The 2016 presidential election drew heightened scrutiny to the role that social media plays in American politics and the degree to which the people—and countries—behind online ad campaigns can hide their identities.
Lawmakers and regulators now seem eager to bring a bit of transparency to online ad spending, with a trio of senators set to introduce a bill on Thursday forcing internet companies to make more disclosures. But history suggests it won’t be an easy fix. Twenty years of digital campaign finance regulation attempts have often run up against firm opposition—from the social media titans to free speech advocates, and some of D.C.’s most powerful lawyers.
The push for additional transparency in digital political advertising was spurred in large part by revelations that Kremlin-linked companies paid for ads on both Facebook and Google in an attempt to both sow division and chaos in American society and undermine Hillary Clinton’s campaign.
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It is a testament to the Clintons’ persistence in American politics that a fight over the regulation of online political speech actually began with a blog focused on her husband’s impeachment.
The year was 1998 and Connecticut businessman Leo Smith wanted to make known his displeasure with his congresswoman, Rep. Nancy Johnson (R-CT), the only member of Connecticut’s congressional delegation to vote in favor of impeaching President Bill Clinton. So Smith did something novel for that era. He started a website to boost Johnson’s challenger in the 1998 election, Democratic activist Charlotte Koskoff.
Smith figured that the effort would not merit regulation by the Federal Election Commission since, after all, he had barely spent any money to set up the site. But just to be sure, he requested an official opinion from the FEC.
The commission disagreed. Smith’s website, it ruled, constituted an expenditure in support of Johnson’s opponent, and hence required disclosure.
Thus began a chaotic and often ad hoc attempt to deal with a revolutionary new medium in the internet and its applicability to American politics.
THE LAW WON…. UNTIL IT DIDN’T.
About four years after the FEC issued its advisory opinion in Smith’s case, Congress took its own stab. In 2002, it passed the Bipartisan Campaign Finance Reform Act, better known as McCain-Feingold for its Senate authors, John McCain and Russ Feingold. Though the law imposed sweeping new regulations on political spending, the FEC, using the law as a guideline, decided to completely exempt online ads from its definition of “public communications.”
The co-authors of McCain-Feingold’s House companion bill, Reps. Christopher Shays (R-CT) and Marty Meehan (D-MA), were not pleased. They sued the FEC in part due to that omission, and successfully invalidated 15 FEC regulations. In response, the commission took another crack at regulating online political speech. In 2006, it codified a new definition of “public communications,” one that specified which types of digital speech were covered.
The resulting rule, finalized in 2006, explicitly excluded political communications on the internet from regulation, provided those behind the communications were not compensated for their work by a political committee. It was a solution that protected blogs and other popular forms of online political speech but still encompassed digital political advertising.
That standard came to be known as the “internet exemption.” The rule establishing it passed unanimously, received broad bipartisan praise. Those doing the praising just didn’t know then that they had paved the way for the heyday of political blogging.
THE AGE OF THE BLOG
Critics of the FEC’s approach did sense a slippery slope. University of California-Irvine law professor Rick Hasen, an expert and longtime writer on campaign finance law, predicted that efforts to exempt online news content from regulation would eventually be exploited by special interests.
“As everyone gets to own the equivalent of a printing press, and everyone can become a journalist, the corporate and labor limit on campaign activity stands to be swallowed up by the media exemption,” Hasen wrote in 2005. In a prescient warning nearly five years before the Supreme Court’s decision in Citizens United vs. FEC, Hasen added, “Especially if limits on independent corporate and union election-related activity disappear, disclosure of funding sources become especially important.”
Sure enough, Hasen was right. An early 2010 federal appeals court case, SpeechNow vs. FEC, struck down federal contribution limits for independent political groups, paving the way for a new type of political committee called a super PAC, which could raise and spend unlimited sums on federal elections. A few months later, in the landmark Supreme Court case Citizens United vs. FEC, the court struck down laws barring corporations, unions, and nonprofits from engaging in “electioneering communications,” or ads designed to shift public opinion on a political candidate during an election season.
