Please join Steptoe’s Tod Cohen, along with in-house counsel, executives, academics, and policymakers on Thursday, February 23, for the first installment of the 2023 Internet Law and Policy Roundtable.

During this interactive virtual event series, we’ll discuss recent developments, evolving issues, and trends in internet law and policy. We’ll save time at the end of each session to address your questions. Our February installment will focus on data privacy and protection issues in a post-Dobbs world. We hope to see you online! 

Register for this free virtual event here: https://email.steptoecommunications.com/139/9049/landing-pages/rsvp-blank.asp

On October 3, 2022, the Supreme Court granted cert in Gonzalez v. Google, marking the first time that the Court will consider the scope of Section 230.  As discussed previously on this blog, Section 230 has increasingly taken center stage in debates about censorship and content moderation.  Yet, for the most part, courts have continued to interpret it expansively.  The Court faces a delicate balancing act in considering the scope of immunity granted by Section 230.

The instant case arises from the 2015 terrorist attacks in Paris.  Reynaldo Gonzalez’s daughter, Nohemi Gonzalez, was murdered in the terror attacks by ISIS terrorists.  Her family members brought an action against Google, alleging that Google had aided and abetted ISIS by hosting their videos.  Although simply hosting a video would normally be protected by Section 230, the plaintiffs additionally alleged that YouTube had affirmatively recommended ISIS videos, which helped ISIS recruit new terrorists.  The district court, though, disagreed and dismissed the claim.

The district court’s decision was consistent with existing precedent.  However, after the appeal had been briefed, Judge Katzmann in the Second Circuit wrote a dissent in Force v. Facebook, 934 F.3d 53 (2d Cir. 2019), arguing that recommendation of content should not be protected by Section 230.  The Ninth Circuit subsequently ruled in Dyroff v. Ultimate Software Group, Inc., 934 F.3d 1093 (9th Cir. 2019) that recommending content does not remove Section 230 protection.  The panel hearing the Gonzalez appeal therefore found itself in an unusual situation.  Dyroff was Ninth Circuit precedent that governed the decision, which led the panel to uphold the dismissal.  Two judges, though, were troubled by this outcome.  One, Judge Berzon, concurred in the opinion but wrote separately to state that she would have held otherwise if not for Dyroff.  The other, Judge Gould, dissented and argued that Judge Katzmann in the Second Circuit had been correct.   After a petition for en banc rehearing was denied, Gonzalez sought cert on the specific issue of whether Section 230(c)(1) immunizes Internet companies for making targeted recommendations provided by other parties or if the liability is limited to only traditional editorial functions.

Despite there being no circuit split or even intra-circuit split, as every court to have considered the issue has agreed that targeted recommendations are protected by Section 230, the Supreme Court granted cert.

Continue Reading The Internet Under Siege: The Future of Section 230?

In a blog post released on August 3, 2021, FTC Bureau of Competition Acting Director, Holly Vedova, announced that, in response to “a tidal wave of merger filings,” the FTC had begun to send standard form letters “alerting companies that the FTC’s investigation remains open and reminding companies that the agency may subsequently determine that the deal was unlawful.” Merging parties receiving such letters were warned by the blog post that although they may “choose to proceed with transactions that have not been fully investigated, they are “doing so at their own risk.”

Technically, the blog post reiterates what the law already provides. The Hart-Scott-Rodino Act already states that “any failure of [the FTC or the DOJ] to take any action … shall not bar any proceeding or any action with respect to such acquisition at any time,” and that nothing in the HSR Act limits the authority of the FTC or DOJ to obtain documents, testimony, or information under the Antitrust Civil Process Act, the FTC Act, or otherwise. 18 U.S.C. § 18a(i).

But, notwithstanding the recent FTC challenge to Facebook’s acquisition of Instagram and WhatsApp (albeit under §2 of the Sherman Act rather than §7 of the Clayton Act), such post-consummation challenges (or even investigations) of transactions that have previously been subject to HSR review are exceedingly rare.

Accordingly, we have four take-aways from Holly Vedova’s blogpost:

  • The blogpost is another indication that the FTC under Chairwoman Lina Khan may be more serious about challenging mergers — including consummated mergers.
  • Parties need carefully to consider this new policy in negotiating merger agreements, because closing conditions predicated on the expiration of relevant waiting periods are likely unaffected by the receipt of such a warning letter. Parties may wish to consider whether closing conditions predicated on the absence of a pending or threatened investigation are satisfied where the FTC has issued such a warning letter stating that the “investigation remains open and ongoing.”  And parties may wish explicitly to address in their merger agreements the effect of the receipt of such a warning letter.
  • Unless the Antitrust Division of the DOJ adopts a similar policy, this creates another meaningful distinction between the federal antitrust enforcement agencies in terms of merger review practice.
  • Because prior challenges to consummated HSR-reviewable transactions have been so rare, institutionalizing the issuance of this type of warning letter – and the potential for the perpetuation of investigations with no statutory or other limit on their duration – introduces an element of uncertainty into deal planning that runs counter to the almost 50-year course of practice under the HSR Act.

