Companies conducting e-commerce rely on search engines and computer algorithms to retrieve, recommend and rank information and products for their customers. For instance, Google retrieves and lists virtually every kind of information that its users seek. Likewise, by using data such as its users' past purchases and demographic information, Amazon lists and recommends customized products for particular users. In this same way, Netflix recommends movies for its users, and Apple ranks apps on its ITunes App Store. Receiving favorable recommendations and priority in rankings are incredibly important to businesses engaged in e-commerce. But are these computer-generated recommendations and search results speech that is protected by the First Amendment?

Last month, one federal court firmly concluded "yes." In an important ruling of first impression, the U.S. District Court for the Southern District of New York concluded that the search results generated by China's largest search engine (Baidu) are protected free speech. Zhang v. Inc. (S.D.N.Y. March 28, 2014). This decision is important for businesses that search for, present and rank information and products for consumers, as well as companies that themselves need consumers to find them online quickly — and to find them in rankings ahead of their competitors.

Baidu is a Chinese search engine that retrieves information, products and services using Chinese search terms. It is one of the most-often visited websites in the world, holding an approximately 80 percent market share of the search engines in China. It also is the first Chinese company to be listed in the NASDAQ 100 index. Baidu was sued by New York residents who describe themselves as "promoters of democracy in China" who published articles online about the democratic movement in China. The plaintiffs alleged that search engines such as Google and Bing retrieve their publications as search results, but Baidu does not and, therefore, censors them. Based on Baidu's failure to retrieve their publications, the plaintiffs raised several claims against Baidu, including claims for violating their civil rights under federal and New York law.

But the court dismissed the plaintiffs' claims by holding that Baidu's search results are speech protected by the First Amendment. The court noted that the First Amendment prohibits the government from interfering with the "editorial judgments of private speakers on issues of public concern." Based on that principle, the court concluded that "there is a strong argument to be made that the First Amendment fully immunizes search engine results from most, if not all, kinds of civil liability and government regulation." It reasoned that search engines are entitled to First Amendment protection because their results are speech.

In reaching its ruling, the court rejected the contention that Baidu is merely a conduit of information or a passive platform that is not entitled to strong protection under the First Amendment. Instead, it concluded that Baidu relies on human judgments about what information to retrieve and how to order and rank that information. In particular, the court noted that by retrieving and organizing information in a way that they think will be relevant and useful to their users, search engines "inevitably make editorial judgments about what information (or kinds of information) to include in the results and how and where to display that information."

The court concluded that just as a newspaper editor's decisions are protected by the First Amendment, so too are a search engine's judgments. The court ultimately ruled that the plaintiffs seek to hold Baidu liable for, and thus punish Baidu for, a conscious decision to design its search-engine algorithms to favor certain expression on core political subjects over other expression on those same political subjects. To allow such a suit to proceed would plainly violate the fundamental rule of protection under the First Amendment, that a speaker has the autonomy to choose the content of his own message.

Finally, the court emphasized that Baidu's search results are speech that should not receive less protection under the First Amendment merely because those results were produced by a computer algorithm. The court reasoned that "the algorithms themselves were written by human beings," and those results inherently incorporate the judgments of Baidu's engineers.

Countless companies conducting e-commerce will be affected by this ruling. For instance, Amazon and other e-commerce sites use algorithms to search for, list and recommend millions of products manufactured by thousands of companies every day. This ruling strongly supports the principle that search engines and e-commerce websites are immune from legal claims that are based on how they retrieve, present and rank information and products. This result is particularly important because high rankings on Google, Amazon and other powerful search engines are critical for companies conducting e-commerce. Finally, the ruling also rejects arguments raised by some First Amendment scholars that content that a company merely compiles and organizes, but does not adopt as its own content, should be entitled to only a lower level of protection under the First Amendment.

Counsel for the plaintiffs stated that they will appeal the U.S. District Court for the Southern District of New York's dismissal of their claims, so the U.S. Court of Appeals for the Second Circuit will also likely have the chance to analyze this important issue.

Originally published in Law360.

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