Spring 2022 www.uclajolt.com Vol. 27, No.

UCLA
JOURNAL OF LAW & TECHNOLOGY

SPECIAL ISSUE: GOVERNING THE DIGITAL SPACE

VIRTUAL GOVERNMENTS

Edward Lee*

ABSTRACT
This Article is the first to elaborate the theory of virtual governments
as a concept to understand Internet platforms. The theory postulates that
large Internet platforms are virtual governments in two senses: (1) they rule
the virtual world online, and (2) they operate as governments even though
not formally recognized as such. With this understanding, we are in a better
position to identify how to improve online governance with respect to
content moderation: Internet platforms should compare their policies,
procedures, and safeguards—or lack thereof—to the standards of due
process, transparency, and accountability applied to national governments
in democracies. These reforms will compensate for the democratic deficit
that undermines the legitimacy of virtual governments’ online governance
of people. By the same token, recognizing Internet platforms as virtual
governments also militates in favor of national governments affording
them comity and mutual respect. Efforts by national governments to break
up virtual governments should be viewed with great scrutiny, as would be
applied if one national government tried to break up the government of a
state or another country. Like federalism, a principle of virtual comity helps
protect individual liberties by dispersing powers among different actors—

* Professor of Law, Illinois Tech Chicago-Kent College of Law. Founder, The Free
Internet Project. Thanks to Hal Krent for helpful feedback on the ideas in this Article.

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which in turn operates as an important check on national governments.

Even (or especially) when there is a backlash against Internet platforms,
adhering to a principle of virtual comity helps to disperse power over the
Internet so it is not concentrated within a national government.

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TABLE OF CONTENTS

INTRODUCTION ................................................................................................... 4
I. INTERNET PLATFORMS AS VIRTUAL GOVERNMENTS ..................................... 8
A. Web1 ....................................................................................................... 8
B. Web2 and the Rise of Internet Platforms and Virtual Governments ......... 9
1. History ............................................................................................... 9
2. Internet Platforms as Virtual Governments .................................. 13
C. Web3 and the Rise of DAOs and Decentralization ................................. 16
II. HOW VIRTUAL GOVERNMENTS SHOULD GOVERN AND BE GOVERNED ...... 19
A. How Virtual Governments Should Govern ............................................ 19
1. Internet Platforms Must Recognize Themselves as Virtual
Governments ................................................................................. 19
2. Internet Platforms Should Adopt Reforms Consistent with
Democratic Accountability ........................................................... 22
a. Priority 1: Enhancing Democratic or Public Participation ......... 22
b. Priority 2: Providing Greater Transparency and Reason-Giving 23
c. Priority 3: Recognizing a Principle of Separation of Powers ....... 26
B. How Virtual Governments Should Be Governed by National
Governments ......................................................................................... 26
III. RESPONDING TO OBJECTIONS ...................................................................... 28
A. Corporations Maximize Share Holder Profits......................................... 29
B. Commandeering Corporations ............................................................... 30
CONCLUSION .................................................................................................... 31

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INTRODUCTION
How people encounter the online world is increasingly determined
by a few, large Internet companies, often derided as “Big Tech.”1 For social
media, the main players in the United States are Facebook, Instagram,
Pinterest, Snap, TikTok, Twitter, and YouTube.2 For search, Google
dominates with a staggering 91.9 percent worldwide market share.3 Far
from the “Declaration of the Independence of Cyberspace” John Perry
Barlow scribed in 1996, the governance of the Internet has not emerged
from “enlightened self-interest and the commonweal.”4 Instead, its
evolution has been guided by the commercially-driven decisions of faceless
corporate employees in areas ranging from content moderation, to personal
data, to tracking of user interactions online. As Internet scholars have long
recognized, these online platforms are quasi-sovereignties, establishing
“Facebookistan,” “Googledom,” “Twitterverse,” “YouTubia,” and now the
bustling “TikTokland,”5 which became popular during the pandemic.6

1. See, e.g., Brody Mullins & Ryan Tracy, Big Tech and Foes Spar Over Bill to Curb Market
Power of Dominant Internet Platforms, WALL ST. J. (Jan. 19, 2022, 5:00 AM),
https://www.wsj.com/articles/big-tech-and-foes-spar-over-bill-to-curb-market-power-of-
dominant-internet-platforms-11642586401.

2. See Most Popular Social Networks Worldwide as of January 2022, Ranked by Number of
Monthly Active Users, STATISTA (Jan. 2022),
https://www.statista.com/statistics/272014/global-social-networks-ranked-by-number-of-
users; Twitter does not rank highly in the world comparison, but it did so in a United
States comparison in 2021. See Jay Baer, Social Media Usage Statistics for 2021 Reveal
Surprising Shifts, CONVINCE & CONVERT, https://www.convinceandconvert.com/social-
media-research/social-media-usage-statistics (last visited Mar. 15, 2022).

3. See Search Engine Market Share Worldwide: Jan 2021 - Jan 2022, STATCOUNTER:
GLOBALSTATS, https://gs.statcounter.com/search-engine-market-share#monthly-202101-
202201 (last visited Mar. 15, 2022).

4. John Perry Barlow, A Declaration of the Independence of Cyberspace, ELEC. FRONTIER

FOUND. (Feb. 8, 1996), https://www.eff.org/cyberspace-independence.

5. See, e.g., REBECCA MACKINNON, CONSENT OF THE NETWORKED: THE WORLDWIDE

STRUGGLE FOR INTERNET FREEDOM 149 (2012); Edward Lee, Moderating Content Moderation:
A Framework for Nonpartisanship in Online Governance, 70 AM. U. L. REV. 913, 929 (2021).

6. See Rachel Bunyan, TikTok is More Popular than Google: Chinese-Owned Video-Sharing App
Clocked Up More Visits After Surge in Popularity During Pandemic, DAILY MAIL (Dec. 22,
2021, 8:49 PM), https://www.dailymail.co.uk/news/article-10338393/TikTok-popular-
Google-surge-popularity-pandemic.html.

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This Article proposes to take the analogy one step further, arguing that
we should envisage these Internet platforms as establishing virtual
governments. As such, Internet platforms are quasi-governments that make
policies and decisions that constitute de facto regulations or laws for people
on the Internet. These virtual governments wield at least as much power
over the ways in which people encounter the Internet as do national
governments.7 Indeed, Internet platforms may exercise even greater power
over content moderation and suspensions of user accounts (known as
“deplatforming” people8) than the U.S. government, which is severely
limited by the First Amendment.9 The ongoing controversy over Internet
platforms’ content moderation—such as the removal of misinformation
related to elections, COVID, and vaccines—has thrown into sharp relief the
enormous power, if not responsibility, these platforms exercise daily.10
Once we recognize these large Internet platforms as virtual
governments, we gain not only a better, more accurate understanding of
the actual power the platforms wield in the online world, but also a critical
lens by which to evaluate their policymaking and decisions. For example,
because these virtual governments are not constituted by elections or public
participation, they operate in the shadow of a democratic deficit—namely,
the vast majority of people online have no say whatsoever in how Internet
platforms govern them.11 This democratic deficit is contrary to the notion of
a free and open Internet. It is one of the main reasons startups and
developers are now feverishly trying to build a decentralized Web3, to

7. See Lee, supra note 5, at 928–29.

8. See Aja Romano, Kicking People Off Social Media Isn’t About Free Speech, VOX (Jan. 21,
2021, 3:30 PM), https://www.vox.com/culture/22230847/deplatforming-free-speech-
controversy-trump.

9. See Lee, supra note 5, at 930.

10. See id. at 915–25 (summarizing controversy and polarization over content
moderation).

11. Cf. Jeffrey R. Lax & Justin H. Phillips, The Democratic Deficit in the States, 56 AM. J. POL.
SCI. 148, 149, 153 (2012) (finding “democratic deficit in state policymaking” based on
study showing “[r]oughly half the time, opinion majorities lose—even large
supermajorities prevail less than 60% of the time.”).