Parties should pay close attention to how aggressively the FTC proceeds under this new policy over the next few months. The policy injects another dose of uncertainty at a time when merger review practice is already being changed.

Judge gavel on a computer keyboard

In a little over 18 months, Vimeo has three times vindicated its rights under Section 230 to take down objectionable content.  Vimeo’s victory came first in the Southern District of New York; the decision there was affirmed by the Second Circuit.  In a rare procedural twist, the Second Circuit panel vacated its decision, but issued an opinion upholding Vimeo’s right to take down objectionable content the following week.  The cases illustrate that Section 230’s strength is not solely in subsection (c)(1) but also in (c)(2), which protects a website’s ability to “in good faith . . .  restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected.”  47 U.S.C. § 230(c)(2).  The trilogy of cases underscores the continued importance of Section 230 to Internet companies, even as it comes under increasing criticism from the public, politicians, and the judiciary. Continue Reading Not Once, Not Twice, But Thrice: Vimeo’s Victory in Taking Down Objectionable Content

Recently, an obscure provision of the Communications Act has been thrust into the limelight.  Section 230 is now discussed nearly daily on talk shows and in newspapers, and is gaining increasing criticism from the courts. The result of this attention is that Congress is now working on reforming Section 230, with a bevy of bills proposed that could dramatically affect the free and open Internet, with the consequences difficult to predict.

First, as a bit of background, Section 230 has two main subsections. The first subsection is direct:

No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

47 U.S.C. § 230(c)(1). In the words of the Fourth Circuit, Section 230 “creates a federal immunity to any cause of action that would make service providers liable for information originating with a third-party user of the service. Specifically, § 230 precludes courts from entertaining claims that would place a computer service provider in a publisher’s role. Thus, lawsuits seeking to hold a service provider liable for its exercise of a publisher’s traditional editorial functions—such as deciding whether to publish, withdraw, postpone or alter content—are barred.” Zeran v. Am. Online, Inc., 129 F.3d 327, 330 (4th Cir. 1997).

Continue Reading Section 230: Major Legislation and Its Future in 2021

On July 9, 2021, President Biden signed Executive Order 14036 – Promoting Competition in the American Economy.  The wide-ranging Executive Order includes 72 initiatives that aim to increase enforcement of existing antitrust laws and other consumer protection regulations. The Order targeted at least 15 federal departments, offices, and agencies, potentially affecting a wide panoply of American industries. It is designed to restore competition in the American economy and reverse the effects of corporate consolidation. The Biden Administration hopes this will drive down prices for consumers, increase wages for workers, and facilitate innovation.

The Executive Order proposes to address these problems by “enforc[ing] the antitrust laws to combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly and monopsony.” The Executive Order also “reaffirms that the United States retains the authority to challenge transactions whose previous consummation was in violation of the [antitrust laws.]”

This Executive Order represents a watershed moment in competition policy in the United States, as the White House has directed the entire U.S. government to more aggressively enforce the antitrust laws. The Executive Order has far-reaching implications for antitrust enforcement and communications law alike as it calls for more rigorous antitrust enforcement by the Department of Justice and the Federal Trade Commission, and seeks new consumer protection regulations through the Federal Communications Commission, the Federal Trade Commission, and the Departments of Transportation and Commerce.

Continue Reading President Biden Signs Sweeping Executive Order Promoting Competition with Far-Reaching Effects on Antitrust Enforcement and Communications Law

What is good for the goose is good for the gander. The saying often finds application in Washington, when a principle formerly benefiting one ideological side suddenly benefits the other due to the vagaries of the ballot box. The filibuster is a classic example. The respect that courts accord to agencies is another. In FCC v. Prometheus Radio Project, the Supreme Court reversed the Third Circuit and unanimously upheld the FCC’s relaxation of its media ownership rules, a significant deregulatory policy of the Trump Administration. But the wide latitude that the Supreme Court gave the Commission’s factual findings has become a valuable tool in the hands of the Biden-era FCC, as the FCC can command the same respect for crucial factual findings needed in support of quite different initiatives, such as new net neutrality rules. Meanwhile, in the proceeding at hand, media ownership, the Commission has subsequently issued a public notice to update the record in the 2018 Quadrennial Review proceeding for its media ownership rules and extended the comment and reply comment deadlines to September 2, 2021 and October 1, 2021, respectively.

