Section 230 and Its Impact on Technology Companies

Section 230 and Its Impact on Technology Companies

Section 230 is a foundational component to how the internet works. More recently, it’s become the target of legislation, which can have significant impacts on the tech industry.
Jay Silver, Partner, Womble Bond Dickinson
Jay Silver, Partner, Womble Bond Dickinson
Andrew Zarkowsky
Andrew Zarkowsky, Head of AI Underwriting, The Hartford

What Is Section 230?

Enacted in 1996, Section 230 of the Communications Decency Act helps protect online companies from liability arising from what is posted on their platforms. Many experts point to Section 230 as a foundational component to how the internet works today.

How Does Section 230 Protect Online Businesses?

Section 230 provides immunity to internet companies in two ways:
  1. A provider or user of an “interactive computer service” can’t be treated as the “publisher or speaker” of information provided by a third party. The law has a broad definition of “interactive computer service.” It includes almost any online platform that publishes third-party content.
  2. Providers and users of interactive computer services can’t be liable for voluntarily taking down content if the provider believes in good faith that the information is obscene or otherwise objectionable.
Jay Silver is a partner at Womble Bond Dickinson, a transatlantic law firm serving business clients across every industry sector with expertise in Section 230 litigation, technology and data privacy. He explains that for Section 230 to protect a company from liability, it has to meet three criteria:
  1. The company provides or uses an interactive computer service.
  2. The plaintiff seeks to hold the defendant liable as the publisher or speaker of the information
  3. The plaintiff sues the company for information provided by a third party.
Without Section 230, online platforms would have to pay for settlements and judgments if they were sued for content that their users posted.
We can look at Google as an example of how Section 230 protected the company. Google was sued, but the company wasn’t liable for a post disparaging a business. That’s because even though the tech business could remove, delete or limit access to content, it chose only to decide to publish or remove the content, rather than edit or substantively change the content.

The Limits of Section 230

Section 230 doesn’t provide immunity in every case, Silver cautioned.
“Negligence and illegal behavior are some of the areas where Section 230 won’t protect an online company,” Silver explained. “So, it’s important that these businesses understand how their platforms work and how they’re interacting with users.”
Four limits of Section 230 include:
  • Negligently designing its website or service, which caused harm to a user
  • Materially contributing to illegality of information or harmful nature of content
  • Failing to warn users of a known danger on the platform
  • Statutory exceptions, such as federal civil rights claims, antitrust claims, Fair Housing Act claims, electronic communications privacy law claims or intellectual property claims

Will Section 230 Protect E-Commerce and Gig Economy Businesses?

E-commerce and gig economy platforms may have some protection under Section 230. Immunity will come down to the type of claim and how a gig economy service operates, according to Andrew Zarkowsky, Technology Industry Practice Lead at The Hartford.
“It’s not as easy as saying every kind of e-commerce or gig economy company would have immunity under Section 230, and varying laws and regulations add another layer of complexity,” said Zarkowsky.
For example, an e-commerce business will likely have protection from claims based on representations or omissions in a product description or advertisement because the content usually comes from a third party. But in some states, the company may be viewed as a “seller,” so it can still be liable for defective products.
For gig economy services, businesses can be liable if the platform encourages unlawful, illegal or harmful conduct.

The Future of Section 230 and Its Impact to the Tech Industry

Congress is considering 14 bills during the 2021-2022 that could amend Section 230. These bills aim to either:
  • Repeal
  • Limit the scope
  • Impose new obligations
  • Alter the “Good Samaritan” portion of the law
For example, the “Disincentivizing Internet Service Censorship of Online Users and Restrictions on Speech and Expression Act,” or the DISCOURSE Act, aims to remove Section 230 protections for “market-dominant” computer services that manipulate algorithms to censor certain materials or viewpoints.
Another bill, the “21st Century Foundation for the Right to Express and Engage in Speech Act,” or 21st Century FREE Speech Act, aims to repeal Section 230 completely. It would also reclassify internet platforms as common carriers, requiring them to provide services to anyone without discriminating against individual users or classes of users based on:
  • Political views
  • Religious affiliation
  • Region
“Even though these bills aren’t signed into law, it’s important for tech companies to be aware of them,” Zarkowsky noted. “It can change how Section 230 worked over the last two decades and can impact a business’ operations.”
Adding attention to Section 230 is the Facebook whistleblower. In October 2021, Frances Haugen, a former data scientist at Facebook, now known as Meta, revealed information about the company’s algorithms and how it was aware that some platforms were harmful to youths.2 While Haugen said she didn’t believe changes to Section 230 would be enough to fix the issues she revealed, her testimony will likely draw more attention to the law and online speech.
It’s not just tech companies who operate online platforms that could be impacted by changes to Section 230, Zarkowsky explained. It’s also the companies that help make up the internet’s infrastructure.
For example, The Internet Society, a nonprofit organization, told The Verge in 2021 that these kinds of companies would have to reduce privacy practices because they’d have to be able to see what kind of information they’re passing off to determine if it’s illegal.1
“Businesses around the world are using cloud computing more for their operations. And the infrastructure to handle this type of internet traffic continues to get built out,” Zarkowsky explained. “Changes to Section 230 could have serious impacts on how businesses providing cloud services and server hosting work.”

Learn More About Section 230

Section 230 isn’t a simple law or topic to understand. And with the potential for changes coming, it can make it even more complicated. We’ve worked with Womble Bond Dickinson to help business owners learn more about Section 230, the limits to its immunity and status updates on the current bills in Congress that can affect the law.
1 The Verge, “What Will Changing Section 230 Mean for the Internet?”
2 NPR, “Here Are 4 Key Points from the Facebook Whistleblower’s Testimony on Capitol Hill”
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