Would Sen. Warner’s Ambitious Plan to Regulate Social Media Giants “Ruin” the Internet—Or Save it?

Sen. Mark Warner’s proposals to regulate social media platforms are by far the most ambitious to come from Congress. We gathered three experts to discuss their pros and cons. 

 

 

Senator Mark Warner. Photo by Mark Warner [CC BY 2.0]

After two years filled with privacy scandals, antitrust fines, and disturbing revelations, legislators on both sides of the Atlantic are finally beginning to come up with policy proposals to address the numerous threats posed by unchecked digital monopolies. In the UK, the House of Commons Digital, Culture, Media and Sport Committee has published a scathing report recommending stricter regulations on social media companies, as well as transparency requirements and penalties. In the US, too, there is a growing awareness on both ends of the political spectrum of the dangers caused by the scale of digital platforms, their opaque algorithms, and lack of effective management.

 

Earlier this month, Axios published a white paper drafted by the office of Senator Mark Warner (D-Va) that contained 20 policy proposals on how to regulate social media platforms. The paper—aimed at stopping the spread of disinformation online, protecting user privacy and promoting competition—includes such proposals as requiring tech platforms to clearly label bot accounts and making them liable for failing to take down “deep fakes” or manipulated audio/video content, as well as comprehensive GDPR-like data protection legislation and handing the Federal Trade Commission more power to “police data protection and unfair competition in digital markets.” While the paper stops short of calling for a breakup of tech giants such as Google and Facebook, it does include a number of proposals that, if implemented, would necessarily force some of the major platforms to radically change their business model. One of those is to label certain services, such as Google Maps, as “essential services,” a designation that would require tech platforms to provide access to these services on “fair, reasonable and non-discriminatory” terms (FRAND) and prevent them from “engaging in self-dealing or preferential conduct.“

 

While there have been a number of previous proposals to regulate social media platforms, Warner’s is by far the most ambitious to come from Congress. Reactions, accordingly, have been mixed: while critics of digital platforms cheered, others, such as the Wall Street Journal’s Andy Kessler, argued that Warner’s proposals would essentially “ruin the Internet.”

 

The ambitious scope of Warner’s proposals, however, is undeniable. “This discussion draft is important for many reasons,” Harold Feld, a Senior Vice President at Public Knowledge, told ProMarket. “First, Warner is considered one of the more tech-savvy Senators in light of his previous career in wireless. That gives these recommendations gravitas. Second, Warner is far more centrist than the progressive wing of the party. That Mark Warner has floated this is a strong signal that it is not only the Elizabeth Warrens of the world who are serious about regulating the large digital platforms. While no one thinks anything is likely to be done this year, this helps to frame the discussion for the next Congress—especially if Democrats manage to capture the Senate.”

 

In order to better understand the significance of Warner’s paper, we reached out to three experts—Gigi Sohn, Daniel Crane, and Hal Singer—to discuss the merits of Warner’s proposals, as well as the potential implications that some of his proposals could have. This is what they had to say: 

 

Gigi Sohn: A good step forward, but what about ISPs?

 

Gigi Sohn. Photo by Joel Sage on Flickr [CC BY 2.0], via Wikimedia Commons

Gigi Sohn, a distinguished fellow at the Georgetown Law Institute for Technology Law & Policy and formerly a counselor to then FCC chairman Tom Wheeler, recently outlined her own suggestions for a policy framework to regulate tech platforms in the Georgetown Law Technology Review. Many of her proposals are not dissimilar to Warner’s, particularly when it comes to data portability and algorithmic transparency and accountability. Here is what she had to say:

 

This is the first comprehensive, thoughtful look coming from Capitol Hill about how to deal with some of the problems afflicting the largest online platforms. There have been a bunch of bills introduced over the past few months purporting to solve some of these problems, but I don’t think they were particularly well thought out. This [white paper] is well-researched, well-thought-out, and comprehensive, and I think that deserves a great deal of praise. 

 

I think there’s a lot of compatibility between Senator Warner’s proposals and mine. We agree on the need for transparency of algorithms and accountability for the harm that algorithms cause. We agree on the need for consumer privacy protections (although not necessarily on the specifics). We agree on the need for data transparency and portability, on the duty to label bots and disclosure for political ads, and the need for the government to fund media literacy programs. I am not sure how much the government can solve the problem of people believing everything they read, but I think teaching people how to be critical of what they see on social media should be taught starting in the first grade.

