The Promise of Internet Intermediary Liability

The internet has transformed the economics of communication, creating a spirited debate as to the proper role of federal, state, and international governments in regulating conduct that relates to or involves the internet. Many have argued that internet communications should be entirely self-regulated – either because they cannot or should not be the subject of government regulation. The advocates of that approach would prefer a no-regulation zone around internet communications, based for the most part on the unexamined view that internet activity is fundamentally different in a way that justifies broad regulatory exemption. At the same time, it is undisputed that some kinds of activity that the internet facilitates violate widely shared norms and legal rules. State legislatures motivated by those concerns have begun to respond with internet-specific laws directed at particular contexts, giving little or no credence to the claims that the internet needs special treatment. This Essay starts from the realist assumption that government regulation of the internet is inevitable. Thus, instead of focusing on the naive question of whether the internet should be regulated, it discusses how to regulate internet-related activity in a way that is consistent with approaches to analogous offline conduct. The Essay also assumes that the most salient characteristic of the internet is that it inserts intermediaries into relationships that could be, and previously would have been, conducted directly in an offline environment. Existing liability schemes generally join traditional fault-based liability rules to broad internet-specific liability exemptions. Those exemptions are supported by the premise that in many cases the conduct of the intermediaries is so wholly passive as to make liability inappropriate. We argue that the pervasive role of intermediaries calls not for a broad scheme of exoneration, premised on passivity, but rather for a more thoughtful development of principles for determining when and how it makes economic sense to allocate responsibility for wrongful conduct to the least cost avoider. Accordingly, in cases in which it is feasible for intermediaries to control the conduct, we recommend a framework that pays serious attention to the possibility of one of a series of three different schemes of intermediary liability. The final Part of the Essay uses that framework to analyze the propriety of intermediary liability for several kinds of internet-related misconduct including internet gambling, child pornography, the sale of counterfeit and contraband on the internet, and security harms