Wu’s history as a law professor and advocate may offer some clues about how he will approach his duties. He rose to prominence as an advocate of “net neutrality,” a phrase he coined in 2002. In general, his scholarship focuses on telecommunications, technology, and competition.

After the 2020 presidential election, Wu and several former federal antitrust officials authored a Washington Center for Equitable Growth (WCEG) report entitled “Restoring Competition in the United States: A Vision for Antitrust Enforcement for the Next Administration and Congress.” The report that concludes the “U.S. economy is plagued by a problem of excessive market power” and “antitrust enforcement has failed to prevent this problem.” Among the report’s recommendations is a suggestion to create a White House Office of Competition Policy within the NEC, to bring a “‘whole government’ approach to competition policy.”

Although the White House has not created such an office, Wu’s title and administrative home in the NEC closely track WCEG’s advice. In the view of Wu and his co-authors, the White House should “pressure agencies to open up closed markets while discouraging agencies from entrenching the industries that they regulate.” Agencies that the WCEG report lists as possessing competition-related rulemaking authority range from the FDA to the Federal Housing Finance Agency.

Wu’s record and the current political environment, however, suggest that the internet and communications industries are likely to be a core part of his focus. The Department of Justice, FTC, and FCC will be central to any ramp-up in competition regulation or enforcement in this arena. These agencies have over time played complementary, but sometimes competing, roles in internet and communications issues, particularly in large communications and media mergers. With the shifting jurisdictional classification of broadband internet services at the FCC, moreover, the dividing line between FCC and FTC jurisdiction over various players in the market has been unclear. Both the FCC and FTC, for example, jointly took an aggressive stance against VoIP gateways through which unlawful robocalls were being transmitted.

These agencies present challenges to an assertive White House coordinating role. The FCC and FTC are independent; the selection of agency chairs and nominations to fill vacancies could indicate how willing the agencies will be to coordinate with the White House. At the same time, the Justice Department’s independence was a prominent issue in Merrick Garland’s confirmation hearings and could affect how the White House attempts to shape the Department’s competition policy agenda.

Wu will also have competition of his own within the White House. For instance, OMB’s Office of Information and Regulatory Affairs has a direct role in reviewing proposed federal regulations and may be more reluctant to issue aggressive regulations. Other White House components, from the Office of Science and Technology Policy to the Domestic Policy Council, are likely to make their voices heard, too.

We will closely monitor developments as Wu’s role and the leadership picture in key agencies become clearer.

The most controversial aspects of the order are its interpretation of Section 230 of the Communications Decency Act ("CDA")—the statutory provision that shields online service providers from liability for user-generated content and the decisions they make about how to moderate that content—and its attempt to prompt the Federal Communications Commission ("FCC") to adopt regulations further interpreting the law. Reform of Section 230 has been under consideration in Congress for years, with Republicans and Democrats both offering different—and mostly contrary—critiques about how online platforms have failed to act in accordance with the statute while also benefitting from the liability protections.

Other directives in the EO attempt to elicit other parts of the federal government to discipline online platforms for their content moderation practices. Absent Congressional action, the EO’s directives appear to stand on shaky legal ground and are likely to have limited legal impact. However, the issuance of the EO alone may be unlawful, at least according to a complaint challenging the constitutionality of the EO filed with the U.S. District Court in D.C. by the Center for Democracy & Technology ("CDT"). According to the complaint, the EO violates the First Amendment, which strictly limits the government’s ability to abridge speech, by retaliating against Twitter for exercising its right to comment on the President’s statements and because it “seeks to curtail and chill the constitutionally protected speech of all online platforms and individuals” by demonstrating the government’s willingness to retaliate against those who criticize the government.

Seeks to “Clarify” the Scope of Section 230 Immunity Through FCC Regulations

Section 230 gives online service providers immunity from liability in two ways. First, Section 230(c)(1) says that online services are not the “publisher or speaker” of the user content they host. Publishers and speakers can be held liable for language that is, for example, libelous or defamatory. This clause prevents online services from being subject to lawsuits making such claims, while preserving the ability to bring direct suits against the users who actually generate the content. Second, Section 230(c)(2) says that online service providers cannot be held liable for “any action voluntarily taken in good faith to restrict access to or availability of material that [it] considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected.” This clause is designed to prevent online services from being deemed publishers when they make decisions about what user-generated content to remove. Its intent originally was to remove disincentives for online service providers to employ blocking and filtering technologies to protect children from online pornography.

