Reform for Online Political Advertising: Add on to the Honest Ads Act.

• Author: Weber, Merrill

TABLE OF CONTENTS I. INTRODUCTION 83 II. BACKGROUND 85 A. The Origins of Political Advertising Regulations for Cable and Broadcast Mediums 85 B. Political Advertising on Broadcast 88 and Digital Mediums C. The Shift To Digital Advertising and 90 Advent of Microtargeting D. Courts Support Disclosure Requirements 92 for Political Advertising E. Reporting Requirements are Essential 94 to an Informed Electorate F. No Uniform Approach to Political Advertising Across Online Platforms 96 ANALYSIS 99 A. The Loophole in Disclosure Requirements for Political III. Advertising on Social Media 99 B. Online Platforms Should Be Required to Disclose Political Advertising 102 C. The Honest Ads Act Address Many of the Issues Presented by Political Advertising on Social Media Platforms 105 D. To Provide Comprehensive Reform, the Honest Ads Act Needs a Provision Addressing Microtargeting 107 E. The Honest Ads Act, As Incorporated by the For The People Act of 2021, Should Be Amended To Restrict The Targeting Options Available To Political Advertisers 8 108 IV. CONCLUSION 110 INTRODUCTION

Since its advent, technology has been developing faster than regulations can keep up. Big technology companies like Facebook, Twitter, and Google thus developed in an environment virtually left up to their own creation. While only 5% of adults used social media in 2005, usership jumped to 50% by 2011. (1) In 2019, that number had jumped to 72%. (2) Despite the massive number of Americans engaging on social media and its prevalence in modern society, the legislature has failed to significantly address the regulatory concerns that have emerged from this digital environment. What has emerged is an ecosystem rooted by user data, fueled through user engagement, and sold out to advertisers for economic gain.

Where there were voters to influence, candidates for political office were not far behind. In the 2008 Presidential election contest between Barack Obama and John McCain, the candidates' respective campaigns first waded into online forums to reach voters through email and text message. (3) In the 2012 Presidential election, online campaign efforts became even more sophisticated, with President Obama going to Tumblr to remind young voters of an upcoming Presidential debate. (4) Social media in the 2016 Presidential election, however, became much more advanced when Russian entities capitalized on social media advertising to sow division among members of the American public. (5)

The idea of foreign interference in American elections shot Congress into action in the wake of the 2016 election. Less than a year later, Senators John McCain and Amy Klobuchar introduced the Honest Ads Act aimed at increasing transparency in online advertising and preventing foreign interference in United States (US) elections. (6) The bill died in committee. (7) Recently, the Honest Ads Act and its provisions have been wrapped into Democrats' comprehensive, anti-corruption bill known as the For The People Act. (8) While the bill passed the House of Representatives in both 2019 and 2021, it has yet to receive Senate approval or a Presidential signature. (9) Today, it has been 12 years since politics met social media, and there are still no laws regulating it.

Over the last few years, social media platforms have continued to blunder along with no regulations or guidance at the cost of the American people's confidence in our democracy. In 2018, news of Facebook's mishandling of millions of users' data in the Cambridge Analytica scandal broke. (10) Though it seemed like new privacy laws to protect user data were just around the corner, Facebook escaped with a Congressional hearing (11) and a $5 billion FTC fine (12)--a drop in the bucket for the company, which was worth $629.6 billion at the time the fine was levied. (13) In the aftermath of the 2020 election, unregulated social media companies have been the root of political misinformation distributed to voting consumers. (14)

Although tech companies have little incentive to curb the use of their platforms for political advertising--data shows that that groups like Facebook, Google, and others raked in $1.3 billion from digital advertising in the 2020 election cycle alone (15)--some have taken steps toward transparency. As of 2021, a small handful of platforms are offering political "Ad Libraries" for the public. (16) These efforts to stave off government regulation are insufficient to satisfy the American public's need for regulation of social media giants in its electoral process. While the Honest Ads Act may become law as part of the For the People Act of 2021, its provisions are only part of the solution to the problem created by 12 years of Congressional inaction. (17)

