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tv   Legal Experts Discuss Social Media Content  CSPAN  July 24, 2021 6:36am-8:02am EDT

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best left to states or the federal government. >> welcome to our showcase discussion series on free-speech and social media. and the vice president for strategic initiatives of the federalist society and director of the freedom of thought projects, new initiative to address emerging challenges to freedom of thought, content, and expression. this afternoon, july 8, we will be discussing how federal preemption and state innovation questions affect competing concerns over speech and content moderation on digital platforms and social media. this is the fifth and a six part series on free-speech and social media moderated by a judge. we also invite you to join us two weeks from today, at 3:00
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p.m. eastern for our final discussion. please note all expressions and opinions are those of the experts on today's call. after our speakers give their opening remarks, we will turn to audience questions, time permitting. if you have a question, please enter it in the q feature at the bottom of your screen. if you are registered for cle, do not forget to complete the sign in form for this program and the sign inform isabella on the page -- the sign in the form is available on the page and you can find that with the link for today's event. our moderator for today's panel, the judge 17. after graduating from -- the judge was appointed in september, 2017. he served with justice clarence thomas. he practiced at jones day where he specialized in appellate and complex litigation.
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he served as assistant attorney general for the civil division of the justice department, as acting is so city -- associate attorney general. and as deputy counsel for the president. he argued 75 appeals including three cases at the supreme court. i will turn this over to the judge to frame the discussion and introduce panelists. thank you for being here today. >> thank you. this is the fifth of a six part series on free-speech and social media. these panels are sponsored by the federalist society's freedom of thought project which explores what seems to be an increasing trend to restrict and punish controversial speech and controversial speakers. a traditional view of speech was
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that a remedy for bad speech is good speech. so if you expressed an unpopular view, you would expect to be subjected to criticism and correction in the public sphere -- the free market of ideas. today, it seems unpopular speakers face worse. if you express a politically unpopular view, you are a risk for losing her job, being hounded out of a university, or losing access to various services. including, as relevant here, access to social media platforms. our last two panels looked at specific efforts to, by governments, to regulate and mitigate this kind of censorship
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by tech platforms. like facebook, twitter, google, through either common carrier regulation or antitrust. we talked a lot about a couple of big cases in the news, including an ohio suit against google search services to have that declared a common carrier under ohio common law. and a suit by state -- a bunch of states against facebook for monopoly based on their allegedly deceptive privacy practices. at some level these suits were conventional in that they targeted the economic aspects of the behavior of a dominant player in a relevant market. today we might get into some or aggressive variations on a
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theme. state efforts to regulate political aspects of the content moderation of these platforms. one example of that is a proposed statute that would prohibit social media from engaging in viewpoint discrimination if the user of a service resides in texas and the communication is stored or received in texas. our first two panels looked at sources of protection for big tech platforms at the federal level. at the two most obvious ones. one is the first amendment. it affords some protection to companies and may tolerate common carrier type regulation
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under the logic of turner versus fcc. it imposes rules on cable companies. the other source of protection against state regulation is section 230 of the communications decency act. it seems to give broad immunity to platforms with regard to decisions about what speech, what third-party speech to permit or suppress. 230 in a broad range seems to preempt any state law by platforms to allow their party speech or by platforms to censor third-party speech. or, as they would put it, to moderate the content. today we will have a broader focus. we will look at other possible sources of federal pension.
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-- preemption. one is looking at what the fcc might do at the federal level either to regulate to itself, regulate content, moderation, and practices of platforms, and or to prevent states from doing that. another source we will talk about is a dormant commerce clause of the constitution. it is a doctrine that congress, by authorizing congress, the constitution, sorry, by authorizing congress to regulate interstate commerce. states regulation that discriminates against interstate congress -- interstate commerce, applies extra territorially or unreasonably burdens interstate commerce. we are also going to talk
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generally about the question that might have residents to members of the federalist society. if we think big tech censorship is a problem that some government should respond to, should that response happened at the federal level or at the state level, or perhaps above? -- or perhaps, at of? -- at both? have a great panel. -- we have a great panel. brendan carr is a commissioner on the federal communications commission and has served as general counsel of the sec, as lead advisor to chairman pai on wireless issues and is an attorney in the fcc general counsel's office. before joining the commission he practiced appellate and telecommunications law at wiley
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rye. he graduated from the catholic university law school and clerked for a judge on the u.s. court of appeals on the fourth circuit. daniel francis is a foreman fellow at the new york university school of law where he writes about constitutional law, competition law, and antitrust. he previously served as a deputy director, associate director, and senior counsel at the federal trade commission, where he focused on antitrust enforcement in digital markets. for 10 years he practiced antitrust with two multinational firms. he holds law degrees from trinity college cambridge, from harvard law school, and from nyu. paul watkins is the managing director of potomac global partners. he focuses on regulatory issues
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involving financial technology. mr. walken's founder the office of innovation at the consumer financial protection bureau and headed up the civil litigation division of the arizona attorney general's office. earlier in his career he was an m&a associate at simpson basher and a securities litigation associate at covington burroughs. he graduated from harvard law school and he clerked for judge shedd. four i turned the floor over to our speakers, i'm going to give you the code you will need to claim credit. i will do this now and try to remember to do it again later in the presentation if you do not have a pencil handy. the code isfotp-579.
