Facebook has succeeded for years in fending off critics and regulators in Washington who have complained about the company’s market power and its failure to protect privacy, police hate speech and curb political disinformation.
Now, a boycott by major advertisers and a subsequent slide in its shares are forcing the world’s largest social media network to reckon with the very issues that policymakers have long failed to resolve.
The corporate backlash could also embolden the US Congress to take action. Some concerns about the company’s massive reach and failure to deal with problematic speech are shared by US Democrats and US Republicans alike.
Illustration: Lance Liu
“We have gotten to a tipping point. The Trump administration, COVID, Black Lives Matter, the ugliness social media is surfacing — I think people finally realize this is not OK, this is not an open exchange of ideas. This is blatant hatefulness and divisiveness,” University of California, Berkeley professor Hany Farid said.
The growing exodus by advertisers started last week by companies including Unilever, Coca-Cola and Starbucks over concerns about ads appearing next to inappropriate content on the platform. The boycott, which on Friday last week drove down Facebook’s stock more than 8 percent — though it recovered some ground Monday — was aimed at pushing the social network and its peers to limit hate speech and posts that divide and misinform.
The boycott has put a spotlight on Facebook’s policies at a time when the company is already under intense scrutiny in Washington over multiple issues and is facing a push to raise liability for third-party content in addition to multiple antitrust inquiries.
Facebook’s cofounder and chief executive officer Mark Zuckerberg announced policy changes on Friday last week, saying Facebook would now label posts that are newsworthy, but violate its rules — which could apply to posts by US President Donald Trump and other politicians. It would also label posts that include information about voting with a link encouraging users to get facts from state authorities, Zuckerberg said.
Facebook’s decision not to fact-check political speech is one of a series of policy choices that many in Washington believe favored the right as the company countered complaints from conservatives that it’s biased. That hands-off approach to content fueled advertisers’ complaints that Facebook has become a haven for hate speech and misinformation as protests against racial injustice sweep the country.
Zuckerberg is facing fresh demands from congressional Democrats for answers on how he is dealing with hate groups on his platform.
Three US Senators — Mark Warner, Mazie Hirono and Robert Menendez — together sent Zuckerberg a letter on Tuesday last week, asking how the company would enforce its bans on hate speech, white supremacy, incitement and similar content. The senators question whether Facebook should still enjoy civil liability protections when people use its tools to coordinate violence.
“We do not profit from hate, and we have no incentive to have hate on our platform. We don’t like it. Crucially, our users don’t like it,” Facebook vice president for global affairs Nick Clegg said.
Zuckerberg won plaudits from the right and criticism from civil rights groups when he pledged in a speech in October last year that the company would continue to stand up for “free expression” on the platform, amid fury that Trump was using the platform to spread misinformation.
For example, Facebook determined that Trump posts on mail-in ballots did not violate its policies, while Twitter slapped fact-checks on his tweets.
In 2016, Facebook opted not to purge the platform of some fake news amid concerns that the move would disproportionately hurt conservatives. As it wooed Republicans, Facebook angered Democrats, fraying its ties to the left as former US vice president and Democratic presidential candidate Joe Biden rises in the polls.
The controversy is coming to a head as the presidential election looms.
Last year, Facebook refused to take down a manipulated video showing US House of Representatives Speaker Nancy Pelosi slurring her words. Facebook later labeled the video as false, which limited its spread, but left the content up.
“They intend to be accomplices with misleading the American people. I think their behavior is shameful,” Pelosi told reporters earlier this year.
The biggest risk for Facebook in Washington is the growing bipartisan desire to change Section 230 of the Communications Decency Act, which protects Facebook and other online platforms from lawsuits over content posted by users.
Long credited with fostering the explosive growth of the Internet, that provision is now under attack at the highest political levels, including by both Trump and Biden.
A flurry of proposals have emerged in the past few months from Republican senators, bipartisan groups of lawmakers, the US Department of Justice and the White House, with more on the way. Trump in May signed an executive order to limit the legal shield if online platforms are politically biased in their moderation.
US Representative David Cicilline, a member of the congressional antitrust caucus that is investigating Facebook and other technology giants, said: “We have to look at Section 230 very carefully,” adding that he is particularly concerned about how Facebook promotes and monetizes controversial content even as the law exempts it from liability for those decisions.
Cicilline also wants to pull in Zuckerberg for a hearing before his caucus issues a report on its antitrust review of the technology sector in coming weeks.
That investigation, which is in its final stages, is to issue recommendations to change antitrust law, which have implications for Facebook.
Facebook faces additional antitrust scrutiny from the US Federal Trade Commission, which fined the company a record US$5 billion last year over the Cambridge Analytica episode and other data lapses. The justice department, which also enforces antitrust law, has its own probe underway, as does a coalition of state judicial departments led by New York Attorney General Letitia James.
Those inquiries pose the most significant threat to Facebook.
“Facebook already understands there are going to be modifications to section 230. What they are not ready for, and what they will fight tooth and nail is a breakup of the company, and if it’s a Biden administration, this is what’s going to be on the table,” University of Chicago strategic management associate professor Guy Rolnik said.
Up until now, Wall Street has shrugged off any risk. Facebook shares rose about 90 percent from the day Trump was inaugurated to a record high on June 23, before the boycott started to eat into the stock price. The company last year brought in more than US$70 billion in revenue.
Some market analysts think the stock is likely to bounce back as advertisers would eventually be compelled to return by the number of customers they can reach on the platform.
Facebook shares rose 2 percent on Monday, in line with the broader market, even amid reports that corporate giants like Microsoft, Ford and The Clorox Co had joined the boycott.
“These companies are going to come back, because when you have 3 billion people, I don’t think any users are really going to get away from using Facebook,” Hodges Capital Management senior vice president Gary Bradshaw said.
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