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Two ideas of free speech duel at America’s Supreme Court

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BACK WHEN X was still Twitter, Ron DeSantis, Florida’s governor, was no fan of the social-media company. In May 2021 he heralded his signing of Senate Bill 7072 as a strike against censorship. Residents of Cuba and Venezuela may be victimised by “tyrannical behaviour”, he said, but Floridians will now be “guaranteed protection against the Silicon Valley elites”. By “taking back the virtual public square”, the state’s lieutenant-governor, Jeanette Nuñez, added, the law will rescue discourse from a “radical leftist narrative”.

In May 2023, with Twitter rebranded and in Elon Musk’s hands, Mr DeSantis opted to launch his ill-fated presidential campaign on the site, and X’s content moderation has been overhauled. But Senate Bill 7072 remains on the books, along with a similar law, House Bill 20, enacted in Texas in September 2021. Challenges to both laws—based on the free-speech guarantee of the First Amendment—come to the Supreme Court on February 26th.

The plaintiffs in NetChoice v Paxton and Moody v NetChoice contend that Texas and Florida are unconstitutionally intruding on private companies’ decision-making about speech they host on their sites. NetChoice represents giants like X, Facebook, Google (owner of YouTube) and TikTok, as well as smaller platforms like Etsy and Pinterest. It argues that “governmental efforts to interfere with the editorial discretion of private parties is forbidden censorship.”

The laws prohibit removing and “shadow-banning” users on large social-media platforms. (Florida’s applies to those with more than 100m active users; Texas sets the floor at 50m.) Texas bars sites from censoring posts based on “viewpoint”; Florida protects users from “inconsistent and unfair actions”. The Sunshine State takes particular aim at sites that ban candidates for state office, a move that can draw fines of up to $250,000 a day. Other violations could expose sites to lawsuits with damages up to $100,000 apiece. Both laws also impose detailed reporting on content moderation—requirements the sites say are “enormously burdensome” but the states insist are “quite modest”.

Two district courts sided with NetChoice’s First Amendment claim, but their respective appellate courts did not see eye to eye. Florida’s law remained blocked by the Eleventh Circuit Court of Appeals. Texas, meanwhile, prevailed at the Fifth Circuit but the Supreme Court granted NetChoice’s request to temporarily freeze HB 20. Now the justices will give the matter a full review.

The tricky question at the heart of these cases is how to conceptualise social-media companies. Are they akin to newspapers, which have total control over which stories appear in their pages? Or are they closer to phone companies or delivery services, which must (with few exceptions) transmit whatever messages or packages their customers wish to dispatch?

The Supreme Court decided in 1974 that Florida could not require newspapers to publish responses from political candidates who had been criticised in their editorial pages. Two decades later it ruled that organisers of a St Patrick’s Day parade did not have to let a gay-pride group march along the route. And last year it allowed a web designer to turn down clients seeking websites for same-sex weddings.

These and other rulings suggest that the First Amendment protects both individuals and businesses from being compelled to communicate ideas with which they disagree. But Florida and Texas say that the likes of Facebook and YouTube are neither publishers nor private citizens but “common carriers” and can be made subject to neutral rules of content moderation. By doing business with all comers, the platforms “can be required to open [their] doors on equal terms to all”—a duty that may be heightened by what the states characterise as “monopoly power in their respective markets”.

As “platform[s] for all ideas”, Texas argues, large social-media sites are easily distinguished from choosy publishers or even bookstores, which can decline to stock any title for any reason. Unlike a cable-television provider or cinema, which “carefully selects and compiles the materials it presents”, Facebook and TikTok (by and large) let their users post what they like. Given the “vastness and diversity” of that content, Florida argues, there is no chance anyone would mistake the views of those who post for those of the companies that host.

Sorting out whether YouTube is more like the Miami Herald, a cinema or AT&T is at the heart of the tangle before the Supreme Court. But differing claims to free speech are also in play, which helps explain why the politics of the NetChoice cases are interestingly scrambled. Although the Florida and Texas laws arrived in a swirl of anti-woke rhetoric, Scott Keller, a conservative former Texas solicitor-general, argued against the Lone Star State’s social-media crackdown at the Fifth Circuit. And odd bedfellows will be arguing alongside one another for NetChoice at the Supreme Court: Paul Clement, the foremost litigator of America’s conservative legal movement, and Elizabeth Prelogar, President Joe Biden’s solicitor-general.

Economics

Donald Trump sacks America’s top military brass

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THE FIRST shot against America’s senior military leaders was fired within hours of Donald Trump’s inauguration on January 20th: General Mark Milley’s portrait was removed from the wall on the E-ring, where it had hung with paintings of other former chairmen of the joint chiefs of staff. A day later the commandant of the coast guard, Admiral Linda Fagan, was thrown overboard. On February 21st it was the most senior serving officer, General Charles “CQ” Brown, a former F-16 pilot, who was ejected from the Pentagon. At least he was spared a Trumpian farewell insult. “He is a fine gentleman and an outstanding leader,” Mr Trump declared.