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fotp579. commissioner, the floor is yours. >> thank you, judge, for that kind introduction. it is great to join you in this esteemed panel to talk about these important issues. i am reminded by your opening remarks to align from a new york editorial board member in 1970 he said diversity of opinion is the lifeblood of our democracy. we were coming out evan era of groupthink and there was a deep embrace particularly of diversity of opinions and a range of ideas and in 1970 the modern-day op-ed page launched and the near times. they wanted to promote ideas and
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perspectives that were not necessarily going to be reflected within the members of the editorial board. fast-forward to today and we are on the back of that trend. it is a trend back toward orthodox thinking. it is a pendulum. hopefully, we can find a way as a cultural or legal matter to return to that era of embracing diversity of opinion. it does have a direct bearing on where we are with big tech today. i think there has never been an industry where there has been a wider gap between power and accountability -- between power and accountability. it is a chasm today. regulators at the state and federal level are looking and trying to close that gap between power and accountability. this series has explored and there's a lot that can be done on section 230. i think fcc has a role to play fleshing out section 230.
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it is in the communications act and i think we have authority to interpret it. i think courts have given to expansive reading of language in section 230 as justice thomas has pointed out in some of his statements. i think the debate goes beyond section 230. even section 230 reform which is necessary is not sufficient to address a lot of abuses of power we see taking place on various tech platforms. i think 230 reform is a great starting point and we have to do it but we need to go beyond that and that is part of where the question of preemption comes in. i think has states are limiting what they can do in terms of directly interpreting section 230. limited might be too weak a phrase. i think states can step in and impose transparency obligations on platforms, they can impose what i would describe as
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nondiscrimination or accountability standards. meaning, if you're going to apply a term of service. let's say you do not want violence on your platform. i think the state can step in and say you have to do that across the board. you cannot take down speech from one side and not vice versa. there's a third level of this which is affirmative antidiscrimination. you can look to public accommodation law and some civil rights laws and apply those to big tech including prohibiting discrimination on race, gender. including political ideology. some state public accommodation laws including that of washington, d.c., has that language today, so i think that is what we can look to import from a state law perspective. they're going to be some hurdles to doing that. as we have talked about any of
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talked about in previous sessions, the first amendment. the first amendment is a strong argument lodged by big tech whether in federal reform or state reform. i think the answer to that is there are a series of types of cases where the supreme court recognized you can regulate entities without infringing their free speech rights. we have must carry, the turner case, prune yard cases. it goes beyond that. state defamation and tort law that is effectively the regulation of speech permissible under the first amendment. we have public interest obligations we apply at the fcc. on broadcasters. and rose like this data roaming role that were -- and rules that like this data roaming rule that requires nontitle to date operators to carry traffic, data traffic, of other entities,
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outside completely of the common carrier context. so i think there is a lot of analogies and precedents that could be look to in the first amendment context. although again that is very interesting to me but it is a little beside this panel. the panel here is focused on preemption. when you start to talk about state law or regulation of content moderation practices. again, federal or state you have first memo and arguments. uniquely, when you go to the state law approach, you will have preemption arguments. as i see it tech would likely lodged two big main lines of argument for preemption of either some or all state law efforts to regulate content moderation. what is going to beat section 230. the other -- one is going to be section 230. the other argument they could lodge is there has been a general policy recognized by fcc of non-regulation or deregulation, when it comes to what we call information
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services, which argued lee, you could fit big tech within that definition -- which, arguably, you could fit big tech within that definition. those are two arguments that could be run by tech companies regardless of the specific form of state law or regulation imposed. in my perspective, i think there is a strong argument state laws can survive preemption under both those lines of attack. first, section 230 c1 is a very broad provision that effectively says, if you leave someone else's speech up on your website, you are not liable for that speech. the person who said it is liable. i do not think there is much you can do or frankly should do, to disrupt that. i think there would be strong preemption if you attempted to do that in state law. there is a second provision of section 230, though, that allows for the good faith, the
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statutory term is, any action voluntarily taken in good faith to restrict access to or availability of material. the statute goes on. the upshot for me is the second provision of section 230 is the prevention that lawfully, to the right interpretation should apply to decisions to take down speech. therefore you only have the 230 protection if you are doing it in good faith. good faith is probably properly defined as a matter of federal law. what that means is there is necessarily a category of takedowns that are bad faith. so i would think you could fit state law regulation of content moderation under that concept of bad faith takedowns, in which case i think you can survive a section 230 preemption claim. in other words, section 230 is not a preemption -- provision
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that says content moderation in all of its forms is protected by the statute as i interpret it. it is if you leave speech up, your protected and no state law can revert that. but if you take it down there's only 230 preemption protection if it is good faith within the meaning of the statute. so i think there's a fair amount of room at the state law level to regulate bad faith content moderation. some of the ideas i put down in terms of anti-disco nation or takedown cash -- antidiscrimination or takedowns in terms of service would be bad faith and could survive at 230 claim. the second i mentioned is, there is a line of fcc precedent that talks about the regulation or, depending on your perspective, nonregulation, of information services. again, this could be part of, we have title i and title ii of
