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New FTC Guidelines Proposes to Address Deceptive Endorsement Advertising on Social Media

Lack of enforcement has led to gray area surrounding endorsement advertising, especially from ‘microcelebrities.’

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Photo of Mannatt Partner Po Yi

WASHINGTON, December 12, 2022 — The rapidly changing social media landscape has led to significant gray area surrounding endorsement advertising from both well-known household names and internet “microcelebrities,” with widespread deceptive practices being facilitated by vague rules and a lack of enforcement, according to experts on a Center for Data Innovation panel Thursday.

The Federal Trade Commission in July proposed changes to its endorsement guidelines for the first time since 2009, and is currently soliciting public comment on the proposal.

These changes are long overdue, said Christopher Terry, professor at the University of Minnesota’s Hubbard School of Journalism and Mass Communication. The government would not tolerate the deceptive endorsement practices by influencers “from an endorser in any other medium,” he said.

He said one of the primary challenges with endorsement advertising on social media is disclosing the financial relationship between brands and influencers in a way that will be understood by consumers. Recent research has demonstrated that many people cannot correctly identify sponsored content on social media, Terry said.

Children are particularly susceptible to endorsement advertising, added Irene Ly, policy counsel for Common Sense Media. Although the proposed guidelines’ inclusion of a new section about child-specific advertising is a positive step, she said, there is still a lack of specificity that might cause confusion for advertisers.

Existing legal standard for endorsement disclosure

There are different ways to provide disclosures on various platforms, and it can be difficult for influencers to figure out the best method for each, said Po Yi, a partner at Mannatt, Phelps & Phillips. However, it is broadly understood that paid posts need some form of disclosure, and most influencers are attempting to comply.

According to the FTC’s “Guides Concerning the Use of Endorsements and Testimonials in Advertising,” Section 255.1, “Endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser.”

Screenshot of panelists from the Center for Data Innovation event

The bigger challenge is that many influencers, especially those with smaller followings and less access to legal resources, don’t realize that their endorsements must be based on personal experience with the product, Yi said.

In November, Google and iHeartMedia had to pay millions after being sued by the FTC for deceptive endorsement advertising. Google provided iHeartMedia with scripts for on-air personalities and celebrities to endorse the Pixel 4 in ads that aired over 11,000 times, despite the fact that none of the endorsers had ever owned the phone.

So far, enforcement agencies have focused on going after companies rather than individual influencers.

Companies should educate influencers on the disclosure and personal experience requirements, but they also need to consistently monitor influencers to ensure continued compliance, Terry said.

There is often confusion about who is ultimately responsible for compliance, Yi said.

“If something goes wrong, the FTC will probably tell you right away, everyone in that chain is responsible, from the influencers to the media company to the agency to the advertiser,” she said.

Another question of liability arises with fake reviews: Should online platforms be responsible for verifying users’ identity, or does that fall to the brands?

Section 230 currently protects social media platforms from liability for fake reviews, Terry said. However, with new content moderation laws on the horizon, this responsibility could soon shift.

Reporter Em McPhie studied communication design and writing at Washington University in St. Louis, where she was a managing editor for the student newspaper. In addition to agency and freelance marketing experience, she has reported extensively on Section 230, big tech, and rural broadband access. She is a founding board member of Code Open Sesame, an organization that teaches computer programming skills to underprivileged children.

Social Media

Must Internet Platforms Host Objectionable Content? Appeals Courts Consider ‘Must Carry’ Rules

Court decisions on Texas and Florida “must-carry” laws disagreed on whether online platforms should be regulated as common carriers.

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Photo of Reese Schonfeld, President of Cable News Network and Reynelda Nuse, weekend anchorwoman for CNN, stand at a set at the broadcast center in Atlanta in May 1980.

WASHINGTON, January 30, 2023 — As the Supreme Court prepares to hear a pair of cases about online platform liability, it is also considering a separate pair of social media lawsuits that aim to push content moderation practices in the opposite direction, adding additional questions about the First Amendment and common carrier status to an already complicated issue.

The “must-carry” laws in Texas and Florida, both aimed at limiting online content moderation, met with mixed decisions in appeals courts after being challenged by tech industry groups NetChoice and the Computer & Communications Industry Association. The outcomes will likely end up “affecting millions of Americans and their ability to express themselves online,” said Chris Marchese, counsel at NetChoice, at a Broadband Breakfast Live Online event on Wednesday.

In September, a federal appeals court in the Fifth Circuit upheld the Texas law, ruling that social media platforms can be regulated as “common carriers,” or required to carry editorial programming as were cable television operators in the Turner Broadcasting System v. FCC decisions from the 1990s.

