Court Upholds N.Y. Law Mandating Platforms Post Terms of Service and Report How Content Moderation Policies Have Been Enforced

The [challenged] Act … it requires a “social media company” to “post terms of service for each social media platform owned or operated by the company in a manner reasonably designed to inform all users of the social media platform of the existence and contents of the terms of service.” X Corp. refers to this requirement as the “Terms of Service Requirement.” Under the Terms of Service Requirement, the “terms of service” publicly posted must “include … contact information for the purpose of allowing users to ask the social media company questions about the terms of service; a description of the process that users must follow to flag content, groups, or other users that they believe violate the terms of service, and the social media company’s commitments on response and resolution time; and a list of potential actions the social media company may take against an item of content or a user.” …

[T]he Act [also] requires social-media companies to semiannually “submit” to New York’s “attorney general a terms of service report,” which X Corp. refers to as the “Terms of Service Report.” The Terms of Service Report, which the “attorney general shall make … available to the public in a searchable repository on its official internet website,” must include several items, such as a platform’s “current version of the terms of service” and “a complete and detailed description of any changes to the terms of service since the previous report.” X Corp. takes aim at only some of the items to be included in the Terms of Service Report. It calls those items the “Content Category Report Provisions.”

Under the Content Category Report Provisions, the Terms of Service Report must include:

[c] A statement of whether the current version of the terms of service defines each of the following categories of content, and, if so, the definitions of those categories, including any subcategories:
[i] hate speech or racism;
[ii] extremism or radicalization;
[iii] disinformation or misinformation;
[iv] harassment; and/or
[v] foreign political interference.

[d] A detailed description of content moderation practices used by the social media company for that platform, including, but not limited to, …
[i] any existing policies intended to address the categories of content described in paragraph (c) of this subdivision ….

[e][i] Information on content that was flagged by the social media company as content belonging to any of the categories described in paragraph (c) of this subdivision, including all of the following:
[A] the total number of flagged items of content;
[B] the total number of actioned items of content;
[C] the total number of actioned items of content that resulted in action taken by the social media company against the user or group of users responsible for the content;
[D] the total number of actioned items of content that were removed, demonetized, or deprioritized by the social media company;
[E] the number of times actioned items of content were viewed or heard by users;
[F] the number of times actioned items of content were shared, and the number of users that viewed or heard the content before it was actioned; and
[G] the number of times users appealed social media company actions taken on that platform and the number of reversals of social media company actions on appeal disaggregated by each type of action.

And in the Terms of Service Report, “[a]ll information required by” Section 1102(1)(e)(i) “shall be disaggregated … ” [by, among other things, the categories such as hate speech, disinformation, etc.]

Central to the parties’ dispute is whether what is known as “Zauderer scrutiny” applies, under which “regulations requiring commercial disclosure of purely factual and uncontroversial information about the terms [through] which services will be available may survive constitutional scrutiny if they are reasonably related to the State’s interest in preventing deception of consumers and are not unjustified or unduly burdensome.” Zauderer scrutiny, the Second Circuit recently explained, “is more relaxed than ordinary intermediate or strict scrutiny.” That is because the “mandated disclosure of accurate, factual, commercial information does not offend the core First Amendment values of promoting efficient exchange of information or protecting individual liberty interests,” and instead “promotes” and “[p]rotect[s]” the “robust and free flow of accurate information” animating the First Amendment. “In such a case, then, less exacting scrutiny is required” than intermediate or strict scrutiny….

Zauderer scrutiny “applies to regulations on commercial speech that require” a speaker to “state purely factual and uncontroversial information about the goods or services the speaker may offer.” … “[W]hile the core notion of commercial speech is speech which does no more than propose a commercial transaction,” even speech which does not itself propose a commercial transaction may still be deemed commercial “based upon a number of factors, including whether the speech is an advertisement, whether the speech references a specific product, and whether the speaker has an economic motive.” …

[T]he disclosure of information “in connection with a proposed commercial transaction” is “clearly commercial speech.” For instance, disclosing a fast-food item’s calorie content “in connection with” that item’s “sale” is commercial speech. So too with disclosing to “consumer debtors … basic information about bankruptcy” when dealing with “a debt relief agency providing bankruptcy assistance.” And in the social-media context, the Second Circuit has explained, the disclosure of “content moderation policies” is sufficiently connected to “the terms of the commercial transaction between the platforms and users” to be commercial speech. By contrast, a social-media company’s “opinions about and reasons for those policies” are not commercial speech….