 

That being said, though I agree with an awful lot of what’s in that paper, I don’t agree with everything that’s in it. Where I get a little bit nervous is some of the discussions about the duty to determine the origin of posts and accounts. There may be very good reasons why people are posting anonymously, particularly if they’re living under repressive government regimes. I think Senator Warner recognizes this problem and that the ability to speak anonymously is part of the right to free speech and the right to privacy.

 

Another thing that kind of makes me a bit nervous is that I think that the GDPR has a lot of good in it, but I am not sure that the it comports particularly well to the US—although obviously parts of it might, certainly the notion that consumers should own their data and that there should be robust notice and consent.

 

I was fascinated by the discussion of information fiduciaries and “essential facilities,” but I’m not sure that we have to go that far in order to place on platforms the requirements that [Warner] wants to place on them. I think Congress could prohibit discrimination in favor of your own sellers, content, and affiliates without naming something an essential facility. I also think you can have strong privacy rules without creating the whole new category of information fiduciary. From a political perspective, if you don’t have to create these new classifications, I think you may have an easier time actually getting the results you want.

 

I like the idea of strengthening the Federal Trade Commission and giving them more rule-making authority; I think it’s critical. I also think Congress needs to be a little bit more specific about what constitutes unfair and deceptive trade practices, because the FTC itself has defined them very narrowly.

 

One thing I would have liked to have seen in the paper is more attention to Internet Service Providers. Senator Warner focuses almost entirely on the platforms, and while they clearly need more regulatory oversight and reforms, I don’t think you can talk about competition and privacy and transparency without also talking about the network providers. We’re in a world where the vast majority of Americans don’t have a choice of more than two ISPs and those ISPs can actually have access to more personal data than Google and Facebook—they just haven’t figured out what to do with it yet. Warner does mention the ISPs very briefly, but I don’t think you can talk about promoting competition, privacy, accountability, and transparency if you’re leaving one half of the Internet ecosystem out of the conversation. I would have liked to have seen more acknowledgement that it’s not just the platforms that are problematic.

 

When it comes to breaking up the platforms—which Warner’s paper does not call for— I’m concerned that the cure may be worse than the disease. I respect my colleagues who do call for it, but I’m not sure I agree with them. AT&T was a monopoly for 84 years and guess what happened to AT&T after it got broken up? It got put back together again, even more powerful than ever. I think it’s fashionable to talk about breaking up the companies, and I can see the rationale for it, but I’m just not convinced that that steps short of that—like nondiscrimination principles, like real data portability, like algorithmic transparency and accountability—won’t work. I’d like to see if those work first before talking about taking such a severe step.

 

Overall, I think that Senator Warner’s ideas are a good step forward in dealing with the problems of concentration, network effects, and control of data—for online platforms. But it doesn’t deal with the other half of the ecosystem. Yes, Google and Facebook and Amazon are gatekeepers, but if you can’t get on the Internet, they cease to exist. It’s much less sexy to talk about Comcast and Charter and AT&T, but they have a power that even those big tech companies don’t have. The concentration in that market is enormous and it’s not getting any better. In fact it’s only getting worse.

 

Even if Warner’s proposals solved all the problems he aims to solve, we still have the problem of broadband providers having access to all your information and charging a median of $80 a month for access. Even if you cleaned up Facebook and Google and Amazon completely, there’s still 20 percent of Americans who don’t have access to it. What good is it to have a system that’s not affordable and accessible and can still violate your privacy? Do the tech companies deserve scrutiny? Absolutely. Have they brought a lot of this on themselves? Yes. But my message to policymakers is that they’ve got to look at ISPs as well.

 

I’m impressed that Senator Warner himself freely admits that some of these ideas may have unintended consequences and may not be politically feasible. I think he knows there’s not going to be a bill with all these 20 ideas ready to pass any time soon, but he wants to at least put some ideas on the table. Over the past year or so there have been a lot of smart folks throwing out various ideas for greater government oversight of the largest online platforms, but until now, nobody has brought many of these ideas together in one place. It’s extremely humble for a senator to say “Look, I don’t have all the answers, I’m not trying to solve everything, but here’s how I think we can get to a place where the online platforms are not threatening our democracy and way of life.” I hope that other members of Congress and policymakers take Senator Warner up on his challenge and that we see more than just grandstanding. We have a real problem here and something needs to be done, and soon.”

