ONCE the giants of the internet could do no wrong. Now they are a favourite target of politicians everywhere. Europe’s finance ministers are discussing ways to increase taxes on digital services. Theresa May, Britain’s prime minister, this week demanded that social-media platforms be able to take down terrorist material within two hours. In America Facebook’s bosses must soon tell Congress what role users tied to Russia played in last year’s presidential campaign.
Much of this is still political theatre. But not all. America’s Senate is contemplating the Stop Enabling Sex Traffickers Act (SESTA), a bipartisan bill that seeks to deter sex trafficking by ensuring that the Communications Decency Act (CDA) does not protect online services, such as Backpage.com, notorious for making money with sex-trafficking ads (see article). Should the bill pass, a wave of lawsuits against social-media platforms is likely to follow.
SESTA highlights a growing problem with which many governments are grappling: how online firms should be held liable for illegal content that is published on their platforms. From October, Germany will require firms to take down hate speech and fake news within 24 hours, or face fines of up to €50m ($60m). Yet the debate over SESTA is especially important. It could end up being the model for other areas, chilling free speech and innovation.
If the internet and some of the firms it has spawned have taken over the world, this is the result not simply of entrepreneurial brilliance but also of an implicit subsidy. In America and Europe online platforms have until now inhabited a parallel legal universe. Broadly speaking, relevant media laws-in particular the CDA-exempt them from liability for what their users do or for the harm that their services can cause.
This made sense in the early days of the internet, when it was still a sideshow. Ruinous lawsuits might have crushed then-infant digital ventures. But today online firms have come to dominate entire industries. They can also no longer be considered neutral conduits for information, like telecoms carriers. Facebook’s algorithms, for instance, determine what members see in their news feeds. The words and deeds of online ghouls have consequences in the real world.
SESTA has a worthy aim. Yet it is too broad. It greatly expands the definition of enabling sex trafficking, including ten actions, from advertising to transporting. It would also let state attorneys-general and civil claimants sue online platforms. A deluge of lawsuits is likely. In general, big tech firms can afford such programmes, but startups may face bankruptcy. Both will want to avoid trouble by erring on the side of safety, curbing free speech.
Rather than attempt to define precisely what material is banned-which invites arguments-the law should instead require firms only to follow a reasonable, transparent process by which they decide what to take down. That would cover sites like Backpage.com and limit potential lawsuits. It should take into account differences in size. Smaller firms could be held to a different standard, depending on their resources and business models. Widely accessible sites could be more tightly regulated than those with a restricted audience.
The drawback is that this turns online firms, especially big ones, into arbiters of acceptable speech. But it would be preferable to a series of all-controlling, SESTA-like laws, which could ultimately turn them into regulated utilities (see Schumpeter). To avoid that fate, they need to realise that, as the dominant actors of the digital age, they bear special responsibility.