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Twitter, Facebook and other social media shares are feeling the heat as one analyst says the rules for online engagement will change soon.
Gabby Jones / Bloomberg
Social media shares plummeted Monday as they face new investigation into their role in last week’s deadly attack by supporters of President Donald Trump on the US Capitol as Congress amid the Electoral College’s election statement Biden was.
After months – years – of pressure,
Twitter
(ticker: TWTR) has finally suspended President Trump’s account and removed all his previous tweets, citing concerns that he is inciting violence.
Facebook
(FB) suspended him for posting at least at the end of his term. Meanwhile, it
Amazon.comsay
(AMZN) On Sunday night, Amazon Web Services, or AWS, suspended its relationship as web host for the right-wing chat service Parler and shut it down to the Internet. Both
Alphabetsay
(GOOGL) Google and
appeal
(AAPL) has already removed the Parler app from the app stores. Visits to parler.com now send an error message ‘this site cannot be accessed’.
Bernstein’s internet analyst Mark Shmulik believes there could be consequences for the businesses in Washington in 2021.
“While the week will certainly be remembered for many more shocking events, it is not lost on us that we may be on the verge of changing the lengthy internet rules for engagement,” he wrote in a research note on Monday.
Shmulik thinks an increase in potential regulatory activity seems likely.
“We expect that much of the activity will focus on Article 230, although it misses the point of the fight,” he wrote, referring to the provision of federal law that protects online businesses from charges for user-posted content. .
But he notes that changing the liability laws does not solve the problem of what is content and what is not allowed. “It is telling that Facebook has been outspoken here about the search for regulatory clues, and has gone so far as to set up their own supervisory board without the formal regulation,” he notes. ‘What we do know is that internet companies probably do not want to make such decisions. Incremental moderation may be welcome, but it’s not cheap and could be to the advantage of Facebook already employing a moderation host [that is about] Six times larger than Twitter’s workforce. ”
Whether social media companies have the right to block Trump or others from their platforms, his answer is that they can “naturally.”
“Private companies with clear terms and conditions can remove and suspend offenders as they see fit,” he writes. ‘As far as social media is concerned, opponents will point to freedom of speech and moderation – it is not difficult to find other social media accounts that violate the same terms and conditions – yet no other account has the authority (as President of the United States), and also not Donald Trump’s reach (the 6th most followed account on Twitter). ”
As for the risks, he notes that there may be a slight decrease in users for Twitter, but adds that there may be other offsets on the advertising side. ” A ban on Trump could provide an incremental catalyst for advertising revenue, ” he writes. “‘Trump’ is the second most blocked keyword by advertisers behind ‘Coronavirus’ …. Remove ‘Trump’ and there is more brand-safe stock to go around.”
Evercore ISI analyst Benjamin Black pointed out in a research note on Monday that there are now new and more complex questions surrounding internet regulation. He asks, for example, whether Jack Dorsey, as CEO of Twitter, should ban potentially dangerous groups, while Dorsey, as CEO of Square, should provide payment services to the same groups. “What we certainly know is that the answer is much more about politics and philosophy than economics,” Black writes.
Black raises more questions than answers – but the questions are interesting. He asks, for example, whether social platforms such as Facebook, Twitter and Alphabet’s YouTube should be subject to other moderation responsibilities than infrastructure providers such as AWS, the app stores and payment processors.
He also asks whether individual nation-states are capable of governing social platforms, “given incentives for parties in power to abuse this authority to advance their own political ambitions.” Black adds that the same problem has arisen in other countries, but that “the spectacle of rioters in the U.S. Capitol, as requested by a sitting U.S. president, crystallizes the shortcomings of national state-led regulation.”
As for the potential for breaking up technology giants, he notes that these moves will do little to address the misuse of platforms. “If Facebook and Instagram were separated, for example, it would not have diminished the rioters’ ability to organize,” he notes. ‘Alternatively, should AWS and Amazon be separated, it would not diminish Amazon’s ability to stop providing infrastructure to Parler. In our view, this poses an important challenge for regulators: the solution most discussed does little to address direct social issues directly. ‘
On Monday afternoon, Twitter closed 6.4% to $ 48.18, bouncing back from an earlier drop of 10%. Facebook fell 4% to $ 256.84, Alphabet shares fell 2.2% to $ 1,766.72, and Amazon shares fell 2.2% to $ 3,114.21.
Write to Eric J. Savitz by [email protected]