April 2017

The German Justice Ministry has introduced a draft law that would impose fines of up to €50 million on social media companies that fail to remove hate speech and other illegal content from their platforms quickly.

The fines would be imposed whenever social media companies do not remove online threats, hate speech, or slanderous fake news. Any obviously illegal content would have to be deleted within 24 hours; reported material that is later determined to be illegal would have to be removed within seven days.

A recent UN study reveals that rapid growth of social networks and e-commerce platforms has driven financial inclusion, economic activity and security in practically all countries and in particular China. The report highlights that popular applications WeChat and AliPay have developed into some of the largest and most sophisticated financial ecosystems in the world. For example, AliPay was first launched in 2004 and by 2016 AliPay was processing 175 million transactions per day, and more than half through a mobile phone.

Increasingly, companies are turning to the internet and social media platforms to advertise their products, often by using native advertising or by providing incentives such as payments or free products to social media “influencers” (Instagrammers, Pinners, Bloggers and Vloggers, to name a few) in exchange for an endorsement.

As we have previously discussed, the FTC has issued Endorsement Guides that provide guidance on appropriate advertising on social media. The FTC has stated that advertising on social media platforms is subject to the same consumer protection laws that prohibit deceptive advertising and that advertising claims must be accompanied by “clear and conspicuous” disclosures.  For example, the FTC has stated that endorsements from social media influencers constitute advertisements that require a disclosure of the connection between the endorser and the advertiser company. If a necessary disclosure is not made or is insufficiently clear and conspicuous, companies may face enforcement action from the FTC.

With the proliferation of so-called “fake news”, companies are starting to rely on third party organizations to perform a “fact checking” function in order to distinguish between legitimate news and fake news. The fake news epidemic gained traction in the recent US presidential election.  We have previously written about the fake news problem, as well as the UK Government’s plan to tackle the issue.

While fake news began as false information disguised as legitimate news sources, the problem with fake news and the question as to what constitutes fake news is becoming more complicated and nuanced.