WASHINGTON — Digital rights experts and advocates are sounding the alarm about new provisions for government intervention in online commerce outlined in the lengthy "America COMPETES" bill, which they say may result in restrictions for potentially controversial content, including porn.
The bill is being promoted as having been "designed to boost U.S. semiconductor manufacturing and competition with China, including $52 billion to support domestic chip research and production," according to NBC News.
But buried in the over-2,000-page document — which includes a smorgasbord of mostly commerce-related initiatives promoted by the Democratic Party — there are two sections that are being flagged as potentially problematic for adult businesses.
The “SHOP SAFE” section — previously a separate bill — would create a souped-up version of DMCA protections for intellectual property and trademarks.
“This means that larger online marketplaces will likely opt to kick-off niche or smaller third-party sellers because they create risk,” a legal expert familiar with the discussions leading to the bill told XBIZ.
The “INFORM” section — also previously its own piece of legislation — will now require large online marketplaces to collect contact information about third-party sellers on their services. There is also a requirement that those sellers disclose that information to consumers on the platform, which could present privacy difficulties for adult sellers and buyers.
A Granular Analysis by Prof. Eric Goldman
In a detailed blog post, digital rights and Section 230 expert Eric Goldman, a professor at Santa Clara Law School, stated that even though lawmakers are currently “relying on the pretense that the bill is not controversial [and] are trying to attach it to the must-pass NDAA [National Defense Authorization Act] bill, even though the bill has absolutely nothing to do with national defense,” the America COMPETES bill “would benefit from more scrutiny, not less.”
Goldman summarizes the new data-gathering requirement of America COMPETES this way:
The bill has four main obligations: (1) marketplaces must collect information from high-volume sellers, (2) marketplaces must verify the information, (3) marketplaces must make high-volume sellers disclose contact info to consumers, and (4) online marketplaces must enable electronic and telephonic reporting of “suspicious activity” in the marketplace.
More details about these obligations:
Information Collection/Verification: An online marketplace must collect the following info from high-volume sellers: (1) the seller’s bank account number, (2) for entities, a government-issued ID for a representative or government-issued record or tax document showing the entity’s business address, (3) tax ID number, and (4) working phone number and email address. Every year, the online marketplace must ask sellers to refresh their information. The online marketplace must suspend any seller who doesn’t comply.
The online marketplace is required to verify the high-volume sellers’ information, but it can rely on any government-issued tax documents (but apparently not other government-issued documents).
The bill says online marketplaces can’t use the seller-supplied information for secondary purposes and must deploy reasonable security procedures and practices to protect the collected info.
Goldman also notes some ominous implications of the bill’s proposed “Mechanism for Reporting Suspicious Activity.” The legislation reads: “An online marketplace shall disclose to consumers in a clear and conspicuous manner on the product listing of any high-volume third party seller a reporting mechanism that allows for electronic and telephonic reporting of suspicious marketplace activity to the online marketplace.”
“I’m sure every online marketplace will be overjoyed to receive these reports,” Goldman noted, with irony. “Remember what happened when people reported 'suspicious' neighborhood activity on Nextdoor? Racism. In this context, it’s likely that: competitors will try to game each other through these notices; IP owners will treat the notice mechanism as a queue to submit takedown demands and cite any failures to honor their ‘notices of suspicious activity’ as proof of scienter in their lawsuits; and consumers will treat this as a general-purpose customer support queue.”
"Also, the SHOP SAFE Act has a misdrafted attempt to impose liability for submitting bogus reports," he said. "The INFORM Act should add such a provision, but draft it properly."
First Amendment Concerns
For Goldman, what is most problematic from a First Amendment standpoint is that, according to the new rules, ”sellers get the right to publish their constitutionally protected ads only if they verify their identity and make other unwanted disclosures; and the ‘publisher’ (the online marketplace) must suspend future publication rights if the sellers don’t authenticate. Framed that way, the law raises obvious constitutional problems as attacking both free speech and the right to anonymous speech. Indeed, a decade ago, laws requiring the age authentication of models in prostitution ads were struck down as First Amendment violations.”
The legal expert also thinks that several provisions of "America COMPETES" also point the way towards a universal system of online identity verification that would completely change internet privacy and freedoms as we know them.
“Make no mistake,” Goldman concludes. “The push for KYC [Know Your Customer]-on-the-internet won’t stop here. I believe this would be the first time that Congress has imposed identity verification requirements on internet players who do not have similar requirements in the offline world. If this passes, it won’t be the last. You can bet the intellectual property lobby is licking its chops for more identity verification requirements.”
“So many critics would love to see every user have a ‘driver’s license for the internet’ — thus eliminating all unattributed activity on the internet. You might think this bill only targets online marketplaces, but it’s likely the camel’s nose towards a more dystopian internet.”
'A Sprawling Mess'
Over at the libertarian news outlet Reason, Elizabeth Nolan Brown also lambastes "America COMPETES" for its chaotic aggregation of sub-provisions that seem disconnected from the sponsors’ stated aim to address competitiveness in the globalized marketplace.
Nolan Brown writes that this “sprawling mess of spending and nonsense” of a bill — full name “The America Creating Opportunities for Manufacturing Pre-Eminence in Technology and Economic Strength Act of 2022” — “addresses everything from ‘combating sexual harassment in science’ to seeing that more science grants go to people with caregiving responsibilities; retention and advancement of women and minorities in science and tech careers; subverting censorship in China; and supporting collective bargaining agreements and union organizing efforts.”
“It aims to tackle Chinese fentanyl production,” Nolan Brown goes on, “e-commerce platform liability, misinformation in foreign media, global wildlife trafficking, legal conventions in Pacific Island nations, Arctic mammal rescue capabilities, coral research and the origins of the COVID-19 virus.”
“It bans shark fin sales, driftnet fishing in the U.S. Exclusive Economic Zone and the transportation of certain wildlife across state lines,” she said. “It offers money for establishing a fund for Chinese language studies, climate change initiatives, solar power, spreading U.S. propaganda overseas and promoting the consumption of certain types of seafood.”
“What do some of these issues have to do with supply chain issues,” asks the Reason editor, a noted commentator on Free Speech issues, “or promoting American manufacturing, or ensuring our global tech competitiveness?”
“Your guess is as good as mine,” she concludes.