Section 230 and the Problem of Social Cost

Authors

Stanley M. Besen
Philip L. Verveer

Abstract

This Article employs, with certain modifications, the framework developed in Ronald Coase’s classic article, “The Problem of Social Cost,” to analyze the current debate over Section 230 of the Communications Decency Act. This provision absolves interactive computer services, also known as platforms, from liability when they disseminate materials that cause “harm” to third parties, “harm” that can take the form of compensable damage of a sort found in ordinary tort cases but also can include broader injuries to social order and cohesion in the form of such things as hate speech and misinformation. The Article begins by pointing out that, as Coase observes, the ability of private markets to deal with such externalities is limited when the harmful effects are widely distributed, so that many of the entities that are harmed do not have incentives to bring private actions against their sources. It also notes that this problem is compounded in the case of information that is distributed over the internet because of the difficulties involved in identifying, and obtaining jurisdiction over, the ultimate sources of such information. For that reason, it concludes that private actions to limit the dissemination of harmful materials are likely to be more effective if interactive computer services, in addition to information sources, can be held liable by their victims both because the services will often be easier to identify and because they have greater ability to engage in content moderation. However, it also observes that this is likely to be of limited effectiveness, in part because of the difficulties of bringing private actions against these services both because of the cost, delay, and uncertainty of litigation and because some services may obtain substantial economic benefits when they disseminate harmful information. For these reasons, the Article concludes that policy makers should consider expanding the range of carve outs, provisions that eliminate the immunity from liability that interactive computer services currently enjoy when they are involved in the dissemination of certain types of harmful materials, and that empowering the government to bring civil actions against interactive computer services for disseminating specific types of harmful information should also be considered.

Recommended Citation

Stanley M. Besen & Philip L. Verveer, Section 230 and the Problem of Social Cost, 30 J. L. & Pol'y 68 (2021).
Available at: https://brooklynworks.brooklaw.edu/jlp/vol30/iss1/2