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Canada

Google To Remove News Links In Canada In Response To Online News Law (www.cbc.ca) 71

Google said Thursday it will remove Canadian news content from its search, news and discover products after a new law meant to compensate media outlets comes into force. CBC.ca reports: "We're disappointed it has come to this. We don't take this decision or its impacts lightly and believe it's important to be transparent with Canadian publishers and our users as early as possible," said Kent Walker, the president of global affairs at Google and Alphabet. "The unprecedented decision to put a price on links (a so-called 'link tax') creates uncertainty for our products and exposes us to uncapped financial liability simply for facilitating Canadians' access to news from Canadian publishers."

Prime Minister Justin Trudeau said the government was confident Google would come around on the legislation. "I will say the conversations with Google are ongoing. It is important that we find a way to ensure that Canadians can continue to access content in all sorts of ways but also that we protect rigorous independent journalism that has a foundational role in our democracies," he said. "We know that democracies only work with a strong independent diverse media and we will continue to work for that."

The bill has been pitched as a way to keep news outlets solvent after advertising moved en masse to digital platforms, virtually wiping out a major revenue stream for journalism. [...] In an attempt to reverse the revenue decline, the government's new regulatory regime will require companies like Google and the Meta-owned Facebook -- and other major online platforms that reproduce or facilitate access to news content -- to either pay to post content or go through a binding arbitration process led by an arms-length regulator, the Canadian Radio-television and Telecommunications Commission (CRTC). An outlet will be considered an eligible news business if it regularly employs two or more journalists in Canada, operates largely within Canada and produces content that is edited and designed in this country. Google and Meta have signaled they'd rather get out of the news-posting business altogether rather than deal with this process.
Meta also announced last week that would be removing all news content from Facebook and Instagram for users in Canada. You can read more about the Online News Act here.
Businesses

FTC Prepares 'the Big One,' a Major Lawsuit Targeting Amazon's Core Business (arstechnica.com) 15

An anonymous reader quotes a report from Ars Technica: The Federal Trade Commission is preparing to file a major antitrust lawsuit accusing Amazon of "leverag[ing] its power to reward online merchants that use its logistics services and punish those who don't," Bloomberg reported today. Bloomberg described the forthcoming lawsuit as "the big one," following several earlier lawsuits filed by the FTC under Chair Lina Khan. "In the coming weeks, the agency plans to file a far-reaching antitrust suit focused on Amazon's core online marketplace, according to documents reviewed by Bloomberg and three people familiar with the case," the report said. Khan may try to force Amazon to "restructure" its business. "Based on her public comments, Khan is unlikely to accept compromises from Amazon and could seek to restructure the company -- a dramatic outcome that Amazon would surely appeal," Bloomberg wrote. [...]

Third-party sellers can rely on Amazon for warehousing, shipping, and other services through the Fulfillment by Amazon (FBA) system, but it takes a big cut out of their revenue. A recent Marketplace Pulse study based on profit and loss statements from a sample of sellers found that "Amazon is pocketing more than 50 percent of sellers' revenue -- up from 40 percent five years ago," because "Amazon has increased fulfillment fees and made spending on advertising unavoidable." "According to P&Ls provided by a sample of sellers, a typical Amazon seller pays a 15 percent transaction fee (Amazon calls it a referral fee), 20-35 percent in Fulfillment by Amazon fees (including storage and other fees), and up to 15 percent for advertising and promotions on Amazon. The total fees vary depending on the category, product price, size, weight, and the seller's business model," Marketplace Pulse wrote in February.