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eliminate the centralized control of Internet platforms.12 As Chris Dixon, a

general partner at a16z venture capital firm and a leading proponent of
Web3, explained: Web3 “fixes the core problem of centralized networks,
where the value is accumulated by one company, and the company ends
up fighting its own users and partners.”13 Critics of the Web2 Internet
platforms disagree with the platforms’ ability to censor people’s speech and
even control people’s ability to participate on the platform.14 Web3 is being
built on blockchain technology, a peer-to-peer, decentralized technology
used for cryptocurrencies and NFTs.15 Scholars have identified how
blockchain technology operates to create or facilitate a new kind of
decentralized governance.16
Whether or not a decentralized Web3 succeeds in displacing the power
of Internet platforms in the future, we must confront what to do, if
anything, about Internet platforms today. One roadmap of reform—the one
proposed by this Article—is to first conceptualize Internet platforms as
virtual governments, and then figure out how to improve them by drawing
upon our existing theories of good governance. Internet platforms can take
immediate steps to address the democratic deficit that they have created.
This is not to say that large Internet platforms should necessarily hold
elections for the selection of members who participate in key policymaking
roles, such as content moderation. But the lack of public participation
creates a democratic deficit that large Internet platforms must attempt to
compensate for in some way—for example, by adopting policies and

12. See Michael Gariffo, What is Web3? Everything You Need to Know About the Decentralized
Future of the Internet, ZDNET (Jan. 18, 2022), https://www.zdnet.com/article/what-is-web3-
everything-you-need-to-know-about-the-decentralised-future-of-the-internet/.

13. Chris Dixon, Why Web3 Matters, FUTURE (Oct. 7, 2021), https://future.a16z.com/why-
web3-matters/.

14. See Joshua Douglas et al. (@minimalsm), Web2 vs Web3, ETHEREUM (Mar. 23, 2022),
https://ethereum.org/en/developers/docs/web2-vs-web3/ (discussing Web3’s benefits
compared to Web2).

15. Id.

16. See, e.g., Andrej Zwitter & Jilles Hazenberg, Decentralized Network Governance:
Blockchain Technology and the Future of Regulation, FRONTS. IN BLOCKCHAIN (Mar. 25, 2020),
https://doi.org/10.3389/fbloc.2020.00012.

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safeguards that are designed to serve humankind and the public interest.
Otherwise, a virtual government can too easily devolve into an autocracy,
ruled by one person, namely, the CEO. That’s why it was not off base for
one commentator to describe Facebook as “the largest autocracy on earth”
and CEO Mark Zuckerberg as its ruler.17
The concept of virtual governments also provides a better framework
by which to scrutinize national governments and their potential regulations
of Big Tech platforms. National governments may overstep their bounds if
they attempt to commandeer Internet platforms to serve illegitimate goals,
such as censoring political dissent or conducting mass surveillance of
citizens.18 Likewise, although the current desire (if not hysteria)19 to break
up Big Tech no doubt sounds very attractive to many people and
politicians,20 it’s important to reserve that nuclear option as a tool of last
resort. Indeed, it is ironic that the last Big Tech company that the
government almost broke up—Microsoft—is no longer the target of such
attacks.21 Many U.S. investors probably welcomed Microsoft’s recent
earnings report, which beat expectations and stemmed a downturn in the
stock market at the time.22
Under my theory of virtual governments, national governments
should recognize virtual governments as important developers of Internet
policies and accord them a degree of comity and mutual respect. Attempts

17. Adrienne LaFrance, The Largest Autocracy on Earth, THE ATL. (Sept. 27, 2021),
https://www.theatlantic.com/magazine/archive/2021/11/facebook-authoritarian-hostile-
foreign-power/620168/.

18. See, e.g., Raphael Satter, U.S. Court: Mass Surveillance Program Exposed by Snowden Was
Illegal, REUTERS (Sept. 2, 2020, 5:20 PM), https://www.reuters.com/article/us-usa-nsa-
spying/u-s-court-mass-surveillance-program-exposed-by-snowden-was-illegal-
idUSKBN25T3CK.

19. See Andy Kessler, Don’t Buy into Big-Tech Hysteria, WALL ST. J.: OP. (Feb. 23, 2020, 1:56
PM), https://www.wsj.com/articles/dont-buy-into-big-tech-hysteria-11582484198.

20. See, e.g., Zephyr Teachout, Look Out, Big Tech, We’re Coming for You, NEW REPUBLIC
(Dec. 10, 2021), https://newrepublic.com/article/164679/antitrust-break-up-big-tech.

21. See Alec Stapp, Why Don’t People Talk About Breaking Up Microsoft?, TRUTH ON THE
MKT. (Aug. 8, 2019), https://truthonthemarket.com/2019/08/08/why-dont-people-talk-
about-breaking-up-microsoft/.

22. Chuck Mikolajczak, Wall Street Recovers from Early Lows on Microsoft Boost, REUTERS
(Oct. 29, 2021, 1:01 PM), https://www.reuters.com/business/wall-street-recovers-early-
lows-microsoft-boost-2021-10-29/.

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to commandeer, and especially, to break up, these virtual governments

should be viewed with great scrutiny. Only if Internet platforms fail to
adopt adequate policies, safeguards, and other meaningful reforms to their
governance operations affecting the online lives of millions of people,
should national governments consider enacting laws to regulate virtual
governments to develop better Internet policies.
Part I introduces and defines the concept of virtual governments and
situates Internet platforms within the development of the Web known as
Web2, which gave rise to social media and large Internet platforms. Part I
also explains how developers are building the decentralized Web3 based
on peer-to-peer blockchain technology, in part to counter the power of
virtual governments. Part II explains how the concept of virtual
governments can give us a better understanding of their power in the online
world, as well a framework to evaluate both online governance by these
companies and attempts by national governments to regulate or even break
up these Internet companies. Finally, Part III addresses objections to the
theory of virtual governments.
I. INTERNET PLATFORMS AS VIRTUAL GOVERNMENTS
Part I introduces the concept of virtual governments to describe
Internet platforms. It situates virtual governments within the historical
development of the Internet in the period commonly described as Web2,
when social media first became popular and consolidated in a few large
Internet platforms, such as Facebook, Twitter, and YouTube. The emerging
Web3 is, in part, a response to the rise of these Internet platforms—and their
perceived autocratic control over their users.
A. Web1
In the mid-1990s, when the Web was becoming more accessible to the
public, many saw the vast potential for democratic participation,
empowerment, and decentralization the Internet could bring. In 1996, Bill
Gates predicted that the Internet “will strengthen democracy” by giving
citizens immediate access to a wealth of information and “empower citizens
to participate in the democratic process and civic affairs with an ease and
immediacy almost unheard of today.”23 In Gates’ view, citizens would be

23. Bill Gates, Internet Will Improve Democracy, DESERET NEWS (July 21, 1996, 12:00 AM),
https://www.deseret.com/1996/7/21/19255319/internet-will-improve-democracy.

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“in a fundamentally more powerful position than ever before.”24 Before

social media existed, Gates even alluded to the possibility that the Internet
would enable people to share their views online: “It will enable people to
delve more deeply into public records and topics of interest, listen to an
important political debate and, perhaps most importantly, exchange opinions
with others about those issues.”25
Beyond the benefits to public debate and access to information, some
theorists viewed the Internet itself as a new frontier that offered people the
prospect of a better, more democratic world. In 1996, John Perry Barlow’s
“A Declaration of the Independence of Cyberspace” became a bold
manifesto that helped galvanize ideals of a free and open Internet.26
Barlow’s Declaration was addressed to the “Governments of the Industrial
World.”27 The Declaration can be read as a warning to the governments of
“China, Germany, France, Russia, Singapore, Italy and the United States,”
which were “trying to ward off the virus of liberty by erecting guard posts
at the frontiers of Cyberspace.”28 Attempts to govern or regulate the
Internet were viewed with suspicion, if not outright disdain.
During this early period of the Internet—called Web1—the Internet
was hailed as both an empowering tool for communication as well as a
place for freedom. In Barlow’s Declaration, the perceived threat to the
promise of the Internet were national governments that attempted to
restrict it. Corporations were not even mentioned as a concern.
B. Web2 and the Rise of Internet Platforms and Virtual Governments
1. History
Web2 ushered in a new kind of participation online with the birth of
blogs, social media, and user-generated content. 29 (This period was
commonly called “Web 2.0,” but, for whatever reason, the latter part “.0” is

24. Id.

25. Id. (emphasis added).

26. See Barlow, supra note 4.

27. Id.

28. Id.

29. See Edward Lee, Warming Up to User-Generated Content, 2008 U. ILL. L. REV. 1459,
1499–1501.

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commonly omitted today.)30 Social networks, including Facebook,

YouTube, Instagram, and Twitter, became popular Internet platforms for
users to share their views and content.31 Not only were these Internet
platforms hailed as facilitators of creativity, the free exchange of ideas, and
user-generated content, they also were used to organize political protests,
most famously in the context of the Arab Spring.32 Internet platforms gave
rise to a new kind of “platform economy” about which business scholars
and analysts have written extensively.33
But Web2 was not all rosy. There was a growing recognition that
Internet platforms, like national governments, governed people’s online
speech, privacy, and life. As Rebecca Mackinnon incisively observed back
in 2012:
“Governance” functions, once carried out almost entirely by nation-
states, are now shared increasingly by private networks and platforms.
The lives of people around the world are increasingly shaped by
programmers, engineers, and corporate executives for whom nobody
ever voted and who are not accountable to the public interest. When
we sign up for Web services, social networking platforms, broadband
service, or mobile wireless networks, and we click “agree” to the terms
of service, we give them false and uninformed consent to operate as
they like.

