How Section 230 Is Anticompetitive

Our polarized Internet world has generated at least one area of extraordinary bipartisan consensus: 77 percent of Americans agree Google, Facebook, and Amazon have too much power according to a Gallup survey.  

The near unanimous participation of Federal, State and Congressional antitrust authorities in probing  Google, Facebook, and Amazon, indicates extraordinary concern that their unchecked market power threatens competition for the consumer market.

Both political parties agree that Section 230 of the Communications Decency Act, which grants Internet platforms with immunity from liability for good faith moderation of online content, in practice provides Internet platforms unaccountable power that warrants reform.

Section 230’s intermediary impunity loophole provides these dominant consumer gatekeepers with anticompetitive advantages that facilitate the monopolization of access to consumer demand online, thus undermining competition for U.S. consumer spending that comprises 68% of U.S. GDP.

These gatekeepers, which do their best to avoid competing directly with each other, dominate competitive access to the online U.S. consumer market, leaving most potential competitors dependent on them to broadly reach online consumer demand.

How could this happen?

Online gatekeeper special interests, which commercially benefit from Internet interactions being viewed as protected free speech, and not commercial conduct that can be judged as harmful and illegal, have subverted competition, and created an unfair playing field.

Over years, their assiduous legal influence over successive Section 230 court precedents via extraordinary funding of legal positions pushing for maximally expansive court interpretations, has resulted in a de facto court-created, loophole that has perverted the law’s intended immunity from liability contingent on “good faith” moderation of content, into de facto intermediary impunity.     

This ‘Bad Samaritan’ impunity loophole in the Good Samaritan-named immunity section of U.S. Internet law is what creates unchecked, anticompetitive, power online that has made America’s most powerful least accountable.

How is Section 230 intermediary impunity anticompetitive? 

Impunity is defined as exemption from punishment, harm, or loss, i.e., extraordinary power.

America’s Constitution of separation of powers, checks and balances, and a Bill of Rights, makes every effort to prevent King George-like impunity, which I characterize in this context as Internet platform intermediary impunity online to harm or coerce others, to take away others’ freedoms, or to gain from harmful or illegal activity.

In this Section 230 Internet intermediary context, impunity is best understood as uniquely disruptive “taker power,” which I define as the power to “take” whatever one wants from others online without consequence, because courts now routinely rule summary judgement in favor of Internet platforms in Section 230 cases, effectively denying plaintiffs discovery and their right to access the courts for recourse and redress.

This unique taker power is inherently anticompetitive.

That’s because it perverts normal legal obligations and limits to operate a business responsibly - into the opposite - disruptive impunity to facilitate and profit from harmful and illicit activity online, e.g., fraud, harassment, illegal drug trafficking, terrorist activity, spread of child sexual abuse materials, espionage, identity theft, etc., to drive outsized business growth of revenue, profit, and market valuation.

In the “give and take” between Internet platforms and everyone else, there is no question that these companies have given consumers incredible benefits and value over the years.

However, the “give and take” is not balanced. They publicly trumpet the benefits they “give” their users, but have been nontransparent and deceptive about much that they “take” from everyone in return.  

Thus, what is in question here is what Internet platforms have taken from others that has been harmful, illegal, and hidden from everyone.

Now let’s try a thought experiment to better understand this unbalanced give and take, and to learn more specifically how Section 230 can be anticompetitive.

First, imagine any sport or game where one team must play by the rules and the other team does not, because it has been granted impunity, which I call a “cheaters charter” in this context.

What does a contest that involves Section 230 intermediary impunity look like?

The team playing with this cheaters charter advantage cannot lose and the team that must play by the rules cannot win.

It is an anticompetitive, unfair playing field.

It is certainly not competition or free market capitalism, because the outcome is predetermined.

Second, imagine what Internet platforms with impunity “taker power” can take from users, competitors, and the public that other companies cannot.  

Take all comers - criminals, predators, bad actors, harmful products and services, etc. - to virally grow fastest, biggest, and broadest.  

Take no responsibility for negligent, reckless, and willfully blind, non-curation of take-all-comers content.

Take advantage of, and profit from, users’ harmful illicit behavior that abuses others’ trust, innocence, insecurities, vulnerabilities, and situations, by taking liberties with their attention, intentions, intimacies, relationships, and locations, without liability or safeguards.

Take no responsibility for protecting minors from harm or exploitation.

Take no responsibility for business practices that profit from harmful misinformation, disinformation, polarization, and addiction.

Take exception with obeying laws and rules everyone else must obey to do “whatever-it-takes” to win.  

Third, imagine “meddler models” that Section 230 intermediary impunity enable Internet platforms to opaquely impose on users and competitors that other companies cannot. 

With Section 230’s intermediary impunity, Internet platforms can program algorithms by default to meddle, which I characterize in this extraordinary context to operate like there is nothing they cannot involve themselves in; none of their prying into the privacies and proprietary affairs of others is out of bounds; and no one else’s data, pictures, or secrets are their own.  

They also can leverage their taker power advantage to meddle at scale by copying, reading, and exploiting most data and metadata that is processed by their many ubiquitous networks, apps, and hardware, without regard to the data’s authenticity, legality, security, or proprietor.

Now step back and imagine what disruptive Internet platforms with a cheaters charter, taker power, and meddler business models can do with impunity that other companies cannot. 

Intercept and profit from competitors’ inside information, trade secrets, confidential business information, and proprietary data.

Interfere with competitors’ direct-to-consumer relationships, branding, marketing, selling, customer service, and delivery.

Interject into others’ business models discriminatory ranking, self-preferencing, and arbitrary rules, fees, and terms.

Interrupt competition, free market forces, and economic value creation.

In sum, this thought experiment shows that we do not have to imagine the ways that Section 230 can be anticompetitive.

Authorities, policymakers, and others need only look for the Section 230 anticompetitive reality that is hiding in plain sight.

Google, Facebook, and Amazon’s extraordinary accumulation of market power over online access to the U.S. consumer market did not happen organically entirely on merit, it also was artificially enabled and facilitated by Section 230’s unintended, anticompetitive, intermediary impunity.


Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor® a responsible Internet consultancy; and is working on his second book tentatively titled: “The Irresponsible Internet & How to Fix It.” In 2011, he authored the first critical book on Google: “Search & Destroy, Why You Can’t Trust Google Inc., which was translated into Korean and Portuguese. Cleland has testified before the Senate and House antitrust subcommittees seven times; and Institutional Investor twice ranked him the #1 independent analyst in communications when he was an investment analyst.