Tech Policy Trends 2021 | DSA and Section 230: Shifting Intermediary Liability Regime

Tech Policy Trends 2021 | DSA and Section 230: Shifting Intermediary Liability Regime

Following over two decades of uninterrupted and loosely regulated growth, tech companies are now under an increasingly powerful microscope in Washington and Brussels alike. With lawmakers exploring legislative action to reform platform liability protections, 2021 may be the year in which the EU and US reshape the intermediary liability regime as we know it.

Europe: A New Wave of Tech Protectionism

In Europe, lawmakers have long taken a pre-emptive approach to regulation, with special attention paid to foreign companies. The EU confidently, and publicly, condemns non-EU companies for monetising data generated by EU consumers, while enabling the dissemination of illegal content and goods. Turning to regulation to increase companies’ responsibility and overall transparency, the European Commission presented its new rulebook for the digital economy, the Digital Services Act (DSA), in December 2020.

Under the new rules, online platforms will have to vet third-party suppliers with identity checks and warn law enforcement if they have suspicions relating to criminal offences. Further, once made aware of illegal content, platforms will no longer benefit from liability exemptions. They will also need to share data relating to illegal content moderation and meet stricter advertising transparency requirements.

Under the DSA, companies must inform consumers about who is paying for the ads they see and why users are targeted. Failure to comply with these rules could result in fines of up to 6% of annual turnover, depending on the severity and frequency of the violation. In addition to increasing the responsibilities of tech companies towards their customers, the DSA is the embodiment of a new wave of tech protectionism in Europe. Driven largely by the concept of technological sovereignty, Brussels is creating new frameworks for the tech industry. Emboldened by the global impact of the General Data Protection Regulation (GDPR), the EU will also look at the DSA to set international standards for the responsibilities of these companies moving forward.

Washington: A New Approach

Meanwhile, in Washington, Section 230 of the Communications Decency Act (47 USC §230) has become a driving focus of the Trump Administration. The 1996 law helps shield “interactive computer services”, including online platforms, from liability by ensuring they are (1) not treated as a publisher or speaker of third-party content and (2) not held liable for efforts to moderate content in “good faith”. This legal shield has powered US innovation across the digital economy for decades and has helped Silicon Valley start-ups grow into the global powerhouses they are today.

However, calls to reform Section 230 have grown louder from lawmakers on both sides of the aisle. With Democrats often citing the need for platforms to more effectively moderate violent content and misinformation, Republicans have voiced concerns about tech companies censoring conservative viewpoints. Thus, the 116th Congress saw a range of legislative proposals introduced to revamp the 1996 liability shield. Bipartisan proposals ranged from the Platform Accountability and Consumer Transparency (PACT) Act, which would require Internet computer services to maintain an acceptable use policy, establish a complaint management system and comply with 24-hour takedown requests, to the Eliminating Abusive and Rampant Neglect of Interactive Technologies (EARN IT) Act of 2020, which creates a Section 230 carve-out for cases relating to child sexual exploitation.

Partisan bills included Senator Lindsey Graham’s [R-SC] Online Content Policy Modernization Act, which eliminates the “otherwise objectionable” category of content and narrows the scope of moderation actions protected under the statute, to the Department of Justice’s proposal that removes immunity for providers “purposefully” promoting certain material online and opens companies up to new civil and criminal liabilities.

Within the executive branch, President Trump published an Executive Order on Preventing Online Censorship in May 2020. In this EO, the White House tasked the Commerce Department with filing a petition for rulemaking through the Federal Communications Commission (FCC) to propose new regulations to “clarify” Section 230. While Republican FCC Chairman Ajit Pai announced his intent to move forward with the rulemaking, he will be stepping down in January 2021, when the new administration assumes office. While we do not expect further rulemaking on Section 230 from the FCC, however, future congressional action is likely.

Given bipartisan support to reform the statute, and President-elect Biden’s interview with the New York Times in which he stated “Section 230 should be revoked, immediately”, further legislative action is expected.

Transatlantic Shift

While the US and the EU have historically been at odds when it comes to regulating the tech industry, recent policy developments indicate a transatlantic shift in how lawmakers aim to hold platforms accountable and limit the liability protections afforded to these companies. Further, the Commission’s ambitious EU-US agenda for global change, which recommends that Washington and Brussels “join forces as tech-allies to shape technologies, their use and their regulatory environment”, could pave the way for closer cooperation and policy convergence under the next administration. This potential alignment represents a unique opportunity for industry to help define the parameters of a future EU-US global policy agenda and help shape the future intermediary liability regime across the Atlantic.

Recommendations

  • As tech policy continues to develop, any company operating online should examine the EU’s proposal in order to identify potential emerging compliance risks.
  • With Brussels policymaking being driven by the concept of digital sovereignty, non-EU businesses should prepare for growing protectionism in the EU.
  • US companies should monitor discussions surrounding Section 230 reform and engage Congress to inform a more thoughtful, forward-looking approach.
  • For industry stakeholders, it will be important to take a broad, transatlantic perspective and aim to engage in both blocks to help define the emerging EU-US tech policy agenda.

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