Articles by: "Adriana Santoni Vicens, Associate – DGA"

Policy

Safe, for now: What Moody v. NetChoice LLC means for media companies

July 29, 2024 Adriana Santoni Vicens, Associate – DGA

On the last opinion day of the 2023-2024 term, the Supreme Court issued its decision in Moody v. NetChoice LLC. The case involved the constitutionality of two laws that sought to limit social media companies’ freedom to moderate content. What was decided (as well as what wasn’t) in the Moody case will have important implications for digital media companies and sets the stage for the constitutional future of content moderation.

Moody v. NetChoice

In 2021, Florida and Texas enacted laws banning certain content moderation practices for covered platforms. The laws also require individualized explanations for users whose posts have been altered or removed.

Although similar, there are several key differences between the laws. Namely, for digital media companies, the Texas law largely excludes traditional media players, including news, sports, and entertainment platforms. There is no such exception present in the Florida law.

NetChoice and the Computer & Communications Industry Association, two trade associations that represent industry leaders such as Meta, Google, and X, challenged both laws. While both laws were initially put on hold by courts in both states, the Texas law was allowed to take effect following an appeal. However, following an order from the Supreme Court, the Texas law was put on hold once again.

In September 2023, the Supreme Court agreed to jointly hear these cases.

The Supreme Court decision

In a somewhat unexpected move, the Supreme Court voided both judgements, sending the cases back to the lower courts. In a 9-0 decision, the Court found that neither court of appeals properly analyzed the First Amendment challenges presented by both laws.

The Court took issue with NetChoice’s legal approach, which forced the association to prove that nearly every application of these laws would be unconstitutional. The nature of these laws and the industry they attempt to regulate, undoubtedly makes this a monumental task for NetChoice. Given the Court’s criticism of Net Choice’s approach, it is likely that organizations seeking to challenge similar laws will concentrate on challenging specific applications, a strategy that might bring more distinct victories to social media companies.

The Court also noted its dissatisfaction with the analyses carried out by the lower courts. To conduct a proper assessment, the lower courts will first have to determine the scope of these laws (which activities and which actors the laws regulate). They will also need to determine which applications of these laws violate the First Amendment, and then measure said number of applications against the number of applications that do not violate the First Amendment.

The Supreme Court also directed the lower courts to evaluate whether the laws’ content moderation provisions intrude upon protected editorial discretion and whether individualized explanation provisions disproportionately burden freedom of expression.

Implications for media companies

Although the Court did not decide the constitutionality of these laws, there is still much to take away for digital media companies. Throughout the decision, the Court repeatedly highlighted the importance of editorial discretion. Writing for the majority, Justice Elena Kagan noted that companies engaging in expressive activity are protected by the First Amendment. Because content curation and moderation has been found to fall within the scope of expressive activity, governmental interference with editorial choices would implicate the First Amendment.

The Court’s clear support of editorial discretion and freedom provides digital media companies necessary cover not only from laws of this nature but from broader governmental infringement upon editorial rights. The Court was also clear in its judgment that “the choice of material” constitutes the exercise of editorial control not only for traditional newspapers but for online platforms as well.

However, while the Court was clear in stating that editorial discretion (including content moderation practices) is subject to First Amendment protections, it was not clear whether all content moderation practices are worthy of these protections. This, because as technology has evolved, the lack of human interference in content moderation raises questions as to how “expressive” this conduct really is.

In her concurring opinion, Justice Amy Comey Barrett questioned whether an algorithm that “presents automatically to each user whatever the algorithm thinks the user will like” or AI tools meant to remove hateful content would constitute expressive activity. Delving further on this point, Justice Comey Barrett added that technological advancements will increasingly shine a light on the overlap between content moderation and consumers’ rights to decide for themselves what they wish to post and view on social media. This overlap, which is certain to have some degree of constitutional implications, should be top of mind for tech and media companies as they continue to develop and finetune their content moderation practices.

In his concurring opinion, Justice Samuel Alito was even more emphatic in raising concerns over the extent to which content moderation constitutes expressive activity. Justice Alito cast content moderation practices under a dubious light, arguing that it is not known how platforms moderate content.

Notwithstanding the accuracy of this assertion, media companies should be prepared for calls requesting increased transparency over their policies. Justice Alito also criticized the majority for assuming that “secret” algorithms are equally as expressive as print news editors. This delineation between the era of print news and today’s digital landscape will surely be echoed by the attorneys general of Florida and Texas as well as other proponents of government interference on content moderation.

