Supreme Court justices in Google case express hesitation about upending Section 230
People wait in line outside the US Supreme Court in Washington, DC, on February 21, 2023 to hear oral arguments in two cases that test Section 230, the law that provides tech companies a legal shield over what their users post online.
Jim Watson | AFP | Getty Images
Supreme Court Justices voiced hesitation on Tuesday about upending a key legal shield that protects tech companies from liability for their users’ posts, and for how the companies moderate messages on their sites.
Justices across the ideological spectrum expressed concern with breaking the delicate balance set by Section 230 of the Communications Decency Act as they rule on the pivotal case, Gonzalez v. Google, even as some suggested a narrower reading of the liability shield could sometimes make sense.
The current case was brought by the family of an American killed in a 2015 terrorist attack in Paris. The petitioners argue that Google, through its subsidiary YouTube, violated the Anti-Terrorism Act by aiding and abetting ISIS, as it promoted the group’s videos through its recommendation algorithm. Lower courts sided with Google, saying Section 230 protects the company from being held liable for third-party content posted on its service.
The petitioners contend that YouTube’s recommendations actually constitute the company’s own speech, which would fall outside the bounds of the liability shield.
But the justices struggled to understand where the petitioner’s counsel, Eric Schnapper, was drawing the line on what counts as content created by YouTube itself.
Conservative Justice Samuel Alito at one point said he was “completely confused” by the distinction Schnapper tried to draw between YouTube’s own speech and that of a third party.
Schnapper repeatedly pointed to the thumbnail image YouTube shows users to display what video is coming up next, or is suggested based on their views. He said that thumbnail was a joint creation between YouTube and the third party that posted the video, in this case ISIS, because YouTube contributes the URL.
But several justices questioned whether that argument would apply to any attempt to organize information from the internet, including a search engine results page. They expressed concern that such a broad interpretation could have far-reaching effects the high court may not be prepared to predict.
Conservative Justice Brett Kavanaugh noted that courts have applied Section 230 consistently since its inception in the 1990s and pointed to the amici briefs that warned overhauling that interpretation would cause massive economic consequences for many businesses, as well as their workers, consumers and investors. Kavanaugh said those are “serious concerns” Congress could consider if it sought to rework the statute. But the Supreme Court, he said, is “not equipped to account for that.”
“You’re asking us right now to make a very precise predictive judgment that ‘Don’t worry, that it’s really not going to be that bad,'” Kavanaugh told U.S. Deputy Solicitor General Malcolm Stewart, who was arguing the high court should send the case back to the lower court for further consideration. “I don’t know that that’s at all the case. And I don’t know how we can assess that in any meaningful way.”
When Stewart suggested that Congress could amend 230 to account for changes in the reality of the internet today, Chief Justice John Roberts pushed back, noting “the amici suggests that if we wait for Congress to make that choice, the internet will be sunk.”
Even conservative Justice Clarence Thomas, who has openly written that the court should take up a case around Section 230, seemed skeptical of the petitioners’ line in the sand. Thomas noted that YouTube uses the same algorithm to recommend ISIS videos to users interested in that kind of content, as it uses to promote cooking videos to those interested in that subject. Plus, he said, he sees those as suggestions, not affirmative recommendations.
“I don’t understand how a neutral suggestion about something that you’ve expressed an interest in is aiding and abetting,” Thomas said.
The justices had tough questions for Google too, wondering if the liability protections are quite as broad as the tech industry would like to believe. Liberal Justice Ketanji Brown Jackson, for example, had a long back and forth with Lisa Blatt, counsel arguing on behalf of Google, about whether YouTube would be protected by Section 230 in the hypothetical scenario in which the company promotes an ISIS video on its homepage in a box marked “featured.”
Blatt said publishing a homepage is inherent to operating a website so should be covered by Section 230, and that organization is a core function of platforms, so if topic headings can’t be covered, the statute basically becomes a “dead letter.”
Liberal Justice Elena Kagan suggested it’s not necessary to agree completely with Google’s assessment of the fallout from altering 230 to fear the potential consequences.
“I don’t have to accept all of Ms. Blatt’s ‘the sky is falling’ stuff to accept something about, ‘Boy, there’s a lot of uncertainty about going the way you would have us go,’ in part just because of the difficulty of drawing lines in this area,” Kagan told Schnapper, adding the job may be better suited for Congress.
