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Here's how reforming Section 230 could impact Big Tech

Santa Clara University School of Law's Eric Goldman joins Yahoo Finance Live to break down the internet’s most important and misunderstood law, Section 230.

Video Transcript

- Big tech will be in focus yet again on the Hill on Tuesday., Twitter CEO Jack Dorsey and Facebook CEO Zuckerberg testifying tomorrow before the Senate Judiciary Committee, the focus this time around on censorship and the platform's handling of the 2020 election. Let's bring in Eric Goldman, who is a Professor at Santa Clara University School of Law. Professor, it's good to talk to you. There's no question this time around, yet again, the conversation of section 230 is going to come up again. I know you have been a very vocal advocate of this provision that has essentially provided immunity to these platforms from any third party content that's posted. What do you think are the chances of any change to that provision, especially given how big these platforms have gotten, both in scale and influence?

ERIC GOLDMAN: Yeah, there's no doubt that there's widespread consensus that section 230 needs reform. The problem is that people don't agree on what needs to be reformed. There's really no clear vision about exactly what problem everyone agrees needs to be solved. So although there might be widespread consensus about Section 230, there's actually not consensus about how to fix it. And that creates a form of paralysis. I don't know when that's going to be broken.

- Yeah, there's a question of what needs to be done. There's also the question of how it might be implemented, in terms of some of these changes. Obviously, the FCC looks to be maybe pressing their role in section 230 here. Talk to me about how that might look, though, considering that some people say they don't have the power to make any of those significant changes.

ERIC GOLDMAN: Yeah, I don't know who's really saying that. Whoever's saying that doesn't understand the law. There's been a number of cases where the FTC has successfully navigated around a section 230 defense. And I don't really see any evidence that it's held back FTC enforcement. So I'm not quite sure why that meme has become so popular. But it's pretty clearly wrong.

- Can you talk a bit about an argument that you've put forward before, when we've talked about Section 230, in sort of the downside of trying to change up the law? I mean, you've talked a lot about how the focus has been so much on big tech companies. But it really is-- the protection section 230 has provided for some of these startups that you've been arguing for.

ERIC GOLDMAN: Yeah, I really wish that we could talk about the full internet ecosystem when we talk about Section 230. So many people are tempted to equate the internet with Google and Facebook. And they're obviously key players on the internet, there's a whole range of really interesting important activity that's taking place beyond them. And section 230 protects that entire ecosystem, not just the people at the very top. So whenever we talk about section 230 reform, we're really asking, what do we want to happen with these littler folks, who don't have the same resources of Google and Facebook? And what do we think is going to happen to the entrepreneurial environment, the new entrants into the marketplace that might hope to unseat Google or Facebook?

- So how do you think lawmakers move forward on this issue? On the one hand, you've got, like you said, are these startups that you've argued need protection. And then you've got the likes of the big tech names, like a Facebook or a Google, who really even, without the Section 230 protection, some would argue that they are able to protect against some of the risks that could come without the provisions in place.

ERIC GOLDMAN: Well, to be clear, even if Google and Facebook didn't have section 230 protection and we're still around, they would change our operations quite a bit. And we would all notice that. So when we talk about the protection for Google or Facebook, what we're really talking about is what activities they enable their users to engage in. And it's clear that we really don't necessarily want to change that. It's something that's going to reconfigure their services.

But in terms of how we move forward, there's no question that we have to be very precise. What exactly is the problem that we want to fix? And will section 230 reform fix it? These are all empirical questions that we can answer empirically. We need to have the will to have that discussion.

- Yeah, the problem, Eric, I think, when people watch these hearings, is that there's not a lot of empirical discussions going on. It's mostly just political positioning when we get these questions. Jack Dorsey kind of goaded into a little bit of that, and having to answer about how effective some of these platforms are in swaying voters. But when we look into some of those key issues-- you talk about solving the issues there-- worry that there might be a little bit of a blowback, in terms of letting these tech platforms censor a little bit more, and calling balls and strikes, something that they haven't tried to do thus far?

ERIC GOLDMAN: I'm not sure I understand the question. But I do need to be precise. Internet companies don't censor their users. Censorship is something that the government does, using the coercive powers of government, to use law to control what people say. Internet companies decide what they think is fit for their audience. I call it editorial discretion. And we want them to exercise that editorial discretion. We want them to decide what is fit for their audience. And we want them to get rid of things that aren't fit for their audience.

So we should be encouraging them to engage in that kind of filtration, and calling it censorship actually misleads us on that.

- I want to get back to an earlier point you made about just what this means for business of these big tech names, if it is in fact those companies that Congress wants to focus on. What would be a fundamental change that you think could happen, from a pullback of section 230, or a potential change to the way section 230 is enforced?

ERIC GOLDMAN: What I fear is that we're going to see social media, turn into the playground of big brands and big public figures, that the gatekeepers, the social media companies, will only provide the publication tools to the people that they already know and can either trust or find enough financial backing to give them the keys to publication.

And so just imagine that you had a site like Twitter, but it was just a playground of brands and existing celebrities. And we wouldn't have the same kind of conversations that we had today among ordinary folk, talking with each other in ordinary ways. I expect that's the kind of stuff that's going to be chopped off with section 230.

- Eric Goldman, Professor at Santa Clara University School of Law. We will, of course, be watching that hearing tomorrow.