adplus-dvertising
Connect with us

Media

Breaking Up Facebook Won’t Fix Social Media

Published

4 years ago

 on

Executive Summary

There’s political pressure to break up Facebook, but that wouldn’t solve the problems that the social-media giant presents. To begin with, it wouldn’t even increase competition in the long run, because social-media platforms enjoy network effects, which always tip towards monopoly or near-monopoly. More importantly, it wouldn’t do anything to safeguard consumer privacy, protect election integrity, balance the need for free speech against the evils of hate speech, or slow the spread of misinformation. For those, we need structural reform.

HBR Staff/ohlamour studio/Stocksy

The Social Dilemma is one of the hottest films on Netflix. For those who haven’t seen it, it’s a wake up call to the dangers of social media — and I’m a big fan. We need to focus attention on this issue; the alarm has been building since films like The Great Hack and books like Surveillance Capitalism and Zucked were published. My new book, The Hype Machine, starts where those movies and books leave off by asking: what can we do, practically speaking, to fix the social media crisis we find ourselves in?

One idea I discuss at length in the book is whether breaking up Facebook will fix the social media morass. Antitrust regulators are certainly eager to dismantle the world’s largest social network. Their argument for doing so cites a litany of real harms, including the erosion of privacy, the spread of misinformation and hate speech, the acceleration of political polarization, and threats to the integrity of elections. Competition, they argue, will force Facebook to fix these problems. However, ill-conceived antitrust action, without structural reform, will not only fail to solve them, it will make matters worse. To understand why, consider the economic logic of these businesses.

Social media markets tip toward monopoly because of network effects: The value of a networked platform is a function of the number of people connecting to it. As more people use the product, its value to everyone increases. The greater the number of people on a network, the greater its gravitational pull. The greater its gravitational pull, the greater the grip it has on current customers. Breaking Facebook up into its component parts might slow that process down — but it won’t change the fact that, in the long run, network effects create monopolies or near-monopolies.

The people running social media companies bolster the tendency toward monopoly by making it difficult for users to walk away: they make the their platforms incompatible with each other and keep an iron grip on the data we upload to them (and that they collect about us). If we leave Facebook or Instagram, we lose our pictures, our conversations, our very memories. We don’t want to give those things up — and we also don’t want to lose the relationships involved. These high-tech walled gardens, which are so difficult to leave, combine with network effects to tip these companies even further toward monopoly.

Creating competition in the social media economy is essential: imagine the positive effects for consumers if social media giants were competing to safeguard consumers’ privacy, for example. But while competition can help force platforms to compete for our attention with designs that protect our societal values, the market forces that push social media companies toward monopolies will remain even if Facebook is dismantled. Breaking up Facebook does nothing to promote the market conditions needed to sustain competition because network effects will simply push the next Facebook-like company into a dominant position. Breaking up one company won’t change the underlying market economics.

There’s a cost to getting this wrong. Network effects create substantial economic benefits for billions of people around the world. As those benefits depend on the connections we make through social media, dismantling the networks will reduce the benefits without addressing the economic forces that drive the social economy towards concentration. Economic measures like GDP and productivity growth don’t capture the consumer value that Facebook creates, because users don’t pay to be on Facebook. (And because they’re not captured, they’re easy for regulators to ignore.) But the value is real: researchers at MIT and Stanford have investigated how much people would need to be paid to give up Facebook; it turns out that ordinary people put a very high value on the service. The research estimates Facebook generates about $370 billion a year in consumer benefits in the U.S. alone. Now, imagine those benefits worldwide.

The antitrust case against Facebook ignores these economic conditions, and it does nothing to directly protect privacy, distinguish free speech from hate speech, ensure election integrity, or reduce fake news. In fact, it will make addressing these harms more difficult by creating more social platforms to regulate and oversee. Rather than politically expedient trust busting, we need structural reform — first to catalyze the competition that a breakup will fail to achieve and then to unwind the market failures wrought by the social economy, one by one. Let’s look at a few structural reforms that would helps us achieve the promise — and avoid the peril — of social media.