What digital media companies can expect going forward

The majority’s reading of the First Amendment is a positive outcome for digital publishers. In reiterating that editorial discretion, including content moderation, warrants First Amendment protections, the Court enabled media companies to continue curating and moderating content at their discretion. If the Court were to have ruled adversely, this freedom would have been placed on the chopping block, and media companies would soon be battling a slew of unfavorable laws seeking to manipulate their editorial discretion.

It is difficult, however, to predict to what extent the Court’s opinion will inform the lower courts’ analyses. Regardless of how the lower courts rule on these laws, the Moody decision serves as a warning that while the Supreme Court remains committed to protecting the right to editorial discretion, there is also a lack of clarity, as well as a sense of skepticism, surrounding the scope of these protections over emerging forms of content moderation.

As algorithms and AI continue to grow even more prevalent and sophisticated, the Supreme Court will eventually have to clarify, and possibly draw new constitutional lines around, First Amendment precedents that originated at a time when computers were just arriving in newsrooms.

Policy

Our content, their rules: What U.S. v Apple means for media companies

April 24, 2024 Adriana Santoni Vicens, Associate – DGA

When the U.S. Department of Justice (DOJ) filed its lawsuit against Apple in March of 2024, it marked a fitting conclusion for a Q1 that brought some of the most notable technological reckonings seen since the advent of social media. More importantly, it signaled the possible beginning of a period of meaningful technological regulation, following years of legislative and regulatory stalemates that have allowed Big Tech companies to tighten their grip on society.

About a month ago, the DOJ filed a suit against Apple for violating antitrust laws. The outcome of the lawsuit could have wide-ranging implications for the mobile app ecosystem and consumer experience. It is also poised to have a significant impact on the media industry.

The DOJ’s monopoly argument

In its complaint, the DOJ argues that Apple maintains its monopoly by imposing hurdles and restrictions on app developers and third parties, effectively building and expanding a moat around its ever-growing monopoly. In its antitrust arguments, the DOJ cites Apple’s blocking of super apps and cloud streaming apps as well as its undermining of cross-platform messaging, smartwatches, and digital wallets.

These actions have resulted in higher fees, decreased innovation, and a less secure and effective user experience. And this despite the fact that Apple has continuously utilized privacy and security concerns to justify its actions, which are cited in the DOJ’s arguments.

However, the DOJ also sets the stage for the broader societal implications of Apple’s monopoly, which include deep repercussions for the digital publishing industry. In its arguments, the DOJ states that Apple’s actions reverberate across related industries, including news media, entertainment, social media, gaming, fitness, and financial services. The DOJ also cites Apple’s foray into content creation and entertainment as a troubling piece in its anticompetitive puzzle that seeks to “get people hooked on the ecosystem.”

Apple’s ecosystem stronghold

According to the DOJ’s antitrust complaint, a key factor in Apple’s preservation of this ecosystem is its selective enforcement of contractual restrictions for app developers through its app review process. Another factor is its denial of access to Application Programing Interfaces (APIs), which connect apps with a smartphone’s operating system.

These actions downgrade the user experience universally. In particular, they downgrade cross-platform experiences, effectively increasing switching costs for users. Furthermore, Apple “inflates the price for buying and using iPhones” while providing consumers with a limited user experience.

Apple also prohibits the creation of alternative app stores, even though these app stores would cater to a consumer’s unique needs and preferences. Despite denying this service to American consumers, Apple offers governments and even certain companies access to different versions of its app store. Following the implementation of the European Union’s “Digital Markets Act,” Apple is now required to offer EU consumers the ability to access alternative app stores.

Due to this arbitrary and flexible enforcement of internal regulations (purportedly in place to protect consumer privacy and security), the DOJ argues that “Apple deploys privacy and security justifications as an elastic shield that can stretch or contract to serve Apple’s financial and business interests.”

The effects of Apple’s anticompetitive behavior

In its complaint, the DOJ identifies “protecting competition and the innovation that competition inevitably ushers in for consumers, developers, publishers, content creators, and device manufacturers” as the reason for bringing this lawsuit. Undoubtedly, the allegedly anticompetitive practices Apple employs in the smartphone market bear effect on digital publishers.

Apple’s practice of “sell[ing] keyword searches for an app to someone other than the owner of the app” could allow competitors of a digital publisher to limit consumer’s access to a publisher’s content or extract data from consumers. Even more troublesome is the possibility of nefarious actors relying on consumer trust of legacy publishers to misdirect them towards malicious apps. Reports indicate that an unidentified threat actor has targeted human rights activists in Western Sahara by deploying malware disguised as a news app run by the Sahara Press Service.

