Privacy Please: Privacy Law, Social Media Regulation and the Evolving Privacy Landscape in the US

Social media regulation is a touchy subject in the United States. Congress and the White House have proposed, advocated, and voted on various bills, aimed at protecting and guarding people from data misuse and misappropriation, misinformation, harms suffered by children, and for the implications of vast data collection. Some of the most potent concerns about social media stem from use and misuse of information by the platforms- from the method of collection, to notice of collection and use of collected information. Efforts to pass a bill regulating social media have been frustrated, primarily by the First Amendment right to free speech. Congress has thus far failed to enact meaningful regulation on social media platforms.

The way forward may well be through privacy law. Privacy laws give people some right to control their own personhood including their data, right to be left alone, and how and when people see and view them. Privacy laws originated in their current form in the late 1800’s with the impetus being one’s freedom from constant surveillance by paparazzi and reporters, and the right to control your own personal information. As technology mutated, our understanding of privacy rights grew to encompass rights in our likeness, our reputation, and our data. Current US privacy laws do not directly address social media, and a struggle is currently playing between the vast data collection practices of the platforms, immunity for platforms under Section 230, and private rights of privacy for users.

There is very little Federal Privacy law, and that which does exist is narrowly tailored to specific purposes and circumstances in the form of specific bills. Somes states have enacted their own privacy law scheme, California being on the forefront, Virginia, Colorado, Connecticut, and Utah following in its footsteps. In the absence of a comprehensive Federal scheme, privacy law is often judge-made, and offers several private rights of action for a person whose right to be left alone has been invaded in some way. These are tort actions available for one person to bring against another for a violation of their right to privacy.

Privacy Law Introduction

Privacy law policy in the United States is premised on three fundamental personal rights to privacy:

Physical right to privacy- Right to control your own information
Privacy of decisions– such as decisions about sexuality, health, and child-rearing. These are the constitutional rights to privacy. Typically not about information, but about an act that flows from the decision
Proprietary Privacy – the ability to protect your information from being misused by others in a proprietary sense.

Privacy Torts

Privacy law, as it concerns the individual, gives rise to four separate tort causes of action for invasion of privacy:

Intrusion upon Seclusion- Privacy law provides a tort cause of action for intrusion upon seclusion when someone intentionally intrudes upon the reasonable expectation of seclusion of another, physically or otherwise, and the intrusion is objectively highly offensive.
Publication of Private Facts- One gives publicity To a matter concerning the Private life of another that is not of legitimate concern to the public, and the matter publicized would be objectively highly offensive. The first amendment provides a strong defense for publication of truthful matters when they are considered newsworthy.
False Light – One who gives publicity to a matter concerning another that places the other before the public in a false light when The false light in which the other was placed would be objectively highly offensive and the actor had knowledge of or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the other would be placed.
Appropriation of name and likeness- Appropriation of one’s name or likeness to the defendant’s own use or benefit. There is no appropriation when a persona’s picture is used to illustrate a non-commercial, newsworthy article. This is usually commercial in nature but need not be. The appropriation could be of “identity”. It need not be misappropriation of name, it could be the reputation, prestige, social or commercial standing, public interest, or other value on the plaintiff’s likeness.

These private rights of action are currently unavailable for use against social media platforms because of Section 230 of the Decency in Communications Act, which provides broad immunity to online providers for posts on their platforms. Section 230 prevents any of the privacy torts from being raised against social media platforms.

The Federal Trade Commission (FTC) and Social Media

Privacy law can implicate social media platforms when their practices become unfair or deceptive to the public through investigation by the Federal Trade Commission (FTC). The FTC is the only federal agency with both consumer protection and competition jurisdiction in broad sectors of the economy. FTC investigates business practices where those practices are unfair or deceptive. FTC Act 15 U.S.C S 45- Act prohibits “unfair or deceptive acts or practices in or affecting commerce” and grants broad jurisdiction over privacy practices of businesses to the FTC. Trade practice is unfair if it causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and is not outweighed by countervailing benefits to consumers or competition. A deceptive act or practice is a material representation, omission, or practice that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer’s detriment.

Critically, there is no private right of action in FTC enforcement. The FTC has no ability to enforce fines for S5 violations but can provide injunctive relief. By design, the FTC has very limited rulemaking authority, and looks to consent decrees and procedural, long-lasting relief as an ideal remedy. The FTC pursues several types of misleading or deceptive policy and practices that implicate social media platforms: notice and choice paradigms, broken promises, retroactive policy changes, inadequate notice, and inadequate security measures. Their primary objective is to negotiate a settlement where the company submits to certain measures of control of oversight by the FTC for a certain period of time. Violations of the agreements could yield additional consequences, including steep fines and vulnerability to class action lawsuits.

Relating to social media platforms, the FTC has investigated misleading terms and conditions, and violations of platform’s own policies. In Re Snapchat, the platform claimed that user’s posted information disappeared completely after a certain period of time, however, through third party apps and manipulation of user’s posts off of the platform, posts could be retained. The FTC and Snapchat settled, through a consent decree, to subject Snapchat to FTC oversight for 20 years.

The FTC has also investigated Facebook for violation of its privacy policy. Facebook has been ordered to pay a $5 billion penalty and to submit to new restrictions and a modified corporate structure that will hold the company accountable for the decisions it makes about its users’ privacy to settle FTC charges claiming that they violated a 2012 agreement with the agency.

Unfortunately, none of these measures directly give individuals more power over their own privacy. Nor do these policies and processes give individuals any right to hold platforms responsible for being misled by algorithms using their data, or for intrusion into their privacy by collecting data without allowing an opt-out.

Some of the most harmful social media practices today relate to personal privacy. Some examples include the collection of personal data, the selling and dissemination of data through the use of algorithms designed to subtly manipulate our pocketbooks and tastes, collection and use of data belonging to children, and the design of social media sites to be more addictive- all in service of the goal of commercialization of data.

No current Federal privacy scheme exists. Previous Bills on Privacy have been few and narrowly tailored to relatively specific circumstances and topics like healthcare and medical data protection by HIPPA, protection of data surrounding video rentals as in the Video Privacy Protection Act, and narrow protection for children’s data in Children’s Online Protection Act. All the schemes are outdated and fall short of meeting the immediate need of broad protection of widely collected and broadly utilized data from social media.

Current Bills on Privacy

Upon request from some of the biggest platforms, outcry from the public, and the White House’s request for Federal Privacy regulation, Congress appears poised to act. The 118^th Congress has pushed privacy law as a priority in this term by introducing several bills related to social media privacy. There are at least ten Bills currently pending between the House of the Senate addressing a variety of issues and concerns from Children’s data privacy to the minimum age for use and designation of a new agency to monitor some aspects of privacy.

S744– The Data Care Act of 2023 aims to protect social media user’s data privacy by imposing fiduciary duties on the platforms. The original iteration of the bill was introduced in 2021 and failed to receive a vote. It was re-introduced in March of 2023 and is currently pending. Under the act, social media platforms would have the duty to reasonably secure user’s data from access, refrain from using the data in a way that could foreseeably “benefit the online service provider to the detriment of the end user” and to prevent disclosure of user’s data unless the party is also bound by these duties. The bill authorizes the FTC and certain state officials to take enforcement actions upon breach of those duties. The states would be permitted to take their own legal action against companies for privacy violations. The bill would also allow the FTC to intervene in the enforcement efforts by imposing fines for violations.

H.R.2701 – Perhaps the most comprehensive piece of legislation on the House floor is the Online Privacy Act. In 2023, the bill was reintroduced by democrat Anna Eshoo after an earlier version on the bill failed to receive a vote and died in Congress. The Online Privacy Act aims to protect users by providing individuals rights relating to the privacy of their personal information. The bill would also provide privacy and security requirements for treatment of personal information. To accomplish this, the bill established a new agency – the Digital Privacy Agency- which would be responsible for enforcement of the rights and requirements. The new individual rights in privacy are broad and include the rights of access, correction, deletion, human review of automated decision, individual autonomy, right to be informed, and right to impermanence, amongst others. This would be the most comprehensive plan to date. The establishment of a new agency with a task specific to administration and enforcement of privacy laws would be incredibly powerful. The creation of this agency would be valuable irrespective of whether this bill is passed.

HR 821– The Social Media Child Protection Act is a sister bill to one by a similar name which originated in the Senate. This bill aims to protect children from the harms of social media by limiting children’s access to it. Under the bill, Social Media platforms are required to verify the age of every user before accessing the platform by submitting a valid identity document or by using another reasonable verification method. A social media platform will be prohibited from allowing users under the age of 16 to access the platform. The bill also requires platforms to establish and maintain reasonable procedures to protect personal data collected from users. The bill affords for a private right of action as well as state and FTC enforcement.