[T]he Content Category Report Provisions simply require the disclosure of parts of X Corp.’s content-moderation policies …. The Content Category Report Provisions require a “statement of whether the current version of the terms of service defines” content categories like hate speech, racism, disinformation, or misinformation at all, and “if so,” what the company’s “definitions of those categories” are. On its face, then, Section 1102(1)(c) does not require a platform to affirmatively define these terms if it does not already have a definition, nor does the provision require a platform to explain the reasons for, or otherwise opine on, any definition it may have…. The Content Category Report Provisions further require a “detailed description of content moderation practices” including “any existing policies intended to address” those categories. Here, too, this provision just requires disclosing existing policies, not the reasons for or opinions about those policies…. [And] if X Corp. “does not currently have existing policies for moderating” certain content categories “based on” X Corp.’s “own understandings of these terms,” X Corp. “can comply” with the Content Category Report Provisions “by simply disclosing that no content was flagged or actioned falling into these categories.”

Indeed, as X Corp. freely admits in its Complaint, the Content Category Report Provisions do “not force X [Corp.] to adopt and regulate” content categories like “‘hate speech,’ ‘racism,’ ‘extremism,’ ‘misinformation,’ or ‘disinformation.'” They merely “requir[e] public disclosure of the content-moderation policies” it already “adhere[s] to.” Simply put, X Corp. “can adopt whatever policies [it] choose[s],” including none at all; under the Content Category Report Provisions, X Corp. “just ha[s] to disclose” any policies it adopts….

Because the Content Category Report Provisions “regulat[e] … commercial speech,” for Zauderer scrutiny to apply, they must also “require” X Corp. to “state purely factual and uncontroversial information” about its “services.” …

The disclosures here are purely factual: the Content Category Report Provisions “merely require[] social media networks to publicly disclose their content moderation policies, whatever those policies may be, and contain[] no requirement that those policies … specifically address” any particular content categories “as defined by the statute.” In other words, disclosing “content moderation policies require[s] only that social media networks make certain truthful statements concerning information material to the consumer.” …

Such disclosure is also uncontroversial. Although X Corp.’s content-moderation “policies themselves might be controversial, the fact that they are what they are is not.” The Content Category Report Provisions care not a whit about whether, let alone how, a social-media company actually regulates content categories like hate speech, racism, or extremism. Because they are “truly agnostic about the substance of the content moderation policy, social media networks are not required to adopt any particular policy or to address any particular category of speech—unless the[ networks] want to.”

X Corp. challenges this premise. It complains that any disclosure would “generate public controversy,” “invariably leav[ing] some set of users dissatisfied,” meaning that the Content Category Report Provisions “presuppose[]” that the compelled disclosures are “controversial.” But this complaint turns the Zauderer framework on its head: the exact same could be said of any compelled commercial disclosure. When facing the menu board at Burger King, a consumer may be shocked at how many calories are in a Whopper, and seek the Sweetgreen next door; a different consumer, hoping to fill up for the day, may wish for more calories, and head to Kentucky Fried Chicken for an eight-piece bucket; still a third may find the Whopper just right. None of that means that disclosing the number of calories in a Whopper is controversial….

Because Zauderer scrutiny applies, the Content Category Report Provisions “pass constitutional muster if reasonably related to the State’s interest in preventing deception of consumers,” or “its equivalent, the non-disclosure of information material to the consumer,” and “are not unjustified or unduly burdensome.” They satisfy this standard. “[C]ompelling disclosure of content moderation policies without any requirements as to the scope or content of those policies … ensure[s] that users are fully informed about the terms of their engagement with a social media network, enabling them to make more informed choices about where they spend their screen time and how to interpret the content they find on a given social media network.” …