Just as Hasen predicted, super PACs began using the internet exemption to great effect as a way to get around campaign finance rules designed to prevent corruption. And once again, a Clinton was at the center of the action.
LIBERALS PAVE THE WAY
In the months after Hillary Clinton declared her 2016 presidential candidacy, her legal team began devising ways to maximize big-money support for her campaign. Leading that team was powerhouse Democratic attorney Marc Elias.
Elias quickly identified loopholes in campaign finance law that would maximize the utility of an array of pro-Clinton super PACs—groups with which the campaign was, in most instances, legally barred from coordinating. One of his ideas was unprecedented in both its audacity and legal ingenuity.
The Clinton campaign would do something most attorneys and campaign finance experts believed was illegal on its face: it would coordinate with a super PAC. The group was called Correct the Record (CTR), and despite its legal status, it would soon form an integral part of the Clinton campaign’s research and rapid response operation.
CTR’s activity was limited solely to producing online content. Its staffers were not compensated by any other political entity and it was offered that content for free. As a result, Elias reasoned in a memo, “None of CTR’s planned communications are ‘public communications’” as defined under the FEC’s 2006 rule.
“That is significant, because the FEC’s coordination restrictions apply only to ‘public communications’ and do not cover other types of communications,” Elias added. “Accordingly, CTR may disseminate these communications in coordination with the campaign without making an impermissible in-kind contribution.”
That memo, and other documents and communications detailing Elias’s strategy, were released by the group WikiLeaks after hackers believed to be acting in concert with the Russian government breached campaign chairman John Podesta’s email account last year.
Backstopped by Elias’s legal reasoning, the Clinton campaign turned to CTR to push out talking points and research in opposition to Republican lines of attack and adversarial press coverage. In private conversations released by WikiLeaks, the campaign discussed a division of labor for going after its critics that split duties among campaign staff, the Democratic National Committee, and CTR. For all intents and purposes, the group was an outgrowth of the campaign itself. But there was an added benefit: it wasn’t bound by normal contribution limits. Instead, it was funded by six- and seven-figure contributions from top Democratic donors.
The result was more or less what Hasen had feared, And at the FEC, a pitched battle emerged between commissioners seeking additional regulations on digital politicking and those warning that any effort to impose such regulations would imperil political speech generally.
From 2014 through last year’s election, Ann Ravel, a former FEC commissioner appointed by President Obama, and Lee Goodman, a Republican FEC commissioner, fought an often-heated contest along this fault line. The fight spilled into public view in 2014 during FEC deliberations over a pair of ads from a conservative group attacking then-President Obama and Sen. Sherrod Brown (D-OH). The ads had been run in October 2012 and seemed to qualify as “electioneering communications” since they had criticized candidates for federal office within 60 days of an election.
But the group behind both ads, Checks and Balances for Economic Growth, said in a sworn statement, that they were aired solely online via its YouTube channel, and hence were covered by the internet exemption. That fact wasn’t disputed. But the case nonetheless turned into a fight over FEC regulation of online ads more generally.
Though she did not deny the ads were exempt from disclosure requirements, Ravel criticized “some of my colleagues [who] seem to believe that the same political message that would require disclosure if run on television should be categorically exempt from the same requirements when placed on the Intemet alone.”
Goodman and two other Republican commissioners claimed Ravel had “ignored well-established Commission rules that free online political speech from FEC regulation.” They added, “We write because we are concerned by the apparent trend among some on the Commission to regulate and deter citizens' use of technology and the Internet to facilitate public political discourse.”
The FEC emerged deadlocked in a 3-3 vote. No action would be taken against Checks and Balances for Economic Growth.
WHERE DO WE GO NOW?
The tension that erupted between Ravel and Goodman has persisted to this day; only, it has taken on heightened meaning with the proliferation of paid ads on Facebook and other social media platforms during the 2016 presidential election.
Facebook has pledged to voluntarily disclose information about who buys the ads that make their way into users’ news feeds. But as late as 2011, the company had sought an exemption to political ad disclosures from the FEC.
