Image result for Senator Warner Shows the Way Forward on Regulating Social MediaHis proposed bill aims to promote balanced sector-specific competition

Senator Mark Warner (D-VA) has been a leader in thinking through how to apply and extend current law to the technology companies whose dominance in particular businesses has, to put it mildly, been object of significant and growing public concern.  His 2018 white paper is a rich source of ideas for throwing a regulatory net around these companies in order to protect the public interest.  He is a co-sponsor of the Honest Ads Act seeking to extend the current disclosure rules for political candidate ads to the online world.

His new bipartisan bill, the Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act, co-sponsored by Senator Josh Hawley (R-MO) and Senator Richard Blumenthal (D-CT), calls for regulating large communications platforms, defined as a“consumer-facing communications and information service provider(s)” with more than a million active monthly users. The bill would create asymmetric regulation, with burdens on the large companies aimed at promoting more effective competition from smaller companies and new entrants.

Senator Warner’s bill requires data portability, interoperability and access for user agents.

These measures have been widely discussed in academic and think tank circles, but the bill puts these pro-competition tools in the hands of the Federal Trade Commission.  Data portability would compel large communications platforms, at the request of a user, “to initiate the secure transfer of user data to a user, or to a competing communications provider acting at the direction of a user, in a structured, commonly used, and machine-readable format.”

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The bill also requires large communications platforms “to facilitate and maintain technically compatible, interoperable communications with a user of a competing communications provider.”  Interoperability must be “based on fair, reasonable, and nondiscriminatory terms.”

Would these measures work to enable other social media and messaging companies to compete more effectively with the existing dominant players?  History shows that analogous measures were modestly successful in related industries. The Federal Communications Commission used number portability and interconnection requirements to nurture competition in telecommunications.  So, they are worth a careful look to see if they can spur social media competition.

In addition, the bill requires large communications platforms to allow users to designate “a custodial third-party agent to manage the user’s online interactions, content, and account settings on a large communications platform on the same terms as a user.”  This will provide convenience for users, but more importantly it will allow aggregation of user preferences in a way which might force large communications platforms to be more responsive to user interests than they would be if they were able to confront users one-on-one.

Senator Warner’s bill does not try to regulate the entire economy.  

One of the bill’s strongest advantages is its narrow focus on communications providers. Many proposals that sound as if they are proposing a new authority to address sector-specific tech problems wind up regulating vast swaths of the economy.  They do this by trying to cover all “digital platforms” or the “digital market” which turns out to be just about every business that uses the Internet. Proposals from Public Knowledge, the Stigler Center, a UK task forced chaired by Jason Furman, the former chair of the U.S. Council of Economic Advisors, and the report from Germany’s Competition Law 4.0 Commission all take this overly broad approach.

Senator Warner’s bill avoids overbreadth by applying just to communications platforms.   This specific sector is clearly of vital importance to the social, political and economic life of the country and it is one where the forces of competition have persistently failed to protect the public interest. The bill has the narrow purpose of promoting competition in this specific market where network effects and scale economies have rendered normal competition ineffective.

Of course, as the bill moves forward this notion will have to be further refined – a “communications and information service provider” covers a lot of territory.  The bill itself contains resources to do this narrowing. The bill tasks the National Institute for Standards and Technology with developing interoperability standards for “popular classes of communications or information services, including (1) online messaging; (2) multimedia sharing; and (3) social networking.”  This narrower notion might serve as a more focused scope of the bill.

The bill empowers an agency to write and enforce some implementing regulations.

It empowers the FTC to write rules implementing the privacy and security rules accompanying the interoperability mandate, and the authentication, registration and deregistration provisions of the delegation requirement.  Senator Warner clearly recognizes that some provisions of the bill will need implementing regulations and ongoing oversight.

Under the bill, however, FTC would still be powerless to write general implementation rules to clarify the key provisions of the bill and to respond creatively to changes in technology and business models.  But the tools of data portability, interoperability and user agents are not self-enforcing.  Ex ante rules are needed to provide clarity and guidance to industry and the public.

In contrast, the 20-year old Children’s Online Privacy Protection Act required the FTC promulgate specific regulations to protect the online privacy of children’s information.  A similar requirement to implement all the provisions of the ACCESS Act through general rulemaking would help to make the bill workable and able to respond to industry changes.

The details still need to be worked out.

The bill recognizes the tensions between promoting competition in social media and protecting privacy and security.  Both the European data protection authorities and Facebook have highlighted this tension and suggested ways to protect the privacy of third-party users when implementing the right of data portability.  The bill adopts some of them by, for instance, forbidding companies from using third-party data for any purpose other than accommodating the data portability right.

The pro-competition tools are also in tension with the needs of content moderation.  For instance, if large communications platforms cannot discriminate against smaller competitors in interoperability arrangements, how can they screen out content coming from problematic communities like 8Chan?  If they do not have insight into the people using other platforms who can deliver messages to their users how can they pro-actively identify harmful content like hate speech, disinformation campaigns and terrorist material?

These issues can be addressed, but it will take public discussion, assessment of alternative approaches and a balancing of competing goals.  Congressional hearings can help this public conversation, but ultimately Congress will need to balance these conflicting goals in its legislation. And then fully authorize a strong regulator to implement this balanced approach and to adjust it over time to make it less vulnerable to future shock.