S 1291–The Protecting Kids on Social Media Act is similar to its counterpart in the House, with slightly less tenacity. It similarly aims to protect children from social media’s harms. Under the bill, platforms must verify its user’s age, not allow the user to use the service unless their age has been verified, and must limit access to the platform for children under 12. The bill also prohibits retention and use of information collected during the age verification process. Platforms must take reasonable steps to require affirmative consent from the parent or guardian of a minor who is at least 13 years old for the creation of a minor account, and reasonably allow access for the parent to later revoke that consent. The bill also prohibits use of data collected from minors for algorithmic recommendations. The bill would require the Department of Commerce to establish a voluntary program for secure digital age verification for social media platforms. Enforcement would be through the FTC or state action.

S 1409– The Kids Online Safety Act, proposed by Senator Blumenthal of Connecticut, also aims to protect minors from online harms. This bill, as does the Online Safety Bill, establishes fiduciary duties for social media platforms regarding children using their sites. The bill requires that platforms act in the best interest of minors using their services, including mitigating harms that may arise from use, sweeping in online bullying and sexual exploitation. Social media sites would be required to establish and provide access to safeguards such as settings that restrict access to minor’s personal data and granting parents the tools to supervise and monitor minor’s use of the platforms. Critically, the bill establishes a duty for social media platforms to create and maintain research portals for non-commercial purposes to study the effect that corporations like the platforms have on society.

Overall, these bills indicate Congress’s creative thinking and commitment to broad privacy protection for users from social media harms. I believe the establishment of a separate body to govern, other than the FTC which lacks the powers needed to compel compliance, to be a necessary step. Recourse for violations on par with the EU’s new regulatory scheme, mainly fines in the billions, could help.

Many of the bills, for myriad aims, establish new fiduciary duties for the platforms in preventing unauthorized use and harms for children. There is real promise in this scheme- establishing duty of loyalty, diligence and care for one party has a sound basis in many areas of law and would be more easily understood in implementation.

The notion that platforms would need to be vigilant in knowing their content, studying its affects, and reporting those effects may do the most to create a stable future for social media.

The legal responsibility for platforms to police and enforce their policies and terms and conditions is another opportunity to further incentivize platforms. The FTC currently investigates policies that are misleading or unfair, sweeping in the social media sites, but there could be an opportunity to make the platforms legally responsible for enforcing their own policies, regarding age, against hate, and inappropriate content, for example.

What would you like to see considered in Privacy law innovation for social media regulation?

Social Media, Minors, and Algorithms, Oh My!

What is an algorithm and why does it matter?

Social media algorithms are intricately designed data organization systems aimed at maximizing user engagement by sorting and delivering content tailored to individual preferences. At their core, social media algorithms collect and subsequently use extensive user data, employing machine learning techniques to better understand and predict user behavior. Social media algorithms note and analyze hundreds of thousands of data points, including past interactions, likes, shares, content preferences, time spent viewing content, and social connections to curate a personalized feed for each user. Social media algorithms are designed this way to keep users on the site, thus giving the site more time to put advertisements on the user’s feed and drive more profits for the social media site in question. The fundamental objective of an algorithm is to capture and maintain user attention, expose the user to an optimal amount of advertisements, and use data from users to curate their feed to keep them engaged for longer.

Addiction comes in many forms

One key element contributing to the addictiveness of social media is the concept of variable rewards. Algorithms strategically present a mix of content, varying in type and engagement level, to keep users interested in their feed. This unpredictability taps into the psychological principle of operant conditioning, where intermittent reinforcement, such as receiving likes, comments, or discovering new content, reinforces habitual platform use. Every time a user sees an entertaining post or receives a positive notification, the brain releases dopamine, the main chemical associated with addiction and addictive behaviors. The constant stream of notifications and updates, fueled by algorithmic insights and carefully tailored content suggestions, can create a sense of anticipation in users for their next dopamine fix, which encourages users to frequently update and scan their feeds to receive the next ‘reward’ on their timeline. The algorithmic and numbers-driven emphasis on user engagement metrics, such as the amount of likes, comments, and shares on a post, further intensifies the competitive and social nature of social media platforms, promoting frequent use.

Algorithms know you too well

Furthermore, algorithms continuously adapt to user behavior through real-time machine learning. As users engage with content, algorithms will analyze and refine their predictions, ensuring that the content remains compelling and relevant to the user over time. This iterative feedback loop further deepens the platform’s understanding of individual users, creating a specially curated and highly addictive feed that the user can always turn to for a boost of dopamine. This heightened social aspect, coupled with the algorithms’ ability to surface content that resonates deeply with the user, enhances the emotional connection users feel to the platform and their specific feed, which keeps users coming back time after time. Whether it be from seeing a new, dopamine-producing post, or posting a status that receives many likes and shares, every time one opens a social media app or website, it can produce seemingly endless new content, further reinforcing regular, and often unhealthy use.

A fine line to tread

As explained above, social media algorithms are key to user engagement. They are able to provide seemingly endless bouts of personalized content and maintain users’ undivided attention through their ability to understand the user and the user’s preferences in content. This pervasive influence extends to children, who are increasingly immersed in digital environments from an early age. Social media algorithms can offer constructive experiences for children by promoting educational content discovery, creativity, and social connectivity that would otherwise be impossible without a social media platform. Some platforms, like YouTube Kids, leverage algorithms to recommend age-appropriate content tailored to a child’s developmental stage. This personalized curation of interest-based content can enhance learning outcomes and produce a beneficial online experience for children. However, while being exposed to age-appropriate content may not harm the child viewers, it can still cause problems related to content addiction.

‘Protected Development’

Children are generally known to be naïve and impressionable, meaning full access to the internet can be harmful for their development, as they may take anything they see at face value. The American Psychological Association has said that, “[d]uring adolescent development, brain regions associated with the desire for attention, feedback, and reinforcement from peers become more sensitive. Meanwhile, the brain regions involved in self-control have not fully matured.” Social media algorithms play a pivotal role in shaping the content children can encounter by prioritizing engagement metrics such as likes, comments, and shares. In doing this, social media sites create an almost gamified experience that encourages frequent and prolonged use amongst children. Children also have a tendency to intensely fixate on certain activities, interests, or characters during their early development, further increasing the chances of being addicted to their feed.

Additionally, the addictive nature of social media algorithms poses significant risks to children’s physical and mental well-being. The constant stream of personalized content, notifications, and variable rewards can contribute to excessive screen time, impacting sleep patterns and physical health. Likewise, the competitive nature of engagement metrics may result in a sense of inadequacy or social pressure among young users, leading to issues such as cyberbullying, depression, low self-esteem, and anxiety.

Stop Addictive Feeds Exploitation (SAFE) for Kids

The New York legislature has spotted the anemic state of internet protection for children and identified the rising mental health issues relating to social media in the youth. Announced their intentions at passing laws to better protect kids online. The Stop Addictive Feeds Exploitation (SAFE) for Kids Act is aimed explicitly at social media companies and their feed-bolstering algorithms. The SAFE for Kids Act is intended to “protect the mental health of children from addictive feeds used by social media platforms, and from disrupted sleep due to night-time use of social media.”

Section 1501 of The Act would essentially prohibit operators of social media sites from providing addictive, algorithm-based feeds to minors without first obtaining parental permission. Instead the default feed on the program would be a chronologically sorted main timeline, one more popular in the infancy of social media sites. Section 1502 of The Act would also require social media platforms to obtain parental consent before allowing notifications between the hours of 12:00 AM and 6:00 AM and creates an avenue for opting out of access to the platform between the same hours. The Act would also provide a limit on the overall number of hours a minor can spend on a social media platform. Additionally, the Act would authorize the Office of the Attorney General to bring a legal action to enjoin or seek damages/civil penalties of up to $5,000 per violation and allow any parent/guardian of a covered minor to sue for damages of up to $5,000 per user per incident, or actual damages, whichever is greater.

A sign of the times

The Act accurately represents the growing concerns of the public in its justification section, where it details many of the above referenced problems with social media algorithms and the State’s role in curtailing the well-known negative effects they can have on a protected class. The New York legislature has identified the problems that social media addiction can present, and have taken necessary steps in an attempt to curtail it.

