Section 230 of the Communications Decency Act of 1996 (47 U.S.C. § 230) was Congress' response to two court cases decided in New York in the early 1990's that had conflicting results.
Cubby and Stratton Oakmont
The first case involved CompuServe, which in the early days of the Internet hosted "an on-line general information service" through which subscribers could access thousands of outside sites and around 150 special-interest forums. When a columnist for one of the special-interest forums posted defamatory comments about a competitor, the competitor sued CompuServe for libel. But the court, in the 1991 case Cubby, Inc. v. CompuServe, Inc, found CompuServe could not be held liable as the columnist’s distributor because CompuServe did not review any of the content on the forums before it was posted. Without knowledge of the libel, CompuServe could not be held responsible for it.
Four years later, in 1995, another New York court took a different approach in Stratton Oakmont, Inc. v. Prodigy Servs. Co. Prodigy was a web services company with two million subscribers that hosted online bulletin boards, including the popular site MoneyTalk. Because Prodigy moderated its online message boards and deleted some messages for "offensiveness and 'bad taste,'" the court found that it had become akin to a publisher with responsibility for defamatory postings that made it onto the site. At the time, Prodigy received 60,000 postings a day—far too many to review in their entirety. But the decision in Stratton Oakmont meant that just for attempting to moderate some posts, Prodigy took on liability for all posts. To avoid liability, the company would have to give up moderating all together and simply act as a blind host, like CompuServe.
In Congress, several legislators reacted to the Stratton Oakmont decision with alarm. Instead of imposing liability on companies that tried to police their sites, these legislators wanted to leave Internet companies like Prodigy free to develop new and innovative services—including moderator tools, as the market dictated—to ensure the Internet could continue to flourish. The prospect of liability for users' posts would have a chilling effect, resulting in severe restrictions on what and where Internet users could post.
The Communications Decency Act
In February of 1995, Senator James Exon (D-NE) introduced the Communications Decency Act (CDA) in an attempt to regulate obscenity and indecency online. The CDA amended telecommunications law by making it illegal to knowingly send to or show minors obscene or indecent content online. Despite the CDA's vague language, threats of pornography and children's safety were enough to let it pass. It was tacked on to the Telecommunications Act, a sweeping bill to update a sixty-year-old law.
The Cox-Wyden Amendment: Section 230
Worried about the future of free speech online and responding directly to Stratton Oakmont, Representatives Chris Cox (R-CA) and Ron Wyden (D-OR) introduced an amendment to the Communications Decency Act that would end up becoming Section 230. The amendment specifically made sure that "providers of an interactive computer service" would not be treated as publishers of third-party content. Unlike publications like newspapers that are accountable for the content they print, online services would be relieved of this liability. Section 230 had two purposes: the first was to "encourage the unfettered and unregulated development of free speech on the Internet," as one judge put it; the other was to allow online services to implement their own standards for policing content and provide for child safety. Seeing the crucial importance of the amendment, the House passed it 420-4.
CDA Struck Down, Section 230 Survives
With Section 230 in the bill, the Telecommunications Act was signed into law on February 8, 1996. That same day, the ACLU filed a legal challenge for a temporary restraining order on the bill's indecency provisions.
The online community was outraged by the passage of the bill. EFF decried CDA's overly broad language and launched a Blue Ribbon Campaign, urging sites to "wear" a blue ribbon and link back to EFF's site to raise awareness. Several sites chose to black out their webpages in protest.
The ACLU's case, which several civil liberties organizations like the EFF as well as other industry groups joined, reached the Supreme Court. On June 26, 1997, in a 9-0 decision, the Supreme Court applied the First Amendment by striking down the anti-indecency sections of the CDA. Section 230, the amendment that promoted free speech, survived.