The Big Story: FCC review of Section 230 draws hundreds of comments. The Federal Communications Commission this week received hundreds of public comments in response to a petition from the Trump administration that asks the FCC to rewrite existing law in order to expose Internet companies that host and moderate user-generated content to new legal liability for user posts. Engine submitted comments explaining that the proposed changes are based on unsupported claims and would actually harm innovation and competition in the Internet ecosystem by making it more risky and costly to host and moderate user-generated content.
The petition from the National Telecommunications and Information Administration asks the FCC to review Section 230 of the Communications Decency Act and fundamentally change the nature of the law’s liability limitations. But rewriting Section 230—especially over false claims about Internet platforms’ political bias and with a misunderstanding of the state of today’s Internet ecosystem and the many players who rely on Section 230—would have a devastating impact on the Internet ecosystem and thousands of mostly small, early-stage platforms.
As Engine pointed out in comments submitted to the FCC, the Trump administration’s petition is based largely on unsubstantiated allegations about Section 230 and misleading claims about the law’s impact on digital competition. The petition lacks any empirical evidence to back up its claims of political bias on the part of Internet companies and argues that the Internet ecosystem has matured to the point of no longer needing Section 230. It also drastically overstates the availability and efficacy of content moderation technology, and makes unfounded claims that the law somehow harms small and new competitors. Even putting aside the flawed thinking behind the policy changes the petition suggests, those changes would have a devastating impact on the thousands of new and small platforms that can rely on Section 230 to defend against meritless lawsuits that would otherwise cost hundreds of thousands of dollars to dismiss. As our comments make clear, if policymakers want to promote competition amongst online platforms and free expression online, they should focus on strengthening—not dismantling—Section 230.
Policy Roundup:
White House interviewing replacements for FTC chair. White House officials are reportedly interviewing candidates to replace Federal Trade Commission Chairman Joseph Simons, despite the fact that his term with the agency doesn’t end until September 2024, he hasn’t expressed his intent to leave the agency, and he cannot legally be replaced except for gross negligence. It was reported last week that President Donald Trump personally pressured Simons to take action against major Internet platforms over allegations of political bias. Simons told a Senate panel last month that the FTC lacks the authority to enforce President Trump’s May executive order on “preventing online censorship.” Last month, the Trump administration withdrew the renomination of Republican Federal Communications Commission Commissioner Mike O'Rielly because he wasn’t supportive enough of the president’s executive order targeting Internet companies.
What the EU-U.S. Privacy Shield rollback means for U.S. startups. In a Medium post, Lourdes Turrecha—the Founder and CEO of data privacy consulting firm PIX—examines how U.S. startups have been affected by the European Court of Justice’s July decision to strike down the EU-U.S. Privacy Shield, which allowed U.S. firms to process and store European users’ data in the U.S. Turrecha looks at the post-Privacy Shield options available to U.S. startups that deal with EU-to-U.S. data transfers, and finds that many data transfer alternatives—such as individual data transfer agreements outside of Privacy Shield’s framework, like Standard Contractual Clauses—pose challenges for the startup community. As we noted after Europe’s top court struck down Privacy Shield, U.S. startups that can’t find alternative ways to comply with the European Union’s data privacy requirements might be forced to abandon the European market until a new data transfer framework is negotiated.
Tech companies increase prices for UK customers following implementation of digital services tax. Over the past several weeks, large U.S. tech companies have announced price increases for enterprise customers based in the United Kingdom following the country’s implementation of a two percent digital services tax (DST) on Internet companies that have a global revenue of £500 million ($663 million), with at least £25 million ($33 million) of that deriving from UK users. The price increases will affect developers, ad buyers, and third-party sellers that operate in the UK. The UK’s levy, which went into effect earlier this year, comes as other European countries have delayed implementation of their own DSTs in order to give the Organisation for Economic Co-operation and Development time to reach an agreement on a global tech tax before the end of the year. As we previously noted, a country-by-country implementation of DSTs—which are largely targeted at U.S. companies—will likely lead to the added administrative burden and tax liability of these levies being passed down to startups and other users of affected platforms in the form of higher service costs.
California consumer protection bill won’t move forward at this time. California Assemblymember Mark Stone, who introduced controversial legislation—AB 3262—that would hold “electronic retail marketspaces” to the same product liability standards as traditional retailers, announced that the legislation “will not advance in its present form by the legislative deadline” following pushback from large and small e-commerce platforms.
Startup Roundup:
#StartupsEverywhere: St. Augustine, Florida. With an entrepreneurial background and experience with influencer-based marketing, Monica Merrill—the Founder and CEO of FlipperSplash—created a platform where small businesses can partner with influencers to effectively market their products and services to a wider audience. We recently spoke with Monica to learn more about FlipperSplash, how brands have been affected by the pandemic, and the goals of the startup moving forward.