According to Bloomberg's article, the "FTC has amassed evidence that the company disadvantages sellers that don't use these services, and the agency is investigating an algorithm that selects merchants for the web store's coveted 'Buy Box,' where consumers can add products to their cart with one click." "The expected allegations are similar to a 2020 report from a US House subcommittee -- which counted Khan as a staff member -- and overlap with a European antitrust case that charged Amazon with rewarding sellers that use its fulfillment services and using merchants' sales data to boost its own retail business," Bloomberg wrote. Amazon agreed to a settlement with the EU in December 2022. The FTC's current investigation began two years before Khan became chair. "Amazon received the initial investigation notice in June 2019, according to documents viewed by Bloomberg. The first request for records followed two months later," the Bloomberg article said. Upon taking charge in 2021, Khan "personally helped draft some lines of questioning for investigators" and took other actions to beef up the probe into Amazon.

Australia

Australia Urged To Ban Online Gambling Ads To Curb Growing Addiction 29

An anonymous reader quotes a report from Reuters: Australia should phase out advertising for online gambling in three years, a parliamentary committee of inquiry recommended on Wednesday as it looked to limit the "havoc" it caused in one of the world's biggest betting market. The committee made 31 recommendations on how online gambling, which it said was changing the culture of sport, should be regulated and how Australians struggling with addiction should be supported. Australians outspend the citizens of every other country on online gambling, Peta Murphy, chair of the committee said in the report titled "You win some, you lose more."

"This is wreaking havoc in our communities," Murphy said. Murphy said online gambling companies advertise deliberately and strategically alongside sport, which has normalized it as fun and harmless and sociable activity. A generation of young Australians views gambling and sport as inextricably linked, Murphy said, adding that it was changing the culture of sport. "Australia would be diminished if sport was to be so captured by gambling revenue that providing an opportunity for betting came to be seen as its primary purpose," Murphy said.

A phased, comprehensive ban on all gambling advertising on all media, broadcast and online, that left no room for circumvention, was needed, the panel said. It recommended the ban be phased in over three years so sporting bodies and broadcasters had enough time to find alternative sources of advertising revenue. [...] Prime Minister Anthony Albanese said the government would consider the recommendations. "We need to deal with online issues, we need to deal with social media issues, we need to deal with it comprehensively across the board," Albanese said on ABC Gold Coast radio.
Music

SiriusXM To Shut Down Stitcher Podcast App (hollywoodreporter.com) 15

SiriusXM will shut down its podcast app Stitcher at the end of August. The Hollywood Reporter reports: In a memo sent to employees, executives from the satellite radio and audio company said SiriusXM will not be backing away from podcasting, but rather will be trying to move more listeners over to its SXM app in order to grow subscriber numbers ahead of new "streaming experience" launching this fall. The SiriusXM Podcast Network, which includes content production hubs Stitcher Studios and Earwolf, remains unchanged as part of this decision and there will not be layoffs as part of this.

"The scale and reach of our widely distributed podcasts has been and remains a crucial accelerant for our advertising sales business, while incorporating podcasts more holistically into our flagship SiriusXM subscription service will help to drive further growth. As a result, we have made the decision to sunset our stand-alone podcast listening app as we increase our focus on these priorities," reads an internal memo Tuesday from chief product and tech officer Joe Inzerillo, chief ad revenue officer John Trimble and chief content officer Scott Greenstein.

Facebook

Facebook To End News Access in Canada Over Incoming Law on Paying Publishers (reuters.com) 43

Meta plans to end access to news on Facebook and Instagram for all users in Canada once a parliament-approved legislation requiring internet giants to pay news publishers comes into effect, the company said on Thursday. From a report: The legislation, known as the Online News Act, was approved by the Senate upper chamber earlier on Thursday and will become law after receiving royal assent from the governor general, a formality. The legislation was proposed after complaints from Canada's media industry, which wants tighter regulation of tech companies to prevent them from elbowing news businesses out of the online advertising market.

"Today, we are confirming that news availability will be ended on Facebook and Instagram for all users in Canada prior to the Online News Act taking effect," Meta said in a statement. Facebook had telegraphed such a move for weeks, saying news has no economic value to the company and that its users do not use the platform for news. The act outlines rules to force platforms such as Facebook and Alphabet's Google to negotiate commercial deals and pay news publishers for their content, a step similar to a groundbreaking law passed in Australia in 2021.

