Case Summary and Outcome

A District Court in Seattle, the United States dismissed a social media platform’s application for a preliminary injunction to prevent its web hosting service suspending those services. After the riots at the US Capitol in January 2021, the web hosting service informed the social media platform that it had breached the service level agreement and acceptable use policy by not taking action against posts on the platform which incited violence. The social media platform then approached the Court, arguing that by suspending the service the web hosting service had, inter alia, breached the contract between them. The Court held that the social media platform had failed to meet the requirements for a preliminary injunction, and emphasized that it was in the public interest to not privilege abusive and harmful social media content over contractual obligations.

Facts

On January 6, 2021, supporters of outgoing US President Donald Trump marched to the US Capitol, causing a violent riot. Shortly thereafter President Trump was indefinitely suspended from the social media platforms Facebook and Twitter and many users moved from Twitter to the online social media platform Parler “in speculative anticipation of Trump’s move to Parler” [p. 4]. On January 9, 2021, Amazon Web Services (AWS) – a company of Amazon.com, Inc. which offers “computing services for businesses, nonprofits, and government organizations globally” informed Parler that it would be suspending its services, on the grounds that Parler’s failure to address posts which “encouraged violence” infringed AWS’s Acceptable Use Policy [p. 3]. The email AWS sent to Parler noted its concern with Parler’s process in complying with the AWS terms of service and that – because of the Capitol riot – “there is a serious risk that this type of content will further incite violence” [p. 4]. It had added that Parler’s inability to comply with the terms of service “poses a very real risk to public safety” [p. 4]. Although Parler informed AWS that it acknowledged that there was a backlog of 26 000 objectionable posts due to a 355% increase in users downloading the app, AWS suspended its service to Parler on January 10, 2021. At the time, Parler’s then-CEO John Matze, claimed that the online platform had 15 million users and that its app was being downloaded a million times a day [p. 2].

Parler was founded in 2018, describing itself as “a conservative microblogging alternative and competitor to Twitter” [p. 3]. In June 2018, Parler entered into a Customer Services Agreement (the Agreement) with AWS for AWS to provide cloud computing services to Parler which would enable it to “function on the internet” [p. 3]. It was during the 2020 presidential election that Parler saw an exponential increase in its online traffic as “millions of users” left twitter and joined Parler’s platform instead [p. 3]. AWS claimed it received reports that Parler’s users were using the platform to post material that “encouraged and incited violence” and that Parler had failed to adequately monitor its platform and moderate these posts [p.3]. AWS informed Parler on multiple occasions that the content posted on its app violated the Agreement, as well as AWS’s Acceptable Use Policy. The Acceptable Use Policy forbids “‘illegal, harmful, or offensive’ use or content, defined as content ‘that is defamatory, obscene, abusive, invasive of privacy, or otherwise objectionable.’” [p.3]. Parler accepted that the posts infringed the policy, but believed that it had satisfied AWS that it was attempting “to address content moderation challenges” and that AWS would cooperate in those efforts [p. 4]. AWS believed, however, that despite their repeated engagements, Parler had failed to respond to these concerns in a “timely or adequate manner.” [p.3].

On January 11, 2021, Parler filed an application for a Temporary Restraining Order before the US District Court for the Western Court of Washington, requesting that the Court prohibit AWS from suspending its services. During the court proceedings the parties agreed to convert the motion into one for a preliminary injunction instead.

Decision Overview

U.S. District Court Judge, Barbara Jacobs Rothstein, handed down the order. The central issue for the Court’s determination was whether Parler had met the burden of proving the elements for a preliminary injunction: the case did not concern any alleged violation of Parler’s First Amendment rights because First Amendment rights may only be exercised against a governmental entity and not against a private company such as AWS.

Parler made three claims against AWS: for “conspiracy in restraint of trade, in violation of the Sherman Act, 15 U.S.C. § 1”; for breach of contract; and for “tortious interference with business expectancy” [p. 1]. Section 1 of the Sherman Act prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce”. In respect of the Sherman Act claim, Parler submitted that AWS and Twitter had acted together “to reduce competition in the microblogging services market to the benefit of Twitter” [p. 6], and that AWS had provided preferential treatment to Twitter by not suspending services to Twitter, despite similar posts. Parler also submitted that AWS had breached its contract by suspending the service without “providing Parler 30 days to cure any alleged material breach” [p. 8]. Parler argued that they would experience irreparable harm if the injunction was not granted because it would be “entirely unable to function online” if AWS continued with its suspension of services and that AWS’s actions amounted to a “direct blow to its mission and reputation, and [has] caused a loss of user loyalty, advertising revenue, and the ability to raise capital” [p.11]. Parler submitted that it was in the public interest that there is consistent enforcement of contractual obligations and fair market competition