Making social networks interoperable and giving consumers the right to export their data. To foster competition, we need legislation that makes social media networks interoperable and allows consumers to take their data and their social networks to competing companies, as happens in the telecommunications industry. Number portability made cellular services more competitive: When the European Union insisted on the ability to take your mobile number, and thus your network of contacts who knew you by that number, to other services in the early 2000’s, the policy increased economic welfare by 880 million euros per quarter across 15 EU countries, accounting for 15% of the observed increase in consumer surplus from 1999 to 2006. Interoperability also leveled the playing field in chat messaging. When the FCC forced AOL to make AIM interoperable with Yahoo, MSN Messenger, and others in 2002, AOL’s market share in instant messaging fell from 65% to 59% one year later, to just over 50% three years after that. In 2018, AIM ceded the entire chat market to Apple, Facebook, Snapchat, and Google. Legislation like the bipartisan ACCESS Act would do the same for social media, forcing platforms like Facebook, Twitter, and Pinterest, to make their social networks interoperable and giving consumers the right to export their data.

Safeguarding election integrity. Congress should pass targeted legislation like the FIRE Act, the SECURE Our Democracy Act, and the Voting System Cybersecurity Act to harden our elections. In addition to fighting fake news, social media companies must make firm, verifiable, and enforceable commitments to make data available for research into social media’s effects on democracy. Risk-limited election audits should safeguard against attacks on our outdated voting systems. The details could be worked out in a bipartisan National Commission on Democracy and Technology.

Protecting privacy and data. Federal privacy legislation must harmonize ad hoc state policies and balance the moral, practical, and utilitarian importance of privacy with the need for data sharing to support investigative journalism, scientific research, commercial applications of machine learning, audits of election integrity, and the economic surplus generated by the advertising economy.

Attacking the spread of misinformation. To slow the spread of misinformation, the platforms must use algorithms, employees, and the crowd to label fake news, make sources transparent, prohibiting advertising next to false content, limit resharing (as WhatsApp did to slow the spread of Covid-19 misinformation), and demote verifiable health or political misinformation in search results. Meanwhile public and private education should reemphasize media literacy and critical thinking.

Finding a better balance between free speech and hate speech. To protect free speech while curtailing harmful speech, we must draw sensible boundaries around the protection from civil liability afforded to the social media platforms by section 230 of the Communications Decency Act of 1996. Section 230 makes a free and open internet possible. Removing it would limit internet freedom and make many of the world’s largest online businesses unworkable. However, regulations can limit the cases under which 230 applies. Rather than have politically appointed commissions like the FTC or the FCC deciding under executive orders when 230 should apply, representative, deliberative legislative boundaries, similar to FOSTA-SESTA, should be drawn to balance free and harmful speech.

Breaking up Facebook could take 10 years. By the time that happened, the landscape of social media would look nothing like it does today. Forward-looking legislation that ensures competition, open markets, and a level playing field, alongside market and legislative remedies for misinformation, privacy, free speech, and election integrity, will chart a more productive path than backward-looking attempts to unwind networks and companies that already exist.

Clarion calls are great. But it’s time we moved past them to real, practical solutions. We don’t have time to waste debating whether social media is good or evil. By now we know it has tremendous promise and the potential for significant peril. We must shift the conversation from how fast we are approaching the impeding rocks to how we steer this ship toward calmer waters. The time for action is now.

Source:- Harvard Business Review

Source link

Related Topics:
Continue Reading

Media

Trump could cash out his DJT stock within weeks. Here’s what happens if he sells

Published

3 weeks ago

 on

August 23, 2024

By

Former President Donald Trump is on the brink of a significant financial decision that could have far-reaching implications for both his personal wealth and the future of his fledgling social media company, Trump Media & Technology Group (TMTG). As the lockup period on his shares in TMTG, which owns Truth Social, nears its end, Trump could soon be free to sell his substantial stake in the company. However, the potential payday, which makes up a large portion of his net worth, comes with considerable risks for Trump and his supporters.

Trump’s stake in TMTG comprises nearly 59% of the company, amounting to 114,750,000 shares. As of now, this holding is valued at approximately $2.6 billion. These shares are currently under a lockup agreement, a common feature of initial public offerings (IPOs), designed to prevent company insiders from immediately selling their shares and potentially destabilizing the stock. The lockup, which began after TMTG’s merger with a special purpose acquisition company (SPAC), is set to expire on September 25, though it could end earlier if certain conditions are met.

