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Regulation Is Coming to the Internet

Cliff Ennico on

The single most significant historical event in my lifetime is not the assassination of President John F. Kennedy, the 1969 moon landing, the social upheavals of the 1960s or the rise and fall of rock 'n' roll. It is the advent of the internet in the early 1990s.

It is difficult for any of us baby-boom geezers to remember what the world was like before the internet (heck, it's hard for most of us to remember what we had for breakfast, but that's another story). The internet was a technological change of truly historical proportions. I predict historians 100 years from now will view our era in the same way historians now view the Industrial Revolution of the 1800s.

Back in the 1990s, lawmakers and regulators in the U.S. and elsewhere recognized the enormous potential of the internet and adopted a hands-off approach to its growth and development. Nearly all of the U.S. laws relating to the internet were passed between 1990 and 1998, during its infancy, and gave web-based companies virtually free rein to do whatever they wish online without fear of lawsuits or government meddling.

Now that the internet has been with us for 25 years and is behaving more and more like an obstreperous 20-something, that attitude is changing both here and abroad.

One of the landmark U.S. internet laws is Section 230 of the Communications Decency Act of 1996 (47 U.S.C. Section 230). That statute prohibits people from suing websites based on the activities of third parties. For example, if someone were to say false and misleading things about you online, you could sue that someone for defamation but not the website on which the bad things were posted. There are hardly any exceptions.

Now, that hasn't prevented people from suing websites anyway, but almost all of the cases to date were dismissed out of hand because of the broad immunity granted by Section 230.

However...

Some recent federal court cases have begun to whittle away at the broad immunity imposed by Section 230 in an effort to curb abusive behavior online. The facts in some of these cases are truly horrific -- people who respond to online dating posts getting raped, people being threatened with death or physical injury, websites that remove content in a discriminatory or arbitrary manner -- and one can understand the desire to make websites more responsible for screening and editing what is posted. But at what point does that screening and editing become censorship? At what point does it threaten the uninhibited and free speech that the U.S. holds especially sacred or make it impossible for small businesses to run their websites? We don't yet have the answers.

A U.S. Supreme Court case from 1992 prohibits states from imposing their sales tax and other taxes on internet commerce. A 1959 federal law prohibits states from imposing their income taxes on internet commerce. At least one Supreme Court justice has indicated that these precedents should be reconsidered in light of the growing dominance of e-commerce in American retail, which has cost states trillions of dollars in tax revenue.

 

If the U.S. has been slow to regulate the internet, foreign countries and groups, especially the European Union, have been rushing to fill the void.

In May 2018, the EU will put into effect the General Data Protection Regulation, or GDPR (Regulation (EU) 2016/679), a comprehensive internet regulation that restricts the export of EU residents' personal data outside the EU and enables them to force websites to remove online information about them under certain circumstances. These new privacy rights are referred to commonly as the "right to be forgotten," but the extent to which they will permit EU residents to become invisible online remains to be seen.

A recent decision of the European Court of Justice held that luxury-goods manufacturers based in the EU could prohibit re-sales of their products by third-party sellers on eBay, Amazon and other online retail platforms operating in EU countries (see http://curia.europa.eu/jcms/upload/docs/application/pdf/2017-12/cp170132en.pdf). This is contrary to U.S. law, which expressly permits such re-sales (see Kirtsaeng v. John Wiley & Sons, Inc.).

Last year, the People's Republic of China passed a comprehensive cybersecurity law requiring websites to store certain data about Chinese citizens on servers located in China, ostensibly to preserve the security of that information but probably to also ensure that the Chinese government can keep tabs on its citizens' activities (see www.chinalawtranslate.com/cybersecuritylaw/?lang=en).

Whenever you give somebody (or something, such as the internet) the freedom to operate without government involvement, there is always the risk that freedom will be abused. There can be no question the internet has been abused over the past 25 years. And wherever freedom is abused, regulation follows.

We must accept that the internet will be more heavily regulated in the years ahead. The question is whether a single government or body (whether the U.S. or the European Union) will set the parameters for future regulation that other countries will follow, or small businesses operating online will face a crazy quilt of conflicting and inconsistent regulations. We'll see.

Cliff Ennico (crennico@gmail.com) is a syndicated columnist, author and former host of the PBS television series "Money Hunt." This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our webpage at www.creators.com.

 

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