Double Trouble: EU Court Ruled Facebook Can Be Forced To Remove Illegal Content As Corporate Support For Its Crypto Currency Falters

These two events are connected by a fundamental and growing lack of trust in Facebook.

This is especially true of its management whose response to criticism appears to have been one of superficial gestures overlaying a deeper contempt for national governments and supranational organizations. What goes around comes around. JL



AnnaMaria Andriotis and Peter Rudegeair report in the Wall Street Journal and Adam Satariano reports in the New York Times:

Europe’s top court said an individual country can order Facebook to take down posts, photographs and videos and restrict global access to that material. Visa, Mastercard. and other financial partners that signed on to help build and maintain the Libra payments network are reconsidering their involvement following a backlash from U.S. and European government officials.
Wall Street Journal - Cracks are forming in the coalition Facebook Inc. FB -0.11% assembled to build a global cryptocurrency-based payments network.
Visa Inc., Mastercard Inc. MA -1.44% and other financial partners that signed on to help build and maintain the Libra payments network are reconsidering their involvement following a backlash from U.S. and European government officials, according to people familiar with the matter. Wary of attracting regulatory scrutiny, executives of some of Libra’s backers have declined Facebook’s requests to publicly support the project, the people said.

Their reluctance has Facebook scrambling to keep Libra on track. Policy executives from Libra’s more than two dozen backers—a group called the Libra Association—have been summoned to a meeting in Washington, D.C., on Thursday, according to people familiar with the matter.
On Oct. 14, representatives from the companies are slated to meet in Geneva to review a charter for the Libra Association and appoint a board of directors, according to a memo reviewed by The Wall Street Journal.
Major defections could imperil Libra, Facebook’s attempt to persuade consumers to swap their national currencies for a digital coin that could be used to pay for goods and services on the internet. Without a network of financial partners that could help transfer currencies into Libra and global retailers to accept it as a form of payment, Libra’s reach would be limited.
When it unveiled the project in June, Facebook said Libra could change the entire financial system, giving consumers a new way to move money across borders. The project’s backers saw the payments-network effort as a long-shot way to profit on Facebook’s 2.4 billion monthly active users.
After watching popular social-media company Tencent Holdings Ltd. come to dominate the market for Chinese digital payments with WeChat Pay, some payments companies agreed to take part in Libra to avoid missing out on the next big thing.
Facebook, which worked in secret for more than a year to develop Libra, has broad ambitions for the project as part of a shift away from its nearly complete reliance on targeted advertising. Facebook Chief Executive Mark Zuckerberg is steering the social-media company to more private and encrypted communications, and Libra could offer a means of providing financial services through those channels.
In announcing the project in June, the company said it hoped to provide basic financial services to people around the world who lack bank accounts and to save some of the $25 billion “lost by migrants every year through remittance fees.”
Some analysts have been bullish that Libra could help Facebook diversify its revenue base and potentially transform the digital consumer economy over the long term. Yet government officials and central bankers were quick to criticize the project, citing concerns about how the network would protect users’ privacy and prevent criminals from using it to launder money.
David Marcus, the Facebook executive in charge of the project, endured two days of tongue-lashings from members of Congress over the summer for the lack of details about how the new cryptocurrency would work as well as the company’s past missteps on data privacy. Federal Reserve Chairman Jerome Powell told legislators he had “serious concerns” about Libra and the company’s timetable of launching it next year.
Privately, U.S. regulators have leaned on Libra’s backers. The Treasury Department sent letters to companies including Visa, Mastercard, PayPal Holdings Inc. PYPL -0.92% and Stripe Inc. asking for a complete overview of their money-laundering compliance programs and how Libra will fit into them, people familiar with the matter said.
Dante Disparte, head of policy and communications at the Libra Association, said in an email that the group has held regular meetings with regulators and policy makers to discuss conforming to anti-money-laundering laws and preventing terrorism financing.
Libra Association members, meanwhile, have been pressing Facebook for more information. They have asked Mr. Marcus and other Facebook executives how illegal activities such as money laundering and terrorist financing would be kept off Libra and haven’t received detailed answers, one of the people said.
Mr. Marcus said on Twitter on Tuesday evening that it was “categorically untrue” that detailed information about how to protect the Libra network from illegal activity wasn’t shared.
“I can tell you that we’re very calmly, and confidently working through the legitimate concerns that Libra has raised by bringing conversations about the value of digital currencies to the forefront,” Mr. Marcus said.
It is unclear how many of the initial Libra Association members ultimately will commit to the network. So far, association members have signed nonbinding letters of intent, and they haven’t yet handed over the $10 million that Facebook requested from each member to fund the creation of the digital coin and build out the payments network, people familiar with the matter said.
“It’s important to understand the facts here and not any of us get out ahead of ourselves,” Visa Chief Executive Al Kelly said on the company’s earnings conference call in July. “No one has yet officially joined.”

New York Times

Europe’s top court said on Thursday that an individual country can order Facebook to take down posts, photographs and videos and restrict global access to that material, in a ruling that has implications for how countries can expand content bans beyond their borders.

