Content Regulation / Censorship, Defamation / Reputation, Political Expression
The Case of Sarawak Report and Malaysia Insider
Closed Mixed Outcome
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The United States Court of Appeals for the Fourth Circuit affirmed a ruling by the Maryland District Court declaring unconstitutional the content-based regulation on speech under Maryland’s Online Electioneering Transparency and Accountability Act, 2018. The Act, which regulated paid ads relating to a candidate or ballot question posted on online platforms operating in Maryland, was passed to prevent instances of foreign meddling in domestic elections in the US such as the Russian campaign to influence the 2016 Presidential contest. The Court held that despite the admirable goals that the Act sought to advance, it was laced with several First Amendment infirmities and did little to further its chief objective of combating foreign meddling in the state’s elections. In particular, it found the requirement to disclose the identity of the advertiser and the cost of placing the ad to constitute compelled political speech that infringed on editorial control. The Court further declined to decide whether strict or exacting scrutiny should apply to a disclosure law such as the one in question in the present case, and held that the law was unconstitutional even under the more permissive exact scrutiny standard.
In January 2017, revelations that Russia exploited social media to sway public opinion and sow discord in the United States made headlines, after a declassified report representing the joint findings of the Central Intelligence Agency (CIA), Federal Bureau of Investigation (FBI) and National Security Agency (NSA) was released. Among other things, the report concluded that President Putin had ordered operations to ‘undermine public faith in the US democratic process’ and damage democratic nominee chances in the 2016 Presidential elections. By using tactics like online trolling, sophisticated cyber espionage and industrial grade hacking, the campaign sought to spread disinformation and disparage candidates the Russian government disfavored. Maryland was among the top three targeted states in 2016.
In response, a number of States including Maryland sought to update their election transparency laws that aimed at thwarting foreign interference in its elections. Maryland resolved to combat foreign meddling by passing the Online Electioneering Transparency and Accountability Act in May 2018. The Act made two changes in its existing law: (i) broadening the disclosure and recordkeeping requirements to include online advertisements, and (ii) extending campaign finance laws to include, for the first time, ‘online platforms’. An online platform was defined to include any public website that receives money for political ads and reaches a circulation of 100,000 unique visitors on monthly basis. For the first part, the Act required online platforms to disclose the purchaser’s identity and amount paid within 48 hours of the publication. The platform must also compile records (subject to inspection) that include (1) the subject of the ad (candidate or ballot issue), (2) dates and times the ad was first disseminated and last disseminated, (3) geographic locations where the ad was disseminated, (4) description of the audience reached or targeted by the ad, and (5) the number of impressions generated.
For platforms within the ambit of the definition above, the Act imposed two requirements, a publication requirement whereby online platforms are required to post information about political ads on the platform’s own website, and secondly, a state inspection requirement imposing an obligation on the platform to collect records concerning political ad purchasers and retain those for at least a year so as to enable a review by the Maryland Board of Elections upon request.
After the Act became law on July 1, 2018 without the signature of Maryland Governor Larry Hogan (who cited ‘serious constitutional law concerns that would compel speech by news outlets’, p. 7), on August 17, 2018, eight newspaper publishers and one press association filed a complaint for declaratory judgment against the Maryland Board of Elections. They challenged the Act as a violation of the First Amendment and sought preliminary injunction. The District Court concluded that the plaintiffs were likely to succeed on the merit of their First Amendment claim and accordingly, granted the publishers’ motion. The State of Maryland appealed.
Before the Appellate Court, it was argued by the publishers that the Act affirmatively compels online platforms to publish certain statements about political advertising. While contesting that such compelled speech is unconstitutional, they also claimed that the Act imposes a burden on the newspapers and other websites to collect, maintain and turn over substantial information about political advertising. Regulations burdening speech are subject to ‘exacting scrutiny’ as per the jurisprudence laid down by First Amendment, requiring the government to exhibit compelling State interest, which was absent in the case. Furthermore, the publishers also claimed a prior restraint imposed by the Act in authorizing the Court to enjoin newspapers and other internet websites from publishing political advertisements.