30. See id. at 1500.

31. See id. at 1500–1502.

32. See Gadi Wolfsfeld, Elad Segev & Tamir Sheafer, Social Media and the Arab Spring:
Politics Comes First, 18 INT’L J. PRESS/POL’Y 115 (2013),
https://journals.sagepub.com/doi/pdf/10.1177/1940161212471716; Catherine O’Donnell,
New Study Quantifies Use of Social Media in Arab Spring, UNIV. OF WASH.: NEWS (Sept. 12,
2011), https://www.washington.edu/news/2011/09/12/new-study-quantifies-use-of-social-
media-in-arab-spring/. But see Robin Wright, How the Arab Spring Became the Arab
Cataclysm, NEW YORKER (Dec. 15, 2015), https://www.newyorker.com/news/news-
desk/arab-spring-became-arab-cataclysm.

33. See, e.g., Chen Xue, Wuxu Tian & Xiaotao Zhao, The Literature Review of Platform
Economy, SCI. PROGRAMMING, Sept. 1, 2020, at 1, https://doi.org/10.1155/2020/8877128.

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Today the power of Internet platforms and services to shape people’s

lives is greater than ever and will only grow.34
Mackinnon likened Internet platforms to sovereigns or nations, aptly
coining the terms “Facebookistan” and “Googledom.”35
Building on that idea, Anupam Chander argued that Facebook
satisfied some of the characteristics of a nation-state, including taking on a
role as a centralized government.36
Facebook has leaders who make rules. Facebook interprets these rules
and enforces them. Enforcement consists in removing and/or banning
individuals or groups for violating Facebook’s terms (as determined by
Facebook), deleting certain information, or sharing certain information
with government authorities.37
Later, in 2018, Kate Klonick argued that social media companies are “New
Governors” of their platforms: Internet platforms operate as a kind of
private governance.38
The early recognition of Internet platforms as powerful sovereigns led
to no reforms. Ironically, the anti-regulatory principle of Barlow’s
Declaration that won the day in Web1 carried over to Web2, at least in the
United States where a significant number of Internet platforms were
headquartered. During this period, the U.S. Congress made no changes to
its two major pieces of legislation—enacted during Web1—that shifted
regulatory power to Internet platforms.
First, Section 230 of the Communications Decency Act of 1996 (Section
230) provides immunity from civil liability to Internet Service Providers
(ISPs) based on the content posted by their users. At the same time, Section
230 encourages ISPs to engage in content moderation by providing

34. Rebecca MacKinnon, Consent of the Networked, SLATE (Jan. 30, 2012, 9:07 AM),
https://slate.com/technology/2012/01/consent-of-the-networked-rebecca-mackinnon-
explains-why-we-must-assert-our-rights-as-citizens-of-the-internet.html.

35. MacKinnon, supra note 5.

36. Anupam Chander, Facebookistan, 90 N.C. L. REV. 1807, 1818 (2012).

37. Id.

38. Kate Klonick, The New Governors: The People, Rules, and Processes Governing Online
Speech, 131 HARV. L. REV. 1598, 1662–63 (2018).

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immunity for good-faith moderation.39 Second, the Digital Millennium

Copyright Act (DMCA) safe harbors provide immunity from copyright
liability to ISPs for certain functions, including passive hosting of third-
party content.40 Congress enacted these laws to encourage private industry
to address the challenges of moderating online content to make the Internet
safer for children and families (under Section 230) and for copyright owners
(under the DMCA).41 For content moderation, Congress had a confined set
of choices because the First Amendment limits what the government can
proscribe. For copyright infringement, Congress didn’t want to make every
online infringement a federal lawsuit, given the sheer magnitude of
infringement online. The combination of Section 230 and the DMCA’s safe
harbors42 established a deregulatory approach by the U.S. government,
largely shifting responsibility for content moderation and combatting
copyright infringement to private actors, especially Internet platforms.
Indeed, many lauded Congress’s laissez faire approach embodied in
both Section 230 and the DMCA safe harbors as a key reason for the
explosion of innovative applications on the Web.43 Tim Wu, now a vocal
critic of Big Tech,44 even called the DMCA the “Magna Carta for Web 2.0.”45
Jeff Kosseff described Section 230’s immunity as the law—or 26 words—

39. See 47 U.S.C. § 230(c); Lee, supra note 5, at 949–50 (explaining the two subsections of §
230(c)).

40. See 17 U.S.C. § 512.

41. See 47 U.S.C. § 230(b); H.R. REP. NO. 105-796, at 72 (1998) (Conf. Rep.) (DMCA safe
harbors to provide “strong incentives for service providers and copyright owners to
cooperate to detect and deal with copyright infringements that take place in the digital
networked environment.”); accord H.R. REP. NO. 105-551, pt. 2, at 49 (1998); S. REP. NO.
105-190, at 20, 40 (1998).

42. The media sometimes confuses one for the other. See Lee, supra note 5, at 941–43
(discussing mistakes made by the New York Times, among others).

43. See, e.g., Edward Lee, Decoding the DMCA Safe Harbors, 32 COLUM. J.L. & ARTS 233,
259–60 (2009).

44. See Cecilia Kang, A Leading Critic of Big Tech Will Join the White House, N.Y. TIMES (Mar.
5, 2021), https://www.nytimes.com/2021/03/05/technology/tim-wu-white-house.html.

45. Tim Wu, Does YouTube Really Have Legal Problems, SLATE (Oct. 26, 2006, 4:28 PM),
http://www.slate.com/id/2152264/.

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that created the Internet.46 During Web2, Facebook, Instagram, Google,

YouTube, and Twitter became household names and Internet platforms
that many millions, if not billions, of users frequented every day. Other
platforms, such as Pinterest, Reddit, and Snapchat, became popular as well.
Although the deregulatory approach to Internet companies occurred in the
1990s when William Clinton, a Democrat, was president with a Republican-
controlled Congress, the philosophy was consistent with the conservative
economic policies of President Ronald Reagan.47 Today, the climate in
Washington has dramatically changed: Both Democrats and Republicans
now seek sweeping regulations of Big Tech and Internet platforms.48
2. Internet Platforms as Virtual Governments
This Article proposes that we recognize Internet platforms as virtual
governments. This Subpart lays out the concept. Later, Part II explains how
the concept of virtual governments improves our understanding of the
current debate in Congress over whether to regulate and potentially break
up Internet platforms.
“Virtual” has two meanings, both of which apply here. First, the term
indicates something that exists or occurs online.49 A virtual government is
one that regulates online activities. It is, in other words, a body or institution
that governs how the platform operates, including what rules and
procedures govern the activities of its users. Second, and just as
importantly, the term indicates something “being such in essence or effect
though not formally recognized or admitted.”50 A virtual government is not
formally recognized as such—but is so in effect. For example, in 1940, when

46. JEFF KOSSEFF, THE TWENTY-SIX WORDS THAT CREATED THE INTERNET 2 (2019).

47. See generally Jefferson Decker, Deregulation, Reagan-Style, REGUL. REV. (Mar. 13, 2019),
https://www.theregreview.org/2019/03/13/decker-deregulation-reagan-style/ (recounting
history behind Pres. Reagan’s deregulatory policy).

