The Federal Trade Commission (FTC) voted on July 1 to withdraw its pubic affirmation of consumer welfare as the guiding principle for antitrust enforcement. While this change is symbolic at this point, it weakens the agency’s public commitment to an objective consumer-based approach to antitrust. The result opens the door to politicized and unprincipled antitrust enforcement that will ultimately hurt rather than benefit consumers.

The FTC is the nation’s primary consumer protection agency, focused on ensuring a healthy market that avoids the dangers of monopolistic practices. The statement on the agency’s antitrust enforcement had been uncontroversial up to this point. A bipartisan group of commissioners passed the statement in 2015—during the Obama Administration—and the statement primarily clarified that the FTC’s antitrust enforcement under Section 5 of the FTC Act concerning the agency’s authority over unfair and deceptive trade practices was guided by consumer welfare. In other words, the FTC would focus on those acts that cause or are likely to cause harm to consumers, based on objective economic analysis rather than the effects of business moves on competition itself or other policy standards. The statement sought to provide clarity to consumers and businesses, and in fact, the sole vote against it was on the basis that the statement was too abbreviated to provide meaningful guidance.

Despite these uncontroversial origins, on Thursday at a hastily announced open meeting, the current FTC voted 3-2 to withdraw this statement. The withdrawal of the FTC’s statement is the latest signal that antitrust policy, particularly at the FTC, is shifting away from focusing on consumers and using the consumer welfare standard.  Instead, there are now real concerns the FTC will enforce antitrust policy in a way that promotes competitors or ideology at consumers’ expense.

Most specifically, rejecting the consumer welfare standard signals the FTC may apply its enforcement power in more subjective ways based in changing political motives and policy preference, as was seen in earlier eras of antitrust enforcement. For example, if not focused on the consumer welfare standard, the FTC could act against some of the largest tech companies to break them up or prevent mergers even though consumers were not harmed—or were even helped—by these changes in the market. This shift would have three specific, if related, implications.

First, it would undermine confidence among consumers in the FTC’s actions. It is far less clear now by what standards antitrust enforcement will be guided and if they are truly objective. As a result, it is unclear what the purpose behind enforcement is.

Second, such expansive enforcement could diminish the options available to consumers. Without the consumer welfare standard, aggressive antitrust enforcement could lead to regulatory interventions in competitive and dynamic markets apart from a data-based and consumer-focused analysis. The result of such unnecessary enforcement could be to raise costs or eliminate products, preventing consumers from having access to products they enjoy or face higher prices, not because of unfair or anti-competitive behavior but because of political animus against a particular industry.

Finally, this shift away from the consumer welfare standard is likely to result in inefficient markets. Unprincipled or politically motivated enforcement could result in some products and services never making it to consumers. In other cases, markets may find certain “competitors” kept alive past their value, or other markets could remain with few choices because companies fear that entrance would be considered anticompetitive. Without the consumer welfare standard, misguided notions of concentration or “bigness” could result in a less beneficial market and instead benefit competitors with inferior products that would not have otherwise survived—all to the detriment of consumers.

When regulators move away from an objective, consumer-focused approach to antitrust, it is ultimately the consumers who are harmed in the form of higher prices, inferior products, and less innovation. As Commissioner Christine Wilson stated prior to the vote, “If the Commission is no longer focused on consumer welfare then consumers will be harmed.”

By: Jennifer Huddleston and Juan Martin Londoño

This year the E3 conference streamed live over Twitch, YouTube, and other online platforms—a reality that highlights the growing importance of platforms and user-generated content to the gaming industry. From streaming content on Twitch, to sharing mods on Steam Workshop, or funding small developing studios on services such as Patreon or Kickstarter, user-generated content has proven vital for the gaming ecosystem. While these platforms have allowed space for creative interaction—which we saw on the livestreams chats during E3—the legal framework that allows all of this interaction is under threat, and changes to a critical internet law could spell Game Over for user-created gaming elements.

This law, “Section 230,” is foundational to all user-generated content on the internet. Section 230 protects platforms from lawsuits over both the content they host as well as their moderation decisions, giving them the freedom to curate and create the kind of environment that best fits its customers. This policy is under attack, however, from policymakers on both sides of the aisle. Some Democrats argue platforms are not moderating enough content, thus allowing hate speech and voter suppression to thrive, while some Republicans believe platforms are moderating too much, which promotes “cancel culture” and the limitation of free speech.

User-generated content and the platforms that host it have contributed significantly to the growth of the gaming industry since the early days of the internet. This growth has only accelerated during the pandemic, as in 2020 the gaming industry grew 20 percent to a whopping $180 billion market. But changing Section 230 could seriously disrupt user-generated engagement with gaming, making content moderation costlier and riskier for some of gamers’ favorite platforms.

An increased legal liability could mean a platform such as Twitch would face higher compliance costs due to the need to increase its moderation and legal teams. This cost would likely be transferred to creators through a revenue reduction or to viewers through rate hikes—resulting in less content and fewer users. Further, restrictions on moderation could lead to undesirable content and ultimately fewer users and advertisers—leading to more profit losses and less content. Ultimately, platforms might not be able to sustain themselves, leading to fewer platforms and opportunities for fans to engage. Platforms such as Twitch already face these problems, but for now they can determine the best solutions without heavy-handed government intervention or costly legal battles.

The impact of changing Section 230 goes beyond video content and could impact some increasingly popular fan creations that are further invigorating the industry. For example, the modding community, composed of gaming fans that modify existing games to create new experiences, often uses various online platforms to share their mods with other players. Modding has kept certain games relevant even years after their release, or propelled games’ popularity by introducing new ways to play them. Such is the case of Grand Theft Auto V’s roleplaying mod, or Arma III’s PlayerUnknown Battlegrounds mod, the inspiration of games such as Fortnite and Call of Duty: Warzone.

These modified games are often hosted on platforms such as Steam Workshop, Github, or on independently run community websites. These platforms are often free of charge, either as a complimentary service of a bigger product – in the case of Steam – or are supported purely by ad revenue and donations. Like streaming platforms and message boards, without Section 230 these services would face increased compliance costs or be unable to remove excessively violent, sexually explicit, or hateful content. The result could be that these new twists on old favorites never make it to consumers, as platforms are unable to host these creations and remain viable as businesses.

Changing or removing Section 230 protections would upend the complex and dynamic gaming environment on display during E3. It took decades of growth for gaming to establish itself as the new king of entertainment and it has defended itself from a variety of technopanics throughout the years. Pulling the plug on Section 230 could mean “Game Over” for the user-generated content that brings gamers so much fun.

Is it a time for the return of the trustbusters? Some politicians seem to imply that today’s tech giants have become modern day robber barons taking advantage of the American consumer and, as a result, they argue that it is time for a return of aggressive antitrust enforcement and for dramatic changes to existing antitrust interpretations to address the concerns associated with today’s big business.

This criticism is not limited to one side of the aisle, with Senators Amy Klobuchar (D-MN) and Josh Hawley (R-MO) both proposing their own dramatic overhauls of antitrust laws and the House Judiciary Committee majority issuing a report that greatly criticizes the current technology market. In both cases these new proposals create presumptive bans on mergers for companies of certain size and lower the burdens on the government for intervening and proving its case. I have previously analyzed the potential impact of Senator Klobuchar’s proposal, and Senator Hawley’s proposal raises many similar concerns when it comes to its merger ban and shift away from existing objective standards.

Proponents on both sides of the aisle argue changing current antitrust standards is needed to fight big business, but sadly these modern-day trustbusters may not be the heroes they see themselves as. In fact, such a shift would harm American consumers and small businesses well beyond the tech sector.

The Trustbusters-Era Standards Would Fail Consumers

The original trustbusters of the late 19^th and early 20^th century created a system that was not always clear and could be abused by regulators subjectively determining what was and was not anti-competitive behavior. The result was that, in this earlier era, businesses and consumers could never be certain what behaviors would be considered violations.

The shift to the consumer welfare standard helped fixed that problem by providing an objective framework using economic analysis to weigh the risk and benefits of behavior and judging it based on its impact on consumers and not specific competitors. Unfortunately, these new proposals would shift away from this objective focus and return to a presumption that big is bad. This shift would be bad news not only for big business but for smaller businesses and consumers as well. Small businesses would lose an important exit strategy option with the presumptive ban on mergers with large companies, and consumers would miss out on benefits such as price reductions, improvements, and innovations that these mergers could bring.

While much of the debate around antitrust changes focuses on large tech firms such as Google, Apple, Facebook, and Amazon, changing antitrust laws would impact far more of the economy than just tech. Both the Hawley and Klobuchar proposals would bar mergers unless there is strong evidence proving their value (a “regulatory presumption” against mergers), but this presumption would impact industries such as pharmaceuticals, finance, and agriculture that also frequently have mergers and acquisitions that benefit consumers by helping to expand the distribution of a product or improve on an existing service. In fact, companies including L’Oreal and Nike could find any mergers or acquisitions presumptively prohibited under the limits in these proposals.

Existing Standards Can Adapt to Dynamic Markets Like Tech

Existing standards are still able to address the concerns associated with this dynamic and changing markets as well as more established markets. For example, the Antitrust Modernization Commission concluded, “There is no need to revise the antitrust laws to apply different rules to industries in which innovation, intellectual property, and technological change are central features.”

Sometimes regulators’ sense of the market in technology may prove to be wrong by the evolution of a technology or the disruption caused by a dramatic shift in the industry. For example, debates used to be focused on MySpace and AOL , which have now become things of internet nostalgia. Today’s tech giants are facing growing challenges not only from each other in many cases, but also from many newer entrants, from ClubHouse and TikTok to Zoom and Shopify. Removing the need to firmly establish the existing standards of an antitrust case would risk unnecessary intervention into the market or, more likely, could prevent actions that benefit consumers.

Some question whether this economic analysis-based standard can handle the zero-price services offered by many technology companies. While price is often the easiest focus, this standard also considers issues such as quality and innovation, making it elastic enough to address potential concerns even if the price is zero. Still, this does not mean that the definition of harm under the consumer welfare standard should be expanded to address any litany of concerns that cannot be objectively shown to have market harm.

Trustbusters’ Concerns with Tech Are Unlikely to Be Solved by Antitrust

Antitrust is also a poor tool to address concerns such as data privacy or content moderation, and using it to do so could allow for future abuse for other political ends. There is no guarantee that smaller companies would respond to existing market demands around issues such as content moderation any differently than the current large players. Additionally, when it comes to privacy and targeted advertising, smaller platforms would have to find new ways to gain revenue and might be forced to monetize the platform more to stay afloat without being able to rely on the revenue from a larger parent company. Finally, there is no guarantee that these smaller companies would be more innovative or dynamic particularly as existing teams and talents are divided by break ups and walls are erected to prevent entry into certain markets.

The good news is some policymakers have realized that these problems exist and argued for preserving the existing framework and addressing these other concerns with appropriately targeted policies. For example, Sen. Mike Lee recently defended the consumer welfare standard and was critical of the negative impact “radically alter[ing] our antitrust regime” could have while still questioning some recent decisions around content moderation.

Conclusion

Many have hoped for a return of bipartisan cooperation in Washington, but unfortunately bad ideas can also emerge on both sides of the aisle. Shifting away from the consumer welfare standard would ultimately harm consumers at a time when innovation and economic recovery are especially critical.

In a five-part series at the American Action Forum, I presented prior to the 2020 presidential election the candidates’ positions on a range of tech policy topics including: the race to 5G, Section 230, antitrust, and the sharing economy. Now that the election is over, it is time to examine what topics in tech policy will gain more attention and how the debate around various tech policy issues may change. In no particular order, here are five key tech policy issues to be aware of heading into a new administration and a new Congress. 

The  Use of Soft Law for Tech Policy 

In 2021, it is likely America will still have a divided government with Democrats controlling the White House and House of Representatives and Republicans expected to narrowly control the Senate. The result of a divided government, particularly between the two houses of Congress, will likely be that many tech policy proposals face logjams. The result will likely be that many of the questions of tech policy lack the legislation or hard law framework that might be desired. As a result, we are likely to continue to see “soft law”—regulation by various sub-regulatory means such as guidance documents, workshops, and industry consultations—rather than formal action. While it appears we will see more formal regulatory action from the administrative state as well in a Biden Administration, these actions require quite a process through comments and formal or informal rulemaking. As technology continues to accelerate, many agencies turn to soft law to avoid “pacing problems” where policy cannot react as quickly as technology and rules may be outdated by the time they go into effect. 

