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Should Private Monopolists Be Subject to a Nondiscrimination Requirement?

Recently, there has been much talk about the power of private companies, such as Google, Twitter, or Cloudfare (the internet security company), over political speech.  The decision by these companies to not provide their services to certain political viewpoints is extremely controversial.  Conservatives often criticize these companies for employing standards that are biased in favor of liberals.  But other conservatives and libertarians often defend the companies on the ground that they are private entities and can choose not to provide services based on the political views of the consumer or user.

This raises the question whether it is legitimate to prohibit such companies from acting in a politically biased way in providing services.  Since I am a classical liberal, I will look at the question from that perspective.  Is it permissible to impose a prohibition on certain types of political bias by private actors from a classical liberal perspective?  In addressing this question, I should note that I am not arguing that this approach will be beneficial for conservatives or libertarians.  I am merely asking whether it is legitimate.

That these are private companies, of course, provides a strong argument in favor of allowing them to make decisions with whom to deal.  But this may not be the end of the story.  If a company has a monopoly on an essential service, then one might argue that it should be limited in its ability to refuse to provide service.  One might require that it should have an obligation to provide services to the public in a nondiscriminatory manner.  Monopolies may be inevitable aspects of certain markets, but that does not mean they should be able to discriminate.

There are several reasons for this conclusion.  First, even if we believe monopolies should not be regulated (perhaps because it is better to have an unregulated monopoly than a regulated one), that does not mean that the unregulated monopoly needs the ability to discriminate in order for it to have the proper economic incentives.

Second, the worst aspects of the coercion that monopolists as to essential services can impose can be eliminated through a nondiscrimination requirement.  Just as governments are properly prevented from exercising coercion in a discriminatory manner, so should essential service monopolists.

Without the nondiscrimination requirement, the monopolist can coerce members of the public as to important rights.  For example, if the essential services are related to speech or writing, then the monopolist can silence an individual or group by not providing those services.  Even if the essential services are unrelated to speech or writing, the monopolist can threaten to not provide its services unless the individual refrains from engaging in the offensive speech or writing.

The nondiscrimination requirement was employed in traditional legal regimes.  For example, in 19th century America, common carriers, such as railroads or inns which were thought of as exercising monopoly power, were subject to a nondiscrimination requirement.  Thus, this requirement certainly had precedents in legal regimes that could be classified as classical liberal.

While there is therefore a strong argument for imposing a nondiscrimination requirement on monopolists, especially those of essential services, the question is whether Google, Twitter, Cloudfare or other services are monopolists.  I hope to turn to this question in the future.

Reader Discussion

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on November 02, 2017 at 10:39:19 am

The nondiscrimination requirement was employed in traditional legal regimes. For example, in 19th century America, common carriers, such as railroads or inns which were thought of as exercising monopoly power, were subject to a nondiscrimination requirement. Thus, this requirement certainly had precedents in legal regimes that could be classified as classical liberal.

Not just the 19th century, and not just America. According to Sir William Blackstone's Commentaries on the Laws of England (1765–1769), "if an inn-keeper, or other victualler, hangs out a sign and opens his house for travelers, it is an implied engagement to entertain all persons who travel that way; and upon this universal assumpsit an action on the case will lie against him for damages, if he without good reason refuses to admit a traveler."

And according to Charles Burdick (1911), the Blackstone's reference to “inn-keeper, or other victual” was intended to apply to anyone who held himself out as open to the public. But recall that Blackstone was referring to the law of a pre-industrial revolution world in which much commerce was done on the basis of personal relationships, so the range of firms that held themselves out to serve bypassing strangers was narrower than we think of today.

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nobody.really
on November 02, 2017 at 10:46:04 am

Not a lawyer, but it's obvious corporations are legal entities given certain privileges under the law. Society can and should expect some standards of behavior in return for the privilege of operating as a corporation. We can debate the limits, but I'd say open access for all citizens is within the reasonable boundaries.

In addition, if providers are policing content then they are acting as publishers and should be liable for any libel or slander that they host on their services.

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boxy
on November 02, 2017 at 10:50:17 am

So a question:

"But recall that Blackstone was referring to the law of a pre-industrial revolution world in which much commerce was done on the basis of personal relationships, so the range of firms that held themselves out to serve bypassing strangers was narrower than we think of today."

