Section 230 Isn't The Problem, Payment Networks Are
Section 230 Isn't The Problem, Payment Networks Are
BY TYLER DURDEN FRIDAY, APR 09, 2021 - 09:00 PM Authored by 'Josh' via MadAtTheInternet.com,
I have operated a controversial website called the Kiwi
Farms for 8 years and was featured in
ZeroHedge in 2019 after telling New Zealand police I would not
be surrendering my user’s information to them. My website thrives and
doubles in size each year, primarily thanks to Section 230. I can allow my
users to say almost anything they want without having to worry about being sued
for what they say. Without these essential protections, I would not be
able to host in the United States.
Unfortunately,
Section 230 has been defamed as the reason Facebook, Twitter, Google, et al behave
the way they do. This is not true. These businesses censor because
they have personal motivations to do so. More importantly, they have
financial motivations to do so.
I hope to convince a reasonable person that:
- Payment networks must be regulated to give
fair access.
- Section 230 is essential and modifying it
harms online speech.
- Big tech does not need Section 230, but
you do.
- You should learn how to use cryptocurrencies right now.
The payment networks are more powerful than big tech.
Without the consent of all four major payment networks to stay
in business, even mighty tech giants are vulnerable to lose billions of dollars
in revenue. The various agreements enforced by the four major payment
networks (MasterCard, Visa, Amex, and Discover) impose rules that any business
wanting to exist in the digital economy must obey. Not all these rules are
written.
The big payment networks like to stay out of the public
eye. They avoid attention by using blacklists which they claim only banks
can add to, but which they manage and share. You also never deal with the
payment network directly. An eCommerce site passes your credit card information
to a “payment gateway”, which is plugged into a “payment processor”, and that
payment processor handles communications with the payment networks. Each of
these are usually different companies. When you get banned from processing
payments, you are told so by your payment gateway or payment processor, but the
decision can come from much higher up. If it were, you’d be lucky to find out.
Consider a company like Patreon. They are an online crowdfunding
service which handles donations from many supporters to many online content
creators. Patreon has its own rules, uses Stripe as a payment gateway and
payment processor, agrees to Stripe’s terms of service, and then Stripe
coordinates with all major payment networks which each have their own set of
agreements. That means every creator on Patreon must obey six
different sets of rules. If the gateway were its own company,
it would be seven. It is no wonder so many people get banned, as only the most
tepid and inoffensive content creators could hope to meet so many different
standards!
Patreon must keep Stripe happy to stay in business, and Stripe
must keep all four payment networks happy to stay in business. If any one
of MasterCard, Visa, Amex, or Discover pass a rule, then it affects the entire
downstream ecosystem. If Discover (5% of the market) says an industry or
behavior is prohibited, then Stripe must enforce that rule on all the merchants
on their service (even merchants who do not process Discover). If
Discover were to cut ties with Stripe, then Stripe would lose at least 5% of
their transactions over night and any merchants who do want to process Discover
cards. That is a large and dramatic blow to any company operating on
small margins.
I do not claim it is MasterCard’s fault that Twitter banned
Trump. I am sure Twitter makes many stupid decisions all on its
own. The problem is that these rules—how they are enforced, the
secrecy in which they are enforced, and unappealable finality of these
decisions—stifle competition. Startups like Gab quickly
find themselves told they are not allowed to make money. This problem has never
existed before on the scale that it does now.
This phenomenon transcends the type of startup. All alt-tech is
trodden upon equally. Patreon competitor New Project 2 was first
banned from a payment processor at the demand of Discover, then after
finding a new payment processor was put on MATCH (the
MasterCard blocklist), prohibiting the company from ever finding another
payment processor. If Dick Masterson (the
owner of NP2) made a new company to try and get around MATCH for the purpose of
continuing NP2, he would very likely find his person on
that blocklist directly, ending all his businesses at once.
These
blocklists, and the risk management factors which decide who goes on them, are
“trade secrets” and you cannot even sue to figure out why you were added
to them. New Project 2 was blacklisted for “Violation of Standards”,
which prohibits it from even using so-called high-risk processors. Nobody knows
what “Violation of Standards” means. Dick only found some details of New
Project 2’s blacklisting because he called the banks and annoyed
the right people for days until they reluctantly admitted who was actually at
fault. Payment networks claim they do not add merchants to the
blacklists, and that only partner banks can, but they will call these banks and
tell them to do it on their behalf, and the banks are not in any position to
refuse.
PayPal has not been mentioned so far, but rest assured they are
one of the most egregious and will drop you first. BitChute, a video
platform competing with YouTube, was banned from PayPal. ZeroHedge
itself is banned from using PayPal. To this day, because
of my association with the Kiwi Farms, I cannot use the Uber app to get a taxi
because Uber uses PayPal to process credit cards and I am banned from PayPal.
Before we
regulate the Internet, why don’t we try to regulate the payment networks?
Give the market a fair chance at competing with tech giants by
enforcing fair access to credit and debit card processing!
The Office of the Comptroller of Currency proposed new
regulation which would require banks (and the services they run, including payment
networks) to stop industry blacklisting and require specific examples of risk
to ban a merchant from processing cards. It was called Fair
Access to Financial Services (OCC-2020-0042-0001).
These “fair access” rules were finalized on
January 14th, 2021. They were set to take effect on April
1st. Placing this on April Fool’s Day was a bit too prescient, because
the Chairman immediately resigned after passing this rule, and the
fair access rule was formally put on an indefinite
pause on January 28th, 2021 – one week after Biden assumed
office.