A soft law approach can be preferable to a hard law approach as it is often able to better adapt to rapidly changing technologies. Policymakers in this new administration, however, should work to ensure that they are using this tool in a way that enables innovation and that appropriate safeguards ensure that these actions do not become a crushing regulatory burden. 

Return of  the  Net Neutrality  Debate 

One key difference between President Trump and President-elect Biden’s stances on tech policy concerns whether the Federal Communication Commission (FCC) should categorize internet service providers (ISPs) as Title II “common carrier services,” thereby enabling regulations such as “net neutrality” that places additional requirements on how these service providers can prioritize data. President-elect Biden has been clear in the past that he favors reinstating net neutrality. 

The imposition of this classification and regulations occurred during the Obama Administration and the FCC removed both the classification under Title II and the additional regulations for “net neutrality” during the Trump Administration. Critics of these changes made many hyperbolic claims at the time such as that Netflix would be interrupted or that ISPs would use the freedom in a world without net neutrality to block abortion resources or pro-feminist groups. These concerns have proven to be misguided. If anything, the COVID-19 pandemic has shown the benefits to building a robust internet infrastructure and expanded investment that a light-touch approach has yielded. 

It is likely that net neutrality will once again be debated. Beyond just the imposition of these restrictions, a repeated change in such a key classification could create additional regulatory uncertainty and deter or delay investment and innovation in this valuable infrastructure. To overcome such concerns, congressional action could help fashion certainty in a bipartisan and balanced way to avoid a back-and-forth of such a dramatic nature. 

Debates Regarding  Sharing Economy Providers ’   Classification  as Independent Contractors 

California voters passed Proposition 22 undoing the misguided reclassification of app-based service drivers as employees rather than independent contractors under AB5; during the campaign, however, President-elect Biden stated that he supports AB5 and called for a similar approach nationwide. Such an approach would make it more difficult on new sharing economy platforms and a wide range of independent workers (such as freelance journalists) at a time when the country is trying to recover economically.  

Changing classifications to make it more difficult to consider service providers as independent contractors makes it less likely that platforms such as Fiverr or TaskRabbit could provide platforms for individuals to offer their skills. This reclassification as employees also misunderstands the ways in which many people choose to engage in gig economy work and the advantages that flexibility has. As my AAF colleague Isabel Soto notes, the national costs of a similar approach found in the Protecting the Right to Organize (PRO) Act “could see between $3.6 billion and $12.1 billion in additional costs to businesses” at a time when many are seeking to recover during the recession. Instead, both parties should look for solutions that continue to allow the benefits of the flexible arrangements that many seek in such work, while allowing for creative solutions and opportunities for businesses that wish to provide additional benefits to workers without risking reclassification. 

Shifting Conversations and Debates Around Section 230 

Section 230 has recently faced most of its criticism from Republicans regarding allegations of anti-conservative bias. President-elect Biden, however, has also called to revoke Section 230 and to set up a taskforce regarding “Online Harassment and Abuse.” While this may seem like a positive step to resolving concerns about online content, it could also open the door to government intervention in speech that is not widely agreed upon and chip away at the liability protection for content moderation. 

For example, even though the Stop Enabling Sex Trafficking Act was targeting the heinous crime of sex trafficking (which was already not subject to Section 230 protection) was aimed at companies such as Backpage where it was known such illegal activity was being conducted, it has resulted in legitimate speech such as Craigslist personal ads being removed  and companies such as Salesforce being subjected to lawsuits for what third parties used their product for. A carveout for hate speech or misinformation would only pose more difficulties for many businesses. These terms to do not have clearly agreed-upon meanings and often require far more nuanced understanding for content moderation decisions. To enforce changes that limit online speech even on distasteful and hateful language in the United States would dramatically change the interpretation of the First Amendment that has ruled such speech is still protected and would result in significant intrusion by the government for it to be truly enforced. For example, in the UK, an average of nine people a day were questioned or arrested over offensive or harassing “trolling” in online posts, messages, or forums under a law targeting online harassment and abuse such as what the taskforce would be expected to consider. 

Online speech has provided new ways to connect, and Section 230 keeps the barriers to entry low. It is fair to be concerned about the impact of negative behavior, but policymakers should also recognize the impact that online spaces have had on allowing marginalized communities to connect and be concerned about the unintended consequences changes to Section 230 could have. 

Continued Antitrust Scrutiny of “Big Tech” 

One part of the “techlash” that shows no sign of diminishing in the new administration or new Congress is using antitrust to go after “Big Tech.” While it remains to be seen if the Biden Department of Justice will continue the current case against Google, there are indications that they and congressional Democrats will continue to go after these successful companies with creative theories of harm that do not reflect the current standards in antitrust. 

Instead of assuming a large and popular company automatically merits competition scrutiny  or attempting to utilize antitrust to achieve policy changes for which it is an ill-fitted tool, the next administration should return to the principled approach of the consumer welfare standard. Under such an approach, antitrust is focused on consumers and not competitors. In this regard, companies would need to be shown to be dominant in their market, abusing that dominance in some ways, and harming consumers. This approach also provides an objective standard that lets companies and consumers know how actions will be considered under competition law. With what is publicly known, the proposed cases against the large tech companies fail at least one element of this test. 

There will likely be a shift in some of the claimed harms, but unfortunately scrutiny of large tech companies and calls to change antitrust laws to go after these companies are likely to continue. 

Conclusion 

There are many other technology and innovation issues the next administration and Congress will see. These include not only the issues mentioned above, but emerging technologies like 5G, the Internet of Things, and autonomous vehicles. Other issues such as the digital divide provide an opportunity for policymakers on both sides of the aisle to come together and have a beneficial impact and think of creative and adaptable solutions. Hopefully, the Biden Administration and the new Congress will continue a light-touch approach that allows entrepreneurs to engage with innovative ideas and continues American leadership in the technology sector. 

The COVID-19 pandemic has shown how important technology is for enabling social distancing measures while staying connected to friends, family, school, and work. But for some, including a number of celebrities, it has also heightened fears of emerging technologies that could further improve our connectivity. The latest technopanic should not make us fear technology that has added so much to our lives and that promises to help us even more.

Celebrities such as Keri Hilson, John Cusack, and Woody Harrelson have repeated concerns about 5G—from how it could be weakening our immune systems to even causing this pandemic. These claims about 5G have gotten serious enough that Google banned ads with misleading health information regarding 5G, and Twitter has stated it will remove tweets with 5G and health misinformation that could potentially cause harm in light of the COVID-19 pandemic. 5G is not causing the current pandemic, nor has it been linked to other health concerns. As the director of American Public Health Association Dr. Georges C. Benjamin has stated, “COVID-19 is caused by a virus that came through a natural animal source and has no relation to 5G, or any radiation linked to technology.”  As the New York Times has pointed out, much of the non-COVID-19 5G health concerns originated from Russian propaganda news source RT or trace back to a single decades-old flawed study. In short, there is no evidence to support many of the outrageous health claims regarding 5G.

New technologies have often faced unfounded concerns about their potential risks. In the late 19 ^th and early 20^th centuries, many people feared electricity in the home was making people tired and weak (similar to the health claims about 5G today). More recently, many were concerned that technologies such as microwave ovens and cell phones might cause cancer or other health issues, but studies have proved that these worst fears have little grounding in science.

Some of these fears are based on misunderstandings of how technology works or confusion over similar but distinct technologies. For example, in the case of concerns about cell phones and cancer, the fears may stem from misunderstandings about the differences between ionizing and non-ionizing radiation. In a time of uncertainty, we may want to rush to maintain the status quo. But any number of innovations such as the radio, trains, or cars that were once feared have themselves become part of the status quo.

Why does it matter if some people are afraid of new technologies? While it is completely rational to want to avoid catastrophic and irreversible harms, unfounded fears can risk delaying important and beneficial technologies. For example, work by Linda Simon suggests that the exaggerated claims and fears of electricity’s impact on health may have slowed its adoption. While all technologies carry some risks, can we imagine all that might have been lost if we had listened to those trying to convince us to avoid electricity out of an abundance of caution? we may laugh about fears of electricity and not understanding its benefits, we still see extreme reactions out of fear of new technology, such as recent attempts to burn 5G towers in the United Kingdom because of misinformation about the health risks.

The recent pandemic should remind why constantly improving connectivity and internet infrastructure has been beneficial. As more of us are working from home and have an increased number of connected devices, 5G will increase network capacity and enable faster download speeds. These improvements also play a key role in the development of a number of emerging technologies from smart home devices and virtual reality to driverless cars and remote surgery.

The problem is not in individual choices to avoid a specific technology, but rather how such technopanics can impact broader adoption of beneficial technologies and innovation-friendly public policies. The good news is policymakers recognize the importance of policies that enable 5G and are also informing the public on the facts about wireless technology and health. During the COVID-19 pandemic, the Federal Communications Commission has continued to pursue policies that can improve connectivity, including for advancements toward 5G.

While we may want to follow celebrity trends when it comes to the latest fashion or TikTok dances, we should only let them scare us in the movies and not when it comes to 5G. If we only focus on the most outrageous and unfounded claims, our fear might distract us too much to see its benefits.

Recently, a group of Republican senators announced they plan to introduce the COVID-19 Consumer Data Protection Act of 2020 to address privacy concerns related to contact-tracing and other pandemic-related apps. This new bill will reinvigorate many of the ongoing concerns regarding a potential federal data privacy framework.

Even before the bill has been officially introduced, it has faced criticism from some groups for failing to sufficiently protect consumers. But a more regulatory approach that might appear protective on the surface also has consequences. The European Union’s (EU) General Data Protection Regulation (GDPR) has made it more complex to develop compliant contact-tracing apps and to run charitable responses that might need personal information. Ideally, data privacy policy around the specific COVID-19 concerns should have enough certainty to enable innovative responses while preserving civil liberties. Policymakers should approach this policy area in a way that enables consumers to choose which options work best for their own privacy preferences and not dictate a one-size-fits-all set of privacy standards.

A quick review of the current landscape of the data privacy policy debate

Unlike the EU, the United States has taken an approach that only creates privacy regulation for specific types of data. Specific frameworks address those areas that consumers would likely consider the most sensitive and expect increased protection, such as financial information, health information, and children’s information. In general, this approach has allowed new and innovative uses of data to flourish.

Following various scandals and data breaches and the expansive regulatory requirements of the EU’s GDPR, policymakers, advocates, consumers, and tech companies have begun to question if the United States should follow Europe’s lead, or instead create a different federal data protection framework, or even maintain the status quo. In the absence of federal action, states such as California have passed their own data privacy laws. The California Consumer Privacy Act (CCPA) became effective in January (you may remember a flurry of emails notifying you of privacy policy changes) and is set to become enforceable July 1. The lack of a federal framework means, with various state laws, the United States could go from an innovation-enabling hands-off approach to a disruptive patchwork, creating confusion for both consumers and innovators. A patchwork means that some beneficial products might not be available in all states because of differing requirements or that the most restrictive parts of a state’s law might become the de facto rule. To avoid this scenario, a federal framework would provide certainty to innovators creating beneficial uses of data such as contact-tracing apps (and the consumers that use them) while also clarifying the redress and any necessary checks to prevent harm.

Questions of Enforcement in the Data Privacy Debate

One key roadblock in achieving a federal privacy framework whether is the question of how such rules should be enforced. Some of the early criticism of the potential COVID-19 data privacy bill has been about the anticipated lack of additional enforcement.

Often the choices for data privacy enforcement are portrayed as a false dichotomy between the status quo or an aggressive private right of action, with neither side willing to give way. In reality, as I discuss in a new primer, there are a wide range of options for potential enforcement. Policymakers should build on the advantages of the current flexible approach that has allowed American innovation to flourish. This also provides a key opportunity to improve the certainty for both innovators and consumers when it comes to new uses of data. More precautionary and regulatory approaches could increase the cost and discourage innovation by burdening innovative products with the need for pre-approval. Ideally, a policy framework should preserve consumers and innovators’ ability to make a wide range of privacy choices but still provides redress in the case of fraudulent claims or other wrongful action.