48. See Lauren Feiner, Democrats and Republicans Show Rare Unity in Desire to Crack Down
on Big Tech Companies, CNBC (June 16, 2021, 12:59 PM),
https://www.cnbc.com/2021/06/16/democrats-republicans-show-unity-in-desire-for-big-
tech-crackdown.html.

49. Virtual, MERRIAM-WEBSTER, https://www.merriam-webster.com/dictionary/virtual

(last visited Feb. 28, 2022).

50. Id.

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William O. Douglas was SEC chair, he described the actors who wielded
“tremendous power” in the financial markets as “virtual governments in
the power at their disposal.”51 Although not formal governments, those
powerful actors were considered virtual governments.
Because it conveys these dual meanings, “virtual government” is a
more apt description than others used in the past: Describing an Internet
platform simply as a “government” lacks the tie to online regulation and
implies the ruling institutions of a nation, state, or locality. Likewise,
“sovereign” lacks the Internet connection and does not focus on the
governance side of Internet platforms.
“Virtual government” has rarely been used to describe an Internet
entity or platform in legal scholarship. In 1991, Laurence Tribe rejected the
argument that the First Amendment should apply to private networks and
bulletin boards on the supposed theory that they were “virtual
governments” and therefore should be treated like the shopping mall in
Pruneyard Shopping Center v. Robins, which was required, under the
California Constitution, to permit individuals to pass out pamphlets on the
private property of a shopping mall.52 Tribe characterized the argument as
a fallacy.53 But Tribe suggested that “certain technologies may become
socially indispensable—so that equal or at least minimal access to basic
computer power, for example, might be [a] significant . . . constitutional
goal.”54 After Tribe’s provocative use of the term in 1991, legal scholars used
it only sparingly to describe various aspects of Internet governance.55

51. Mark J. Roe, A Political Theory of American Corporate Finance, 91 COLUM. L. REV. 10, 40
(1991) (quoting WILLIAM O. DOUGLAS, DEMOCRACY AND FINANCE 15 (1940)).

52. Laurence H. Tribe, The Constitution in Cyberspace: Law and Liberty Beyond the Electronic
Frontier, HUMANIST, Sept.–Oct. 1991, at 18; see also PruneYard Shopping Ctr. v. Robins,
447 U.S. 74, 78 (1980) (“The California Supreme Court reversed, holding that the
California Constitution protects ‘speech and petitioning, reasonably exercised, in
shopping centers even when the centers are privately owned.’” (quoting Robins v.
PruneYard Shopping Ctr., 592 P.2d 341, 347 (Cal. 1979))).

53. Tribe, supra note 52.

54. Id.; see also Don Oldenburg, The Law: Lost in Cyberspace, WASH. POST, Oct 1, 1991, at E5
(some private networks “may be outgrowing their private status and ripening for
regulation.”).

55. See, e.g., William S. Byassee, Jurisdiction of Cyberspace: Applying Real World Precedent to
the Virtual Community, 30 WAKE FOREST L. REV. 197, 218 (1995) (section titled “Virtual

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Outside the legal academy, the term “virtual government” can be

traced to at least 1998-99.56 A provocative project by computer science
students at Stanford University classified the types of governments that
were sprouting to regulate online communities.57 In lines that are incredibly
prescient, the students stated:
The online world is filled with virtual communities, each
experimenting with its own unique style of government. Many of the
classic forms of government in the real world can be found somewhere
online—monarchy, oligarchy, anarchy, democracy, even feudalism.
Most virtual governments combine the characteristics of several models,
and no two communities are governed in exactly the same way.58

Violence and Virtual Government” describes how a “multi-user dungeon” (MUD) called
LambdaMOO established “a system of petitions and ballots as a mechanism for popular
vote on social issues and use of administrative powers, with the results as a binding
mandate on the conduct of the administrators themselves” in response to virtual rape of
some of its members); Michael Johns, The First Amendment and Cyberspace: Trying to Teach
Old Doctrines New Tricks, 64 U. CIN. L. REV. 1383, 1437 (1996) (“Second, in formulating
new legal doctrine, lawmakers should recognize, empower, and learn from the multitude
of self-regulating structures that have already been developed by the users and
administrators of cyberspace. These structures include customary law or “netiquette,”
contracts, and even small virtual governments.”); Mark A. Lemley, The Law and Economics
of Internet Norms, 73 CHI.-KENT L. REV. 1257, 1266 (1998) (“While the world they envision
is not in fact one entirely free from law—they acknowledge the need for a variety of legal
rules in cyberspace—it is one that would take the law ‘in-house,’ creating virtual courts
and virtual governments within cyberspace. This approach is self-consciously based on
the ‘law merchant’ enforced in private merchant courts during the Middle Ages.”). On
April 2, 2022, my search of “virtual government” in the Law Reviews and Journals
database on Westlaw resulted in only 36 sources. Between 2004 to February 2022, Google
searches for “virtual government” have been relatively low, although they started to
increase in April 2020. GOOGLE TRENDS,
https://trends.google.com/trends/explore?date=all&q=virtual%20government (search for
“virtual government” on April 2, 2022). The increase occurred in the same year that the
Internet platforms intensified their content moderation. See Lee, supra note 5, at 915–18.

56. See Jed Burgess et al., Controlling the Virtual World: Governance of On-Line Communities,
STAN.: CS201 PROJECTS, https://cs.stanford.edu/people/eroberts/cs201/projects/1998-
99/controlling-the-virtual-world/index.html (last visited Mar. 17, 2022).

57. Id.

58. Id. (emphasis added).

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Although the students were speaking at the beginning of Web1, their

analysis holds true for Web2: the virtual governments of Internet platforms
are all different, but they share some general features, such as community
standards and a notice-and-takedown process for copyright-infringing
material (so that they can take advantage of the DMCA’s safe harbor). The
Stanford students described three types of online governments at the time:
(1) democracy in which the people govern, (2) autocracy in which a
privileged individual or few govern, and (3) anarchy.59 Noticeably absent
from the list, however, is a republic—what the United States aspires to be
under the Constitution.60 It’s unclear why the Stanford students omitted a
republic; perhaps, at the time, no online community resembled one.
C. Web3 and the Rise of DAOs and Decentralization
We are just entering Web3, in which individuals, organizations, and
businesses are building a decentralized Web.61 A major development in
Web3 is the emergence of decentralized autonomous organizations
(DAOs). DAOs, which run on the same blockchain technology that gave
rise to Bitcoin and other cryptocurrencies, are a way to convene people on
the Internet to create an organization, agree on its mission, and set up its
governing rules.62 It’s like a Web3 nonprofit, company, or group, depending
on the objective of the organization. But the people in the group run it. They

59. Jed Burgess et al., Governments, STAN.: CS201 PROJECTS,

https://cs.stanford.edu/people/eroberts/cs201/projects/1998-99/controlling-the-virtual-
world/government/index.html (last visited Apr. 2, 2022).

60. See, e.g., Duncan v. McCall, 139 U.S. 449, 461 (1891) (“By the Constitution, a republican
form of government is guaranteed to every state in the Union, and the distinguishing
feature of that form is the right of the people to choose their own officers for
governmental administration, and pass their own laws in virtue of the legislative power
reposed in representative bodies, whose legitimate acts may be said to be those of the
people themselves; but, while the people are thus the source of political power, their
governments, national and state, have been limited by written constitutions, and they
have themselves thereby set bounds to their own power, as against the sudden impulses
of mere majorities.”).

61. See Gilad Edelman, The Father of Web3 Wants You to Trust Less, WIRED (Nov. 29, 2021,
8:00 AM), https://www.wired.com/story/web3-gavin-wood-interview/.

62. See Taylor Locke, What Are DAOs? Here’s What to Know About the ‘Next Big Trend’ in
Crypto, CNBC: MAKE IT (Oct. 25, 2021, 12:26 PM),
https://www.cnbc.com/2021/10/25/what-are-daos-what-to-know-about-the-next-big-
trend-in-crypto.html.

