Judge John Cronan of the Southern District of New York delivered today’s decision in X Corp. v. James.
Businesses do not always welcome exposing every detail about their offerings. Yet when the government requires truthful disclosures about those offerings, the First Amendment generally permits such mandates. “Such disclosure advances, rather than obstructs, the First Amendment aim of uncovering the truth and supports the efficiency of the ‘marketplace of ideas.’”
That principle resolves this dispute. New York State mandates social-media platforms to reveal certain facets of their content-moderation policies. X Corp. seeks to reveal less than the law requires and invokes the First Amendment to resist the mandate. But the First Amendment presents no barrier to New York’s statute. Here, more speech—essentially sunlight—serves as “the best of disinfectants.” …
The challenged Act requires a “social media company” to “post terms of service for each social media platform owned or operated by the company in a manner reasonably designed to inform all users of the social media platform of the existence and contents of the terms of service.” X Corp. characterizes this as the “Terms of Service Requirement.” Under that Requirement, the publicly posted terms must “include … contact information for the purpose of allowing users to ask the social media company questions about the terms of service; a description of the process that users must follow to flag content, groups, or other users that they believe violate the terms of service, and the social media company’s commitments on response and resolution time; and a list of potential actions the social media company may take against an item of content or a user.” …
[T]he Act also obliges social-media companies to semiannually “submit” to New York’s “attorney general a terms of service report,” which X Corp. refers to as the “Terms of Service Report.” The Terms of Service Report, which the “attorney general shall make … available to the public in a searchable repository on its official internet website,” must contain several elements, including a platform’s “current version of the terms of service” and “a complete and detailed description of any changes to the terms of service since the previous report.” X Corp. challenges only a portion of the items to be included in the Terms of Service Report, calling those items the “Content Category Report Provisions.”
Under the Content Category Report Provisions, the Terms of Service Report must include:
[c] A declaration about whether the present version of the terms of service defines each of the following content categories, and, if so, the definitions of those categories, including any subcategories:
[i] hate speech or racism;
[ii] extremism or radicalization;
[iii] disinformation or misinformation;
[iv] harassment; and/or
[v] foreign political interference.[d] A thorough outline of content-moderation practices employed by the social-media company for that platform, including, but not limited to, …
[i] any existing policies aimed at addressing the categories of content described in paragraph (c) of this subdivision ….[e][i] Information about content flagged by the social-media company as belonging to any of the categories described in paragraph (c) of this subdivision, including all of the following:
[A] the total number of flagged items of content;
[B] the total number of actioned items of content;
[C] the total number of actioned items of content that led to action against the user or group responsible for the content;
[D] the total number of actioned items of content that were removed, demonetized, or deprioritized by the social-media company;
[E] the number of times actioned items of content were viewed or heard by users;
[F] the number of times actioned items of content were shared, and the number of users who viewed or heard the content before it was actioned; and
[G] the number of times users appealed social-media company actions on that platform and the number of reversals on appeal disaggregated by each type of action.And in the Terms of Service Report, “[a]ll information required by” Section 1102(1)(e)(i) “shall be disaggregated …” by, among other things, the categories such as hate speech, disinformation, etc.
At the heart of the dispute is whether the so-called “ scrutiny” should apply, which holds that regulations mandating commercial disclosure of purely factual and non-controversial information about the terms by which services will be available may survive constitutional scrutiny if they are reasonably related to the State’s interest in preventing consumer deception and are not unjustified or excessively burdensome. The Second Circuit recently described scrutiny as more lenient than ordinary intermediate or strict scrutiny. This is because the mandated disclosure of accurate, factual, commercial information does not offend the core First Amendment values of promoting an efficient exchange of information or protecting individual liberty interests; instead it “promotes” and “protects” the robust and free flow of accurate information that underpins the First Amendment. In such a scenario, the required standard of scrutiny is correspondingly less exacting than intermediate or strict scrutiny….
