The Plot Against Section 230 Is Being Run By Big Legacy Companies Who Failed To Adapt To The Internet

from the the-plot-against-the-internet dept

Last summer, we explained how it was not crazy to think that the narrative being pushed about internet companies and Section 230 was a manufactured narrative by Hollywood and other old legacy companies jealous of the success of new internet companies. Now, the NY Times has a detailed article on exactly that. It's about how a broad coalition of big, old, legacy companies are conspiring to punish Google and Facebook by convincing the media and politicians that Section 230 of the Communications Decency Act is bad.

The headline lists three companies: IBM, Marriott, and Disney. While that might seem like "an unusual constellation of powerful companies" -- as the article puts it -- there is a simple thing tying them together: all three failed to adapt to an open internet. And now they're trying to kill it.

Disney and its powerful trade association have fought to stop the law’s spread abroad. Marriott has asked Congress to amend the law. IBM has a plan to slim it down. An unusual constellation of powerful companies and industries are fighting to weaken Big Tech by limiting the reach of one of its most sacred laws. The law, known as Section 230, makes it nearly impossible to sue platforms like Facebook or Google for the words, images and videos posted by their users.

We've discussed each of these companies and their motivations in the past. Disney, of course, is a stand-in for the MPAA and all of the big Hollywood movie studios. Indeed, while Disney led the copyright lobbying charge in the 80s and 90s, the company leading the way against the internet and Section 230 over the past decade has been Fox. But, of course, Disney recently bought Fox. Hollywood has been fighting against the open internet for years, and its lobbyists have been planting false narratives about 230 for years, and eagerly fan the flames at every opportunity. Their hope has always been to chip away at 230 to make Google and Facebook more vulnerable, and to force them to negotiate some sort of huge transfer of money.

Marriott, somewhat famously, has been screaming bloody murder about Airbnb for years, because it can't stand having competition that actually offers better service. Its hatred of 230 is because Airbnb has argued (though not always successfully), that 230 protects it from liability over user listings -- which, if successful, would block some of the laws Marriott and the wider hotel industry have been pushing to hinder Airbnb.

Finally, there's IBM. And while the article doesn't mention it, it's really IBM and Oracle teaming up here. Last summer we wrote about IBM's sad attack on 230, a law that it doesn't rely on. Once again, with IBM and Oracle, we see two giant, lumbering tech companies, that made bad bets on the internet, and rather than recognizing that they messed up, they're using lobbying and the political process to harm the competitors who built the products people actually want. Neither IBM nor Oracle rely on Section 230, since they don't run consumer facing internet services. Both bet that the enterprise market and data would be where the market was -- but it actually turned out to be in consumer facing services. In both cases, the bottom-up open internet has also enabled smaller enterprise focused offerings to chip away increasingly at the bottom of their markets.

A decade ago, we wrote about writer Andy Kessler's concept of political entrepreneurs v. market entrepreneurs. One of them builds better, more innovative products that increase consumer welfare and increase the overall size of the pie by making things people want. The other uses its enormous power and political connections to pass regulations that hinder competitors who have innovated. One becomes successful through building services that make money from happy customers. One makes money by creating a restrained market in which they can collect monopoly rents above and beyond what an open market would bear.

The latter -- the old legacy companies using lobbying to stomp out competition -- are a form of dangerous "unproductive entrepreneurship." It does not make the world a better place. It limits innovation and limits consumer welfare.

So the next time you hear about the "techlash" and the "problems" of Section 230, consider who actually stands to benefit from chipping away (or removing entirely) Section 230. It is not you or me. It is not those who rely on a wide variety of internet services to express ourselves. It is the legacy companies which have fallen behind, which have not adapted, and which are using their political will to try to suppress and destroy the open systems that the rest of us now depend on.

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Filed Under: competition, lobbying, market entrepreneurs, political entrepreneurs, section 230, techlash

Companies: disney, facebook, fox, google, ibm, marriott, oracle