The Rise of International Internet Regulations

Internet regulations are tightening into a chokehold for Internet service providers and edge providers.  To the delight of some, governments east of the Atlantic are regulating what content is permissible to store or display.  Regulations on the use of consumer information and on grades of access service have been tightened to the extent that they prohibit services that consumers would want.  A serious clash between regulators in the US and EU seems inevitable and not in the interest of consumers in either continent.

Google has strict guidelines about where ads should appear but doesn’t always get it right.

The Guardian reported it pulled all of its ads from Google and YouTube because they were found adjacent to extremist content after its agency used Google’s programmatic ad exchange.  Then Jaguar yanked its ads after they were placed on YouTube next to ISIS videos.  More advertisers jumped ship, including the UK government, which pulled its taxpayer-funded advertising on YouTube and Google. Now, Verizon, AT&T, and McDonalds UK joined the boycott.

Google reacted quickly by handing the advertisers better tools to separate their promotions from content they regard as objectionable.  This seemed the least disruptive strategy among the unpalatable choices Google, YouTube, and other ISP or edge providers face.  Google can refuse adverts from sources that promote unpopular messages, or refuse adverts from those who are sensitive to being near unpopular messages, or they can scrutinize advert content, carefully removing messages that are likely to upset someone.  To some degree, YouTube chose the labor intense task of “closely monitoring the content that actually makes it to YouTube.”

Triage based on content will increase the cost of placing adverts and it will probably trigger complaints of “free speech” violations by the ousted content providers.  Even worse, just committing to perform content scrutiny could affirm for regulators that the task is not impossibly onerous and that ISP and edge providers can be held accountable for violations of law (e.g., hate speech, copyright violations or slander) imbedded in the content.  No one wants to become the regulator’s full-time, unpaid hall monitor watching for objectionable content, especially when missing something bad could land you in jail.

Germany plans to require social networks to remove slanderous or threatening online postings quickly or face fines of up to $53 million.  The EU claims some social network service terms broke EU consumer protection law and that edge providers need to do more to “tackle fraud and scams on their websites.”

The Federal Communications Commission (FCC) may reconsider a cluster of its rules that are inconsistent with the version of privacy policy enforced by the Federal Trade Commission.  The FCC’s rules (WC Docket No. 16-106) require ISPs to get opt-in consent from consumers before sharing sensitive customer information with advertisers and other third parties. The FCC had categorized Web browsing history and app usage history as sensitive information, along with other categories such as geo-location data, financial and health information, and the content of communications.

Mobile broadband service providers argue that browsing history and app usage are not sensitive information and should not need opt-in permission to be shared with advertisers.  The FCC is likely to agree and that will better align US regulations on consumers’ browsing history and app usage across firms regulated by the FCC (ISPs such as AT&T and Comcast) and by the FTC (Internet edge providers such as Facebook and Google).

While we might achieve a more unified set of regulatory protections for consumers in the US, our protections are unlikely to harmonize with the EU’s more extensive (e.g., “right to be forgotten”) and content-driven (fast take down of “slander”) protections.  The chasm in protection expectations would matter less if we had not already agreed to safeguard EU’s consumer protections as part of the Privacy Shield which we agreed to have the FTC monitor and enforce.

Some want to overturn the Privacy Shield agreement by forcing an EU-version of consumer rights to be imposed onto American consumers.  A letter from the ACLU and Human Rights Watch warns the EU that the Privacy Shield lacks “effective US oversight and redress mechanisms.”  The consequence of failure in the Privacy Shield would be severe dysfunction or blockage in transatlantic data flows that involve consumer records.  That would endanger much of US success in service exports.

There is no quick accommodation that will satisfy both sides of the Atlantic.  Proposals on careful policing of website content and protection of consumer personal information may need extensive study, particularly if the real economic consequences of specific protections are to play a role in the actual services and rules.  While regulators gravitate to what can be offered for “free” or a basic minimum price, free or cheap is not always the consumer’s best choice.

Before “prohibited” becomes the norm, regulators should consider how a better range of ISP services might better track the needs of consumers.  Most people use free email service, but email service without adverts is faster, far less distracting, easier to use, and many would prefer it.  Yahoo offers an email service without adverts for a modest price.

Broadcast TV is offered “free” in return for consumers being force-fed adverts during 30% of their time.  Many prefer ad-free channels.  Perhaps ISPs could offer Internet with fewer adverts in-return-for-the right to collect basic information.  That model could be part of a basic grade of Internet access where consumers exchange basic demographics, browsing and apps usage in return for a lower price for access.

A premium-priced grade of Internet access might suppress all information sharing except when the consumer explicitly requests sharing.  Likewise, basic Internet access would deliver upload and download speeds as described in the service agreement. A premium-priced access service might give the consumer higher priority (better place in the queue for packets uploaded and downloaded). The advantage would be evident during times of congestion.

For some consumers, rock bottom price is more important than saving time or preserving strict privacy.  For other consumers, privacy may have more value than cheap price.  Many regard conserving their time on task as the most important.  Regulators should not automatically prohibit the consumer’s selection among these choices.  Consumers should be free to specify their Internet service choices.

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