AWS submitted that it had made no agreement with Twitter and that it simply could not have provided preferential treatment to Twitter because it did not provide storage services to Twitter. AWS maintained that Parler had breached the Agreement which required that Parler ensure that its users not infringe its Acceptable Use Policy. It added that reinstating its services to Parler would lead to the continuation of more abusive and potentially violent (unmoderated) content which was likely to “pose a risk to public safety”, and so was not in the public interest [p.12].

The Court identified the four elements a plaintiff needs to demonstrate for a preliminary injunction to be granted in its favor: 1) that it is likely to succeed on the merits; 2) that it is likely to suffer irreparable harm in the absence of preliminary relief; 3) that the balance of equities tips in its favor; and 4) that an injunction serves the public interest. [p.5]. It assessed each of these four elements on their own, applying Parler’s three claims to them one-by-one.

In assessing Parler’s likelihood of success on the merits on the Sherman Act claim, the Court noted that Parler would have to demonstrate “(1) the existence of an agreement, and (2) that the agreement was in unreasonable restraint of trade” [p.6]. The Court held that the evidence provided by Parler of any interaction between Twitter and AWS was “dwindlingly slight”, and was refuted by AWS. It noted that the AWS executive explicitly denied the existence of an agreement to collude with Twitter against Parler stating that “[t]o my knowledge, AWS and Twitter have never discussed, much less agreed upon, any policy, practice, or act directed at Parler” [p.7]. Accordingly, the Court held that Parler had failed to demonstrate the likelihood of success on this claim. In respect of the breach of contract claim, the Court noted that the Agreement stated that AWS was entitled to “terminate the Agreement ‘immediately upon notice’ and without providing any opportunity to cure” if Parler was in breach of the Agreement [p. 9]. As a result, the Court held the Parler had not demonstrated a likelihood of success on the breach of contract claim. The Court noted that for Parler to succeed in a “tortious interference” claim it would have to demonstrate that there was an additional contractual relationship, that AWS knew of that relationship and intentionally interfered for an improper purpose or used improper means, and that Parler suffered damage. The Court held that Parler had “failed to raise more than the scantest speculation that AWS’s actions were taken for an improper purpose or by improper means” and that Parler had therefore failed to demonstrate a likelihood of success [p. 10].

Although the Court noted that the “likelihood of success” inquiry is a threshold one – and that, therefore, once a court has determined that a plaintiff has failed to satisfy that element it need not assess the other elements – the Court did address the other three elements. The Court examined whether there would be irreparable injury if the preliminary injunction was not granted, and noted that Parler’s admission that an award of damages would compensate much of the harm they may suffer “substantially diminished” their claim under this leg of the inquiry [p. 11]. In assessing where the balance of hardships lay, the Court found that AWS had “convincingly argued” that an inability to suspend Parler’s services would “interfere with AWS’s ability to prevent its services from being used to promote—and, as the events of January 6, 2021 have demonstrated, even cause—violence” [p. 12]. Accordingly, the Court held that it was not the case that the balance “sharply tipped in Parler’s favor” [p. 12]. The Court weighed up the parties’ arguments on how the public interest is best served, and concluded that, given that Parler had failed to demonstrate a likelihood of succeeding on the merits of its breach of contract claim at this point in the proceedings, it was unlikely that granting the injunction would weigh in the interest of the public. Furthermore, in light of the riots at the U.S. Capitol, the Court explicitly rejected any notion that the balance of equities and the public interest would favor abusive and violent content over the enforcement of a contractual obligation.

The Court stressed that courts must treat preliminary injunctions as an extraordinary remedy and held that Parler had failed to meet the standard for a preliminary injunction on all three of its claims. It added that this denial of the preliminary injunction has no bearing on the substance of Parler’s claims and whether those claims would be successful in subsequent litigation on the merits of the claims, and highlighted that although this case calls attention to the increasingly complex relationship between online media and tech companies and therefore has underlying implications for the right to freedom of expression this motion for preliminary injunction did not assert a violation of any First Amendment rights.