Welcome to The Corner. In this issue, we look at the potential effects of the Supreme Court’s review of Section 230. We also describe a new Open Markets report that details the dangers of a new carbon credits scheme run by Big Ag.

Google’s Section 230 Arguments to Court Highlight Need for Enforcers to impose Non-Discrimination Rules on Platforms

Karina Montoya

Last week, the U.S. Supreme Court spent two days hearing the oral arguments in two cases that challenge the liability shield granted to digital platforms under Section 230 of the 1996 Communications Decency Act. At the end of the sessions, the justices were more bewildered than clear-headed about how to rule. At one point, Justice Elena Kagan warned it would be better for Congress to take on the challenges to Section 230 — an observation that seemed more and more true as the proceedings unfolded.

The justices heard one case that directly involves Section 230, and another one related to it. In Gonzalez v. Google the defendant claims that Section 230 protects the company from liability for videos posted by its subsidiary YouTube that may have inspired acts of terrorism by ISIS. In Twitter v. Taamneh, the platform now controlled by Elon Musk similarly argues that it is not responsible for “aiding and abetting” ISIS terrorists even though its algorithms pushed ISIS content to some users.

Let’s recall that Section 230, which is sometimes referred to as the “twenty-six words that created the internet,” has two main provisions. One allows what it calls “interactive computer services” to escape liability for the third-party content they carry; the other gives them the right to not post or publish any content they don’t want to.

That’s a potent combination of legal privileges that no other kind of corporate entity has ever enjoyed. Traditional publishers, for example, are free to pick and choose what and whom they publish but can be sued for libel. Phone companies, by contrast, are not held responsible for what people say on the phone, yet they have no ability to censor what is transmitted. But Section 230 gives digital platforms all the privileges traditionally granted to publishers and to communication networks respectively without imposing any of the traditional corresponding responsibilities.

The statute also fails to define what “interactive computer services” are. Congress clearly had in mind 1990s-era chat rooms and bulletin boards, but today giant platform monopolies like Google insist that it applies to them, too, at least some of the time. For example, responding to questioning by Justice Ketanji Brown Jackson, Google’s attorney acknowledged that YouTube sometimes acts as a publisher — and is, therefore, subject to libel laws — but could not articulate exactly when that would be the case. According to its attorney, whether Google is a publisher or not depends on whether its algorithmically organized content is a “feature” or something “inherent to publishing.”

This fuzzy, never-before-heard formulation opened the door for Justice Amy Coney Barrett to ask if the same logic would apply if YouTube’s algorithms are not truly “neutral.” Google’s attorney answered that Section 230 is a crystal-clear law that frees platforms from any liability as long as they are dealing with third-party content. But Justices Jackson and Barrett were not convinced.

And for good reason. YouTube’s algorithms aren’t neutral; they make editorial choices to elevate some messages and not others, just like publishers do. Yet under Section 230, digital platforms retain the right to “de-platform” or discriminate against any voice they like for reasons that could range from limiting hate speech to deprioritizing non-engaging content in order to drive profits.

Congress made Section 230 the law of the land, and though it may be incoherent at its core, it’s hardly unconstitutional. So there’s not much the Supreme Court can or should do about it without usurping Congress’ prerogative. Instead, as Open Markets Institute senior policy analyst Daniel Hanley has written, law enforcers should do a better job of applying existing competition law, and Congress should prepare to step in if this proves insufficient.

Potential remedies include not just fixing Section 230, but more importantly preventing conflicts of interests and self-dealing by enforcing structural separations between adjacent lines of business, such as prohibiting a single corporate giant from being simultaneously a publisher, an advertiser, a marketer, a data broker, and the owner of key communications infrastructures. This is the approach recently taken by the Department of Justice, which is suing Google to separate its business with advertisers from the services it provides to publishers to place ads. 

Another powerful tool, as reported in a previous newsletter, would be for the government to impose transparent non-discrimination obligations on digital platforms just as we did with other communications networks like telephones and telegraphs, and on transportation networks like railroads and airlines. Contrary to what many believe, this would not prevent digital platforms from refusing to distribute disinformation or hate speech. Much as an airline can enforce policies against boarding passengers who are drunk or armed, the same is true of online platforms. The main restriction is that, like airlines, the platforms must publish their terms of service and then apply the same standard to everyone.

Open Markets and Friends of the Earth Issue Report Exposing Big Ag’s Carbon Credits Scheme

Open Markets Institute and Friends of the Earth this week released a groundbreaking report Agricultural Carbon Markets, Payments and Data: Big Ag's Latest Power Grab. The report found that carbon payment programs promoted by Bayer, Cargill, Nutrien, and other giant corporations are largely ineffectual, and also promote further consolidation of control over individual farmers, who are required to use digital platforms controlled by the corporations.

“We can’t trust the very corporations that got us into this climate crisis to get us out of it on their terms and timeline,” said Claire Kelloway, food program manager for the Open Markets Institute. “Corporations are designed to serve their investors, not the public, and that’s exactly what these carbon offsetting schemes will do by locking farmers into their networks, protecting product sales, and stalling meaningful regulation.”

The report finds that reliably and consistently measuring or modeling soil carbon is very challenging. Coupled with varied or inconsistent standards for verification, selling and buying carbon offsets is little more than speculation. Polluters can buy credits from projects that overestimate carbon sequestration or fail to store carbon in the long term, running the risk of increasing carbon emissions while worsening pollution hotspots in low-wealth, and Black and Brown communities. The report received coverage in Common Dreams.

📝 WHAT WE'VE BEEN UP TO:

• Open Markets Institute legal director Sandeep Vaheesan published an op-ed in The New Republic urging federal agencies to look at the workers and businesses Amazon controls beyond its corporate boundaries when bringing antitrust action against the behemoth, which is expected later this year. Writing that breaking up Amazon is not enough, Vaheesan says, “Reining in Amazon requires challenging its domination through contracts and surveillance — the tools through which it has supercharged its awesome power.”

