Shifting the Costs of Policing Online Conduct: Using Internet Intermediary Liability to Uphold Social Norms

Posted: 1 Apr 2014

Date Written: April 1, 2014


Online information traffic passes through layers of intermediation as communication flows between users. Each of these waypoints is a type of Internet Intermediary Platform, an online service or Internet provider that provides a means for information and information services to be indexed, hosted, accessed, shared, and transmitted between third parties on the Internet. These services play a critical role in the information economy, making it possible for users to find and evaluate online information and also providing forums which establish transactional norms and codes of conduct. However, intermediary platforms also provide affordances for undesired user behaviors; they may become forums for content that is deemed defamatory, objectionable, obscene, or an invasion or privacy rights. The result of this unintended facilitation is that intermediaries are targeted for civil action by stakeholders that see them not only as conduits but also as potential gatekeepers. There has consequently been a rise in lawsuits in which stakeholders sue intermediaries in an effort to hold them responsible for online activities conducted by their third party users. The use of secondary liability is an approach by which governments and individuals strive to impose legal responsibilities on intermediary platforms in order to achieve their desired social outcomes and the protection of individual rights. The question of whether intermediaries operating within a borderless Internet should be held liable for third party behaviors governed by disparate national laws has been the subject of much legal and philosophical debate. In contrast, this study opts to empirically examine the phenomenon of intermediary liability in defamation and objectionable content lawsuits. Internet intermediary liability is framed as a transaction cost strategy in which stakeholders use secondary liability as a mechanism to shift some costs of policing and enforcing behavioral norms from the state and its law enforcement agencies onto Internet intermediaries.

Drawing from a dataset of 250 intermediary liability lawsuits drawn from six countries to empirically test my hypotheses, it is argued that different social objectives lead to heterogenous selection preferences amongst types of intermediary targets for litigation. Furthermore, the network centrality of the type of intermediary platform targeted may influence the magnitude of policing and monitoring activities requested. Consequently, some types of platforms may bear a disproportionate 'gatekeeping burden' leading to increased costs of operation and market entry. These results have important implications for policymakers with respect to Internet governance, online conduct, and online platform competition.

Keywords: transaction cost economics, defamation and reputation, objectionable content, intermediaries, secondary liability, online platform competition

JEL Classification: K42, O33, O38

Suggested Citation

Selby, Jaclyn, Shifting the Costs of Policing Online Conduct: Using Internet Intermediary Liability to Uphold Social Norms (April 1, 2014). 2014 TPRC Conference Paper. Available at SSRN:

Jaclyn Selby (Contact Author)


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