Should Trump decide to sell his shares after the lockup expires, the market could respond in unpredictable ways. The sale of a substantial number of shares by a major stakeholder like Trump could flood the market, potentially driving down the stock price. Daniel Bradley, a finance professor at the University of South Florida, suggests that the market might react negatively to such a large sale, particularly if there aren’t enough buyers to absorb the supply. This could lead to a sharp decline in the stock’s value, impacting both Trump’s personal wealth and the company’s market standing.

Moreover, Trump’s involvement in Truth Social has been a key driver of investor interest. The platform, marketed as a free speech alternative to mainstream social media, has attracted a loyal user base largely due to Trump’s presence. If Trump were to sell his stake, it might signal a lack of confidence in the company, potentially shaking investor confidence and further depressing the stock price.

Trump’s decision is also influenced by his ongoing legal battles, which have already cost him over $100 million in legal fees. Selling his shares could provide a significant financial boost, helping him cover these mounting expenses. However, this move could also have political ramifications, especially as he continues his bid for the Republican nomination in the 2024 presidential race.

Trump Media’s success is closely tied to Trump’s political fortunes. The company’s stock has shown volatility in response to developments in the presidential race, with Trump’s chances of winning having a direct impact on the stock’s value. If Trump sells his stake, it could be interpreted as a lack of confidence in his own political future, potentially undermining both his campaign and the company’s prospects.

Truth Social, the flagship product of TMTG, has faced challenges in generating traffic and advertising revenue, especially compared to established social media giants like X (formerly Twitter) and Facebook. Despite this, the company’s valuation has remained high, fueled by investor speculation on Trump’s political future. If Trump remains in the race and manages to secure the presidency, the value of his shares could increase. Conversely, any missteps on the campaign trail could have the opposite effect, further destabilizing the stock.

As the lockup period comes to an end, Trump faces a critical decision that could shape the future of both his personal finances and Truth Social. Whether he chooses to hold onto his shares or cash out, the outcome will likely have significant consequences for the company, its investors, and Trump’s political aspirations.

728x90x4

Source link

Continue Reading

Media

Arizona man accused of social media threats to Trump is arrested

Published

3 weeks ago

 on

August 23, 2024

By

Cochise County, AZ — Law enforcement officials in Arizona have apprehended Ronald Lee Syvrud, a 66-year-old resident of Cochise County, after a manhunt was launched following alleged death threats he made against former President Donald Trump. The threats reportedly surfaced in social media posts over the past two weeks, as Trump visited the US-Mexico border in Cochise County on Thursday.

Syvrud, who hails from Benson, Arizona, located about 50 miles southeast of Tucson, was captured by the Cochise County Sheriff’s Office on Thursday afternoon. The Sheriff’s Office confirmed his arrest, stating, “This subject has been taken into custody without incident.”

In addition to the alleged threats against Trump, Syvrud is wanted for multiple offences, including failure to register as a sex offender. He also faces several warrants in both Wisconsin and Arizona, including charges for driving under the influence and a felony hit-and-run.

The timing of the arrest coincided with Trump’s visit to Cochise County, where he toured the US-Mexico border. During his visit, Trump addressed the ongoing border issues and criticized his political rival, Democratic presidential nominee Kamala Harris, for what he described as lax immigration policies. When asked by reporters about the ongoing manhunt for Syvrud, Trump responded, “No, I have not heard that, but I am not that surprised and the reason is because I want to do things that are very bad for the bad guys.”

This incident marks the latest in a series of threats against political figures during the current election cycle. Just earlier this month, a 66-year-old Virginia man was arrested on suspicion of making death threats against Vice President Kamala Harris and other public officials.

Continue Reading

Media

Trump Media & Technology Group Faces Declining Stock Amid Financial Struggles and Increased Competition

Published

3 weeks ago

 on

August 20, 2024

By

Tech News in Canada

Trump Media & Technology Group’s stock has taken a significant hit, dropping more than 11% this week following a disappointing earnings report and the return of former U.S. President Donald Trump to the rival social media platform X, formerly known as Twitter. This decline is part of a broader downward trend for the parent company of Truth Social, with the stock plummeting nearly 43% since mid-July. Despite the sharp decline, some investors remain unfazed, expressing continued optimism for the company’s financial future or standing by their investment as a show of political support for Trump.

