Prager U vs. YouTube [Updated]

Prager University produces a wide variety of educational videos that have become very popular, especially with young people. They are some of the highest quality materials available on the internet. As with most other video producers, Prager U’s most important outlet is YouTube, which is owned by Google and is the platform on which 90 percent or more of videos are watched, worldwide.

For several years, YouTube has suppressed Prager U’s videos by “restricting” them, which makes them invisible to viewers who are using the restricted mode, as is the case in many school environments, and by not allowing them to be monetized. After multiple appeals of YouTube’s discriminatory decisions, Prager U sued YouTube and Google in federal court, alleging violations of the First Amendment and the Lanham Act (the federal law that governs advertising in interstate commerce), as well as several causes of action under California law. The district court judge granted defendants’ motion to dismiss the federal counts, and Prager U appealed. That appeal was argued on Tuesday before a three-judge panel of the 9th Circuit Court of Appeals.

That YouTube has engaged in viewpoint discrimination to the detriment of Prager U is indisputable. That YouTube does this because its employees disapprove of conservatism is obvious. But YouTube and Google are private companies, and the First Amendment applies only to government. (“Congress shall make no law…”) The U.S. Supreme Court has articulated a narrow exception where the First Amendment can apply to private entities if they “exercise powers traditionally exclusively reserved to the State.” Prager U faces an obvious hurdle, in that hosting videos is not a traditional governmental function.

The hurdle got higher when, in June, the U.S. Supreme Court decided Manhattan Community Access Corp. v. Halleck, in which the City of New York hired a private nonprofit to operate the public access channels on Manhattan’s cable television system. On its face, this seems like an instance where a private entity has taken over a governmental function and is involved in “state action.” But the Court’s conservative majority, in an opinion by Justice Kavanaugh, rejected that position. Kavanaugh emphasized the very narrow circumstances under which a private entity can be subjected to the First Amendment. The four liberal justices dissented, not unreasonably, based on my superficial reading. But their dissent does Prager U little good, as no governmental entity has delegated the task of hosting videos to YouTube.

The 9th Circuit broadcasts its oral arguments live (on YouTube, ironically), and they remain archived. Here is Tuesday’s hearing; it begins about halfway through the video:

I thought everyone involved acquitted himself or herself well. Prager U’s lawyer emphasized YouTube’s repeated representations that it is a viewpoint-neutral forum, equally available to all. But, as one judge noted, if YouTube has failed to live up to its promises, that sounds more like a contract cause of action than a First Amendment issue. The two judges who asked questions were obviously sympathetic to Prager U on the facts, but skeptical of its legal theory given Supreme Court precedents and the language of the First Amendment. Looming in the background, of course, is the fact that YouTube monopolizes (in the legal sense of the term) video hosting, while Google monopolizes search and Facebook and Twitter monopolize their social media niches.

It is YouTube’s market dominance that gives Prager U’s case its resonance, yet there is no traditional legal theory that clearly applies. Market dominance does not align with First Amendment jurisprudence, and antitrust law, which is administered as much by economists as by lawyers, generally assumes that the point of having a monopoly is to make money by raising prices. To my knowledge, there is no body of antitrust law that addresses the abuse of monopoly power not to raise prices, but to advance a political and philosophical agenda.

The Supreme Court might create such a body of law, under the broad mandate of the several antitrust statutes. The propriety of doing so is far beyond the scope of this post. But there remains the question of antitrust remedies. Treble damage awards in favor of aggrieved parties like Prager U might help to keep liberal platforms in line, although contract-based actions might do that nearly as well. Some, like Glenn Reynolds, argue that the tech and social media monopolies should be broken up under the antitrust laws. But if there were, say, five YouTubes, is there any reason to think that any of the five would be hospitable to conservatives?

And what if tech platforms like Google, YouTube, Facebook and Twitter are natural monopolies, like the electric company and the water company? I suspect that this is the case; otherwise, why do successful competitors not spring up? Once we had Facebook and MySpace, now we only have Facebook. Social media platforms derive their value largely from network effects. I.e., Facebook is valuable precisely because your high school classmates are on it. You don’t have to search five or six different platforms to communicate with them. Likewise with Twitter: it is desirable to only tweet once, not five times on five different platforms, in order to reach your audience. YouTube is perhaps different; there may be room for competing video platforms, like Vimeo. But YouTube’s 90 percent-plus market dominance suggests that it, too, may be a natural monopoly.

Natural monopolies like the electric company and the water company are, by statute, regulated utilities. It may be that internet platforms should be treated in similar fashion. But that would require federal legislation that at this point has zero chance of passage.

Prager U may yet win its case, which is in its early innings. Perhaps the 9th Circuit will hold that Prager’s First Amendment and Lanham Act claims state a claim, and give it a green light to pursue discovery. Perhaps Prager U will prevail on its state law causes of action, although I assume that California’s judiciary is securely in the hands of the Democratic Party, which generally is not in favor of free speech. But for the foreseeable future, the Left’s control over the principal means of public communication will remain a huge advantage.

UPDATE: Prager U explains its position in the YouTube lawsuit in this video, featuring one of its lawyers:

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