• OMI chief economist Brian Callaci published an article in Project Syndicate calling for robust merger guidelines that would force corporations to innovate rather than seek acquisitions in order to grow. Callaci wrote, “The history of U.S. antitrust policy illustrates the economic benefits of strict merger review.… By channeling business activity toward creating new productive capacity and employment, rather than toward consolidation, antitrust agencies helped propel the entire U.S. economy.”

• In an article for Euractiv, OMI Europe director Max von Thun argued that Europe’s green subsidy splurge, which comes in response to the Inflation Reduction Act, risks benefiting a small group of large corporations instead of the smaller companies behind the most innovative emerging green technologies. He writes, green subsidy programs overwhelmingly favor large firms, and “would likely lead to higher costs, less choice and less innovation, and leave us with less competition in the industries of the future.” 

• Max von Thun also wrote a Tech Policy Press piece examining whether the EU’s regulatory authorities may be losing their lead in reining in Big Tech after years of staying ahead of regulators in other countries. Recent developments like the DOJ lawsuit against Google have shifted the debate. He says, “Perhaps the biggest reason the EU is losing its edge is its unwillingness to consider structural solutions to Big Tech’s dominance.”

• The Washington Post quoted OMI executive director Barry Lynn as saying that the DOJ’s suit blocking the Simon & Schuster and Penguin Random House merger could lead to breakups among Big Tech companies as judges turn against the consumer welfare standard and return to the notion that corporate power harms sellers, small businesses, or even democracy. 

• HuffPost cited Open Markets’ policy director Phil Longman opposition to a potential $27 billion railroad merger between Canadian Pacific and Kansas City Southern. “We’re already at such a point of massive consolidation that we’re going to have a railroad that runs from Halifax, Nova Scotia, to Vancouver down through the Midwest and into Mexico,” he said. “It’s going to make the old transcontinental railroad look like a branch line.”

• Senior OMI fellow Johnny Ryan was quoted by International Banker critiquing Ireland’s efforts to regulate Big Tech saying, “The object of Europe’s landmark law — the GDPR [General Data Protection Regulation] — was to finally stop the data free-for-all within and between these companies, and that law put the onus on Ireland’s authority — the Data Protection Commission —to police it. But in my view, it’s the DPC that is paralyzing Europe’s enforcement against Big Tech.”

• Columnists in The New Republic, The American Prospect, and The Hill proposing Sara Nelson, international president of the Association of the Flight Attendants-CWA, AFL-CIO, as a replacement to the outgoing labor secretary cited her fiery remarks at OMI’s Renewing the Democratic Republic Event last month. The New Republic quotes her rousing call, “They have stolen our labor,” from the conference. The American Prospect quoted her from the conference as saying, “the more mergers and acquisitions concentrate power into a few hands, the more power they’re able to wield in the public sphere … there is only one effective check on organized money, and that’s organized workers.” 

🔊 ANTI-MONOPOLY RISING: 

• The Department of Justice (DOJ) is looking into an antitrust lawsuit against Google Maps for requiring developers to use its maps and search products together in their terms of service. The practice known as bundling, which forces users to use one of its products in order to gain access to another one, can violate antitrust law. A DOJ lawsuit against Google Maps would represent the federal agency’s third antitrust case against the company. (Bloomberg)
   

• The DOJ has joined European countries in preparing an antitrust lawsuit against Adobe’s $20 billion acquisition of web-based design start-up Figma. The deal has been likened to Meta’s 2012 acquisition of Instagram as an instance of a takeover of a small but rapidly growing rival. (Bloomberg)
   

• U.S. Senator Elizabeth Warren called out pharma company Merck for perpetuating its monopoly over the cancer drug Keytruda. Along with Senator Bernie Sanders and Representatives Katie Porter and Pramila Jayapal, Warren wrote to the the U.S. Patent and Trademark Office expressing concern over Merck’s abuse of the patent system to fend off competing drugs, accusing the company of anti-competitive business practices. (Reuters)

• U.K.’s Competition Markets Authority has appointed an accomplished collection of experts to assist in enforcing competition in digital markets. The panel comes alongside new powers bestowed on the CMA, which allow the antitrust regulator to tackle problems in online markets more rapidly. (UK Gov) 

📈 VITAL STAT:

6,800

The number of unionized Jet Blue flight attendants opposing the merger with Spirit airlines who have written to Attorney General Merrick Garland and Transportation Secretary Pete Buttigieg asking them to block the merger on the grounds that the deal violates antitrust law, undermines competition, and would lead to the merged company violating worker contracts. Unionized Spirit flight attendants, on the other hand, favor the merger. (New York Times) 

📚 WHAT WE'RE READING:

“A Strategy for Factory Towns.” (American Family Voices, Mike Lux): Pollster Mike Lux’s pivotal report focuses on voters in “Factory Town” counties in six midwestern states. Big takeaways include populist economic messaging works much better than cultural war messaging and Republicans are seen as the party of wealthy corporations and CEOs.

“Data Brokers and the Sale of Americans’ Mental Health Data.” (Duke University's Sanford School of Public Policy, Joanne Kim): The author shows how unregulated data brokers are able to sell troves of sensitive mental health data to anyone who requests it, exposing Americans to scams and harassment based on health information collected by apps, social media, and other websites not covered by HIPAA.

You can find the full job listings here. 

🔎 TIPS? COMMENTS? SUGGESTIONS?

We would love to hear from you—just reply to this e-mail and drop us a line. Give us your feedback, alert us to competition policy news, or let us know your favorite story from this issue. 

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