Tag: Internet

What’s Missing from Facebook’s Oversight Board

Facebook has set out a draft charter for an “Oversight Board for Content Decisions.” This document represents the first concrete step yet toward the “Supreme Court” for content moderation suggested by Mark Zuckerberg. The draft charter outlines the board itself and poses several related questions for interested parties. I will offer thoughts on those questions in upcoming blog posts. I begin here not with a question posed by Facebook, but rather by discussing two values I think get too little attention in the charter: legitimacy and deliberation.

The draft charter mentions “legitimacy” once: “The public legitimacy of the board will grow from the transparent, independent decisions that the board makes.” Legitimacy is commonly defined as conforming to law or existing rules (see, for example, the American Heritage Dictionary). But Facebook is clearly thinking more broadly, and they are wise to do so. Those who remove content from Facebook (and the board that judges the propriety of those removals) have considerable power. The authors of banned content acquire at least a certain stigma and may incur a broader social censure. Facebook has every legal right to remove the content, but they also need public acceptance of this power to impose costs on others. Absent that acceptance, the oversight board might become just another site of irreconcilable political differences or worse, “the removed” will call in the government to make things right. The oversight board should achieve many goals, but its architects might think first about its legitimacy.

The term “deliberation” also gets one mention in the draft charter: “Members will commit themselves not to reveal private deliberations except as expressed in official board explanations and decisions.” So there will be deliberations, and they will not be public (more on this in later posts about transparency). The case for deliberation is strengthened by considering its absence.

The draft could have said “members will commit themselves not to reveal private voting….” In a pure stakeholder model of the board, members would accurately represent the Facebook community (that is, they would be diverse). Members would consider the case before them and vote to advance the interests of those they represent. No deliberation would be necessary, though talk among members might be permitted. And, of course, such voting could be both transparent and independent. But the decision would be a mere weighing of interests rather than a consideration of reasons.

Why would those disappointed by the decision nonetheless consider it legitimate? Facebook could say to the disappointed: The board has final say on appeals of content moderation (after all, it’s in the terms of service you signed), and this is their decision. Logically that deduction might do the trick, but I think a somewhat different process might increase the legitimacy of the content moderation in the eyes of the disappointed. 

Consider a deliberative model for the board. A subset of the board meets and discusses the case before them. Arguments are offered, values probed, and conclusions reached. But the votes on the case would be informed by the prior deliberation. Members will represent the larger community in its many facets, but the path from representation to voting will include a collective giving and taking of reasons. That difference, I think, makes the deliberative model more likely to gain legitimacy. Simply losing a vote can seem like an expression of power. Losing an argument is more acceptable, and later the argument might be renewed with a different outcome.

The importance of deliberation implicates other values in the charter, especially independence. The draft places great weight on the independence of the board from Facebook. That emphasis is understandable. Critics have said Facebook will turn a blind eye to dangerous speech because it attracts attention and thereby, advertising dollars (Mark Zuckerberg has rebutted this criticism). The emphasis on independence from the business contains a truth: a board dedicated to maximizing Facebook’s quarterly returns might have a hard time gaining legitimacy. But the board’s deliberations should not be completely independent of Facebook. Facebook needs to make money to exist. Doing great harm to Facebook as a business cannot be part of the remit of the board. 

Here, as so often in life, James Madison has something valuable to add. In Federalist 10, Madison argues that political institutions should be designed to protect the rights of citizens and to advance “the permanent and aggregate interests of the community.” Facebook is a community. The Community Standards (and the board’s interpretation of them) should serve the permanent and aggregate interests of that community. The prosperity of the company (though perhaps not necessarily at every margin) is surely in the interest of the community. The interests represented on the board are a starting point for understanding the interests of that community, but in themselves they are not enough for that.  Deliberation might be the bridge between those interests and the “permanent and aggregate interests of the community.” Looked at that way, most users would have a reason to believe in the legitimacy of a deliberative board as opposed to a board of stakeholders.

Facebook’s draft charter evinces hard work and thought. But it could benefit from more focus on the conditions for the legitimacy of the oversight board. Deliberation (rather than simple interest representation) is part of the answer to the legitimacy question. As deliberations go forward, perhaps the charter’s framers might give more attention to how institutional design can foster deliberation.

Why ‘Net Neutrality’ Is a Problem

Yesterday, Federal Communications Commission Chairman Ajit Pai announced his intention to reverse Obama administration “net neutrality” rules governing the internet that were put in place in 2015. Some commentators are criticizing the announcement as a give-away to large telecom companies and an attack on consumers. But the Obama rules create some serious problems for consumers—problems that Pai says he wants to correct.

