Texas begins patchwork of social media regulation

In the decades following the end of the shooting part of the Civil War, midwestern farmers shipped their grain by rail to Chicago, where it was transferred first into huge grain elevators and then into the ships that transported it around the world.

It was in an era of great prosperity — for the owners of the grain elevators. In 1874, according to the landmark US Supreme Court decision Munn v. Illinois, there were 14 enormous elevators on the Chicago waterfront, owned by nine firms. The firms set their prices at the beginning of each year, publishing their agreed upon rates in the newspapers.

Nowadays we’d call that price fixing and it would be an antitrust violation (although modern companies routinely surmount that little obstacle by buying out their competitors). But the Sherman Act, the nation’s first antitrust law, didn’t come into force until 1890. Back in 1874, the elevator owners’ anti-competitive cartel was lawful.

The Illinois Legislature, sympathetic to farmers, struck back by capping the prices the elevators could charge.

The elevators sued, claiming that price controls deprived them of property (that is, their anticipated profits) without due process of law in violation of the 14th Amendment to the Constitution.

Somewhat surprisingly, the very conservative US Supreme Court of the era upheld the legislation. Chief Justice Morrison Waite reached deep into the English common law to show that “when private property is devoted to a public use, it is subject to public regulation.”

In English and American legal history, he wrote, governments have always regulated common carriers, a term that originally referred to forms of public transportation such as ferries, stagecoaches and railroads. Common carriers could be legally required to serve all comers at prices fixed by regulators.

In modern legal usage, “common carrier” describes an entire category of businesses that serve the broad public, especially those that face little competition. For example, telephone companies are considered common carriers today.

Waite lumped the grain elevators into the same general category. Because the owners chose to enter a business “in which the whole public has a direct and positive interest,” they were subject to “such regulations as might be established by the proper authorities for the common good.”

In April 2021, Supreme Court Justice Clarence Thomas published a little concurring opinion outlining an argument that Twitter should be regulated as a common carrier. His argument, boiled down, was that Twitter is like the telephone (an electronic form of communication) and therefore should be treated the same way.

Taking Thomas’s hint, the Texas Legislature enacted House Bill 20, which comprehensively regulates the big social media platforms, not just in Texas but all across the country. HB20’s introductory paragraphs declare the platforms to be common carriers.

As described in the last column, HB20 limits content moderation on the platforms and imposes onerous disclosure requirements on their parent companies.

Trade groups representing the big platforms south. They strenuously disputed the common carrier designation. In December, a federal district judge issued an injunction, temporarily preventing HB20 from going into effect.

In a written opinion, the judge identified the key legal issue. Are the platforms “akin to newspapers that engage in substantial editorial discretion,” and therefore entitled to the protection of the First Amendment’s free press clause, or are they instead “a passive conduit for content posted by users,” with little or no claim to First Amendment protection?

HB20 says “the latter.” But when Texas Gov. Greg Abbott signed the bill into law, he declared it necessary to counteract “a dangerous movement by social media companies to silence conservative viewpoints and ideas.”

If the platforms do, indeed, discriminate based on content, as Abbott claimed, that in itself proves they exercise editorial control. They aren’t mere conduits. The governor’s justification for signing the legislation contradicted its core legal rationale.

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HB20 represents a political paradox, too, because Abbott was approving heavy-handed governmental regulation of private businesses, something conservatives of an earlier era would have regarded as anathema.

Now that Texas has broken the ice, what’s to stop New Mexico from enacting its own comprehensive set of social media regulations?

Texas legislators chose to regulate only platforms with more than 50 million monthly users because they wanted to exempt conservative favorites Parler and Gab. But if the big platforms are common carriers, so are the little ones. Any other state could, under the Texas rationale, regulate the daylights out of them all.

Which, of course, would be a chaotic disaster. Congress could always step in and pre-empt the field, giving us a single unified set of laws. But unless and until these highly polarized Congress acts, we face the prospect of a growing patchwork of state-by-state regulations.

Joel Jacobsen is an author who retired in 2015 from a 29-year legal career. If there are topics you would like to see covered in future columns, please write him at [email protected].

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