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donate to the group, receive nonfungible tokens (NFTs) in exchange, which

entitle them to vote on how to govern the DAO and run it.63 The rules that
govern the DAO are recorded on blockchain for transparency, and they
help to make the DAO decentralized, without the need for a central
organizer or administrator.64 Compound governance is one open-source
protocol that DAOs can adopt; the COMP token even allows the owner to
delegate voting power to a third party.65 In short, as one commentator
observed: “The DAO is a paradigm shift in the very idea of economic
organization. It offers complete transparency, total shareholder control,
unprecedented flexibility and autonomous governance.”66
DAOs offer a decentralized, democratic approach. They are direct
challenges to the model of Internet platforms that operate more as
autocracies. “The rules and governance of each DAO is coded in smart
contracts on the blockchain and cannot be changed unless voted upon by
the DAO’s members.”67 DAOs can be used in virtually any context in which
organizing people is necessary. For example, ConstitutionDAO organized
people to contribute funds to make a bid on a copy of the U.S. Constitution
up for auction at Sotheby’s.68 People purchased NFTs that raised $47
million.69 ConstitutionDAO, however, lost the auction to billionaire hedge

63. See Seth Bannon, The Tao of “The DAO” or: How the Autonomous Corporation Is Already
Here, TECHCRUNCH (May 16, 2016, 7:30 AM), https://techcrunch.com/2016/05/16/the-tao-
of-the-dao-or-how-the-autonomous-corporation-is-already-here/.

64. See Cathy Hackl, What Are DAOs and Why You Should Pay Attention, FORBES (June 1,
2021, 8:00 AM), https://www.forbes.com/sites/cathyhackl/2021/06/01/what-are-daos-and-
why-you-should-pay-attention/?sh=7a3ae3257305.

65. See Robert Leshner, Compound Governance: Steps Towards Complete Decentralization,
MEDIUM: COMPOUND (Feb. 26, 2020), https://medium.com/compound-finance/compound-
governance-5531f524cf68.

66. See Bannon, supra note 63.

67. See Locke, supra note 62.

68. See CONSTITUTIONDAO, https://www.constitutiondao.com/ (last visited Apr. 2, 2022).

69. See Nilay Patel, From a Meme to $47 Million: ConstitutionDAO, Crypto, and the Future of
Crowdfunding, VERGE (Dec. 7, 2021, 10:15 AM),
https://www.theverge.com/22820563/constitution-meme-47-million-crypto-
crowdfunding-blockchain-ethereum-constitution.

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fund CEO Ken Griffin, returned the money to its members, and
disbanded.70 But that won’t be the end of DAOs. DAOs are just beginning.
DAOs offer a more democratic alternative to today’s Internet
platforms, in which people have practically no decisionmaking power on
matters of governance. As one researcher observed, “[t]here’s a small group
of companies that own all this stuff, and then there’s us who use it, and
despite the fact that we contribute to the success of these platforms, we
don’t have anything to show for it.”71 Perhaps the most intriguing
possibility is that a DAO, governed by its members, can replace a Web2
Internet platform—as Cooper Turley, an investor in and developer of
DAOs, remarked: “I believe that the next Facebook-like company will be
formed as a DAO rather than an LLC.”72 Mark Cuban, who is an investor in
Web3 projects, concurred: “The future of corporations could be very
different as DAOs take on legacy businesses…. Entrepreneurs that enable
DAOs can make money. If the community excels at governance, everyone
shares in the upside.”73 DAOs are disruptive because they are
democratically run in a decentralized manner with all members having a
vote in how the funds of the DAO are used.74
Whether DAOs succeed in displacing large Internet platforms is not
crucial for us to resolve in this Article. Instead, it is important to recognize
that DAOs prioritize governance structures and people’s participation in
ways that today’s dominant Internet platforms do not. DAOs do not have
a democratic deficit. Internet platforms do.

70. See Jacob Kastrenakes, ConstitutionDAO Will Shut Down After Losing Bid for
Constitution, VERGE (Nov. 23, 2021, 3:30 PM),
https://www.theverge.com/2021/11/23/22799192/constitutiondao-shutting-down-lost-
auction-refunds.

71. Bobby Allyn, People Are Talking About Web3. Is It the Internet of the Future or Just a
Buzzword?, NPR (Nov. 21, 2021, 6:00 AM),
https://www.npr.org/2021/11/21/1056988346/web3-internet-jargon-or-future-vision.

72. Locke, supra note 62.

73. Id.

74. See, e.g., Horacio Ruiz, A Look at Nouns DAO, ALTS CO (Sept. 12, 2021), https://alts.co/a-
look-at-nouns-dao/; see also Tracy Wang, FlamingoDAO’s NFT Portfolio Is Now Worth $1B,
COINDESK (Feb. 10, 2022, 3:52 PM),
https://www.coindesk.com/markets/2022/02/10/flamingodaos-nft-portfolio-is-now-
worth-1b/.

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II. HOW VIRTUAL GOVERNMENTS SHOULD GOVERN AND BE GOVERNED

Once we recognize Internet platforms as virtual governments, it helps
to clarify two related issues: first, how virtual governments should govern
their users; second, how national governments should govern virtual
governments. This Part addresses each issue in turn.
A. How Virtual Governments Should Govern
1. Internet Platforms Must Recognize Themselves as Virtual
Governments
The first step for Internet platforms to respond to the backlash—or
“techlash”—they face is to recognize that they are virtual governments, not
just for-profit corporations. Such recognition will provide greater clarity to
the important roles they serve and responsibilities they must assume.
No longer should it be acceptable for Internet platforms to disclaim
their profound role as virtual governments. Back in 2012, Mackinnon
succinctly described this corporate view: “Executives of these companies
often argue that human rights are neither their concern nor their
responsibility: the main obligation of any business, they point out, is to
maximize profit and investor returns.”75 This corporate view has probably
eroded, evidenced by the emergence of community guidelines—or rules
governing content and conduct on the platforms—for users. Every major
Internet platform has adopted its own community guidelines and
procedures to enforce them.76 As Mark Zuckerberg famously admitted in
2018: “In a lot of ways Facebook is more like a government than a
traditional company. We have this large community of people, and more
than other technology companies we’re really setting policies.”77 But some
companies may still be reluctant to view themselves as virtual governments
rather than profit-making businesses.78

75. Mackinnon, supra note 34.

76. See Lee, supra note 5, at 994–95.

77. Franklin Foer, Facebook’s War on Free Will, GUARDIAN (Sept. 19, 2017, 1:00 AM),
https://www.theguardian.com/technology/2017/sep/19/facebooks-war-on-free-will.

78. See, e.g., Edward Lee, Recognizing Rights in Real Time: The Role of Google in the EU Right
to Be Forgotten, 49 U.C. DAVIS L. REV. 1017, 1037 (2016) (stating that then Google
Chairman Eric Schmidt and Google European Communications Director Peter Barron
both agreed that Google never wanted to have to make decisions that courts could make
regarding the right to be forgotten).

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The recognition of Internet platforms as virtual governments helps to

bring clarity to the controversy. First, it changes the mission of the
company: it can no longer view governance as a perfunctory task foisted
upon it by the U.S. Congress or the Court of Justice of the European Union.
Instead, the company should view governance as a profound responsibility
that is fundamental to its mission or identity. Second, recognition of an
Internet platform as a virtual government can lead to better policymaking
and procedures for the platform and its users. Once a company realizes it
is a virtual government, it should make more conscientious decisions to
adopt good governance features including due process, separation of
powers, and democratic participation.
In this regard, Mark Zuckerberg deserves some credit. In 2018, he
announced that Facebook would create an independent oversight body—
colloquially called a Supreme Court—to hear discretionary appeals of
Facebook’s specific decisions whether to moderate content on its platform.79
Twenty paid experts from diverse specialties, including academia, politics,
journalism, and human rights comprise the Oversight Board,80 which is
funded by a trust established by Facebook.81 In December 2021, members
haled from 16 countries, with 4 members from the United States.82 The
Oversight Board has its own website, charter, bylaws, and an appeals
process that results in published appellate decisions.83
Many have lambasted the Oversight Board as Facebook’s lackey,
established to paper over the endemic problems of Facebook’s platform that

79. See Casey Newton, Facebook Will Create an Independent Oversight Group to Review
Content Moderation Appeals, VERGE (Nov. 15, 2018, 2:29 PM),
https://www.theverge.com/2018/11/15/18097219/facebook-independent-oversight-
supreme-court-content-moderation.

80. See Our Commitment, OVERSIGHT BD., https://oversightboard.com/meet-the-board/ (last

visited Dec. 28, 2021).

