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Silicon Valley’s most prized legal shield is increasingly in jeopardy as Republicans prove they're serious about tackling allegations of bias against conservatives. 

Freshman Sen. Josh Hawley (R-Mo.) will introduce legislation this morning that would overhaul a key legal provision that grants tech companies broad immunity for the content people post on their platforms. 

It would only allow companies to keep that immunity granted under Section 230 of the Communications Decency Act if they submit to an external audit by the Federal Trade Commission that “proves by clear and convincing evidence that their algorithms and content-removal practices are politically neutral,” his office said in a news release. 

“With Section 230, tech companies get a sweetheart deal that no other industry enjoys: complete exemption from traditional publisher liability in exchange for providing a forum free of political censorship,” Hawley said in a statement. “Unfortunately, and unsurprisingly, big tech has failed to hold up its end of the bargain.”

Hawley’s bill sets the stage for a showdown with Silicon Valley tech companies who view this immunity as critical to their businesses and have largely defended Section 230 against any changes in Washington. It's also the first concrete attempt to change the law specifically because of charges from President Trump and prominent Republicans that tech companies are unfairly silencing conservative voices on the platform. 

Technology companies were immediately on the defensive, warning that such changes could hinder their ability to moderate harmful content, such as hate speech, extremism or harassment. 

The Internet Association, a trade group whose members include Facebook, Google and Twitter, noted that Section 230 is also the provision that protects the companies from liability for decisions they make to remove content they view as objectionable. 

“This bill forces platforms to make an impossible choice: either host reprehensible, but First Amendment protected speech, or lose legal protections that allow them to moderate illegal content like human trafficking and violent extremism,” Internet Association president and chief executive Michael Beckerman said in a statement. “That shouldn't be a tradeoff.”

And the Silicon Valley companies have long denied that their actions or algorithms are politically motivated — and there is no evidence that they have made decisions systematically in favor of one political party or another.

“Internet companies share Senator Hawley’s goal of ensuring online platforms are somewhere individuals can freely and safely share their views,” Beckerman said. 

Hawley’s bill, called the Ending Support for Internet Censorship Act, clearly targets Silicon Valley's largest companies. It only applies to companies that have 30 million active monthly users in the U.S., more than 300 million active monthly users worldwide or who have more than $500 million in global annual revenue.

Companies of this size would have to prove to the FTC that they’re politically neutral, and they would only be granted legal immunity under a supermajority vote by the commissioners. The companies would be responsible for the costs of the audits, and they would be required to conduct such audits every two years. 

Some critics are wary that the bill could set the stage for the government to play an outsized role in policing speech online. Americans for Prosperity, the main political arm of the conservative Koch network, called lawmakers to reject Hawley’s proposal.

“Senator Hawley’s misguided legislation sets the table for stricter government control over free expression online,” said Billy Easley, a policy analyst for Americans for Prosperity. “Eroding the crucial protections that exist under Section 230 creates a scenario where government has the ability to police your speech and determine what you can or cannot say online.”

Hawley’s legislation comes as Democrats are also setting their sights on Section 230 — but for very different reasons. There’s a growing push for debate over whether the law should be changed to ensure the companies are taking greater responsibility for disinformation and other content on their sites.

Earlier this week, Sen. Mark R. Warner (D-Va.) suggested it might be time to debate the future of Section 230 as the U.S. confronts new disinformation threats, like deepfakes, or videos manipulated with artificial intelligence to make it appear someone is doing something that never happened.  

“I think we should have a debate in this area,” Warner said at an event at the Council on Foreign Relations earlier this week.

BITS, NIBBLES AND BYTES

BITS: Regulators at home and abroad are scrutinizing Facebook's new cryptocurrency project, known as Libra. One top Democrat wants Facebook to put the project on hold until regulators and Congress have a chance to review the company’s plans.

“With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users,” House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) said in a Tuesday statement.

