From spreading misinformation to selling deadly products, bad actors use technology platforms to their advantage while causing devastating harms to privacy, health, and even democracy. Despite their central role in enabling these bad actors, the platforms almost entirely escape liability. This legal immunity is purportedly grounded in economics. From the beginning, courts and legislatures feared that liability would chill innovation, growth, and user access. They also speculated that platforms have sufficient market incentives to voluntarily police bad actors, making liability unnecessary. Whereas many scholars have argued that platform immunity is blind to justice, this Article shows that it is also blind to economics. We challenge the fundamental precepts that market incentives suffice and that liability inevitably brings detrimental chilling effects. By tracing the legal origins of platform immunity and synthesizing decades of legal and economic research, we show how judges and lawmakers have consistently applied shallow or misguided economic reasoning. Their misconceptions rely on an outdated depiction of economics and a narrow view of efficiency. Once updated for key factors such as platforms' financial incentives to allow bad actors and the feasibility of platforms deploying automated monitoring technologies to prevent harms, economics fails to justify a broad shield against liability. Instead, economics offers a promising roadmap for holding platforms accountable for their harms while preserving their social benefits. Designing a better liability framework is increasingly important as advances in artificial intelligence accelerate technology's presence in our everyday lives, creating unpredictable opportunities for bad actors to weaponize platforms. Anchoring platform liability more effectively in economic reasoning will help create a more adaptive legal framework that keeps pace with the future.
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