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The U.S. Supreme Court against a blue sky in Washington, D.C., US. Photographer: Stefani Reynolds/Bloomberg

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A legal test that Google’s lawyer told the Supreme Court was roughly “96% correct” could drastically undermine the liability shield that the company and other tech platforms have relied on for decades, according to several experts who advocate for upholding the law to the highest degree.

The so-called “Henderson test” would significantly weaken the power of Section 230 of the Communications Decency Act, several experts said in conversations and briefings following oral arguments in the case Gonzalez v. Google. Some of those who criticized Google’s concession even work for groups backed by the company.

Section 230 is the statute that protects tech platforms’ ability to host material from users — like social media posts, uploaded video and audio files, and comments — without being held legally liable for their content. It also allows platforms to moderate their services and remove posts they consider objectionable.

The law is central to the question that will be decided by the Supreme Court in the Gonzalez case, which asks whether platforms like Google’s YouTube can be held responsible for algorithmicaly recommending user posts that seem to endorse or promote terrorism.

In arguments on Tuesday, the justices seemed hesitant to issue a ruling that would overhaul Section 230.

But even if they avoid commenting on that law, they could still issue caveats that change the way it’s enforced, or clear a path for changing the law in the future.

What is the Henderson test?

One way the Supreme Court could undercut Section 230 is by endorsing the Henderson test, some advocates believe. Ironically, Google’s own lawyers may have given the court more confidence to endorse this test, if it chooses to do so.

The Henderson test came about from a November ruling by the Fourth Circuit appeals court in Henderson v. The Source for Public Data. The plaintiffs in that case sued a group of companies that collect public information about individuals, like criminal records, voting records and driving information, then put in a database that they sell to third parties. The plaintiffs alleged that the companies violated the Fair Credit Reporting Act by failing to maintain accurate information, and by providing inaccurate information to a potential employer.

A lower court ruled that Section 230 barred the claims, but the appeals court overturned that decision.

The appeals court wrote that for Section 230 protection to apply, “we require that liability attach to the defendant on account of some improper content within their publication.”

In this case, it wasn’t the content itself that was at fault, but how the company chose to present it.

The court also ruled Public Data was responsible for the content because it decided how to present it, even though the information was pulled from other sources. The court said it’s plausible that some of the information Public Data sent to one of the plaintiff’s potential employers was “inaccurate because it omitted or summarized information in a way that made it misleading.” In other words, once Public Data made changes to the information it pulled, it became an information content provider.

Should the Supreme Court endorse the Henderson ruling, it would effectively “moot Section 230,” said Jess Miers, legal advocacy counsel for Chamber of Progress, a center-left industry group that counts Google among its backers. Miers said this is because Section 230’s primary advantage is to help quickly dismiss cases against platforms that center on user posts.

“It’s a really dangerous test because, again, it encourages plaintiffs to then just plead their claims in ways that say, well, we’re not talking about how improper the content is at issue,” Miers said. “We’re talking about the way in which the service put that content together or compiled that content.”

Eric Goldman, a professor at Santa Clara University School of Law, wrote on his blog that Henderson would be a “disastrous ruling if adopted by SCOTUS.”

“It was shocking to me to see Google endorse a Henderson opinion, because it’s a dramatic narrowing of Section 230,” Goldman said at a virtual press conference hosted by Chamber of Progress after the arguments. “And to the extent that the Supreme Court takes that bait and says, ‘Henderson’s good to Google, it’s good to us,’ we will actually see a dramatic narrowing of Section 230 where plaintiffs will find lots of other opportunities to to bring cases that are based on third-party content. They’ll just say that they’re based on something other than the harm that was in the third party content itself.”

Google pointed to the parts of its brief in the Gonzalez case that discuss the Henderson test. In the brief, Google attempts to distinguish the actions of a search engine, social media site, or chat room that displays snippets of third-party information from those of a credit-reporting website, like those at issue in Henderson.

In the case of a chatroom, Google says, although the “operator supplies the organization and layout, the underlying posts are still third-party content,” meaning it would be covered by Section 230.

“By contrast, where a credit-reporting website fails to provide users with its own required statement of consumer rights, Section 230(c)(1) does not bar liability,” Google wrote. “Even if the website also publishes third-party content, the failure to summarize consumer rights and provide that information to customers is the website’s act alone.”

