Breakingviews - Big Tech backlash will hurt Little Tech more

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NEW YORK/SAN FRANCISCO (Reuters Breakingviews) - Some U.S. lawmakers want to curb the society-shaping power of technology firms like Facebook. By doing so, they could end up doing irreparable damage to smaller technology companies too, from dating sites to business listings services. Politicians’ weapon of choice – a piece of legislation dating back to 1996 – is far too blunt.

At issue is Section 230 of the Communications Decency Act. It shields online companies such as social networks from legal liability for content that users post on their platforms. But it leaves them free to moderate harmful material, with a pretty broad remit as long as they act in “good faith.” On Wednesday, that privilege was put through its paces at a Senate hearing with the chiefs of Facebook, Twitter and Alphabet.

Facebook’s Mark Zuckerberg said Congress should come together to makes changes to the law, but offered little guidance on what that might mean. Twitter boss Jack Dorsey advocated for more transparency around decisions made by online platforms to increase trust. But mostly it was a partisan affair, with Republicans accusing the platforms of suppressing conservative voices while Democrats argued that their rivals are merely advancing President Donald Trump’s personal agenda on the eve of an election.

The problem is that it’s not just the giants who benefit from Section 230. Policing content requires people, and big budgets that smaller firms don’t have. Listings firm Yelp had $526 million in cash at the end of June. Alphabet had $121 billion. New players like Twitter rival Parler, popular among some conservatives, would also be hurt.

Getting rid of the liability shield isn’t the only threat. Some lawmakers want Section 230 to be more specific about what tech companies can remove or flag. Attorney General Bill Barr favors narrowing down what material firms can deem “objectionable.” That may just make tech titans less willing to police content, creating more online toxicity and making the spread of misinformation harder to check. 

Either way, changing Section 230 is an unappealing trade-off. Removing it would further entrench powerful social media platforms. And making it too specific would give them a reason to be hands-off – with potentially harmful consequences for society. With a combined market value of nearly $2 trillion, Twitter, Facebook and Google parent Alphabet make big targets, but they won’t be the big losers from internet reform.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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