Facebook Should Face Liability Over Ads, House Democrat Says

(Bloomberg) -- U.S. lawmakers should look into increasing liability for online platforms such as Facebook Inc. for ads and other commercial speech, a top House Democrat said on Wednesday.

The comments by Representative Jan Schakowsky of Illinois, chairwoman of a subcommittee that has taken the lead in shaping an online privacy bill, come as a legal shield protecting the companies from lawsuits over third-party content is under increasing attack from both parties in Washington.

Advocates of the legal immunity, known as Section 230 of the Communications Decency Act, have argued it protects free speech online by encouraging social media platforms to leave up controversial content, although it also protects their efforts to remove objectionable posts

“We must draw bright lines that make clear that commerce is not the same thing and should not be confused with speech,” Schakowsky said during a Wednesday webinar with tech critics. “Making money online and selling advertising is not the same as free speech.”

Increasing liability for online ads would attack the lucrative heart of business models at Facebook, which generated almost $71 billion in revenue in 2019, as well as sales at Google’s parent company Alphabet Inc., which brought in $162 billion that year.Schakowsky suggested changes that applied to commercial speech could target other tech companies as well, citing Airbnb Inc., which has used Section 230 to push back on regulations of the short-term rentals that users post on the site. Although Section 230 does not apply to content that Amazon.com Inc. generates itself, the e-commerce giant also has a thriving marketplace for third-party sellers.

Schakowsky in January said her staff was looking into tweaking the legal shield as a way to encourage the companies to police election misinformation. Although she had said she was trying to finalize a bill in March, that measure is now on track for the summer, according to a Democratic staff member familiar with the process.

She has also complained about companies that allow false advertising and defective products, which she cited on Wednesday. Schakowsky said Facebook has not responded to her calls to stop the sale of infant sleep products on its platforms, after the Consumer Product Safety Commission recalled more than five million of them.

Schakowsky also repeated her opposition to including language resembling the legal immunity in U.S. trade agreements -- a concern echoed by several top Republicans and Democrats.

Both parties have increasingly pushed to reexamine the provision, although they don’t always agree on solutions. In May, after Twitter Inc. added fact-checking information to a post from Donald Trump that contained misinformation about voting, the president signed an executive order aiming to limit the shield in cases in which social media companies take down or limit political content. Legal scholars pointed out several problems that could stop the plan from ever taking effect and Democrats slammed the effort.Asked about Schakowsky’s proposal, a Facebook spokesman referred to the company’s response to Trump’s order.

“By exposing companies to potential liability for everything that billions of people around the world say, this would penalize companies that choose to allow controversial speech and encourage platforms to censor anything that might offend anyone,” the company said in the statement.

The company spokesman said it would respond to Schakowsky about the listings for sleepers, which it removes when it becomes aware of them. Airbnb and Google did not immediately return a request for comment.

It was unclear Wednesday how Schakowsky would design a bill, what kinds of commercial speech would lose legal protections and whether the idea could gain support from fellow Democrats or Republicans.

Both defenders and foes of Section 230 say it’s become a focus of anger at the platforms, some of which originates in decisions about content moderation but can also extend to concerns about privacy and market power.

The American Economic Liberties Project, which is allied with Democrats and argues for stepped-up antitrust enforcement, said in a Wednesday policy paper that Google and Facebook should be broken up, face regulation and lose Section 230 immunity if they continue to profit from advertising. The policy group said the companies had a negative effect on democracy.

Democrats’ concerns about Section 230 have usually focused on urging the removal of racist content, hate speech and election misinformation. Republicans have sought to have more of their content -- which they say gets silenced in those sweeps -- remain on the sites. The split has limited bipartisan agreement on making changes to the law.

“If half of the potential votes in Congress want to change this to push in the direction of more removals and the other half wants to change to push in the direction of fewer removals, that’s pretty hard to reconcile and keep the legislation,” said Daphne Keller, a lecturer at Stanford University’s law school.

Still, Keller said that the controversy around Trump’s order, which tech groups and Democrats slammed as an attack on free speech, could provide a spotlight for counter-proposals.

“This creates a really good media moment to introduce your bill if you’re one of those people who want to change CDA 230 already,” said Keller, a former lawyer for Google.

(Updates with additional Schakowsky comments from sixth paragraph.)

For more articles like this, please visit us at bloomberg.com