Social media algorithms will always play an intricate role in shaping user experiences. However, their addictive nature should rightfully subject them to scrutiny, especially in their effects among children. While social media algorithms offer personalized content and can produce constructive experiences, their addictive nature poses significant risks, prompting legislative responses like the Stop Addictive Feeds Exploitation (SAFE) for Kids Act. Considering the profound impact of these algorithms on young users’ physical and mental well-being, a critical question arises: How can we effectively balance the benefits of algorithm-driven engagement with the importance of protecting children from potential harm in the ever evolving digital landscape? The SAFE for Kids Act is a step in the right direction, inspiring critical reflection on the broader responsibility of parents and regulatory bodies to cultivate a digital environment that nurtures healthy online experiences for the next generation.

From Hashtags to Hazards: Dangerous Diets and Digital Doses

Dieting, weight loss, and the need to be skinny has been prevalent in society from as early as the 19^th century. People will find and try anything these days, healthy or not, to lose weight fast: diet pills, eating plans, radiofrequency lasering, you name it. People will go through such lengths to lose weight the wrong way – not exercising, not eating right, and not getting enough sleep. The emergence of social media has only compounded these issues. Social media creates pathways leading to social comparison, thin/fit ideal internalization, and self-objectification.

Type 2 diabetes is often associated with obesity and occurs when the body does not produce enough insulin, or does not react to insulin, and therefore cannot function properly. This disease is usually diagnosed in people ages 45-64 who are physically inactive and not leading a healthy lifestyle. In the early 2000s, pharmaceutical companies were looking for an easy solution to lower blood sugar to manage this disease. Enter: Ozempic.

Drugmaker Novo Nordisk introduced Ozempic in 2017 when the Food and Drug Administration authorized its use for adults with type 2 diabetes. It started as a relatively mundane drug with a straightforward goal: to help individuals manage their blood sugar levels and lead healthier lives. The weekly injection was designed to simulate insulin production and suppress glucagon release, ultimately leading to a rise in hormone levels that go to your brain, telling it that the stomach is full. It also increases the time it takes for ingested food to leave the body, slowing digestion. Originally, the marketing for Ozempic only targeted adults with type 2 diabetes and was to be used with diet and exercise as a healthy way to lower blood sugar.

Turning an Unintended Outcome into a Marketing Advantage

Soon after Ozempic hit the market, surveys and studies came out that showed those who used the drug also lost weight. People who took it lost an average of 14.9% of their body weight in six months of use. The unintended weight loss from Ozempic would have usually been listed as a side effect for the medication. Now having an additional benefit of losing weight, ads for Ozempic included it along with the diabetes usage. Marketers knew their audience and this new marketing campaign attracted a large group of people who wanted to lose weight. They tapped into this market to increase sales and revenue for the drug, which continues to be very successful.

In recent years, the pharmaceutical industry has witnessed a dramatic shift in how drugs are marketed, perceived, and consumed. This is largely due to the power of social media platforms and its influence on users. The allure of social media’s vast audience, the power of user-generated content, and its complex algorithms turned Ozempic into a trending topic. In the last year, social media helped Ozempic become widely known that the drug could double as a potential solution for weight loss. The drug went viral as hashtags and posts illuminated Ozempic as a cheat to losing weight, and losing weight fast. No diet or exercise needed. Individuals, not just those diagnosed with diabetes, were captivated by this prospect, and sought after Ozempic.

The new social media sensation garnered attention on platforms like TikTok, Instagram, and YouTube, with users, influencers, and celebrities sharing their experiences, before-and-after photos, and purported success stories. The influx of advertisements and users mentioning Ozempic increased the drug’s sales by 111% since last year. Elon Musk credited fasting, no tasty food, and Ozempic/ Wegovy (a drug very similar to Ozempic), as the reasons he shed almost 30 pounds. Other celebrities who have taken the drug, and have been vocal about it, include Amy Schumer, Chelsea Handler, Charles Barkley, Sharon Osborne, Tracy Morgan, and many more who are known to not have type 2 diabetes.

Rewards Turn to Consequences

Now being marketed almost strictly as a weight loss drug from different vendors, the viral run on Ozempic has led to worldwide shortages, doctors over-prescribing the drug, and many different legal issues. The blowup of Ozempic online was at least in part fueled by people who wanted to lose weight but who did not have any medical reasons to take it. The scarcity of Ozempic, coupled with the high demand, poses a threat to the health of individuals with type 2 diabetes who depend on this medication. As a result of this issue, Novo Nordisk paused advertisements for Ozempic in May of 2023. However, most of the ads on social media were not coming from the drugmaker, and instead were coming from online pharmacies and smaller marketers. These marketers attract vulnerable users who are seeking that quick fix to weight loss. While pharmaceutical companies can be held liable if their advertisements are proven to be false and/or misleading, the social media platforms are not liable under Section 230.

Users were not walking; they were running to doctors begging for Ozempic, even users who are not overweight, let alone have diabetes. It is very easy to get a prescription for Ozempic since only an online telehealth appointment is needed. Medicines and drugs that are approved for specific uses in the United States can be prescribed off-label for any use. Off-label use is when doctors prescribe medications for purposes not approved by the Food and Drug Administration. Doctors were prescribing Ozempic for patients that did not have type 2 diabetes and did not need it. At this time, the FDA has not approved Ozempic for the sole purpose of weight loss (yet). Doctors have gotten around this by prescribing other weight loss drugs such as Wegovy. Even though off-label use is not illegal, it still raises a slew of legal issues.

Off-Label Dangers and Legal Showdowns

To this day, there have not been adequate studies of how Ozempic works for people without diabetes and there may not be enough evidence to support using the drug for people who are not diabetic. Off-label use of Ozempic can lead to serious side effects. In August of 2023, after being prescribed Ozempic for weight management, a Louisiana resident claimed to have developed gastroparesis and argued that Novo Nordisk failed in their duty to adequately warn about potential adverse side effects associated with the drug. Gastroparesis is a condition that impacts the normal movement of muscles in the stomach. Less than a month after this suit was filed, the FDA and Novo Nordisk added a warning for Ozempic that it could cause intestinal blockage. This case is still in its early stages, but more and more people are coming forward and hiring attorneys for this condition in relation to taking Ozempic. A class action or multi-district litigation is predicted to occur in these cases.

Another potential legal implication of the off-label use of Ozempic going viral is medical malpractice and the potential for mass claims against doctors and manufacturers for prescribing the weight loss drug without proper medical justification. Social media users who see advertisements on platforms and want to lose weight are not asking doctors to prescribe Ozempic to them; they are begging. The drug manufacturers aren’t providing comprehensive information to patients about potential adverse reactions and are actively promoting the use of these drugs among individuals who may receive only minimal or no long-term benefits from them.

Predicting the Future of Ozempic

To better understand the Ozempic situation, it is valuable to draw parallels with the OxyContin opioid epidemic. OxyContin was first introduced in 1996 and is a powerful narcotic designed for the management of severe pain. However, as a result of over-promotion and improper sales tactics, it was overprescribed and led to widespread abuse, addiction overdose and death. The similarities between the issues surrounding the two drugs include:

Over-prescription– in both cases, doctors and manufacturers have played a pivotal role in the over-prescription of the medications. OxyContin was prescribed for chronic pain, a use that went beyond its intended purpose, while Ozempic was prescribed off-label for weight loss.
Patient demand– in both cases, patient demand and pressure have played a significant role in prescription practices. Patients seeking quick and easy solutions are more likely to want and receive medications that may not be appropriate for their condition and health.
Pharmaceutical company responsibility– Purdue Pharma, makers of OxyContin, faced, and continue to face, lawsuits for aggressively marketing the drug. Although no lawsuits have been filed against Ozempic yet for this, the responsibility of pharmaceutical companies in promoting medications beyond their FDA-approved uses could show a common thread between both drugs.

The one key difference between the OxyContin epidemic and the issues with Ozempic today is that in the early 2000s, social media sites were not as prolific. The advent of social media amplifies the speed and scale at which information, whether accurate or not, spreads. The contagious nature of user-generated content, testimonials, and before-and-after narratives on platforms has the potential to magnify the off-label promotion and demand for Ozempic as a weight loss solution. This can fuel an unwarranted surge in prescriptions without proper medical assessment, potentially leading to increased risks, adverse effects, and challenges in regulating the medication’s use. The ease with which information circulates on social media might intensify the scope and speed of the ‘Ozempic epidemic,’ raising concerns about patient safety and regulatory control.

Where Does the Liability Land?

The story of Ozempic’s transformation from a diabetes medication to a weight loss sensation driven by social media is a compelling example of how the digital age can shape public perception and lead to a vast number of legal issues. If Section 230 is amended and sets forth certain parameters in which social media sites can be liable, could platforms be held accountable for the shortage of the drug due to social media’s contributions of Ozempic’s popularity? Could the platforms be responsible for the possible increase in body image issues and eating disorders associated with the trend to be skinny?