The Almighty Buck

US Might Finally Force Cable-TV Firms To Advertise Their Actual Prices (arstechnica.com) 67

The Federal Communications Commission (FCC) has proposed new rules to crack down on hidden fees charged by cable and satellite video providers. "My administration's top priority is lowering the cost of living for the middle class, and that includes cracking down on companies' use of junk fees to hide true costs from families, who end up paying more as a result," Biden said in a statement on Tuesday. Ars Technica reports: As Biden noted, the FCC "proposed a new rule that would require cable and satellite TV providers to give consumers the all-in price for the service they're offering up front." The proposed rule would force companies like Comcast, Charter Spectrum, and DirecTV to publish more accurate prices. Biden continued: "Too often, these companies hide additional junk fees on customer bills disguised as "broadcast TV" or "regional sports" fees that in reality pay for no additional services. These fees really add up: according to one report, they increase customer bills by nearly 25 percent of the price of base service."

FCC Chairwoman Jessica Rosenworcel first floated pricing transparency rules for the TV services offered by cable and satellite companies in March. That effort took a step forward on Tuesday when the commission approved a Notice of Proposed Rulemaking (NPRM) that seeks public comment on rules that would force video providers to offer accurate prices in advertising. "Consumers who choose a video service based on an advertised monthly price may be surprised by unexpected fees related to the cost of video programming that raise the amount of the bill significantly," the NPRM said. The cable and satellite TV companies' practice of listing "Broadcast TV" and "Regional Sports Network" fees separately from the advertised price "can be potentially misleading and interpreted as a government-imposed tax or fee, instead of a company-imposed service fee increase," and make it hard for customers to compare prices across providers, the FCC said.

The docket is available here, and comments will be accepted for 60 days after the NPRM is published in the Federal Register. The FCC said its proposal "would require cable operators and DBS [direct broadcast satellite] providers to clearly and prominently display the total cost of video programming service." The FCC is also seeking comment on whether it has the authority to impose similar requirements on other types of video providers. But Rosenworcel reportedly said in a congressional hearing that the FCC's authority under US law doesn't extend to streaming services.

Canada

Meta Pulls News Content From Canadian Facebook and Instagram (engadget.com) 43

Meta has confirmed that it will remove all news content from Facebook and Instagram for users in Canada, following the passing of the Online News Act by the Canadian Parliament. Engadget reports: "Today, we are confirming that news availability will be ended on Facebook and Instagram for all users in Canada prior to the Online News Act (Bill C-18) taking effect," the company posted. "We have repeatedly shared that in order to comply with Bill C-18, passed today in Parliament, content from news outlets, including news publishers and broadcasters, will no longer be available to people accessing our platforms in Canada."

The Online News Act is designed to address the precipitous drop in advertising revenue Canadian news organizations have experienced over the past two decades. It does so by requiring big tech companies like Google and Meta to negotiate reimbursement plans with those outlets for running said stories on their respective platforms. Earlier in June, Meta announced that it was working to develop a software-based solution to its C-18 issue. As of Thursday, those efforts remain ongoing "and currently impact a small percentage of users in Canada." Aside from the loss of news functionality, Meta assures its users that no other aspects of the Facebook experience will be impacted.

News

McDonalds and Fandom Replaced A Wiki Page With An Advertisement (kotaku.com) 43

An anonymous reader shares a report: Grimace, an ancient McDonalds character who -- recent marketing blitz aside -- may be so unknown among younger readers they will actually need to consult a website to find out who the hell he is, has for a very long time had an extensive page up over at the unofficial McDonalds Wiki. Until this week, at least, when McDonalds paid the site's owners to temporarily replace Grimace's biography with a paid advertisement.

