FTC to Bloggers: Drop that Sample!

The Federal Trade Commission has announced plans to regulate the behavior of bloggers.  Unfortunately, not their terrible grammar, short attention spans or inexplicably short fuses.

Instead, the FTC announced updates to its 1980 policy regarding endorsements and testimonials, first developed to reign in the use of celebrity endorsers with no real connection or experience with products they claimed to use and adore.

The proposed changes require bloggers who recommend products or services to disclose when they have a “material connection” to the provider—that is, that they were paid to write positive reviews or given freebies to encourage them to do so.  (The FTC, of course, is limited to activities in the U.S.)

You might think bloggers would be flattered to be put in the same category as celebrities, but no.  The response has been universal outrage, as noted by Santa Clara University Law Professor Eric Goldman in his detailed analysis of the proposed changes. (The complete FTC report is available here, but it is 81 pages of mostly mush.)

The principal objection is that the changes, which take effect December 1st, continues to exempt journalists in traditional media but not those in what the agency quaintly refers to as “new media”—that is, those whose content appears online, whether in blogs, social networking, email, or other electronic communications.  While professional journalists can be trusted to speak truthfully about products even when they are provided sample or review copies, bloggers cannot.

L. Gordon Crovitz’s column in today’s Wall Street Journal nicely dismantles the faulty reasoning in the Commission’s analysis.  Moreover, Eric Goldman’s post (cited above) argues persuasively that the one example the FTC gives of a violation of the policy as applied to bloggers is directly at odds with Section 230 of the Communications Act, which provides broad immunity to third parties for content posted by someone else through any Internet service.  So it may be that the proposed change is pre-empted by the broad and sensible provisions of Section 230, which creates a wide breathing space for interactive communications to develop. (The FTC makes no mention of Section 230 in its report.)

To me, in any event, this is a classic problem of the poor fit between traditional legal systems and rapidly-evolving new information technologies.  Legal change, as I write in The Laws of Disruption, relies heavily on the process of “reasoning by analogy.”  When confronted with new situations, lawmakers, regulators and judges will look for analogous situations elsewhere in the law and apply the rules that most closely match the new circumstances.

In times of radical transformation at the hands of disruptive technologies, however, reasoning by analogy is a terrible way to develop a  body of law for new activities. Bloggers are not like journalists and they are not like celebrity endorsers.  They are like bloggers—a new form of communication, still very much in its early stages of development, that uses new technology to engage in a new kind of conversation.

No old rule, extended and mangled until it is unrecognizable, is likely to fit the new situation.  And rather than try to guess at a new rule, regulators should fight their natural tendencies and just wait.  For now, the Web has been developing a variety of self-correcting mechanisms and reputational metrics that may do an effective and efficient job of policing abuses of the trust between bloggers and their readers.  Sorry folks, but we may not need the FTC and its cumbersome enforcement mechanisms to save the day this time.

What’s more, the risk of applying ill-considered old-world regulations to new situations is that regulations (even if lightly or not at all enforced) will retard, skew, or otherwise chill the development of new ways of interacting at the heart of digital life.

That doesn’t seem to worry the FTC.   “[C]ommenters who expressed concerns about the future of these new media if the Guides were applied to them,” they say, “did not submit any evidence supporting their concerns.”

Let’s turn that objection around to the right direction.

The FTC did not submit any evidence of a problem that needs to be solved, or of their ability to solve it.