There’s a reason we don’t write much about Section 230. For those unfamiliar, Section 230 is the statutory provision clarifying that internet services hosting content created by third parties are not liable for a range of potential civil actions that could be directed at those third parties. The statute is intended to apply long-existing protections for physical forums to virtual forums. The idea is to prevent opportunistic litigation against forum operators that is more properly directed at the publishers of the content at issue. Specifically, we don’t write much about 230 because fighting efforts to cut holes in it isn’t as urgent as fighting efforts to impose new forms of direct liability to marketplaces (a kind of forum) our member companies use. Yes, preserving existing liability protections is a worthy cause. But the alligators closest to our boat happen to be a few proposals that would go further than removing protections from vicarious liability, and instead would impose entirely new, direct liability regimes. These proposals (for example, the Open App Markets Act (OAMA) and American Innovation and Choice Online Act (AICOA)), would have an even more drastic effect on small app company success, so more of our time is spent pushing back on them instead of 230 bills.
That said, the cases involving Sec. 230 as it applies to app stores and bills like AICOA and OAMA do have some commonality. Namely, the Diep case petitions a federal court to dictate app store decisions, by holding them accountable for any fraud that may occur on an app distributed through the app store. Notably, under that standard, it’s hard to imagine any apps getting through review, which of course would raise costs and barriers to entry for app companies. In a similar vein, AICOA and OAMA seek to supplant app store operators with the government as the arbiter of app store carriage decisions. The difference here is that the Diep lawsuit would direct app stores to take the polar opposite approach to fraud and other threats to consumers. Specifically, AICOA and OAMA would require the main mobile app stores to carry all apps with only narrow exceptions and unreliable affirmative defenses. The bill’s must-carry mandate would probably apply to the fraudulent wallet app in question in the Diep case.
To summarize, there is an effort on the one hand to impose almost strict liability on app stores that would require them to block all apps that may be able defraud people, and on the other hand, an effort to punish app stores for barring or removing these same apps and apps the app store knows are likely to try and defraud consumers. This convoluted game of tug-of-war is to be expected if we decide that government should be the primary manager of app stores. The constituencies that animate the government interests in app store intervention do not have a unified purpose, and there is no evidence that government actors would be rewarded for gracefully resolving conflicting purposes. Ultimately, the ability to handle the conflicting interests at issue in a way that satisfies consumers so that they are willing to come back to the stores in part defines the competitive benefit of one app store or online marketplace over another.
A final example helps illustrate the problem. Our president, Morgan Reed, participated last week in a roundtable hosted by the United States Patent and Trademark Office (USPTO) on “Future Strategies in Anti-Counterfeiting and Anti-Piracy.” The roundtable’s participants were focused relatively narrowly on preventing intellectual property (IP) theft in an evolving internet landscape. As you can imagine, one of the problems they addressed is the appearance of pirated apps and content on app stores, which requires coordinated efforts of content owners and app stores to combat. Part of Morgan’s presentation discussed how OAMA and AICOA would interfere with IP enforcement by creating a default presumption that all apps must be carried. Unsurprisingly, the bills weren’t on many radars. And yet, it is obvious how the bills would seriously hinder and often completely thwart the important goals of the roundtable’s participants. The idea of a default must-carry regime on app stores must seem absurd from the IP community’s perspective.
So, while some constituencies seek and would be rewarded by maximum flexibility or even a mandate for app stores to remove pirated or fraudulent content, other constituencies want a legal presumption that app stores have to carry that content (unless a narrow exception applies). If the government is pushed into the role of app store manager, it will have to deal with and respond to these constituencies, just as the app stores today must deal with and respond to market forces. Unfortunately, the government’s ability to respond to and resolve these conflicts would be far more convoluted, time-consuming, process-laden, and worst of all, only indirectly beholden to consumers. In all of this is evidence of the app stores’ imperfections, but they’re a far better alternative than government bureaucracies to manage the stores.