How an obscure legal doctrine called the Henderson test could weaken Section 230 and change free speech on the internet
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
Technology
Disney making $1 billion investment in OpenAI, will allow characters on Sora AI video generator
The Walt Disney Company on Thursday announced it will make a $1 billion equity investment in OpenAI and will allow users to make videos with its copyrighted characters on its Sora app.
OpenAI launched Sora in September, and it allows users to create short videos by simply typing in a prompt.
As part of the startup’s new three-year licensing agreement with Disney, Sora users will be able make content with more than 200 characters across Disney, Marvel, Pixar and Star Wars starting next year.
“The rapid advancement of artificial intelligence marks an important moment for our industry, and through this collaboration with OpenAI we will thoughtfully and responsibly extend the reach of our storytelling through generative AI, while respecting and protecting creators and their works,” Disney CEO Bob Iger said in a statement.
Tune in at 10:30 a.m. ET as Disney CEO Bob Iger and OpenAI CEO Sam Altman joins CNBC TV to discuss the media giant’s investment. Watch in real time on CNBC+ or the CNBC Pro stream.
As part of the agreement, Disney said it will receive warrants to purchase additional equity and will become a major OpenAI customer.
Disney is deploying OpenAI’s chatbot ChatGPT to its employees and will work with its technology to build new tools and experiences, according to a release.
When Sora launched this fall, the app rocketed to the top of Apple’s App Store and generated a storm of controversy as users flooded the platform with videos of popular brands and characters.
The Motion Picture Association said in October that OpenAI needed to take “immediate and decisive action” to prevent copyright infringement on Sora.
OpenAI CEO Sam Altman said more “granular control” over character generation was coming, according to a blog post following the launch.
As AI startups have rapidly changed the way that people can interact with content online, media companies, including Disney, have kicked off a series of fresh legal battles to try and protect their intellectual property.
Disney sent a cease and desist letter to Google late on Wednesday alleging the company infringed its copyrights on a “massive scale.” In the letter, which was viewed by CNBC, Disney said Google has been using its copyrighted works to train models and distributing copies of its protected content without authorization.
Universal and Disney have sued the AI image creator Midjourney, alleging that the company improperly used and distributed AI-generated characters from their movies. Disney also sent a cease and desist letter to Character.AI in September, warning the startup to stop using its copyrighted characters without authorization.
Disney’s deal with OpenAI suggests the company isn’t ruling out AI platforms entirely.
The companies said they have affirmed a commitment to the use of AI that “protects user safety and the rights of creators” and “respects the creative industries,” according to the release.
OpenAI has also agreed to maintain “robust controls” to prevent illegal or harmful content from being generated on its platforms.
Some of the characters available through the deal include Mickey Mouse, Ariel, Cinderella, Iron Man and Darth Vader. Disney and OpenAI said the agreement does not include any talent likeness or voices.
Users will also be able to draw from the same intellectual property while using ChatGPT Images, where they can use natural language prompts to create images.
“Disney is the global gold standard for storytelling, and we’re excited to partner to allow Sora and ChatGPT Images to expand the way people create and experience great content,” Altman said in a statement.
Curated selections of Sora videos will also be available to watch on Disney’s streaming platform Disney+.
WATCH: We tested OpenAI’s Sora 2 AI-video app to find out why Hollywood is worried
Technology
Goldman Sachs leads investment in software delivery startup Harness at $5.5 billion valuation
Jyoti Bansal, co-founder and CEO of Harness, speaks at the company’s Unscripted conference in London on Sept. 25, 2025.
Harness
Almost nine years ago, Jyoti Bansal sold AppDynamics to Cisco for $3.7 billion just as the software startup was set to go public.
Bansal’s latest venture, Harness, is now worth substantially more than that, after raking in $200 million in fresh capital at a $5.5 billion valuation in a funding round led by Goldman Sachs.
Harness’ technology helps companies manage and monitor code that’s produced with the help of artificial intelligence, making sure it doesn’t break, create security vulnerabilities or trigger cost overruns. It’s a compliment to the so-called vibe coding trend that’s taken off with the boom in generative AI.
