Maryland One Step Closer to Implementing a Digital Ad Tax

For a while we have seen the European Union (EU) grapple with the development of digital ad taxes which have had a significant impact on U.S. Big Tech companies. Now, Maryland is showing similar regulatory oversight on digital ads as the EU. 

Last year HB 732 was passed which would have imposed a graduated tax on the annual gross revenue derived from digital advertising in Maryland. The graduated tax would be: 

• For persons with global annual gross revenues of $100 million through $1 billion, the rate would be 2.5% of the assessable base.

• For persons with global annual gross revenues of more than $1 billion through $5 billion, the rate would be 5% of the assessable base.

• For persons with global annual gross revenues of more than $5 billion through $15 billion, the rate would be 7.5% of the assessable base.

• For persons with global annual gross revenues exceeding $15 billion, the rate would be 10% of the assessable base.

Last year Maryland Governor Hogan vetoed the bill stating “These misguided bills would raise taxes and fees on Marylanders at a time when many are already out of work and financially struggling. With our state in the midst of a global pandemic and economic crash, and just beginning on our road to recovery, it would be unconscionable to raise taxes and fees now.” 

Besides looking at this from a political lens of whether technology companies are regulating content speech and whether Section 230 should be revisited, there is also an economic lens. The pandemic has caused people to migrate from physical office space to digital commerce platforms, meaning that states are now grappling with the virus and shrinking taxable income. 

As far as Maryland goes the House of Delegates has voted to override the Governor’s veto of HB 732. The next step is for the Senate to override the legislation to implement it. The problem is there will be legal challenges to this law.  

Additionally, we believe that this is not the last time that we’ll see legislation like this. Similar efforts in New York and West Virginia have failed while Connecticut, Indiana have been the latest to introduce similar legislation. 

Technology stakeholders including those in digital commerce will continue to be at risk. We at Lanton Law can help. Our legal and policy tools can help offer your organization a clear path forward to navigate what will be changing policies for technology stakeholders. Contact us today to discuss your options.

The SAFE TECH Act Introduced into Congress

The ‘‘Safeguarding Against Fraud, Exploitation, Threats, Extremism, and Consumer Harms Act’’ or the "SAFE TECH Act" has been introduced into Congress. The proposal is led by Senators Warner (D-VA), Hirono (D-HI) and Klobuchar (D-MN), as the bill seeks changes to 47 U.S. Code § 230. 

The law which is part of the Communications Decency Act (CDA), also called Title V of the Telecommunications Act of 1996, provides ISP’s with federal immunity to any cause of action that seeks to make ISP’s liable for information that originated with a third party service user. 

Specifically, §230 states: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” The additional specifics of this law describe the liability shield that these companies currently enjoy which is further protected by federal preemption law. 

We have written several blog post on this topic about prior legislation targeting the law as well as prior U.S. DOJ Scrutiny on the matter. 

Since the SAFE TECH Act has been unveiled there have been multiple stakeholders expressing concern with unintended consequences this proposal in its current form has that will likely result in chilling of expression. 

Regardless of your political viewpoint, if you are a tech stakeholder that has ISP capabilities or you are providing services that deal with the exchange of ideas, you should be monitoring this type of legislative action to avoid unnecessary surprises to your business model. We at Lanton Law can help. 

Our legal and policy tools can help offer your organization a clear path forward to navigate what will be changing policies for technology stakeholders. Contact us today to discuss your options.

The Department of Justice Releases Proposed Section 230 Legislation

For some time now we have been forecasting that technology stakeholders had to be aware of looming regulatory oversight, especially around the issues of antitrust and Section 230. 

Last week the Department of Justice (DOJ) sent draft legislation to Congress to reform Section 230 of the Communications Decency Act.  The draft legislative text implements reforms that the Department of Justice deemed necessary in its June Recommendations. 

The Justice Department’s proposals available here focus on two issues: addressing illicit activity online and promoting transparency and open discourse. 

Regardless of whether this or other legislation gets enacted this year, Section 230 comes under increasing scrutiny by policymakers. It’s a question of when for technology regulation, so if you are a technology stakeholder it is better to be prepared.

Lanton Law is a national boutique law and government affairs firm that focuses on technology and healthcare. If you are an industry stakeholder with questions about the current landscape or if you would like to discuss how your organization’s strategic initiatives might be impacted by either Congress, regulatory agencies or legal decisions, contact us today.

New Congressional Bill Aimed at Tech ISPs

The Platform Accountability and Consumer Transparency Act has been introduced by Sens. Brian Schatz (D-Hawaii) and John Thune (R-South Dakota), which targets Internet Service Providers and attempts to limit their protections under 47 U.S. Code § 230 of the Communications Decency Act (CDA), also called Title V of the Telecommunications Act of 1996. 

The proposed Act points out two critical facts: 

• “Online consumers are not adequately protected in the United States because, with the exception of Federal criminal statutes, providers of interactive computer services are immune from the enforcement of most Federal statutes and regulations.

• The bill among a list of proposed policies also seeks to preserve the internet and other interactive computer services as forums for diversity of political discourse, unique opportunities for cultural development, and myriad avenues for intellectual and commercial activity.”