The EO purports to clarify the scope of the immunity available under Section 230. Specifically, the EO says that online providers are not acting in “good faith” when they claim to be forums for free and open speech but instead engage in “deceptive or pretextual actions (often contrary to their stated terms of service) to stifle viewpoints with which they disagree.” According to the EO, under these circumstances, the online services are editorializing and therefore acting as publishers, in which case, the EO says the online services should lose their immunity under Section 230(c)(2). This interpretation, which is largely contrary to more than two decades of court precedents, would effectively mean that online services could be held liable for all the content their users post if it is determined their content moderation practices are biased.

To effectuate this interpretation, the EO sets out two directives. First, it directs “all executive departments and agencies [to] ensure that their application of section 230(c) properly reflects the narrow purpose of the section.” This directive is unlikely to carry any weight as Section 230 is not applied by federal agencies, but by courts, which are not subject to presidential directives. Second, the EO directs the National Telecommunications Information Association ("NTIA") to, within 60 days, file a petition for rulemaking asking the FCC to propose regulations to further clarify the circumstances under which an online service can lose its liability protection when it “restricts access to content” in a manner not specifically protected by subparagraph (c)(2)(A),” and the conditions under which such restrictions are not made in “good faith.”

Absent additional authority delegated by Congress, the FCC is unlikely to actually implement such regulations. The Commission has been reluctant to extend regulation to edge providers, such as online platforms, and its legal authority to do so has been debated. While the CDA technically added Section 230 into the Communications Act—the FCC’s regulatory sandbox—the Communications Act does not have any legal hooks that allow the agency to regulate online platforms and Section 230 itself does not provide the agency with any such independent authority. Tellingly, the FCC did not implement Section 230 in 1996 when the provision was added to the Act and does not have any rules on its books that interpret Section 230. Even if the FCC does have such authority, current leadership has already made clear, in the Restoring Internet Freedom order, that it does not want the agency to be the arbiter of neutrality for Internet service providers, which it ostensibly has the authority to do, let alone the arbiter of neutrality by online platforms, over which it has no explicit authority. While all five Commissioners released statements after the EO, three Commissioners expressed opposition or strong skepticism of the “good faith” concept. Thus, even if NTIA were to file a petition for rulemaking, new rules appear unlikely.

Other Directives in the Executive Order

While the directives above have received the most attention, the EO includes four other directives designed to penalize online platforms that engage in alleged viewpoint discrimination.

• Review Government Spending to Online Platforms – The EO directs executive branch departments and agencies to, within 30 days, assess their advertising and marketing spending on online platforms and report their findings to the Office of Management and Budget, while also directing the Department of Justice to “review the viewpoint-based speech restrictions imposed by each online platform identified in the report[s]” and assess whether any “are problematic vehicles for government speech due to viewpoint discrimination, deception to consumers, or other bad practices.” Conspicuously absent is an actual directive for departments and agencies to limit federal spending to such online platforms.
• FTC Review of Content Moderation Practices – The EO directs the Federal Trade Commission ("FTC") to “consider taking action” using its authority under Section 5 of the FTC Act to determine whether online platforms have engaged in unfair or deceptive acts or practices by “restrict[ing] speech in ways that do not align with those entities’ public representations about those practices,” which is something the FTC was already permitted to do. The FTC is also required to consider whether to develop a report describing the apparent 16,000 complaints that the White House received through its “Tech Bias” reporting tool.
• State Review of Content Moderation Practices – The EO directs the Attorney General to establish a working group to assess potential enforcement of state statutes prohibiting unfair or deceptive acts or practices against online platforms, develop model legislation for states that do not have such authority, and collect information regarding various practices by online platforms that could amount to viewpoint discrimination.
• Federal Legislation – The EO directs the Attorney General to “develop a proposal for Federal legislation that would be useful to promote the policy objectives” of the EO.

The order has garnered substantial criticism from online industry advocates and civil liberties groups alike. Among the online platforms, Twitter seemed undeterred by the EO, calling it a “reactionary and politicized approach” and promptly labeling another Trump tweet for glorifying violence in violation of its terms and conditions. Meanwhile, Facebook CEO Mark Zuckerberg, while critical of the EO, also critiqued Twitter’s actions, saying that social media companies should not be the arbiters of truth.

Initial reactions from the FCC Commissioners have been mixed. Republican Commissioner Carr was most supportive of the move, saying he welcomed the EO and its call for guidance on the “good faith” limitation in Section 230. Democratic Commissioner Rosenworcel had a contrary take, saying the EO would turn the FCC into the “speech police.” Both Commissioner Starks (a Democrat) and Commissioner O’Rielly (a Republican) avoided any direct criticism of the EO but affirmed the First Amendment’s important role in the issue. Chairman Pai largely stayed out of the fray, saying that the agency would “carefully review any petition for rulemaking” filed by NTIA. NTIA has not commented on the Executive Order.