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fcc. let me briefly describe two lines of cases, or lines of precedent. on one hand, there is a case that strongly recognizes this concept of a federal policy of nonregulation. there was an eighth circuit case that dealt with voip. minnesota tried to impose tariffs and obligations on voice providers and the fcc stepped in and said, no, we have a policy of nonregulation a voice and that has primitive effect. the eighth circuit says yes, you're right -- has preemptive effect. the eighth circuit says yes, you're right that prints minnesota state law. the other case -- that preempts minnesota state law. the other case out of new york new york district court where new york state imposed a requirement that required internet providers to offer $50 per month low income services --
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$15 per month low income services. the district court decided the new york state law is stayed based on a likelihood of success based on a concept of conflict and feel preemption that emanates from the committee cases act. third, a case in that bucket would be our own decision at the fcc in 2017 where we moved internet providers from a title ii regulation to title i. we said decision to deregulate from title ii to title i, carries preemptive force. therefore imprints any state law to the contrary. -- therefore, it preempts any state law to the contrary. it was not. me to -- it was not. it was not upheld by the dcc. the d.c. circuits said no, fcc,
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your decision to move from title ii to title i to deregulate we do not think is deserving, at least weighty primitive force. -- preemptive force. a second opinion would be justice thomas in the separate void -- voip case said he thought the appropriate case the court should revisit broad preemptive court -- case the supreme court given to decisions not to regulate and a third case i would put in that vein would be a recent district court case in the ninth circuit of california. california imposed net neutrality like requirement on isps. and the state denied request by isps and said the fcc decis the decision to deregulate moving title 2 to title i does not preempt california net neutrality law.
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interesting lines of precedent. you could put them all together regardless which way you come out, that final question, given that 230 as that idea of good faith but there's necessarily for states to regulate bad faith concept moderation and otherwise there's not the same comprehensive federal regime that issue in traditional telephone services that would displace content moderation at the state level. i will stop there, but two species of preemption claims raised against state law, anti-disco and obligations and how i would think about the answers. >> daniel, you are up. >> thank you, pleasure to be here today and to talk to you a little about my favorite corner
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of constitutional law. i want to talk about the faith of the federal constitution leaves for faith platforms. and give in general terms where the most important constraints are and how our constitutional order might react to this extraordinary wave of state radio story efforts we are seeing so just take a moment to set the scene at least as i see it, we've seen over the last two decades a lot of commercial change in the rise of platform businesses that are often very diverse in lots of ways, sometimes i'm depressed by the label big tech but it is true that platform businesses, what we think of as the digital economy is radically changing
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everything for retail to the way we get around in cities to operating systems, there's a digital platform everywhere. the framing of this conversation is an extraordinary and multidirectional backlash against some of the consequences on the rise of platforms. there is bipartisan consensus we must do something, a radical set of changes with much less consensus about what needs to be done and why. so in our federalist system one of the benefits of the way our political system is organized, is local particularly state governments are not just coequal but preemptive, preeminent pockets in that discussion, so we seen law enforcement efforts at the state level, antitrust suits led by state coalitions including yesterday, a lot of
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legislation, and in california censorship laws, you touched earlier on texas, florida taxation measures aimed at digital businesses, digital advertising a little unusual and as we also mentioned earlier, to designate google a public utility or common carrier. so with faith driving the conversation and framing many of the productive complex what does the federal constitution have to say about all that. the baseline is of course we are not used to a complicated literary landscape in this country. state law, common law, environmental rules, there is a certain level of diversity and complexity that comes with any
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federalism, individual states that suit their local population, citizens, businesses, a lot of room for regulatory learning, is the classic benefit of life in a federal system. but there are limits to what the federal constitution will tolerate. on at least two occasions in our history the emergence of the integrity of the national economic figures was jeopardized by diverting state regulation. one was the articles of confederation in the 1780s, notoriously a variety of inconsistent or conflicting trade regulations that fueled a lot of it. in the last few decades in the nineteenth century when the national market was emerging, railroads and telegraph but
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that system face the prospects of death by 1000 cuts as individual states regulated terms, rates, discrimination by railroads and threaten the integrity of the office. on both of those occasions the federal constitution came to the rescue and the first example, commercial problems and the articles of confederation was a driver of what led the colonies to come together, the states to come together, not just the constitution but the constitution containing interstate commerce that we have today. as we sit here in 2021 thinking of the commerce clause we assume it is for legislation but in fact at least at the time of the constitutional convention the balance of evidence suggests the focus, james madison said a short time later the focus was to prevent inconsistent regulatory actions.
