I am a Twitter shareholder. As a macro-focused investor, one of my priorities is to consider risks – especially the kind of “black swan” risks that few foresee.
Social media platforms are widely recognized as excellent companies due to their low cost structures and network effect monopolies. These factors make them particularly resistant to the risks of the “black swan” that can destroy weaker companies. In fact, Facebook and Twitter stocks have risen by more than 25 percent since the success of COVID. Snap (parent company of Snapchat) and Pinterest have doubled. Alphabet (parent company of Google and YouTube), Amazon and Apple have similar network monopolies and performed well even when the pandemic hit a large part of the economy.
But I fear that the strong business models of these companies are making their managers complacent in the face of great risk.
Social media platforms have gained enormous power over large parts of the public discourse. In response, many representatives of the established media have demanded that they exercise a certain amount of editorial censorship. Some of their own staff – many of them activist young graduates – have called for even more aggressive censorship.
Despite some resistance, the managers of these social media companies have joined many of these demands. Facebook and Twitter set up “fact-checking” programs that allow the old media companies to challenge allegations they don’t like. Many platforms have banned certain individuals – especially from the right-wing scene – for “hate speech” or other subjective violations. And during COVID, full censorship was normalized as platforms blocked parts that contradicted the CDC or other official statements.
The 2020 elections further polarized this issue. Both Twitter and Facebook censored the New York Post’s Hunter Biden laptop story weeks before the election, limiting the circulation of an important news story (and applying a standard radically different from their permissive handling of unconfirmed allegations about Trump). Twitter continues to lock out the Post, asking it to withdraw the story. Such a decision seems to reflect a clear decision by the executives of these companies to help Biden.
A contested election – far from a possibility, since so many states have changed their election procedures this year – could dramatically increase the stakes. There have already been calls from prominent media and technology personalities to block Trump’s Twitter account, which he uses to bypass the media gatekeepers and communicate directly with the American people in the event that the President disputes popular media coverage of the election results. It would be consistent with the pattern established by COVID to extend social media censorship to other citizens who repeat the President’s claims. Through such measures, the social media platforms could give the Trump opponents in the mass media a wide scope for shaping the national presentation of a dispute.
My goal here is not to propose political responses to such steps. The point is to consider the risk that such actions pose to the social media companies themselves.
Social media executives have long feared the left. They know that the threats of the left are to be taken seriously: Activist employees are threatening to disrupt their operations, ongoing media campaigns will denigrate them at the national level, and progressive tax proposals could impose significant costs on both companies and individual executives. While Obama, like many younger Democrats who are considered pro-business, often preferred heavy fines that could be directed at his nonprofit allies, today’s left increasingly reflects the language of earlier European progressives by calling for aggressive regulation and antitrust enforcement. Some even advocate the nationalization of social media companies; one scenario envisages a PBS-like board. Senator Ron Wyden (D-OR) has suggested that Mark Zuckerberg should face the “possibility of imprisonment”.
Some have argued that the broader embrace of the left by technology companies (especially on social and cultural issues) not only reflects the personal prejudices of their executives, but also represents a wager