Let's be clear up front: the original biography, written by critic, writer and digital marketer Nathan Steinmetz, aka Humanstein, isn't the most important piece of historical information on the internet. Doing exactly what it needed to do, it served as an introduction to the character himself, before also (this was the real highlight) delving into real-life matters like Malaysian Happy Meals, records of his public appearances and a list of the people who had voiced the character and worn the purple suit. Or it did, until it started looking like this instead. At time of writing the page had been completely hijacked, Nathan's research wiped and replaced with reminders that people can go buy a Grimace meal at McDonalds and play a video game based on the character. The wiki's changelog says the swap is temporary, running "for the length of this [advertising] campaign." [...]

AI

Meta Wants Companies To Make Money Off Its Open-Source AI, in Challenge To Google (theinformation.com) 13

Meta Platforms CEO Mark Zuckerberg and his deputies want other companies to freely use and profit from new artificial intelligence software Meta is developing, a decision that could have big implications for other AI developers and businesses that are increasingly adopting it. The Information: Meta is working on ways to make the next version of its open-source large-language model -- technology that can power chatbots like ChatGPT -- available for commercial use, said a person with direct knowledge of the situation and a person who was briefed about it. The move could prompt a feeding frenzy among AI developers eager for alternatives to proprietary software sold by rivals Google and OpenAI. It would also indirectly benefit Meta's own AI development.

[...] Meta stands to gain from releasing open-source AI models. As developers adopt and improve those models or patch their security holes, Meta will be able to incorporate those improvements in AI models for its own consumer and advertising products, Zuckerberg said in an April call with stock analysts. For instance, Zuckerberg has said he wants small businesses and content creators that use Facebook's apps to have access to "AI agents" who can act on their behalf by automatically communicating with fans or customers. "LLaMA or the language model underlying this is basically going to be the engine that powers that," he said in an interview last week with podcaster Lex Fridman.

Advertising

Video Ads Are Coming To All Your Uber Apps (businessinsider.com) 57

According to the Wall Street Journal, Uber plans to introduce full-length video ads across a variety of its platforms for the first time this week. Insider reports: Riders will encounter ads that are up to 90 seconds long on Uber's app while waiting for pickup and during rides. Similar to New York City taxis, which introduced TV screens in 2007, select Uber cars will have tablets that auto-play ads as well, the WSJ reported. Video ads will also be incorporated across Uber Eats and Drizly, an alcohol delivery service acquired by Uber for over $1 billion in 2021, the WSJ reported. On Uber Eats, ads will display while customers wait for their deliveries, and on Drizly, ads will play on search results pages.

While this development is not exactly out of the blue -- Uber announced it would launch an advertising division to connect brands with customers in October -- the move to begin implementing them so swiftly shows how serious the company is about its goal of growing its advertising business to more than $1 billion in sales by 2024. Part of Uber's pitch to brands is its cache of user data. The company has information on where its users go, how often they travel to their destinations, and how long they spend in the car.
"We have two minutes of your attention," Mark Grether, vice president and general manager of Uber Technologies' advertising division, told the WSJ. "We know where you are, we know where you are going to, we know what you have eaten."

Grether added that Uber can use all of that data "to then basically target a video ad towards you."
Youtube

Why YouTube Could Give Google an Edge in AI (theinformation.com) 30

Google last month upgraded its Bard chatbot with a new machine-learning model that can better understand conversational language and compete with OpenAI's ChatGPT. As Google develops a sequel to that model, it may hold a trump card: YouTube. From a report: The video site, which Google owns, is the single biggest and richest source of imagery, audio and text transcripts on the internet. And Google's researchers have been using YouTube to develop its next large-language model, Gemini, according to a person with knowledge of the situation. The value of YouTube hasn't been lost on OpenAI, either: The startup has secretly used data from the site to train some of its artificial intelligence models, said one person with direct knowledge of the effort. AI practitioners who compete with Google say the company may gain an edge from owning YouTube, which gives it more complete access to the video data than rivals that scrape the videos. That's especially important as AI developers face new obstacles to finding high-quality data on which to train and improve their models. Major website publishers from Reddit to Stack Exchange to DeviantArt are increasingly blocking developers from downloading data for that purpose. Before those walls came up, AI startups used data from such sites to develop AI models, according to the publishers and disclosures from the startups.