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the supreme court endorsed that understanding. in the second case in the nineteenth century with favor of regulations of railroads prompted the supreme court to invigorate dormant commerce clause law with the idea that it would prevent certain kinds of regulation that interfere in interstate commerce or interstate networks that are important to the national economy, most famously in 1886 the supreme court held that even portions of interstate railroads prompted the creation of the first federal regulatory agency so in both of those cases when the national market was really threatened the commerce clause stepped in. took a while for the legal frameworks to settle down but by the first few decades of the
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twentieth century it had done so and modern consensus became appropriate 3 things, discrimination against out-of-state is, extraterritorial regulation or state makes access contingent on what you do or don't do elsewhere, something very funny happened over the last 40 years, that model really -- continuously lipservice, what the court has been focused on is intentional protection, states preferring internal commerce or interstate commerce was part of the reason for the decline is what we haven't seen since the 1980s, a wave of state measures that threaten to fragment the national market, to focus on intentional protectionism. that today may be changing and we may be seeing the first raindrops of a storm of legislation threatens exactly
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the kind of thing that led to those terms to the commerce clause in the past. to be sure i want to be clear about what i'm suggesting, there's a lot of room in the constitution, they taught that even interstate companies, multinational companies intentionally directed to a state, state tax law, conduct genuinely located in attributable to a particular state absolutely fine but i see in some of this modern recent wave of legislative and regulatory efforts real themes of extraterritoriality and undue burdens in exactly the way that emanated dormant commerce clause in the past and the first one is the maryland taxing measuring digital
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advertising. a dozen examples of state regulatory efforts at this point we could talk about each of them but the extraordinary thing about the maryland digital advertising act is it exerts maryland's taxing authority over all digital advertising services in the state of maryland without defining whatever digital advertising is or even what in the state of maryland is in the most natural rate of the statute is that it takes conduct to be in the state of maryland. if somebody in maryland can visit it on a website and that is a theme that runs through many state regulatory efforts, that is a remarkable agent the commerce clause is only for the last week years that the supreme court has recognized a sufficient nexus with activity of your estate if somebody physically ships goods into your state. for a long time that was not enough to create a tactical nexus. the court case that said you
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have to have premises. three years ago they said all right, if your shipping goods into a state that is contact and a half, no way no how on that framework is the fact the user in the state is able to visit your website. it is a remarkable reach common to many of the statutes but exemplified by maryland. the other one i want to mention is florida and texas, the online censorship act, to talk about the first amendment law and florida law that prison luminary was joined by federal district court. both of those measures, imposed pretty radical obligations with respect to activities that has such minimal contact with florida and texas respectively. they apply as long as the
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relevant activity can be viewed by a user in texas. if you're a michigan platform regulating speech by a michigan user, you fall in the reach of these remarkable obligations and statutes so those are broad that go beyond the kind of things we saw in the railroad context or focusing on in the intrastate portion. that is pretty much all i want it to say by way of overview. i really predict that the commerce clause for the last 40 or 50 years that may be ending and i predict there will be a turn now of businesses and other regulated entities look back at case law extraterritoriality, unreasonable burdens in a way that might reinvigorate the commerce clause. >> paul. >> thanks to the federalist society for the chance to be part of this panel. my contribution to this
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discussion comes from having experience at the state level suing companies and then being in regulatory roles promoting innovation and i think these two elements are key to what i expect red states to do in response going forward, lawsuits and promoting innovation but i want to back up and talk about how red states find themselves in the circumstance where they are having to sue all these platforms and to a large extent it is because. states, small number of states have crushed their competitors in venture capital investment in developing emerging businesses. the numbers are really astounding. if you look at just california california has received 50% of venture capital investment just about every year from 2010 to 2020, new york and massachusetts over 70%, some
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years close to 80%, the closest competitor is texas in 2010 which was getting into thousand and 5% of venture capital investment, although their absolute numbers have been increased they've not kept pace. in 2020 their share of venture capital investment drops to 2.7% so these companies are developing with in particular cultures and are subject to primary regulators that reflect them and that shapes a lot of policy particularly a few years ago when many companies said we are going to depart from the friedman doctrine of shareholder capitalism, reflect the values of our stakeholders, these extensions of policy. those policy preferences are drawn from that culture from the geographic culture, from
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the regulatory culture so it has been a surprise that red states look at this and say where did this come from. this doesn't match what we are hoping to see, with these extension of policy preferences from companies the same way they would treat an extension of policy preferences from the federal government from another state which is they respond with a bunch of lawsuits. i want to talk a little bit about how some of these lawsuits could be modified a little bit, regulatory structures can be modified a little bit, but what i hope the states that are upset about this focus on is what they can do to do a much better job promoting innovation because that is the sort of activity that i think will lead to long-term solutions and be probably beneficial. short-term these lawsuits are going to be filed. we talked a little bit about
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some of these laws and space that is left under explicit preemption like section 230 or the commerce clause. i'm really surprised or states haven't utilized the consumer protection statutes, there's a reference in the florida law to the statutes and impose their own fine structure, texas doesn't represent a reference them all, they create a second fine structure. these are extremely powerful statutes where what professor francis was talking about, the fact that you could see activity in a certain state, that is enough, you consumer that, that is misrepresentation, you can change the way a company displays or rights content that is displayed in your state, you brought a lawsuit against the company that had an ad in the super bowl when the arizona cardinals were in the super bowl, seen by just about everybody in the state, each viewing of the ad was
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potentially a violation, you can find each violation, you put that together and have fines that are close to us not over $100 billion and then you come in and say if you buy now you can settle for tens of millions. states do this sort of thing all the thing and it is extraordinarily powerful and extraordinarily effective and i'm surprised it is not being used. departing a little bit but some of you are familiar with the case that came through washington, this woman was selling flowers for this wedding ceremony and was signed by the state and the penalties in that case came because the violation of washington does, nation law is a per state violation and so that is why the penalties were so large.