Dueling appeals court interpretations

By contrast, the judges overturning the Florida ruling held that social media platforms are not common carriers. Even if they were, the 11th Circuit Court judges held, “neither law nor logic recognizes government authority to strip an entity of its First Amendment rights merely by labeling it a common carrier.”

Whether social media platforms should be treated like common carriers is “a fair question to ask,” said Marshall Van Alstyne, Questrom chair professor at Boston University. It would be difficult to reach a broad audience online without utilizing one of the major platforms, he claimed.

However, Marchese argued that in the Texas ruling, the Fifth Circuit “to put it politely, ignored decades of binding precedent.” First Amendment protections have previously been extended to “what we today might think of as common carriers,” he said.

“I think we can safely say that Texas and Florida do not have the ability to force our private businesses to carry political speech or any type of speech that they don’t see fit,” Marchese said.

Ari Cohn, free speech counsel at TechFreedom, disagreed with the common carrier classification altogether, referencing an amicus brief arguing that “social media and common carriage are irreconcilable concepts,” filed by TechFreedom in the Texas case.

Similar ‘must-carry’ laws are gaining traction in other states

While the two state laws have the same general purpose of limiting moderation, their specific restrictions differ. The Texas law would ban large platforms from any content moderation based on “viewpoint.,” Critics have argued that the term is so vague that it could prevent moderation entirely.

“In other words, if a social media service allows coverage of Russia’s invasion of Ukraine, it would also be forced to disseminate Russian propaganda about the war,” Marchese said. “So if you allow conversation on a topic, then you must allow all viewpoints on that topic, no matter how horrendous those viewpoints are.”

The Florida law “would require covered entities — including ones that you wouldn’t necessarily think of, like Etsy — to host all or nearly all content from so-called ‘journalistic enterprises,’ which is basically defined as anybody who has a small following on the internet,” Marchese explained. The law also prohibits taking down any speech from political candidates.

The impact of the two cases will likely be felt far beyond those two states, as dozens of similar content moderation bills have already been proposed in states across the country, according to Ali Sternburg, vice president of information policy for the CCIA.

But for now, both laws are blocked while the Supreme Court decides whether to hear the cases. On Jan. 23, the court asked for the U.S. solicitor general’s input on the decision.

“I think this was their chance to buy time because in effect, so many of these cases are actually asking the court to do opposite things,” Van Alstyne said.

Separate set of cases calls for more, not less, moderation

In February, the Supreme Court will hear two cases that effectively argue the reverse of the Texas and Florida laws by alleging that social media platforms are not doing enough to remove harmful content.

The cases were brought against Twitter and Google by family members of terror attack victims, who argue that the platforms knowingly allowed terrorist groups to spread harmful content and coordinate attacks. One case specifically looks at YouTube’s recommendation algorithms, asking whether Google can be held liable for not only hosting but promoting terrorist content.

Algorithms have become “the new boogeyman” in ongoing technology debates, but they essentially act like mirrors, determining content recommendations based on what users have searched for, engaged with and said about themselves, Cohn explained.

Reese Schonfeld, President of Cable News Network and Reynelda Nuse, weekend anchorwoman for CNN, stand at one of the many sets at the broadcast center in Atlanta on May 31, 1980. The network, owned by Ted Turner, began it’s 24-hour-a-day news broadcasts on Sunday in the afternoon. (AP Photo/Joe Holloway used with permission.)

“This has been litigated in a number of different contexts, and in pretty much all of them, the courts have said we can’t impose liability for the communication of bad ideas,” Cohn said. “You hold the person who commits the wrongful act responsible, and that’s it. There’s no such thing as negligently pointing to someone to bad information.”

A better alternative to reforming Section 230 would be implementing “more disclosures and transparency specifically around how algorithms are developed and data about enforcement,” said Jessica Dheere, director of Ranking Digital Rights.

Social media platforms have a business incentive to take down terrorist content, and Section 230 is what allows them to do so without over-moderating, Sternberg said. “No one wants to see this horrible extremist content on digital platforms, especially the services themselves.”

Holding platforms liable for all speech that they carry could have a chilling effect on speech by motivating platforms to err on the side of removing content, Van Alstyne said.

Our Broadband Breakfast Live Online events take place on Wednesday at 12 Noon ET. Watch the event on Broadband Breakfast, or REGISTER HERE to join the conversation.

Wednesday, January 25, 2023, 12 Noon ET – Section 230, Google, Twitter and the Supreme Court

The Supreme Court will soon hear two blockbuster cases involving Section 230 of the Telecommunications Act: Gonzalez v. Google on February 21, and  Twitter v. Taamneh on February 22. Both of these cases ask if tech companies can be held liable for terrorist content on their platforms. Also in play: Laws in Florida and in Texas (both on hold during the course of litigation) that would limit online platforms’ ability to moderate content. In a recent brief, Google argued that denying Section 230 protections for platforms “could have devastating spillover effects.” In advance of Broadband Breakfast’s Big Tech & Speech Summit on March 9, this Broadband Breakfast Live Online event will consider Section 230 and the Supreme Court.

