From the Digital to the Physical: Federal Limitations on Regulating Online Marketplaces
Citation: Benjamin Edelman, Abbey Stemler (2018/01/31) From the Digital to the Physical: Federal Limitations on Regulating Online Marketplaces.
Internet Archive Scholar (search for fulltext): From the Digital to the Physical: Federal Limitations on Regulating Online Marketplaces
Download: http://www.benedelman.org/publications/federal-limitations-regulating-online-marketplaces-2018-01-31.pdf
Tagged: CDA230 (RSS), intermediary liability (RSS)
Summary
Describes how CDA 230 and other laws have protected online marketplaces that tangibly impact local physical outcomes or activities that localities have had control over, from local taxation and regulation.
Provides brief case studies of Craigslist (general purpose listings), Uber (ride hailing), Airbnb (short-term rentals), and StubHub (ticket resale).
Local enforcement efforts include attempting to require marketplaces to verify participant compliance with regulation, to require marketplaces to change their design to facilitate compliance or enforcement (e.g., to publish or withhold certain information needed to ascertain compliance or to not encourage illegal behavior), to pay taxes, and to disclose participant information.
CDA 230 was enacted to protect providers of interactive computer services from defamation lawsuits and to encourage such providers to moderate user-provided content without fear of publisher liability. Marketplaces have argued for a broad interpretation of "interactive computer service", such that eg eBay, Airbnb, or Uber would be interactive computer services rather than modern replacements for malls, hotels, or taxis. Marketplaces also argue that their info is provided by third parties, and that regulations holding them liable treat them as publishers or speakers of content provided by users. Other laws used include the 1996 Federal Telecommunications Act, Stored Communications Act, Due Process Clause, Dormant Commerce Clause, and Internet Tax Freedom Act.
5 ways to argue CDA should allow local regulation of marketplaces:
- marketplace is more than an interactive computer service
- marketplace is an information content provider
- marketplace is something other than publisher or speaker
- federalism avoidance of preemption canon
- narrow CDA 230 interpretation (e.g., to "good samaritan" moderation promoting "decency", block protection if on notice of illegal activity)
Describes efficiency and fault grounds for assigning liability to marketplaces or not -- what assignment produces the most net good, and whether the marketplace deserve liability based on its design or conduct.
Proposes 5 factors for assessing marketplace liability:
- specificity (eg Uber vs generality eg Craigslist) positive indicator for both efficiency and fault
- scale (large marketplaces can comply more easily, cost amortized across many users/transactions, eg ContentID, or hard to argue rental marketplace can hire photographers in many localities, but not comply with local law in each)
- unlawful design (is unlawful behavior encouraged by the marketplace, or does it result from participant preferences)
- control (eg of transaction), enhancement (eg services and financing for participants), representations (eg of quality), market development (did marketplace create the market eg Airbnb, or is it just another info source for existing market eg Craigslist)
- localism (has activity in question traditionally been regulated locally)
Closes with recommendations for:
- Courts: be skeptical of complete immunity
- Congress: expressly narrow 230
- States and cities: craft regulations from outset to deal with CDA 230 defenses, collaborate on litigation, and be aware of their institutional limitations
