PayPal Launches New Internet Controversy over Decision to Censor Erotica Content Sold through Platform

PayPal has set off a new controversy on the Internet by advising e-book sellers that they must remove all erotica content off their websites or PayPal will stop doing business with them.   In particular, PayPal is apparently concerned with content dealing with erotica fiction containing rape, incest, and bestiality, reported Technolog on MSNBC's website.

According to a report by Tech Crunch, e-book publisher Smashwords received a notice from PayPal on Feb. 18th giving the publisher only a few days to achieve compliance with the "ultimatum."  In response to the Paypal demands, Smashwords has posted this press release on its website advising authors, publishers, and literary agents of the new Smashwords position.

Zdnet is reporting  that AllRomance, Excessica and Bookstrand received similar notices.

As you might expect, the uproar over the Internet is on the fact that a payment processor is trying to "censor" obscene content sold over the Internet by third parties.  The concern is over the slippery slope of censorship and how dangerous this is for society as a whole.

On the other hand, PayPal is definitely not the only payment processing option available over the Internet, so these e-book publishers do have other options besides working with Paypal.  Moreover, PayPal is a privately owned company, and despite recent acts by the President and Congress to force particular behavior on privately owned companies, as far as I know, there are still laws in this country recognizing the right of privately owned companies to make their own decisions about how to run their businesses, including what customers to work with and what terms and conditions to operate under.  We may be on a slippery slope of private companies losing their autonomy to make their own business decisions, but at the moment, we still live in a country where private companies have some autonomy to make their own individual decisions.

Furthermore, we still have obscenity laws in this country, which are local in nature.  Can't an international company like PayPal take the position that running payments to purchase obscenity would be a violation of the laws somewhere in this country?

According to many of dissenter voices over the Internet, the answer is a clear "no." Constitutional rights to free speech are at risk when censorship is involved, say these dissenters.

In considering this issue, I must say that I am a strong proponent of free speech; however, at the same time, I personally see no value in this type of content, other than to law enforcement who might want to know who is reading it.  I would contrast this type of content with pure adult pornography in the sense that it is actually depicting criminal activity against a non-consenting third party or a third party who is not capable of consenting, whereas pornography does not by its very nature depict something that is of a criminal nature.  That puts this type of content, in my opinion, in a different category from mere obscene content.

I would also argue that companies like PayPal have the right to make business decisions based on their own conscience and morals, provided that those decisions do not violate any laws themselves. I worry about the direction our society is going in, if private companies are no longer the afforded the opportunity to make business decisions for themselves and the public good starts dictating private business behavior motivated by morality and conscience. Isn't that how our society and other societies have gotten themselves in trouble in the past?

It will be interesting to see how this controversy develops. The Silicon Valley IP Licensing Law Blog will continue to follow the story and keep you posted on any new developments.