81. See Cecilia Kang, What Is the Facebook Oversight Board?, N.Y. TIMES (May 5, 2021),
https://www.nytimes.com/2021/05/05/technology/What-Is-the-Facebook-Oversight-
Board.html.

82. See Oversight Board (Facebook), WIKIPEDIA,

https://en.wikipedia.org/wiki/Oversight_Board_(Facebook)#Members (last visited Dec.
28, 2021).

83. See OVERSIGHT BD., https://oversightboard.com/ (last visited Apr. 2, 2022).

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favors virality through polarization, misinformation, and extremism.84

Those serious charges deserve a full examination, which goes beyond the
scope of this Article. But I believe the Oversight Board is a significant
development for online governance and virtual governments. It is an
example of what I’ve called a private administrative agency.85 Indeed, the
Oversight Board has incorporated features from administrative agencies
and courts, including the solicitation of public comments or briefs, as well
as the issuance of published decisions for each appeal.86 The Board allows
public comments before deciding each appeal.87
For the first time in the history of Web2 Internet platforms, a tribunal
is publishing the decisions on whether certain content violated the
platform’s community standards. Although the Oversight Board hears only
a tiny fraction of appeals, the publication of content moderation decisions
is a huge step in the right direction. The industry standard—among
Facebook/Instagram, Google/YouTube, Twitter, and TikTok—is to avoid
explaining the reasons for the removal of content except, perhaps, in rare
cases.88 In other words, the public has no way of knowing how most content

84. See, e.g., Roger McNamee & Maria Ressa, Facebook’s “Oversight Board” Is a Sham. The
Answer to the Capitol Riot Is Regulating Social Media, TIME (Jan. 28, 2021, 10:30 AM),
https://time.com/5933989/facebook-oversight-regulating-social-media/; Jeremy Lewin,
Facebook’s Long-Awaited Content ‘Supreme Court’ Has Arrived. It’s a Clever Sham, GUARDIAN
(Mar. 17, 2021, 6:23 AM),
https://www.theguardian.com/commentisfree/2021/mar/17/facebook-content-supreme-
court-network.

85. Lee, supra note 78, at 1055 (“[A] private administrative agency is defined as a non-
governmental entity that (i) derives its authority or responsibility for administration of
certain tasks through a formal or informal delegation of power by the government and
(ii) performs public functions that are meant to serve the public or society at large.”).

86. Curiously, the Oversight Board’s bylaws do not contain a specific provision for
requesting public comment, but instead, authorize an appeals panel to request
information and briefs from experts, advocacy, or public interest organizations. See
OVERSIGHT BD., OVERSIGHT BOARD BYLAWS 16 (2022),
https://www.oversightboard.com/sr/governance/bylaws.

87. See Announcing the Board’s Next Cases and Changes to Our Bylaws, OVERSIGHT BD. (Nov.
2021), https://oversightboard.com/news/3138595203129126-announcing-the-board-s-next-
cases-and-changes-to-our-bylaws/.

88. See generally Jillian C. York & Corynne McSherry, Content Moderation Is Broken. Let Us
Count the Ways., ELEC. FRONTIER FOUND. (Apr. 29, 2019),

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moderation decisions were made. The decisions are secret. The Oversight
Board’s publication of its decisions provides the public with an invaluable
explanation of its decision in affirming or reversing Facebook’s content
moderation. I have argued for a similar agency to review Google’s decisions
on requests under the EU right to be forgotten and to render published
decisions for greater accountability.89
The Oversight Board’s other significant contribution to online
governance is the adoption of a process for the public to comment on
pending appeals.90 It marks a rare instance in which a decision affecting
users on an Internet platform is informed by public input. Much more needs
to be done. For example, Internet platforms should include a period of
notice and comment inviting public input before making significant
changes to their content moderation policies. (Ideally, such notice and
comment would have preceded the original adoption of the policies.)
2. Internet Platforms Should Adopt Reforms Consistent with Democratic
Accountability
Once Internet platforms understand themselves as virtual
governments, that recognition provides greater clarity as to how they can
improve their governance of the platforms. From top to bottom, they should
reevaluate their existing policies and procedures against the measure of
good governance practices from nation-states. It goes beyond the scope of
this Article to elaborate a comprehensive set of principles. But three
priorities for Internet platforms should be recognized: (1) enhancing
democratic or public participation; (2) providing greater transparency and
reason-giving and; (3) recognizing a principle of separation of powers.
a. Priority 1: Enhancing Democratic or Public Participation
Internet platforms should address the general lack of democratic or
public participation—the democratic deficit—in both their policymaking
and their enforcement of those policies. It is a complete contradiction, if not
Orwellian, for an Internet platform’s so-called community standards to be

https://www.eff.org/deeplinks/2019/04/content-moderation-broken-let-us-count-ways
(explaining how Facebook’s content moderation can occur without explanation); John
Bergmayer, Due Process for Content Moderation Doesn’t Mean “Only Do Things I Agree
With”, PUB. KNOWLEDGE (June 29, 2020), https://publicknowledge.org/due-process-for-
content-moderation-doesnt-mean-only-do-things-i-agree-with/.

89. See Lee, supra note 5, at 1091-92.

90. OVERSIGHT BD., supra note 87.

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imposed without a way for the public—the community—to provide input

into their creation or modification. A standard devised by employees and
executives at corporations and imposed upon the public is not a community
standard.
The democratic deficit also undermines the enforcement of the
community standards. Except for Facebook’s Oversight Board, Internet
platforms enforce their community standards behind closed doors—in a
modern-day Star Chamber—without any published decisions, much less a
way for the public to comment on a controversial enforcement decision that
might have consequences beyond the particular dispute. Elsewhere, I have
proposed that Internet platforms can incorporate a civil rights advocate and
a public advocate to represent important interests in appeals of content
moderation decisions.91 Internet platforms’ current approach to content
moderation resembles an autocracy or dictatorship, not a republic or
democracy.
b. Priority 2: Providing Greater Transparency and Reason-Giving
Internet platforms should strive for greater transparency and reason-
giving. They already provide transparency reports regarding content
moderation and enforcement of their policies.92 But these reports are not
enough. They typically provide only general, aggregate numbers for the
enforcement of their policies against users.93 Some companies provide
selective examples of moderated content, such as Google’s publication of
examples of its decisions on user requests under the EU right to be
forgotten.94 For 2020, Google provided a selection of examples out of the
thousands of decisions it made that year.95 This approach should be

91. See Lee, supra note 5, at 1045–48.

92. Id. at 998–1022.

93. See, e.g., Hate Speech, FACEBOOK, https://transparency.fb.com/data/community-

standards-enforcement/hate-speech/facebook/ (last visited Apr. 2, 2022).

94. Requests to Delist Content Under European Privacy Law, GOOGLE,

https://transparencyreport.google.com/eu-privacy/overview?hl=en (last visited Apr. 2,
2022).

95. Id. (examples for all countries in 2020). Twitter also included examples of content
moderation in its transparency report. See Removal Requests, TWITTER,

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expanded beyond the right to be forgotten to copyright decisions under the

DMCA safe harbors, YouTube’s ContentID,96 enforcement of community
standards, and other decisions affecting users’ online access and activities.
Providing the public with an explanation of the reasons for an enforcement
decision is a hallmark of due process97—“reason giving is meant to ensure
that the hearing itself is not a charade.”98
Relatedly, Internet platforms should provide greater transparency
regarding the procedures they use for enforcement of their policies. For
example, in a prior article, I reviewed the content moderation procedures
used by the major Internet platforms. Most provided only a sketchy outline

https://transparency.twitter.com/en/reports/removal-requests.html#2021-jan-jun (report
for Jan. to June 2021).

96. YouTube established an automated system to identify copyrighted content that

copyright holders have submitted to YouTube for inclusion in its matching database. See
Hassan Ali, YouTube Content ID: What Is It and How Does it Work?, WYZOWL,
https://www.wyzowl.com/youtube-content-id/ (last visited Apr. 2, 2022). If a user posts a
video that contains content that matches the copyrighted materials in YouTube’s
database, the copyright holder will be notified by YouTube and given three options: (1)
block the user’s video, (2) monetized the user’s video with ads, or (3) track the popularity
of the user’s video. See How Content ID Works, YOUTUBE HELP,
https://support.google.com/youtube/answer/2797370?hl=en#zippy=%2Cwhat-options-
are-available-to-copyright-owners (last visited Apr. 2, 2022). YouTube revealed that 98%
of the copyright infringement claims is handled through Content ID and only 2% under
notice-and-takedown of the DMCA. Copyright holders choose to monetize the users’
videos in 90% of the disputes. See Ernesto Van der Sar, YouTube’s Takedown Numbers Are a
Mystery, But Content-ID Is a ‘Cash Cow’, TORRENTFREAK (May 16, 2021),
https://torrentfreak.com/youtubes-takedown-numbers-are-a-mystery-but-content-id-is-a-
cash-cow-210516/.

