Regulatory Spotlight Shines on Facebook, Twitter Political Ads

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By Alexis Kramer

Anonymous online political advertising is gripping lawmakers’ attention as worries about foreign meddling loom over the 2018 midterm U.S. elections.

Congress and the Federal Election Commission are mulling how to regulate political ads on Facebook Inc., Twitter Inc., and other sites to ensure that U.S. citizens know who are placing the ads to try to influence how they vote.

Potential new regulations, or a new disclosure law, would impact the upcoming midterm elections, in which Democrats hope to make a referendum on President Donald Trump and regain control of the House, the Senate, or both chambers. Tightening ad disclosure rules, proponents say, could enhance election campaign transparency, minimize interference from foreign actors, and provide clearer guidance to social media sites whose influence in electoral politics has surged in recent years.

Increased regulation of online political ads could spark free speech concerns and create burdensome liability issues for social media platforms, depending on the scope of such rules, First Amendment and election law attorneys told Bloomberg Law. Requiring online advertisers to disclose their identities could interfere with their right to anonymous political speech and may discourage internet users from buying political ads, the attorneys said. Social media platforms may find keeping track of certain ad buyers to be a daunting task, and may err on the side of disclosure if the rules are too broad, the attorneys said.

“People and platforms would be forced to anticipate whether they might be caught up in the ambit of the law,” Lawrence Walters, a First Amendment attorney at Walters Law Group in Longwood, Fla. said.

New regulations may impact social media giants’ bottom lines. Alphabet Inc.'s Google’s overall ad revenue for the third quarter of 2017, including from any political ads, was $27.5 billion, Bloomberg Intelligence data show. Facebook raked in $10.1 billion in overall ad revenue, including from any political ads, during the same period, the data show.

Congressional efforts may center around issue ads—posts focused on divisive social issues that don’t mention a political candidate—which constituted the majority of ads allegedly purchased by Russians during the 2016 U.S. presidential election. Lawmakers also may try to modify rules around candidate-endorsement ads, possibly tightening disclosure rules for online ads to more stringent levels applied to TV-and-radio ads. The FEC has already begun a rulemaking process for updating its disclosures rules for internet ads.

The FEC oversees ads by political committees or by outside groups that expressly advocate for a candidate, but it lacks jurisdiction over issue ads. Congress would have to pass a new law to expand the agency’s jurisdiction to include such ads.

Sen. Amy Klobuchar (D-Minn.) and Rep. Derek Kilmer (D-Wash.) have introduced legislation ( S. 1989, H.R. 4077) in the Senate and House that would expand existing disclaimer rules for television and radio political ads that mention a candidate to apply to such ads online as well. The legislation would also require digital platforms to maintain a public record of political ads sold, including buyer identities.Meanwhile, social media companies are trying to tackle the issue themselves with an array of self-regulatory moves aimed at addressing growing complaints about their political influence and appeasing regulators considering new rules.

Constitutional Challenges

Regulations requiring certain internet posts to include the author’s identity are vulnerable to constitutional challenges. The U.S. Supreme Court historically has championed strong First Amendment protection for anonymous speech, particularly political speech.

Forcing internet users to disclose who they are through disclaimers could run afoul of that protection, Michael Columbo, a political law attorney at Nielsen Merksamer Parrinello Gross & Leoni LLP in the San Francisco Bay Area, told Bloomberg Law.

“When the government compels you to identify yourself when engaging in political speech, which is what disclaimers do, there is no option for anonymity or for speaking under a pseudonym,” Columbo said.

A court may uphold a new law requiring self-identification in political speech if the government can show it is narrowly tailored to achieve a compelling interest. A court would likely find that preserving the integrity of the U.S. election process is a compelling government interest, Joseph Lewczak, an advertising attorney and partner at Davis & Gilbert LLP, said.

But the government also would have to show that the regulation in question is the least restrictive means available to advance that compelling interest. That could be more difficult for government lawyers, he said.

The government will find it difficult to show that it is narrowly trying to prevent foreign interference in U.S. elections with rules affecting foreign and U.S.-based advertisers alike, Jan W. Baran, an election lawyer at Wiley Rein LLP in Washington, told Bloomberg Law.

Still, the government’s defense of potential legislation aimed at promoting ad transparency could resonate in the courts, Marc Rotenberg, president and executive director of the Electronic Privacy Information Center in Washington D.C., said.

“Companies could always raise First Amendment objections to government regulation but transparency obligations typically survive these challenges,” Rotenberg said.

Regulation that tries to sweep in more speech than the government can justify could also be challenged under the First Amendment as vague or overbroad. Klobuchar’s and Kilmer’s bills would require online platforms to disclose the buyer identities of ads that concern “any political matter of national importance.”

Regulation that turns on whether the ad content comprises that kind of message may chill free speech, Columbo said. “With unclear lines, or lines you need a lawyer to see, people often choose to not say what they wanted to say, or not say anything at all,” he said.

Courts have found unclear laws impacting First Amendment rights to be unconstitutional, Columbo said.

Broadening Disclosure Rules

Existing FEC rules require ads on television and radio by political action committees and campaigns that mention a particular candidate to identify the ad buyer and whether the ad was authorized by a candidate. The extent to which the rules apply to such political ads online is unclear. The responsibility for complying with FEC rules falls on advertisers, not platforms that host ads.

But Klobuchar’s and Kilmer’s bills would impose a number of duties on social media platforms and other online publishers, including requiring them to maintain a public record of political ad purchases and make reasonable efforts to ensure foreign actors don’t buy such ads.

Disclosure requirements would place an enormous burden on platforms, particularly small ones, to monitor ads and decide which content falls under the scope of regulation, Walters said. Such requirements could also reduce advertisers’ incentive to advertise on the platforms, Baran said.

A federal law, the Communications Decency Act, protects online platforms from liability for user-generated content. It isn’t clear how the law would apply to platform disclosure requirements. But new requirements could drive platforms to “undertake good faith efforts to comply” with them regardless of that law, Walters said.

Self-Regulation Sufficient?

Social media sites have been actively tightening their election ad policies although they’ve generally fallen short of expressly endorsing Klobuchar’s and Kilmer’s bills. Facebook, Twitter, and Google have said they’re willing work with lawmakers as the legislation advances through Congress.

Meanwhile, Facebook has announced new verification and disclosure requirements for advertisers wanting to run election-related ads. Twitter said in an October blog post it will launch a “transparency center” that will show all current Twitter ads and how long they’ve been up. It also pledged to work with policy makers and ad companies to enhance transparency on issue-based ads.

Google said it will release a transparency report in 2018 that will disclose the identities of ad buyers on its platforms and how much money they are spending, according to a document it published in October.

The three companies have asked the FEC to clarify online advertiser disclaimer responsibilities and supported the agency’s opening of the rulemaking process on the issue.

The FEC Dec. 14 also issued guidance to online publishers, saying disclaimers should be required on Facebook image and video ads. But the commission said it couldn’t agree on the rationale for this conclusion and what the disclaimers should entail. A Facebook spokesperson told Bloomberg Law that the company will “continue to engage in efforts on a multitude of fronts” on the issue. A Twitter spokeswoman declined to comment. A Google spokesperson didn’t respond to a request for comment.

It’s too early to tell how successful the social media giants will be in heading off new regulations or a new disclosure law in the coming months. As the next election season heats up, lawmakers and regulators are likely to weigh in with new limits on online political ads.

To contact the reporter on this story: Alexis Kramer in Washington at aKramer@bna.com

To contact the editor responsible for this story: Roger Yu at ryu@bloomberglaw.com

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