There are tradeoffs in all approaches. Current Federal Trade Commission (FTC) enforcement has led to concerns around the use of consent decrees and the need for clarity. A new agency to govern data privacy could be a massive expansion of the administrative state. State attorneys general might interpret and enforce federal privacy law differently if not given clear guidance from the FTC or Congress. A private right of action could deter not only potentially harmful innovation but prevent consumers from receiving beneficial products out of concerns about litigation risks. I discuss each of these options and tradeoffs in more detail in the new primer mentioned earlier.

Policymakers should look to the success of the current approach and modify and increase enforcement to improve that approach, rather than pursue other options that could lead to some of the more pronounced consequences of intervention.

Conclusion

As we are seeing play out during the current crisis, all privacy regulation inevitably comes with tradeoffs. We should be cautious of policies that presume that privacy should always be the preferred value and instead look to address the areas of harm while allowing a wide range of preferences. When it comes to questions of enforcement and other areas of privacy legislation, policymakers should look to preserve the benefits of the American approach that has given rise to a great deal of innovation that could not have been predicted or dictated.

Autonomous vehicles are quickly becoming a reality. Waymo just launched a driverless taxi service in Arizona. Part of GM’s cuts were based on a decision to refocus their efforts around autonomous vehicle technology. Tesla seems to repeatedly be promising more and more features that take us closer than ever to a self-driving future. Much of this progress has been supported by the light touch approach that has been taken by both state and federal regulators up to this point. This approach has allowed the technology to rapidly develop, and the potential impact of federal legislation that might detour this progress should be cautiously considered.

For over a year, the Senate has considered passing federal legislation for autonomous vehicle technology, the AV START Act, after similar legislation already passed the House of Representatives. This bill would clarify the appropriate roles for state and federal authorities and preempting some state actions when it comes to regulating autonomous vehicles and will hopefully end some of the patchwork problems that have emerged. While federal legislation regarding preemption may be necessary for autonomous vehicles to truly revolutionize transportation, other parts of the bill could create increased regulatory burdens that actually add speed bumps on the path of this life-saving innovation.

94% of auto accidents  are caused by human error and over 40,000 Americans died in car accidents last year alone.  Widespread adoption of autonomous vehicle technology can reduce traffic accidents by up to 90% and potentially save thousands of lives. With this in mind the Department of Transportation (DoT) and many states have encouraged the development of this life saving technology through the use of “soft law.” In the last two versions of its guidance on autonomous vehicles, DoT has taken a flexible approach rather than issuing top down restrictions that could hinder innovation. This approach is focused on the voluntary adoption of principles that can be quickly adapted to factor in developments in technological process far more easily than legislation or traditional rule-making that assume a certain path or favor a particular technology.

36 states and the District of Columbia have enacted legislation or issued executive orders regarding autonomous vehicles. Many states have taken the lead in using adaptive policy frameworks to promote an innovative approach in transportation to solve both the concerns of congestion and improve safety. In general, these laws have encouraged testing and innovation, but now given the variety in these policies, issues are starting to emerge that could limit future innovation. Innovators seeking to create vehicles that can travel across state lines must negotiate compliance with many different and conflicting policies. In fact, Audi refused to deploy its most technologically advanced driver assistance system because of the lack of clarity and uncertain legality associated with the current regulatory structure.

Federal legislation could answer the legal and regulatory questions that emerge when states have different policy approaches to this new technology. AV START Act establishes that the DoT remains the authority on federal safety standards including those for these new technologies and that it should continue to lead the way on a variety of policy questions related to autonomous vehicles. It also establishes that states retain traditional control over issues such as insurance and liability when it comes to autonomous vehicles. This clarification would help solve the patchwork issues that have started to emerge and such preemption may make for a smoother ride into an autonomous future.

Some of the requirements added by the bill could undermine the existing soft law approach that has allowed this area of innovation to flourish. For example, this bill requires rulemaking and regulation regarding testing and reporting for level 2 autonomy like is used in Tesla’s Autopilot and GM’s Super Cruise which are already available to consumers. Such a requirement would increase the burdens on innovators as well as possibly delaying the wider spread deployment of such technologies as companies seek to update their compliance and may need to make changes to insure they are meeting new reporting requirements. Similarly, the bill requires the DoT to engage in formal rulemaking on a variety of issues from consumer education about autonomous capabilities to child safety alerts for both autonomous and non-autonomous vehicles. Requiring formal rulemaking and mandating reports in the space particularly for existing, deployed technology could undermine the success previously brought about by the soft law approach could be a bump in the road on the way to a safer, driverless future.

At the same time, the current version of AV START encourages more soft law actions from the DoT. This includes a variety of delegations from Congress for working groups, studies, and advisory boards on issues such as accessibility, consumer education, and cybersecurity. Unlike the requirements for reporting and rulemaking, such approaches encourage regulators and entrepreneurs to develop solutions together and are not as likely to have a negative impact on innovation. So far, on both a state and federal level this regulatory approach has shown that it can remove the roadblocks to implementing this lifesaving technology while still providing a policy framework to address issues such as safety.

As discussed in my forthcoming paper with Ryan Hagemann and Adam Thierer, one of the reasons for the growth of soft law has been Congress’s failure to act when it comes to technology policy issues. While the AV START Act may show that this is not always the case, it also reveals why even when Congress does act, soft law’s flexible and adaptable approach may be preferable for rapidly evolving technologies. There are important roles for legislation in preventing regulatory or state actions from driving this technology off the road, but changing lanes from soft law to hard law could slow down rather speed up this important innovation.

There has been an increasing outcry recently from conservatives that social media is conspiring to silence their voices.  Leading voices including President Donald Trump and Senator Ted Cruz have started calling for legislative or regulatory actions to correct this perceived “bias”. But these calls for fairness miss the importance of allowing such services to develop their own terms and for users to determine what services to use and the benefit that such services have been to conservatives.

Social media is becoming a part of our everyday lives and recent events have only increased our general awareness of this fact. More than half of American adults login to Facebook on a daily basis. As a result, some policymakers have argued that such sites are the new public square. In general, the First Amendment strictly limits what the government can do to limit speakers in public spaces and requires that such limits be applied equally to different points of view. At the same time, private entities are generally allowed to set terms regarding what speech may or may not be allowed on their own platforms.

The argument that modern day websites are the new public square and must maintain a neutral view point was recently rejected in a lawsuit between PraegerU and YouTube. Praeger believed that its conservative viewpoint was being silenced by YouTube decision to place many of its videos in “restricted mode.” In this case, the court found that YouTube was still acting as a private service rather than one filling a typical government role. Other cases have similarly asserted that Internet intermediaries have First Amendment rights to reject or limit ads or content as part of their own rights to speak or not speak. Conservatives have long been proponents of property rights, freedom of association, and free markets. But now, faced with platforms choosing to exercise their rights, rather than defend those values and compete in the market some “conservatives” are arguing for legislation or utilizing litigation to bully the marketplace of ideas into giving them a louder microphone. In fact, part of the purpose behind creating the liability immunity (known as Section 230) for such services was the principle that a variety of platforms would emerge with different standards and new and diverse communities could be created and evolve to serve different audiences.

A similar idea of a need for equal content was previously used by the Federal Communications Commission (FCC) and known as “the fairness doctrine”. This doctrine required equal access for groups or individuals wanting to express opposing views on public issues. In the 1980s Reagan era Republicans led the charge against this doctrine arguing that it violated broadcasters’ First Amendment rights and actually went against the public interest. In fact, many have pointed out that the removal of the fairness doctrine is what allowed conservative talk radio hosts like Rush Limbaugh to become major political forces.  In the 2000s, when liberals suggested bringing back the fairness doctrine, conservatives were aghast and viewed it was an attack on conservative talk radio.  Even now, President Trump has used social media as a way to deliver messaging and set his political agenda in a way that has never been done before. If anything, there are lower barriers to creating a new medium on the Internet than there are on the TV or radio airwaves. As a 2016 National Review article states if conservatives are concerned with how they are being treated by existing platforms, “The goal should not be to create neutral spaces; it should be to create non-neutral spaces more attractive than existing non-neutral spaces.” In other words rather than complaining that the odds are against them and demanding “equal time”, conservatives should try to compete by building more attractive platforms that promote the content moderation ideals they believe are best. But perhaps, the problem is they realize that ultimately difficult or unpopular content moderation decisions must be faced by any platform.

Content moderation is no easy task. Even for small groups differing beliefs can quickly result in grey areas that require difficult calls by an intermediary. For social media and other Internet intermediaries, when dealing with such issue on a scale of millions and a global diversity of what is and isn’t acceptable, content moderation becomes exponentially complicated. It is unsurprising that a rate of human and machine learning errors exist in making such decisions. AI might seem like a simple solution but such filters aren’t aware of the context in many cases. For example, a Motherboard article recently pointed out the difficulty that those with last names like Weiner and Butts face when trying to register for accounts on websites with AI filters to prevent offensive language. Leaving the task of content moderation to humans is both incredibly difficult on the moderators and may result in inconsistent results due to the large volume of content that must be moderated and differing interpretations of community standards. As Jason Koebler and Joseph Cox point out in their Motherboard article on the challenge of content moderation on a global scale that Facebook is dealing with, “If you take a single case, and then think of how many more like it exist across the globe in countries that Facebook has even less historical context for, simple rules have higher and higher chances of unwanted outcomes.” It is quite clear that if we as a society can’t decide on our own definitions of things like hate speech or bullying in many cases, how we can expect a third party public or private to make such decision in a way that satisfies every perspective?

The Internet has helped the world truly create a marketplace of ideas. The barriers to entry are rather low and the medium is constantly evolving. Because of social media and the Internet more generally conservative voices are able to reach a wider audience than before. Conservatives should be careful what they wish for with calls for “fairness,” because such power could actually prevent future innovation or new platforms and extend the status quo instead.

There are a growing number of voices raising concerns about privacy rights and data security in the wake of news of data breaches and potential influence. The European Union (EU) recently adopted the heavily restrictive General Data Privacy Rule (GDPR) that favors individual privacy over innovation or the right to speak. While there has been some discussion of potential federal legislation related to data privacy, none of these attempts has truly gained traction beyond existing special protections for vulnerable users (like children) or specific information (like that of healthcare and finances). Some states, notably including California, are attempting to solve this perceived problem of data privacy on their own, but often are creating bigger problems and passing potentially unconstitutional and often poorly drafted solutions.

All states have at least minimal data breach laws and the quality of such laws both in effectiveness and impact on innovation varies. Normally states work as “laboratories of democracy” and are able to test out different regulatory schemes for new technologies with less demosclerosis than the federal process. Similarly, they are better able to account for different preferences in tradeoffs, and in some cases, they are more able to remove barriers to entry by reforming existing areas of law like licensure or products liability to accommodate a new technology. In areas like autonomous vehicles, telemedicine, and drone policy states are often leading the way to embrace these new technologies. However, a new trend in some states to formally regulate the Internet through laws aimed at data privacy or net neutrality to achieve what they perceive as failures of the federal government to act ignores the potential damage to the permissionless federal policy that made the Internet what it is today.

California has passed the California Consumer Privacy Act (CCPA) and other states are likely to follow suit. Unfortunately, these type of statutes are likely to impact innovation in a misguided attempt to correct issues with data privacy. However, these statutes could reach far beyond state borders and illustrate the potential risks of a fifty-state privacy patchwork.

These laws will likely lead to a problem in identifying what entities are covered by the privacy legislation. California’s recent CCPA defines those who are required to comply so ambiguously that a reasonable interpretation would imply the law applies so long as a single user is a resident of California whether they are accessing the website from California or not and no matter if the website purposefully avails itself of California or not.