Meanwhile, Apple blocks the use of digital wallets. This denies publishers the ability to enhance the consumer experience through the use of “rewards points in purchasing, digital receipts, returns, loyalty programs, and digital coupons for purchases of relevant subscriptions and digital goods.” This is particularly impactful as publishers attempt to reinvent and redesign their offerings in the face of industry headwinds.

Apple’s anticompetitive effect on discourse and democracy

There is, however, an even more troubling dimension to the arguments presented by the DOJ that affects digital publishers. In an ever-increasing digital world, smartphones aren’t just a means of communication, they are conduits of vital information that connect us to our community and the world. What the DOJ has attempted to demonstrate in its complaint is that these devices, which have become inextricably linked with every aspect of daily life, are controlled by their manufactures to a detrimental and preoccupying extent.

The DOJ alleges that Apple “frequently uses App Store rules and restrictions to penalize and restrict developers that take advantage of technologies that threaten to disrupt, disintermediate, compete with, or erode Apple’s monopoly power.” If television manufacturers arbitrarily decided to limit access to certain news channels, consumers and regulators would be rightfully outraged. And yet, the DOJ argues that Apple not only holds this power, but consciously exercises it in a bid to maintain its monopoly power.

Apple’s “Apple News” service has the power to “increase [Apple’s] power over content creators and newspapers, among others, by exerting control over how audiences access their work, decreasing traffic to their websites and apps.” While the anti-competitive implications of this are obvious, it also means that Apple has the ability decrease or even impede traffic to authors and publishers because they present a possible liability for the company. Jon Stewart’s allegation that in 2021, Apple asked him not to interview FTC Chair Lina Khan for his podcast (which was produced by the company) proves that such a possibility is not farfetched.

Apple’s arbitrary app review process exacerbates the issue. It allows the company to deny access to a publication’s content not just to subscribers of its “Apple News” service, but to the over 250 million users of iPhones and other Apple products in the United States.

At a time during which media companies have to navigate the rough waters of all-time-high political polarization, at what point does it become easier for these companies to simply cease consumer access to “controversial” content altogether? What happens when a corporation decides that an op-ed, a journalist, or even an entire publication is not worth the corporate risk? The answers to these questions are unclear, and in this ambiguity lies the importance of this case on the digital publishing industry and a society that depends on it to conduct a well-informed life.

Policy

Election 2024: What the results will mean for digital publishers

March 4, 2024 Adriana Santoni Vicens, Associate – DGA

As November 5 draws increasingly near, the rhetoric surrounding the 2024 election is almost inescapable. Although think pieces, pundits, and poll numbers populate publications across the country, much less is said about how the outcome of this monumental election will affect the future of these outlets.

At first glance, the attitudes of President Joe Biden and former President Donald Trump about digital publishers appear to be diametrically opposed. Former President Trump’s adversarial attitude towards the media industry requires little preamble; after all, the term “fake news” is synonymous with his tenure and persona.

Meanwhile, President Biden has embraced legacy media and publishers, choosing to author op-eds in some of the nation’s most prominent outlets, such as the Washington Post and The New York Times. However, while a return by former-President Trump to the White House would probably mean another four years of him snubbing the White House Correspondents’ Dinner, his policies surrounding the industry wouldn’t be all that different to President Biden’s.

Regardless of their personal attitudes towards the media and digital publishers, the winning candidate will have to make important decisions that will have deep implications for the future of the industry. Even amidst the polarization that permeates the halls of Congress, lawmakers have found surprising agreement in their critiques of Big Tech. Proposals to regulate these companies, such as the rolling back of Section 230 protections, would send ripples across the entire industry.

This increased scrutiny has also opened the floodgates of antitrust considerations, and, if elected, Biden and Trump would both face historic antirust considerations surrounding the tech industry. Without doubt, their motives differ: President Biden being spurred by concerns over the effects of the industry’s shifting tectonic plates and former-President Trump being spurred by personal dislike and distrust towards internet companies. However, both are likely to take actions to try and halt Big Tech from dominating most aspects of modern society.

With that being said, we summarize below some of the most pressing policy issues at the intersection of Big Tech and digital media, as well as the actions President Biden and former-President Trump are expected to take that are likely to impact those in the business of digital media.

Regulating Artificial Intelligence (AI)

If there is one topic that has galvanized the industry during the past year it is without a doubt AI. Its promise and perils have made it the most controversial topic across industry discussions, and the approach taken by the whomever is sworn in on January 20, 2025, will send waves across the industry.

For a Biden administration, their top AI priorities would center on ensuring that agencies comply with the directives and deadlines established in the AI Executive Order, published in October of 2023. Earlier this year, the White House touted that all agencies had completed their 90-day deliverables.