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tidying -- a violation of the state consumer to failing to act in good faith, would be a productive path for states to go down. but i think the real concern and productive activity is encouraging innovation because we are in a unique historical moment where these platforms have power and the technology is moving in a direction that is unlikely we will need these platforms long-term. this is the way technology has proceeded in the past. nobody needs your product the next decade. through smart contracts many folks are trying to build competing social platforms where the users have more control over their own content, paid directly for their content
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and my fear is in the regulatory responses for the judicial decisions that we somehow solidify these platforms as necessary for regulatory structure and this is something the platforms would like to see. it is why you see companies say we are fine with you forming 230 because they would like to be needed. so what the states do is essential that they do not take actions that would require that and states opened the door for competitors. an example of what not to do and the fact just fit together so well that you couldn't make it up. one of the big innovations is in block chain and within blocks chain crypto currency and under the trump administration and the secretary of the treasury there was very little guidance given
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to this industry except for from speeches and in particular there was an enforcement action brought by the sec against social media company no one had heard of cobb telegram and telegram was trying to launch a token that could be traded through its messenger service and they did according to a generally accepted framework but the sec said you can't do that, we are going to shutdown your token. fast forward one year, what does donald trump junior said? go follow me on telegram. telegram would have been a much more viable competitor to facebook if trump's sec had let them have their offering, let them develop in a new direction and compete on new ground with the incumbents but if folks who
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are upset about the social platforms are not willing to allow this competitive activity they are going to solidify the monopolies that are currently in place. what i think the path is for states that are upset about this is to coordinate, to use existing regulatory frameworks that have traditionally been allowed under preemption to coordinate what they are planning to do which gives them joint market power and to jointly encourage innovation in all sorts of areas, policy and a number of other areas so that innovators are moving into these states and the states jointly have market power within a country that i think will probably trend toward a bifurcated market. those are my brief remarks. i will turn it back to you, judge, and look forward to continuing the conversation.
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>> before we continue, let me reread the cle code for anyone who is interested. once again, it is best ot p as in freedom of thought project, 579. all right. let me give each of our panelists may be two minutes to respond to anything they heard from their co-panelists. >> a lot of interesting discussion, a direct response or rebuttal. one thing i will touch on is there's been a lot of interest recently including one of justice thomas's recent statements that we should potentially classify big tech
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providers as common interiors themselves or places of public accommodation. my view on that is what we really need to do is look to apply antidiscrimination obligations on big tech and i would say, and carried in public accommodation law are precedents in past examples where we have some form of antidiscrimination requirements on those types of entities but doesn't necessarily flow from that we need to classify big tech as common carriers or places of public accommodation. rather, we take the core concepts and bring them forward into these websites. >> daniel. >> thank you. i have a word or two of
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reaction. i absolutely agree with what i take you to mean about common carriers. the economics of common carriers is traditionally understood are radically different from those we associate with the digital platform so i often hear this idea that facebook or google, exactly like railroads or networks, that is directly wrong. what makes it distinctive for example is competition in a certain sense doesn't work, choosing between monopoly which means monopoly prices back by the state where you a lot of work competition to bring prices down to variable costs and railroads go out of business, that happens in the 1880s so that it secures a lot more than it reveals given the the economics don't apply to digital platforms today in light of product differentiation but my question
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is this. i take this to be central to your view of the right way forward. i if i could invite you to say a little more about what that means and how to identify it so if a publisher or platform genuinely believe a certain kind of speech or viewpoint is pernicious, harmful, uncongenial to a social religious mission, would it be bad faith to moderate on that basis? >> i agree the focus has to be looking for ways to sponsor the competition to avoid heavy-handed regulatory approach and instead create conditions for entry. i want to push back on the idea that any regulation is monopoly reinforcing. it wasn't clear to me why not allowing crypto currency would enable that social media network to be more competitive in the provision of social media any more than prohibiting
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it from providing any other product. unclear to me why we see that is the case with the platform monopoly problem in the antitrust act but otherwise it has been great. thank you. >> let me respond to that, thanks for the question. it comes down to a phenomena and we are seeing throughout the economy, embedded finance which is the benefit of being able to engage in commercial activity through one single portal and social media companies push into this hard and dramatically. facebook wanting to compete with amazon being a place you find goods and services and when you have your own currency, there are real efficiencies around taking that into cars and makes it efficient for your users to
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monetize that content because they can potentially charge, something called a nonfungible token that can show ownership around a particular digital representation. people can transact and give the right to particular posts or artwork so there's a lot of functionality there and to come in they will need something like that. i do think they have to be mindful they are not preventing that sort of activity. a particular area of concern, a speech by one of the cftc commissioners getting into the weeds to answer your question about there are blocked chain
