April 11, 2019 at 5:00 am ET
Ben Carson, the secretary for the Department of Housing and Urban Development, recently sued Facebook for failing to show certain housing ads to all 218 million Americans who use Facebook. Rather than just prosecuting the advertisers who placed the ads, Carson wants to hold Facebook liable for discrimination in how these advertisers directed their ads to be shown.
Discrimination in housing is against the law. But why would HUD prosecute platforms — rather than the landlords and realtors who discriminated when placing their ads? That’s a legally tenuous tactic that just distracts from that actual problems of discrimination. If upheld, HUD’s prosecution of Facebook would let the actual discriminators off the hook, while penalizing an innovative American company and its users.
Legal Issues with HUD’s Complaint
HUD alleges that Facebook “[made] or caused to be made . . . advertisement[s] with respect to the sale or rental of a dwelling which indicate[d] . . . preference[s], limitation[s] or discrimination because of race, color, religion, sex, handicap, familial status, or national origin” in violation of 24 C.F.R. § 100.75.
This shows that Carson and HUD don’t really understand how online ads work.
Ads submitted are not individually approved, as they may be in magazines, newspapers and on TV. Instead, Facebook’s algorithms match submitted ads with categories of users that meet the advertiser’s targeted audience.
What if Facebook owned actual bulletin boards that were displayed in coffee shops, restaurants, and bars all over the country? If an apartment owner placed their ads on bulletin boards in predominantly white neighborhoods, we’d hold the apartment owner accountable for discrimination — not the bulletin board owner. Facebook’s systems operate the same way, so Carson has no basis to prosecute Facebook. HUD should be looking at whether advertisers are targeting their ads in a discriminatory way.
HUD also claims that Facebook breaks the law by allowing advertisers to select who does and doesn’t see their ads. When an advertiser tells Facebook not to display its ads to certain demographic audiences, HUD accuses Facebook of “refusing to publish” the ad.
HUD’s next claim is that Facebook charges advertisers based on the quantity and characteristics of users who see the ads. But Facebook ad pricing is determined by actual performance of ads, measured by how many Facebook users viewed and engaged with the ad in their news feed.
Finally, HUD says Facebook is liable for tolerating housing discrimination — even if only by third-party advertisers unrelated to Facebook. But back in the 1990s, Congress anticipated this situation by enacting Section 230 of the Communications Decency Act, known as “Twenty-six words that created the internet.” This law expressly says “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” So it’s hard to see how HUD has a case.
Section 230 had it right. Holding platforms liable for actions of others would create intolerable legal risks for platforms we rely on every day. Yelp wouldn’t be able to host negative reviews of restaurants. Patreon wouldn’t be able to host innovators’ ideas. And it’s hard to see how YouTube would allow us to freely post our videos. And it misdirects prosecutors away from actors and actions that our anti-discrimination laws intended to target.
HUD’s lawsuit portrays all targeted advertising as harmful discrimination, whereas many targeted ads obviously benefit minority communities and protected classes. For example, nonprofits providing low-cost health services should be allowed to target ads to the most vulnerable communities. And entertainment content by and for minority communities, such as BET and PinkNews, should be allowed to target ads to their desired audiences. But if HUD restricts targeted advertising that can limit the ability of any organization or business to reach the communities they serve.
Platforms, however, should do more to avoid enabling advertisers to practice illegal discrimination in categories like housing and financial services. Facebook, for example, will soon require advertisers in these categories to verify their compliance with discrimination laws.
HUD’s case is legally tenuous and the impact of their prosecution could harm the very communities HUD aims to help. Carson should steer HUD’s legal scrutiny towards those who discriminate, instead of targeting platforms that enable services to target minority communities.
Steve DelBianco is president and CEO of eCommerce trade association NetChoice.
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