Does this argue for or against a) the social media monopolist(s) and / or b) the rural small farmer, who from time to time agrees to host a wedding party in the backwoods of rural America.
The latter would appear to be, at least, somewhat akin to Blackstone's times.

As to innkeepers, it appears that our social media magnates would appear to be open to all comers in their "inn" provided that the travelers are prepared to accept "Procrustean" bedding.

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gabe
on November 02, 2017 at 11:23:16 am

If you require an unregulated firm to “avoid discrimination," can you still say that it's unregulated? In other words, what does “discrimination” entail for purposes of this discussion?

There are two relevant standards of discrimination here.

1. Establish a uniform standard of behavior on the part of the seller (tariffs and practices), and requires the seller to justify (on the basis of extraordinary circumstances) deviations from that standard.

2. Establishe a finite list of suspect criterion that indicate “undue” discrimination, and permits a seller to discriminate on any basis other than the suspect bases.

As Rappaport notes, mere speech/viewpoint is not generally on the list of suspect criterion. The Bill O’Reilly Show is not required to accept my advertising if they don’t like the content of my ad. And if they do accept, I’m permitted with discontinue advertising if I later conclude that I don’t like the content of O’Reilly’s show.

I could imagine implementing a Type 1 nondiscrimination policy on Google/Twitter/Cloudfare advertising: You must accept any advertiser who pays, regardless of content, on the same terms as any other advertiser.

But implementing a Type 2 nondiscrimination policy would be trickier because of the challenge of distinguishing each internet company’s the true motives. Could Google refuse, on putatively politically neutral grounds of aesthetics, to run an anti-abortion add that depicts a gruesome image of a mutilated fetus? Could the Jehovah’s Witnesses insist on their right to run an add saying that the Iraq War would be a terrible policy? And if so, could the Nation of Iraq do the same? Or would the identity of the speaker alter the extent of the speaker’s rights?

It’s a quagmire….

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nobody.really
on November 02, 2017 at 12:59:52 pm

These internet entities can discriminate as long as they don't start baking cakes. Only progressive discriminators are allowed.

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Badabing
on November 02, 2017 at 14:32:52 pm

State sanctioned monopolies have been a problem in Anglo-American politics since the reign of Elizabeth I. Paragraph 9 of the Massachusetts Body of Liberties of 1641 says:

No monopolies shall be granted or allowed amongst us, but of such new Inventions that are profitable to the Countrie, and that for a short time.

http://history.hanover.edu/texts/masslib.html#ms

Obviously, if Rappaport concedes that Google, Facebook and the rest are any kind of state sanctioned or tolerated monopoly engaged in the transmission of ideas, opinions and speech they are subject to the Constitution, particularly the Bill of Rights.

I think it is impossible to reach any other conclusion.

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EK
on November 02, 2017 at 15:06:17 pm

To be a monopoly, you only have to be a monopoly in "any section of the country", not in a "relevant geographic market". Therefore, so long as Google is the primary search engine in any county, state, or tri-state area, it is a monopoly, even if it isn't a monopoly country-wide. Because Google is the primary search engine in Wyoming, it is a monopoly and is therefore subject to anti-trust legislation---like anti-discrimination laws.

United States v. Pabst Brewing Company (June 13, 1966):
Apparently the District Court thought that, in order to show a violation of § 7, it was essential for the Government to show a "relevant geographic market" in the same way the corpus delicti must be proved to establish a crime. But when the Government brings an action under § 7, it must, according to the language of the statute, prove no more than that there has been a merger between two corporations engaged in commerce and that the effect of the merger may be substantially to lessen competition or tend to create a monopoly in any line of commerce "in any section of the country." (Emphasis supplied.) The language of this section requires merely that the Government prove the merger may have a substantial anticompetitive effect somewhere in the United States -- "in any section" of the United States. This phrase does not call for the delineation of a "section of the country" by metes and bounds as a surveyor would lay off a plot of ground. [3] The Government may introduce evidence which shows that, as a result of a merger, competition may be substantially lessened throughout the country, or, on the other hand, it may prove that competition may be substantially lessened only in one or more sections of the country.

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Justice Blackheart
on November 02, 2017 at 15:52:37 pm

How did this equal access to common carriers & service providers work in its application; separate but equal?

"You can ride the train so long as its not in the same car as the white folk"; "You can stay in the inn, so long as its IN the barn and not In the INN, if you're African Americ- IN"?