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based derivatives trades occurring outside of an exchange and it is hard to regulate that because they regulate exchanges and then expect the exchanges to regulate the activity that occurs and this is a common regulatory structure. you can see it in anti-money laundering. regulators don't impose all those things, they impose them on financial institutions and then financial institutions impose a lot of customers. if you don't need the institution anymore, it is just customers interacting directly, that can cause regulators to worry because they are depending on the platform. my fear is if folks come in and say we are in an effective marketplace of ideas, we need this very comprehensive regulatory structure that facebook, twitter and so forth is imposing on all the content in the next generation is
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simply going to skip over the need for that sort of platform that would then be perceived as unlawful because the regulators would feel the contents was not sufficiently regulated. so that is the backdrop that i think should cause some caution on the part of regulators and if i could ask you a question. i know we've seen not necessarily in a social media context but within financial regulation some of the new york regulators say we want you to reduce or stop lending to energy companies if you're doing business in new york and then i believe related commentary by eugene bullock on some recent lawsuits saying these lawsuits by the former president are real stretch unless there were regulators actually directing companies to ban the president or say this would be a good idea. i'm curious if you think there are certain facts that might be
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discovered involving regulatory regulators pressuring platforms that would then be a dormant commerce clause violation of any other way where it states would say please, state regulators, you are trying to extend your policies into our state, doing informally and indirectly but we are upset about it and we are going to sue. what facts would fit that? >> take that on and we will get back to it. >> let me do this in 15 or 20 seconds. i don't know the details of that set of regulatory measures. in principle what they would be looking for is number one, signs that new york was being protectionist, in some way favoring in-state activities.
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it is not obvious to me, the touchstone directs territoriality, not whether you are doing something that has an effect in other states, all state regulations is that was whether you are making market access conditional on something that happens out of state, like i'm requiring from a few years ago you can only sell your e-cigarette in my state if you manufacture them in the way that i prescribed or can only operate your social network if you conduct out-of-state content moderation in the way that i prescribed to use today's example so that kind of extraterritorial reach going on would be a commerce clause angle for sure. >> pad face. so editors of "national review" genuinely believe that right-leaning speech is a good
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thing and they limit access to their platform to contributors who share that view. editors of the new republic same thing on the left, doesn't seem like bad faith and it does seem like something we would want to affirmatively protect. so why is it any different one of platform, they genuinely believe left-wing speech is good speech and they act on that view? >> there is a couple answers here. one is the idea that i have put forward for state law regulation and transparency would allow or only apply to the general-purpose website so places like facebook, twitter,
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youtube, if you are very clear, political angle i want to take and moderate, there will be room even under my theory to say the commission doesn't lie to you but in the main where you hold yourself as a general use platform particularly, not exclusively but particularly which facebook and others do for all the discrimination we do we do not engage in partisan political takedowns. people can agree or disagree but if you pass a lot today, don't moderate content based on political ideology twitter or facebook could say that doesn't pinch us because we don't do that. you would need some pre-textuality type of look behind, but i would leave room for specialized websites that
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are very -- continue to do that and only apply this to general-purpose, it is not quite the same thing as a telephone carrier or isp but in terms of the spectrum of speech interest i would say that they were on that side of the spectrum, isp and telephone on one end and newspapers on the other end, i would say these general use websites, somewhere in the cable realm as opposed to a newspaper or as you indicate, newspaper magazine, in that magazine or something. >> let's talk about things that the fcc might do and building on that spectrum and let's talk about some of the history with the agencies attempts to impose
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net neutrality and history in the supreme court and our court. so the dc circuit has said that the commission has a choice to treat broadband internet providers as either telecommunications services or information services and my head spins when i read those definitions and the dueling thomas and scalia opinions in brand x. turns out it is a critically important distinction because whatever falls under title i we've said can't be regulated as common carrier and whatever falls under title ii the communications act does
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regulate as a common carrier. i know you don't do this but you have the discretion to treat the broadband providers as telecommunication services, is there any room to argue you can do the same thing for the platforms and if you can, is that an idea worth considering to impose on them net neutrality in the sensible rule against people who are discriminated against? >> a good question. whether something is a title 2 are title i as you pointed out, all kinds of interesting and sometimes secular definitional reasons but one way to very much dumb it down is are you operating with economic considerations and others as well, or doing more than being
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a dumb pipe? there are arguments you can make that there are versions of what big tech is doing, not necessarily all features of big tech but some that approach a transport type dumb pipe type of thing but again it is not a position i'm advocating for because i think to apply antidiscrimination requirements which is what really matters to big tech you don't need to pound them into the square hole of public accommodation, those are examples, just import those antidiscrimination requirements and when you classify something under title ii you strip the federal trade commission jurisdiction for the interview so negative externality from that perspective as well.