State laws also unintentionally make it more difficult for small, local companies to compete with Internet giants. Large companies like Google and Facebook can afford the cost of additional compliance but it is more difficult for smaller and mid-size companies to cover such costs. As a result, if they are able to comply they often are more limited in their ability to fund future innovation as they instead invest resources in compliance. In a world of state based privacy laws, it’s inevitable that some would impose contradictory standards and as a result might actually make it worse rather than better as companies pick and choose which states to comply with. What is already playing out in Europe where small and mid-size companies are choosing to exit the market rather spend the cost in complying with new restrictions could play out for states with more restrictive data requirements. And it’s not just fledging startups that have difficulty, the L.A. Times and Chicago Tribune have been unavailable to Europeans since GDPR became effective as they had not completed compliance by the May deadline. In some cases companies have founded it easier to block or exclude effected users than to comply with onerous data restrictions.

In some cases, states making exceptions for companies below a certain number of user also may discourage investment at a certain point. For example the CCPA kicks in at 50,000 users. As a result there is a large marginal costs for gaining 50,001 ^st user as compliance with the standards are immediately required. This might lead to caps on certain newer platforms or encourage innovators to look for loopholes to avoid the high cost of compliance early on.

But even if states were able to create a sort of interstate compact that created an effectively uniform state level set of privacy laws, it would still be an inappropriate use of federalism for the state to govern data privacy due to its de facto impact on interstate commerce and the First Amendment.

The Internet by its very nature transcends states borders and any state laws aimed at impacting privacy are likely to have national and global impact. This is not what is intended by federalism and not just the case for states like California with a significant amount of tech companies. If there are 50 different state laws than new online intermediaries will have  develop 50 different compliance policies or the most restrictive state will become the de facto standard for everyone left in the industry. As Jeff Kosseff points out, a world of 50 variations of the same privacy law based on users would require out-of-state content creators would likely require significant changes to their existing systems and place an undue burden on content creators and users.

Additionally, there are legitimate concerns about the First Amendment rights to share information that may be in conflict with the way privacy rights are enforced under proposed laws. Requiring otherwise lawful content to be removed silences the speaker. For example, if a friend posts a picture from a party that includes you and you ask all your data be removed is that data yours or your friends. To remove the data would silence a speaker and value one individual’s right to privacy over another’s right to speak. In some cases it seems such tradeoffs could be reasonable such as speech that is not just merely offensive but causes clear harm to the person it is about such as revenge porn, but in many cases it is far less clear. Unfortunately when faced with the crippling potential sanctions of such laws, many companies take a remove first question second approach as has been seen with copyright under the Digital Millennium Copyright Act (DMCA).

While there is a growing voice for data privacy, there seems to be little willingness on the part of consumers or regulators to make such tradeoffs. The so called “privacy paradox” where people do not undertake the necessary actions to match with their stated desire for increased data privacy and many willingly admit they prefer the convenience they receive in exchange for their data. If action on data privacy is necessary, it should occur at a federal level to avoid the patchwork problems that would result from inconsistent state laws. Any law must be narrowly tailored to respect the First Amendment rights of both users and platforms. We also must be aware of the tradeoffs that we are making between innovation and privacy when we see calls for a US GDPR. At the same time we should be concerned that as a result of the heavy burden of compliance with GDPR, a more regulated Internet where only those who can afford to comply survive may replace the permissionless start-up American driven version.

While federal preemption may be needed to address a patchwork of state privacy laws, we should be cautious and seek to avoid the mistakes of GDPR type privacy laws that place a value on individual privacy above innovation and knowledge sharing. Simple steps in providing more transparent information and requirements for notification are more likely to allow individuals to make the privacy choices that best fit their needs.

A privacy patchwork of state based “solutions” is likely to create more problems than it solves. The real solutions to our current dilemmas will come from conversations about how we balance the rewards of innovation with individual preferences for privacy.

The Internet is a great tool for women’s empowerment, because it gives us the freedom to better our lives in ways that previously far more limited. Today, the FCC’s Restoring Internet Freedom Order helped the Internet become even freer.

There is a lot of misinformation and scare tactics about the previous administration’s so-called “net neutrality” rules. But the Obama-era Open Internet Order regulations were not neutral at all. Rather, they ham-handedly forced Internet Service Providers (ISPs) into a Depression-era regulatory classification known as a Title II common carrier. This would have slowed Internet dynamism, and with it, opportunities for women.

Today’s deregulatory move by the FCC reverses that decision, which will allow more ISPs to enter the market. More players in the market make Internet service better, faster, cheaper, and more wildly available. This is especially good for women who have especially benefited from the increased connectivity and flexibility that the Internet has provided.

The growth of the Internet has enabled women to connect with others and pursue economic opportunities like operating a small business that had higher cost and more barriers in the pre-digital age. From 2007 to 2015, the number of women-owned businesses grew by more than 65%. For minority women, the rate of business ownership has nearly tripled since 1997. This is in no small part thanks to how much faster and easier the Internet makes it to sell goods or services across the country or around the world. Now, the mom who does monogramming on the side or makes awesome salsa is no longer limited to selling locally, but can become a global entrepreneur through platforms like Etsy. While there are still many barriers to entry facing female entrepreneurs, the Internet has knocked down startup costs and broadened the market for their goods.

Faster Internet also allows more companies to offer flexible working opportunities. These are especially useful for working moms who need  more choices to balance parenting and work. A 2016 survey by Working Mother magazine found that 80% of mothers were more productive when allowed to use some type flexwork, much of which has been enabled by faster, better, and cheaper Internet. As companies invest more in 5G and expand access to broadband, the ability to connect will only get faster and easier. More does need to be done to ensure that women aren’t punished in their careers for taking advantage of flexwork opportunities. But the increase in flexwork gives everyone, but especially women, more options to pursue what is best for them and their families.

Finally, there has been a lot of fearmongering that ISPs will block access to feminist websites in a post-regulatory world. This is nonsense. For one, ISPs were already legally allowed to block content under the original regulations. In fact, some small ISPs purposefully marketed their blocking of questionable content for religious families.

As my colleague Brent Skorup has explained, the “net neutrality” that most people claim to support is not at all what the 2015 regulations accomplished. We all want an Internet that gives people access to the vast array of information available. But when someone says that most people favor “net neutrality” or that “net neutrality” protects women or marginalized groups; well, to quote The Princess Bride: “You keep using that word. I do not think it means what you think it means.” It’s easy to be in favor of the version of “net neutrality” that is portrayed in some surveys and media, but the reality is the Title II restrictions were far more about regulating the Internet like an old school landline than they were about promoting access or preventing throttling.

The great thing about the freedom of the Internet is that it allows people to connect and pursue new opportunities. From beauty vloggers to Etsy entrepreneurs to the mother who wants to help her children with homework, the Internet has especially opened new opportunities for women.

ISPs will still have to engage in competition under the watch of the Federal Trade Commission, but it will become more affordable and easier for smaller ISPs to enter the market. We should not act like Chicken Little and assume the sky is falling now that some two-year-old regulations are being repealed. Rather, we should be excited for the increasing opportunities that Restoring Internet Freedom Order will provide. And for those who want to empower women, the greater chance for more services is likely to provide them with an easier, better, and faster way to do so.

The recently enacted Stop Enabling Sex Trafficking Act (SESTA) has many problems including that it doesn’t achieve its stated purpose of stopping sex trafficking . It contains a retroactivity clause that appears facially unconstitutional , but this provision would likely be severable by courts if used as the sole basis of a legal challenge. Perhaps more concerning are the potential First Amendment violations of the law.

These concerns go far beyond the rights of websites as speakers, but to the individual users’ content generation. Promoting sex trafficking is already a crime and a lawful restraint on speech. Websites, however, have acted broadly and quickly due to concerns of their new liability under the law and as a result lawful speech has also been stifled.

Given the controversial nature of the law it seems likely that a legal challenge is forthcoming. Here are three ideas about what a First Amendment challenge to the law might look like.

SESTA and Users’ Free Speech Rights

SESTA impacts individual users’ speech rights. As Elizabeth Nolan Brown writes, the law will create a chilling effect that could result in harming the very victims it claims to protect and could lead to further marginalizing minority viewpoints.

Despite their increasing presence and role in our everyday lives, Internet intermediaries, such as social media, are not public forums, but rather private actors. The recent Praeger case in California against YouTube has reinforced this point. As a result, they may choose to limit speech or actions in accord with terms of service or other policies.  Some would argue that moderation decision made in consideration of liability by these private actors do not constitute a violation of speech rights, but rather merely a modification of existing terms of service. However, this ignores both the chilling effects of such regulations and the fact that speech that would not be a violation of terms is likely to be removed as a result of broad interpretations of SESTA.

In the landmark case Reno v. ACLU , the Supreme Court recognized the problem of censoring online speech. In striking down the parts of the Communications Decency Act (CDA) other than Section 230’s liability protection, the Court stated, “[T]he CDA effectively suppresses a large amount of speech that adults have a constitutional right to receive and to address to one another. That burden on adult speech is unacceptable if less restrictive alternatives would be at least as effective in achieving the legitimate purpose that the statute was enacted to serve.” The results of SESTA have been a swift suppression of certain speech online and not just sex trafficking.

For example, Craigslist removed its entire personal section in response to the passage of SESTA. Ads that in no way could be considered a violation of either the terms of service or sex trafficking under federal laws were removed along with any potentially violative ads. Similarly, sex workers have expressed concerns sharing client information as a way to keep one another safe would be impossible under the statute as passed. Removing all this information also makes it more difficult for individuals trying  to help identify trafficking victims and facilitate their escape to find and assist victims and investigators. All of this information is lawful speech that will be either considered illegal or effectively eliminated by unnecessary burdens intermediaries must take to protect themselves from both criminal and civil liability.

The courts have generally favored allowing to disallowing speech. While minimal limits regarding time, manner, and place have been upheld in some cases and courts have found the state may regulate obscenity, speech restrictions are generally subject to strict scrutiny and must be narrowly tailored. SESTA uses broad definitions to classify what is considered sex trafficking and is likely to include both voluntary and involuntary interactions. Similarly the fact that the “participation in a venture” standard appears to set a low bar for an intermediary encourages an act first, question second behavior similar to that which has failed for the DMCA . To prevent liability under the statute, intermediaries must either increase moderation or cease moderating altogether. It is almost certain that lawful speech will regularly be caught up in such extreme moderation.

Finally, there are the concerns that chipping away at Section 230 liability opens the doors to broader Internet censorship . The Internet has been a stronghold of Free Speech where any idea can be expressed while well-intentioned laws like SESTA risk encouraging the idea that controversial or disliked speech can be censored.

Defining Intermediaries’ Editorial Control

Prior to Section 230 in Cubby v. Compuserve , the federal district court for the Southern District of New York found that Internet intermediaries act more like a distributor such as a bookstore or library than a traditional publisher. As a result, they have less control over the content created and distributed by their services than an editor or publisher would. Therefore, at common law, the intermediaries were found to have less liability for defamation or obscenity than a traditional publisher. This liability increases or decreases depending on the intermediary’s involvement with user generated content. Intermediaries who create or modify content are not acting as intermediaries and may be held liable if such content is illegal, such as sex-trafficking related content, even prior to SESTA.

The First Amendment Rights of Intermediaries

Intermediaries have free speech rights too. They may choose content to restrict or not restrict. Curation of content has been found to be protected as a form of speech for intermediaries such as search engines by several U.S. courts. In the pre-Internet Smith v. California case, the Supreme Court struck down the application of strict liability for obscene materials of a bookstore.  The court found that the lack of a knowledge requirement for criminal liability to attach was unconstitutional. SESTA requires knowledge but is vague regarding what knowledge an intermediary must have to be considered a participant in such a venture. Additionally, it gives broad power to state attorneys general to conduct investigation or take action with mere reasonable suspicion of a violation. One potential challenge would be whether the lack of a Good Samaritan clause and the vagueness regarding what constitutes knowledge in the statute violates the standards set in Smith .  Combined with the apparent protections of speech rights for intermediaries in the decisions to curate content, it may be possible for the intermediaries themselves to mount a First Amendment challenge.

Conclusion

SESTA has now become law, but it is almost certain it will face a constitutional challenge from users whose content was blocked or the intermediaries themselves on First Amendment grounds. In the past the courts have recognized the importance of maintaining free expression and a wide range of discourse online even when such content may be objectionable to many, one can only hope they would continue that line of thought if SESTA faces a First Amendment challenge.