Anywho; the cardinal rule of any viable business is, "know thy customer". It would seem in this instance, "thy customer" is the advertisers that purchases advertising; is not this the source and summit of the revenue streams of these companies? Don't know about yins, but I've never paid a cent to gaggle, facebooger, or twittle. But, countless cents to many of the companies that advertise therein. Too, I've paid thousands of cents (because I lack good sense) to print media and cable media), just as to trains and Inns. Are we tweeting up the wrong tree?

It would seem, the only justification of bringing charges of discrimination against these entities, is if they denied equal access to advertisers. The rest of us are merely free-riders who have no real interest or standing in whether they operate as a monopoly.

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Paul Binotto
on November 02, 2017 at 16:00:17 pm

The primary purpose of anti-trust laws is to prevent monopolies in the marketplace of ideas. Content-based discrimination, or political-ideological discrimination, is precisely what creates a monopoly in the marketplace of ideas. So the only way to breakup a monopoly in the marketplace of ideas is to ban content-based (ideology-based) discrimination.

If the first amendment is understood as first-and-foremost an anti-trust law in the marketplace of ideas, than the first amendment's primary activity is preventing ideological discrimination in the main channels (mediums) of expressive distribution.

Lorain Journal Co. v. United States (December 11, 1951):
They expressly and unequivocally state that the publisher's conduct was aimed at a larger target -- the complete destruction and elimination of WEOL. The court found that the publisher, before 1948, enjoyed a substantial monopoly in Lorain of the mass dissemination not only of local news and advertising, but of news of out-of-state events transmitted to Lorain for immediate dissemination, and of advertising of out-of-state products for sale in Lorain. WEOL offered competition by radio in all these fields, so that the publisher's attempt to destroy WEOL was in fact an attempt to end the invasion by radio of the Lorain newspaper's monopoly of interstate as well as local commerce. [6]

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Hayeking down the Stream of Consciousness
on November 02, 2017 at 16:22:10 pm

How does the proposed right-of-access to youtube differ from the politician's claimed right-of-access to advertise on tv and in newspapers? That is, how do "ideological non-discrimination laws" differ in practice from the fairness doctrine and right-of-access laws?

To me they seem different, since there isn't a limited amount of youtube space in the same way there's a limited amount of advertising space (paper) or time (tv). The newspaper may not want to have a Clinton presidential advertisement in their paper because it takes up precious room they could sell to Victoria Secret for more money. But youtube can't say that they need to prevent someone from uploading video A so another person can upload video B instead.

The question is, should youtube require a fee to upload videos that they don't monetize and make money from? And would they take advantage of this by no longer monetizing any video that they didn't think would garner more views than the fee they were charging?

Columbia Broadcasting System, Inc. v. Democratic National Committee (May 29, 1973) :
Under a constitutionally commanded and Government supervised right-of-access system urged by respondents and mandated by the Court of Appeals, the Commission would be required to oversee far more of the day-to-day operations of broadcasters' conduct, deciding such questions as whether a particular individual or group has had sufficient opportunity to present its viewpoint and whether a particular viewpoint has already been sufficiently aired. Regimenting broadcasters is too radical a therapy for the ailment respondents complain of.

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Red Lions and Tigers and Bear Stearns, oh my
on November 02, 2017 at 16:38:55 pm

The main purpose of the first amendment is to protect anonymous speech (see below), that is, the main purpose of rights is to protect the ability to exercise a right anonymously. The internet is the main and best forum for exercising the right-of-freedom-of-speech anonymously. To deny people access to the most-visited internet forums/websites that allow anonymous posting would be to so handicap the right to speak anonymously as to effectively destroy the right entirely.

McIntyre v. Ohio Elections Commission (April 19, 1995):
Whatever the motivation may be, at least in the field of literary endeavor, the interest in having anonymous works enter the marketplace of ideas unquestionably outweighs any public interest in requiring disclosure as a condition of entry. [n.5] Accordingly, an author's decision to remain anonymous, like other decisions concerning omissions or additions to the content of a publication, is an aspect of the freedom of speech protected by the First Amendment.
The freedom to publish anonymously extends beyond the literary realm.

