Both Democrats and Republicans want to weaken tech’s legal liability shield — here’s how the proposed changes could impact platforms

Published Thu, Mar 4 202111:56 AM ESTUpdated Fri, Mar 5 20215:32 PM EST

Key Points

Both President Joe Biden and his predecessor Donald Trump agreed that Section 230 must be significantly changed to rein in the power of the Big Tech companies.
But Democrats and Republicans tend to differ on how to reform the law.
Several of the proposed reforms would have different impacts on a range of online platforms.

There’s one political movement that seems unlikely to change with the presidential transition this year: a desire to overhaul Section 230 of the Communications Decency Act. President Joe Biden shares the conviction with his predecessor Donald Trump that the law, which serves as a liability shield for tech platforms like Facebook , Twitter and Google’s YouTube , must be significantly altered or repealed to rein in the companies’ vast power. Most lawmakers seem unwilling to go as far as a full repeal of the law, but there's a bipartisan desire to force Big Tech to take more responsibility for the editorial decisions they make on what can and can't appear on their platforms. That push for change has spurred tech companies to reconsider how they can adapt to a change in Section 230, which gives them broad immunity from being held liable for what users post to their social networks. But any potential change to Section 230 comes with risks and costs for the largest tech firms the current proposals are designed to regulate. And for tech start-ups, which the law was originally designed to protect, there's a risk of increased legal costs that could hamper growth if Section 230 is fully repealed. Good luck building the next Google or Facebook if you're shackled to new regulations your predecessors didn't have to deal with. “The incumbent players in this space will have the option to try to still operate as much as possible in this space if Section 230 is narrowed. But every other company won’t,” said Bill Easley, a senior policy analyst at Americans for Prosperity, an advocacy group funded by Charles Koch. “If you’re not a FAANG [Facebook, Amazon, Apple, Netflix, Google], you’re not going to make it." There’s a wide range of bills currently being considered by Congress that could hurt Big Tech's rapid growth. The best outcome for those companies would be to see no change to the law. But of the options on the table, here’s how different corners of the internet could be impacted: Repeal A full repeal of Section 230 is the least popular option among the tech platforms as well as many digital rights groups. Without Section 230, platforms could be sued over a host of issues related to their users’ posts and also for taking down posts, even if they have good reason to believe they’re harmful. A repeal of Section 230 could incentivize platforms to screen content before it’s uploaded so that they can limit their legal exposure. Of course, a lag time for posts just about erases much of the value of social media, which has grown so quickly in part because of its instantaneous nature. Legal experts tend to agree that a repeal would likely be most harmful to emerging platforms like audio network Clubhouse, which would not have the vast resources of a company like Facebook or YouTube to either closely moderate users’ actions or fight off legal challenges in court. Even with Section 230 protections, meritless lawsuits can cost a business a few thousand to tens of thousands of dollars to deal with early-stage legal proceedings, according to Engine , a group that advocates for start-up-friendly policies and has reportedly been backed by Google . Without Section 230 – or even with just a weakened version – those claims could go much further, racking up legal costs that could be worth hundreds of thousands of dollars, Engine said based on discussions with legal experts. Those costs wouldn't even account for additional content moderation expenses many platforms would likely have to take on to reduce their liability risk. Such costs would vary widely by company depending on what form and level of moderation they choose to do should they seek to maintain core elements of their business models. Such an outcome would run counter to the stated goals of many lawmakers seeking to reform Section 230, who seek to rein in the power of the largest tech companies so that emerging ones can thrive. Other approaches to reform There are two key aspects to Section 230 on which lawmakers on different sides of the political spectrum have zeroed in. The first part, subsection c(1), is what prevents digital platforms from being treated like publishers or speakers of information posted on their services. That’s what insulates the platforms from the type of liability users themselves or traditional newspapers would have to face. The second part falls under subsection c(2) of the law and is commonly known as the “Good Samaritan” protection. That’s the portion of the law that says digital platforms shouldn’t be held responsible for taking “good faith” actions to remove or restrict access to “objectionable” material. In general, Democrats have been more eager to reform c(1) so that digital platforms can be exposed to legal liability under some circumstances. The idea of such a reform is typically to incentivize the platforms to take more proactive steps to combat harmful content on their services, such as misinformation or child sexual abuse material. Republicans, generally, have been more keen to seek changes to c(2), with the goal of limiting the circumstances by which a platform could be protected for removing users’ posts. Several Republican lawmakers have claimed tech platforms disproportionately censor conservative speech, though independent analyses have shown conservative voices often thrive on social media and the tech companies have denied such censorship claims. Narrowing liability protection One of the most recent Section 230 reform bills targeting c(1) is the SAFE TECH Act , led by Sen. Mark Warner, D-Va., and backed by Sens. Amy Klobuchar, D-Minn., and Mazie Hirono, D-Hawaii. The bill seeks to limit Section 230’s protection for internet platforms in specific circumstances. For example, it would remove liability protection for ads or other types of paid content that platforms host. They could also be sued by targets of stalking and harassment and families pursuing wrongful death suits if they believe content hosted on the platforms played a role in those offenses. While on their face, bills like this can seem appealing for limiting harmful behavior online, legal experts warned such proposals could come with unintended consequences. First, smaller companies are likely to bear the brunt of the burden under such policies because they already have fewer resources to devote to moderation. Even if the burden is limited or exempted for smaller companies, potential investors could become more wary of funding a newer enterprise built on user-generated content if it would eventually be exposed to a high level of liability risk. "I think if you narrow c(1) too much, you basically come close to repealing Section 230,” Easley said. Under Section 230, companies and their investors can essentially assume they won’t be held responsible for their users’ posts. But if that protection is narrowed, Easley said, “those legal assumptions are all thrown out the window.” Since platforms would have a greater risk of being taken further into the legal process for their users’ posts under such a law, Easley said that as a lawyer, he would advise a company like Reddit to suspend any group hosting controversial speech to avoid liability if such a bill were passed. Such a move would risk angering users and possibly driving them to other platforms more willing to take on the risk, including more well-resourced ones. Easley said his advice might change for a larger, more well-financed platform like Facebook. In that case, he said, he might advise the company to hire as many moderators as possible to review users’ posts before they can be published on the service. Still, that could make the service less valuable to users hoping to notify their audiences instantly during an event. As a result, emerging platforms could be forced to either shut down or take on less legally risky content, like that which is professionally produced, according to Eric Goldman, a professor at the Santa Clara University School of Law who frequently writes about Section 230 on his blog . If this were to happen, consumers would likely see a more limited range of voices on social media, he said. Exemptions to the liability