The advantage that Google gains in AI from owning YouTube may reinforce concerns among antitrust regulators about Google's power. On Wednesday, the European Commission kicked off a complaint about Google's power in the ad tech world, contending that Google favors its "own online display advertising technology services to the detriment of competing providers." The U.S. Department of Justice in January sued Google over similar issues. Google could use audio transcriptions or descriptions of YouTube videos as another source of text for training Gemini, leading to more-sophisticated language understanding and the ability to generate more-realistic conversational responses. It could also integrate video and audio into the model itself, giving it the multimodal capabilities many researchers believe are the next frontier in AI, according to interviews with nearly a dozen people who work on these types of machine-learning models. Google CEO Sundar Pichai told investors earlier this month that Gemini, which is still in development, is exhibiting multimodal capabilities not seen in any other model, though he didn't elaborate.

Businesses

Comcast Complains To FCC That Listing All of Its Monthly Fees is Too Hard (arstechnica.com) 109

mschaffer shares a report: Comcast and other ISPs have annoyed customers for many years by advertising low prices and then charging much bigger monthly bills by tacking on a variety of fees. While some of these fees are related to government-issued requirements and others are not, poorly trained customer service reps have been known to falsely tell customers that fees created by Comcast are mandated by the government. The FCC rules will force ISPs to accurately describe fees in labels given to customers, but Comcast said it wants the FCC to rescind a requirement related to "fees that ISPs may, but are not obligated to, pass through to customers." These include state Universal Service fees and other local fees. As Comcast makes clear, it isn't required to pass these costs on to customers in the form of separate fees. Comcast could stop charging the fees and raise its advertised prices by the corresponding amount to more accurately convey its actual prices to customers. Instead, Comcast wants the FCC to change the rule so that it can continue charging the fees without itemizing them..

I suppose it's just easier to grab people's money than it is to make up names for the fees, Mschaffer adds.

Google

Google Faces EU Break-Up Order Over Anti-Competitive Adtech Practices (reuters.com) 51

Alphabet's Google may have to sell part of its lucrative adtech business to address concerns about anti-competitive practices, EU regulators said on Wednesday, threatening the company with its harshest regulatory penalty to date. From a report: The European Commission set out its charges in a statement of objections to Google two years after opening an investigation into behaviours such as favouring its own advertising services, which could also lead to a fine of as much as 10% of Google's annual global turnover. The stakes are higher for Google in this latest clash with regulators as it concerns the company's biggest money maker, with the adtech business accounting for 79% of total revenue last year.

Its 2022 advertising revenue, including from search services, Gmail, Google Play, Google Maps, YouTube adverts, Google Ad Manager, AdMob and AdSense, amounted to $224.5 billion. EU antitrust chief Margrethe Vestager said Google may have to sell part of its adtech business because a behavioural remedy is unlikely to be effective at stopping the anti-competitive practices.

Google

Google To Get Hit With EU Antitrust Charges for Ad Tech Abuses (bloomberg.com) 14

Google is set to be hit with a formal antitrust complaint from the European Union that could lead to massive new fines and strike at the heart of the advertising technology that drives most of the US firm's revenue. From a report: The so-called statement of objections, to be announced as soon as Wednesday, will mark another escalation in a long-running saga that's already led to a trio of EU penalties totaling more than $8.6 billion. The new charges will target the core of the Alphabet unit's ad tech business model, according to people familiar with the matter who spoke on condition of anonymity. Google's advertising business is by far its most successful, accounting for about 80% of its annual revenue. In 2022, its ad sales amounted to about $225 billion. The new complaint is the most significant in the current five-year mandate of the European Commission, the EU's antitrust watchdog, one of the people said.
Government