The company argued that the character limits of ads on Facebook’s platform made a standard political disclosure impossible. It sought relief under what is known as the “small items” exemption. The FEC was, predictably, deadlocked on the matter, meaning Facebook received no such exemption, but commission inaction allowed the company to continue running ads sans disclosure in the years since.
Facebook’s legal counsel in that case was none other than... Marc Elias.
Elias, indeed, is a recurring character in much of the drama that has led the social media political landscape to this current point. He also represented Google before the FEC in 2010 in what was the last instance of the FEC affirmatively ruling on a case involving the “small items” exemption for a major digital advertiser. In that case, Elias convinced the commission to exempt Google from disclosure rules as long as the pages to which its ads redirected did disclose who was behind them.
That case was specific to Google and did not establish broadly applicable rules for ad disclosure on social media, search engines, and similar platforms. The year after its Google ruling, the FEC opened up an initial comment period on such rules, but never ended up codifying them. It’s now reopened that comment period in what disclosure advocates hope will be an earnest effort to address the issue.
“The issues of coordination, the issues of dark money, as well as the issues of foreign money all enter into the rationale to make these changes,” Ravel, the former FEC commissioner, told The Daily Beast in criticizing the idea that internet communications are exempt from FEC rules.
“That’s really the whole reason for campaign finance rules besides corruption and the like—but it is in part transparency so people can determine if there’s corruption, as well as just the ability to know who’s behind campaigns so they can make thoughtful decisions when they’re voting,” Ravel added. “All of these things are being done purposefully, in my view, to ultimately deregulate campaign finance completely.”
Divisions at the FEC remain deep, and the commission currently has just five members, meaning all but one of them would have to vote in favor of a regulatory proposal for it to go into effect.
A number of experts believe that Republican commissioner Matthew Peterson could rally a coalition to support a rule imposing additional disclosure requirements on digital political ads. But Trump has nominated Peterson to a federal judgeship, and it’s not likely that he’ll remain on the commission long enough to vote on a final rule. Trump has also nominated Texas Republican attorney James Trainor to the commission, and Trainor is seen as skeptical of efforts to impose new disclosure requirements.
Absent FEC action, Congress could pass a new law imposing clear disclosure requirements on Facebook, Google, and other popular internet ad platforms. Sens. Amy Klobuchar (D-MN), Mark Warner (D-VA), and John McCain (R-AZ) plan to introduce legislation on Thursday that would require major digital platforms such as Facebook to publicly disclose the organizations or individuals who purchase election-related advertisements in bulk.
Advocates believe legislative action is necessary in part because, left to their own devices, social media companies aren’t likely to disclose ad information on their own. Facebook and Twitter have already turned over thousands of Russian-linked ads to the House and Senate intelligence committees. But they did so only under duress. Lawmakers have urged the social media companies to make those ads public, arguing that they were an integral part of the Kremlin’s disinformation campaign to help propel Trump to the presidency.
There are also concerns about the FEC’s ability to regulate online political ads without Congress first stepping in to change the law in a way that targets the internet’s exemption from disclosure rules when it comes to communications used for electioneering purposes.
Ravel isn’t confident that the commission, despite having opened up a public comment period, would act on its own to solve the problem, in part because the current commissioners are “already devising their communications strategy for why they're not going to agree to do any regulations” by citing commonly employed conservative arguments against restrictions on free speech.
“Once Congress enacts specific laws, it is much more difficult for the FEC to refuse to enforce those laws,” Ravel told The Daily Beast.
Whether Congress can act is another question entirely. McCain is the only Republican co-sponsor currently on the bill. And though there is a sense of urgency among many senators—particularly those who sit on the Intelligence Committee—over past and future Russian meddling in American elections, even the bill’s sponsors are wary of going too far in the other direction.
Warner has pledged to work with the tech giants in order to win over their support.
“We don’t want to slow down innovation or restrict free speech or people’s access to the internet, [but we want to] deal with the problems we saw in 2016 in terms of foreign interference in our electoral process,” the Senator said on Wednesday.