The FTC commissioners have been silent on the EO, but the agency’s spokesperson, Peter Kaplan, said that “[t]he FTC is committed to robust enforcement of consumer protection and competition laws, including with respect to social media platforms, and consistent with our jurisdictional authority and constitutional limitations.”

Any substantive action at the FCC is likely months away, at best. NTIA has until July 27, 2020, to file its petition with the FCC, on which the FCC has no obligation to act. If the agency does respond, it may seek comment on whether to initiate a rulemaking first, before initiating a Notice of Proposed Rulemaking. Given the constitutional implications, the FTC may also hesitate to act in accordance with the EO. Regardless, we don’t expect any substantive action in 2020, if at all, particularly in light of the pending legal challenge by CDT. In the meantime, the impact of the EO will largely be political, not legal, while the purpose, meaning and fate of Section 230 is almost certain to be debated in Congress for years to come.

Review of applications, referred by the FCC to Team Telecom, with certain national security and law enforcement concerns has long been part of the landscape, but, because the Team Telecom review process had had no statutory or regulatory framework, the communications industry had little insight into the review process or the Executive Branch’s related activities. This is not to say that the new Committee will be transparent, and one should not expect that, but the EO better defines the process and the potential scope of the review activities.

Committee Responsibilities

The Committee is tasked to review, for national security and law enforcement concerns raised by foreign participation in the United States telecommunications services sector, those applications before the FCC “for a license or authorization, or the transfer of a license or authorization” which the agency refers to the Committee (“Referred Application”). The EO does not purport to dictate when the FCC, an independent agency, refers applications to the Committee, but the track record of referrals to Team Telecom probably provides a guide of what will be referred. And nothing prevents the Committee, or an executive agency, from asking the Commission to refer an application (which has been the case prior to the EO). Moreover, the interrelationship between the Committee’s activities and those of the Committee on Foreign Investment in the United States (“CFIUS”), whose authority pursuant to statute concerns review of certain covered transactions involving foreign investment in U.S. businesses in the telecom sector and beyond, remains to be seen. Historically the link between Team Telecom review and CFIUS activities has not been susceptible to clear explanation. Indeed, there is only one mention of CFIUS in the EO, in the context of information that the Committee can share with the CFIUS when it is undertaking a review of transactions.

By all appearances, the Committee will replace the functions of Team Telecom which currently conducts such national security reviews but is not governed by any established procedures. The new EO also contemplates review, on the Committee’s own motion, of existing FCC licenses and authorizations to identify “any new or additional risks” to law enforcement and national security. These reviews may result in a recommendation to the FCC to modify or revoke licenses and authorizations even where Team Telecom or the Committee has not imposed mitigation measures earlier. While the EO provides some long-sought clarity and structure to the review process, some uncertainties remain as to how this Committee will operate and use its authority to seek conditions on or denial of FCC licenses, given the White House’s initiative to establish the Committee. However, judging by an executive agency recommendation – a mere five days after the EO was issued – that the FCC revoke China Telecom’s FCC license, albeit not under the guise of the new Committee, and the Commission’s show cause orders issued to four Chinese government owned FCC licensees, the U.S. telecommunications industry should expect to see close review of new applications and potentially renewed scrutiny of previously-granted FCC licenses.

Responding to the release of the EO, FCC Chairman Pai welcomed the EO’s “formalizing Team Telecom review and establishing a process that will allow the Executive Branch to provide its expert input to the FCC in a timely manner.” FCC Commissioner O’Reilly, long an ardent proponent for revising the review process and a champion of the Commission’s rulemaking seeking changes associated with Team Telecom review, similarly lauded the EO for “establishing a formal structure . . . and including deadlines for the relevant agencies to render decisions” and noted that fixing the “incoherent and indefensibly unpredictable review process” had been his priority over the last several years. In its rulemaking proceeding in 2016 the FCC proposed definitive timeframes and a clear review process but, despite receiving industry support, that proceeding stalled.

Committee Structure and Implementation

Comprising, at its core, the same three agencies as Team Telecom, the Committee, chaired by the Attorney General, the head of the Department of Justice, will include the Secretary of Defense, Secretary of Homeland Security, and to the extent the President deems appropriate, the heads of any other executive agencies or Assistants to the President. Officials of other agencies – such as the Director of National Intelligence, the Secretary of Commerce, and the Secretary of State – will have limited roles in certain circumstances.