Louisiana Passes Bill Banning Kids From the Internet Without Parental Consent (theverge.com) 108

Louisiana lawmakers have passed a bill that would prohibit minors from creating their own social media accounts without parental consent, potentially impacting popular platforms like Instagram and online games such as Roblox and Fortnite. The Verge reports: The bill, HB61, would ban "interactive computer services" from allowing people under 18 to sign up for their own accounts without parental consent. The bill's definition of online services is extremely broad, seemingly barring minors from creating social media accounts on sites like Instagram, accessing popular online games like Roblox and Fortnite, or even registering for an email address. The bill also goes as far as allowing parents to cancel the terms of service contracts their children entered into when signing up for existing accounts.

As of publication, it's unclear how the state plans to enforce these new rules, but it calls on state entities to review the bill and provide feedback before it would go into effect. The Louisiana State Legislature passed the bill unanimously on Tuesday, sending it to Gov. John Bel Edwards' desk for final approval. The ban would go into effect August 1st of next year if he chooses to sign it.
"We are hopeful that Governor Edwards will veto this bill. It violates First Amendment rights, takes away parental rights for their families and requires massive data collection on all Louisiana citizens," NetChoice vice president and general counsel Carl Szabo said in a statement Thursday.

"It's true that Big Tech's advertising model hurts kids and teens," Fight for the Future said in a call for people to tell their elected officials not to pass online age restrictions. "But age-gating all social media, for anyone under 18? That won't solve the problem, and it's a direct attack on millions of young people's First Amendment rights."

Further reading: Congress Shocked To Discover 10 Year Olds Check the 'I'm Over 18' Box Online [Not The Onion]
Privacy

iOS 17 Automatically Removes Tracking Parameters From Links You Click On (9to5mac.com) 54

iOS 17 and macOS Sonoma include even more privacy-preserving features while browsing the web. From a report: Link Tracking Protection is a new feature automatically activated in Mail, Messages, and Safari in Private Browsing mode. It detects user-identifiable tracking parameters in link URLs, and automatically removes them.

Adding tracking parameters to links is one way advertisers and analytics firms try to track user activity across websites. Rather than storing third-party cookies, a tracking identifier is simply added to the end of the page URL. This would circumvent Safari's standard intelligent tracking prevention features that block cross-site cookies and other methods of session storage. Navigating to that URL allows an analytics or advertising service at the destination to read the URL, extract those same unique parameters, and associate it with their backend user profile to serve personalized ads.

Microsoft

Microsoft Stashes Nearly Half a Billion in Case LinkedIn Data Drama Hits (theregister.com) 13

Microsoft has warned investors about a "non-public" draft decision by Irish regulators against LinkedIn for allegedly dodgy ad data practices, explaining it had set aside some cash to pay off any potential fine. From a report: How much? Oh, a mere $425 million. The software giant said the funds were connected to a 2018 investigation by the Irish Data Protection Commission (IDPC) looking into whether LinkedIn's targeted advertising practices violated the the European Union's General Data Protection Regulation (GDPR). At the time of the complaint, the 2016 law had been recently implemented and the watchdog was just settling into its role as EU overlord of judging data practices of the tech giants. Microsoft denies it broke any GDPR rules and said it "intends to defend itself vigorously in this matter."
News

Maryland License Plates Now Inadvertently Advertising Filipino Online Casino (vice.com) 51

Roughly 800,000 Maryland drivers with license plates designed to commemorate the War of 1812 are now inadvertently advertising a website for an online casino based in the Philippines. From a report: In 2012, to celebrate the 200th anniversary of the War of 1812, Maryland redesigned its standard license plate to read "MARYLAND WAR OF 1812." The license plates, which were the default between 2012 and 2016, have the URL www.starspangled200.org printed at the bottom. Sometime within the last year, www.starspangled200.org stopped telling people about how Marylander Francis Scott Key was inspired to write the national anthem "The Star Spangled Banner" after watching British ships bombard Fort McHenry in Baltimore during the War of 1812 and started instead redirecting to a site called globeinternational.info, in which a blinking, bikini-clad woman advertises "Philippines Best Betting Site, Deposit 100 Receive 250."