In response, the State of Maryland argued that the District Court erred in declining to apply ‘exacting scrutiny’ on account of the Act’s burden on neutral third parties, specifically when online providers are required to disclose only a line or two of factual information related to paid advertisements that publishers have already chosen to accept. Moreover, the State’s interest in electoral transparency, enforcing substantive campaign finance laws and preventing involvement of foreign actors was ‘compelling’ as well as ‘substantially related’ to disclosure and record-keeping obligations under the Act. As a result, State interest thwarted the burden on newspapers’ editorial judgment and control.
Judge Wilkinson delivered the majority opinion of the United States Court of Appeals for the Fourth Circuit, joined by Judge Motz and Judge Floyd. The principle issue before the Court was whether the Maryland Act as applied to the plaintiffs, on account of alleged violations of the First Amendment principles, was unconstitutional.
Earlier, the District Court had sought to grant preliminary relief on three counts. Firstly, the Court held that the Act was subject to strict scrutiny rather than exacting scrutiny (latter being more permissible), as it burdened neutral third party platforms rather than direct political participants. Secondly, the Act failed the strict scrutiny test as by not addressing the core problem of foreign election interference, it was unable to tailor its law to account for compelling interests at stake. Finally, the Court held that the Act would also fail exacting scrutiny on account of a mismatch between the Act’s ‘means and ends’ [p. 9].
The Appellate Court agreed with the District Court’s finding that the Maryland Act was a ‘compendium of traditional First Amendment infirmities’, being (i) a content based law, (ii) that targets political speech and (iii) compels newspapers and other online platforms to carry messages on its website. Taken together, the Act posed a ‘real risk of either chilling speech or manipulating the marketplace of ideas’ [p. 14].
The Court began by declaring a presumption against constitutionality of content-based laws, such as the one in the present case, to ensure that a ‘marketplace of ideas’ exists and does not deteriorate to a mere forum for ‘state-favored speech’ [p. 10]. The Court’s concern was also multiplied as the impugned law sought to aim directly at political speech, which typically lies at the ‘heart of the First Amendment’s protection’ [p. 11’].
Specifically, the Court noted that the publication and inspection requirements compelled free speech by forcing elements of the society to speak when they would otherwise have refrained. In essence, the publication requirement envisaged by the Act required online platforms hosting political ads to post detailed information in searchable format in “a clear identifiable location on the online platform’s website” within a span of 48 hours of purchase, apart from an additional requirement to maintain such records for a period of one year after the relevant election. Non-compliance of the provisions of the Act was punishable by criminal penalties.
Notably, a compulsion to disclose identifying information regarding political speakers also had an unintended consequence in implicating protections to anonymous speech. Relying on the fact that revelations of executive misconduct are often sourced in anonymity, the Court invoked First Amendment protection against the State’s move to enlist the press to disclose sources of free speech.
There were several other aspects of Maryland’s law that also warranted scrutiny of the Court. Of particular importance was the nature of the Act, that places the burden of disclosure and recordkeeping obligations on platforms rather than political actors. It was argued by the State of Maryland that publication and retention of election information was upheld by the Court in several similar instances, and even though such requirements burdened the ability to speak, they did not impose ‘any ceiling on campaign-related activities nor prevented anyone from speaking’ [p. 13, 14].
While the Court saw sense in this argument, it noted that the logic was only limited to direct participants in the political process for whom the ambition to succeed in elections had an effect to offset the burden imposed by disclosure obligations. When applied to neutral third party platforms, it only deterred platforms from carrying political speech, making it financially irrational and more cumbersome to host political content in comparison to others. The Court based this conjecture on strong evidence in practice, noting the recent move by the search engine Google to stop hosting political advertisements in the State of Maryland, as well as like promises by other publishers.