In recent months, venture capitalists have poured money into startups such as Cursor, Lovable and most recently Kilo Code that sell subscriptions for tools for directing AI models to write and update software. Harness’ software draws on models from Anthropic and OpenAI.
Earlier this year, Bansal bolstered Harness’ cybersecurity chops by merging the startup with Traceable, another company he co-founded. The combined company, based in San Francisco, has a total of about 1,300 employees.
Harness is on track to exceed its goal of more than $250 million in annualized revenue, growing more than 50% year over year, Bansal said. That makes it larger than AppDynamics at the time it was acquired by Cisco.
Bansal is aiming for a different outcome this time.
“I’m a believer that at the right market timing, we want to operate as a public company, so we can build for the long term,” Bansal said.
In addition to the funding round, Harness is also planning a $40 million tender offer to provide some liquidity to long-standing employees.
WATCH: ‘Vibe-coding’s’ evil twin? How AI ‘vibe-hacking’ is upending cyber security
Technology
Esusu, platform for renters to build credit scores, valued at $1.2 billion in new funding round
Esusu, a fintech platform that helps renters build credit scores, has raised $50 million in a Series C funding round at a $1.2 billion valuation.
Renters have remained largely excluded from the traditional credit system, with an estimated $1.4 trillion paid to landlords every year in the U.S., but only 20% of those landlords choosing to report the rent paid. As a result, millions of reliable renters remain in a category referred to as the “credit invisible.”
“110 million people in America rent … and less than 10% of that data shows up on their credit score,” said Esusu co-founder and CEO Wemimo Abbey in an interview on CNBC’s “Worldwide Exchange” on Thursday. “When people pay rent, we make sure it shows up in their credit score,” he said.
While on-time mortgage payments are known to increase one’s credit score, many renters don’t have any history of credit. Esusu reports on time rent payments to credit bureaus so renters can build their scores. Over 50 million Americans lack a credit history with the three major credit bureaus: Experian, Equifax and TransUnion.
The company says $30 billion in mortgages has already been accessed by renters who use its system.
“Esusu is fundamentally reshaping how the financial system can work for everyone,” Sean Mendy, partner at Westbound Equity Partners and a lead investor in the deal, said in a statement. “When people are given the tools to rise, they do.”
Esusu was ranked No. 49 on CNBC’s 2025 Disruptor 50 list.
Esusu partners with 65% of the largest commercial real estate owners and property managers in the U.S., as well as with banks. Since its launch in 2016, its platform has grown to support more than five million rental units nationwide, reaching about 12 million renters and processing nearly $100 billion in annual lease volume. Landlords that use its technology include Bell Partners, BH Management, Blackstone, Cortland, Invitation Homes, Jonathan Rose Companies, Kayne Anderson, Morgan Properties, Nuveen Real Estate, Pretium, Related Companies, TruAmerica, and WinnCompanies.
The fintech company plans to use the new funding to expand three initiatives. It will broaden distribution of its rent reporting API through what it calls “rent reporting as a service.” Among recent partners for this initiative, Esusu technology now reaches 228 million monthly active users through real estate platform Zillow. The company also plans to launch Esusu Pay in 2026, which will allow renters to split monthly rent into installments.
Esusu will also focus on the opportunity to make rental data a more prominent feature in mortgage underwriting. The Federal Housing Finance Agency has formalized the inclusion of rental data in mortgage underwriting, which will required verified rental and identity data. Esusu acquired identity verification firm Celeri early this year. Esusu already has partnerships with Fannie Mae and Freddie Mac to increase the number of units nationally that report rent as part of credit.
Esusu founders Abbey and Samir Goel grew up watching their families struggle financially as immigrants from Lagos, Nigeria, and New Delhi, India, respectively, which was a founding motivation for Esusu. “When we came here, we didn’t have a credit score. We went to one of the biggest financial institutions to borrow money; we were turned away and had to go borrow from a predatory lender who wanted to lend at over 400% interest rate,” Abbey told CNBC in a June 2025 interview. “My mother sold my dad’s wedding ring. We borrowed money from church members and that’s how we got started.”
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