Stratton Oakmont, Inc. v. Prodigy Services Co.
Issue
Whether Prodigy was liable as a publisher of defamatory statements posted by a user, given that Prodigy voluntarily exercised editorial control over content on its boards.
What Happened
Prodigy operated an online bulletin board service and held itself out as a "family-oriented" computer network. It employed automated software to screen for offensive language and published content guidelines that it enforced. A user posted statements on Prodigy's "Money Talk" board falsely accusing Stratton Oakmont, a securities broker-dealer, of fraudulent conduct. The New York Supreme Court held that because Prodigy actively exercised editorial control — distinguishing itself from CompuServe, which did not — it was liable as a publisher rather than a mere distributor.
Why It Matters
The direct legislative catalyst for § 230. Congress enacted § 230(c)(1) specifically to reverse the Stratton Oakmont result and eliminate the perverse incentive it created: under Stratton Oakmont, a platform that chose to moderate content assumed publisher liability, while a platform that did nothing was shielded as a mere distributor. § 230 was designed to encourage good Samaritan moderation by immunizing platforms that moderate from publisher liability.
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