Panelists:

  • Chris Marchese, Counsel, NetChoice
  • Ari Cohn, Free Speech Counsel, TechFreedom
  • Jessica Dheere, Director, Ranking Digital Rights
  • Ali Sternburg, Vice President of Information Policy, Computer & Communications Industry Association
  • Marshall Van Alstyne, Questrom Chair Professor, Boston University
  • Drew Clark (moderator), Editor and Publisher, Broadband Breakfast

Panelist resources:

Chris Marchese analyzes technology-related legislative and regulatory issues at both the federal and state level. His portfolio includes monitoring and analyzing proposals to amend Section 230 of the Communications Decency Act, antitrust enforcement, and potential barriers to free speech and free enterprise on the internet. Before joining NetChoice in 2019, Chris worked as a law clerk at the U.S. Chamber Litigation Center, where he analyzed legal issues relevant to the business community, including state-court decisions that threatened traditional liability rules.

Ari Cohn is Free Speech Counsel at TechFreedom. A nationally recognized expert in First Amendment law, he was previously the Director of the Individual Rights Defense Program at the Foundation for Individual Rights in Education (FIRE), and has worked in private practice at Mayer Brown LLP and as a solo practitioner, and was an attorney with the U.S. Department of Education’s Office for Civil Rights. Ari graduated cum laude from Cornell Law School, and earned his Bachelor of Arts degree from the University of Illinois at Urbana-Champaign.

Jessica Dheere is the director of Ranking Digital Rights, and co-authored RDR’s spring 2020 report “Getting to the Source of Infodemics: It’s the Business Model.” An affiliate at the Berkman Klein Center for Internet & Society, she is also founder, former executive director, and board member of the Arab digital rights organization SMEX, and in 2019, she launched the CYRILLA Collaborative, which catalogs global digital rights law and case law. She is a graduate of Princeton University and the New School.

Ali Sternburg is Vice President of Information Policy at the Computer & Communications Industry Association, where she focuses on intermediary liability, copyright, and other areas of intellectual property. Ali joined CCIA during law school in 2011, and previously served as Senior Policy Counsel, Policy Counsel, and Legal Fellow. She is also an Inaugural Fellow at the Internet Law & Policy Foundry.

Marshall Van Alstyne (@InfoEcon) is the Questrom Chair Professor at Boston University. His work explores how IT affects firms, innovation, and society with an emphasis on business platforms. He co-authored the international best seller Platform Revolution and his research influence ranks among the top 2% of all scientists globally.

Drew Clark (moderator) is CEO of Breakfast Media LLC. He has led the Broadband Breakfast community since 2008. An early proponent of better broadband, better lives, he initially founded the Broadband Census crowdsourcing campaign for broadband data. As Editor and Publisher, Clark presides over the leading media company advocating for higher-capacity internet everywhere through topical, timely and intelligent coverage. Clark also served as head of the Partnership for a Connected Illinois, a state broadband initiative.

WATCH HERE, or on YouTubeTwitter and Facebook.

As with all Broadband Breakfast Live Online events, the FREE webcasts will take place at 12 Noon ET on Wednesday.

SUBSCRIBE to the Broadband Breakfast YouTube channel. That way, you will be notified when events go live. Watch on YouTubeTwitter and Facebook

See a complete list of upcoming and past Broadband Breakfast Live Online events.

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Section 230

Section 230 Interpretation Debate Heats Up Ahead of Landmark Supreme Court Case

Panelists disagreed over the merits of Section 230’s protections and the extent to which they apply.

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Screenshot of speakers at the Federalist Society webinar

WASHINGTON, January 25, 2023 — With less than a month to go before the Supreme Court hears a case that could dramatically alter internet platform liability protections, speakers at a Federalist Society webinar on Tuesday were sharply divided over the merits and proper interpretation of Section 230 of the Communications Decency Act.

Gonzalez v. Google, which will go before the Supreme Court on Feb. 21, asks if Section 230 protects Google from liability for hosting terrorist content — and promoting that content via algorithmic recommendations.

If the Supreme Court agrees that “Section 230 does not protect targeted algorithmic recommendations, I don’t see a lot of the current social media platforms and the way they operate surviving,” said Ashkhen Kazaryan, a senior fellow at Stand Together.

Joel Thayer, president of the Digital Progress Institute, argued that the bare text of Section 230(c)(1) does not include any mention of the “immunities” often attributed to the statute, echoing an argument made by several Republican members of Congress.

