The Promise of Internet Intermediary Liability

The Internet has transformed the economics of communication, creating a spirited debate about the proper role of federal, state, and international governments in regulating conduct related to the Internet. Many argue that Internet communications should be entirely self-regulated because such communications 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 largely on the unexamined view that Internet activity is fundamentally different in a way that justifies broad regulatory exemption. At the same time, some kinds of activity that the Internet facilitates undisputedly violate widely shared norms and legal rules. State legislatures motivated by that concern 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 Article 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, this Article discusses how to regulate Internet-related activity in a way that is consistent with approaches to analogous offline conduct. The Article also assumes that the Internet\u27s most salient characteristic 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 with 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. Over time, this has produced a great volume of litigation, mostly in the context of the piracy of copyrighted works, in which the responsibility of the intermediary generally turns on fault, as measured by the intermediary\u27s level of involvement in the challenged conduct. This Article argues 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. The Internet\u27s rise has brought about three changes that make intermediaries more likely to be least cost avoiders in the Internet context than they previously have been in offline contexts: (1) an increase in the likelihood that it will be easy to identify specific intermediaries for large classes of transactions, (2) a reduction in information costs, which makes it easier for the intermediaries to monitor the conduct of end users, and (3) increased anonymity, which makes remedies against end users generally less effective. Accordingly, in cases where intermediaries can feasibly control the conduct, this Article recommends serious attention to the possibility of one of three different schemes of intermediary liability: traditional liability for damages, takedown schemes in which the intermediary must remove offensive content upon proper notice, and \u27hot list schemes in which the intermediary must avoid facilitation of transactions with certain parties. Part III of this Article uses that framework to analyze the propriety of intermediary liability for several kinds of Internet-related misconduct. This Article is agnostic about the propriety of any particular regulatory scheme, recognizing the technological and contextual contingency of any specific proposal. Because any such scheme will impose costs on innocent end users, selecting a particular level of regulation should depend on policymakers\u27 view of the net social benefits of eradicating the misconduct, taking into account the intermediaries\u27 and innocent users\u27 compliance costs associated with the regulation. Still, the analysis of this Article suggests three points. First, the practicality of peer-to-peer distribution networks for the activity in question is an important consideration because those networks undermine the regulatory scheme\u27s effectiveness, thereby making regulation less useful. Second, the highly concentrated market structure of Internet payment intermediaries makes reliance on payment intermediaries particularly effective as a regulatory strategy because of the difficulty illicit actors have in relocating to new payment vehicles. Third, with respect to security harms, such as viruses, spam, phishing, and hacking, this Article concludes that the addition of intermediary liability in those cases is less likely to be beneficial because market incentives appear to be causing intermediaries to undertake substantial efforts to solve these problems without the threat of liability

Bitcoin: Is Cryptocurrency Viable?

Bitcoin, a virtual currency invented in 2009, was created as a peer-to-peer currency that eliminated the need for a third party authority, such as banks or government, to be involved in monetary transactions. Having no intrinsic value but carrying no government guarantees relegates bitcoin and its competitors to the perpetual role of investment opportunity, deriving value not from a practical use, but from a nominal, dollar value. This will continue to be the case until the U.S. Government sanctions virtual currency as a viable store of value. Because the dollar plays such a large role in the world’s economy, other countries will not adopt virtual currency technology unless the U.S. does so first. Substantial populations around the world must embrace bitcoin as a significant source of value before any monetary authority will relinquish the power associated with fiat currency. There are, however, many aspects of the virtual-currency model created by bitcoin that could be useful in improving the efficiency of money movement around the United States and the globe, through transaction memory, low transaction cost, and secure account information