Google also said 230 would not apply to a website that “requires users to convey allegedly illegal preferences,” like those that would violate housing law. That’s because by “‘materially contributing to [the content’s] unlawfulness,’ the website makes that content its own and bears responsibility for it,” Google said, citing the 2008 Fair Housing Council of San Fernando Valley v. Roommates.com case.

Concerns over Google’s concession

Section 230 experts digesting the Supreme Court arguments were perplexed by Google’s lawyer’s decision to give such a full-throated endorsement of Henderson. In trying to make sense of it, several suggested it might have been a strategic decision to try to show the justices that Section 230 is not a boundless free pass for tech platforms.

But in doing so, many also felt Google went too far.

Cathy Gellis, who represented amici in a brief submitted in the case, said at the Chamber of Progress briefing that Google’s lawyer was likely looking to illustrate the line of where Section 230 does and does not apply, but “by endorsing it as broadly, it endorsed probably more than we bargained for, and certainly more than necessarily amici would have signed on for.”

Corbin Barthold, internet policy counsel at Google-backed TechFreedom, said in a separate press conference that the idea Google may have been trying to convey in supporting Henderson wasn’t necessarily bad on its own. He said they seemed to try to make the argument that even if you use a definition of publication like Henderson lays out, organizing information is inherent to what platforms do because “there’s no such thing as just like brute conveyance of information.”

But in making that argument, Barthold said, Google’s lawyer “kind of threw a hostage to fortune.”

“Because if the court then doesn’t buy the argument that Google made that there’s actually no distinction to be had here, it could go off in kind of a bad direction,” he added.

Miers speculated that Google might have seen the Henderson case as a relatively safe one to cite, given than it involves an alleged violation of the Fair Credit Reporting Act, rather than a question of a user’s social media post.

“Perhaps Google’s lawyers were looking for a way to show the court that there are limits to Section 230 immunity,” Miers said. “But I think in in doing so, that invites some pretty problematic reading readings into the Section 230 immunity test, which can have pretty irreparable results for future internet law litigation.”

WATCH: Why the Supreme Court’s Section 230 case could reshape the internet

Why the Supreme Court's Section 230 case could reshape the internet

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Affirm CEO says furloughed federal employees are starting to lose interest in shopping

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Affirm CEO says furloughed federal employees are starting to lose interest in shopping

Affirm CEO: We're not seeing a degradation in Affirm's consumer

Affirm CEO Max Levchin said Friday that while the buy now, pay later firm isn’t seeing credit stress among federally employed borrowers due to the government shutdown, there are signs of a change in shopping habits.

“We are seeing a very subtle loss of interest in shopping just for that group, and a couple of basis points,” Levchin told CNBC’s “Squawk on the Street.”

At least 670,000 federal employees have been furloughed in the shutdown, and about 730,000 are working without pay, the Bipartisan Policy Center said this week.

Levchin said he’s closely watching employment data for signs of major disruptions, but the company is “capable” of adjusting credit standards when needed.

“Right now, things are just fine,” he said. “We’re not seeing any major disturbances at all.”

The federal funding lapse, which began Oct. 1, is the longest in U.S. history and has halted work across agencies with an impact beyond those who are government employees. The SNAP food benefit program, which serves 42 million Americans, has also been cut off.

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The comments from Levchin followed a fiscal first-quarter earnings report that blew past Wall Street’s estimates. Affirm posted earnings of 23 cents per share on $933 million in revenue. Analysts polled by LSEG expected earnings of 11 cents per share on $883 million in sales.

Revenues climbed 34% from a year ago, while gross merchandise volumes jumped 42% to $10.8 billion from $7.6 billion a year ago. That surpassed Wall Street’s $10.38 billion estimate.

The fintech company, which went public in 2021, also lifted its full-year outlook, saying it now expects gross merchandise volume to hit $47.5 billion, versus prior guidance of $46 billion.

Affirm also said it renewed its partnership with Amazon through 2031. The company has also inked deals with the likes of Shopify and Apple in a competitive e-commerce landscape.

Long-time partner Walmart recently ditched Affirm for Swedish buy now, pay later firm Klarna, which went public in September after delaying its public offering due to market uncertainty caused by President Donald Trump‘s tariff plans. Worries of a pullback in discretionary spending due to tariffs ignited fears across the fintech sector.