97. Goldberg v. Kelly, 397 U.S. 254, 271 (1970) (“Finally, the decisionmaker’s conclusion
as to a recipient’s eligibility must rest solely on the legal rules and evidence adduced at
the hearing. To demonstrate compliance with this elementary requirement, the decision
maker should state the reasons for his determination and indicate the evidence he relied
on, though his statement need not amount to a full opinion or even formal findings of
fact and conclusions of law.” (internal citations omitted)).

98. Jerry L. Mashaw, Reasoned Administration: The European Union, the United States,
and the Project of Democratic Governance, 76 GEO. WASH. L. REV. 99, 106 (2007).

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of the procedures used.99 Even worse is the lack of disclosure by Internet

platforms in their use of algorithms and artificial intelligence in what
content the platforms feed to users, as well as in the enforcement of their
policies, such as for potential copyright infringement. For example,
whistleblower Frances Haugen, a former Facebook employee, revealed
many disturbing aspects of Facebook’s policies. For example, she claimed
that Facebook knowingly used an algorithm for its news feed that favored
the most divisive posts because they were most likely to go viral and spark
user engagement.100 Facebook stuck with its algorithm even after its data
scientists warned that “[o]ur approach has had unhealthy side effects on
important slices of public content, such as politics and news.”101 Internet
platforms should provide disclosure statements to the public explaining
how they use algorithms/AI on their users’ interactions with the platform
and in enforcement of their policies. Internet platforms should also allow
outside researchers access to the platforms’ data (anonymized so as not to
disclose personal information) to study the potential harmful effects the
platforms have on, for example, adolescents. Congress is considering a bill
that would give the Federal Trade Commission authority to require Internet
platforms to “disclose, in real time, what information is spreading on them”
and to allow outside researchers access to the company’s data to conduct
studies on the platforms’ operation and effect on society.102
I have proposed a Nonpartisan Content Moderation (NCM) procedure
that explains, step by step, how Internet platforms can provide both greater

99. See Lee, supra note 5, at 995 (“More generally, the community standards typically do
not provide much specific detail about the precise procedures, mechanics, guiding
principles, or timetable that content moderators must follow.”).

100. See Keach Hagey & Jeff Horwitz, Facebook Tried to Make Its Platform a Healthier Place. It
Got Angrier Instead, WALL ST. J. (Sept. 15, 2021, 9:26 AM),
https://www.wsj.com/articles/facebook-algorithm-change-zuckerberg-
11631654215?mod=article_inline.

101. Id.

102. See Ben Smith, A Former Facebook Executive Pushes to Open Social Media’s ‘Black Boxes,’
N.Y. TIMES (Jan. 2, 2022),
https://www.nytimes.com/2022/01/02/business/media/crowdtangle-facebook-brandon-
silverman.html.

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due process and greater transparency in content moderation.103 Alternative

proposals can be considered. The main point is that Internet platforms’
current approaches can be significantly improved to address the
democratic deficit that undermines the legitimacy of their current content
moderation.
c. Priority 3: Recognizing a Principle of Separation of Powers
Internet platforms should recognize a principle of separation of
powers.104 CEOs of Internet platforms, such as Facebook’s CEO Mark
Zuckerberg, should not be allowed to overrule the content moderation
decisions of those employees trained in and entrusted with content
moderation. “Otherwise, one person could undermine the checks and
balances built into the multimember and multi-level review for content
moderation. In a court or administrative tribunal, it would be highly
irregular for one person to be able to veto or override a decision from the
proceedings below.”105
The three priorities outlined above provide a few examples of how
recognizing Internet platforms as virtual governments can sharpen our
understanding of how they should govern themselves and their users’
online lives—and can lead to real reforms.
B. How Virtual Governments Should Be Governed by National
Governments
Recognizing Internet platforms as virtual governments also exposes
the risks involved in attempts by national governments to regulate—if not
break up—Internet platforms. When one government attempts to dictate
the decisions of another government, it raises immediate concerns. When
national governments are involved, the principle of comity of nations
counsels for the recognition of mutual respect and courtesy for each
nation’s laws.106 When a national and a state government in the United
States is involved, the Tenth Amendment recognizes certain limits on the

103. Lee, supra note 5, at 1039–52.

104. Id. at 1053–54.

105. Id. at 1053.

106. See generally Hilton v. Guyot, 159 U.S. 113, 163 (1895) (“The extent to which the law
of one nation ... shall be allowed to operate within the dominion of another nation,
depends upon ... ‘the comity of nations.’”).

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extent to which the national government, even with the Supremacy Clause,
can interfere with the province of state governments or commandeer state
officials to perform duties required by a federal statute.107 As Chief Justice
Roberts explained:
[F]ederalism secures to citizens the liberties that derive from the
diffusion of sovereign power. . . . The independent power of the States
also serves as a check on the power of the Federal Government: By
denying any one government complete jurisdiction over all the
concerns of public life, federalism protects the liberty of the individual
from arbitrary power.108
Of course, the Framers did not have Internet platforms in mind when
they devised a system of governance based on federalism. But their purpose
in diffusing power to protect individual liberty applies equally to
protecting freedoms online. There is a real danger that the backlash against
Internet platforms results in greater concentration of power over the
Internet in the federal government—which would be a cure worse than the
disease.109
If we take the concept of virtual governments seriously, then we should
recognize an analogous approach to federalism that accords comity, mutual
respect, and a certain level of deference to Internet platforms that operate
as virtual governments. Indeed, in the past the U.S. government has often,
though not always, take a deferential, free-market approach to the

107. See generally Printz v. United States, 521 U.S. 898, 919 (1997) (“The Framers’
experience under the Articles of Confederation had persuaded them that using the States
as the instruments of federal governance was both ineffectual and provocative of federal-
state conflict.”); New York v. United States, 505 U.S. 144, 157 (1992) (“The Tenth
Amendment thus directs us to determine, as in this case, whether an incident of state
sovereignty is protected by a limitation on an Article I power.”).

108. Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 536 (2012) (internal citations
omitted) (internal quotations omitted).

109. Cf. Yaqiu Wang, In China, the ‘Great Firewall’ Is Changing a Generation, HUM. RTS.
WATCH (Sept. 1, 2020, 11:57 AM), https://www.hrw.org/news/2020/09/01/china-great-
firewall-changing-generation.

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Internet.110 In 2022, that sentiment appears to be lost. Congress seems poised

to enact greater regulations on Internet platforms involving antitrust
reforms and enhanced privacy protection, and greater restrictions on
Internet platforms’ content moderation imposed by amendments to, if not
repeal of, Section 230 immunity.111 Once seen as the darlings of Silicon
Valley and American ingenuity, Facebook, Google, and other Internet
platforms are reviled as Big Tech that must be regulated or even broken
up.112 The Biden Administration has already taken steps to rein in Big
Tech.113
Some of these legal reforms may be warranted to address pervasive
problems on Internet platforms, such as the lack of privacy protections in
the U.S. It goes beyond the scope of this Article to evaluate the various bills
and proposals to rein in Big Tech. Yet there is a danger that the fervor to
regulate Big Tech obscures the consequences of U.S. government regulation
of the Internet. If U.S. government regulation of the Internet becomes
commonplace and not exceptional, then what is to distinguish U.S.
regulations of the Internet from ones imposed by China, Russia, and other
countries?
III. RESPONDING TO OBJECTIONS
This Part responds to criticisms. No doubt many are likely to oppose
the idea of Internet platforms being recognized as virtual governments.

110. See, e.g., 47 U.S.C. § 230(b)(2) (recognizing policy “to preserve the vibrant and
competitive free market that presently exists for the Internet . . . unfettered by Federal or
State regulation”).