She also called on Facebook executives to testify in front of her committee about the project. There’s bipartisan interest in calling a hearing. Rep. Patrick T. McHenry (N.C.), the committee’s top Republican, sent a letter yesterday asking Waters to host the hearing.

Facebook is pushing into cryptocurrency after years of political headaches in Washington have culminated in greater antitrust scrutiny of the company in recent weeks. As the company unveiled the plans, it gave lawmakers a new opportunity to attack its size and power.

From Sen. Sherrod Brown (D-Ohio), the top Democrat on the Senate Banking Committee:

Hawley, who is a vocal Facebook critic, told one reporter the plan could expand the company’s monopoly:

French and German officials are also demanding regulation to prevent Facebook from becoming a “shadow bank” or “sovereign currency,” reports Bloomberg News's Alastair Marsh.

NIBBLES: Google will commit $1 billion to add about 20,000 homes across the Bay Area over the next 10 years, the company announced yesterday. Community activists have pressured Google and its peers to do more to address the housing crisis that many believe the tech companies exacerbated.

“The lack of new supply, combined with the rising cost of living, has resulted in a severe shortage of affordable housing options for longtime middle- and low-income residents,” Google CEO Sundar Pichai wrote in a blog post. About three-quarters of that amount will be spent to build housing on commercial land owned by Google and 5,000 of the units will be dedicated to affordable housing, Mercury News reported. 

The move follows similar pledges from Facebook and Microsoft, which both committed $500,000 to housing in their respective cities of San Francisco and Seattle this year.

But as Initialized Capital partner Kim-Mai Cutler points out, funding isn’t the only obstacle to building. Zoning in the region has made it extremely difficult to build new units.
 

Bloomberg News reporter Gerrit De Vynck pointed out that Google's commitment doesn't begin to cover the amount being called for by community activists: 

Still, California Assemblyman Scott Wiener, who represents San Francisco, called the announcement “a strong step in the right direction.” 

BYTES: Brands are getting in on the fight against online hate and fake news thanks to an alliance between marketing and advertising heavyweights and Google, Apple and Twitter, reports the Wall Street Journal's Nat Ives.

The coalition, which boasts big-name brands including General Mills and MasterCard, is hoping to develop a set of policy guidelines that can be implemented across platforms in "certain cases,” group member John Montgomery, global executive vice president of brand safety at GroupM, tells Ives.

Repeated content moderation scandals have put brands that rely on social media platforms for key digital advertising between a rock and a hard place. Fed up, some are choosing to withdraw their ad dollars. Nestle, McDonald’s and AT&T all halted ads on YouTube among growing concerns the platform is sexualizing minors through its algorithms, Nate reports.

PUBLIC CLOUD

— News from the public sector:

Members of the Senate Commerce security subcommittee examined the impact of banning Chinese-made drones, or components for drones, during a hearing on Tuesday.
The Hill
‘The workers responsible ... deserve to collectively bargain as part of a union,’ Sanders said
The Verge
For years, it was the largest portal for sex on the internet. Now its fate could shape the future of Silicon Valley.
Wired
PRIVATE CLOUD

— News from the private sector:

Technology
The online retail giant is working to draw customers who have long been loyal to Walmart.
Jay Greene and Abha Bhattarai
Tesla loses vice president of HR and head of diversity, Felicia Mayo, one of a few black woman executives to break Silicon Valley's glass ceiling.
CNBC
Backed by ex-GE boss Jeff Immelt and venture capital firms Greylock and NEA, Cleo was on the Silicon Valley fast track. But its CEO and cofounder Shannon Spanhake lied about her background and built a work culture that didn’t match the vision of a parent-friendly company she was selling.
Forbes
The site’s journalists took part in an IRL protest after a series of tweets criticized the company’s refusal to recognize their affiliation with the News Guild.
The New York Times
CHECK-INS

Today:

  • New America's Blockchain Trust Accelerator and the Office of Educational Technology will host a reception to open the Summit on Education Blockchains.