“We’re a court, we really don’t know about these things,” Kagan said. “These are not like the nine greatest experts on the internet.”
Section 230 proponents are optimistic
Several experts rooting for Google’s success in this case said they were more optimistic after the arguments than before at a press conference convened by Chamber of Progress, a center-left industry group that Google and other major tech platforms support.
Cathy Gellis is an independent attorney in the San Francisco Bay Area who filed an amicus brief on behalf of a person running a Mastodon server, as well as a Google-funded startup advocacy group and a digital think tank. She told CNBC that briefs like hers and others seemed to have a big impact on the court.
“It would appear that if nothing else, amicus counsel, not just myself, but my other colleagues, may have saved the day because it was evident that the justices took a lot of those lessons on board,” Gellis said.
“And it appeared overall that there was not a huge appetite to upend the internet, especially on a case that I believe for them looked rather weak from a plaintiff’s point of view.”
Still, Eric Goldman, a professor at Santa Clara University School of Law, said while he felt more optimistic on the outcome of the Gonzalez case, he remains concerned for the future of Section 230.
“I remain petrified that the opinion is going to put all of us in an unexpected circumstance,” Goldman said.
On Wednesday, the justices will hear a similar case with a different legal question.
In Twitter v. Taamneh, the justices will similarly consider whether Twitter can be held liable for aiding and abetting under the Anti-Terrorism Act. But in this case, the focus is on whether Twitter’s decision to regularly remove terrorist posts means it had knowledge of such messages on its platform and should have taken more aggressive action against them.
Conservative Justice Amy Coney Barrett asked Schnapper how the decision in that case could impact the one in the Google matter. Schnapper said if the court ruled against Taamneh, the Gonzalez counsel should be given the chance to amend their arguments in a way that fits the standard set in the other case.
The C3.ai logo is seen near a computer motherboard in this illustration taken on Jan. 8, 2024.
Dado Ruvic | Reuters
Shares of the enterprise artificial intelligence company C3 AI fell 14% in extended trading on Wednesday after it announced fiscal first-quarter results and the appointment of Stephen Ehikian as its new CEO.
C3 AI reported $70.3 million in revenue for the quarter, down from $87.2 million during the same period last year. The company’s GAAP net loss widened to an 86-cent loss from a 50-cent loss a year ago.
Ehikian is a long-time tech executive who built two companies that were both acquired by Salesforce, C3 AI said. C3 AI said Ehikian assumed the new role on Sept. 1.
C3 AI kicked off a search for a new chief executive in July after its former CEO, Thomas Siebel revealed that he was diagnosed with an autoimmune disease earlier this year that resulted in “significant visual impairment.”
“C3 AI is one of the most important companies in the AI landscape and enterprise software, with a platform and applications that are unmatched,” Ehikian said. “I am confident that we will be able to capture an increasing share of the immense market opportunity in Enterprise AI.”
The company has had a rocky few months since Siebel’s diagnosis.
Shares plunged in August after C3 AI announced disappointing preliminary financial results and a restructuring of its global sales and services organization.
Siebel said in an August statement that sales results during the quarter were “completely unacceptable.” He attributed the performance to the “disruptive effect” of the reorganization, as well as his ongoing health issues.
Marc Benioff, co-founder and CEO of Salesforce, sits for an interview in San Francisco on April 25, 2025.
David Paul Morris | Bloomberg | Getty Images
Salesforce issued disappointing guidance on Wednesday, even as earnings and revenue topped estimates for the fiscal second quarter. The stock dropped 4% in extended trading.
Here’s how the company did in comparison with LSEG consensus:
- Earnings per share: $2.91 adjusted vs. $2.78 expected
- Revenue: $10.24 billion vs. $10.14 billion expected
Revenue increased 10% from $9.33 billion a year earlier, according to a statement. Net income rose to $1.89 billion, or $1.96 per share, from $1.43 billion, or $1.47 per share, a year ago.
For the fiscal third quarter, management called for $2.84 to $2.86 in adjusted earnings per share on $10.24 billion to $10.29 billion in revenue. Analysts polled by LSEG had been looking for $2.85 per share on $10.29 billion in revenue.