Specifically, the interactive computer service provider shall provide the following elements:

• reasonably inform users about the types of content that are allowed on the interactive computer service;

• explain the steps the provider takes to

• ensure content complies with the acceptable use policy;

• explain the means by which users can notify the provider of potentially policy-violating content, illegal content, or illegal activity

• include publication of a quarterly transparency report outlining actions taken to enforce the policy

While there are some First Amendment concerns with this legislation, this demonstrates how Section 230 comes under increasing scrutiny by policymakers. It’s a question of when for technology regulation so if you are a technology stakeholder, it is better to be prepared.

Lanton Law is a national boutique law and government affairs firm that focuses on technology and healthcare. If you are an industry stakeholder with questions about the current landscape or if you would like to discuss how your organization’s strategic initiatives might be impacted by either Congress, regulatory agencies or legal decisions, contact us today.

Senator Hawley Proposes New Congressional Legislation Targeting Behavioral Ads

U.S. Senator Josh Hawley (R-MO) has recently announced his new legislation titled the Behavioral Advertising Decisions Are Downgrading Services (BAD ADS) Act. This bill proposes to remove Section 230 immunity from Big Tech companies that display manipulative, behavioral ads or provide data to be used for them. Behavioral ads are defined in the legislation. 

It is unclear as to how this ties directly to Section 230 immunity and is different from other Congressional bills that create a nexus between Section 230 and its protections to content policies on websites. This bill would not apply to contextual ads  such as advertising that is directed to a user based on:

• ‘‘(aa) the content of the website, online service, online application, or mobile application to which the user is connected;

• ‘‘(bb) the location of the user, as of the time at which the advertising is directed to the user; or

• ‘‘(cc) the search terms that the user applied to arrive at the website, service, or application to which the user is connected

Regardless of whether this or other legislation gets enacted this year, Section 230 comes under increasing scrutiny by policymakers. It’s a question of when for technology regulation, so if you are a technology stakeholder it is better to be prepared.

Lanton Law is a national boutique law and government affairs firm that focuses on technology and healthcare. If you are an industry stakeholder with questions about the current landscape or if you would like to discuss how your organization’s strategic initiatives might be impacted by either Congress, regulatory agencies or legal decisions, contact us today.

New Legislation Targeting Technology Liability Shield Under Section 230

Earlier this year we started our conversation with the technology industry urging stakeholders to be aware of the growing policy attacks on the responsibilities of an Internet Service Provider (ISP) via the technology law 47 U.S. Code § 230. 

The law which is part of the Communications Decency Act (CDA), also called Title V of the Telecommunications Act of 1996, provides ISP’s with federal immunity to any cause of action that seeks to make ISP’s liable for information that originated with a third party service user. 

Specifically, §230 states: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” The additional specifics of this law describe the liability shield that these companies currently enjoy which is further protected by federal preemption law. 

A few weeks back we highlighted how politicians on both sides of the aisle have been more assertive in how tech companies are not living up to their expectations under Section 230. Now in addition to recent U.S. Department of Justice scrutiny, U.S. Senator Hawley (R-MO) has introduced the Limiting Section 230 Immunity to Good Samaritans Act, which seeks to provide accountability for bad actors who abuse the Good Samaritan protections provided under that Act. 

According to the Senator’s press release the bill “would prohibit Big Tech companies from receiving Section 230 immunity unless they update their terms of service to promise to operate in good faith and pay a $5,000 fine (or actual damages, if higher) plus attorney’s fees if they violate that promise.” This legislation makes it easier for Americans to sue tech companies that censor political speech or hide competitor content. This bill mirrors more conservative politicians who feel that tech companies are censoring conservative viewpoints.

Regardless of your political viewpoint, if you are a tech stakeholder that has ISP capabilities or you are providing services that deal with the exchange of ideas, you should be monitoring this type of legislative action to avoid unnecessary surprises to your business model. We at Lanton Law can help. 

Our legal and policy tools can help offer your organization a clear path forward to navigate what will be changing policies for technology stakeholders. Contact us today to discuss your options.     

Department of Justice Will Hold February 2020 Workshop on Section 230 Which Will Impact Tech Stakeholders

Earlier this month, we released a blog post titled Tech Companies and the Uncertain Future of §230. In it we focused on what Section 230 of the Communications Decency Act is and how the tech community would be impacted by changes currently being debated by both sides of the political aisle in Congress. 

Interestingly, the Department of Justice (DOJ) has announced that it will hold a public workshop in Washington, D.C. on Feb. 19, 2020, titled “Section 230 – Nurturing Innovation or Fostering Unaccountability?” According to the DOJ the workshop will discuss the law, its expansive interpretation by the courts, its impact on the American people and business community, and whether improvements to the law should be made. 

Additionally, the Department stated “Following the public workshop, the Justice Department will invite stakeholders with diverse perspectives for private listening sessions and roundtables to seek additional input and discuss the problems, benefits, and potential improvements to Section 230.  The department will publish readouts on the various perspectives and debate from those meetings.”

Congressional officials have been increasing their desire to modify this law. Democrats have complained that the law allows tech companies to be lax in patrolling misinformation or violent extreme content while Republicans have advocated that the law prevents them from imposing actions against tech companies for removing conservative political content.  

As we continue to become an increasingly connected world, being able to digitally share content with each other is not likely to slow down anytime soon. However; the market and our intentions in sharing data have changed significantly since when section 230 was enacted in 1996. While major tech titans like Facebook, Twitter, Alphabet are at the center of this debate, we foresee that other tech stakeholders should take note of these developments and plan accordingly. We don’t believe that this debate will slow down at all so making adaption to section 230 is key. Contact Lanton Law for more details.