Through our excellent counsel at Yetter Coleman LLP, the International Center for Law & Economics (ICLE ) filed an amicus brief with the U.S. Supreme Court in the Moody v. NetChoice and NetChoice v. Paxton cases. In it, we argue that the First Amendment’s protection of the “marketplace of ideas” requires allowing private actors—like social-media companies—to set speech policies for their own private property. Social-media companies are best-placed to balance the speech interests of their users, a process that requires considering both the benefits and harms of various kinds of speech. Moreover, the First Amendment protects their ability to do so, free from government intrusion, even if the intrusion is justified by an attempt to identify social media as common carriers.
If social-media companies are to create a useful product for their users, they must be able to strike a delicate balance between what people want to post and what they want to see and hear. As multisided platforms that rely on advertising revenue, they must also make sure to keep high-value users engaged on the platform. Moderation policies are an attempt to create community rules to strike this balance. This may include limits on otherwise legal speech in ways that are not viewpoint neutral. For instance, to keep users and advertisers, social-media platforms may choose to restrict pro-Nazi speech. But in order to enforce these rules, they need the ability to exclude those who refuse to abide by them. This is private ordering: the ability of private actors to create rules for their own property and to enforce them through technological and legal means.
The First Amendment’s protection of private ordering is exemplified by the Court’s jurisprudence on state action and the right to editorial discretion. As stated in Manhattan Cmty. Access Corp. v. Halleck, 139 S. Ct. 1921, 1928 (2019):
The text and original meaning [of the First and Fourteenth Amendments], as well as this Court’s longstanding precedents, establish that the Free Speech Clause prohibits only governmental abridgment of speech. The Free Speech Clause does not prohibit private abridgment of speech.
One of the exceptions from this general rule is when a private actor exercises a function “traditionally and exclusively” performed by the government. Id. at 1929 (emphasis in original). The paradigmatic example is a company town, as in the case of Marsh v. Alabama, 326 U.S. 501 (1946). If it is “not an activity that only governmental entities have traditionally performed,” a private actor providing a forum for speech retains “editorial discretion over the speech and speakers in the forum.” Halleck, 139 S. Ct. at 1930.
Moreover, the First Amendment’s reach does not grow when private-property owners open their property for speech. If such property owners were “subject to First Amendment constraints” and thus “lose the ability to exercise what they deem to be appropriate editorial discretion within that open forum,” then they would “face the unappetizing choice of allowing all comers or closing the platform altogether.” Id. at 1930.
The application to social-media platforms is obvious: they are private actors with a right to exercise editorial discretion over the forum they open to third-party speech. They are not exercising a function traditionally and exclusively performed by the government in hosting speech. In other words, social media is not a company town.
Finally, the common-carriage rationales raised by Florida and Texas are simply inapplicable to social-media platforms. For instance, social-media companies do not open up their property to the public on an indiscriminate basis to say whatever they want. Instead, by their terms of service, they require users to agree to their moderation policies, and they retain their editorial discretion to enforce those policies. And insofar as market power is relevant, neither Texas or Florida made any attempt to show (nor could they) that all those companies subject to their laws have market power.
The summary of argument is below, and the whole brief is here.
SUMMARY OF ARGUMENT
“The most basic of all decisions is who shall decide.” Thomas Sowell, Knowledge and Decisions 40 (2d ed. 1996). Under the First Amendment, the general rule is that private actors get to decide what speech is acceptable. It is not the government’s place to censor speech or to require private actors to open their property to unwanted speech. The market process determines speech rules on social media platforms just as it does in the offline world.
The animating principle of the First Amendment is to protect this “marketplace of ideas.” “The theory of our Constitution is ‘that the best test of truth is the power of the thought to get itself accepted in the competition of the market.’” United States v. Alvarez, 567 U.S. 709, 728 (2012) (quoting Abrams v. United States, 250 U.S. 616, 630 (1919) (Holmes, J., dissenting)). To facilitate that competition, the Constitution staunchly protects the liberty of private actors to determine what speech is acceptable, largely free from government regulation of this marketplace. See Halleck, 139 S. Ct. at 1926 (“The Free Speech Clause of the First Amendment constrains governmental actors and protects private actors….”).
Importantly, one way private actors participate in the marketplace of ideas is through private ordering—by setting speech policies for their own private property, enforceable by common law remedies under contract and property law. See id. at 1930 (a “private entity may thus exercise editorial discretion over the speech and speakers in the forum”).
Protecting private ordering is particularly important with social media. While the challenged laws concern producers of social media content, producers are only a sliver of social media users. The vast majority of social media users are content consumers, and it is for their benefit that social media companies moderate content. Speech, even when lawful and otherwise protected by the First Amendment, can still be harmful, at least from the point of view of listeners. Social media companies must balance users’ demand for speech with the fact that not everyone wants to consume every possible type of speech.
The issue is how best to optimize the benefits of speech while minimizing negative speech externalities. Speech produced on social media platforms causes negative externalities when some consumers are exposed to speech they find offensive, disconcerting, or otherwise harmful. Those consumers may stop using the platform as a result. On the other hand, if limits on speech production are too extreme, speech producers and consumers may seek other speech platforms.
To optimize the value of their platforms, social media companies must consider how best to keep users—both producers and consumers of speech—engaged. Major social media platforms mainly generate revenue through advertisements. This means a loss in user engagement could reduce the value to advertisers, and thus result in less advertising revenue. In particular, a loss in engagement by high-value users could result in less advertising, and that in turn, diminishes incentives to invest in the platform. Optimizing a platform requires satisfying users who are valuable to advertisers.
Major social media platforms have developed moderation policies in response to market demand to protect their users from speech those users consider harmful. This editorial control is protected First Amendment activity.
On the other hand, the common carriage justifications Texas and Florida offer for their restrictions on social media platforms’ control over their own property do not save the States’ impermissible intervention into the marketplace of ideas. Two of the most prominent legal justifications for common carriage regulation—holding one’s property open to all-comers and market power—do not apply to social media companies. Major social media companies require all users to accept terms of service, which limit what speech is allowed. And assuming market power can justify common carriage, neither Florida nor Texas even attempted to make such a finding, making at best mere assertions.
The States’ intervention is more like treating social media platforms as company towns—an outdated approach that this Court should reject as inconsistent with First Amendment doctrine and utterly unsuitable to the Internet Age.
 Throughout this brief, the term “platform” as applied to the property of social media companies is used in the economic sense, as these companies are all what economists call multisided platforms. See David S. Evans, Multisided Platforms, Dynamic Competition, and the Assessment of Market Power for Internet-Based Firms, at 6 (Coase-Sandor Inst. for L. & Econ. Working Paper No. 753, Mar. 2016).