 

Gigi Sohn: “One thing I would have liked to have seen in the paper is more attention to Internet Service Providers. Senator Warner focuses almost entirely on the platforms, and while they clearly need more regulatory oversight and reforms, I don’t think you can talk about competition and privacy and transparency without also talking about the network providers.”

 

Daniel Crane: Lumping so many different issues together “obscures the variety in the issues presented”

 

Daniel Crane

Daniel Crane, an antitrust law expert and the Frederick Paul Furth Sr. Professor of Law at the University of Michigan, takes a more skeptical approach to Warner’s proposals. In an email to ProMarket, Crane wrote:

 

The white paper circulated by Senator Mark Warner’s staff regarding ‘Potential Policy Proposals for Regulation of Social Media and Technology Firms’ covers an enormous range of issues, from Russian election meddling, to fake news, to online defamation, to competition in online platforms. While there is some benefit to comprehensive consideration of the problems raised by online platforms, there is also some danger that lumping so many different issues into an overarching ‘what should we do about FAANG?’ question obscures the variety in the issues presented. Further, to the extent that different aspects of the FAANG question are related, it’s not clear that ratcheting up regulation across the board, as the white paper seems to suggest, would improve matters. To the contrary, it might be that a regulatory fix for one problem would exacerbate another.

 

Take the relationship between data protection and competition. There seems to be a common assumption that the FAANGs are simultaneously jeopardizing consumers by sitting on too much data to ensure adequate protection and wielding so much economic power that they can deny consumers variety and innovation. But would consumer data be safer in a more competitive world with many smaller firms? Perhaps not. There is empirical evidence of economies of scale in regulatory compliance. That might mean that larger firms have an easier time complying with complex regulations, and hence that if data protection regulation actually achieves more data protection, data will be safer with larger firms. Or, it might mean that increasing data protection and similar regulation will make it increasing difficult for smaller firms to compete, and hence perpetuate the trend toward concentration, as suggested in a recent study by the Mercatus Center. Either way, efforts to achieve data protection and competition may be at regulatory cross-purposes.

 

Similar results might obtain with respect to the white paper’s suggested reforms to Section 230 of the Communications Decency Act. Platforms may be ‘least cost avoiders’ with respect to take-downs of defamatory materials (as the white paper claims) if they have the scale and resources to operate sophisticated policing departments. On the other hand, a smaller platform might find it difficult to respond adequately and in a timely fashion to ‘DeepFakes’ allegations and, unlike its larger counterparts, might not be able to weather damages judgments that could result from revisions to Section 230. So it’s possible that imposing further regulatory protections for data privacy and personal reputations in the online world would perversely accomplish what Justice Blackmun worried about in U.S. v. Topco (1972): that “the bigs, therefore, should find it easier to get bigger.

 

Perhaps Senator Warner and his staff realize this, which is why they have chosen to focus on behavioral competition remedies rather than structural ones like break-ups or divestitures. The core of their proposal is to treat dominant online platforms as ‘essential facilities’ subject to obligations to serve all comers on fair, reasonable, and non-discriminatory (‘FRAND’) terms.

 

FRAND obligations can be beneficial as applied to the sale or license of goods or services, and many firms chose to adopt such commitments voluntarily to preempt concerns about the exercise of market power in such settings as standard-setting organizations (SSOs) or patent pools. But mandating FRAND obligations is questionable when applied not to goods or services a firm is in the business of selling or licensing, but rather to internal aspects of the firm’s operations. Courts, arbitrators, or agencies may be have a reasonable chance of “getting it right” when scrutinizing the terms of commercial contracts for reasonableness, but they risk doing serious damage if called on to reorganize a firm’s internal operations. Thus, for example, mandating a FRAND obligation on Google licensing of mapping technologies is a very different proposition than forcing Google to change its internal algorithms so as to avoid discriminating in its organic search rankings. The Warner white paper does not make clear whether it is envisioning FRAND obligations simply for goods or services offered in market transactions, or a more general obligation of fair and reasonable dealing for dominant online platforms.