Last Friday, law enforcement agencies shutdown Backpage.com. The website has become infamous for its role in sex trafficking, particularly related to underage victims, and its shutdown is rightly being applaud by many as a significant win for preventing sex trafficking online. This shutdown shows, however, that prosecutors had the tools necessary to go after bad actors prior to the passage of the Stop Enabling Sex Traffickers Act (SESTA) last month. Unfortunately, this is not the first time the government has pushed for regulation of technology knowing it already had the tools and information needed to build a case against bad actors.

The version of SESTA passed by Congress last month included a number of poorly thought through components including an ex post facto application and poorly articulated definitions, but it passed both houses of Congress with little opposition. In fact, because the law was seen as a must pass and linked to sex trafficking, the Senate even overwhelming rejected an amendment to provide additional funding for prosecuting such crimes. Even without being signed into law, SESTA has already resulted in Reddit and Craigslist removing communities from their platforms within days of its passage. What this most recent event shows is the government already had the tools to go after the bad actors like Backpage, but failed to use them as Congress debated and passed a law that chipped away at the protection for the rest of the Internet and gave the government even broader powers.

This is not the first time that the government has encouraged through either its action or inaction damaging regulation of disruptive technology while knowing that it had tools at its disposal that could achieve the desired results without the need for an additional regulatory burden. In 2016, the government argued following the San Bernadino shootings that it need more access to encrypted devices like the iPhone when Apple refused to comply with a writ compelling it to unlock the shooters’ phones. The Senate responded to the controversy by proposing a bill that would require business like Apple to assist authorities in gaining access to encrypted devices. Thankfully, because the FBI was able to gain the information needed without Apple through a third party vendor, such calls largely diminished and the legislation never went anywhere.  Now, a recent Office of the Inspector General report has revealed the FBI “testified inaccurately or made false statements” regarding its ability to gain data from the encrypted iPhone.

It is highly concerning that when the government has the tools needed to engage in action to stop bad actors, but desires more regulatory power over tech it chooses to pursue regulation for all instead of using the proper tools it already has to pursue the bad actors. Rather than gaining new tools that risk ruining innovation, the government should first exhaust the tools they have to prosecute those bad actors. When they do use these tools against the likes of MyRedbook, Rentboy, and now Backpage, the prosecutions have been by and large successful. This continued pattern of behavior should raise heightened concerns about  calls for greater regulation of technology and whether the trade-offs such regulation would require are needed.

Neither the government’s desire for more regulation nor its negative impact is limited to technology. Research from the Mercatus Center has shown that the cumulative effect of regulation has slowed GDP growth by 0.8% per year since 1980. Particularly for new startups these regulatory burdens increase the cost of even entering the increasingly global marketplace due to both increased compliance costs and fears of company ending litigation.

With the awareness that these additional regulations are often unnecessary and harmful to both technology and the economy more generally, there should be heightened concern for calls to give regulators additional tools in light of specific events. These calls for regulation have once again arisen with recent fatal Uber autonomous vehicle accident and the Facebook scandals. These regulations may actually make problems worse not better by creating a regulated monopoly that prevents new entrants from improving quality and increasing competition. As Mark Zuckerberg noted while answering a question during Congressional testimony yesterday when there are more rules it is easier for larger companies to comply with them than smaller companies.  Additional regulations make it more difficult for us to get the next Facebook, the next Google, or the next Uber.

The overall framework of Permissionless Innovation put in effect during the Clinton administration has allowed the Internet to flourish and the US to become a global leader in Internet innovation and we must not let the failure to use the tools available deceive us into believing that such an environment does not work. Regulation is sometimes necessary, but over regulation, particularly of technology, poses significant risks that must be considered in more than just a reactive fashion.

SESTA passed the Senate last week after having previously passed the House. President Trump is expected to sign it into law despite the opposition to this version of the bill from the Department of Justice. As I have previously written about, there are a great deal of concerns about how the bill may actually make it harder to address online sex trafficking and more generally impact innovation on the Internet.

The reality is that we are looking at a post-SESTA world without the full protection of Section 230 and that reality will likely end up far from the best case scenario, but hopefully not fully at the worst. Intermediaries, however, do not have the luxury to wait around and see how the law actually plays out, especially given its retroactive provision. As a result, Reddit has already deleted a variety of sub-reddits and Craigslist has closed its entire personals section. One can only imagine the difficult decisions facing the creators of dating apps or messaging services.

So what can we expect to happen now…

1.    Questions remain about how often the law will be used, and when civil cases will be brought

Prosecutors just a few years ago were given additional criminal resources to prosecute sex trafficking in the SAVE Act. Yet, these tools have rarely been used due to the difficulty in prosecuting such crimes. Similarly, most civil litigation settles out of court. Especially given the potential PR nightmares of being seen as not believing victims or favoring bad actors if a civil case does go to trial, there will be a great deal of pressure on intermediaries to settle out of court whether they engaged in unlawful actions or not. The push for settlement will likely be even stronger for smaller companies who lack the resources to hire legal teams, fund litigation, and risk greater damage to the business.

2.   However, at some point SESTA will likely end up in court and likely face a constitutional challenge.

The response on the part of websites to the requested changes seems to have been swift and far-reaching. Given that SESTA presents First Amendment challenges and has a most likely unconstitutional retroactive provision, the question seems to be who and when the law will be challenged in courts.

The retroactive nature of the law appears facially unconstitutional. It is, however, likely the courts would be able to sever this provision from the rest of the law. This would fix some of the minor issues with establishing liability after a decision regarding moderation was made, but would not fix the broader innovation and speech quashing concerns of the law.

The First Amendment challenges could come either from sex workers whose lawful speech is being silenced or from those not at all related to sex work whose innocent actions were censored as a result of an intermediary’s low risk tolerance due to increased liability under SESTA.

3.    Big intermediaries like Facebook and Google will adjust, but new intermediaries may struggle to get off the ground.

Facebook deletes over 1 million accounts a day. Various tech and app companies are estimated to employ over 100,000 moderators to evaluate user generated content. This work is deeply disturbing and has a high human toll for those engaged in it as other technology has not been able to replace the ability of human moderators to make certain distinctions. Large companies might be able to adapt by hiring more moderators or deleting certain user communities for potential liability raising areas, but smaller companies will be even less able to compete and adapt.

SESTA may prevent us from getting the next Google, Facebook, or Paypal for three key reasons. First, it raises the initial cost of launching a product that has user generated content by requiring additional moderators just to get off the ground. Second, it is likely to make funders less likely to invest in new intermediaries like messaging and dating services if they are concerned that the company is likely to get sued. Third, it may prevent existing small and mid-size tech or app companies in areas like social media or messaging from expanding or innovating in areas that are likely to have interactions between users due to concerns about liability.

For all the concerns that tech is getting too centralized in a few companies, there seems to be little attention paid to the fact that raising the liability risks through laws such as SESTA may result in a scenario where only those few big companies can comply.

4.    It sets an uneasy precedent for further eroding Section 230.

This is perhaps the greatest concern. Sex-trafficking is evil, but prosecutors had the tools to go after it and Section 230 already had a carve out for federal crimes. SESTA signals that a legislative reaction to a single or few bad actors’ actions online can result in chipping away at the protection that has allowed the Internet to flourish. It shows that such actions are often not narrowly tailored due to their reactive nature. Especially as there are growing concerns about various individual actors, we must remember that broad legislation risks making it difficult for good actors and new challengers to try to take their place. A post-SESTA world signals that while Section 230 may still exist, it is far to easily eroded for all when concerns about the bad actions of a few arise.

What happens over the next few months and years as both new and existing intermediaries try to adapt will greatly influence the future of the Internet and its ability to be a tool for global connectedness. As Senator Wyden said following the rejection of an amendment to SESTA to fund sex trafficking prosecutions, “I anticipate having to turn back to this topic in short order after the effects of this bill become clear.” How swiftly those effects are felt by everyone and whether the reality of their damage to innovation is clear to policymakers remains unknown, but that such effects will occur in one form or another cannot be disputed.

While the Net Neutrality debate has been in the foreground, Congress has been quietly moving forward legislation that risks fundamentally modifying the liability protection for Internet intermediaries like Facebook, Google, and PayPal, and forever changing the Internet. The proposed legislation has good intentions of stopping sex trafficking, but in an effort to stop a few bad actors the current overly broad version of the bill risks not only stopping the next Internet innovation, but also failing to achieve even this laudable goal.

Where Are We Now: A Legislative Update

As I have written earlier, the House and the Senate version each introduced bills nobly aimed at preventing and fighting sex trafficking. The House bill, FOSTA, was amended during the committee process and these significant changes minimized many of the most concerning elements of the original version of the legislation. The bill still had many flaws including standards that remained vague and did not account for a website’s size, but it was generally applauded as a significant step towards achieving its goal while minimizing the damage to free expression on the Internet. The Senate bill, SESTA, retained many of the concerns of the initial FOSTA bill. Before the House voted, FOSTA was amended to include all elements of SESTA both good and bad. The bill with SESTA attached passed the House and now proceeds to the Senate where a vote is expected next week.

The Continuing Problems of FOSTA/SESTA

According to Internet law professor Eric Goldman, unfortunately the House passed FOSTA now represents the worst of both worlds and could have far reaching implications not just for those engaged in detestable practices but also for advocates, social media, and free speech online more generally. The current version of the bill has also been criticized by many including not only the tech community, but also the prosecutors at the Department of Justice.

There are at least three primary issues remaining in the FOSTA/SESTA legislation as proposed.

First, it could make the problem of identifying and rescuing victims more difficult for advocates. This is for two main reasons. As law professor Ariel Levy pointed out even if the bill succeeds in removing sex trafficking online, it will only push the true perpetrators of these acts further underground making it harder for those seeking to monitor and prosecute such crimes to find victims. It also risks silencing the spread of information to help victims due to broad language in the law and the difficulty companies would have in distinguishing such messages. Finally, the law does not distinguish forced from voluntary transactions. Advocates for sex workers have expressed concerns that the law would prevent the sharing of information that has increased safety.

Second, it could actually make it more difficult for prosecutors to go after perpetrators of these crimes. The Department of Justice letter points out that the vague language such as “participation in a venture” will make it harder to prosecute wrongdoers. As I have previously discussed, prosecutors have the tools and should be encouraged to use them. Mike Masnick recently pointed out that while the bill creates a new crime, it is already illegal to engage in and advertise sex-trafficking. The current vagueness and imposition of new liability on third parties not actively engaged in trafficking could make it harder for prosecutors to use the tools they have to go after the actual traffickers.

Finally, as Rep. Justin Amash questioned in the immediate aftermath of its passage the bill as currently written could easily be interpreted as allowing for ex post facto liability and prosecutions. The version passed by the House expressly allows the prosecution of actions that would have been illegal under the law even if the actions occurred years before its passage. If such provisions were enforced, it’s plausible the courts could find the statute facially unconstitutional.

Potential Solutions

Section 230 immunity has allowed the Internet to flourish for over 20 years. Without such protections, it is unlikely that many user generated communities like social media sites or messaging services would have developed.  Since the Senate has not yet voted on the bill, there is still time to leave Section 230 as it currently functions or for amendments that could minimize the risks described above.

First, as suggested by the Department of Justice letter attention should be given to vague definition of participation to limit the application of the law to only those who actively engage in such acts. The current language means that a search engine, payment processor, or social media site could be found liable for even a single transaction by a user. Clear definitions are particularly important given they impact not only civil liability but also the creation of a new crime.

Second, the intent requirements could be raised to limit the law only to those with truly bad intentions and protect Good Samaritan actors who accidentally make a mistake. The current version has a relatively low requirement for liability. A recent Wall Street Journal editorial pointed out that an attorney would only need to show that the website “should have known” not that they actually knew this behavior was going on in order to bring a lawsuit. As a result, intermediaries are most likely to engage in aggressive censorship. This could result in wrongfully silencing advocates as discussed above. Of course, others could choose not to engage in moderating at all out of a fear that they will be found to have knowledge. Ideally, a provision to protect moderator actions and a heightened mens rea requirement would minimize these risks.

Third, remove any ex post facto applications of the statute. A website could not have taken additional steps to comply with a law that existed prior to its passage, so should only reasonably be held liable for actions that occur since the law’s passage. Even for seemingly innocuous social media websites like Facebook or search engines like Google the new standard would require significantly more resources devoted to monitoring than they already engage in. Given that the law would undo two decades of status quo for moderation, it seems providing intermediaries a few months to insure they have the necessary resources is a reasonable change.

Section 230 has worked to allow the Internet to flourish in ways that could not have been predicted 20 years ago. Any changes to Section 230 liability protection are likely to have far reaching implications for the Internet and innovation. While these changes may be brought with good intentions, they risk fundamentally changing  nature of new communications tools and doing quite a bit more than just targeting bad actors.

Autonomous cars have been discussed rather thoroughly recently and at this point it seems a question of when and how rather than if they will become standard. But as this issue starts to settle, new questions about the application of autonomous technology to other types of transportation are becoming ripe for policy debates. While a great deal of attention seems to be focused on the potential revolutionize the trucking and shipping industries, not as much attention has been paid to how automation may help improve both intercity and intracity bus travel or other public and private transit like trains. The recent requests for comment from the Federal Transit Authority show that policymakers are starting to consider these other modes of transit in preparing for their next recommendations for autonomous vehicles. Here are 5 issues that will need to be considered for an autonomous transit system.

1. Establish what agency or sub-agency if any has the authority to regulate or guide development of autonomous buses.

Currently, the National Highway Traffic Safety Administration (NHTSA) has provided the most thorough guidance on autonomous vehicles, but it has focused almost exclusively on privately owned, individual transport rather than buses or trucking. Currently buses are regulated by the Federal Transit Administration (FTA), NHTSA, the Federal Motor Carrier Safety Administration, Transportation Security Administration (TSA), and various agencies depending on what particular regulation is being addressed. With the growth of soft law particularly for autonomous vehicles, this overlapping jurisdiction becomes even more complicated for those hoping to start a new driverless bus system.

For example, an innovator hoping to start a driverless bus system from Washington, DC to New York City could have approval from NHTSA for the vehicles safety standards from an informal sandboxing, but find him or herself fighting the TSA after the system was ready due to the intercity travel or state regs in either location. This overlapping jurisdiction at the federal level results in further delay for innovators who may think they have properly consulted necessary agencies or are not required to seek approval.

While evasive entrepreneurs have been able to work within and around such regulations, other times they have had to engage in innovation arbitrage in order to continue such projects or stop development before its fully realized. Yes, Elon Musk might be willing to flip switch on Hyperloop with a verbal yes, but other innovators and investors are less likely to pursue costly projects that regularly face regulatory rejection.

2. Vertical Take Off and Landing (VTOL) may be more transformational than autonomous buses

It’s possible that at some point multi-passenger Vertical Take Off and Landing (VTOL) may actually be more disruptive and take the place of standard buses. These devices are basically drones that can carry human passengers.

Uber, for example, has already announced its plans to test such technology in the relatively near future. Just like we may skip some levels of automation on particular technologies, we may find that we are better off skipping autonomous buses in favor of other technology altogether.

3. State and local governments also have significant impact on buses and that’s not necessarily bad.

Right now a great deal of regulation of both autonomous vehicles and intracity transit is done at a state or local level through restrictions on operations, noise control, and local sanctioned-monopolies. Some of this is because of the increasing difficulty in creating formalized rules or legislation to address disruptive technology at a pace sufficient to keep up with innovation. As Adam Thierer, Ryan Hagemann, and I discuss in our forthcoming paper, this has led to an increased use of soft law at a federal level. It has also opened a window for state and local governments to try new policy solutions to determine what (if any) form of regulation might be best to encourage a disruptive technology like autonomous vehicles. While some economists might argue that every new government is a barrier to efficiency, allowing such local regulations is not in and of itself bad.

If the federal government were to become the new bus czar, it would not likely end well. Not only would cities and states protest the usurpation of their traditional role, but they would lack the local knowledge to determine which tradeoffs to make. Transit would best serve its citizens when they are making the decisions that most directly impact them. While the future may have less strict routes, schedules, and stops through services like Lyft Shuttle even these will require some knowledge of local needs to determine the hours and areas for the most profitable operation.

At the same time, there are real risks that a few powerful cities or states like California or New York City could prevent life-saving innovations like autonomous transit in smaller markets. This could be in a variety of ways from permitting to lane restrictions to funding. Still when examined as a national or even international market, it is likely that innovators would choose to take their technology elsewhere to a market that did exist. For example, following increased regulations related to autonomous vehicle testing in California, Uber moved its autonomous vehicle testing to a more welcome regulatory environment in Arizona. While engaging in such innovation arbitrage is not as easy for an entire transit system, states and cities that are more welcoming or at least willing to work with technological disruptors are more likely to see innovators flock to those areas as well as tangential benefits of allowing such new technology.

4. Smart cities v. dumb choices

In general, it should be applauded that many states and cities are trying to take proactive actions to prepare for potentially transformative changes of driverless cars. However, many of these actions are dumb choices that neither prepare for the change nor promote innovation. As Emily Hamilton has written, “Self-interested incentives may lead policymakers to implement new technologies without making real changes in the quality of service delivery.”

Some of the investment in technological infrastructure has its benefits such as providing data to make infrastructure decision and increased safety and connectedness by enabling more direct communication with citizens. At the same time, many of these projects have been little more than novelties and suffer from the same cronyism issues as other government funded projects. With autonomous vehicles, cities and states may risk betting on the wrong horse and investing in technology that will later be incompatible with the most common product on the market. As Michael and Emily Hamilton have written with the gap between the proposal of legislation and its actual implementation it is easy for the “smart” technologies to be outdated by the time they actually reach citizens.

Still, there are general policy changes that can prepare cities for a smart future. Adam Thierer has written about three policy proposals (an Innovator’s Presumption, a Sunsetting Imperative, and a Parity Provision) that would enable policymakers to create cities that embraced innovation. These proposals rather than targeting specific technologies would create a regulatory environment that encourages experimentation and innovation in a variety of industries.

5. Concerns about the impact of autonomous buses are well intentioned, but typically more about incumbents maintaining their market share.

As Michael Farren and I wrote about the collective freakout in Oregon about having to pump your own gases, often technopanics overlap with an imbedded cronyism or incumbents trying to keep out new entrants through bootleggers and Baptists phenomena.

Sadly, this phenomena is starting emerge when discussions about autonomous buses appear. Unions in some cities like Columbus, Ohio have public voiced their opposition if the jobs of current operators would be impacted. While job loss is a sad event, new technologies do not merely appear overnight and bring with them new job opportunities. Attempts by unions and other advocates to prevent any potential job losses from autonomous vehicles, could cost hundreds of thousands of lives including those of bus and truck drivers. Delaying a life-saving technology because it may negatively impact a few when it could benefit a large number in most cases is not a desirable tradeoff. Policymakers and advocates must realize that there will always be tradeoffs and recognize that often a small loss is necessary for a larger gain.

Technology does not just destroy jobs, it also creates them. A 2015 Deloitte study found that in the 140 years since the industrial revolution new technology had created more jobs than it had destroyed and not just in areas directly related to the technology. As individuals had more free time because technology made things like agriculture and manufacturing easier, significant growth was experienced not only in jobs related directly to technology, but also service and creative industries. While cars may have unemployed blacksmiths, they provided new opportunities for many others by creating and expanding new industries. It is likely that the current disruptive technologies will do the same.

As both the technology and policy surrounding autonomous vehicles evolves these and many other issues will have to be discussed and decided. It is a welcome event that such conversations are beginning to embrace the broader applications of the technology rather than solely focusing on “driverless cars” and hopefully this expanded focus will allow for even greater innovation and benefits.

The house version of the Stop Enabling Sex Trafficking Act (SESTA), called the Allow States and Victims to Fight Online Sex Trafficking Act (FOSTA), has undergone significant changes that appear to enable it to both truly address the scourge of online sex trafficking and maintain important internet liability protection that encourages a free and open internet. On Tuesday, this amended version passed the House Judiciary Committee. Like most legislation, this latest draft isn’t perfect. But it has made significant steps towards maintaining freedom online while addressing the misdeeds of a few.

The Good

First, the new version creates a new crime that targets online sex traffickers and those wrong-doers who intentionally promote or facilitate their actions. Earlier versions of the House and Senate sex trafficking bills created mens rea, or state of mind, issues whereby a website was compelled to engage in strict moderation for fear of something “falling through the cracks” while encouraging good behavior on the part of intermediaries. The new FOSTA proposal substitutes a higher standard, which largely obviates these concerns.

The revised bill also clearly focuses on sex trafficking and online prostitution rather than attacking potential “bad actions” online more generally. Even so, some are concerned about the impact this revised focus may have on consensual transactions or protected (even if objectionable) speech. However, combined with the creation of a new crime under the Mann Act, it appears to remove most of the early concerns that the new law could be applied too broadly and chip away at Section 230. Indeed, the language of the new bill makes it clear that Section 230 was “never intended to provide legal protection to websites that unlawfully promote and facilitate prostitution and contribute to sex trafficking.”

The revised bill creates civil liability only when a violation of the new criminal law has already occurred. This prevents someone from going after an intermediary merely because they have “deeper pockets” than the actual perpetrators. By requiring an intermediary also be guilty of a criminal violation, it limits the likelihood that individuals would be successful in such suits except in cases where the website had knowingly facilitated or actively encouraged such violations of the law.

Finally, the revised FOSTA relies on a national standard instead of a patchwork of state law claims. Given the truly global nature of the Internet, this provides greater certainty for intermediaries regarding under what standard they will be held liable.

The Remaining Questions/Concerns

The current version of the bill uses a standard of 5+ victims for the new criminal enhancement. But there is a problem with using a raw number of victims, as Eric Goldman points out.  He lays out a thought experiment: let’s say that a  larger website like Google or Facebook, has  0.01% of its usage dedicated to prostitution. That’s about 100,000 people. Goldman points out that even if these companies were 99.99% compliant in taking down this activity—a worthy feat, to be sure—some would surely still fall through the cracks. The 5+ standard could make the social platforms look like “hotbeds of prostitution activity” despite their best intentions. A simple solution would be to switch from a raw number of “victims” to a percentage of users or revenues before attaching criminal or civil liability.

Additionally, there are some concerns about whether the new law could still make things worse for victims. As one advocate wrote, putting victims on the street rather than online may make them much more likely to be subject to violence and may make it more difficult to identify and assist trafficking victims. Unfortunately, the dangers and harms associated with trafficking and sex work cannot be resolved by a single bill.

Like most legislation, FOSTA is not perfect, but the current version does avoid the most damaging elements of earlier iterations. The changes also show that legislators are becoming aware of the possible unintended consequences that broader legislation could lead to.

As I have previously written about, a bill currently up for debate in Congress runs the risk of gutting critical liability protections for internet intermediaries. Earlier today the Stop Enabling Sex Traffickers Act passed out of committee with an amendment attempted to remedy some of the most damaging changes to Section 230 in the original act. While this amendment has gained support from some industry groups, it does not fully address the concerns regarding changes to intermediary liability under Section 230. While the amended version shows increased awareness of the far reaching consequences of the act, it does not fully address issues that could have a chilling effect on speech on the internet and risk stifling future internet innovation.

• Good Samaritan Provision

As Eric Goldman points out, the amended version expressly retains part the Good Samaritan provisions of Section 230 for removals, but it still enables new liability for user publication. As a result, the new amendment only partially preserves Good Samaritan mechanisms and does not fully address concerns about good faith attempts to avoid the new liability.

• Knowledge Standard

The amended version that cleared committee clarifies the knowledge standard of the earlier bill by stating that for liability to attach the intermediary the intermediary must have participated by “knowingly assisting, supporting, or facilitating a violation.” This improves but does not fully mitigate the damage that establishing new liability could do to internet free speech. As EFF writes, facilitates legally means “to make easier or less difficult” and would include a huge swath of innocuous products, websites, and activities.

This standard is particularly dangerous for online dating and messaging services. For example, if a traffickers used a messaging service to communicate this could be seen as facilitating because it made it easier to communicate. Dating services which set up meetings could also be seen as facilitators if a bad actor used their service to conduct human trafficking. As Mike Masnick at TechDirt argues, there is little certainty in the amended version of what “knowingly” means and it may be as low a standard as general knowledge or media reports that your website was at some point used (or allegedly used) by sex traffickers.

• The Retroactivity Provision

The new version does not clear up concerns about retroactivity. In both the amended and original versions, the bill states that it applies “regardless of whether the conduct alleged occurred, or is alleged to have occurred, before, on or after such date of enactment.”  As a result companies are open to civil and criminal liability for conduct that did not have such liability when it occurred.

While the amended SESTA signals a recognition that the bill needs to more narrowly tailored,  it leaves internet intermediaries with the same two choices if enacted.

The first option for intermediaries would be to engage in an aggressive takedown process like they do for copyright claims under the DMCA. This reaction is to take down questioned content first and ask whether it should have been taken down later.  As Masnick notes, however, the DMCA has much clearer provisions for when content must be taken, but still there are seemingly rampant issues with false claims. Such a situation would only be worse under SESTA especially for social media, search engines, and dating websites. Some websites might choose to quit operating rather than engage in the high level of moderation that would be necessary. Because the bill applies to all sizes of companies without any limitations for the amount staff or users, this is more likely to have a negative impact on smaller or more innovative services that might one day become the next Facebook or Google. These companies do not have the same manpower to engage in an aggressive monitoring for their user base and as a result may have more difficulty entering the market if there are greater compliance burdens. Those that did continue would only be those who could afford to devote large number of staff and legal resources to monitoring and determining the accuracy of claims.

The second option is to avoid the cooperation and self-monitoring that websites engage in now.  In a recent interview regarding Russian election ads, Senate Majority leader Mitch McConnell stated that tech should be “more interested in cooperating with law enforcement.” SESTA, however, provides the opposite incentive. Cooperation in investigations would show knowledge and open the intermediary up to further civil liability. As a result, intermediaries might be discouraged from future cooperation.

The amended version will now head to the Senate floor for debate. The bill has a noble goal of making sex trafficking more difficult and this revised version shows progress towards protecting intermediary liability. Still, it addresses the issue more broadly than needed and risks fundamentally changing the internet.

Tesla, Volvo, and Cadillac have all released a vehicle with features that push them beyond the standard level 2 features and nearing a level 3 “self-driving” automation system where the driver is still needs to be there, but the car can do most of the work. While there have been some notable accidents, most of these were tied to driver errors or behavior and not the technology. Still autonomous vehicles hold the promise of potentially reducing traffic accidents by more than 90% if widely adopted. However, fewer accidents and a reduction in the potential for human error in driving could change the function and formulas of the auto insurance market.

Tesla’s semi-autonomous autopilot has been in the market for over the year and insurance companies have responded to the new technology in various ways. Some insurers, like the innovative company Root, have recognized the safety benefits of even semi-autonomous technology and offered drivers of such vehicles a discount on their insurance premiums for its use. Others, however, are likely charging higher rates pointing to a 2017 AAA recommendation stating that even with the enhanced autopilot Tesla owners have filed more claims and those claims tend to be more expensive. More generally insurers seem to have not factored in the potential benefits of semi-autonomy into their rates yet and instead focus on the costs of the vehicles and repairs. But as more cars with such semi-autonomous features hit the road, consumers will likely demand new products. As cars become safer, the insurance market is likely to shrink with at least one report estimating a reduction of 40% of accidents if even only the current level of Autopilot was widely adopted.

Since most states require drivers to carry insurance on their vehicles, it will be necessary for the insurance market to provide products in order for widespread adoption of driverless cars to occur. At the same time insurance typically regulated at a state level allowing widespread experimentation to occur before national norms emerge.  This widespread insurance requirement is different from other disruptive technologies, such as artificial intelligence or 3-D printing, and therefore for widespread adoption to be possible the insurance market or its related government policies must adapt sooner rather than later.

It is becoming increasingly clear that autonomous vehicles will disrupt the insurance industry even before they become the majority of vehicles on the road. As a June report from KPMG noted the acceleration of autonomous technology has progressed more rapidly than anticipated and as a result the auto insurance industry may arrive in a chaotic middle sooner than anticipated. If the industry fails to adapt, the report notes, the auto insurance sector could shrink by almost $137 billion. Some of the earliest adaptations will still rely on individuals who own the car, but as the technology is likely to change car ownership entirely new insurance policies and coverage will need to evolve. If auto insurance companies choose like many today not to adapt to these changes, they may find themselves displayed by a new industry that does.

Innovators recognize that autonomous vehicles may disrupt the existing auto insurance market and in some cases are seeking partners to determine how to develop policies to embrace and encourage acceptance of the new product. Working directly with innovators is likely to allow insurers to offer the products needed to allow both widespread adoption of the new technology and create or maintain competitive policies as the auto insurance sector changes. Such collaboration is probably most useful in the ride-sharing space where the lines between corporate and individual owners can be blurry.

Another way to potentially disrupt the insurance market will be for the manufacturer to actually offer or hold the insurance on the vehicle. Tesla is already trying such an all in one price in some Asian markets. Tying insurance in with the cost of the vehicle would skip the middle man, but also may offer less choice to consumers. Still such options are likely to be more appealing when the technology involved and not humans are likely the risk being insured.

These early attempts to respond to semi-autonomous vehicles show that some stakeholders are already trying to avoid a chaotic middle period. Just as with technology itself, the accompanying insurance market will likely have to go through experimental design and trial and error before arriving at a new market equilibrium. If the auto insurance industry does not respond to increasingly autonomous vehicles, it runs the risk of negative consequences including:

1. As previously discussed, the industry itself would shrink significantly;
2. A lack of flexibility and adaptability further creates chaotic middle where courts, consumers, insurers, and regulators are uncertain of who and what is covered and where the responsibility for any damages should lie;
3. Missing the opportunity to expand their services into new technologies or create new products that respond to consumer preferences in light of these technological changes.

It will be interesting to watch if the current players in the auto insurance market are able to overcome and adapt to these challenges or if new entrepreneurial disruptors emerge along with the new technology.

Hurricanes Harvey and Irma mark the first time two Category 4 hurricanes have made U.S. landfall in the same year. Currently the estimates are the two hurricanes have caused between $150 and $200 million in damages.

If there is any positive story within these horrific disasters, it is that these events have seen a renewed sense of community and an outpouring of support from across the nation. From the recent star studded Hand-in-Hand relief concert and JJ Watts Twitter fundraiser to smaller efforts by local marching bands and police departments in faraway states.

What has made these disaster relief efforts different from past hurricanes? These recent efforts have been enabled by technology that was unavailable during past disasters, such as Hurricane Katrina.

1. Airbnb

Many people chose to evacuate once the paths and intensity of Hurricanes Irma and Harvey became clear. In fact, Hurricane Irma created the largest evacuation in US history. As a result, many hotels quickly filled.

Airbnb has been able to step in to allow local citizens to help in this situation by waiving its fees and encouraging owners to offer space free of charge to those displaced by the disasters. The website also makes it easy for evacuees to search and find available lodging. The service not only helps evacuees, but also volunteers and contractors coming to the area to help with recovery.

Additionally, the website was able to help authorities locate and communicate U.S. citizens who may have been in rented residences on Caribbean islands after the storm hit.

Licensing or other regulatory requirements could also limit what or which owners are able to offer in times of emergency preventing good Samaritans from being able to help. Regulations applying other lodging regulations, interpreting zoning laws, or outright bans on services like Airbnb could prevent this free service in the future. While Airbnb can waive its own fees, it would be unable to waive regulations from state or local governments allowing owners to offer their home. Often such regulations or enforcement attempts target hosts rather than companies like the zoning interpretation the city of Miami considered. If there are concerns about legality, individuals might be less likely to fill this void and help their neighbors or strangers through such services in times of crisis.

2. Drones

The Red Cross called for volunteer drone pilots who had the necessary paperwork and authorization to operate in the impacted areas and for the first time in a one week test used drones to deliver and survey disaster relief needs in some of the hardest hit areas.

But delivering supplies is not the only way drones are able to assist with recovery efforts. Verizon and AT & T were able to use drones to determine if equipment was damaged and causing outages, and then respond accordingly. Similarly some insurers have been deploying drones to allow adjusters to view and assess heavily damaged areas sooner.

In the immediate aftermath prohibited private drones from flying in areas around Houston, still the agency issued some permits allowing drones to assist in locating those who are trapped and survey the damage.  There were many legal concerns to be considered in the initial aftermath and in the future use of drones including both property issues and concerns of interference. A less restrictive environment might have allowed drones to provide greater assistance sooner with a minimal risk of privacy invasion or interference.

3. Tesla

Tesla issued an over the air update for additional battery life (an upgrade that is normally available for a fee) to provide owners the ability to evacuate following the preferred route. While some may have concerns that this power could be used negatively by the corporation, the success shows that over-the-air updates could be used to improve safety or other features in the future.

Additionally, one of the issues in any evacuation is traffic. The more cars on the road (particularly as weather worsens), the greater the risk of accidents. Assuming there is not too much precautionary interference, in the future self-driving cars could aid in making evacuation traffic safer and less stressful.

4. Social media and messaging apps help connect neighbors and get help

Want help? There’s an app for that.

The Cajun Navy gained renown for rescuing neighbors in the Southern Louisiana floods, but the app Zello made becoming a member of it even easier during Hurricane Harvey. Similarly, the app allowed victims of the storms to share information as power went out using less bandwith then phone calls.

Traditional social media also played a role in search and rescue efforts. When 9-1-1 failed, those in need of help turned to Twitter and Facebook in some cases. Neighbors, friends, or even strangers could use the information to provide help when traditional responders were unavailable. So many people were relying on social media, the Coast Guard had to issue a comment requesting people call not tweet at them for rescue.

Social media certainly had problems with misinformation, but in recent disasters it has shown to be an important part of disaster response and preparedness.

The one that might have been….

Could Flytenow have provided a possible solution to some of the concerns of airline price-gouging in the wake of Hurricane Irma? Flytenow hoped to make flight sharing a reality for the masses, but was shutdown due to interpretations by the FAA regarding common carriers. There are limitations on flight sharing, however, in a crisis, it’s possible allowing this type of arrangement could have resulted in a greater number of flights available. If demand was high, available pilots planning their own evacuation might consider posting additional available seats for others in exchange for some share of the expense of the flight. The result likely would be more seats available and lower prices overall. Using a platform rather than a traditional bulletin board arrangement would allow a service to limit the availability to only those who are certified or otherwise shown to be competent to fly in difficult conditions. Perhaps Flytenow would even have provided some sort of good Samaritan program like Airbnb to help get flights to those most in need of evacuation. Still, because of regulatory precaution, at least for now, we will not know the potential impact flight sharing could have on assisting in such natural disasters.

Conclusion

Technology is changing the way we respond to disasters and assisting with relief efforts. As Allison Griswold writes at Quartz, this technology enabled response has redefined how people provide assistance in the wake of disaster. We cannot plan how such technology will react to difficult situations or the actions of such platforms users, but the recent events in Florida and Texas show it can enable us to help one another even more. The more technology is allowed to participate in a response, the better it enables people to connect to those in need in the wake of disaster.

Congress is poised to act on “driverless car” legislation that might help us achieve one of the greatest public health success stories of our lifetime by bringing down the staggering costs associated with car crashes.

The SELF DRIVE Act currently awaiting a vote in the House of Representatives would pre-empt the existing state laws concerning driverless cars and replace these state laws with a federal standard. The law would formalize the existing NHTSA standards for driverless cars and establish their role as the regulator of the design, construction, and performance of this technology. The states would become regulators for driverless cars and its technology in the same way as they are for current driver operated motor vehicles.

It is important we get policy right on this front because motor vehicle accidents result in over 35,000 deaths and over 2 million injuries each year. These numbers continue to rise as more people hit the roads due to lower gas prices and as more distractions while driving emerge. The National Highway Traffic Safety Administration (NHTSA) estimates 94 percent of these crashes are caused by driver error.

Driverless cars provide a potential solution to this tragedy. One study estimated that widespread adoption of such technology would avoid about 28 percent of all motor vehicle accidents and prevent nearly 10,000 deaths each year. This lifesaving technology may be generally available sooner than expected if innovators are allowed to freely develop it.

Are we preempting too early?

Currently twenty-one states have passed legislation related to driverless cars and 4 more have issued executive orders related to the issue. The content of these law varies from simple studies to requirements for testing to more general allowance of driverless cars on public roads. The requirements for operating driverless cars in these laws vary from highly restrictive in states like California to rather flexible and permissive in states like Florida.

While these laws may not be perfect, they provide a variety of examples to see the potential impact of regulation on driverless cars.  Additionally, they have shown general trends have started to emerge in how states are choosing to regulate the testing of driverless cars.

A federal intervention might be necessary were liability concerns to threaten to shutdown the potentially lifesaving industry over some early issues, but so far these threats have not surfaced. It also might be necessary if inconsistent standards about the use, design, and requirements for these vehicles become incompatible. In cases where pre-emption has shown to be necessary to allow the technology to develop, like Section 230 and the internet, traditionally we have at least seen what happens at common law first. This common law test has not yet occurred to know if such intervention would be necessary.

Are we preempting too much or too little?

The proposed federal legislation appears to preempt with a middle of the road approach. In this way the SELF DRIVE Act appears to risk preempting state laws that could lead to more rapid adoption of driverless cars. For example, some states, like Florida, have already passed laws that allow for private operation of highly autonomous vehicles. Other states, like Michigan, have also looked to address liability issues in their laws. The proposed federal legislation would supersede these more open standards for a middle of the road approach.

At the same time, the proposed federal law may not preempt enough. Driverless cars may change the traditional owner-operator connection that served as the basis for state regulation and licensing. The proposed legislation expressly does not pre-empt the state role in licensing and insurance. The law also continues to allow states to set higher standards for performance which could allow the more restrictive and precautionary regulations of states like California to survive while the more permissionless laws are pre-empted. If autonomous vehicles represent a fundamental change to ownership and a new least-cost complier, then maybe this relationship should also be reexamined.

Are we giving a federal regulator too much power?

Much of the proposed legislation delegates power to the National Highway Safety Transportation Administration (NHTSA). This raises concerns about the continued growth of the administrative state and the apparent preference of Congress to choose delegation over its own legislative authority.

While the bill adopts initial standards for driverless cars, the delegation of authority to NHTSA transfers the power for such regulation from Congress and the states to an administrative agency. The proposed legislation would place regulation of not only safety and design, but also cybersecurity for these vehicles with NHTSA. While NHTSA already regulates the automotive industry, this new delegation raises two questions. First, if the goal of delegation is to allow experts to make decisions, is NHTSA and expert when it comes to regulating cybersecurity of driverless cars? Second, how would NHTSA regulate and interact with those autonomous vehicle developers who are not currently automanufacturers and could this new delegation have spillover effects?

Does federal preemption provide legal clarity or not?

One of the arguments for federal preemption of state laws is that it provides legal clarity. This legal clarity, in turn, is seen to provide innovators with more certainty and more stability in which to pursue their innovation. In general, this is true, but the current patchwork of automotive, insurance, and tort law at a state level may not render certainty in this particular instance.

Insurance and tort law are primarily governed at a state level. Past attempts for federal preemption in these areas have failed. (For example a late 1990s push to preempt states from allowing no fault auto insurance.) As a result, states have the greatest common law experience in how to handle such issues when an accident involving a driverless car inevitably happens. If a federal law impacts how such vehicles are viewed, it may actually increase uncertainty regarding the existing common law for such issues.

Conclusion

There are still legal and regulatory questions to be worked out to both encourage and respond to driverless cars. The current situation at both a state and federal level raises questions as well as answers them. Still autonomous vehicles are poised to become one of the greatest innovative success stories of our lifetime.

On August 1, Sens. Mark Warner and Cory Gardner introduced the “Internet of Things  Cybersecurity Improvement Act of 2017.” The goal of the legislation according to its sponsors is to establish “minimum security requirements for federal procurements of connected devices.” Pointing to the growing number of connected devices and their use in prior cyber-attacks, the sponsors aims to provide flexible requirements that limit the vulnerabilities of such networks. Most specifically the bill requires all new Internet of Things (IoT) devices to be patchable, free of known vulnerabilities, and rely on standard protocols. Overall the legislation attempts to increase and standardize baseline security of connected devices, while still allowing innovation in the field to remain relatively permissionless. As Ryan Hagemann[1] at the Niskanen Center states, the bill is generally perceived as a step in the right direction in promoting security while limiting the potential harms of regulation to the overall innovation in the Internet of Things.

The proposed legislation only creates such security requirements for the Internet of Things products purchased by the government. As a result, it does not directly affect the perceived market failure in securing the Internet of Things for either state and local governments or consumers. As a result, it is possible that either further state or federal legislation could develop different security norms in these areas or allow the market to sort out what level of security is needed in such products. Similarly, innovators might create different versions of products for consumers as opposed to the government if they found the security requirements of the federal procurement laws unnecessary. At the same time, consumers and other levels of government might reject such products if they feel they are less secure. For example, states and federal governments have independently developed their protocols and requirements for security in IT and Telecommunications services, and while all require some level of security, the exact requirements may vary. While most consumers still expect or opt in to some level of security for their personal computers, there are different expectations in security protocols for government and medical computer networks. A similar phenomena could emerge in the Internet of Things where the devices procured by the government are more secure than those available to the average consumer.

Defining and quantifying the Internet of Things can be difficult as new connected devices from toasters to teddy bears continue to arrive seemingly daily. As Ariel Rabkin discusses the bill defines the scope of devices covered in a broad ambiguous term of “Internet-connected device” which could cover not only new connected devices but much more mundane and common general purpose items such as laptops and smart phones. This ambiguity presents a serious concern regarding the proposed legislation. Given the security guidelines are being issued by the Office of Management and Budget in conjunction with each executive agency, we could see issues in agency’s use of soft law in an attempt to get Internet of Things entrepreneurs to adopt such standards beyond the items which the government procures. Because the items covered by the proposed legislation is ambiguous, it also raises concerns of what happens to emerging technologies such as connected cars where current security standards are already being discussed by agencies and devices such as laptops and cell phones where there are existing government and agency standards. If not clarified such a broad definition has potential to create uncertainty if the agency-based security standards for procurement. While initial standards are aimed at federal procurement, the delegation to agencies of these standards could lead to broader could lead to agency threats more generally in the Internet of Things and the use of government procurement standards as a type of soft law to influence the pace and course of innovation.

The proposed legislation provides a basic start on limiting the liability for Internet of Things researchers and systems security architects especially when coupled with existing intermediary protections. Unlike the FTC’s strict liability data security rules, the proposed legislation carves out safe harbors for both good faith security research and testing and updating the Digital Millennium Copyright Act (DMCA) and Computer Fraud and Abuse Act (CFAA) to have safe harbors provided the device was in compliance with the issued guidelines under the new legislation. This, however, creates questions of liability for non-federal government purchasers. First, if the devices fail to comply with the proposed standards in the consumer market could the presence of a more secure government alternative be used to support a design defect argument as the availability of a reasonable alternative design? And if not for an individual consumer, then what about a state or local government. Under the proposed legislation, merely not complying with standards in a consumer grade product does not seem likely to give rise to a case against an Internet of Things producer. The proposed legislation also does not appear to adequately address a safe harbor for insufficient fix or a latent defect. While these situations should not immediately find a company negligent, there are concerns that an inefficient patch might exacerbate rather than solve a problem.  It also does not address a possible situation where a third party fails to update the security measures or the government in some way modifies existing protocols on the device inadvertently changing existing security features.

In general, the Internet of Things Cybersecurity Act of 2017 provides a base level of security that could lead to greater adoption by government entities without disrupting the innovation in the consumer market. At the same time its broad definition of the Internet of Things risks potential soft law abuse and its specificity to government procurement limits its potential broader impact on IoT security. If passed, the Internet of Things Cybersecurity Act might lead to promotion of security across devices and broader innovation in such protocols without requiring such technology into captivity.

[1] Ryan provided feedback on an earlier draft of this post.

“First electricity, now telephones. Sometimes I feel as if I were living in an H.G. Wells novel.” –Dowager Countess, Downton Abbey

Every technology we take for granted was once new, different, disruptive, and often ridiculed and resisted as a result. Electricity, telephones, trains, and television all caused widespread fears once in the way robots, artificial intelligence, and the internet of things do today. Typically it is realized by most that these fears are misplaced and overly pessimistic, the technology gets diffused and we can barely remember our life without it. But in the recent technopanics, there has been a concern that the legal system is not properly equipped to handle the possible harms or concerns from these new technologies. As a result, there are often calls to regulate or rein in their use.

In the late 1980s, video cassette recorders (VCRs) caused a legal technopanic. The concerns were less that VCRs would lead to some bizarre human mutation as in many technopanics, but rather that the existing system of copyright infringement and vicarious liability could not adequately address the potential harm to the motion picture industry. The then president of the Motion Picture Association of America Jack Valenti famously told Congress, “I say to you that the VCR is to the American film producer and the American public as the Boston Strangler is to the woman home alone.”

In the eyes of the film and television producers the legal system did not have the resources to protect their copyright or hold the manufacturers and distributors of these disruptive machines properly liable for their actions. The Ninth Circuit initially sided with the producers finding that recording of television programs for home-viewing was not part of a blanket fair use exception in copyright law and that the manufacturers and distributors of VCRs could be held vicariously liable for their actions. This was overturned at the Supreme Court by a single vote.

By denying the movie industry a victory, ironically, the courts actually handed them a much bigger one. By allowing for the widespread adoption of this technology, the courts actually provided a new line of profit for the studios in home video sales and did not cripple copyright law in the process. It also though shows that the process by and large works. Individuals who pirate or distributed copyrighted video material (remember the FBI warnings at the start of tapes) could still be held personally liable for their violations. If Congress had intervened, the actions would likely have been too broad or too narrow to give appropriate remedy as common law did. Similar concerns arise today with new creative techniques such as 3D printing, but typically it is best to at least let the common law attempt to address these concerns before deeming it incapable. This illustrates how liability norms can evolve naturally over time to strike a sensible balance.

This legal technopanic also emerged around the Internet. The global and anonymous nature of the Internet naturally make it more difficult to perceive the potential harms and to identify the perpetrators and gain jurisdiction over them. Or so the legal technopanic goes. Judge Easterbrook explained in his 1996 article Cyberspace and the Law of the Horse, “the law applicable to specialized endeavors is to study general rules.” Intellectual property law and property rights more generally are relatively well defined general rules. The beauty of the common law is its ability to adapt to a specific situation. Still there are concerns which may require interventions to be made. When necessary these interventions are especially important because, as John Villasenor wrote, “While technology is usually described as an enabler … liability is often described as an impediment.”

For example, Congress preemptively limited the liability of internet service providers in Section 230 of the Communications Decency Act. While there always seem to be concerns over this immunity when bad things happen on the internet, by and large the courts have been able to determine when the ISP was actively contributing to the violations of state and federal laws. In fact the protection provided by Section 230 merely codified the same principles at common law which lead to the protection of the VCR.

A little protection via legislation was necessary to allow the internet to flourish, but that protection was needed in part because of a legal technopanic. Similarly, Congress intervened to establish a notice-and-takedown procedure through the Digital Millennium Copyright Act (DMCA), when it became apparent that existing copyright law was not evolving as quickly as technology to address both the internet host and the copyright holders concerns. While ideally the common law would have been allowed to evolve to a conclusion on the issue, the sudden rise of YouTube and other online services necessitated at least a temporary intervention. Such legislation represents a compromise that likely would have resulted in a winner or loser if it had played out in the courts. As a result, while the common law is typically preferable sometimes legislation is necessary to at least temporarily establish a norm and stem the prevention of innovation from a possible legal technopanic.

By and large the courts have adapted disruptive technology as quickly or even more so then society, and as a result allowed the common law to see reason. Perhaps the moral of the story is as Edward Coke wrote in 1642, “The common law itself is nothing else but reason.”