Lawmakers Propose New Legislation for Online Ads (Audio)

Executives from all three companies are scheduled to testify in Congress about how Russia used their networks during the campaign, and in advance of that testimony, Senator John McCain is announced he will support legislation introduced by Democratic Senators Amy Klabachar and Mark Warner to impose new disclosure requirements for

online political ads. Here to talk with us about online political advertising and how the Russians used it and what this legislation would do are Bradley Smith, a professor at Kappel University Law School who is the former chairman of the Federal Election Commission, and Bradley Moss, a partner at mark z PLC. Bradley Moss explained to us what we know so far about how Russian affiliated UH people, had you used the used the networks like Facebook, Google and

Twitter to try to influence the election last year? Sure, absolutely so what we know and this is largely just from the media reports. There hasn't been a whole lot of public hearings yet on it that will happen at

the beginning of next month. Is that Russian based spots or trolls everyone to identify them, used social media platforms like Twitter and LinkedIn, h even finding out we have even Tinder and Grinder and all these different different platforms by which people in the modern age communicate had used

them to spread various aspects of disinformation. Um. A lot of it came through what's called the i RA or the Internet Research Agency, which was this troll farm one by the Russian government, a Russian Russian government and affiliated organizations to more or less flood the zone and just spread in such an immense amount of disinformation to particular demographics so as to confuse the populace and to the extent they could to try to either discourage people from

voting or to try to place inaccurate information with those photos in the context of their voting decisions. Professor, Why have online political ads been exempt from the regulations that paid TV, radio and print ads have been subjected to for years? Well, this is a misconception. They're not actually

exempt from those requirements. Rather, there has always been in the Federal Ution Campaign Act and exemption where disclaimers are impractical or the items are too small, for example, applies to bumper stickers, pens, buttons, all kinds of things like that, and for many uh Internet ads, for many small tweets and and Facebook type ads, it is simply not practically put that disclaimer there. So that is the basis on which these ads did not carry a disclaimer. Let me

ask you this. Facebook did not get an exemption from the disclaimer requirement inn as Google did, so why hasn't Facebook been forced to comply or face some kind of penalties? Well at the time, one of the questions has been whether or not this exemption for what's often called the small items exemption should apply to various Internet type advertising and digital platforms, and that has varied with the question of you know, what is the cost how practical is

it to do? So what you had was a series of Advisor opinion request where companies were asking, you know, in specific situations, do we need a disclaimer on this, that or the other? So there are different situations each time. In Google's case, the Commission voted that no disclaimer was necessary. In the Facebook case, the Commission ended up splitting three to three which means essentially they didn't give Facebook and

opinion one way or the other. But as a practical matter, since you need uh four commissioners to vote for an enforcement action, uh, and you have three commissioners say no, you don't need a disclaimer, it was logical for Facebook to assume that they weren't going to have to go

through that. Putting a disclaimer on all those ads are turning away as at was not, in their estimation practical Fred Moss, what exactly you know if they apply these standards under this bill to online advertising on a place like Facebook, what exactly will this bill do? It will, more or less to the extent that they're not already consistent with what you see on TV. It'll bring those ads in some fashion, some manner in line with what we've all typically seen all the various type of radio

and television ads we've seen over the years. You know, at the end there's some type of disclaimer paid for by Hillary Clinton for president, down it's not the president, etcetera, etcetera. It's more or less trying to provide the public with at least a semblance of transparency and understating of who pays for it. The question, of course, and this is what no one truly knows right now, is will it matter?

You know? Is there's the obvious part of if if the disclosure requirements are imposed, that the most egregious violations of using foreign money to pay for ads will come down a bit just because it will be too obvious. But the more subtle and nuanced ways in which I'm sure countries such as Russia could use through shell corporations to try to pay for it, it's not clear that that will ever be made really obvious enough to allow

for criminal enforcement. It's not clear to what extent the public whatever died deep enough into it to see if they to find out who's paying for a particular advocy on Facebook. We're talking with Professor Bradley Smith of Capital University Law School, who is the former chairman of the Federal Election Commission, and Bradley Moss, a partner at Mark Zad about a new bill to require disclosure of who paid for online political ads in places like Facebook, Twitter,

and Google. Apparently Russian Russian trolls put a lot of ads onto um these sites over the course of the election last year, and Congress is now looking at the impact and what to do about it. Currently, disclosure is not required as it is for print, radio, and TV, but Congress is knew. But if this bill were adopted by Congress and signed by the President, the similar disclosure would be required online. Professor Smith, we were talking a little bit before the break about whether or not this

kind of disclosure can actually be effective. I mean, given the fact that people online are very good at hiding not just who they are and using fake names, but also even where their servers are located or which server is actually putting out messages to various places, can this kind of disclosure actually work online to combat the problem that Congress is looking at now. Well, I do think