International Regulation of Social Media- A Survey

The debate on regulation of social media in the United States is a heated one. Lawmakers, fueled by both theoretical concerns and specific incidences, have proposed and debated legislation to regulate social media platforms, thus far – unsuccessfully. Bills have failed both because of constitutional concerns and lack of appetite. Sen. Amy Klobuchar said the tech lobby is so powerful that bills with “strong, bipartisan support” can fall apart “within 24 hours.

Recently, the Biden administration was prohibited from asking sites to remove misinformation content, with the Federal Appeals Court ruling that doing so was a violation of the first amendment. Additionally, Section 230 is alive and well, shielding media platforms from liability for pretty much anything posted on their sites. This is reflected in the recent cases Twitter, Inc. v. Taamneh and Gonzalez v. Google.

Elsewhere in the world, legislation designed to regulate social media is proposed, approved, awaiting and already in process of implementation. Unlike the US, Europe, the UK and others do not have the high First Amendment bar to overcome, making regulation a realistic possibility. A survey of active regulation and proposed regulation shows determination and promise in tackling some of the greatest concerns that social media poses.

Legislation worldwide has been designed to combat a variety of harms and threats, with each country and legislative body disclosing their most important concerns. The harms range from protecting children from viewing inappropriate content to establishing a level playing field to foster innovation, growth, and competitiveness in business. Most regulation places an onus on social media companies to be vigilant, police their own platforms, and remove content that violates the law. Heavy fines, up to 10% of the platform’s gross global profit would be assessed in fines if violated. A survey of the proposed and adopted legislation regulating social media shows progress toward a goal of a happier and safer online existence for all.

In the European Union

The European Union (EU) has elected a regulatory “one-two punch” to both control anticompetitive behavior of the platforms and to stop misinformation in its tracks.

The Digital Services Act (DSA) and the Digital Market Act (DMA) form a single set of rules that apply across the whole EU. They have two main goals: to create a safer digital space and to establish a level playing field to foster innovation, growth, and competitiveness for smaller and new business.

The DSA, passed in September 2023 and to be implemented in the new year, is designed to address social media’s harms to society. Under the DSA, platforms as well as providers of digital services will be required to more aggressively police their platforms. The DSA imposes reporting and monitoring obligations for illegal content and misinformation. Digital service providers, including social media sites, will be compelled to set up new policies and procedures to identify and remove flagged hate speech, terrorist propaganda and other “material defined as illegal by countries within the European Union.” This includes a duty to monitor and report, mandating internal audits and reporting on them. The DSA also requires platforms to disclose how their services amplify divisive content and stop targeting online ads based on a person’s ethnicity, religion or sexual orientation. Using children’s data for algorithms and advertising is also strictly prohibited. Social media giants are held to an even higher standard under the DSA. Very Large online platforms are held to an even higher standard. Platforms like Meta, X, and TikTok will be compelled to analyze the systemic risks that they can create including dissemination of illegal content, effect on fundamental rights, on elections and electoral processes, and gender-based violence or mental health trends.

Penalties for failure to adhere to the DSA are steep. Violation could be assessed with fines of up to 6% of a platform’s global profits per annum.

The DMA, which passed earlier this year, is meant to protect businesses from anticompetitive behavior by platforms, which negatively affects small businesses. Most of the regulation is aimed at creating a level playing field for businesses using platforms, and to combat the grip of platforms over app stores, advertising, and online shopping. Under the DMA, a platform cannot treat services and products offered by the platform better than those offered by a third party on the platform. They must give users access to the data they collect from the third party and can no longer track users beyond the platform’s own site for use in advertising or prevent third parties from directing users to another site from the platform.

Penalties for violation could soar into the billions. Violators can be fined for up to 10% of the platform’s global profits per annum, and up to 20% for repeat offenders.

To enforce the new laws, the EU plans to form a unit of 240 officers dedicated to the purpose.

United Kingdom

Kyiv, Ukraine – September 5, 2019: A paper cubes collection with printed logos of world-famous social networks and online messengers, such as Facebook, Instagram, YouTube, Telegram and others.

In September 2023, Parliament approved the Online Safety Bill. The bill is designed to prevent children from consuming harmful information online. Under the bill, platforms must act rapidly to remove illegal or harmful content from their sites. They must implement more transparent procedures and enforce them. They must implement and enforce age-checking measures to ensure children are not seeing inappropriate content. Platforms must also provide parents accessible ways to report problems as they arise, and to allow parents the ability to make their children’s accounts more secure using parental controls. They also must analyze and publish risk assessments. Critically, the law places a legal responsibility on social media platforms to enforce the promises they make to users when they sign up, through the platform’s terms and conditions. In effect, they are legally bound to enforce their terms and conditions.

Punishment for violations could exceed fines of 18 million Pounds, or 10% of their global annual revenue, whichever is higher.

Australia

Australia also recently proposed legislation aimed at regulating and removing misinformation and illegal content, particularly for the benefit of children. The law would compel platforms to remove “cyber-abusive” information within 24 hours. This regulation would also allow the regulatory body in charge there, the Australian Competition and Consumer Commission (ACCC) and the Australian Association of National Advertisers (AANA), to obtain information and documents from digital platforms relating to disinformation and misinformation.

Indonesia

Indonesia centers its newest proposed legislation on its concern for the local markets and local vendors. Last month, the President of Indonesia announced that the Trade Ministry would be issuing regulation that would ban e-commerce on social media platforms. No specific platforms were mentioned, but TikTok is likely one of the targets. Officials have claimed that e-commerce sellers using predatory pricing on social media platforms are threatening local markets in Indonesia, with some officials specifically citing TikTok. The proposed bill prohibits direct transactions on social media sites, but vendors can still advertise products on social media. No word yet on how or when implementation would commence.

Efforts from around the globe to regulate social media and digital platforms are full of promise. Implementation and enforcement will be a challenge, as the digital world expands and mutates continually, and opposition to change by social media platforms is sure to follow. Here in the United States, there is much we could borrow and implement. From the comfortable position of early and interested observer, let’s see.

New York is Protecting Your Privacy

TAKING A STANCE ON DATA PRIVACY LAW

The digital age has brought with it unprecedented complexity surrounding personal data and the need for comprehensive data legislation. Recognizing this gap in legislative protection, New York has introduced the New York Privacy Act (NYPA), and the Stop Addictive Feeds Exploitation (SAFE) For Kids Act, two comprehensive initiatives designed to better document and safeguard personal data from the consumer side of data collection transactions. New York is taking a stand to protect consumers and children from the harms of data harvesting.

Currently under consideration in the Standing Committee on Consumer Affairs And Protection, chaired by Assemblywoman Nily Rozic, the New York Privacy Act was introduced as “An Act to amend the general business law, in relation to the management and oversight of personal data.” The NYPA was sponsored by State Senator Kevin Thomas and closely resembles the California Consumer Privacy Act (CCPA), which was finalized in 2019. In passing the NYPA, New York would become just the 12^th state to adopt a comprehensive data privacy law protecting state residents.

DOING IT FOR THE DOLLAR

Companies buy and sell millions of user’s sensitive personal data in the pursuit of boosting profits. By purchasing personal user data from social media sites, web browsers, and other applications, advertisement companies can predict and drive trends that will increase product sales among different target groups.

Social media companies are notorious for selling user data to data collection companies, things such as your: name, phone number, payment information, email address, stored videos and photos, photo and file metadata, IP address, networks and connections, messages, videos watched, advertisement interactions, and sensor data, as well as time, frequency, and duration of activity on the site. The NYPA targets businesses like these by regulating legal persons that conduct business in the state of New York, or who produce products and services aimed at residents of New York. The entity that stands to be regulated must:

(a) have annual gross revenue of twenty-five million dollars or more;
(b) control or process personal data of fifty thousand consumers or more;
or (c) derive over fifty percent of gross revenue from the sale of personal data.

The NYPA does more for residents of New York because it places the consumer first, as the Act is not restricted to regulating businesses operating within New York but encompasses every resident of New York State who may be subject to targeted data collection, an immense step forward in giving consumers control over their digital footprint.

MORE RIGHTS, LESS FRIGHT

The NYPA works by granting all New Yorkers additional rights regarding how their data is maintained by controllers to which the Act applies. The comprehensive rights granted to New York consumers include the right to notice, opt out, consent, portability, correct, and delete personal information. The right to notice requires each controller provide a conspicuous and readily available notice statement describing the consumer’s rights, indicating the categories of personal data the controller will be collecting, where its collected from, and what it may be used for. The right to opt out includes allowing for consumers to opt out of processing their personal data for the purposes of targeted advertising, the sale of their personal data, and for profiling purposes. This gives the consumer an advantage when browsing sites and using apps, as they will be duly informed of exactly what information they are giving up when online.