The EO sets a ninety (90) day timeline, or until June 2, 2020, for the Committee members to enter into a Memorandum of Understanding (that may or may not become public) that, among other requirements, establishes the information to be collected from applicants, defines standard mitigation measures, and identifies the plan for implementing the EO. However, the EO does not set an actual deadline by which the Committee will begin reviewing Referred Applications, but does provide that the purview includes applications “referred by the FCC before the date of [the EO] to the group of executive departments and agencies involved in the review process that was previously in place,” i.e., to Team Telecom. This should provide for something of a seamless transition from the current framework to the new Committee.

The EO Brings Some Insights into the Review Process

While the Committee’s responsibilities generally would be familiar to Team Telecom observers, at least two aspects are worth specific mention.

First, the EO establishes some semblance of definitive timeframes and processes for the Committee’s review of Referred Applications, albeit triggered by a somewhat uncertain date when applicants’ responses to the Committee’s questions and information requests are “complete.” Telecommunications providers and legal practitioners that have been through a Team Telecom review know that the process often was lengthy, with reviews not uncommonly taking nine months and even much longer. Moreover, neither the applicants nor the FCC had any insight into the mechanics of the review process or whether the review was continuing in the background during the often long stretches of time with no communication, from the Executive Branch after responses to the Team Telecom questions and information requests (commonly referred to as “triage” questions) were provided, at least until the end of the review process.

Under the EO, the Committee is to finish its initial review within 120 days of when an applicant’s responses are complete, although the Committee may conclude that a “secondary assessment” is warranted.” Any secondary review must be completed within ninety days of the start of the secondary assessment. So, reviews could take seven months after the triage questions have been completely addressed and still be within the time frames contemplated by the EO. Experience often showed, under the Team Telecom process, that completing triage could take several months itself.

The EO also provides a look “behind the curtain” of the Committee, from a procedural perspective, as it delineates the actions, such as the Director of National Intelligence’s review and written national security threat assessment, that the various Committee components will take during the review process. While knowledge that a process actually exists will be of interest to applicants, the substance of the internal communications will likely not be shared until such time as Committee recommendations are made known in terms of proposed mitigation measures or the lack of objections to a Referred Application.

Second, the EO makes clear that the Committee may take a fresh look at existing licensees for national security and law enforcement risks although the procedures surrounding such license reviews are not as fully flushed out in the EO as are those surrounding examination of Referred Applications. This authority may lead to the Committee seeking license revocation through the FCC or requiring the licensee enter into a mitigation agreement to avoid, presumably, an effort to revoke the license. While Team Telecom has sought license revocations over the past few years where mitigation agreements are already in place and there are issues of compliance, see also here and here, we are unaware of existing licensees being required to enter into new or revised mitigation agreements absent new applications, for example for assignments or transfers of control, being filed with the FCC.

Nevertheless, this explicit authority for the Committee to revisit and possibly modify or require new mitigation agreements is not entirely surprising. As we have reported previously, increased concerns regarding the security of telecommunications equipment from certain foreign-owned equipment manufacturers, such as Huawei and ZTE, recently have led the FCC to restrict and, in some cases, ban the use of such manufacturers’ equipment. The Executive Branch and other agencies similarly have identified numerous national security threats, with cybersecurity as a top concern, arising in the many years since some FCC licenses have been granted. Consequently, the Committee is unlikely to be shy about revisiting existing licensees where there now are perceived law enforcement or national security concerns that the Committee believes need to be addressed by mitigation measures. Of course, having a licensee’s existing mitigation agreement revisited, typically in the form of a generally more robust National Security Agreement (“NSA”) or a frequently “lighter touch” Letter of Assurances (“LOA”), or a licensee being required to enter into such a mitigation agreement for the first time, may have serious implications for the licensee depending on its business and operations models.

The EO explains that, while it does establish certain procedures and timeframes, it does not create any rights or benefits, substantive or procedural, that applicants or licensees can enforce at law or in equity against the government or any other person. Moreover, the EO does not supersede the existing rights or discretion of any Federal agency, outside the activities of the Committee, to conduct inquiries with respect to an FCC application or license or to negotiate, enter into, impose, or enforce contractual provisions” with such applicant or licensee, which would include existing mitigation arrangements with one or more executive branch agency.