One such investor, Todd Schlanger, an interior designer from West Palm Beach, explained his commitment to the stock, stating, “I’m a Republican, so I supported him. When I found out about the stock, I got involved because I support the company and believe in free speech.” Schlanger, who owns around 1,000 shares, is a regular user of Truth Social and is excited about the company’s future, particularly its plans to expand its streaming services. He believes Truth Social has the potential to be as strong as Facebook or X, despite the stock’s recent struggles.

However, Truth Social’s stock performance is deeply tied to Trump’s political influence and the company’s ability to generate sustainable revenue, which has proven challenging. An earnings report released last Friday showed the company lost over $16 million in the three-month period ending in June. Revenue dropped by 30%, down to approximately $836,000 compared to $1.2 million during the same period last year.

In response to the earnings report, Truth Social CEO Devin Nunes emphasized the company’s strong cash position, highlighting $344 million in cash reserves and no debt. He also reiterated the company’s commitment to free speech, stating, “From the beginning, it was our intention to make Truth Social an impenetrable beachhead of free speech, and by taking extraordinary steps to minimize our reliance on Big Tech, that is exactly what we are doing.”

Despite these assurances, investors reacted negatively to the quarterly report, leading to a steep drop in stock price. The situation was further complicated by Trump’s return to X, where he posted for the first time in a year. Trump’s exclusivity agreement with Trump Media & Technology Group mandates that he posts personal content first on Truth Social. However, he is allowed to make politically related posts on other social media platforms, which he did earlier this week, potentially drawing users away from Truth Social.

For investors like Teri Lynn Roberson, who purchased shares near the company’s peak after it went public in March, the decline in stock value has been disheartening. However, Roberson remains unbothered by the poor performance, saying her investment was more about supporting Trump than making money. “I’m way at a loss, but I am OK with that. I am just watching it for fun,” Roberson said, adding that she sees Trump’s return to X as a positive move that could expand his reach beyond Truth Social’s “echo chamber.”

The stock’s performance holds significant financial implications for Trump himself, as he owns a 65% stake in Trump Media & Technology Group. According to Fortune, this stake represents a substantial portion of his net worth, which could be vulnerable if the company continues to struggle financially.

Analysts have described Truth Social as a “meme stock,” similar to companies like GameStop and AMC that saw their stock prices driven by ideological investments rather than business fundamentals. Tyler Richey, an analyst at Sevens Report Research, noted that the stock has ebbed and flowed based on sentiment toward Trump. He pointed out that the recent decline coincided with the rise of U.S. Vice President Kamala Harris as the Democratic presidential nominee, which may have dampened perceptions of Trump’s 2024 election prospects.

Jay Ritter, a finance professor at the University of Florida, offered a grim long-term outlook for Truth Social, suggesting that the stock would likely remain volatile, but with an overall downward trend. “What’s lacking for the true believer in the company story is, ‘OK, where is the business strategy that will be generating revenue?'” Ritter said, highlighting the company’s struggle to produce a sustainable business model.

Still, for some investors, like Michael Rogers, a masonry company owner in North Carolina, their support for Trump Media & Technology Group is unwavering. Rogers, who owns over 10,000 shares, said he invested in the company both as a show of support for Trump and because of his belief in the company’s financial future. Despite concerns about the company’s revenue challenges, Rogers expressed confidence in the business, stating, “I’m in it for the long haul.”

Not all investors are as confident. Mitchell Standley, who made a significant return on his investment earlier this year by capitalizing on the hype surrounding Trump Media’s planned merger with Digital World Acquisition Corporation, has since moved on. “It was basically just a pump and dump,” Standley told ABC News. “I knew that once they merged, all of his supporters were going to dump a bunch of money into it and buy it up.” Now, Standley is staying away from the company, citing the lack of business fundamentals as the reason for his exit.

Truth Social’s future remains uncertain as it continues to struggle with financial losses and faces stiff competition from established social media platforms. While its user base and investor sentiment are bolstered by Trump’s political following, the company’s long-term viability will depend on its ability to create a sustainable revenue stream and maintain relevance in a crowded digital landscape.

As the company seeks to stabilize, the question remains whether its appeal to Trump’s supporters can translate into financial success or whether it will remain a volatile stock driven more by ideology than business fundamentals.

Continue Reading

Trending