The European Court of Justice’s decision came after a former Austrian politician sought to have Facebook remove disparaging comments about her that had been posted on an individual’s personal page, as well as “equivalent” messages posted by others. The politician, Eva Glawischnig-Piesczek, a former leader of Austria’s Green Party, argued that Facebook needed to delete the material in the country and limit worldwide access.

The decision is a blow to big internet platforms like Facebook, placing more responsibility on them to patrol their sites for content ruled illegal.

The case has been closely watched because of its potential ripple effects for regulating internet content. The enforcement of defamation, libel and privacy laws varies from country to country, with language and behavior that is allowed in one nation prohibited in another. The court’s decision highlights the difficulty of creating uniform standards to govern an inherently borderless web and then enforcing them.

Facebook and other critics had warned, before the decision, that letting a single nation force an internet platform to delete material elsewhere would limit free speech. Implementing such a global ban would likely require the use of automated content filters, which civil society groups and others have cautioned could lead to the takedown of legitimate material because filters cannot detect nuances used in satire and some political commentary.

Opponents had also argued that allowing the removal of an original post and then expanding that ban to posts considered “equivalent” added some potential for unintended consequences.

Supporters counter that defamation laws haven’t been enforced appropriately in the internet age and are needed to force platforms like Facebook to do more to combat internet trolls, hate speech and other personal attacks that spread on the web.

Facebook sharply criticized the ruling. “This judgment raises critical questions around freedom of expression and the role that internet companies should play in monitoring, interpreting and removing speech that might be illegal in any particular country,” the company said in a statement.

“It undermines the longstanding principle that one country does not have the right to impose its laws on speech on another country. It also opens the door to obligations being imposed on internet companies to proactively monitor content and then interpret if it is ‘equivalent’ to content that has been found to be illegal.”

Ms. Glawischnig-Piesczek did not respond to requests for comment.

The decision highlights a widening gap between the United States and Europe on regulating the technology industry. Europe has imposed tougher policies on privacy, antitrust, copyright and content moderation, while the United States has traditionally had a more hands-off approach.

Yet as Europe has enacted tougher policies, courts are being asked to clarify their reach, including if Facebook, Google and other platforms must apply the rules beyond the borders of the 28-nation European Union.

Last week, the European Court of Justice limited the reach of the privacy law known as the “right to be forgotten,” which allows European citizens to demand Google remove links to sensitive personal data from search results. The court said Google could not be ordered to remove links to websites globally, except in certain circumstances when weighed against the rights to free expression and the public’s right to information

On Thursday, the Luxembourg-based court turned its attention to the reach of European defamation laws. It ruled that a national court of a European Union country could order Facebook to remove posts considered defamatory in regions beyond its jurisdiction.

The decision should not be expected to lead to a flood of orders against Facebook to take down content globally, said David Erdos, deputy director of the Center for Intellectual Property and Information Law at Cambridge University. The opinion was narrowly crafted, he said, and urged national courts to weigh any bans carefully against international laws.

“Courts will be feeling their way for years to come,” he said.

The difference between today’s decision and last week’s ruling limiting the reach of the right to be forgotten is that an Austrian court had specifically found, within its decision, that the offensive comments toward Ms. Glawischnig-Piesczek were illegal.

The court on Thursday said that while Facebook wasn’t liable for the disparaging comments posted about Ms. Glawischnig-Piesczek, it had an obligation to take down the posts after a court ruled them defamatory. Facebook, the court said, “did not act expeditiously to remove or to disable access to that information.”

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“The key thing about this case is what preventive measures can be imposed on Facebook,” said Martin Husovec, an assistant law professor at Tilburg University’s Institute for Law, Technology and Society in the Netherlands.

The court’s decision cannot be appealed.

Ben Wagner, director of the Privacy and Sustainable Computing Lab at Vienna University, said the case raises broad concerns about restricting political speech. Although the court wasn’t ruling on whether the comments made against Ms. Glawischnig-Piesczek were defamatory, Mr. Wagner said the decision undermined freedom of speech given that she is a public figure.

“We’re talking about a politician who is being insulted in a political context, that’s very different than a normal citizen.” he said. “There needs to be a greater scope for freedom of opinion and expression.”

Facebook has long said it is an impartial platform and argued that it should not be held legally responsible for material posted by its more than 2 billion users. Yet with increased scrutiny from policymakers around the world, the social network has taken steps to limit hate speech and extremism on its site. Last month, it appointed an 11-member oversight board to review content decisions.

The European Court of Justice decision was rooted in events from 2016, when a Facebook user in Austria posted a link to a news article about immigration that included comments calling Ms. Glawischnig-Piesczek a “lousy traitor of the people,” a “corrupt oaf” and member of a “fascist party.”

Facebook initially refused demands to remove the material. In many countries the comments would be considered acceptable, if vulgar, political speech.

Ms. Glawischnig-Piesczek successfully sued Facebook in Austrian courts, which concluded the comments were intended to damage her reputation. She also demanded that Facebook remove posts that were similar in tone to the original insults.

The Austrian Supreme Court referred the case to the European Court of Justice.