content that may have any potential of generating controversy or misinterpretation. But either way, we’re going to see maybe less content creation and less content consumption and less business available to match the demand and supply of such information need. So I think this will be a dire situation in my opinion, and would reduce the economic benefits the Internet has brought to many players.”

C.) Harms to internet users, consumers, and free expression

• Laura Bisesto:

“Part of Section 230 is that the community or that users are able to take down otherwise objectionable content without liability…in terms of the algorithmic amplification, I think you can see, you know, a disproportionate impact on smaller niche companies that use algorithms to curate the types of content. I mean, for Nextdoor, we want to make sure you’re seeing relevant very hyper local content…it’s really important to us to be able to continue to use algorithms to provide useful content that’s relevant. And any narrowing of Section 230 could really impede that ability on both sides, on removing content, but also the promoting of relevant content.”

“My colleague describes the situation [of the Internet without Section 230] as a cesspool or Disneyland scenario…[companies that avoid liability] would be the potential cesspool situation for certain platforms that have that kind of content. And then there’s the over-moderation as well, which is really harmful for free expression and for, you know, especially groups that are cultural minorities or dissenting viewpoints.”

“And [user-led content moderation] actually, for us, we believe, a competitive feature of our business model. And because of it, we think we are different. We’re different from the big players and we have a different offering. So actually changing that part of the law could really negatively impact our competitive model. And I think, you know, again, empower the big players when I know a lot of the attack is at them.”

• Sarah Oh Lam:

“…companies might feel like it’s not even worth it to ask users to contribute third party data anymore. […]. Maybe user-generated content won’t even be that big of a percentage of the Internet.”

• Ginger Zhe Jin:

“If [startups] put more resources in compliance, it could imply that they have less resources for innovation of the next generation products and services, so that could be eventually detrimental to consumers and to competition as well.”