However, the most relevant deliverable for digital publishers won’t arrive until mid-2024, when the Director of the United States Patent and Trademark Office (USPTO) is expected to issue recommendations to the President on potential executive actions relating to copyright and AI. Earlier this month, Ben Buchanan, White House Special Advisor for AI, stated that while the Administration does not yet have an official stance on AI and copyright issues, the Administration’s general priorities are “making sure that we have an innovative AI ecosystem and making sure the people who create meaningful content are appropriately compensated for it.”

For a Trump administration, it can be expected that a significant portion of the USPTO’s recommendations will be adopted, given that these are set to arrive only a few months before election day. Although earlier this month former-President Trump stated that AI was “maybe the most dangerous thing out there,” he has given little indication as to what his administration’s policies would be.

Nonetheless, it is expected that a Trump administration would give special focus to AI’s potential discrimination or censorship of conservative or MAGA voices. For example, given the former President’s acrimonious attitude towards his adversaries, he is sure not to be content with Chat GPT’s refusal to produce a poem in his administration.

Data privacy policy and online safety

Following the landmark hearing on Big Tech held earlier this year, children’s online safety has dominated the national discussion surrounding data privacy. A Biden administration can be expected to throw its weight behind the Kids Online Safety Act (KOSA), which has shaped up to be the paramount bill on the topic.

This legislative effort, which has faced several roadblocks since its introduction in 2022, is closer than ever to this finish line, now that is has earned the backing of over 60 senators including Senate Majority Leader Chuck Schumer (D-NY). As presently written, KOSA has limited applicability to digital publishers, although its eventual passage, coupled with more stringent data privacy efforts being proposed across multiple states, might signify stricter privacy requirements for publishers further down the road.

At a broader level, President Biden is expected to announce executive actions aimed at preventing foreign adversaries from illegitimately gaining access to Americans’ data sometime in 2024. Such actions would probably impose new data privacy requirements on digital publishers, although the span of these requirements would be determined by the breadth of the actions announced. However, these new requirements and publishers’ compliance with them could boost consumer trust, at a time when data breaches are more rampant than ever.

It can be expected that if elected, President Trump would also support KOSA, given its broad bipartisan support. However, he can also be expected to reject international data privacy standards, as well as rescind any actions taken by the current FCC on net neutrality or broadband privacy.

Corporate taxes

A Biden administration is expected to continue its support for progressive tax reforms, including increasing the corporate tax rate. As part of his FY2024 budget, President Biden proposed to increase the corporate tax rate from 21% up to 28%. President Biden is also expected to close certain tax loopholes that could impact corporate financial strategies, as well as increase funding for social programs.

Meanwhile, if elected, former-President Trump would at the very least focus on maintaining the corporate tax rate at 21%, although he could very well attempt to lower the rate to 15%, the rate the former-President initially sought for the 2017 Tax Cuts and Jobs Act. When asked about the possibility of lowering the corporate tax rate to 15% during a September interview with NBC’s Meet the Press, former President Trump stated that he’d “like to lower them a little bit.” More broadly, a Trump administration would seek to extend, or even make permanent, a majority of provisions from the 2017 tax cuts, such as the Qualified Business Income Deduction.

What’s next?

Many of most relevant decisions regarding the future of digital publishing lie outside the purview of the executive branch. As brought up in the Senate Judiciary Committee hearing on AI and Copyright, members of Congress are exploring legislation that would require the implementation of licensing agreements between publishers and AI companies, as well as legislation that would at the very least “clarify” the applicability of Section 230 and copyright law to content scraping carried out by AI companies. Additionally, other major questions surrounding copyright law are in the hands of the courts, as is the case with The New York Times’ lawsuit against Open AI and Microsoft.

Still, a multitude of regulatory decisions will land on the desk of whomever is elected on November 5, 2024. What is of most concern to digital publishers isn’t necessarily which candidate emerges victorious, but how to best advocate for the protection and preservation of the digital publishing industry amidst a confluence of interests and voices that will crowd the White House on these industry-defining issues.

Policy

The future of journalism – defining copyright in the age of AI

January 31, 2024 Adriana Santoni Vicens, Associate – DGA

On January 10, 2024, the Senate Judiciary Committee’s Subcommittee on Privacy, Technology, and the Law held a hearing titled “Oversight of A.I.: The Future of Journalism,” kickstarting legislative activity on AI for 2024. The central question of this hearing wasn’t whether copyright law covers AI, most witnesses and members of Congress seemed to agree that it does, it was whether existing law properly and effectively protects AI’s infringement on the intellectual property of journalists. As Subcommittee Chairman Senator Richard Blumenthal (D-CT) stated, rights need remedies, and for these remedies to be effective, they must be enforceable. It was that effectiveness and enforceability that was the true centerpiece of this Congressional discussion.