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>> i think you all have agreed to that under title i. >> section 230, interestingly, title 2 of the communications act but i think we do have authority to interpret section 230, to get into case law a little bit, too much -- c1 is limited, see 2 applies to takedowns, we can do that and issue rules either way that say the guidance on good faith bad faith lines that congress chose to draw in the sand including 230 pursuant to that, we can take action and define good faith bad faith. takedowns are inconsistent in
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terms of service, these cases can be defined as bad faith and the furthest degree, strongest arguments on the other side would be to say bad faith is discriminating based on race, gender and political ideology, we can do that and obvious gradation complied in terms of service, treat light cases alike, a personal complaint there but not particularly strong and what we should do as a policy matter is affirmative antidiscrimination, a stronger first amendment argument, it is a gradation. >> any thoughts, i know you are not fcc lawyers but any thoughts on this?
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>> you read my mind, you're describing the carveout from ftc jurisdiction, section 5 of the sec act for common areas. another unintended consequence of some of the proposals to reclassify big tech or other platforms would have really significant consequences, the antitrust projects not least they have been in the lead on so much of the tech heavy nasdaq in recent years. >> let's talk about extraterritoriality for a minute. when i was in private practice and did a lot of work on federal statutory presumption against extraterritoriality and turns out in that context it is very easy to specify the full that statutes are presumed not to apply extraterritoriality unless congress says so but it turns out it is actually very hard to figure out what counts as an extraterritorial application and i'm sure we
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have analogous problems in dormant commerce context. so could you speak a little more on how we would think about -- looking at the texas statute, limited, appears limited to users who reside in the state which is clearly some attempt to deal with extraterritoriality and then an independent requirement, for the expression has to be shared or received in the state. so what should be the touchstone? of texas wants to regulate content moderation in texas?
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is it that the users computer is located in texas at the time of the use or does it turn on where facebook is and is that even a meaningful question given the way computer networks work? i imagine it probably doesn't turn on whether electrons in the network flow through texas, but how do we think about what would be appropriate commerce clause line between texas and what happens in texas but not what happens in california? >> exactly right to highlight the intransigence particularly in a digital economy, drawing lines that are framed in physical, territorial terms so point number one, it would be
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an enormous mess, regardless of the most optimistic assumptions, there is no way this isn't miserable for everybody involved. let me acknowledge that. second, what we are talking about as with many discussions we can talk about strengths and weaknesses, levels of risk and bright line rolls and it is fairly clear, texas, florida, texas, it clearly reaches too far. for the user, somebody in texas still fights, number one it protects the user's ability to receive the expression of another person so you can be in a situation where somebody in oregon is posting somebody or something online, there's a
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content moderation decision made by a company in california or washington state and you have say about how that is treated, that activity falls within the reach of the texas cell. the fact that the texas person can reach across the internet and connect with, texas's regulatory reach. that raises the same -- >> just because it is shared received in texas? >> you are right that it is the user but if you look at the operative herbage on the censorship the user's ability to receive the expression of another person so as i read it that means as long as there's one person in texas who can find it on the internet it falls within the regulatory reach of the statute and that is really remarkable to touch back to what we were talking
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about, the supreme court, sufficient contact when you ship goods into estate without having an op-ed as it clearly goes beyond that. and in a distinctive way for regulatory efforts is it very sharply presents the opportunity for inconsistent and contradictory regulatory efforts so it requires no imagination to imagine a statutory effort or common-law cause of action in another state that would make somebody responsible for failing to engage in content moderation republishing communications of a certain kind including content exempt to texas law where you can imagine the parade of communications we could be talking about. another reason i feel confident or think this would animate so much is it sharply raises the idea of legislation so if i
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were to give guidance to the states, think very hard about your jurisdictional connections, state law and tax law conducted directed at knowingly directed at or entities in a state, that raises many concerns so if what you really want to do is create protected rights for citizens in your state, number one should be confined only to those citizens. there's an interesting commerce clause earlier this year, 630 held it did not violate the commerce clause for kentucky to a net a price gouging law that only applied to salespeople in kentucky and the court said amazon's business is currently set up this would interfere with amazon's practice, that is
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a feature of amazon's business model, it could very easily adjust its business for consumers in kentucky for the kentucky regulated pricing doesn't affect what is going on elsewhere so that kind of thing is feasible technically and commercially for platforms to comply with that law without it touching out-of-state activities would be a huge bound forward. another thing is the disclosure obligations for state specific labeling requirements. arkansas in platform regulations just recently enacted in full that online marketplaces oppose their contact information as part of the experience on the marketplace so they know who they are buying from. that obligation which is consistent with data protection state regulations we are seeing as well as likely to be less
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concerning on the dormant commerce clause. focusing on direct contact and out-of-state interactions, taking notice rather than creating these aggressive actions those would be the directions i encourage this. >> brendan or paul, pretty good case that regulation on the state level is going to be often messy for the reason stan has laid out, to what extent does that counsel for handling this at the federal level? when uniform that everyone can coherently live under? >> i think there are lots of products that have variations at the state level and i don't know just because something is digital or available online that it necessarily needs to be
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uniform. there are lots of providers if we are analogizing to the agility contact to operate more in some jurisdictions than in others so i am -- i don't necessarily think this is a horrible outcome if a business decides we don't like the way some state comes out and define unfair practices in a way that lays it out and the platforms as we don't want to be held to that standard so we won't offer our product there, i don't think that's a horrible result. states need to have the ability to regulate themselves. >> if we had federal regulation in this space, decreased the
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need for public policy or policy need for regulation at the state level, it would certainly strengthen arguments for preemption. don't know that it would completely eliminate the need for the ability for states to ask about a different circumstance. the spot we find ourselves in is a wide gap between power and accountability and part of it is the mast power in what i was called blind spots for republicans and democrat lawmakers alike. on the left there was an ideological sort of mind mill between a lot of silicon valley corporations and the democrat party so there was -- maybe look the other way on the constitution of power, republicans on the other hand there was this sort of fundamentalist experience to this idea that a large corporation is doing a wants to gain power who are we as conservatives to say something? republicans are increasingly turning away from that you and
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becoming skeptical of concentrations of power but that blind spot lawmakers on the right and left that resulted in this massive concentration of power in silicon valley and that's where the need for action, the federal response decreases pressure and need for policy response in increased arguments about preemption. >> last question i have is for paul. the numbers you gave on blue states versus red states, pretty daunting and one way to counteract that is for the red states to band together and jointly ask to acquire countervailing power. is there any compact clause violation there?
