Sometime quite soon, your member of Congress will vote to destroy the Internet, or not. Inc.com counts itself among the many enterprises that would rather Congress chooses “not.”
As they return from their holiday break, both chambers of Congress are rushing to vote on bills designed to thwart online piracy of intellectual property. The Senate Judiciary Committee already approved its version, S. 968, known as the Protect IP Act (PIPA), and Majority Leader Henry Reid has scheduled a floor vote for January 24, the day the Senate returns. (Senator Ron Wyden has threatened to filibuster, but supporters may not have much trouble rounding up votes to overturn his efforts.)
The House, meanwhile, is on hold for debate on its version, the Stop Online Piracy Act (SOPA), H.R. 3261. Both bills aim to ostracize sites that market pirated goods and services—a worthy cause that enjoys considerable bipartisan support, as it should. Needless to say, the bills are also lovingly endorsed by big media lobbies like the RIAA and the MPAA, which happen to outspend tech lobbyists by a factor of six.
The problem is, both bills are loaded with potentially dangerous unintended consequences for the fast growing tech companies that are the heart of innovation and employment in this economy. Once a copyright holder fingers a site for carrying pirated content, the House bill, for example, requires internet service providers to block U.S. access to the site, payment processors to cut off their transactions, and ad networks to stop promoting them. In short, the site would soon be out of business.
The sweeping nature of those remedies scares online content companies ranging from Google to Twitter to Wikipedia, and it has united online entrepreneurs ranging from Sergey Brin to Reid Hoffman to Marc Andreesen in opposition. (Most recently Rackspace and GoDaddy have added their voices.) Opponents also include conservative think tanks like Cato Institute and the Heritage Foundation, which oppose the bills on free-speech grounds, a whole other issue.
There are three commercial problems with the proposed interference with the Web.
1. The law would potentially threaten any Web-based company that included user-supplied content. After all, some fraction of user-generated content could infringe copyrights without the Web-company’s knowledge. Declan McCullogh has been following the progress of the bills at CNET.com, and maintains a continuously updated FAQ post. This excerpt captures the concern about the chilling effect the law would have on start-ups:
According to reddit co-founder Alexis Ohanian, [reddit] wouldn’t exist if SOPA had been law when he and his colleagues thought to build the site. “The story of reddit […] simply could not have happened in a world with this bill,” said Ohanian in a video posted toYouTube. “And it’s not just reddit, it’s every single other social media site out there that will be threatened by this bill.”
House Judiciary Committee chairman Lamar Smith, the bill’s author, says such fears are overblown. The bill targets foreign “rogue” sites and requires a copyright holder to get a court order from the Justice Department before cutting it off. Sites that don’t profit from knock-off goods or pirated content, he says, have no worries.
And that may be true—as long as copyright trolls and the government never abuse the powers granted by the bill, and as long as venture capital is not scared off by the threat that such over-reaching might one day occur. Unfortunately, the record of such restraint isn’t encouraging, as Cato’s Julian Sanchez documents.
2. The burden of unintended consequences falls most heavily on small companies. Major online content providers have the legal resources to do battle with nuisance claims of copyright infringement. Small companies don’t. As the Electronic Frontier Foundation’s Corynne McSherry told Inc.com’s Lindsay Blakely in this post:
The [accused] website has five days to figure out how to respond before it's cut off. If you’re YouTube, you have the resources, lawyers, and wherewithal to fight back. Now imagine you're an everyday start-up that’s just getting off the ground. You don’t want to spend your money on lawyers; you need to spend it developing the technology that’s going to make you succeed.
3. Cutting off access to the URLs of rogue sites messes with online security protocols, raising unknown risks for any site that relies on e-commerce. Without going too deep into the technical details, a new online protocol called DNSSEC helps insure that online bad guys can’t hijack customers’ connection to their intended websites in order to steal passwords, say. SOPA would encourage internet service providers to break that protocol, which opens up a many potential cans of worms. Allan Friedman of the Brookings Institutions explains why:
Those seeking infringing content have always responded to legal and technical countermeasures by shifting their habits. From Napster to Kazaa to LimeWire to BitTorrent to illegal streaming websites, users adapt by the millions….It would be incredibly naïve to expect [any response to SOPA’s blocking of offending sites] other than attempts to evade DNS blocking, and using DNS servers outside the U.S. is the easiest path…This introduces huge risks to American Internet users. These [foreign] DNS servers can sit as the “man-in-the-middle” on all Internet transactions, allowing the possible compromise of almost any transaction.
Let’s be clear: There is nothing wrong with trying to block access to sites that traffic in stolen property. But Congress’s attempt to starve the pirates is likely to have an unforeseen impact on small companies’ ability to operate in reasonable fashion, to raise capital and to conduct secure online transactions. You can be sure that Congress has at best an imperfect understanding of the laws’ potential side effects. Clearly, more deliberation is in order. The Web is going to be around for a while. What’s the rush?