Casey and Brad begin the podcast discussing conspiracy theories and how they come to be. Oftentimes, these theories come from people trying to make sense of things they do not understand. The most recent conspiracy theory is that the November 2020 presidential election was fraudulent. In the same way internet companies can remove inaccurate material related to past conspiracy theories, these firms are also removing content related to this current conspiracy theory. Social media companies have this right due to the passing of Section 230 in the mid-1990s.
In the early 1990s, the Internet became more widely adopted and created means for users to engage in forums and other user-generated content. While this helped to expand the use of the Internet, it also resulted in a number of legal cases putting service providers at fault for the content generated by its users. This concern was raised by legal challenges against CompuServe and Prodigy, early service providers at this time. CompuServe stated they would not attempt to regulate what users posted on their services, while Prodigy had employed a team of moderators to validate content. Both faced legal challenges related to content posted by their users. In Cubby, Inc. v. CompuServe Inc., CompuServe was found not to be at fault as, by its stance of allowing all content to go unmoderated, it was a distributor and thus not liable for libelous content posted by users. However, Stratton Oakmont, Inc. v. Prodigy Services Co. found that as Prodigy had taken an editorial role with regard to customer content, it was a publisher and legally responsible for libel committed by customers.
What is Section 230?
Section 230 says that “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider” (47 U.S.C. § 230). In other words, online intermediaries that host or republish speech are protected against a range of laws that might otherwise be used to hold them legally responsible for what others say and do. The protected intermediaries include not only regular Internet Service Providers (ISPs), but also a range of “interactive computer service providers,” including basically any online service that publishes third-party content. Though there are important exceptions for certain criminal and intellectual property-based claims, CDA 230 creates a broad protection that has allowed innovation and free speech online to flourish. It allows for companies like YouTube, Facebook, Twitter and other social media firms to police themselves. Social media platforms try to find a middle ground and remove things they know are false, while also allowing people to express their opinions.
Section 230 protects these firms from being sued and it also gives them the power to police their platforms however they deem appropriate. These firms are essentially able to control the media as many consumers receive their news and information from these platforms. News companies are also morphing and today is very commentary heavy. The news has become a form of entertainment and hardly unbiased anymore.
Both sides of the political spectrum want to eliminate Section 230 for different reasons. Democrats say that Section 230 has not done enough to prevent foreign bad actors from disseminating propaganda and false information. Republicans believe Section 230 is being used to censure conservative viewpoints.
What does eliminating Section 230 mean for social media firms?
If Section 230 is eliminated, social media firms would most likely be held responsible for misinformation. This would be almost impossible to manage. There are over 6,000 tweets a second. How would these be reviewed and approved or denied? Twitter would need to develop some sort of artificial intelligence and/or hire employees to monitor the content before it is published. This also means social media business models would completely changed. These firms would most likely have to become a pay-to-play model.
There was a NY Times article where Biden says Section 230 should be eliminated but Biden has not been vocal about the topic since the Trump censure. It will be interesting to see what happens to the stock prices of these firms over the next year or so. The attention on this matter may also fizzle out after the Biden administration takes office. Only time will tell how this will play out.
We need to have truth and we do need to squash conspiracy theories, especially when they put individual lives at risk. It will be difficult to quiet all these voices and also difficult to legislate this topic. The FCC chair may have to solve the problem at the committee level because of the influence of monetary donations by big tech firms to legislators.
This is another reason the Wiser team prefers investing in index funds vs. individual stocks. As a general rule, index fund investing is better than investing in individual stocks because it keeps costs low, removes the need to constantly study earnings reports from companies and almost certainly results in being “average,” which is far preferable to losing your hard-earned money in a bad investment.