111. See Lauren Feiner, 2022 Will Be the ‘Do or Die’ Moment for Congress to Take Action
Against Big Tech, CNBC (Dec. 31, 2021, 9:59 AM), https://www.cnbc.com/2021/12/31/2022-
will-be-the-do-or-die-moment-for-congress-to-take-action-against-big-tech.html.

112. See, e.g., Sheelah Kolhatkar, What’s Next for the Campaign to Break Up Big Tech, NEW
YORKER (July 6, 2021), https://www.newyorker.com/business/currency/whats-next-for-
the-campaign-to-break-up-big-tech.

113. See Kevin Breuninger & Lauren Feiner, Biden Signs Order to Crack Down on Big Tech,
Boost Competition ‘Across the Board,’ CNBC (July 9, 2021, 2:22 PM),
https://www.cnbc.com/2021/07/09/biden-to-sign-executive-order-aimed-at-cracking-
down-on-big-tech-business-practices.html; see also Sheelah Kolhatkar, Lina Khan’s Battle to
Rein in Big Tech, NEW YORKER (Nov. 29, 2021),
https://www.newyorker.com/magazine/2021/12/06/lina-khans-battle-to-rein-in-big-tech.

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A. Corporations Maximize Share Holder Profits

A foundational belief of corporate law is the notion that corporations
have a duty to maximize the profits, value, or wealth of shareholders.114 Yet,
as legal scholars recognize, the legal authority for this belief is “strangely
scant.”115 Although it is often described as widely accepted, the normative
theory to justify this belief is contested.116 For example, legal scholars who
advance the theory of corporate social responsibility (CSR) have posed a
major challenge to the traditional view of corporate shareholder
maximization, especially today when concerns about climate change and
the destruction of the planet are much greater.117 But assuming this belief in
shareholder primacy is correct, expending resources to improve virtual
governance might appear contrary to that corporate objective: Why would
Internet platforms spend more money and resources to shore up their
content moderation procedures, safeguards, and staff—to make them
operate better and more fairly—when the platforms could just do what they
are doing now?
Perhaps not. I have the sense that we may be reaching a tipping point
beyond which business as usual will no longer work. Either Congress will
enact one of the bills to impose greater requirements on Internet platforms’
content moderation, or startups and other enterprises will succeed in
building the decentralized Web3 that turns Internet platforms, such as
Facebook, into the next MySpace.

114. See Robert J. Rhee, A Legal Theory of Shareholder Primacy, 102 MINN. L. REV. 1951,
1951–55 (2018).

115. Id. at 1956.

116. Id. at 1963–67.

117. See Robert Sprague, Beyond Shareholder Value: Normative Standards for Sustainable
Corporate Governance, 1 WM. & MARY BUS. L. REV. 47, 77 (2010); David L. Engel, An
Approach to Corporate Social Responsibility, 32 STAN. L. REV. 1, 3 (1979) (“[T]he basic
question of corporate social responsibility is not whether we wish to compel or forbid
certain kinds of corporate conduct by legislative command, for example, but rather
whether it is socially desirable for corporations organized for profit voluntarily to
identify and pursue social ends where this pursuit conflicts with the presumptive
shareholder desire to maximize profit. I will, simply as a convention, refer to any such
corporate activity as a form of voluntarism or altruism.”).

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There are already ominous signs. Twitter CEO Jack Dorsey abruptly
quit so he could focus, not on the controversies of Twitter’s content
moderation, but on Bitcoin and decentralized finance, both facets of
Web3.118 Mark Zuckerberg changed Facebook’s name to Meta, to shift the
business to the emerging metaverse, a major part of Web3.119 And, in a
clever passing of the buck, he has openly lobbied Congress to enact laws to
fix or resolve the controversies over content moderation.120 In some
respects, Dorsey’s and Zuckerberg’s moves are not surprising. The easiest
way out of fixing the intractable problems with content moderation is
quitting or moving on. An analogous situation is now occurring in the
automobile industry, which long ignored climate change and sustainability
issues, but now has shifted dramatically to electric vehicles (EVs).121 Thus,
even if maximizing shareholder wealth is the primary duty of corporations,
reforming their content moderation policies and procedures is likely to
serve that goal. Business as usual won’t last.
B. Commandeering Corporations
A related criticism is that my theory has commandeered corporations
to take on new civic or societal responsibilities as so-called virtual
governments. For-profit corporations should not be expected to do so.
That’s the responsibility of federal, state, and local governments. There’s a
big difference between the state and private actors. The concept of virtual
governments crosses the line and should be categorically rejected.
This criticism is similar to the one above, but without the emphasis on
maximizing shareholder profit. Instead, it relies on the distinction between

118. See Benjamin Pimental, Don’t Think of It as Leaving Twitter. Jack Dorsey’s Going All In
on Crypto., PROTOCOL (Nov. 29, 2021), https://www.protocol.com/fintech/jack-dorsey-
bitcoin-crypto-twitter.

119. See Salvador Rodriguez, Facebook Changes Company Name to Meta, CNBC (Oct. 29,
2021, 8:56 AM), https://www.cnbc.com/2021/10/28/facebook-changes-company-name-to-
meta.html.

120. See Peter Kafka, Facebook Wants Washington’s Help Running Facebook, VOX (Mar. 24,
2021, 6:25 PM), https://www.vox.com/recode/2021/3/24/22349186/facebook-zuckerberg-
testimony-section-230-reform-proposal.

121. See Mike Colias et al., Auto Makers Supercharge Move into Electric Vehicles, WALL ST. J.
(Jan. 5, 2022, 5:06 PM), https://www.wsj.com/articles/auto-makers-supercharge-move-
into-electric-vehicles-11641420382.

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the state and private actors. While that distinction does matter, the line is
blurred in some contexts. Private entities are sometimes tasked with
responsibilities for the public good. Essentially, the state outsources public
responsibilities to private actors. Take, for example, healthcare and the
treatment of people who are sick or dying. The United States has both non-
for-profit and for-profit health care institutions, but we expect that all
healthcare institutions have a responsibility for the care and welfare of their
patients.122 During the pandemic that responsibility was profound.123 I
believe Internet platforms who decide the online fate of millions of people
every day occupy a similar position. Indeed, content moderation has
developed into a profession for “trust and safety” online.124 Whether
professionals are engaged in trust and safety or in healthcare, the
institutions at which they work must consider their larger, societal
responsibility.
CONCLUSION
This Article is the first to elaborate the concept and theory of virtual
governments. The Article makes the case for why Internet platforms should
be understood as virtual governments. With that understanding, we are in
a better position to identify how to improve content moderation: Internet
platforms should compare their policies, procedures, and safeguards—or
lack thereof—to the standards of due process, transparency, and
accountability applied to national governments. These reforms will
compensate for the democratic deficit that undermines the legitimacy of
Internet platforms’ governance of their users. By the same token,
recognizing Internet platforms as virtual governments militates in favor of

122. See generally Dan W. Brock & Allen Buchanan, Ethical Issues in For-Profit Health Care,
in FOR-PROFIT ENTERPRISE IN HEALTH CARE (Bradford H. Gray ed., 1986),
https://www.ncbi.nlm.nih.gov/books/NBK217902/; Terry L. Corbett, The Case for a Health
Care Benefit Corporation, 47 CAP. U. L. REV. 183, 240–41 (2019) (explaining how
corporations in health care are different in services and role than ordinary businesses).

123. See generally Johan C. Bester, Justice, Well-Being, and Civic Duty in the Age of a
Pandemic: Why We All Need to Do Our Bit, 17 J. BIOETHICAL INQUIRY 737 (2020),
https://link.springer.com/article/10.1007/s11673-020-10053-4.

124. See Adelin Cai & Clara Tsao, The Trust & Safety Professional Association: Advancing the
Trust and Safety Profession Through a Shared Community of Practice, TECHDIRT: TECH POL’Y
GREENHOUSE (Aug. 28, 2020, 12:00 PM),
https://www.techdirt.com/articles/20200820/09120545153/trust-safety-professional-
association-advancing-trust-safety-profession-through-shared-community-
practice.shtml.

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national governments affording them comity and mutual respect. Efforts

by national governments to break up virtual governments should be
viewed with great scrutiny, just as would be applied if one national
government tried to break up a government of a state or another country.
Like federalism, a principle of virtual comity helps to protect individual
liberties by dispersing powers among different actors—which operates as
an important check on the federal government itself.

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