“All the statute says is that we cannot treat interactive computer service providers or users — in this case, Google’s YouTube — as the publisher or speaker of a third-party post, such as a YouTube video,” Thayer said. “That is all. Warped interpretations from courts… have drastically moved away from the text of the statute to find Section 230(c)(1) as providing broad immunity to civil actions.”

Kazaryan disagreed with this claim, noting that the original co-authors of Section 230 — Sen. Ron Wyden, D-OR, and former Rep. Chris Cox, R-CA — have repeatedly said that Section 230 does provide immunity from civil liability under specific circumstances.

Wyden and Cox reiterated this point in a brief filed Thursday in support of Google, explaining that whether a platform is entitled to immunity under Section 230 relies on two prerequisite conditions. First, the platform must not be “responsible, in whole or in part, for the creation or development of” the content in question, as laid out in Section 230(f)(3). Second, the case must be seeking to treat the platform “as the publisher or speaker” of that content, per Section 230(c)(1).

The statute co-authors argued that Google satisfied these conditions and was therefore entitled to immunity, even if their recommendation algorithms made it easier for users to find and consume terrorist content. “Section 230 protects targeted recommendations to the same extent that it protects other forms of content presentation,” they wrote.

Despite the support of Wyden and Cox, Randolph May, president of the Free State Foundation, predicted that the case was “not going to be a clean victory for Google.” And in addition to the upcoming Supreme Court cases, both Congress and President Joe Biden could potentially attempt to reform or repeal Section 230 in the near future, May added.

May advocated for substantial reforms to Section 230 that would narrow online platforms’ immunity. He also proposed that a new rule should rely on a “reasonable duty of care” that would both preserve the interests of online platforms and also recognize the harms that fall under their control.

To establish a good replacement for Section 230, policymakers must determine whether there is “a difference between exercising editorial control over content on the one hand, and engaging in conduct relating to the distribution of content on the other hand… and if so, how you would treat those different differently in terms of establishing liability,” May said.

No matter the Supreme Court’s decision in Gonzalez v. Google, the discussion is already “shifting the Overton window on how we think about social media platforms,” Kazaryan said. “And we already see proposed regulation legislation on state and federal levels that addresses algorithms in many different ways and forms.”

Texas and Florida have already passed laws that would significantly limit social media platforms’ ability to moderate content, although both have been temporarily blocked pending litigation. Tech companies have asked the Supreme Court to take up the cases, arguing that the laws violate their First Amendment rights by forcing them to host certain speech.

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Section 230

Supreme Court Seeks Biden Administration’s Input on Texas and Florida Social Media Laws

The court has not yet agreed to hear the cases, but multiple justices have commented on their importance.

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Photo of Solicitor General Elizabeth Prelogar courtesy of the U.S. Department of Justice

WASHINGTON, January 24, 2023 — The Supreme Court on Monday asked for the Joe Biden administration’s input on a pair of state laws that would prevent social media platforms from moderating content based on viewpoint.

The Republican-backed laws in Texas and Florida both stem from allegations that tech companies are censoring conservative speech. The Texas law would restrict platforms with at least 50 million users from removing or demonetizing content based on “viewpoint.” The Florida law places significant restrictions on platforms’ ability to remove any content posted by members of certain groups, including politicians.

Two trade groups — NetChoice and the Computer & Communications Industry Association — jointly challenged both laws, meeting with mixed results in appeals courts. They, alongside many tech companies, argue that the law would violate platforms’ First Amendment right to decide what speech to host.

Tech companies also warn that the laws would force them to disseminate objectionable and even dangerous content. In an emergency application to block the Texas law from going into effect in May, the trade groups wrote that such content could include “Russia’s propaganda claiming that its invasion of Ukraine is justified, ISIS propaganda claiming that extremism is warranted, neo-Nazi or KKK screeds denying or supporting the Holocaust, and encouraging children to engage in risky or unhealthy behavior like eating disorders,”

The Supreme Court has not yet agreed to hear the cases, but multiple justices have commented on the importance of the issue.

In response to the emergency application in May, Justice Samuel Alito wrote that the case involved “issues of great importance that will plainly merit this Court’s review.” However, he disagreed with the court’s decision to block the law pending review, writing that “whether applicants are likely to succeed under existing law is quite unclear.”

Monday’s request asking Solicitor General Elizabeth Prelogar to weigh in on the cases allows the court to put off the decision for another few months.

“It is crucial that the Supreme Court ultimately resolve this matter: it would be a dangerous precedent to let government insert itself into the decisions private companies make on what material to publish or disseminate online,” CCIA President Matt Schruers said in a statement. “The First Amendment protects both the right to speak and the right not to be compelled to speak, and we should not underestimate the consequences of giving government control over online speech in a democracy.”

The Supreme Court is still scheduled to hear two other major content moderation cases next month, which will decide whether Google and Twitter can be held liable for terrorist content hosted on their respective platforms.

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