Suing Internet Firms to Police Online Misconduct: An Empirical Study of Intermediary Liability Litigation by Secondary Stakeholders
41 Pages Posted: 2 Apr 2015 Last revised: 18 Aug 2015
Date Written: September 30, 2014
Internet intermediary platforms are online services that provide a means for information to be hosted, shared, and transmitted between third parties. As such, they also enable the distribution of content that is ‘objectionable’ from a societal point of view. Consequently, a growing population of individuals and organizations has filed civil suits against Internet platforms as a consequence of online speech or misconduct by the third-party users of these services. Such actors comprise a platform’s “secondary stakeholders,” meaning that they neither own stock nor are part of the firm’s supply chain or customer base. Secondary stakeholders may be particularly motivated to act when they feel they are direct victims of a negative consumption externality that occurs as a result of a firm’s economic activities and thus are ‘owed’ a response. Although these 'secondary' stakeholders do not hold sway over the firm via formal or implied contractual obligations, regulatory power, or market mechanisms, the use of intermediary liability litigation affords them the ability to exercise sometimes powerful demands.
I situate legal action targeting Internet intermediary platforms in the context of stakeholder theory and argue that specific attributes of the stakeholders and of their requests in intermediary liability suits may confer legitimacy and urgency which results in increased salience, or likelihood of positive responses, from judges. While the singular locus of examination in much prior work is the salience decision, I argue for the importance of addressing factors that shape stakeholder demands in order to better explicate the relationship between stakeholders, their requests, and litigation outcomes (salience). I develop a two stage framework in which I first examine the relationship between Stakeholder Attributes and Request Development and then the relationship between Request Development and Salience (or litigation outcomes).
In order to test my hypotheses, I built a hand-collected database of 295 objectionable content lawsuits filed against Internet intermediary platforms in the United States between 1995 and 2014. I conduct an empirical analysis using a two-stage logistic regression model using the following measures developed over a two-year period. The type of plaintiff is coded as individual, firm, or government. Acts of online misconduct were classified on a four-point scale ranging from 1 (most likely tort) to 4 (most likely crime). Intermediary platforms were assigned to six categories which were ranked on a 6-point ordinal item measuring the category's distance (in an engineering context) from the Internet 'backbone,' or how 'downstream' it is, as a proxy for its location in the ecosystem. The farther downstream a category is, the less central it is to the network and the more visible it is to the end user. The size of the stakeholder’s request is measured in terms of ‘Duties of Care,’ a 4-point ordinal item representing the type of remedy requested by a plaintiff (information disclosure, content blocking, content filtering, service discontinuation) and the corresponding burden to the intermediary. Finally, litigation outcomes are coded (liable or not liable) for each intermediary platform.
My primary findings are:
1) The more likely an act of online misconduct is to be classified as a crime rather than as a tort, the greater will be the size of the stakeholder’s request.
2) The more visible an intermediary is to users in terms of its location in the network architecture, the greater the size of the stakeholder’s request.
3) While the criminality of misconduct and the visibility of intermediary targets contribute positively to the likelihood of positive litigation outcomes for the stakeholder, the size of the stakeholder’s request is negatively correlated with the likelihood of a positive litigation outcome.
Keywords: intermediary liability, Internet intermediary, stakeholder theory, online misconduct, Internet law
JEL Classification: K42, O33, O38
Suggested Citation: Suggested Citation