for emerging companies could help, he said, though fine-tuning those thresholds could be tricky and eventually any growing platform would still have to adapt to the regulation. Another issue with requiring greater moderation requirements is risking collateral damage if companies seek to broadly reduce their legal exposure by limiting and deleting posts. Goldman said that if Congress were to require more moderation of the platforms, some completely legitimate services and posts will be removed just to avoid the risk of liability. This was true after the passage of FOSTA-SESTA, which removed Section 230 protections in cases where digital platforms host sex trafficking or sex work ads. Its passage effectively shut down Craigslist’s personal classified section and Backpage.com. Since then, sex workers and their advocates have said the law has created a more unsafe environment for consensual sex workers who found the websites useful to vet clients by sharing information with others. "Rather than trying to be more granular in their approach to moderating content, they're like, 'we can't do it, we'll just turn it off,’” Goldman said. “So pieces of the internet went dark in response to FOSTA and that's going to be true with any new effort to require additional content moderation.” Finally, bills like the SAFE TECH Act that seek to tie payment for a post or ad to greater liability risk could have wide-ranging impacts, Goldman noted. Beyond adding liability for advertising content, such a provision could make a paid service like Dropbox’s premium level exposed to more liability for files it hosts. For any site that puts content behind a subscription paywall, like email newsletter platform Substack or creative funding platform Patreon, this type of reform would force such them to either untether their posts from payment or ramp up moderation standards. For example, to avoid being stripped of liability protection on its paid content, a service like Substack could opt to screen any monetized newsletters to mitigate risk. To do so, it may have to take on extra costs of hiring moderators and developing robust algorithms that can spot risk. To keep the additional costs at a manageable level, it may have to consider limiting the number of writers who can put newsletters behind a paywall to reduce the amount of content it has to screen. Such a decision would likely slow the platform's growth since many writers currently see it as an attractive way to make money on the side or as an independent creator. Limiting what platforms can take down On the other side of the aisle, Republicans have sought to narrow Section 230 protections by limiting the types of content platforms can freely take down. That’s the case with the Online Freedom and Viewpoint Diversity Act led by Sens. Roger Wicker, R-Miss., Lindsey Graham, R-S.C. and Marsha Blackburn, R-Tenn. The bill seeks to define the types of content platforms should be allowed to take down under the Good Samaritan protection and remove room for platforms’ subjective judgement. It changes the text saying platforms may take down “otherwise objectionable” content to say they are permitted to remove specific categories of content that is “promoting self-harm, promoting terrorism, or unlawful.” Both Easley and Goldman said this approach would likely make today’s mainstream social media platforms like Facebook, Twitter and YouTube less desirable places for consumers to spend their time. While those platforms currently have a range of policies against things like pornography, harassment and hate, their ability to take down content that doesn’t fall into the strict categories outlined by the bill would be limited if it were to pass. That could end up driving away users who would typically utilize the platforms, or at least significantly reduce the time they spend on them. “The Republican approach of reducing discretion has a very high likelihood of letting the trolls overrun the internet and driving people away from usage," Goldman said. Not to mention that advertisers would likely chafe at having their products and services shown next to such posts. The public has repeatedly urged brands to take stands against major social media platforms for hosting harmful content, like last summer during a large ad boycott of Facebook's services. Brands ranging from Unilever to Verizon joined the campaign, which was meant to pressure the platform to do more to prevent hate speech on its services. Without the ability to quickly take down a wide range of potentially harmful posts that don't fall into the clearly-defined categories, brands could deem social media platforms simply too risky to market their services and products. Easley hypothesized that e-commerce platforms like Amazon and Etsy could be less impacted by this kind of change to Section 230, mainly because of the way consumers tend to use them. Amazon and Etsy, for example, host products and reviews from users, while a social network like Facebook is made to host messages to the public or a community. That could mean that the types of posts likely to drive consumers away – like that containing pornographic content, harassment or bigotry – is more likely to proliferate and hinder a social media platform than an e-commerce site. Bipartisan bills There are two bipartisan bills that could provide a window into the potential areas where lawmakers can find common ground on Section 230. The EARN IT Act, introduced by Graham and Sen. Richard Blumenthal, D-Conn., sought to make the platforms more responsible for policing their services for child sexual abuse material. A weakened version of the bill was eventually passed out of the Senate Judiciary Committee with a unanimous vote last year and would remove the liability protection for legal claims involving the distribution, advertisement or solicitation of child sexual abuse material. Like other reductions to 230 immunity, this could incentivize greater posting limitations by the platforms to prevent liability exposure. The PACT Act , introduced by Sen. Brian Schatz, D-Hawaii, and Sen. John Thune, R-S.D., would require platforms to provide transparency reports on their moderation practices and make them comply with court orders to take down illegal activity within 24 hours. Smaller platforms would have greater flexibility to respond to illegal content and user complaints under the proposal. Goldman said he’s concerned that court orders could be gamed to harm a platform or wrongly remove speech. Speech could be removed before an appeal of the order can be heard and a removal could end up being ordered simply if a defendant does not show up to stop it, he said. Conclusion Any change to Section 230 is likely to be cause for concern to tech platforms, since it means there’s a greater chance that more lawsuits will be able to advance in court. As it stands, it’s pretty simple for courts to dismiss cases that are clearly covered by 230 protections. But chipping away at those could make those decisions less clear-cut and lengthen legal processes for platforms, making them more costly as well. Short of an overhaul of Section 230, Congress could end up passing piecemeal changes to the law over time, like its 2018 passage of FOSTA-SESTA . But the way platforms responded to that bill by shutting down whole parts of their services shows just how precarious the current operation of the internet really is. Goldman said that under many proposals, consumers could stand to lose certain services they’ve grown accustomed to, like consumer-written reviews on Yelp , made possible through a careful reduction of liability risk under Section 230. But lawmakers are eager for change. Following the insurrection at the U.S. Capitol on Jan. 6, Cowen analyst Paul Gallant said that “revising Section 230 has jumped up to be the top tech priority in Congress this year because of the role that social media platforms played in that incident.” The types of companies most impacted by piecemeal changes will depend on what form they take. Efforts to remove sexual exploitation material, especially of children, seems to have gained the most traction on both sides of the aisle, as exemplified by both FOSTA-SESTA and the EARN IT Act. But small tweaks could include exposing the platforms to liability for knowingly hosting misinformation, criminal liability or for removing certain types of content. “I think certain members of Congress want [platforms] to restrict all of a particular type of content and nothing more,” Gallant said. “And is that feasible? I doubt it. There's too much content every second coming on the networks to be perfect." Subscribe to CNBC on YouTube. WATCH: Section 230 explained