This rule was politicized as a way for Republicans to force
poor, innocent multinational trillion dollar banking institutions to do
business with ‘evil’ industries like oil drilling and the NRA. The
Chairman of the OCC made note that it should be an act of congress to regulate
those industries, not unilaterally enforced by nameless risk management
committees behind closed doors.
It is unlikely that payment network regulation will find
bipartisan support. The payment networks do a good job of picking their
targets. Controversial but left-leaning organizations like Nation
of Islam appear to have no issue processing cards, despite
their virulent antisemitism rivaling anything found on Gab. Perhaps if Planned
Parenthood suddenly needed cash upfront to perform abortions
things would change. Until then, free speech will be clustered alongside
weapons and Alaskan oil prospecting as an industry that is safe to punch down
at.
So, if bankers are above regulation for now, why not regulate
social media?
We have
already amended Section 230 and it sucked.
There are holes poked into Section 230 protections
already. When Section 230 was first passed in 1996, Congress effectively
legalized piracy. Platforms were immunized even from copyright
infringement damages. So, if pirates could stay anonymous, there was no
one to sue for distributing copies of movies.
To patch the piracy loophole, in 1998, we passed the DMCA.
This act created the process for the copyright takedown system that is infamous
on websites like YouTube. Rights Holders can now take down copyrighted
content and sue the services directly if they refuse to comply. Unfortunately,
the process created is so sloppy and awful it is a continuous nightmare for a
host like me (and everyone on YouTube) to deal with.
For one, there is no recourse for flagrant or malicious DMCA
takedowns. There is no requirement that the person sending the DMCA prove
they own the copyright, to have a copyright ID, to be an attorney, or anything
to that effect. I routinely receive copyright complaints that I must take
seriously for content they don’t even own. OnlyFans (a Grand
Cayman company) makes it clear in their Terms of Service that they do not own
the content they host. Despite that, OnlyFans routinely
sends me DMCA takedown notices for their 3rd party content through a man out of
California who is not an attorney. This is a total farce, and there is
nothing I can do. I still must reply with a counter notice, but they
never take it to court and I never even hear back. I have no legal
recourse against this abuse.
This will be everything online if
further loopholes were carved into Section 230. Imagine
if defamation was handled the same way the copyright system is.
Random trolls could issue takedowns for your Tweets and Facebook posts. You
would have to send a legal counter notice with your real name and address to
the troll to reinstate your messages. There would be no validations in
place. Your speech would be at the mercy of the whims of insane people
online.
In this environment where platforms could be held liable for
things said on their websites, only the richest of them could afford
survival. I am currently dealing with two
lawsuits. They are completely baseless, insane ramblings from insane
people, but they will still cost a lot of money to deal with. There is no
way to get fees from them because they have nothing to take. Without Section
230, I would lose a layer of protection enabling me to deal with these lawsuits
for much less than it would if we had to take it to trial. It would
destroy the site, especially since I cannot charge cards normally to generate
consistent revenue to fund my defenses with.
President Trump and people in general seem desperate just for
revenge. The rabble directed towards Section 230 is out of anger.
“If only this blow were delivered and 230 were repealed,” they think, “Twitter
would be plunged into financial ruin overnight.” Maybe a Samson Option is
what we need?
Unfortunately, it is not so simple. Twitter
would adapt and become more censorious to reduce its civil liabilities.
All US search engines would have their results curated by anyone willing to complain
about defamation—including, and perhaps especially, by public figures with
something to hide. The smaller and less profitable sites hosted out of
the US (Gab, Parler, 4chan, 8kun, Kiwi Farms, Encyclopedia Dramatica, thousands
of small, federated services and communities) would either be destroyed
outright, forced go private, or driven out of the United States. It would be a
total disaster for the little guys.
Jack Posobiec made a comment recently that
Justice Clarence Thomas had ruled Section 230 was unconstitutional. This
is not true. The opinion he cited as ‘sauce’ was not case law, but rather
an opinion in the strictest sense. Thomas did not even claim Section 230
was unconstitutional. This misinformation was seen hundreds of thousands
of times and further defamed the public perception of a law we rely on to even
conduct these conversations about Section 230 online.
So, if we
can’t regulate the banks and Section 230 is actually good, what can we
do?
What Clarence Thomas actually suggested was that we might have
to regulate the supermassive tech companies as ‘common carriers’ or
utilities. Regulating only the largest social media networks could
work. You can either be a monopoly, or you can be unregulated,
you cannot be both. I maintain that regulating
payment networks first would be ideal,
but that will not happen.
There is some hope that FedNow,
an atrociously named US answer to SEPA, could offer some relief to this payment
network bottleneck on speech. I am not optimistic for it, but it is good for
more people to know it is supposedly in development.
Cryptocurrencies
bypass the payment network bottleneck now.
The more people who know how to transact in cryptocurrency, the
freer the Internet will be. Sites like buybitcoinworldwide.com (not an affiliate
url) contain simple guides on how to get into the ecosystem regardless of your
country. You do not have to invest any money in.
Just learn how crypto works, how to get it, and how to send it. That knowledge
cannot be taken away from you—and it might prove useful, sooner
rather than later.
https://www.zerohedge.com/technology/section-230-isnt-problem-payment-networks-are
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