While all the rights included in the NYPA are groundbreaking for the New York consumer, the right to consent to sensitive data collection and the right to delete data cannot be understated. The right to consent requires controllers to conspicuously ask for express consent to collect sensitive personal data. It also contains a zero-discrimination clause to protect consumers who do not give controllers express consent to use their personal data. The right to delete requires controllers to delete any or all of a consumer’s personal data upon request, demanding controllers delete said data within 45 days of receiving the request. These two clauses alone can do more for New Yorker’s digital privacy rights than ever before, allowing for complete control over who may access and keep sensitive personal data.

BUILDING A SAFER FUTURE

Following the early success of the NYPA, New York announced their comprehensive plan to better protect children from the harms of social media algorithms, which are some of the main drivers of personal data collection. Governor Kathy Hochul, State Senator Andrew Gounardes, and Assemblywoman Nily Rozic recently proposed the Stop Addictive Feeds Exploitation (SAFE) For Kids Act, directly targeting social media sites and their algorithms. It has long been suspected that social media usage contributes to worsening mental health conditions in the United States, especially among youths. The SAFE For Kids Act seeks to require parental consent for children to have access to social media feeds that use algorithms to boost usage.

On top of selling user data, social media sites like Facebook, YouTube, and X/Twitter also use carefully constructed algorithms to push content that the user has expressed interest in, usually based on the profiles they click on or the posts they ‘like’. Social media sites feed user data to algorithms they’ve designed to promote content that will keep the user engaged for longer, which exposes the user to more advertisements and produces more revenue.

Children, however, are particularly susceptible to these algorithms, and depending on the posts they view, can be exposed to harmful images or content that can have serious consequences for their mental health. Social media algorithms can show children things they are not meant to see, regardless of their naiveté and blind trust, traits that are not exactly cohesive with internet use. Distressing posts or controversial images could be plastered across children’s feeds if the algorithm determines it would drive better engagement by putting them there. Under the SAFE For Kids Act, without parental consent, children on social media sites would see their feed in chronological order, and only see posts from users they ‘follow’ on the platform. This change would completely alter the way platforms treat accounts associated with children, ensuring they are not exposed to content they don’t seek out themselves. This legislation would build upon the foundations established by the NYPA, opening the door to even further regulations that could increase protections for the average consumer and more importantly, for the average child online.

New Yorkers: If you have ever spent time on the internet, your personal data is out there, but now you have the power to protect it.

Don’t Talk to Strangers! But if it’s Online, it’s Okay?

It is 2010. You are in middle school and your parents let your best friend come over on a Friday night. You gossip, talk about crushes, and go on all social media sites. You decide to try the latest one, Omegle. You automatically get paired with a stranger to talk to and video chat with. You speak to a few random people, and then, with the next click, a stranger’s genitalia are on your screen.

Stranger Danger

Omegle is a free video-chatting social media platform. Its primary function has become meeting new people and arranging “online sexual rendezvous.” Registration is not required. Omegle randomly pairs users for one-on-one video sessions. These sessions are anonymous, and you can skip to a new person at any time. Although there is a large warning on the home screen saying “you must be 18 or older to use Omegle”, no parental controls are available through the platform. Should you want to install any parental controls, you must use a separate commercial program.

While the platform’s community guidelines illustrate the “dos and don’ts” of the site, it seems questionable that the platform can monitor millions of users, especially when users are not required to sign up, or to agree to any of Omegle’s terms and conditions. It, therefore, seems that this site could harbor online predators, raising quite a few issues.

One recent case surrounding Omegle involved a pre-teen who was sexually abused, harassed, and blackmailed into sending a sexual predator obscene content. In A.M. v. Omegle.com LLC, the open nature of Omegle ended up matching an 11-year-old girl with a sexual predator in his late thirties. Being easily susceptible, he forced the 11-year-old into sending pornographic images and videos of herself, perform for him and other predators, and recruit other minors. This predator was able to continue this horrific crime for three years by threatening to release these videos, pictures, and additional content publicly. The 11-year-old plaintiff sued Omegle on two general claims of platform liability through Section 230, but only one claim was able to break through the law.

Unlimited Immunity Cards!

Under 47 U.S.C. § 230 (Section 230), social media platforms are immune from liability for content posted by third parties. As part of the Communications Decency Act of 1996, Section 230 provides almost full protection against lawsuits for social media companies since no platform is seen as a publisher or speaker of user-generated content posted on the site. Section 230 has gone so far to say that Google and Twitter were immune from liability for claims that their platforms were used to aid terrorist activities. In May of 2023, these cases moved up to the Supreme Court. Although the court declined to rule for the Google case, they ruled on the Twitter case. Google was found not liable for the claim that they stimulated the growth of ISIS through targeted recommendations and inspired an attack that killed an American student. Twitter was immune for the claim that the platform aided and abetted a terrorist group to raise funds and recruit members for a terrorist attack.

Wiping the Slate

In February of 2023, the District Court in Oregon for the Portland Division found that Section 230 immunity did not apply to Omegle in a products liability claim, and the platform was held liable for these predatory actions committed by the third party on the site. By side-stepping the third-party freedom of speech issue that comes with Section 230 immunity for an online publisher, the district court found Omegle responsible under the Plaintiff’s products liability claim, which targeted the platforms’ defective design, defective warning, negligent design, and failure to warn.

Three prongs need to be proved to preclude a platform from liability under Section 230:

A provider of an interactive site,
Whom is sought to be treated as a publisher or speaker, and
For information provided by a third-party.

It is clear that Omegle is an interactive site that fits into the definition provided by Section 230. The issue then falls on the second and third prongs: if the cause of action treated Omegle as the speaker of third-party content. The sole function of randomly pairing strangers causes the foreseen danger of pairing a minor with an adult. Shown in the present case, “the function occurs before the content occurs.” By designing the platform negligently and with knowing disregard for the possibility of harm, the court ultimately concluded that the liability of the platform’s function does not pertain to third-party published content and that the claim targeted specific functions rather than users’ speech on the platform. Section 230 immunity did not apply for this first claim and Omegle was held liable.

Not MY Speech

The plaintiff’s last claim dealing with immunity under Section 230 is that Omegle negligently failed to apply reasonable precautions to provide a safe platform. There was a foreseeable risk of harm when marketing the service to children and adults and randomly pairing them. Unlike the products liability claim, the negligence claim was twofold: the function of matching people and publishing their communications to each other, both of which fall directly into Section 230’s immunity domain. The Oregon District Court drew a distinct line between the two claims, so although Omegle was not liable under Section 230 here through negligent service, they were liable through products liability.

If You Cannot Get In Through the Front Door, Try the Back Door!

For almost 30 years, social media platforms have been nearly immune from liability pertaining to Section 230 issues. In the last few years, with the growth of technology on these platforms, judges have been trying to find loopholes in the law to hold companies liable. A.M. v. Omegle has just moved through the district court level. If appealed, it will be an interesting case to follow and see if the ruling will stand or be overruled in conjunction with the other cases that have been decided.

How do you think a higher court will rule on issues like these?

THE SCHEME BEHIND AN ILLEGAL STREAM

FOLLOW THE STREAM TOWARDS A FELONY

The Protecting Lawful Streaming Act makes it a felony to engage in large-scale streaming of copyright material. The introduction of this law took place on December 10th, 2020. The law pertains to the increased concern surrounding live audio and video streaming in recent years. Specifically, such streaming has transformed society and become one of the most influential ways society chooses to enjoy various forms of content. Yet, the growth of legitimate streaming services has continuously been accompanied and disturbed by unlawful streaming of copyright materials. Initially, the illegal streaming of copyright material was only a misdemeanor until the Protecting Lawful Streaming Act became a part of America’s newest addition to the law.

Under the Protecting Lawful Streaming Act, a person must act:

Willfully.
For purposes of commercial advantage or private financial gain.
Offer or provide to the public a digital transmission service.

ALL FOR ONE, ONE FOR ALL

The law’s enactment incentivizes those who indulge in hosting illegal streams subjects them to severe criminal penalties. Accordingly, anyone who hosts an illegal stream that not only infringes upon copyright material but also obtains an economic benefit will now face felony charges. Many fail to recognize that while the individual responsible for hosting the illegal stream faces criminal charges, any individual who merely partakes in viewing this infringement does not technically violate any criminal law. Therefore, illegal streams that host hundreds and even thousands of viewers allow for no criminal action to be taken or even threatened to all these spectators. Instead, the focus is entirely on the host of this illegal stream.