Levchin said categories such as ticketing and travel have seen an uptick in interest, and consumer shopping remains strong. Active consumers grew to 24.1 million from 19.5 million a year ago.

“We’re every single day out there preaching the gospel of buy now, pay later being the better way to buy, and consumers are obviously responding,” he said.

Affirm shares jump 11% as transaction volume surges 42% in the quarter

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Block sinks 10% after weak third quarter results miss Wall Street estimates

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Block sinks 10% after weak third quarter results miss Wall Street estimates

Block shares drop more than 8% on quarterly miss

Block shares fell 10% Friday after weak third-quarter earnings fell short of Wall Street expectations and showed slowing profit growth for the company’s Square service.

Here is how the company did compared with LSEG estimates:

  • Earnings per share: 54 cents adjusted vs. 67 cents expected
  • Revenue: $6.11 billion vs. $6.31 billion expected

Revenue for the quarter was up 2% over last year. The Jack Dorsey-founded firm’s shares have fallen 24% year to date.

Square’s gross payment volume was up 12% year over year, but gross profit growth for the point-of-sale service was only up 9% over a year ago, slowing from last quarter’s 11%.

The company attributed the slower growth to a processing partner change and lower-margin hardware sales.

“Our product and go-to-market strategies are working as we continued to gain profitable market share in our target verticals like food and beverage, with larger sellers, and outside the U.S.,” Chief Financial Officer Amrita Ahuja said on the earnings call.

Cash App’s gross profit growth fared much better at $1.62 billion, increasing 24% over a year ago with 58 million monthly transacting active users. The strength was driven by the service’s Cash App Borrow, Cash App Card, and Buy Now Pay Later.

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Morgan Stanley analysts wrote that they were “encouraged by the pace of credit expansion at Cash App” and are focused on “whether credit expansion will ultimately produce better inflows” per active customer and increase direct deposit accounts.

Ahuja said gross profit was a bright spot for Block, as the company reported $2.66 billion in gross profit growth, up 18% over the prior year. FactSet expected $2.60 billion in gross profit for the quarter.

The company raised its full-year guidance to expect a $10.2 billion gross profit for 2025, increasing from last quarter’s projection of $10.2 billion.

Block reported net income of $461.54 million, or 74 cents per share, which was up significantly over a year ago when the company reported net income of $283.75 million, or 45 cents per share.

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Block year-to-date stock chart.

CNBC’s MacKenzie Sigalos contributed to this report.

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Archer tanks 12% after air taxi maker sells additional 85 million shares, buys LA-area airport

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Archer tanks 12% after air taxi maker sells additional 85 million shares, buys LA-area airport

Courtesy: Archer Aviation

Archer Aviation‘s stock plummeted 12% after a share sale overshadowed a narrower-than-expected third-quarter loss.

The company posted a net loss $129.9 million, narrower than the FactSet estimate of a $178.6 million loss.

However, Archer disclosed a $650 million stock offering for 81.25 million shares to support its $126 million acquisition of Hawthorne Airport in Los Angeles as a hub for air taxi operations there. Archer was chosen as the official air taxi provider for the 2028 Olympics in Los Angeles.

The move would dilute the value of the stock for existing shareholders. The weighted average for Archer shares outstanding has grown to about 660.9 million from 397.5 million a year ago.

Interest in electric aircraft makers has picked up in recent months as major players have edged closer to certification. Earlier this week, Beta Technologies went public on the NYSE.

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Archer, like its competitors, is taking major steps toward achieving Federal Aviation Administration certification, a key approval needed to fly commercially.

In September, Archer said its Midnight aircraft reached a record altitude of 7,000 feet. The milestone came about a month after the company achieved its longest piloted flight.

Archer has bet big on building and deploying air taxis in the United Arab Emirates as competitor Joby Aviation teams up with Saudi Arabia.

For the current quarter, Archer said it expects a loss between $110 million and $140 million for adjusted earnings before interest, taxes, depreciation and amortization, a loss of $125 million at the midpoint. Analysts expected a loss of $119.9 million, according to FactSet.

Earlier this week, Joby Aviation reported a wider-than-expected third-quarter loss. Shares have slumped 20% over the last week, while Archer has lost nearly a third of its value. Both companies have more than doubled in value over the last year.

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Archer Aviation and Joby Aviation year-to-date stock chart.

Beta Technologies CEO: Here's how our aircrafts differentiate from competitors

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