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The University of Chicago Business Law Review

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489

Abstract

The rapid advancement of generative artificial intelligence (AI) is testing the limits of Section 230 of the Communications Decency Act, a statute that has long shielded online platforms from liability for user-generated content. This liability shield helped shape the modern internet, but AI’s ability to create its own content blurs the traditional distinction between platforms acting as passive hosts and those functioning as active publishers. As a result, courts and lawmakers are reexamining the scope and future of Section 230. This Comment examines how proposed reforms to Section 230 could impact startups and emerging tech companies that use generative AI in their products and services. It argues that broad rollbacks or carve-outs from Section 230 protections would impose disproportionate burdens on smaller companies, exposing them to increased litigation risks, major compliance costs, and crucially, barriers to innovation. Using a comparative analysis of existing proposals, caselaw, and international AI regulations, this Comment introduces a proportional framework that combines risk-based tiers with sandbox innovation and scales obligations to company capacity while fostering responsible experimentation. The framework’s goal is to hold companies accountable without stifling innovation for smaller market entrants. As a result, this model offers a balanced path forward for regulating generative AI content in the digital age.

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