PLATFORMS ENGINEERING IS PERFECTLY IMPERFECT

The question then becomes, what does social media do with illegal streaming? For starters, social media platforms serve as one of, if not the most, influential ways illegal streams reach society. Social media platform designs focus on spreading information. They not only spread information but essentially take information and provide the capability to have it worldwide within seconds. As such, these platform’s engineering do precisely what illegal streaming hosts want. That is to expose these streams to millions of individuals who may indulge and use copyright material for their benefit. Social media’s capabilities of utilizing hashtags, likes, shares, and other methods of expansion through social media allow hosts to capitalize on these platform’s designs to take advantage for their own personal and financial gain.

NOT MY MESS, NOT MY PROBLEM

Social media platforms are not liable for copyright material exposure on their platforms. According to the Digital Millennium Copyright Act, the only requirement is that these platforms must take prompt action when contacted by the rights holders. However, the statistics have shown thus far that social media platforms fail to take the initiative and are generally unwilling to address this ongoing concern. The argument on behalf of social media platforms is that the duty is not on their behalf but on the rights holders to report an infringement. With this belief, social media platforms could take a more significant initiative to address this concern of illegal streaming. While social media platforms have at least some implementations to help prevent infringement of owner’s work, the system is flawed, with many unresolved areas of concern. Current measures in place by themselves fail to provide reassurance that they can protect the content of the actual owner from being exploited for the financial benefit of illegal streaming hosts around the world.

MORE MONEY, MORE PROBLEMS

The question then becomes, how many illegal streaming services impact people? Major entertainment networks such as the NFL, NBA, and UFC are just a few examples of illegal streaming threatening their businesses’ most critical revenue stream. That being the television viewership. Not only this but even movie and non-sport television programs are reported to have lost billions of dollars to the hands of illegal streaming. Thus, by enacting the Protecting Lawful Streaming Act, the goal is to deter harmful criminal activity and simultaneously protect the rights of creators and copyright owners.

Furthermore, the individual people would least expect to be harmed by illegal streaming is also in jeopardy. That being themselves! Illegal streams cause various risks of malicious software that can infect one’s device. This exposure puts individuals’ personal information at risk. It is subject to several casualties, such as identity fraud, financial loss, and permanent damage to devices that watch these illegal streaming services.

WHAT’S MINE IS YOURS

Society must recognize and address how individuals can counteract illegal streaming legally yet unfairly. For instance, an individual who legally purchases a pay-per-view event and then live streams this on their social media for others to also spectate. Someone can lawfully buy the stream and not be subject to being host to an illegal stream. Yet, the same issue arises. The owners of this content are stuck with no resolution and lose out on potential revenue. Rather than these individuals all purchasing the content for themselves, one is used as a sacrifice while the others reap the same benefit without costing a dime. The same scenario can arise where individuals gather in one home to watch a pay-per-view or a movie on demand. This conduct is not illegal, but it negates the potential revenue these industries may obtain. Such a solution was, is, and consistently will be recognized as legal activity.

AN ISSUE, BUT NOT AN ISSUE WORTH SOLVING

Even streaming platforms like Netflix fail to take any measures regarding not necessarily illegally streaming its content but sharing passwords for one account. Although such conduct can be subject to civil liability in a breach of its contractual terms or even criminal liability if fraud is determined, these platforms fail to take proper measures against this behavior. Ultimately, moving forward on these actions would be too costly and can result in losing viewership through this sort of conduct.

Through these findings, it’s clear that illegal streaming has and continues to take advantage of the actual copyright owners of this material. The Protecting Lawful Streaming Act was society’s most recent attempt to minimize this ongoing issue through an effort to increase the criminal penalty and deter such conduct. Yet, based on the inability to identify and diminish these illegal streams on social media, many continue to get away with this behavior daily. The legal loopholes discussed above prove that entertainment industries may never see the revenue stream they anticipate. Only time will tell how society responds to this predicament and whether some law will address it in the foreseeable future. If the law were to hold higher standards for social media platforms to take accountability for this conduct, would it make a difference? Even so, would the minimization of social media’s influence on the spread of illegal streams even have a lasting impact?

Mental Health Advertisements on #TikTok

The stigma surrounding mental illness has persisted since the mid-twentieth century. This stigma is one of the many reasons why 60% of adults with a mental illness often go untreated. The huge treatment disparity demonstrates a significant need to spread awareness and make treatment more readily available. Ironically, social media, which has been ridiculed for its negative impact on the mental health of its users, has become a really important tool for spreading awareness about and de-stigmatizing mental health treatment.

The content shared on social media is a combination of users sharing their experiences with a mental health condition and companies who treat mental health using advertisements to attract potential patients. At the first glance, this appears to be a very powerful way to use social media to bridge treatment gaps. However, it highlights concerns over vulnerable people seeing content and self-diagnosing themselves with a condition that they might not have and undergoing unnecessary, and potentially dangerous, treatment. Additionally, they might fail to undergo needed treatment because they are overlooking the true cause of their symptoms due to the misinformation they were subjected to.

Attention Deficit Hyperactivity Disorder (“ADHD”) is an example of a condition that social media has jumped on. #ADHD has 14.5 billion views on TikTok and 3 million posts on Instagram. Between 2007 and 2016, diagnoses of ADHD increased by 123%. Further, prescriptions for stimulants, which treat ADHD, have increased 16% since the pandemic. Many experts are attributing this, in large part, to the use of social media in spreading awareness about ADHD and the rise of telehealth companies that have emerged to treat ADHD during the pandemic. These companies have jumped on viral trends with targeted advertisements that oversimplify what ADHD actually looks like and then offers treatment to those that click on the advertisement.

The availability and reliance of telemedicine grew rapidly during the COVID-19 pandemic and many restrictions regarding telehealth were suspended. This created an opening in the healthcare industry for these new companies. ‘Done’ and ‘Cerebral’ are two examples of companies that have emerged during the pandemic to treat ADHD. These companies attract, accept, and treat patients through a very simplistic procedure: (1) social media advertisements, (2) short online questionnaire, (2) virtual visit, and (3) prescription.

Both Done and Cerebral have utilized social media platforms like Instagram and TikTok to lure potential patients to their services. The advertisements vary, but they all highlight how easy and affordable treatment is by emphasizing convenience, accessibility, and low cost. Accessing the care offered is as simple as swiping up on an advertisements that appear as users are scrolling on the platform. These targeted ads depict images of people seeking treatment, taking medication, and having their symptoms go away. Further, these companies utilize viral trends and memes to increase the effectiveness of the advertisements, which typically oversimplify complex ADHD symptoms and mislead consumers.

While these companies are increasing healthcare access for many patients due to the low cost and virtual platform, this speedy version of healthcare is blurring the line between offering treatment to patients and selling prescriptions to customers through social media. Further, medical professionals are concerned with how these companies are marketing addictive stimulants to young users, and, yet, remain largely unregulated due to outdated guidelines on advertisements for medical services.

The advertising model utilized by these telemedicine companies emphasize a need to modify existing laws to ensure that these advertisements are subjected to the FDA’s unique oversight to protect consumers. These companies are targeting young consumers and other vulnerable people to self-diagnose themselves with misleading information as to the criteria for a diagnosis. There are eighteen symptoms of ADHD and the average person meets at least one or two of those in the criteria, which is what these ads are emphasizing.

Advertisements in the medical sphere are regulated by either the FDA or the FTC. The FDA has unique oversight to regulate the marketing of prescription drugs by manufacturers and drug distributors in what is known as direct-to-consumer (“DTC”) drug advertising. The critics of prescription drug advertisements highlight the negative impact that DTC advertising has on the patient-provider relationship because patients go to providers expecting or requesting particular prescription treatment. In order to minimize these risks, the FDA requires that a prescription drug advertisement must be truthful, present a fair balance of the risks and benefits associated with the medications, and state an approved used of the medication. However, if the advertisement does not mention a particular drug or treatment, it eludes the FDA’s oversight.

Thus, the marketing of medical services, which does not market prescription drugs, is regulated only by the Federal Trade Commission (“FTC”) in the same manner as any other consumer good, which just means that the advertisement must not be false or misleading.

The advertisements these Telehealth companies are putting forward demonstrate that it is time for the FDA to step in because they are combining medical services and prescription drug treatment. They use predatory tactics to lure consumers into believing they have ADHD and then provide them direct treatment on a monthly subscription basis.