Continue Reading Supreme Court Upholds FCC Decision to Abolish Media Ownership Rules

Hal 9000The EU has recently proposed a draft regulation that would address future challenges of artificial intelligence. The EU is attempting a balancing act between promoting the development of AI against over-regulation of new technologies. The regulation categorizes AI based on the perceived risk level, regulating more strictly an AI system that is deemed as being higher-risk.

The draft regulation adopts a broad definition of AI to encompass software developed with a variety of machine learning techniques. These include supervised, unsupervised and reinforcement learning and a variety of methods such as deep learning, logic and knowledge-based and statistical approaches, Bayesian estimation, and search optimization methods that generate outputs. Relevant outputs include content, predictions, recommendations, or decisions influencing the environments with which the AI interacts.

Below are highlights of the main aspects of the draft regulation.

Continue Reading The End of Skynet? The EU Takes on AI

Commercial practices of Internet Services Providers (ISPs) to exclude certain applications and services from being counted against customers’ data caps, a practice known as Zero-Rating, are arguably creating an economic incentive for users to prefer zero-rated apps and services. These commercial behaviors are under scrutiny on both sides of the Atlantic, but the way regulators are actually tackling the issue differs. While in the U.S., California’s net neutrality law prohibits ISPs from engaging in discriminatory Zero-Rating, the European Union’s net neutrality law only sets up a general obligation of equal traffic treatment.  AT&T’s recent decision to end its Zero-Rating program across the U.S. shows that U.S. ISPs are ready to adapt their commercial strategies to strict net neutrality rules.

The European Union (EU) is dealing with Zero-Rating through the prism of the first court case from the Court of Justice of the European Union (CJEU) on the topic.

Continue Reading How to Achieve Net Neutrality? Cornering Zero Rating Has No Geo Cap

The following originally appeared in the January 2021 issue of the CPI Antitrust Chronicle. 

The communications industries range from plain old telephone service, through broadband access, whether fixed or mobile, to cable and satellite video distribution. These industries are not exactly passé compared to the online platforms such as the search engine “market” that Google has so admirably revolutionized and may (or may not) dominate today. After all, Google search queries need a pipe to travel from us, the hopeful searchers toiling on our computers, tablets or smartphones, to Google servers. Even more important, the pipe is necessary for the return trip back to us, bringing a cornucopia of audio and video that condenses real and imaginary worlds on one small screen in ways that would have been incredible to time travelers visiting us from the twentieth century.

And so, the communications industries and online platforms need each other: the first needs the second’s content. The second needs the first’s pipes. In that sense, they are contemporaries and codependents. But the communications industries have a history longer than that of the online platforms — after all, they go back to 1876, when Alexander Graham Bell summoned Mr. Watson on the phone. With the longer history comes longer experience with analyzing and resolving competitive issues. And the communications industries afford many useful teachings for a way forward in the Google search engine case, including a way past and around the impasses and conundrums presented by the complaint filed against Google by the Department of Justice (“DOJ”).

Here are two of these lessons: be careful not to throw out the baby of the competition you want with the bathwater of the exclusivity arrangements you do not like. And, to promote competition, nurture a competitor: find a white knight or two; and give them the resources to compete.

But first, a few words about what links legacy communications and online platforms together from the perspective of competition analysis. There is a lot that does. First, they are both networks prone to market power and its exercise: each additional user of the network does not merely add a proportionate unit to a provider’s market share; it takes out disproportionate quantities of oxygen away from would-be competing networks. Second, both industries are chains of intricately connected links. In the communications industry, we have electromagnetic spectrum, wireless towers, cable or satellite platforms, broadband access pipes, and online video products or cable networks that pass through these pipes. In the online platform space, we have search engines, browsers, and operating systems. And, of course, as mentioned, each industry is a link to the other’s chain in its own right: online platforms provide increasing amounts of content for the communications conduits, which in turn provide all of the transmission capacity for that content. Vertical integration over many links of the chain also gives companies with market power over one of them one more chance to leverage that power. At the same time, a presence in one link of the chain may endow a company with the wherewithal to become a credible competitor over another link. Continue Reading Mr. Watson, Come Here. I Want To See You: A Message From the Communications Industries on How to Promote Competition in the Online Platform Space