it's problematic in a number of ways. One of the first things, for example, is that the press conference introducing the legislation yesterday, Senators Warner and Colbukar mentioned again that, you know, voters needed to know who was paying for the ads they were seeing. But in fact, in many of these cases, voters still won't know who's paying for the ads they're seeing. They won't know unless they go to this registry that the platforms need to keep, and

voters typically aren't going to do that. And by the time they do, they won't remember what ad they saw from where, and what was paid and what wasn't. So you've got some problem there is whether you can even accomplish that basic objective of giving information that's useful to voters at a time what's useful to them. But there's are other issues here. I mean, the amounts engaged were

really quite small. Mark Penn, the former Clinton strategist, has estimated that the actual amounts it was campaign related was as little as sixty dollars in the Wall Street Journal just uh this past week. But even if it was more than that, it's a small amount compared to the total.

And it would be fairly easy. Although you lose some ability to target as much as we want, it would be pretty easy to just set up free accounts and just keep pumping out news through bots that are not doing paid advertising, but again are just setting up vac accounts that can be taken down. But there's kind of

race going on and on again. We're talking about the Russian government interfering in our campaigns, and when you're talking about that, I don't think they're going to be easily deterred by a requirement that ads have some kind of minimal disclaimer on them. And I do want to emphasize one of the things again, David, just from the instance. Again, it's not that that Internet is treated differently than other uh uh. Media. It's just that the small exemptions uh uh.

There are a small items exemption that is in the law. Seems to be something that pops up more in the case of Internet, but that small exemptions does apply to all kinds of media as well. So it's not again like the Internet has the specifically different regime, It's that it has the same regime. Brad Moss, do you agree, even if there is a chance of being able to stop some foreign interference with these online ads, shouldn't we go forward with this kinds of this kind of legislation. Yeah,

I mean an actor largely agree with the professor. I don't only have any disagree with anything he said, just that I mean the part of the problems here. Even I mean the legislation I have no problem with. It will be good from a general transparency and accountability standpoint,

so it doesn't hurt anything as far as I'm concerned. Uh, the larger problem, but I don't think this legislation can truly end asks anymore so than past legislation that required disclosure for any number of different types of organizations that place political ads in print or news media or on TV. Is that as a question of does the public care to dig into the details to find out who paid for it? And do they care even if it is

paid for by some you know, possibly mischievous entity. You know when you said always say people are entitled with their own opinions. These days, especially in the Internet era, it seems to be the people are entitled to their own sacks. And that's part of what was certainly exacerbated during the election with the Russian bots with this information, But it only works if if the public was willing

to incorporate it into their thought process. And I think that speaks to a larger societal problem we have that no legislation can truly address so much as it's a matter of how we, as you know, as a marathon public address this various various different types of information that exists in various mediums and social platforms. Well, Professor Smith, given what you pointed out, that is the seriousness of the fact that the Russian government was attempting to um

influence an American election. Is there something legislatively that could be done that would be more effective than the bill that's currently pending, Well, I don't know, off the off the top of my head. I mean I I am of the persuasion that generally know there's probably not much that can be done. And moreover, it's not apparent that

this is a major problem. Again, you know, spending a few thousand dollars um is not necessarily have hot Remember, Russia runs a twenty four hour news station in the United States to influence American elections. Uh, and we let

them do that. And that's the important thing to remember is that whatever burdens were putting here and here, this bill is talking about requiring grassroots groups that spend as little as five hundred dollars in the aggregate over a two year period to start having various reports and filings and so on. And it's going to suppress some of

that activity. And we need to say, you realize that while the target maybe Russian interference, main people that are going to be hit are going to be American citizens who have to do more. And it's going to be you know, these very little thresholds aimed at the most grassroots of political activity that are using the net to reach folks where they never could before in traditional broadcasting. You know, you couldn't do anything for five So I think that's it's just a real cautionary note that we

need to keep in mind. Well, this is obviously an issue that we're gonna be talking about for some time to come, as we have midterm elections coming up and then another presidential election actually only a few years away. So our thanks to Professor Bradley Smith of Capital University Law School and Bradley Moss of Mark's Aid for being here on Bloomberg. Later talk about legislation pending to create

online advertisement political disclosure. Uh. Coming up on Bloomberg Law, we're going to be talking about Johnny Depp, the actor. Johnny Depp has lost a fortune of money, and he say he's been very profligant in the way he has spent his money, but he has had claims that his financial managers have mismanaged it to his detriment and took money that should have gone to him. He's now claiming that his lawyer did the same thing and colluded with

his managers. He's brought a lawsuit for thirty million dollars in fees, and we'll be talking about that coming up straight ahead on Bloomberg Law. This is Bloomberg