Facebook Chairman and CEO Mark Zuckerberg.

Erin Scott | Reuters

There’s one political movement that seems unlikely to change with the presidential transition this year: a desire to overhaul Section 230 of the Communications Decency Act.

President Joe Biden shares the conviction with his predecessor Donald Trump that the law, which serves as a liability shield for tech platforms like Facebook, Twitter and Google’s YouTube, must be significantly altered or repealed to rein in the companies’ vast power.

Most lawmakers seem unwilling to go as far as a full repeal of the law, but there's a bipartisan desire to force Big Tech to take more responsibility for the editorial decisions they make on what can and can't appear on their platforms. That push for change has spurred tech companies to reconsider how they can adapt to a change in Section 230, which gives them broad immunity from being held liable for what users post to their social networks.

But any potential change to Section 230 comes with risks and costs for the largest tech firms the current proposals are designed to regulate. And for tech start-ups, which the law was originally designed to protect, there's a risk of increased legal costs that could hamper growth if Section 230 is fully repealed. Good luck building the next Google or Facebook if you're shackled to new regulations your predecessors didn't have to deal with.

“The incumbent players in this space will have the option to try to still operate as much as possible in this space if Section 230 is narrowed. But every other company won’t,” said Bill Easley, a senior policy analyst at Americans for Prosperity, an advocacy group funded by Charles Koch. “If you’re not a FAANG [Facebook, Amazon, Apple, Netflix, Google], you’re not going to make it."

There’s a wide range of bills currently being considered by Congress that could hurt Big Tech's rapid growth. The best outcome for those companies would be to see no change to the law. But of the options on the table, here’s how different corners of the internet could be impacted: