Media Regulation

[Co-authored with Connor Haaland and originally published on The Bridge as, “Do Our Leaders Believe in Free Speech and Online Freedom Anymore?”]

The president is a counterpuncher': Trump on familiar ground in ...A major policy battle has developed regarding the wisdom of regulating social media platforms in the United States, with the internet’s most important law potentially in the crosshairs. Leaders in both major parties are calling for sweeping regulation.

Specifically, President Trump and his presumptive opponent in the coming presidential election, former Vice President Joe Biden, have both called for “Section 230” of the Communications Decency Act to be repealed. Last week, the president took a misguided step in this direction by signing an executive order that, if fully carried out, will result in significantly greater regulation of the internet and of speech.

A Growing Call to Regulate Internet Platforms

The ramifications of these threats and steps could not be more profound. Without Section 230—also known as “the 26 words that created the internet”—we would have a much less advanced internet ecosystem. Twitter, Facebook, YouTube, and Wikipedia would have never grown as quickly. Indeed, the repeal of Section 230 means many fewer jobs, less information distribution, and, frankly, less joy.

Shockingly, by backing Trump’s recent push for regulating these internet platforms, many conservatives are betraying their own principles—the ones that support freedom of expression and the ability to run private businesses without government interference.

Section 230 limits the liability online intermediaries face for the content and communications that travel over their networks. The immunities granted by Section 230 let online speech and commerce flow freely, without the constant threat of legal action or onerous liability looming overhead for digital platforms. To put it another way, without this provision, today’s vibrant internet ecosystem likely would not exist. Continue reading →

President Trump and his allies have gone to war with social media sites and digital communications platforms like Twitter, Facebook, and Google. Decrying supposed anti-conservative “bias,” Trump has even floated an Executive Order aimed at “Preventing Online Censorship,” that entails many new forms of government meddling with these private speech platforms. Section 230 is their crosshairs and First Amendment restraints are being thrown to the wind.

Various others have already documented the many legal things wrong with Trump’s call for greater government oversight of private speech platforms. I want to focus on something slightly different here: The surprising ideological origins of what Trump and his allies are proposing. Because for those of us who are old-timers and have followed communications and media policy for many decades, this moment feels like deja vu all over again, but with the strange twist that supposed “conservatives” are calling for a form of communications collectivism that used to be the exclusive province of hard-core Leftists.

To begin, the truly crazy thing about President Trump and some conservatives saying that social media should be regulated as public forums is not just that they’re abandoning free speech rights, it’s that they’re betraying property rights, too. Treating private media like a “public square” entails a taking of private property. Amazingly, Trump and his followers have taken over the old “media access movement” and given it their own spin. Continue reading →

In the US there is a tangle of communications laws that were added over decades by Congress as–one-by-one–broadcast, cable, and satellite technologies transformed the TV marketplace. The primary TV laws are from 1976, 1984, and 1992, though Congress creates minor patches when the marketplace changes and commercial negotiations start to unravel.

Congress, to its great credit, largely has left alone Internet-based TV (namely, IPTV and vMVPDs) which has created a novel “problem”–too much TV. Internet-based TV, however, for years has put stress on the kludge-y legacy legal system we have, particularly the impenetrable mix of communications and copyright laws that regulates broadcast TV distribution.

Internet-based TV does two things–it undermines the current system with regulatory arbitrage but also shows how tons of diverse TV programming can be distributed to millions of households without Congress (and the FCC and the Copyright Office) injecting politics into the TV marketplace.

Locast TV is the latest Internet-based TV distributor to threaten to unravel parts the current system. In July, broadcast programmers sued Locast (its founder, David Goodfriend) and in September, Locast filed its own suit against the broadcast programmers.

A portion of US TV regulations.

Many readers will remember the 2014 Aereo decision from the Supreme Court. Much like Aereo, Locast TV captures free broadcast TV signals in the markets it operates and transmits the programming via the Internet to viewers in that market. That said, Locast isn’t Aereo.

Aereo’s position was that it could relay broadcast signals without paying broadcasters because it wasn’t a “cable company” (a critical category in copyright law). The majority of the Supreme Court disagreed; Aereo closed up shop.

Locast has a different position: it says it can relay broadcast signals without paying because it is a nonprofit.

It’s a plausible argument. Federal copyright law has a carveout allowing “nonprofit organizations” to relay broadcast signals without payment so long as the nonprofit operates “without any purpose of direct or indirect commercial advantage.”

The broadcasters are focusing on this latter provision, that any nonprofit taking advantage of the carveout mustn’t have commercial purpose. David Goodfriend, the Locast founder, is a lawyer and professor who, apparently, sought to abide by the law. However, the broadcasters argue, his past employment and commercial ties to pay-TV companies mean that the nonprofit is operating for commercial advantage.

It’s hard to say how a court will rule. Assuming a court takes up the major issues, judges will have to decide what “indirect commercial advantage” means. That’s a fact-intensive inquiry. The broadcasters will likely search for hot docs or other evidence that Locast is not a “real” nonprofit. Whatever the facts are, Locast’s arbitrage of the existing regulations is one that could be replicated.

Nobody likes the existing legacy TV regulation system: Broadcasters dislike being subject to compulsory licenses; Cable and satellite operators dislike being forced to carry some broadcast TV and to pay for a bizarre “retransmission” right. Copyright holders are largely sidelined in these artificial commercial negotiations. Wholesale reform–so that programming negotiations look more like the free-market world of Netflix and Hulu programming–would mean every party has give up something they like improve the overall system.

The Internet’s effect on traditional providers’ market share has been modest to date, but hopefully Congress will anticipate the changing marketplace before regulatory distortions become intolerable.

Additional reading: Adam Thierer & Brent Skorup, Video Marketplace Regulation: A Primer on the History of Television Regulation and Current Legislative Proposals (2014).

Originally published on 9/9/19 at The Bridge as, “Beware Calls for Government to ‘Save the Press‘”

—–

by Adam Thierer & Andrea O’Sullivan

Anytime someone proposes a top-down, government-directed “plan for journalism,” we should be a little wary. Journalism should not be treated like it’s a New Deal-era public works program or a struggling business sector requiring bailouts or an industrial policy plan.

Such ideas are both dangerous and unnecessary. Journalism is still thriving in America, and people have more access to more news content than ever before. The news business faces serious challenges and upheaval, but that does not mean central planning for journalism makes sense.

Unfortunately, some politicians and academics are once again insisting we need government action to “save journalism.” Senator and presidential candidate Bernie Sanders (D-VT) recently penned an op-ed for the Columbia Journalism Review that adds media consolidation and lack of union representation to the parade of horrors that is apparently destroying journalism. And a recent University of Chicago report warns that “digital platforms” like Facebook and Google “present formidable new threats to the news media that market forces, left to their own devices, will not be sufficient” to continue providing high-quality journalism.

Critics of the current media landscape are quick to offer policy interventions. “The Sanders scheme would add layers of regulatory supervision to the news business,” notes media critic Jack Shafer. Sanders promises to prevent or rollback media mergers, increase regulations on who can own what kinds of platforms, flex antitrust muscles against online distributors, and extend privileges to those employed by media outlets. The academics who penned the University of Chicago report recommend public funding for journalism, regulations that “ensure necessary transparency regarding information flows and algorithms,” and rolling back liability protections for platforms afforded through Section 230 of the Communications Decency Act.

Both plans feature government subsidies, too. Sen. Sanders proposes “taxing targeted ads and using the revenue to fund nonprofit civic-minded media” as part of a broader effort “to substantially increase funding for programs that support public media’s news-gathering operations at the local level.” The Chicago plan proposed a taxpayer-funded $50 media voucher that each citizen will then be able to spend on an eligible media operation of their choice. Such ideas have been floated before and the problems are still numerous. Apparently, “saving journalism” requires that media be placed on the public dole and become a ward of the state. Socializing media in order to save it seems like a bad plan in a country that cherishes the First Amendment. Continue reading →

Slate recently published an astonishing piece of revisionist history under the title, “Bring Back the Golden Age of Broadcast Regulation,” which suggested that the old media regulatory model of the past would be appropriate for modern digital media providers and platforms. In the essay, April Glaser suggests that policymakers should resurrect the Fairness Doctrine and a host of old Analog Era content controls to let regulatory bureaucrats address Digital Age content moderation concerns.

In a tweetstorm, I highlighted a few examples of why the so-called Golden Era wasn’t so golden in practice. I began by noting that the piece ignores the troubling history of FCC speech controls and unintended consequences of regulation. That regime gave us limited, bland choices–and a whole host of First Amendment violations. We moved away from that regulatory model for very good reasons.

For those glorifying the Fairness Doctrine, I encourage them to read the great Nat Hentoff’s excellent essay, “The History & Possible Revival of the Fairness Doctrine,” about the real-world experience of life under the FCC’s threatening eye. Hentoff notes: Continue reading →

Bots and Pirates

by on December 4, 2018 · 0 comments

A series of recent studies have shown the centrality of social media bots to the spread of “low credibility” information online. Automated amplification, the process by which bots help share each other’s content, allows these algorithmic manipulators to spread false information across social media in seconds by increasing visibility. These findings, combined with the already rising public perception of social media as harmful to democracy, are likely to motivate some Congressional action regarding social media practices. In a divided Congress, one thing that seems to be drawing more bipartisan support is an antagonism to Big Tech.

Regulating social media to stop misinformation would mistake the symptoms of an illness for its cause. Bots spreading low quality content online is not a cause for declining social trust, but a result of it. Actions that explicitly restrict access to this type of information would likely result in the opposite of their intended effect; allowing people to believe more radical conspiracies and claim that the truth is censored.

A parallel for the prevalence of bots spreading information today is the high rates of media piracy that lasted from the late-1990s through the mid-2000s, but experienced a significant decline throughout this past decade (many of the claims by anti-piracy advocates of consistently rising US piracy fail to acknowledge the rise in file sizes of high quality downloads and the expansion of internet access, as a relative total of content consumption it was historically declining). Content piracy and automated amplification by bots share a relationship through their fulfillment of consumer demand. Just as nobody would pirate videos if there were not some added value over legal video access, bots would not be able to generate legitimate engagement solely by gaming algorithms. There exists a gap in the market to serve consumers the type of content that they desire in a convenient, easy-to-access form.

This fulfilment of market demand is what changed consumer interest in piracy, and it is what is needed to change interest in “low credibility” content. In the early days of the MP3 file format the music industry strongly resisted changing their business models, which led to the proliferation of file sharing sites like Napster. While lawsuits may have shut down individual file sharing sites, they did not alter the demand for pirated content, and piracy persisted. The music industry’s begrudging adoption of iTunes began to change these incentives, but pirated music streaming persisted. It was with legal streaming services like Spotify that piracy began to decline as consumers began to receive what they asked for from legitimate sources: convenience and cheap access to content. It is important to note that pirating in the early days was not convenient, malware and slow download speeds made it a cumbersome affair, but given the laggard nature of media industry incumbents, consumers sought it out nonetheless.

The type of content considered “low credibility” today, similarly, is not convenient, as clickbait and horrible formatting intentionally make such sites painful to use in order to maximize advertising dollars extracted. The fact that consumers still seek these sites out regardless is a testament to the failure of the news industry to cater to consumer demands.

To reduce the efficacy of bots in sharing content, innovation is needed in content production or distribution to ensure convenience, low cost, and subjective user trust. This innovation may come from the social media side through experimentation with subscription services less dependent on advertising revenue. It may come from news media, either through changes in how they cater content to consumers, or through changes in reporting styles to increase engagement. It may even come through a social transformation in how news is consumed. Some thinkers believe that we are entering a reputation age, which would shift the burden of trust from a publication to individual reporters who curate our content. These changes, however, would be hampered by some of the proposed means to curtail bots on social media.

The most prominent proposals to regulate social media regards applying traditional publisher standards to online platforms through the repeal of Section 230 of the Communications Decency Act, which in turn would make platforms liable for the content users post. While this would certainly incentivize more aggressive action against online bots – as well as a wide amount of borderline content – the compliance costs would be tremendous given the scale at which social media sites need to moderate content. This in turn would price out the innovators who would not be able to stomach the risks of having fewer bots than Twitter or Facebook, but still have some prevalent. Other proposals, such as the Californian ban on bots pretending to be human, reviving the Fairness Doctrine for online content, or antitrust action, range from unenforceable to counterproductive.

As iTunes, Spotify, Netflix, and other digital media platforms were innovating in the ways to deliver content to consumers, piracy enforcement gained strength to limit copyright violations, to little effect. While piracy as a problem may not have disappeared, it is clear that regulatory efforts to crack it down contributed little, since the demand for pirated content did not stem purely from the medium of its transmission. Bots do not proliferate because of social media, but because of declining social trust. Rebuilding that trust requires building the new, not constraining the old.

 

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.

Continue reading →

For decades, cities, the FCC, and Congress have mandated that cable TV operators carry certain types of TV programming, including public access channels, local broadcast channels, local public television, and children’s programming. These carriage mandates have generated several First Amendment lawsuits but cable operators have generally lost. Cable operators have junior varsity First Amendment rights and the content they distribute is more regulated than, say, newspapers, Internet service providers, search engines, and Netflix. I submitted public interest comments (with JP Mohler) to the FCC this week explaining why cable operators would likely win today if they litigated these cable carriage regulations.

Regulations requiring newspapers, book publishers, or Internet service providers to carry the government’s preferred types of content are subject to strict scrutiny, which means such regulations typically don’t survive. However, cable is different, the Supreme Court held in the 1994 Turner case. The Supreme Court said regulations about what cable operators must carry are subject to intermediate–not strict–scrutiny because cable operators (in 1994) possessed about 95% of the subscription TV market and nearly every household had a single choice for subscription TV–their local cable monopoly. In the words of the Supreme Court, cable’s content regulations “are justified by the special characteristics of the cable medium: the bottleneck monopoly power exercised by cable operators.”

As a result, the FCC enforces “leased access” regulations that require cable operators to leave blank certain TV channels and give non-affiliated programmers a chance to use that channel capacity and gain viewership. Cable operators in the 1990s sued the FCC for enforcing these regulations in a 1996 case called Time Warner v. FCC. The DC Circuit relied on the 1994 Turner case and upheld the leased access rules.

Recently, however, the FCC asked whether First Amendment interests or TV competition requires giving these regulations another look. In our public interest comment, JP and I say that these rules have outlived their usefulness and cable operators would likely win a First Amendment lawsuit against the FCC today.

Two things have changed. First, cable operators have lost their “bottleneck monopoly power” that justified, in the eyes of the Supreme Court in 1994, giving cable operators weakened First Amendment protection.

Unlike in the 1990s, cable operators face significant competition in most local markets from satellite and telco TV providers. Over 99 percent of US households have at least three pay-TV options, and cable has lost over 15 million subscriber households since 2002. In 1997, when Turner II was decided, cable had over 90 percent of the pay-TV market. Cable operators’ market share has shrunk nearly every year since, and in 2015 cable had around 54 percent market share.

This competitive marketplace has stimulated massive investment and choice in TV programming. The typical household has access to far more channels than in the past. Independent researchers found that a typical US household in 1999 received about 50 TV channels. By 2014, the typical household received over 200 TV channels. In 2018, there will be an estimated 520 scripted TV series available, which is up nearly 50 percent from just five years ago.

This emergence of TV competition and its beneficial effects in programming and consumer choice undermines the justification for upholding cable content regulations like leased access.

Second, courts are more likely to view the Supreme Court’s Denver decision about leased access regulations in a new light.  In Denver, the Supreme Court divided into concurrences as to the proper First Amendment category of cable operators, and whether intermediate or strict scrutiny should apply to the leased access laws at issue. The “Marks test” is the test lower courts use for determining the holding of a Supreme Court decision where there is no majority supporting the rationale of any opinion. Viewed through the lens of the prevailing Marks test, cable operators are entitled to “bookstore owner” status for First Amendment purposes:

Given that four justices in Denver concur that one of the potential bases for deciding cable’s First Amendment status is the classification of cable operators as bookstores and three justices concur that this classification is the definitive justification for the judgment, the narrowest grounds for resolving the issue is simply this latter justification. Under the prevailing Marks test, then, lower courts will apply strict scrutiny to the leased access rules in light of the Denver decision.

For these reasons, and the need to conserve agency resources for more pressing matters, like rural broadband deployment and spectrum auctions, we encourage the FCC to discontinue these regulations.

You can read our public interest comment about the leased access regulations at the Mercatus Center website.

Leased Access Mandates Infringe on the First Amendment Rights of Cable Operators, and the FCC Should Decline to Enforce the Regulations

With Facebook CEO Mark Zuckerberg in town this week for a political flogging, you might think that this is darkest hour for the social networking giant. Facebook stands at a regulatory crossroads, to be sure. But allow me to offer a cynical take, and one based on history: Facebook is potentially poised to score its greatest victory ever as it begins the transition to regulated monopoly status, solidifying its market power, and limiting threats from new rivals.

By slowly capitulating to critics (both here and abroad) who are thirsty for massive regulation of the data-driven economy, Facebook is setting itself up as a servant of the state. In the name of satisfying some amorphous political “public interest” standard and fulfilling a variety of corporate responsibility objectives, Facebook will gradually allow itself to be converted into a sort of digital public utility or electronic essential facility.

That sounds like trouble for the firm until you realize that Facebook is one of the few companies who will be able to sacrifice a pound of flesh like that and remain alive. As layers of new regulatory obligations are applied, barriers to new innovations will become formidable obstacles to the very competitors that the public so desperately needs right now to offer us better alternatives. Gradually, Facebook will recognize this and go along with the regulatory schemes. And then eventually they will become the biggest defender of all of it.

Welcome to Facebook’s broadcast industry moment. The firm is essentially in the same position the broadcast sector was about a century ago when it started cozying up to federal lawmakers. Over time, broadcasters would warmly embrace an expansive licensing regime that would allow all parties—regulatory advocates, academics, lawmakers, bureaucrats, and even the broadcasters themselves—to play out the fairy tale that broadcasters would be good “public stewards” of the “public airwaves” to serve the “public interest.”

Alas, the actual listening and viewing public got royally shafted in this deal. Continue reading →

Broadcast license renewal challenges have troubled libertarians and free speech advocates for decades. Despite our efforts (and our law journal articles on the abuse of the licensing process), license challenges are legal. In fact, political parties, prior FCCs, and activist groups have encouraged license challenges based on TV content to ensure broadcasters are operating in “the public interest.” Further, courts have compelled and will compel a reluctant FCC to investigate “news distortion” and other violations of FCC broadcast rules. It’s a troubling state of affairs that has been pushed back into relevancy because FCC license challenges are in the news.

In recent years the FCC, whether led by Democrats or Republicans, has preferred to avoid tricky questions surrounding license renewals. Chairman Pai, like most recent FCC chairs, has been an outspoken defender of First Amendment protections and norms. He opposed, for instance, the Obama FCC’s attempt to survey broadcast newsrooms about their coverage. He also penned an op-ed bringing attention to the fact that federal NSF funding was being used by left-leaning researchers to monitor and combat “misinformation and propaganda” on social media.

The silence of the Republican commissioners today about license renewals is likely primarily because they have higher priorities (like broadband deployment and freeing up spectrum) than intervening in the competitive media marketplace. But second, and less understood, is because whether to investigate a news station isn’t really up to them. Courts can overrule them and compel an investigation.

Political actors have used FCC licensing procedures for decades to silence political opponents and unfavorable media. For reasons I won’t explore here, TV and radio broadcasters have diminished First Amendment rights and the public is permitted to challenge their licenses at renewal time.

So, progressive “citizens groups” even in recent years have challenged license renewals for broadcasters for “one-sided programming.” Unfortunately, it works. For instance, in 2004 the promises of multi-year renewal challenges from outside groups and the risk of payback from a Democrat FCC forced broadcast stations to trim a documentary critical of John Kerry from 40 minutes to 4 minutes. And, unlike their cable counterparts, broadcasters censor nude scenes in TV and movies because even a Janet Jackson Superbowl scenario can lead to expensive license challenges.

These troubling licensing procedures and pressure points were largely unknown to most people, but, on October 11, President Trump tweeted:

“With all of the Fake News coming out of NBC and the Networks, at what point is it appropriate to challenge their License? Bad for country!”

So why hasn’t the FCC said they won’t investigate NBC and other broadcast station owners? It may be because courts can compel the FCC to investigate “news distortion.”

This is exactly what happened to the Clinton FCC. As Melody Calkins and I wrote in August about the FCC’s news distortion rule:

Though uncodified and not strictly enforced, the rule was reiterated in the FCC’s 2008 broadcast guidelines. The outline of the rule was laid out in the 1998 case Serafyn v. CBS, involving a complaint by a Ukrainian-American who alleged that the “60 Minutes” news program had unfairly edited interviews to portray Ukrainians as backwards and anti-Semitic. The FCC dismissed the complaint but DC Circuit Court reversed that dismissal and required FCC intervention. (CBS settled and the complaint was dropped before the FCC could intervene.)

The commissioners might personally wish broadcasters had full First Amendment protections and want to dismiss all challenges but current law permits and encourages license challenges. The commission can be compelled to act because of the sins of omission of prior FCCs: deciding to retain the news distortion rule and other antiquated “public interest” regulations for broadcasters. The existence of these old media rules mean the FCC’s hands are tied.