scrutiny “applies to regulations on commercial speech that compel the speaker to disclose purely factual and uncontroversial information about the goods or services the speaker may offer.” … “While the fundamental notion of commercial speech is speech that simply proposes a commercial transaction,” even language that does not itself propose a transaction may still be categorized as commercial “based on various factors, including whether the speech serves as an advertisement, references a specific product, and whether the speaker has an economic motive.” …
[T]he disclosure of information “in connection with a proposed commercial transaction” is “clearly commercial speech.” For example, revealing a fast-food item’s calorie count “in connection with” that item’s sale constitutes commercial speech. The same reasoning applies to providing basic information about bankruptcy to consumer debtors when furnishing services from a debt-relief agency. In the social-media sphere, the Second Circuit has stated that disclosing a platform’s content-moderation policies is sufficiently connected to the terms of the commercial transaction between platforms and users to be treated as commercial speech. By contrast, a social-media company’s “opinions about” and “reasons for” those policies are not commercially speech….
[T]he Content Category Report Provisions merely require disclosure of portions of X Corp.’s content-moderation policies …. The Provisions demand a “statement of whether the current version of the terms of service defines” content categories such as hate speech, racism, disinformation, or misinformation at all, and if so, the company’s definitions of those categories. On its face, Section 1102(1)(c) does not compel a platform to adopt a definition if one does not already exist, nor does it force the platform to justify, or opine about, any definition it may hold…. The Provisions further require a “detailed description of content-moderation practices” including “any existing policies intended to address” those categories. Here, too, the requirement is limited to disclosing existing policies, not the reasons behind or the views on those policies…. [And] if X Corp. “does not currently have existing policies for moderating” certain content categories “based on” X Corp.’s own understandings of these terms, it can comply with the Content Category Report Provisions simply by stating that no content was flagged or actioned falling into these categories.
Indeed, as X Corp. concedes in its Complaint, the Content Category Report Provisions do not compel X Corp. to adopt and regulate content categories such as “‘hate speech,’ ‘racism,’ ‘extremism,’ ‘misinformation,’ or ‘disinformation.’’ They merely require public disclosure of the content-moderation policies it already adheres to. Put plainly, X Corp. may adopt any policies it chooses, including none at all; under the Content Category Report Provisions, X Corp. merely must disclose the policies it adopts….
Because the Content Category Report Provisions regulate commercial speech, for scrutiny to apply, they must also require X Corp. to “state purely factual and uncontroversial information” about its services. …
The disclosures here are purely factual: the Content Category Report Provisions merely compel social-media networks to publicly disclose their content-moderation policies, whatever those policies may be, and impose no obligation that those policies specifically address any particular content categories as defined by the statute. In other words, disclosing content-moderation policies requires only that social-media networks make certain truthful statements about information material to consumers. …
Such disclosure is also uncontroversial. Although X Corp.’s content-moderation policies themselves might be controversial, the fact that they exist in their current form is not. The Content Category Report Provisions show no concern for whether or how a social-media company actually regulates content categories such as hate speech, racism, or extremism. Because they take a stance that is truly neutral about the substance of content-moderation policies, networks are not required to adopt any particular policy or address any specific category of speech—unless the networks choose to do so.
X Corp. challenges this premise. It argues that any compelled disclosure would prompt public dispute, leaving some users dissatisfied, and thus the Content Category Report Provisions presuppose that the compelled disclosures are inherently controversial. Yet this contention turns the framework on its head: any compelled commercial disclosure can provoke disagreement. When a consumer views a menu board at Burger King, they might be shocked by a Whopper’s calorie count and opt for a different restaurant; another consumer might desire more calories and go elsewhere; a third might feel the Whopper is perfectly adequate. None of these reactions proves that disclosing calories is inherently controversial….
Because scrutiny is applicable, the Content Category Report Provisions satisfy constitutional muster if they are reasonably tied to the State’s interest in preventing consumer deception, or to the corresponding aim of not withholding information material to consumers, and if they are not unjustified or unduly burdensome. They meet this standard. “Requiring the disclosure of content-moderation policies without defining their scope or content” helps ensure that users are fully informed about their engagement with a social-media network, enabling more informed choices about where to spend screen time and how to interpret the content encountered on a given platform.” …
The court also found that the statute is not preempted by § 230 because it does not bar or mandate any content moderation.