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Tally-ho v. California
on November 02, 2017 at 17:19:55 pm

It's not just that private companies can't discriminate based on gender or race, but that can't have policies that have disparate-impacts on a particular gender or race. So, for instance, a restaurant can't just not ban women, but it can't ban people with hair longer than six inches or ban people who wear make-up, because most of the people who would be banned would be women. (That's why they say "no shirt, no shoes" rather than "no pants", because banning people who wear dresses would have a disparate-impact on women and would in application be gender-discrimination.)

So the same for youtube and conservativism. Since most of the people whose videos would be banned (or hidden, etc.) from youtube are videos made by white people, such ideological discrimination has a disparate-impact on whites and is therefore racist in practice, even if not racist in principle.

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Fogging the lens of truth
on November 02, 2017 at 23:41:56 pm

You are laboring, like so many others, under the misapprehension that these corporations are "private". They are not.

They are government-chartered limited liability organizations, and as such are not really private.

Private organizations are those where the owners bear all of the liabilities, in full.

It's long past time to recognize that, and treat corporations, LLCs, etc. as the government wards that they are, and regulate them to within an inch of their shareholder's lives, while at the same time loosening the cinch straps on truly private companies.

Kurt

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Kurt
on November 03, 2017 at 10:51:47 am

Anybody have a response to Paul Binotto's "free-rider" argument?

What harm is being done to the free-riders, who "tag along for free, on a vehicle intended to generate ad revenues for the site operator / app? What damages? Then again, it is "MY" site, why must I let you voice what I do not like. YOU are free to express yourself elsewhere - probably also at no charge?

Simple thing to do is STOP patronizing these "privacy-invading" sites.

Better solution:

Let some Big Moneybags of the Right start their own site and restrict the looney-toon left?

Same with newspapers; Stop bitchin' and start your own.

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gabe
on November 03, 2017 at 13:49:23 pm

Paul's first sentence assumes that the 1896 decision in Plessy v. Ferguson accurately reflects 1000 years of Anglo-American common and statutory law. It does not. It only reflects the laws of the American plantation economies that developed after 1663 and that were presumed to have been extinguished by the Civil War Amendments.

Private monopolies for profit of things widely used or relied upon by the general population have always been subordinated to the public interest.

If Google, Facebook and the rest want to control the content of their sites then the first remedy is that they have no legal protection and all their patents, copyrights and trade secrets are not longer protected by US law.

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EK
on November 03, 2017 at 14:35:03 pm

EK:

Fair enough and agreed re: Plessy not being reflective of Anglo tradition.

But I was asking about the question of "standing" implicit in Paul's comments. What harm have I suffered by not being able to post comments on Facebook (all hypothetical, of course, as i cannot tolerate the execrable Zuckerburg (?) and I believe that social media is both distasteful and detrminental to civic health). What right do I have to post anything on another individuals site. In a sense, it is akin to my walking into the nearest bank, open to all, and demanding that the clerks therein listen to my rants.

Must a environmental advocacy group, give time to a petroleum executive? - and so on?

Why would a court grant me standing. I pay nothing; I am still able to express my idiot opinions at other sites; other than a presumptive claim of "victimhood" I offer no concrete evidence of harm.

BTW: I am not advocating current practice as a proper prescription - only asking how it is that I am entitled to any hearing whatsoever.

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gabe
on November 03, 2017 at 15:11:22 pm

In truth, EK, this is not at all what the first sentence was assuming. Instead it was questioning the quote from the essay cited in Nobody's initial commentary:

"The nondiscrimination requirement was employed in traditional legal regimes. For example, in 19th century America, common carriers, such as railroads or inns which were thought of as exercising monopoly power, were subject to a nondiscrimination requirement. Thus, this requirement certainly had precedents in legal regimes that could be classified as classical liberal."

The first sentence was really challenging the veracity that 19th century America subjected common carriers or inns to a non-discrimination requirement. Or if in fact they (common carriers/inns) freely operated under a principle of "separate but equal", despite the "traditional legal regimes".

The second part of my commentary, beginning "anywho" is an all together separate (although not unrelated) assertion specifically regarding where standing to claim discrimination resides in entities such as Google & Facebook, where use is 1) voluntary, 2) free, and 3) the actual business model is to maximize advertising income by exploiting the public neurosis to reveal every detail about oneself to the world, for the purpose of precise targeting of advertisement.

