Jenny Lee’s analysis of the House Committee on Energy & Commerce’s hearing that grilled the CEO’s of Facebook, Google, and Twitter regarding “Disinformation Nation: Social Media’s Role In Promoting Extremism And Misinformation.”
Jenny Lee is an expert in regulatory issues for technology companies and a partner at the law firm Arent Fox LLP. Prior to entering private practice she was an enforcement attorney at the Consumer Financial Protection Bureau (CFPB). Lee watched the House hearing today and makes these observations,
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What Will Happen After Today’s House Hearing
"As I predicted, the members of Congress, from both sides, demonstrated in today’s House hearing that the Congress is galvanized and ready to proceed with serious legislation," Lee says.
"The legislation that they discussed is interesting because it reflects earnest and bipartisan endeavors to solve a scattershot of multiple, distinct (but large) issues. They include: liability exemption for businesses, technology and innovation, the attention economy, children’s mental health, genocide, the global pandemic, Black Lives Matter, anti-conservative bias, and election interference," Lee says.
"The true test will be what happens in the days that follow today’s House hearing. It will be up to the industry, comprising both large and small Internet platforms, and lawmakers as well as agencies like the FTC, FCC, and CFPB, to put in the elbow grease to convert policy objectives into real legal proposals," Lee says.
"There are many pitfalls ahead, which merely reflect the enormity of the problems. In my view, these pitfalls include," Lee says.
Misunderstanding Of How Litigation Works
"A misunderstanding by all stakeholders regarding how litigation works. Many members emphasized that some categories of lawsuits are so important that, while big tech can keep the Section 230 exemption from liability for some matters, they should NOT retain the exemption if the underlying lawsuits are about: consumer protection violations. (Shakowsky for example said this.) The Senate Safe Tech Act has a similar model, but says not if the underlying lawsuit is for civil rights violations or injunctive relief. All sides seem to agree that one way to draw the line in the sand is to base it on what is legal versus illegal," Lee says.
"But the big problem with this approach is: it misconstrues what Section 230 liability exemption is. Defendants whom we assist in court will use motions to dismiss under rule 12(b)(6) to defend the case, dispose of it before trial, by invoking exemptions in statutes. It is circular and flawed reasoning for lawmakers to base the carveout on what is deemed a consumer protection violation. You cannot know if injunctive relief was warranted, or if a consumer protection violation was ruled to have happened, until AFTER THE CASE IS DONE. But the point of a liability exemption is that you need a shield to keep the case from getting going, and to stop the case before costly discovery and trial begins," Lee says.
"Otherwise, smaller companies will wind up being stifled by the enormous costs of defending litigation – so even if the injunction never turns out to be meritorious, companies need to spend money just to reach a ruling that they are not guilty," Lee says.
"The solution that is being proposed is flawed, because it does not allow the business to use the exemption until it is too late and the money has already been spent," Lee says.
"The solution that many people spoke about today fundamentally belies the nature of what an exemption is in court, under our country’s current rules of civil procedure," Lee says.
What We Want From The Governments Vs Private Corporations
"Another interesting problem that the hearing shone a spotlight on today:
"A taking is when the government seizes private property for public use. Today’s hearing reflects that we aren’t sure what we want governments to do versus what we want private corporations to do. Before, we relied on public services for things like legal protection, law enforcement investigation, and consumer protection. But now, Republicans and Democrats alike are imposing on the shoulders of private companies an amorphous obligation to nearly act as substitutes for government functions. One of the tech company CEO’s was grilled for the role that private companies in not doing enough to help law enforcement like the FBI. Many of the questions seem to suggest the incorrect conclusion that somehow making money is a crime, or somehow it is unlawful to do marketing to attract people to use your product. These oddities in the discussion are all reflective of this single tension: lawmakers not being able to ascertain what they should expect from private businesses in this industry," Lee says.
"Interestingly, a lawmaker said that tech companies are supposed to be “Good Samaritans.” But in the same hearing, lawmakers also said those same tech companies are not non-profits. Which is it?" Lee says.
"Section 230 anxiety creates a world in which we are seeing some strange bedfellows. Lawmakers who have traditionally been of the viewpoint that we should support free market economics, allow private corporations to run private businesses, and enact class action reform to stop calamitous rising class action litigation costs – these are the same lawmakers who are now saying we need to strip companies of their liability exemptions, mandate that they provide good to the public (asking them to, for example, combat not just illegal action like sex trafficking but also combat legal actions like bullying), and interfere with compliance departments when tech seeks in good-faith to follow their own internal corporate policies. In no other industry do we see this happen happening at this large of scale," Lee says.
The Natural Consequences
"What must businesses be looking ahead to prepare to do? The natural consequence of this is – to what degree, given the large societal questions posed by tech and Internet communications today – are we more comfortable with allowing government to do a so-called takings of private business, than we were before? Certainly the Internet is not private property belonging to any one company. But the platforms belong to the companies that made them," Lee says.
"Today’s hearing shows that Congress is poised to dig into unprecedented technology questions from multiple different angles, and there is bipartisan agreement that something must be done," Lee says.
"Lawmakers need to confront whether it is inconsistent to allow private businesses to flourish undisturbed in some contexts, but in this context, to not only interfere with private company operations but also to mandate that the offer certain kinds of services the government wants. The constituents may not fully appreciate this is what is happening," Lee says.
The Understanding Of Technology, Algorithms And Compliance Systems
Another issue that the hearing revealed:
"A continuing chasm between the understanding of technology, algorithms and compliance systems in Silicon Valley, versus among lawmakers. Many of the questions caused conversations where people were talking past each other. And some of this is because there is not equal footing between the two groups (regulators and the regulated) as compared to other industries. For example, if someone is speeding, everyone can understand that driving past the speed limit caused the car accident. So we understand the nature of the problem. This is not true of tech. Because the algorithms are so innovative and proprietary, it is difficult for lawmakers to even pinpoint the cause of the harm. The lawmakers are turning to outside experts and the regulated to provide answers on what must be regulated. This makes for a cumbersome dialogue, where the discussion is both fact-finding and conclusory at the same time," Lee says.
"In this context, business leaders have an opportunity to plan ahead and develop internal compliance systems that allay the concerns of lawmakers but is also consistent with their own business model," Lee says.
"Tech company leaders are also poised to develop clever solutions to multiple issues, and because confrontations with regulators and lawmakers are only likely to continue in the coming months, leaders in the industry would be well-advised to plan ahead for them," Lee says.