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Utah lawmakers are using tax threats to force social media companies to the negotiating table

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Legislators are working on a proposal to regulate social media despite legal hurdles.

(Francisco Kjolseth | The Salt Lake Tribune) Senator Mike McKell, R-Spanish Fork, is pushing for bill to regulate how social media moderates content, but these companies refused to negotiate with him.

When Governor Spencer Cox vetoed a controversial social media regulation bill passed by Utah lawmakers earlier this year, it was done with an understanding that these social media companies were making good faith discussions about their moderation and user prohibition practices.

That didn’t happen and lawmakers are clearly frustrated by the lack of communication.

In the 2021 session, lawmakers narrowly approved SB228, which sought to protect Utah users from “unfair” moderation practices by social media companies.

Bill’s sponsor, Senator Mike McKell, R-Spanish Fork, suggested that social media companies clearly describe their moderation practices and notify Utah account holders if something they posted was removed and why. The proposal also required an appeal process for users whose content had been removed and fined $ 1,000 per instance if the Utah Attorney General decided to take action.

Despite several warnings from industry groups and experts that the proposal violated federal law and the first amendment, the bill was only passed to veto Cox on “technical grounds”.

“When we agreed to this veto, we were told these companies would come to the table,” said Senator Curt Bramble, R-Provo. “They’ve had crickets ever since.”

Bramble decided it was time to trade carrots for legislative chopsticks.

Social media companies enjoy extensive state protection for content posted on their platforms. However, this protection does not extend to state taxes.

“The state has the power to tax different business models differently. And if that tax were nominal, maybe 130% of their gross government revenue, I think that would get their attention, ”Bramble said during the hearing last week. “We could do it 150%.”

According to Bramble, this threat had the desired effect.

“Since that meeting, every lobbyist from all of these companies has reached out to me to ask me to sit down and discuss this,” Bramble said with a chuckle.

The question remains what, if anything, the legislature can do with online content.

Conservatives have long complained that despite evidence to the contrary, social media platforms are biased against their political views. The issue came to the fore after the 2020 elections when former President Donald Trump was banned from almost every online platform for making unsubstantiated claims that the election was fraudulent and incited to violence among his supporters.

Section 230 of the Communications Decency Act gives social media platforms a lot of leeway in dealing with user-generated content. It also protects these platforms from legal liability regarding what users post. Any regulations Utah seeks to impose on platforms would be overridden by existing federal law.

The First Amendment protects individuals and businesses from government regulations on most speeches, which is another major hurdle for lawmakers when trying to legislate.

Several other Republican-controlled states proposed or enacted laws to crack down on social media companies following Trump’s ban. Florida passed law preventing social media companies from banning political candidates. This law was blocked in court.

Mississippi, North Dakota and West Virginia have considered allowing individuals to sue if they are censored on social media. Iowa lawmakers are considering withholding tax credits for social media companies that censor users.

There is hope among Utah lawmakers that they can find a solution that meets the legal requirements and can live with the social media company.

McKell says there had been some preliminary talks during the American Legislative Exchange Council conference earlier this summer in Salt Lake City, but there has been no progress since then.

“There were some commitments to come up with some solutions. These solutions have not yet been presented at this point, ”said McKell. “We have to keep working on this.”

McKell pointed to a recent article in the Wall Street Journal that revealed that Facebook has a secret moderation system that exempts some high-profile users from moderation practices, as evidence that the company is engaging in unfair practices that warrant state regulation.

McKell says he will keep working on the proposal with the aim of getting a bill to the committee in November.

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