Under the Obama rules, internet service providers (ISPs) are subject to “rate-of-return” regulations, which the federal government previously applied to AT&T’s long-distance telephone service back when it was a monopoly more than 50 years ago. Ostensibly, rate-of-return regulation gives government officials the power to review and approve or reject ISP rates. In reality it basically guarantees ISPs government-enforced market protection and profitability, in exchange for regulators ensuring that ISPs won’t be too profitable.

As explained in this 2014 post, rate-of-return regulation involves more than just telecom. It is an attempt to settle fights between “producers” and “shippers”—whether those are farms, mines, and factories on one side and railroads and shipping lines on the other, or Netflix and Hulu on one side and ISPs on the other. In all those cases, the producers and shippers need each other to satisfy consumers, but they fight each other to capture the larger share of consumers’ payments. If shippers charge more, then farmers, factories, and Netflix must charge less in order to maintain the same level of sales.

The political resolution of the producer–shipper fights was the Interstate Commerce Act of 1887 and its rate-of-return regulations, which were initially written with railroads in mind. Similar efforts were later extended to trucking, air transportation, energy, and telecom. It took about 100 years for policymakers to accept that those efforts hurt consumers much more than it helped them, forcing on consumers too many bad providers with high prices and poor quality.

European Criticism of American Internet Platforms

The Guardian reports on calls by German chancellor Angela Merkel for internet platforms to “divulge the secrets of their algorithms”:

Angela Merkel has called on major internet platforms to divulge the secrets of their algorithms, arguing that their lack of transparency endangers debating culture.

The German chancellor said internet users had a right to know how and on what basis the information they received via search engines was channelled to them.

Speaking to a media conference in Munich, Merkel said: “I’m of the opinion that algorithms must be made more transparent, so that one can inform oneself as an interested citizen about questions like ‘what influences my behaviour on the internet and that of others?’.

“Algorithms, when they are not transparent, can lead to a distortion of our perception, they can shrink our expanse of information.”

An algorithm is the formula used by a search engine to steer a request for information. They are different for every search engine, highly secret and determine the significance or ranking of a web page.

Merkel has joined a growing number of critics who have highlighted the dangers of receiving information that confirms an existing opinion or is recommended by people with similar ideas.

“This is a development that we need to pay careful attention to,” she told the conference, adding that a healthy democracy was dependent on people being confronted by opposing ideas.

“The big internet platforms, through their algorithms, have become an eye of a needle which diverse media must pass through [to access their users],” she said.

My sense is that some Europeans are frustrated at how American companies dominate many aspects of the Internet. However, instead of trying to compete with the American companies in the marketplace (which would be a welcome development, as more competition is good), they have decided that regulating these companies (e.g., through antitrust scrutiny) is their best strategy for reducing American dominance.

Appeals Court Approves Net Neutrality Rules

The United States Court of Appeals for the District of Columbia upheld on Tuesday June 14, 2016 so called “net neutrality” rules issues by the Federal Communications Commission in February 2015.  Two previous attempts by the FCC to regulate the internet under different sections of the Telecommunications Act were overturned by the same court in 2010 and 2014 reflecting the traditional policy distinction between heavily regulated traditional telephone landline service and so-called information services involving computers that were not regulated.

The rule issued by the FCC in 2015 reclassified internet services as falling under the same legal regime as traditional telephone service.  Yesterday’s Appeal Court decision accepts that reclassification and the legal authority that goes with it.

Regulation has published four articles in the last two years year criticizing traditional public utility regulation of the internet.  Christopher Yoo from the University of Pennsylvania argues that traditional telephone regulation envisions a monopoly service and government oversight ostensibly intended to limit prices and expand service provision. But the expansion of wireless high-speed Internet has allowed multiple competitive providers to provide service to a large majority of American consumers while restraining capital costs.  “What Hath the FCC Wrought”, by former FCC chief economist Gerald Faulhaber, argues that service quality will suffer to the extent that internet access providers can’t charge more for streams that impose greater costs on the system. Kansas State professor Dennis Weisman argues that internet regulation will likely protect competitors from competition rather than serve consumer interests just like the old telephone regulatory scheme. And Larry Downes from the Georgetown Center for Business and Public Policy argues that the movement to re-regulate telecom is propelled by some firms’ quest for rents under new regulation, and by Federal Communications Commission attempt to regain political power and the benefits that come with it. 