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Checks and Balance newsletter: The journalist’s dilemma of covering Trump

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Checks and Balance newsletter: The journalist’s dilemma of covering Trump

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Germany’s election will usher in new leadership — but might not change its economy

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Production at the VW plant in Emden.

Sina Schuldt | Picture Alliance | Getty Images

The struggling German economy has been a major talking point among critics of Chancellor Olaf Scholz’ government during the latest election campaign — but analysts warn a new leadership might not turn these tides.

As voters prepare to head to the polls, it is now all but certain that Germany will soon have a new chancellor. The Christian Democratic Union’s Friedrich Merz is the firm favorite.

Merz has not shied away from blasting Scholz’s economic policies and from linking them to the lackluster state of Europe’s largest economy. He argues that a government under his leadership would give the economy the boost it needs.

Experts speaking to CNBC were less sure.

“There is a high risk that Germany will get a refurbished economic model after the elections, but not a brand new model that makes the competition jealous,” Carsten Brzeski, global head of macro at ING, told CNBC.

The CDU/CSU economic agenda

The CDU, which on a federal level ties up with regional sister party the Christian Social Union, is running on a “typical economic conservative program,” Brzeski said.

It includes income and corporate tax cuts, fewer subsidies and less bureaucracy, changes to social benefits, deregulation, support for innovation, start-ups and artificial intelligence and boosting investment among other policies, according to CDU/CSU campaigners.

“The weak parts of the positions are that the CDU/CSU is not very precise on how it wants to increase investments in infrastructure, digitalization and education. The intention is there, but the details are not,” Brzeski said, noting that the union appears to be aiming to revive Germany’s economic model without fully overhauling it.

“It is still a reform program which pretends that change can happen without pain,” he said.

Geraldine Dany-Knedlik, head of forecasting at research institute DIW Berlin, noted that the CDU is also looking to reach gross domestic product growth of around 2% again through its fiscal and economic program called “Agenda 2030.”

But reaching such levels of economic expansion in Germany “seems unrealistic,” not just temporarily, but also in the long run, she told CNBC.

Germany’s GDP declined in both 2023 and 2024. Recent quarterly growth readings have also been teetering on the verge of a technical recession, which has so far been narrowly avoided. The German economy shrank by 0.2% in the fourth quarter, compared with the previous three-month stretch, according to the latest reading.

Europe’s largest economy faces pressure in key industries like the auto sector, issues with infrastructure like the country’s rail network and a housebuilding crisis.

Dany-Knedlik also flagged the so-called debt brake, a long-standing fiscal rule that is enshrined in Germany’s constitution, which limits the size of the structural budget deficit and how much debt the government can take on.

Whether or not the clause should be overhauled has been a big part of the fiscal debate ahead of the election. While the CDU ideally does not want to change the debt brake, Merz has said that he may be open to some reform.

“To increase growth prospects substantially without increasing debt also seems rather unlikely,” DIW’s Dany-Knedlik said, adding that, if public investments were to rise within the limits of the debt brake, significant tax increases would be unavoidable.

“Taking into account that a 2 Percent growth target is to be reached within a 4 year legislation period, the Agenda 2030 in combination with conservatives attitude towards the debt break to me reads more of a wish list than a straight forward economic growth program,” she said.

Change in German government will deliver economic success, says CEO of German employers association

Franziska Palmas, senior Europe economist at Capital Economics, sees some benefits to the plans of the CDU-CSU union, saying they would likely “be positive” for the economy, but warning that the resulting boost would be small.

“Tax cuts would support consumer spending and private investment, but weak sentiment means consumers may save a significant share of their additional after-tax income and firms may be reluctant to invest,” she told CNBC.  

Palmas nevertheless pointed out that not everyone would come away a winner from the new policies. Income tax cuts would benefit middle- and higher-income households more than those with a lower income, who would also be affected by potential reductions of social benefits.

Coalition talks ahead

Following the Sunday election, the CDU/CSU will almost certainly be left to find a coalition partner to form a majority government, with the Social Democratic Party or the Green party emerging as the likeliest candidates.

The parties will need to broker a coalition agreement outlining their joint goals, including on the economy — which could prove to be a difficult undertaking, Capital Economics’ Palmas said.

“The CDU and the SPD and Greens have significantly different economic policy positions,” she said, pointing to discrepancies over taxes and regulation. While the CDU/CSU want to reduce both items, the SPD and Greens seek to raise taxes and oppose deregulation in at least some areas, Palmas explained.

The group is nevertheless likely to hold the power in any potential negotiations as it will likely have their choice between partnering with the SPD or Greens.

“Accordingly, we suspect that the coalition agreement will include most of the CDU’s main economic proposals,” she said.

Germany is 'lacking ambition,' investor says

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