The potential for consumer harm is clear and many experts are pointing to the similarities between the opioid epidemic and stimulant drugs. However, the FDA has not currently made any changes to how they regulate advertising in light of social media. The laws regarding DTC drug advertising were prompted in part by the practice of self-diagnosis/self-medication by consumers and the false therapeutic claims made by manufacturers. The telemedicine model these companies are using is emphasizing these exact concerns by targeting consumers, convincing them they have a specific condition, and then offering the medication to treat it after quick virtual visit. Instead of patients going to their doctors requesting a specific prescription that may be inappropriate for a patient’s medical needs, patients are going to the telehealth providers that only prescribe a particular prescription that may also be inappropriate for a patient’s medical needs.

Through the use of social media, diagnosis and treatment with addictive prescription drugs can be initiated by an interactive advertisement in a manner that was not possible when the FDA made the distinctions that these types of advertisements would not be subject to its oversight. Thus, to protect consumers, it is vital that telemedicine advertisements are subjected to a more intrusive monitoring than consumer goods. This will require the companies making these advertisements to properly address the complex symptoms associated with conditions like ADHD and give fair balance to the harms of treatment.

According to the Pew Research Center, 69% of adults and 81% of teens in the United States use social media. Further, about 48% of Americans get their information regularly from social media. We often talk about misinformation in politics and news stories, but it’s permeating every corner of the internet. As these numbers continue to grow, it’s crucial to develop new methods to protect consumers, and regulating these advertisements is only the first step.

Memes, Tweets, and Stocks . . . Oh, My!

Pop-Culture’s Got A Chokehold on Your Stocks

In just three short weeks, early in January 2021, Reddit meme-stock traders garnered up enough of GameStop’s stock to increase its value from a mere $17.25 per share to $325 a pop. This reflected almost an 1,800% increase in the stock’s value. In light of this, hedge funds, like New York’s Melvin Capital Management, were left devastated, some smaller hedge funds even went out of business.

For Melvin, because they were holding their GameStop stock in a short position (a trading technique in which the intention is to sell a security with the plan to buy it back later, at a lower cost, in an anticipated short term drop), they lost over 50% of their stock’s value, which translated to nearly $7 billion, in just under a month.

Around 2015, the rise of a new and free online trading platform geared towards a younger generation, emerged in Robinhood. Their mission was simple — “democratize” finance. By putting the capacity to understand and participate in trading, without needing an expensive broker, Robinhood made investing accessible to the masses. However, the very essence of Robinhood putting the power back in the hands of the people, was also what caused a halt in GameStop’s takeover rise. After three weeks, Robinhood had to cease all buying or selling of GameStop’s shares and options because the sheer volume of trading had exceeded their cash-on-hand capacity, or collateral that is required by regulators to function as a legal trade exchange.

But what exactly is a meme-stock? For starters, a meme is an idea or element of pop-culture that spreads and intensifies across people’s minds. As social media has increased in popularity, viral pop-culture references and trends have as well. Memes allow people to instantaneously spread videos, tweets, pictures, or posts that are humorous, interesting, or sarcastic. This in turns goes viral. Meme-stocks therefore originate on the internet, usually in sub-Reddit threads, where users work together to identify a target stock and then promote it. The goal of promoting a meme stock largely involves shorting the stock—as explained above—which means buying, holding, selling, and rebuying as prices fluctuate to turn a profit.

GameStop is not the first, and certainly not the last, stock to be traded in this fashion. But it represents an important shift in the power of social media and its ability to affect the stock market. Another example of the power meme-culture can have on real-world finances and the economy, is Dogecoin.

Dogecoin was created as satirical new currency, in a way mocking the hype around existing cryptocurrencies. But its positive reaction and bolstered interest on social media turned the joke crypto into a practical reality. This “fun” version of Bitcoin was celebrated, listed on the crypto exchange Binance, and even cryptically endorsed by Elon Musk. More recently, in 2021, cinema chain AMC announced it would accept Dogecoin in exchange for digital gift card purchases, further bolstering the credibility of this meme-originated cryptocurrency.

Tricks of the Trade, Play at Your Own Risk

Stock trading is governed by the Securities Act of 1933, which boils down to two basic objectives: (1) to require that investors receive financial and other material information concerning securities being offered for public sale; and (2) to prohibit any deceit, misrepresentations, and other fraud in the sale of securities. In order to buy, sell, or trade most securities, it must first be registered with the SEC—the primary goal of registration is to facilitate information disclosures, so investors are informed before engaging. Additionally, the Securities Exchange Act of 1934 provides the SEC with broad authority over the securities industry, to regulate, register, and oversee brokerage firms, agents, and SROs. Other regulations at play include the Investment Company Act of 1940 and the Investment Advisers Act of 1940 which regulate investment advisers and their companies, respectively. These Acts require firms and agents that receive compensation for their advising practices are registered with the SEC and adhere to certain qualifications and strict guidelines designed to promote fair, informed investment decisions.

Cryptocurrency has over the years grown from a speculative investment to a new class of assets and regulation is imminent. The Biden Administration has recently added some clarification on crypto use and its regulation through a new directive designating power to the SEC and the Commodity Futures Trading Commission (CFTC), which were already the prominent securities regulators. In the recent Ripple Labs lawsuit, the SEC began to make some strides in regulating cryptocurrency by working to classify it as a security which would bring crypt into their domain of regulation.

Consequentially, the SEC’s Office of Investor Education and Advocacy has adapted with the times and now cautions against making any investment decisions based solely off of information seen on social media platforms. Because social media has become integral to our daily lives, investors are increasingly relying and turning to it for information when deciding when, where, and on what to invest. This has increased the likelihood of scams, fraud, and other misinformation consequences. These problems can arise through fraudsters disseminating false information anonymously or impersonating someone else.

However, there is also an increasing concern with celebrity endorsements and testimonials regarding investment advice. The most common types of social media online scam schematics are impersonation and fake crypto investment advertisements.

With this rise in social media use, the laws governing investment advertisements and information are continuously developing. Regulation FD (Fair Disclosure) provides governance on the selective disclosure of information for publicly traded companies. Reg. FD prescribes that when an issuer discloses any material, nonpublic information to certain individuals or entities, they must also make a public disclosure of that information. In 2008, the SEC issued new guidance allowing information to be distributed on websites so long as shareholders, investors, and the market in general were aware it was the company’s “recognized channel of distribution.” In 2013 this was again amended to allow publishing earnings and other material information on social media, provided that investors knew to expect it there.

This clarification came in light of the controversial boast by Netflix co-founder and CEO Reed Hastings on Facebook that Netflix viewers had consumed 1 billion hours of watch time, per month. Hasting’s Facebook page had never previously disclosed performance stats and therefore investors were not on notice that this type of potentially material information, relevant to their investment decisions, would be located there. Hastings also failed to immediately remedy the situation with a public disclosure of the same information via a press release or Form 8-K filing.

In the same vein, a company’s employees may also be the target of consequence if they like or share a post, publish a third-party link, or friend certain people without permission if any of those actions could be viewed as an official endorsement or means of information dissemination.

The SEC requires that certain company information be accompanied by a disclosure or cautionary disclaimer statement. Section 17(b) of the 1933 Act, more commonly known as the Anti-Touting provision, requires any securities endorsement be accompanied by a disclosure of the “nature, source, and amount of any compensation paid, directly or indirectly, by the company in exchange for such endorsement.”

To Trade, or Not to Trade? Let Your Social Media Feed Decide

With the emergence of non-professional trading schematics and platforms like Robinhood, low-cost financial technology has brought investing to the hands of younger users. Likewise, the rise of Bitcoin and blockchain technologies in the early-to-mid 2010’s have changed the way financial firms must think about and approach new investors. The discussion of investments and information sharing that happens on these online forums creates a cesspool ripe for misinformation breeding. Social media sites are vulnerable to information problems for several reasons. For starters, which posts gain attention is not always something that can be calculated in advance—if the wrong post goes viral, hundreds to thousands to millions of users may read improper recommendations. Algorithm rabbit-holes also pose a risk to extremist views and strategically places ads further on this downward spiral.

Additionally, the presence of fake or spam-based accounts and internet trolls pose an ever more difficult problem to contain. Lastly, influencers can sway large groups of followers by mindlessly promoting or interacting with bad information or not properly disclosing required information. There are many more obvious risks associated but “herding” remains one of the largest. Jeff Kreisler, Head of Behavioral Science at J.P. Morgan & Chase explains that:

“Herding has been a common investment trap forever. Social media just makes it worse because it provides an even more distorted perception of reality. We only see what our limited network is talking about or promoting, or what news is ‘trending’ – a status that has nothing to do with value and everything to do with hype, publicity, coolness, selective presentation and other things that should have nothing to do with our investment decisions.”