The EO Also Creates Some Uncertainty

While the EO provides some transparency in, and certainty to, the Referred Application review process, many questions remain. To mention a few of those questions:

• What information will Referred Application applicants have to provide? Traditionally, applicants undergoing a Team Telecom review have faced fairly consistent sets of triage questions that vary by the type of application, with additional questions typically customized based on the applicant. The EO directs the Committee to develop the information requests that will be required from Referred Application applicants but it is unknown if those questions will be similar in scope and content to the triage questions or if the Committee will develop different and possibly more burdensome triage questionnaires given the elevated concerns within the government regarding the security of U.S. telecommunications and networks.
• What compliance obligations will be included in mitigation agreements? Under the current Team Telecom review process, applicants can expect to enter into a comprehensive NSA or an often narrower and lighter LOA. These arrangements are publicly available and provided FCC license applicants with a general sense of the scope of compliance obligations. In more recent years, we have observed a convergence toward more common terms, albeit with some ability to negotiate certain aspects of the mitigation. The EO retains the use of mitigation agreements but refers to “standard” and “non-standard” mitigation agreements. It is unclear if the “standard” vs “non-standard” mitigation dichotomy refers to the difference between LOAs and NSAs or contemplates other compliance frameworks. It is possible that LOAs and NSAs will be considered standard mitigation and non-standard mitigation measures will contain even more stringent or targeted compliance obligations. Alternatively, the Committee may revise the entire mitigation measure regime, and the degree of “negotiation” the government is willing to engage in may be adjusted materially, and not necessarily for the better.
• Exactly when will the Committee and its new measures replace the current Executive Branch review regime? The EO sets a 90 day deadline for the Committee to develop an implementation plan. It is possible that the Committee may be able to meet this deadline since the three primary member agencies already will be familiar with the review process based on their experience with the Executive Branch reviews. However, the EO does not identify a deadline for when the Committee will begin reviewing Referred Applications (or existing licenses) per the EO framework. The EO suggests that pending reviews may become subject to the EO timelines. If that’s true, will the timelines apply in full? Where the review is well under way? Will already pending reviews be placed on hold until the Committee is up and running? Similarly, will applications referred after the EO was released remain in pending status until the Committee gets things up and running?

Although not even a month has passed since the EO was released, action already is being taken to revoke the FCC license of China Telecom, and to require four other Chinese government-affiliated licensees to show cause why their FCC licenses should not be revoked. In what clearly was an already pending initiative, within five days of the EO’s release, Team Telecom recommended the FCC revoke China Telecom’s license. The recommendation, exceeding fifty pages and containing hundreds of pages of, often redacted, exhibits, details numerous concerns regarding China Telecom’s operations, which were subject to a 2007 LOA. The concerns range from the company’s failure to comply with its mitigation agreement to making inaccurate statements regarding its cybersecurity practices to providing opportunities for the Chinese government to engage in economic espionage and misroute or disrupt U.S. communications. Although China Telecom currently has only an LOA as its mitigation agreement, and presumably could be required to enter into a more comprehensive NSA, the Executive Branch explicitly rejected the transition to an NSA based on China Telecom being deemed “an untrustworthy and unwilling partner” in its current LOA. Unlike other Executive Branch license revocation recommendations which typically cited to general mitigation agreement noncompliance and, more often, apparent cessation of operations, the China Telecom revocation recommendation identifies numerous and detailed concerns and relies, in part, on information obtained under the Foreign Intelligence Surveillance Act. Similarly, on Friday the Commission issued show cause orders to China Telecom Americas, China Unicom Americas, Pacific Networks, and ComNet giving them thirty days to show cause why their FCC licenses should not be revoked. The show cause orders cite to Team Telecom’s China Telecom revocation recommendation when noting that, as entities ultimately owned or controlled by the Chinese government-owned entities, the four FCC licensees would be vulnerab[le] . . . to the exploitation, influence, and control of the Chinese government.” Although the show cause orders were issued on the Commission’s own motion, the FCC’s action undoubtedly is related to the EO’s review of existing licensees for national security and law enforcement concerns. In light of the national security concerns the Executive Branch outlined in the China Telecom recommendation, the FCC’s show cause orders to China Telecom Americas, China Unicom Americas, Pacific Networks, and ComNet, and the similar concerns regarding Huawei and ZTE equipment, we anticipate the Committee similarly will be proactive in revisiting any licensees that may raise national security concerns.

Key Takeaways

The EO provides some clarity regarding the Referred Application review process and timeframe but many uncertainties remain, including just how long the process will begin after the application is referred.

Applicants contemplating transactions or new FCC licensing that will involve a Referred Application will benefit from a clearly defined review timeframe, once triage is “complete,” but also may face different, and potentially more stringent, mitigation obligations.

Current FCC licensees, whether parties to mitigation agreements or not bound by such agreements, may have their communications operations reviewed for national security concerns and the licensee could be subjected to new or revised mitigation requirements.

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