The witnesses at the hearing were: Danielle Coffey, President and Chief Executive Officer of the News Media Alliance, Jeff Jarvis, Tow Professor of Journalism Innovation at the CUNY Graduate School of Journalism, Curtis LeGeyt, President and Chief Executive Officer of the National Association of Broadcasters and Roger Lynch, Chief Executive Officer of Condé Nast.

For senators, a sense of urgency

During his opening statement, Senator Blumenthal (D-CT) highlighted the importance of this subject and this hearing, touting it as critical to democracy. Careful not to vilify the possibilities awarded by AI, Senator Blumenthal argued it is essential for reporters and readers to be able to reap the benefits of AI while avoiding its pitfalls. Nonetheless, he clearly called out how the rise of big tech and generative AI has led to the decline of the news industry, with the hard work of authors being utilized without credit or compensation.

Evident in Senator Blumenthal’s remarks was a sense of urgency, as he expressed that it was essential that Congress learn from their mistakes in tackling social media. He also floated several areas of consensus around the topic of AI, such as licensing, transparency, incentive structures for companies to develop trustworthy products, limiting big tech’s monopolistic practices when it comes to advertising, and clarifying that Section 230 does not apply to AI.

As a refresher, Section 230 of the Telecommunications Act of 1996 states that “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” Since coming into effect, Section 230 has granted websites and social media companies immunity from liability for content posted on their platforms by others.

It is no surprise that several of these areas of consensus are present in legislative proposals introduced by Senator Blumenthal. In 2023, he, alongside Subcommittee Ranking Member Senator Josh Hawley (R-MO) introduced the “No Section 230 Immunity for AI Act”as well as an AI Legislative Framework which tackled licensing regimes, transparency, and trustworthiness.

In his opening statement, Senator Hawley echoed Senator Blumenthal’s sense of urgency in protecting the work product, data, and information of consumers, at a time when the largest tech companies attempt to monopolize these areas.

For witnesses, a (somewhat) clear solution

Across the board, the hearing’s four witnesses illustrated the invaluable contributions the news industry has made to society. Danielle Coffey, Curtis LeGeyt, and Roger Lynch all agreed that licensing agreements are an essential component in combating the risks AI poses to the industry.

Coffey highlighted that such agreements could help avoid protracted uncertainty in the courts, while LeGeyt and Lynch raised how licensing agreements have become standard practice in the music, radio, and local television industries. Jeff Jarvis was more optimistic about the positive use cases of AI in the industry and advocated for the measured embrace and implementation of AI in journalistic practices.

A fork in the road for the industry

Following witness testimonies, committee members expressed their support of licensing agreements as a solution to some of the copyright issues raised by the interaction between AI and the news industry. Even more so, several committee members expressed their eagerness to tackle the issue directly and immediately.

Senator Mazie Hirono (D-HI) inquired whether Congress needed to enact legislation for these kinds of licensing procedures to be implemented, while Senator Blumenthal stated that when it comes to both licensing and Section 230 issues, Congress has an obligation to clarify current law, ensure that licensing is legally required and reinforce the inapplicability of Section 230. Somewhat surprisingly, it was some of the witnesses who pumped the legislative breaks on these comments. Regarding Senator Hirono’s comments, LeGeyt argued that such Congressional action would be premature while Coffey stated she believed the industry would prevail in addressing these issues through pending litigation.

What is undeniable, is that 2024 is set to be a landmark year for Congressional action on AI, and that copyright issues offer legislators a path to AI “victory” that is targeted, discreet, and not overtly controversial. Because of this, regardless of what was advocated for in this hearing, members of Congress can be expected to at the very least attempt to “clarify” the applicability of existing copyright law to generative AI models. Of course, the distinction between a limited clarification of current law and the outright enforcement of these types of agreements is up to legislators.

While witnesses adamantly made the case that copyright law is on their side, legislators continuously expressed concerns with the efficacy of existing protections. Going back to Senator Blumenthal’s statement, about rights needing remedies that are effective and enforceable, participants agreed that the rights of journalists certainly exist in copyright law, but for legislators, efficacy and enforceability need an extra push from Congress to come to fruition.

Looking towards 2024, with copyright litigation in its nascent stages, the digital content industry may certainly find relief in the legal system but would be wise to hedge some of its bets in the hands of legislators who seem keen on engaging with this industry-defining issue.