Thus, by differentiating platform-based campaign finance regulations (such as the Act) from typical ‘garden-variety’ campaign finance regulations, the Court warned against additional constitutional infirmities that may arise on account of the class of plaintiffs in question (i.e. newspaper outlets in the present case). The Court went so far as to suggest that Maryland’s law intruded into the function of the editors by compelling them to speak in a way they wouldn’t otherwise.
In response to the State’s claim that the publication requirement mandated little more than ‘a line or two of factual information’, the Court relied on the Supreme Court judgment in Riley v. Nat’l Fed’n of the Blind of N.C., Inc., 487 U.S. 781 (1988) to hold that no constitutional difference exists between ‘compelled statements of opinion’ and ‘compelled statements of fact’ [p. 19]. On a similar note, the claim by the State of Maryland that the law applied only to advertisements where publishers chose to comply (i.e. had an ability to opt out by not posting qualifying political ads) was also dismissed by the Court, citing the fact that forgoing some free speech rights by accepting political speech only strikes at the heart of the objectives of First Amendment principles.
Separately, the Court also placed substantial concern against the ability of the State to supervise the operations of the news outlets by virtue of the inspection requirement under the impugned Act. In absence of a clear limit, it provided the government with a wide inspection authority, which when combined by the expansive disclosure obligations, only thwarted speech. Furthermore, there was no direct evidence whatsoever of Russian meddling in news outlets, in absence of which intrusive preventive regulatory measures were declared illegal by the Court.
The fact that there was no concrete proof to justify the capacious scope of the Act to include any and every public-facing website, search engine, social network or ad network with 100,000 or more monthly unique visitors was also a major factor in upholding the unconstitutionality of the Act.
A counter-argument by the State of Maryland that third party disclosure obligations were upheld by the Supreme Court in the broadcasting context [FCC v. League of Women Voters of Cal., 468 U.S. 364 (1984); Red Lion Broad. Co. v. FCC, 395 U.S. 367 (1969)] did not prove very useful, as the Court was quick to point out that the justified special powers of the government in regulating broadcast licensees was due to the scarcity of the broadcast frequencies as against the ‘limitless’ nature of the internet.
It is important to note that the Court applied the exacting scrutiny standard in declaring the Maryland law unconstitutional, agreeing with the reasoning of the District Court that the Act was not narrowly tailored to achieve its legitimate desired objectives. However, it declined to decide whether strict or exacting scrutiny should apply in disclosure laws. Declaring an inevitable reviewing standard, in view of the Court, would have meant scripting the future and disregarding novel challenges to electoral integrity hitherto not foreseen by the Court.
Decision Direction indicates whether the decision expands or contracts expression based on an analysis of the case.
The judgment of the Appellate Court expands freedom of expression, insofar as it recognizes that prior restraints and content based restrictions suffer from presupposed First Amendment infirmities. In the present case, while the Court acknowledged the legitimate State objective to govern online political advertisements in the wake of foreign meddling, it noted that the expressive burdens of the Maryland scheme were “bereft of any coherent connection to an offsetting state interest.” [p. 29]
The Brennan Center for Justice filed an amicus brief urging reversal of the trial court’s decision arguing that the district court “erred in subjecting Maryland’s rules for sellers of online political advertising to more demanding constitutional scrutiny than other campaign disclosure rules. The brief also notes that while freedom of the press is a bedrock American value, media companies are not entitled to heightened First Amendment protection when they are not engaging in traditional press activities.”
Further, a blog by the Maryland State Bar Association noted that the ruling ignored the Act’s voter information objective and cited McConnell v. FCC, 540 U.S. 93 (2003) to recall “the Supreme Court has emphasized the importance of providing the electorate with information about the source of campaign spending — even when these disclosure requirements burden election-related speech.” It further argues that the ruling effectively extends constitutional protection to administrative burdens placed on platforms, and that the real winners were the economic interests, as the operative issues ended up being the economic costs and advertising profit margins.
In the long-term the ruling could also undermine any further congressional consideration of the Honest Ads Act.
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