 

Another key issue with FRAND commitments or obligations—one not addressed in the white paper—is what institution has jurisdiction to determine when the dominant firm has failed to honor the FRAND obligation. As soon as someone claims that a FRAND commitment has been violated, the next question is who adjudicates that claim and, if necessary, sets the terms of dealing. Courts are generally very bad at setting terms of dealing (although they sometimes undertake that task, as they have been for decades under the ASCAP and BMI consent decrees). Regulatory agencies might take it up, but there is no agency with the obvious expertise or resources to decide what terms online platforms should have to offer third parties. SSOs and patent pools often solve these problems by creating arbitral mechanisms for resolution of disputes over FRAND—a solution that the Justice Department has blessed so long as the mechanism for arbitrator selection is not biased. Similarly, the Comcast/NBCU consent decree calls for commercial arbitration for resolution of FRAND issues. Determining how the content of FRAND obligations would be decided is critical to assessing the kinds of policy proposals outlined in the Warner white paper.

 

“The Warner white paper does not make clear whether it is envisioning FRAND obligations simply for goods or services offered in market transactions, or a more general obligation of fair and reasonable dealing for dominant online platforms.”

 

Hal Singer: A “Net Tribunal” to police discriminatory conduct by dominant tech platforms

 

Hal Singer

Hal Singer, an antitrust economist and senior fellow of the George Washington Institute of Public Policy, has recently proposed that a new independent tribunal for the Internet (a “Net Tribunal”) be created as a way to police discriminatory conduct by dominant tech platforms—and potentially Internet service providers. By invoking telecom-based non-discrimination regulations, Warner’s proposals seem to take a similar approach to protecting edge innovation. About Warner’s proposals, Singer says:

 

I proposed case-by-case adjudication of discrimination complaints outside the Federal Communications Commission because the process tends to become incredibly politicized once a finding by the FCC’s administrative law judge (ALJ) gets appealed to the FCC commissioners. In every vote to date after a finding of discrimination by the FCC’s ALJ, FCC Commissioner have voted their party line. This defeats the purpose of a dispassionate, fact-finding inquiry.

 

One idea consistent with Senator Warner’s approach would be to house this tribunal within the Federal Trade Commission through the FTC’s existing ALJ process.

 

About using the FTC’s ALJ, Singer responded:

 

If we could find a way to immunize the FTC’s ALJ process from politics at the appeals stage, then I would be happy with the Net Tribunal operating within the FTC, which I see as less of a political animal than the FCC. There are two possible ways to do this: one is to route appeals straight to an appellate court and skip the FTC commissioners. Another approach is to set a really high standard for reversal, so a Republican commissioner can’t reject a finding of discrimination merely because he or she doesn’t believe discrimination is a bad thing.

 

Singer explained that there are three important tweaks to the existing FTC ALJ process, once immunized from political forces, to ensure that the new forum effectively can police discriminatory conduct or self-dealing by the platforms:

 

First, under the FTC’s existing ALJ process, the only complainant can be the FTC. That’s a flawed design. We don’t want the level of enforcement to go to zero under Republican administrations, and the key to preventing that is to allow the edge providers—the independent apps and content providers who are being discriminated against—to be complainants as well, in the same way that independent cable networks can be complainants in front of the FCC’s ALJ. Under the current FTC ALJ process, edge providers must convince the FTC to bring a complaint by knocking on doors.

 

Second, we have to give the FTC’s ALJ a new standard against which the discriminatory conduct would be judged. As Congress understood when designing the nondiscrimination protections of the Cable Act of 1992, we cannot have these cases—which involve mild forms of discrimination well short of exclusive dealing—decided pursuant to any kind of antitrust or consumer welfare standard. As Kevin Caves and I explain in our article, the harm in these discrimination episodes manifests not as a short-run price or output effect readily cognizable under antitrust law, but instead as a loss to edge innovation. Asking edge providers to link the discrimination to a loss in innovation would be an impossible evidentiary burden. And I don’t want to see edge providers bring cases only to lose with certainty because we have the wrong standard. So I would insist that Congress give some guidance to the FTC and spell out a specific new standard for nondiscrimination.

 

Third, because the purpose of the protections is to stimulate edge innovation, we need speedy relief whenever a complainant brings a meritorious case. The ALJ must be armed with injunctive powers, as well as the power to award compensation for lost profits, and the relief should kick in immediately upon a finding of discrimination. Respondents should not be able to continue discriminating while the appeals process is going on, as cable operators do now.

 

In terms of the next steps in the process, Singer suggested that “finding support for this idea in the Senate Judiciary Committee is key.”

 

Hal Singer: “Under the FTC’s existing ALJ process, the only complainant can be the FTC. That’s a flawed design. We don’t want the level of enforcement to go to zero under Republican administrations, and the key to preventing that is to allow the edge providers—the independent apps and content providers who are being discriminated against—to be complainants as well.”

 

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