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People walk past a billboard advertisement for YouTube on September 27, 2019 in Berlin, Germany.

Sean Gallup | Getty Images

The Department of Justice warned the Supreme Court against an overly broad interpretation of a law shielding social media companies from liability for what users post on their platforms, a position that undermines Google’s defense in a case that could reshape the role of content moderation on digital platforms.

In a brief filed Wednesday led by DOJ Acting Solicitor General Brian Fletcher, the agency said the Supreme Court should vacate an appeals court ruling that found Section 230 of the Communications Decency Act protected Google from being liable under U.S. antiterrorism law.

Section 230 allows for online platforms to engage in good-faith content moderation while shielding them from being held responsible for their users’ posts. Tech platforms argue it’s a critical protection, especially for smaller platforms that could otherwise face costly legal battles since the nature of social media platforms makes it difficult to quickly catch every harmful post.

But the law has been a hot-button issue in Congress as lawmakers on both sides of the aisle argue the liability shield should be drastically limited. But while many Republicans believe the content moderation allowances of the law should be trimmed down to reduce what they allege is censorship of conservative voices, many Democrats instead take issue with how the law can protect platforms that host misinformation and hate speech.

The Supreme Court case known as Gonzalez v. Google was brought by family members of American citizen Nohemi Gonzalez, who was killed in a 2015 terrorist attack for which ISIS claimed responsibility. The suit alleges Google’s YouTube did not adequately stop ISIS from distributing content on the video-sharing site to aid its propaganda and recruitment efforts.

The plaintiffs pursued charges against Google under the Antiterrorism Act of 1990, which allows U.S. nationals injured by terrorism to seek damages. The law was updated in 2016 to add secondary civil liability to “any person who aids and abets, by knowingly providing substantial assistance” to “an act of international terrorism.”

Gonzalez’s family claims YouTube did not do enough to prevent ISIS from using its platform to spread its message. They allege that even though YouTube has policies against terrorist content, it failed to adequately monitor the platform or block ISIS from using it.

Both the district and appeals courts agreed that Section 230 protects Google from liability for hosting the content.

Though it did not take a position on whether Google should ultimately be found liable, the DOJ recommended the appeals court ruling be vacated and returned to the lower court for further review. The agency argued that while Section 230 would bar the plaintiffs’ claims based on YouTube’s alleged failure to block ISIS videos from its site, “the statute does not bar claims based on YouTube’s alleged targeted recommendations of ISIS content.”

The DOJ argued the appeals court was correct to find Section 230 shielded YouTube from liability for allowing ISIS-affiliated users to post videos since it did not act as a publisher by editing or creating the videos. But, it said, the claims about “YouTube’s use of algorithms and related features to recommend ISIS content require a different analysis.” The DOJ said the appeals court did not adequately consider whether the plaintiffs’ claims could merit liability under that theory and as a result, the Supreme Court should return the case to the appeals court so it can do so.

“Through the years, YouTube has invested in technology, teams, and policies to identify and remove extremist content,” Google spokesperson José Castañeda said in a statement. “We regularly work with law enforcement, other platforms, and civil society to share intelligence and best practices. Undercutting Section 230 would make it harder, not easier, to combat harmful content — making the internet less safe and less helpful for all of us.”

Chamber of Progress, an industry group that counts Google as one of its corporate partners, warned the DOJ’s brief invites a dangerous precedent.

“The Solicitor General’s stance would hinder platforms’ ability to recommend facts over lies, help over harm, and empathy over hate,” Chamber of Progress CEO Adam Kovacevich said in a statement. “If the Supreme Court rules for Gonzalez, platforms wouldn’t be able to recommend help for those considering self-harm, reproductive health information for women considering abortions, and accurate election information for people who want to vote. This would unleash a flood of lawsuits from trolls and haters unhappy about the platforms’ efforts to create safe, healthy online communities.”

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Ether falls 7% following a multimillion dollar hack of a decentralized finance protocol

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Ether falls 7% following a multimillion dollar hack of a decentralized finance protocol

Representation of Ethereum, with its native cryptocurrency ether.

Dado Ruvic | Reuters

Ether fell as much as 9% on Monday, slipping below its critical $3,600 support level, shortly after a multimillion dollar hack affected a protocol on the token’s native network. 

The cryptocurrency, which is issued on Ethereum, was last down 6.6% at around $3,600, CoinMetrics data shows. That’s roughly 25% off its high of $4,885 hit on August 22

The coin’s tumble came after Ethereum-based decentralized finance protocol Balancer on Monday lost possibly more than $100 million in a hack. The exploit marks the latest in a series of bearish events that have put digital assets investors on tenterhooks over the past few weeks.

In mid-October, U.S. President Donald Trump announced “massive” tariffs on China over its restriction of rare earth exports, kicking off investors’ flight from crypto to risk-off assets such as gold. And although the president later walked back that threat, his comments sparked a sell-off that triggered cascading liquidations of highly leveraged digital asset positions

Last week, Federal Reserve Chair Jerome Powell cautioned investors about expecting future rate cuts, adding to existing bearish market sentiment.     

“These events have put investors on uneasy footing as we roll into November,” Juan Leon, senior investment strategist at Bitwise, told CNBC. “Macro volatility notwithstanding, this October’s drawdown appears to have been a healthy, albeit sharp, de-leveraging event that flushed speculative excess from the market.”

Some stocks linked to digital assets are also coming under pressure. Coinbase shares were down nearly 4%, while Bitcoin treasury firm Strategy edged down more than 1%.   

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Nvidia adds nearly $100B in market cap in a matter of days. Here is what’s going right

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Nvidia adds nearly 0B in market cap in a matter of days. Here is what's going right

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Lambda, Microsoft agree to multibillion-dollar AI infrastructure deal with Nvidia chips

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Lambda, Microsoft agree to multibillion-dollar AI infrastructure deal with Nvidia chips

In this photo illustration, a person is holding a smartphone with the logo of US GPU hardware company Lambda Inc. (Lambda Labs) on screen in front of website.

Timon Schneider | SOPA Images | AP

Cloud computing startup Lambda announced on Monday a multibillion-dollar deal with Microsoft for artificial intelligence infrastructure powered by tens of thousands of Nvidia chips.

The agreement comes as Lambda benefits from surging consumer demand for AI-powered services, including AI chatbots and assistants, CEO Stephen Balaban told CNBC’s “Money Movers” on Monday.

“We’re in the middle of probably the largest technology buildout that we’ve ever seen,” Balaban said. “The industry is going really well right now, and there’s just a lot of people who are using ChatGPT and Claude and the different AI services that are out there.”

Balaban said the partnership will continue the two companies’ long-term relationship, which goes back to 2018.

A specific dollar amount was not disclosed in the deal announcement.

Read more CNBC tech news

Founded in 2012, Lambda provides cloud services and software for training and deploying AI models, servicing over 200 thousand developers, and also rents out servers powered by Nvidia’s graphics processing units.

The new infrastructure with Microsoft will include the NVIDIA GB300 NVL72 systems, which are also deployed by hyperscaler CoreWeave, according to a release.

“We love Nvidia’s product,” Balaban said. “They have the best accelerator product on the market.”

The company has dozens of data centers and is planning to continue not only leasing data centers but also constructing its own infrastructure as well, Balaban said.

Earlier in October, Lambda announced plans to open an AI factory in Kansas City in 2026. The site is expected to launch with 24 megawatts of capacity with the potential to scale up to over 100 MW.

OpenAI signs $38B deal with Amazon: Here's what to know

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