Free Speech and the Fake News Problem

How should a platform or a society address the fake news problem? The spread of misinformation is ancient, complex, yet ubiquitous in elections, vaccination campaigns, and global climate policy debates. After examining key attributes of “fake news” and of current solutions, this Article presents design tradeoffs for balancing free speech rights and the right to be free of false speech harms. Surprisingly, there exist boundary cases when a just society is better served by a mechanism that allows lies to pass, even as there are alternate boundary cases when a just society should put friction on truth. Harm reflects an interplay of lies, decision errors, and externalities. To make progress, this Article then endeavors to bridge law and information economics. Bridging these schools of thought offers three steps forward.The first step is a clearer problem definition. While much scholarship focuses on veracity, harms are better cognized as decision errors and externalities. A focus on truth per se is misguided because one cannot own truth and one cannot be dispossessed of truth. By contrast, one can be liable for decision errors and externalities. This alternate interpretation suggests a syllogism that defines the problem:Misinformation produces externalities. Externalities produce market failures. Market failures require intervention. But government intervention in the case of speech is forbidden by the First Amendment. Thus, attempts by courts and society to push the problem to the “marketplace of ideas” to sort things out will fail. Markets do not self-correct market failures.The second step offers more free speech protection than platform firms offer while updating Section 230. Revisions have faced two main critiques: that holding platforms actionable for false speech would cause them to chill speech, and that ambiguity in individual messages makes judgement of false speech infeasible at scale. Whistleblower testimony before congress emphasized platform amplification of content in pursuit of engagement. A targeted solution can separate original speech from amplified speech, generously protecting the former while reverse amplifying the latter. The second element uses scale as an advantage. Rather than vet every message, the system takes only statistical samples. The Central Limit Theorem guarantees that establishing the presence of misinformation in amplified speech is feasible to any level of desired accuracy simply by taking larger samples. The third step forward seeks to address the conflict-of-interest problem inherent in allowing any central authority to judge speech. Of all known solutions to externality problems, only Coase’s tools are market based. The task then is to design systems of rights such that decentralized institutions can internalize negative externalities. A primary contribution of this Article is to propose such a system of rights such that no government, no private firm, and no powerful person individually judges speech. The task of addressing fake news is transformed into a task of problem definition, decentralized mechanism design, and truthful signaling for which tools of information economics are well-suited.