I would probably debate that the "widely used or relied upon" assertion is properly used as you apply it to these entities. There is really no conceivable harm or injury I can contemplate that a user could suffer by not being able to post a specific point of view on Facebook, or any expressed or unexpressed warranty or assurances by these companies that their content is 1) to be relied on or, 2) that it is unbiased.

I would however, though I haven't read their user agreements (which much exist), highly suspect that these companies make it a condition of use of their platforms, agreed to by a user at sign-up, that the companies maintain sole right to moderate/censor site content.

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Paul Binotto
on November 03, 2017 at 15:19:28 pm

"BTW: I am not advocating current practice as a proper prescription – only asking how it is that I am entitled to any hearing whatsoever." - this is ditto for me. I am not condoning the practice or the wisdom of it, only the spurious assertion that a user has standing to sue under these circumstances.

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Paul Binotto
on November 03, 2017 at 17:56:44 pm

You're entitled to a hearing because Google is a monopoly whose patents, copyrights and trade secrets are protected by US law.

If Google doesn't mind losing its standing to enforce its rights then I guess maybe you would lose your First Amendment rights to use its platforms.

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EK
on November 04, 2017 at 13:23:43 pm

EK:

Here is something in support of your argument - Communication Decency Act

https://amgreatness.com/2017/10/31/tech-giants-are-biggest-threat-facing-trump-supporters/

"It is important to recognize that these companies can do this because they have special protections not afforded other industries. In 1996, to spur growth during the early years of the Internet, Congress passed Section 230 of the Communication Decency Act to protect “interactive computer services” from lawsuits based on what users say or do on their systems. Section 230 also immunizes Internet companies from liability for removing content they deem “objectionable,” even if it is constitutionally protected content.

With the protections of Section 230 of the Community Decency Act, Silicon Valley executives can undermine the First Amendment rights of all Americans with no accountability.

Helping foster the growth and economic development of the Internet with particular—and extraordinary—legal protections might have made sense in the 1990s. In 2017, however, extraordinarily wealthy and powerful companies are abusing those particular provisions. Congress never intended to give a handful of Silicon Valley executives the keys to the First Amendment when it adopted Section 230. "

It appears that these Titans of Industry WERE specifically provided protections for removing content that the companies deemed objectionable. Whoa!!!!! Isn't that "special"? Your Federal Tax dollars at work, once again.

Time to remove those protections!

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gabe
on November 04, 2017 at 13:49:22 pm

We do have standing (probably not in the legal sense), in the sense that monopoly practices distort markets, and thereby affect us all. lmagine a world where only Protestants could shop at Kroger and Catholics, at Safeway.

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Trevor Chase
on November 04, 2017 at 13:52:09 pm

See the old taxpayer standing cases. You need enough skin in the game.

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Trevor Chase
on November 04, 2017 at 15:03:36 pm

Or enough of your skin need to have been burned to warrant judicial attention - unless, of course, one's skin is burned by having monies go to a parochial school. Perhaps, it is the incense presumably burned at these schools - who knows?

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gabe
on November 04, 2017 at 16:36:19 pm

lmagine a world where only Protestants could shop at Kroger and Catholics, at Safeway.

According to Garrison Keillor, Lake Wobegon, Minnesota, is a town where the Lutherans all drive Fords bought from Clarence at Bunsen Motors and the Catholics all drive Chevies from Florian at Krebsbach Chevrolet.

Then there was that young couple who moved into the Severson’s old place. As we headed to church each Sunday morning, they just waved as us from their porch, sipping coffee. And they drove a Kia. The theological implications were unknowable.

Just to be safe, the city council voted to ban Sharia law….

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nobody.really
on November 04, 2017 at 17:04:28 pm

"Just to be safe, the city council voted to ban Sharia law…."

I have it on good authority that the City council received campaign contributions from the local pig farmers, a substantial number of whom were Baptists!

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gabe
on November 04, 2017 at 18:06:56 pm

That really would be some strange world indeed, (and one where me and the Mrs. would likely starve, as while there are plenty of Protestants and Catholics in my neck of the woods, I can't think of a single Kroger or Safeway within 50 miles or 100 miles)...almost as unjust as a world where only Pro-Choice people can belong to the Democratic Party. (Just joking, Chase Dog, just joking).

Joking aside, it does distort markets, doesn't it, and community, doesn't it?

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Paul Binotto

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