This note will first provide background on the regulation of cable and broadcast advertising and how it is currently regulated today. Second, it will provide the legal grounding for requiring disclosure of political spending in campaigns. Third, it will outline the important role that disclosure plays in public information. Fourth, it will outline the harmful effects of unregulated political advertising on online tech platforms, namely microtargeting. Fifth, it will discuss the way tech platforms have attempted to self-regulate political advertising on media platforms. Sixth, it will discuss the loophole in legislation that allows social media platforms to circumvent disclosure requirements. Finally, it will discuss the legal foundation for regulating social media platforms' political digital advertising and why the Honest Ads Act falls short of addressing the issues presented by the lack of regulation in digital political advertising.

2. BACKGROUND

   1. The Origins of Political Advertising Regulations for Cable and Broadcast Mediums

      Radio and cable have been regulated by Congress since 1927 (18) and 1965, (19) respectively, laying the groundwork for the current regulatory scheme for political advertising seen with the Federal Communications Commission (FCC). This section will first give a brief history of the legislative responses to broadcast mediums and the origination of regulations for political advertising. This section will then discuss the FCC's current regulatory scheme for political advertising on broadcast networks and the disclosure requirements imposed on those broadcasters.

      When radio became a popular form of communication in America in the early 1920s, (20) Congress responded by passing the Radio Act of 1927. (21) This Act created the Federal Radio Commission (FRC), (22) which was tasked with licensing radio stations, reducing interference, and regulating content "related to the broadcasting stations by legally qualified candidates and censorship over material for broadcast." (23) This power, given to the FRC in section 18 of the Radio Act, was seen as the precursor (24) to the modern "equal opportunities" rule which requires broadcasters who open the door to political advertising to give all registered candidates equal access to their facilities. (25)

      Congress replaced the Radio Act of 1927 upon its expiration with the Communications Act of 1934, which created the modern FCC. (26) Notably, [section] 315 of the Communications Act of 1934 codified the equal opportunities requirement and laid out the "political record" requirement that broadcasters disclose a "complete record of a request to purchase broadcast time" for political advertisements run on their networks. (27) Recently, the Bipartisan Campaign Reform Act of 2002 (BCRA) updated [section] 315 and broadened its disclosure requirements to include advertisements that discuss any "political matter of national importance." (28)

      Today, the FCC requires broadcasters--which the FCC defines as "radio, television, wire, satellite and cable"--to comply with an extensive list of disclosure requirements for political advertisements purchased on their networks. (29) Broadcasters are required to keep and compile an online, publicly available "political file" (30) for any advertisement that:

      (A) is made by or on behalf of a legally qualified candidate for public office; or (B) communicates a message relating to any political matter of national importance, including--

      (i) a legally qualified candidate;

      (ii) any election to Federal office; or

      (iii) a national legislative issue of public importance. (31)

      The FCC was forced to clarify the parameters of [section] 315, as modified by BCRA, in October 2019 in response to legal action taken against broadcasters who failed to comply with the disclosure requirements for political advertisements. (32) In the FCC's opinion, referred to as the Political File Order, (33) the commissioners clarified that broadcasters were required to provide detailed disclosures for "each request to purchase political advertising time." (34) The FCC mandated that those disclosures include information on "all political matters of national importance, including the names of all legally qualified candidates for federal office (and the offices to which they are seeking election), all elections to federal office, and all national legislative issues of public importance, to which the communication refers." (35) Furthermore, the disclosures would have to include "all of the chief executive officers or members of the executive committee or board of directors of any person seeking to purchase political advertising time." (36) Finally, the FCC's opinion clarified the definitions of "legally qualified candidate," "national legislative issue of public importance," and "political matter of national importance"--all of which trigger the aforementioned disclosure requirements if referenced in the content of the advertisement. (37)

      The FCC revisited its Political File Order just a few months later in April 2020. (38) In that Order on Reconsideration, the FCC clarified that the requirements discussed in the Political File Order applied to issue advertisers' requests to purchase...