The issue was spotted by a Redditor who said "I was never a fan of having a plate celebrating the War of 1812, but I'm even more upset now that I (and tons of other Marylanders) are driving advertisements for international online gambling." Domain registration information shows that starspangled200.org has been re-registered and transferred a handful of times within the last few years. It is not exactly clear when it stopped being a website about American history. The Internet Archive shows that as recently as December 2022, the website explained that "the young United States was embroiled in the War of 1812 and the Chesapeake Bay region felt the brunt of it." A snapshot from today, however, explains that "Extremely lenient laws govern gaming," in the Philippines. "This is a result of the growing popularity of gambling among tourists and the enormous casino resorts that have recently been built."

Apple

Apple Touts $1.1 Trillion in App Store Commerce in 2022 (techcrunch.com) 18

Ahead of Apple's Worldwide Developer Conference next week, the company is offering an update on its app ecosystem with the release of a new report detailing app earnings over the course of last year. From a report: In the analysis, released today, Apple says its App Store ecosystem generated $1.1 trillion in developer billings and sales in 2022, 90% of which was commission-free -- a metric it likes to tout to downplay the growing complaints about the high cost of doing business on a marketplace that generally takes a 15% to 30% commission on in-app purchases and paid downloads, with some exceptions. This $1.1 trillion breaks down as $910 billion in total billings and sales from the sale of physical goods and services, $109 billion from in-app advertising, and $104 billion for digital goods and services. The figures are a sizable increase from 2019 data, when Apple said the App Store had facilitated $519 billion in commerce, with then "just" $61 billion coming from digital goods and services.
The Courts

Supreme Court Declines To Hear Bid To Sue Reddit Over Child Porn (reuters.com) 99

An anonymous reader quotes a report from Reuters: The U.S. Supreme Court on Tuesday declined to hear a bid by child pornography victims to overcome a legal shield for internet companies in a case involving a lawsuit accusing Reddit Inc of violating federal law by failing to rid the discussion website of this illegal content. The justices turned away the appeal of a lower court's decision to dismiss the proposed class action lawsuit on the grounds that Reddit was shielded by a U.S. statute called Section 230, which safeguards internet companies from lawsuits for content posted by users but has an exception for claims involving child sex trafficking. The Supreme Court on May 19 sidestepped an opportunity to narrow the scope of Section 230 immunity in a separate case.

Section 230 of the Communications Decency Act of 1996 protects "interactive computer services" by ensuring they cannot be treated as the "publisher or speaker" of information provided by users. The Reddit case explored the scope of a 2018 amendment to Section 230 called the Fight Online Sex Trafficking Act (FOSTA), which allows lawsuits against internet companies if the underlying claim involves child sex trafficking. Reddit allows users to post content that is moderated by other users in forums called subreddits. The case centers on sexually explicit images and videos of children posted to such forums by users. The plaintiffs -- the parents of minors and a former minor who were the subjects of the images -- sued Reddit in 2021 in federal court in California, seeking monetary damages. The plaintiffs accused Reddit of doing too little to remove or prevent child pornography and of financially benefiting from the illegal posts through advertising in violation of a federal child sex trafficking law.

The San Francisco-based 9th U.S. Circuit Court of Appeals in 2022 concluded that in order for the exception under FOSTA to apply, plaintiffs must show that an internet company "knowingly benefited" from the sex trafficking through its own conduct. Instead, the 9th Circuit concluded, the allegations "suggest only that Reddit 'turned a blind eye' to the unlawful content posted on its platform, not that it actively participated in sex trafficking." Reddit said in court papers that it works hard to find and prevent the sharing of child sexual exploitation materials on its platform, giving all users the ability to flag posts and using dedicated teams to remove illegal content.

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