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Rewriting the Roadmap to Innovation

Since it went commercial roughly 20 years ago, the internet has become a part of our daily lives, from entertainment to shopping to social networking. Today’s internet is a vibrant global network connecting more than 3.5 billion users worldwide through 224 million websites. Every day, users send almost 270 million emails worldwide and 2 billion users connect with each other through Facebook, the most popular social media platform. That the United States is the dominant force in all of this is not an accident. America’s tech giants emerged from a policy framework that fostered innovation and entrepreneurship. Unfortunately, these bedrock principles are under attack today as lawmakers ponder expansive new liability laws that would profoundly alter the way the internet works. The latest effort to rewire the internet comes in the noble sounding “Stop Enabling Sex Traffickers Act of 2017” (SESTA). While the goals are laudable, it would have a significant adverse impact on how we use the internet, but little impact on sex trafficking.

At the dawn of the internet, the president and Congress were wary of internet regulation. Indeed, President Clinton created a task force that laid out five principles of governance for the internet that basically endorsed a digital free market. Ironically, this effort was chaired by Ira Magaziner, the director of Hillary Clinton’s health care task force who had no qualms about regulating something as complex as the American health care system. But even he was cautious about the government meddling in the emerging online world, with his first two principles being: “The private sector should lead,” and, “Government should avoid undue restrictions on internet commerce.”

When writing some of the fundamental rules of the road for the internet, Congress took these principles to heart, as can be seen in two critical pieces of legislation: the Communications Decency Act (CDA) and the Digital Millennium Copyright Act (DMCA). The CDA was Congress’s attempt to regulate pornography and set decency standards for the internet, and the DMCA was to address the complex issue of copyright in a digital world.

The CDA bluntly states in its findings that the policy of the United States is “to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation.” More importantly, both the CDA and DMCA established rules for the internet that limited the liability of online service providers. Section 230 of the CDA, added in conference by Reps. Chris Cox and Ron Wyden, states: “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.” Likewise, Section 512 of the DMCA limits the liability of service providers for copyright violations by users on their network, provided that they are not aware of the infringements and, once they are notified, they remove the offending material.

Together, these laws are responsible for the permissionless innovation that revolutionized the internet. Imagine a world where Yahoo, Google, or Facebook were liable for any violations or infringements that users post on their services, and, remember, Facebook has two billion users. The internet that emerged would be nowhere near as free-wheeling and open as the internet we have today. Fearful of legal repercussions, every online service provider and online forum would be forced to monitor the communications of its users. Even an errant reply comment could trigger legal action. The administrative costs of monitoring this system would soon be prohibitive, and the effect on free speech chilling. Just as importantly, a system operating under constant threat of liability is unlikely to attract the venture capital that built the internet. The final service would be more limited and users would clearly not have the same internet experience they have today.

Fortunately, we avoided that fate. But two decades after the internet was unleashed, threats of new regulation are mounting. The DMCA has long been a battle ground between rights holders and online providers, who are accused of not addressing the rampant piracy issues. For the content industry, the solution is to revisit the safe harbor that limits the liability of the service providers. However, large online platforms like YouTube and Facebook are taking measures to reduce content that may violate copyright, creating algorithms that constantly scour the web for violations.

And the recent introduction of SESTA by Sens. Rob Portman and Claire McCaskill directly targets Section 230 of the CDA, the safe harbor that protects providers from civil liability and ensures that any criminal liability is handled by the federal courts. The bill is aimed at Backpage.com, a site under investigation for human trafficking. And while the site may try to claim protection under Section 230, there is evidence suggesting that they do not qualify for that liability protection. Furthermore, the Department of Justice can already prosecute anyone who violates federal laws against trafficking, so it is not evident that a sweeping revamp of the liability rules is the solution.

The internet is showing its age. As the industry has matured, fault lines have emerged with respect to issues such as liability rules. As in any dynamic industry, it is not uncommon that change brings frictions between the various players in the ecosystem. But the answer is not to rush through sweeping legislation that rewrites the basic rules of the game. There may be room for improvement, and thoughtful discussions of reform can be useful. And it may be, as in the case of the DMCA, that the groups involved can discuss options for improvement, finding ways to address concerns through industry standards rather than legislation. The SESTA legislation may be a conversation starter, but it should not be the law of the land.

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