Internet Industry More Popular Than Ever-60% Have Favorable View

New polling from Gallup finds that more Americans view the internet industry favorably than any time since Gallup began asking the question in 2001. Today, 60% of Americans have either a “very positive” or “somewhat positive” view of the industry, compared to 49% in 2014.

Favorability toward the Internet industry has ebbed and flowed during the 2000s, but today marks the most positive perception of the industry. Compared to other industries, Gallup found that the Internet industry ranks third behind the restaurant and computer industries.

Perceptions have improved across most demographic groups, with the greatest gains found among those with lower levels of education, Republicans and independents. It is likely these groups are “late adopters” of technology and have grown more favorable as they’ve come to access it. Indeed, late adopters have been found to be older, less educated and more conservative. Pew also finds that early users of the Internet have been younger, more urban, higher income Americans, and those with more education. Indeed, as Internet usage has soared from 55% to 2001 to 84% in 2014, many of these new users come from the ranks of conservative late adopters.

These data suggest the more Americans learn about the Internet the more they come to like it and appreciate the companies who use it as a tool to offer consumer goods and services.

Please find full results at Gallup.

Research assistant Nick Zaiac contributed to this post.

Free Trade on the Internet

This is from a recent speech by Senator Ron Wyden (D-OR):

Today, the Internet represents the shipping lane of 21st Century goods and services. It is reshaping global commerce just like social media is reshaping societies. But right now the trade rules don’t neatly apply to the digital economy, despite the growing number of protectionist barriers popping up. The most recent WTO rules were written before the Internet.

It’s time for the digital economy to be within the Winners Circle by keeping data flows open and ensuring that foreign markets aren’t more legally hazardous than the U.S.

This is an important point. With regard to international trade in goods, the impact of the Internet has been significant, but only within certain limits. With the exception of goods for which electronic versions have been developed, you still need to make the goods at a factory and ship them around the world.  

With services, by contrast, the Internet revolution has been greater. A number of services that used to be difficult to trade internationally at all are now tradable with the click of a mouse. To use an example I’ve written about recently, online higher education services are taking off. Someday soon it may be just as convenient for a Washingtonian to get a degree from Melbourne University in Australia as it is to do so from Georgetown.

One problem, though, as Senator Wyden points out, is that many of our international trade rules were written in the pre-Internet era. This became apparent during the WTO dispute over online gambling. The rules could barely fit with this new industry.

FCC Takes Eye Off Ball, Leaves Court in Defeat

On Tuesday, the U.S. Court of Appeals for the D.C. Circuit served the Tennis Channel a crushing blow, essentially holding that government agencies cannot tell cable operators what networks should be disseminated to consumers.  

The court found that the FCC had made an unforced error in ruling that Comcast had acted illegally against the Tennis Channel by refusing to distribute it as widely as Comcast’s own sports networks, Golf Channel and Versus.  This was a challenge based on Section 616 of the Communications Act, which gives the FCC authority to prevent “multichannel video programming distributors” from restraining the ability of unaffiliated “video program vendors” from competing “fairly by discriminating” – a broad power that the FCC still managed to abuse here.

Initially, the Tennis Channel contracted with Comcast to distribute its content on Comcast’s less broadly distributed sports tier.  It later approached Comcast with a proposal to reposition the channel onto a tier with broader distribution.  Comcast backhanded this proposal, citing financial impracticability – a basic analysis of whether such a move would make sense given ratings, market demand, etc.  An FCC administrative law judge, without citing contrary financial studies (or even a video replay) then corrected what he deemed to be marketplace “discrimination” and ordered Comcast to pay $375,000 to the government and make the Tennis Channel more widely available to consumers.

On appeal, the D.C. Circuit smashed that finding of unlawful discrimination. Indeed, substituting the judgment of an administrative agency for a freely agreed distribution deal for no good reason flouts basic principles of administrative and contract law.  Even in this day of government overreach, it’s just not cricket!

Judge Brett Kavanaugh’s concurring opinion warrants special attention – and applause.  He concluded that Section 616’s prohibition on discrimination only applies when a distributor possesses market power and that Comcast has no such advantage in the national video programming distribution market. According to Kavanaugh, applying Section 616 to a video programming distributor that lacks market power is not only outside the lines of the Communications Act, but the First Amendment as well.

That is, when Comcast distributes specific channels, it’s transmitting speech.  Overruling a cable operator’s programming choices thus interferes with editorial discretion to select and transmit a protected form of speech.  Courts should continue to umpire federal agencies that grant themselves the power to distort the marketplace of ideas.

For more on this case and the important First Amendment and rule of law issues it raises, see Randolph May of the Free State Foundation.

Pages