Salesforce maintained its full-year revenue outlook but now sees higher earnings. The company is targeting $11.33 to $11.37 in adjusted earnings per share on $41.1 billion to $41.3 billion in revenue. The consensus estimate from LSEG was $11.31 in earnings per share and $41.2 billion in revenue. The forecast in May included $11.27 to $11.33 in adjusted earnings per share.
Salesforce has fallen out of favor on Wall Street this year due to an extended stretch of meager revenue growth, which has been stuck in the single digits since mid-2024. While the company regularly touts its investments in artificial intelligence and the advancements in its software and systems, it hasn’t been lifted by the AI boom in the same way as many of its tech peers.
Going into Wednesday’s report, Salesforce was down 23% for the year, lagging behind all but one stock in the Dow and trailing all other large-cap tech companies.
The ratio of Salesforce’s enterprise value to its free cash flow has reached a 10-year low because of fears of disruption from AI, according to analysts at Jefferies, who have a buy rating on the stock. Salesforce is trying to counter the pressure by selling its Agentforce AI software that can automate the handling of customer service questions.
During the fiscal second quarter, Salesforce said it was planning to increase the cost of some products and announced its intent to acquire data management software company Informatica for $8 billion.
Executives will discuss the results with analysts on a conference call starting at 5 p.m. ET.
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Dylan Field, co-founder and CEO of Figma, center, appears on the floor of the New York Stock Exchange in New York on July 31, 2025. Figma Inc. shares surged as much as 229% after the design software maker and some of its shareholders raised $1.2 billion in an IPO, with the trading valuing the company far above the $20 billion mark it would have reached in a now-scrapped merger with Adobe Inc.
Michael Nagle | Bloomberg | Getty Images
Figma shares plunged 13% in extended trading on Wednesday after the design software company reported results for the first time since its IPO in July.
Here’s how the company did in comparison with LSEG consensus:
- Earnings per share: breakeven
- Revenue: $249.6 million vs. $248.8 million expected
Revenue increased 41% year over year in the second quarter from $177.2 million a year earlier, Figma said in a statement. The company provided a preliminary estimate of $247 million to $250 million in a July regulatory filing. CNBC isn’t including a profit estimate because it’s Figma’s first earnings report.
Net income totaled $846,000, compared with a loss of $827.9 million in the second quarter of 2024. The company’s adjusted operating income came to $11.5 million, after Figma provided a prior estimate of $9 million to $12 million.
For the third quarter, Figma forecast revenue of between $263 million and $265 million, which would represent about 33% growth at the middle of the range. The LSEG consensus was $256.8 million.
The company sees between $88 million and $98 million in adjusted operating income for the full year and a little over $1.02 billion in revenue. The revenue range implies about 37% growth and is above the $1.01 billion LSEG consensus.
Last year, Figma picked up more revenue from customers as it sold them access to Dev Mode, which helps software developers to implement designs that designers create in the company’s software. That momentum is putting a damper on revenue growth for the third quarter, Figma co-founder and CEO Dylan Field said in an interview.
In the second quarter, Figma announced Figma Make, which uses artificial intelligence to compose app and website designs based on a user’s descriptions, and Figma Sites, which turns designs into working websites. The company also acquired vector graphics startup Modyfi and content management system startup Payload.
Figma has yet to start fully charging for AI products, but says it has built the underlying costs into its model. The company is not providing a forecast for third-quarter adjusted operating income.
A number of software vendors have faced pressure this year due to concerns surrounding AI and whether it will displace business. Field said he’s not seeing that play out internally and that, if anything, the role of designers will only become more critical.
“I think that the more that software becomes easier to build with AI, the more that people are going to see that that human touch is needed,” Field said. He acknowledged that Figma has been adopting so-called vibe-coding tools for AI-driven software development.
Figma reported a 129% net retention rate, a reflection of expansion with existing customers. The figure was down from 132% in the first quarter.
Following its IPO, Figma expects a share sale lockup to expire for 25% some employees’ stock after market close on Sept. 4. Investors holding just over half of Figma’s outstanding Class A stock have agreed to an extended lock-up that will expire in August 2026 for about 35% of their shares.
Field said he wanted to provide clarity for investors.
“That’s something that I think is valuable information,” he said.
On Wednesday the company’s stock closed at $68.13. The company priced shares in its IPO at $33, and saw the stock pop to $115.50 in its debut.
Executives will discuss the second-quarter results with analysts on a conference call starting at 5 p.m. ET.
This is breaking news. Please check back for updates.
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