This shift to a digital lifestyle and reliance on social media for information has played a key role in the information dissemination for investor decision-making. Nearly 80% of institutional investors now use social media as a part of their daily workflow. Of those, about 30% admit that information gathered on social media has in some way influenced an investment recommendation or decision and another third have maintained that because of announcements they saw on social media, they made at least one change to their investments as a direct result. In 2013, the SEC began to allow publicly traded companies to report news and earnings via their social media platforms which has resulted in an increased flow of information to investors on these platforms. Social media also now plays a large role in financial literacy for the younger generations.

The Tweet Heard Around the Market

A notable and recent example of how powerful social media warriors and internet trolls can be in relation to the success of a company’s stock came just days after Elon Musk’s acquisition of Twitter and only hours after launching his pay-for-verification Twitter Blue debacle. Insulin manufacturing company Eli Lilly saw a stark drop in their stock value after a fake parody account was created under the guise of their name and tweeted out that “insulin is now free.”

This account acting under the Twitter handle @EliLillyandCo labeled itself, bought a blue check mark, and appended the same logo as the real company to its profile making it almost indistinguishable from the real thing. Consequently, the actual Eli Lilly corporate account had to tweet out an apology “to those who have been served a misleading message from a fake Lilly account.” And clarifying that, “Our official Twitter account is @Lillypad.”

This is a perfect example for Elon Musk and other major companies and CEOs just how powerful pop-culture, meme-culture, and internet trolls are by the simple fact that this parody account casually dropped the stock of a multi-billion dollar pharmaceutical company almost 5% in the matter of a few hours and weaponized with $8 and a single tweet.

So, what does all this mean for the future of digital finance? It’s difficult to say exactly where we might be headed, but social media’s growing tether on all facets of our lives leave much up for new regulation. Consumers should be cautious when scrolling through investment-related material, and providers should be transparent with their relationships and goals in promoting any such materials. Social media is here to stay, but the regulation and use of it are still up for grabs.

I Knew I Smelled a Rat! How Derivative Works on Social Media can “Cook Up” Infringement Lawsuits

If you have spent more than 60 seconds scrolling on social media, you have undoubtably been exposed to short clips or “reels” that often reference different pop culture elements that may be protected intellectual property. While seemingly harmless, it is possible that the clips you see on various platforms are infringing on another’s copyrighted work. Oh Rats!

What Does Copyright Law Tell Us?

Copyright protection, which is codified in 17 U.S.C. §102, extends to “original works of authorship fixed in any tangible medium of expression”. It refers to your right, as the original creator, to make copies of, control, and reproduce your own original content. This applies to any created work that is reduced to a tangible medium. Some examples of copyrightable material include, but are not limited to, literary works, musical works, dramatic works, motion pictures, and sound recordings.

Additionally, one of the rights associated with a copyright holder is the right to make derivative works from your original work. Codified in 17 U.S.C. §101, a derivative work is “a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a ‘derivative work’.” This means that the copyright owner of the original work also reserves the right to make derivative works. Therefore, the owner of the copyright to the original work may bring a lawsuit against someone who creates a derivative work without permission.

Derivative Works: A Recipe for Disaster!

The issue of regulating derivative works has only intensified with the growth of cyberspace and “fandoms”. A fandom is a community or subculture of fans that’s built itself up around one specific piece of pop culture and who share a mutual bond over their enthusiasm for the source material. Fandoms can also be composed of fans that actively participate and engage with the source material through creative works, which is made easier by social media. Historically, fan works have been deemed legal under the fair use doctrine, which states that some copyrighted material can be used without legal permission for the purposes of scholarship, education, parody, or news reporting, so long as the copyrighted work is only being used to the extent necessary. Fair use can also apply to a derivative work that significantly transforms the original copyrighted work, adding a new expression, meaning, or message to the original work. So, that means that “anyone can cook”, right? …Well, not exactly! The new, derivative work cannot have an economic impact on the original copyright holder. I.e., profits cannot be “diverted to the person making the derivative work”, when the revenue could or should have gone to original copyright holder.

With the increased use of “sharing” platforms, such as TikTok, Instagram, or YouTube, it has become increasingly easier to share or distribute intellectual property via monetized accounts. Specifically, due to the large amount of content that is being consumed daily on TikTok, its users are incentivized with the ability to go “viral” instantaneity, if not overnight, as well the ability to earn money through the platform’s “Creator Fund.” The Creator Fund is paid for by the TikTok ads program, and it allows creators to get paid based on the amount of views they receive. This creates a problem because now that users are getting paid for their posts, the line is blurred between what is fair use and what is a violation of copyright law. The Copyright Act fails to address the monetization of social media accounts and how that fits neatly into a fair use analysis.

Ratatouille the Musical: Anyone Can Cook?

Back in 2020, TikTok users Blake Rouse and Emily Jacobson were the first of many to release songs based on Disney-Pixar’s 2007 film, Ratatouille. What started out as a fun trend for users to participate in, turned into a full-fledged viral project and eventual tangible creation. Big name Broadway stars including André De Shields, Wayne Brady, Adam Lambert, Mary Testa, Kevin Chamberlin, Priscilla Lopez, and Tituss Burgess all participated in the trend, and on December 9, 2020, it was announced that Ratatouille was coming to Broadway via a virtual benefit concert.

Premiered as a one-night livestream event in January 1 2021, all profits generated from the event were donated to the Entertainment Community Fund (formerly the Actors Fund), which is a non-profit organization that supports performers and workers in the arts and entertainment industry. It initially streamed in over 138 countries and raised over $1.5 million for the charity. Due to its success, an encore production was streamed on TikTok 10 days later, which raised an additional $500,000 for the fund (totaling $2 million). While this is unarguably a derivative work, the question of fair use was not addressed here because Disney lawyers were smart enough not to sue. In fact, they embraced the Ratatouille musical by releasing a statement to the Verge magazine:

“Although we do not have development plans for the title, we love when our fans engage with Disney stories. We applaud and thank all of the online theatre makers for helping to benefit The Actors Fund in this unprecedented time of need.”

Normally, Disney is EXTREMELY strict and protective over their intellectual property. However, this small change of heart has now opened a door for other TikTok creators and fandom members to create unauthorized derivative works based on others’ copyrighted material.

Too Many Cooks in the Kitchen!

Take the “Unofficial Bridgerton Musical”, for example. In July of 2022, Netflix sued content creators Abigail Barlow and Emily Bear for their unauthorized use of Netflix’s original series, Bridgerton. The Bridgerton Series on Netflix is based on the Bridgerton book series by Julia Quinn. Back in 2020, Barlow and Bear began writing and uploading songs based on the Bridgerton series to TikTok for fun. Needless to say, the videos went viral, thus prompting Barlow and Bear to release an entire musical soundtrack based on Bridgerton. They even went so far as to win the 2022 Grammy Award for Best Musical Album.

On July 26, Barlow and Bear staged a sold-out performance with tickets ranging from $29-$149 at the New York Kennedy Center, and also incorporated merchandise for sale that included the “Bridgerton” trademark. Netflix then sued, demanding an end to these for-profit performances. Interestingly enough, Netflix was allegedly initially on board with Barlow and Bear’s project. However, although Barlow and Bear’s conduct began on social media, the complaint alleges they “stretched fanfiction way past its breaking point”. According to the complaint, Netflix “offered Barlow & Bear a license that would allow them to proceed with their scheduled live performances at the Kennedy Center and Royal Albert Hall, continue distributing their album, and perform their Bridgerton-inspired songs live as part of larger programs going forward,” which Barlow and Bear refused. Netflix also alleged that the musical interfered with its own derivative work, the “Bridgerton Experience,” an in-person pop-up event that has been offered in several cities.

Unlike the Ratatouille: The Musical, which was created to raise money for a non-profit organization that benefited actors during the COVID-19 pandemic, the Unofficial Bridgerton Musical helped line the pockets of its creators, Barlow and Bear, in an effort to build an international brand for themselves. Netflix ended up privately settling the lawsuit in September of 2022.

Has the Aftermath Left a Bad Taste in IP Holder’s Mouths?

The stage has been set, and courts have yet to determine exactly how fan-made derivative works play out in a fair use analysis. New technologies only exacerbate this issue with the monetization of social media accounts and “viral” trends. At a certain point, no matter how much you want to root for the “little guy”, you have to admit when they’ve gone too far. Average “fan art” does not go so far as to derive significant profits off the original work and it is very rare that a large company will take legal action against a small content creator unless the infringement is so blatant and explicit, there is no other choice. IP law exists to protect and enforce the rights of the creators and owners that have worked hard to secure their rights. Allowing content creators to infringe in the name of “fair use” poses a dangerous threat to intellectual property law and those it serves to protect.

Tag: #SocialMedia