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>> don't know anything about the compact clause, might be a stupid question but it strikes me if two states are forming an agreement to jointly regulate, that might be a concern. >> if i could respond to your question on federal preemption, the only area to do something at the federal level, in a regulatory role, that cements their business model and that would be a big mistake. to the compact question there are a number of ways to do this. most of the challenges with compact, is versus the federal government not necessarily versus other states with successful compacts, some around insurance provided for reciprocal and so forth but
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states can handle this if you operate in this other state states can get together and say we see the new brand some of these platforms have this issue around independent contractors and we will resolve it directly at the beginning. there is a huge gap if you look at investments in facebook occurring in 2004, data standards for a decade, investments in ai in 2011, we don't have any ai efforts at the federal level so there's a decade where states can act quickly and form good policy and attract investment and if they do that they will be reported and it will be a productive area.
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>> i just received one question from the audience. we are running over. which is california regulates emissions. probably in extraterritoriality question for dan. california regulates emissions in california, it seems formally not extraterritorial. and yet the effect of that is to compel auto manufacturers to have a national standard, it is not feasible to have one set of cars to sell for use in california and a different set elsewhere. how is internet regulations on?
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>> it is an example of the system working the way it is supposed to. in the federal literature it has a california affect and the idea is even california is appropriately focusing as you describe on a -- emissions in california. it is not attempting to say of my citizen in california might visit or be virtually present in massachusetts i will try to convert regulatory control the massachusetts law. what california does is regulates in its own sphere and the economics and federalism mean reaction to that. if your state and acts the full it doesn't make sense in a particular way but you need to be ready for the state to say i'm not going to do business
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under these terms for regulatory federalism but an alternative is to say that is how we do business and for reasons of scale i will do business that way nationally or globally. that kind of interaction between regulatory and private enterprises, that is economic federalism and it does show a role in leaving the regulatory conversation but can do it in the bounds of the constitution. >> another question along the same lines. on the texas like scheme, why can't we think of the regulation?
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can texas simply regulate what shows up on computer screens in texas and that seems formally interesting in the way that california emissions are formally interested. >> that is a wonderful distillation of one of the most important questions? if the answer to that question is yes then two things will follow. thing number one is virtually every state in the union can exercise regulatory jurisdiction over virtually every business. if that is sufficient to constitute sufficient regulatory commission by the commerce clause for the same reasons then it dramatically sets a wide bound for state jurisdiction and what follows
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on that is a horrendous array of inconsistencies. i'm skeptical sometimes, it will be impossible, cost of regulation is part of the free market. that prospect that states or local regulatory jurisdiction, that question is the supreme court, we talked earlier about the wayfarer decision. it is unlikely the court would agree about digital federalism and the more tailored approach, an extraordinary time. >> we are well over time.
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>> the fellow panelists enjoyed the discussion, interesting first amendment or preemption cases and some of these issues are joined, with action here. >> thanks to this terrific conversation, with messy constitutional litigation and interacting litigation of the bad thing, these are the most important foundational questions about not just a regulatory system the constitutional order for economic and social values. we will limit law from watching these and be part of a national conversation about it so just as we have today we learned a lot so thank you. >> paul, you get the last word. >> thank you, judge. i would at how far are we from
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that scenario of regulating what happens? if you look at california's data protection law or different disclosures required to occur the difference is a number of states who care about these things as much as california does, that is what is going to cause the effects but thank you for the opportunity to participate. >> thank you all for a very lively informative discussion. i enjoyed it very much and i will turn things back over. >> thank you, judge, and our panelists. a gripping and fascinating discussion on behalf of the federalist society. i want to thank you for your time and insight and vigorous and interesting discussion of -- i want to thank our audience for joining this discussion. we welcome your feedback by email, and we invite you to
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