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Florida, Dec. 16 (The Conversation) Elon Musk’s acquisition of Twitter, along with his controversial statements and decisions as its owner, has sparked renewed calls to regulate social media companies .
Elected officials and policy scholars have argued for years that companies like Twitter and Facebook (now Meta) wield enormous sway over public discourse and can use that clout to elevate some views and suppress others. Critics also accuse the companies of failing to protect users’ personal data and downplaying the harmful effects of using social media.
As an economist who studies the regulation of utilities such as electricity, gas and water, I wonder what that regulation would look like. There are many regulatory models in use around the world, but few seem to fit the realities of social media. However, observing how these models work can provide valuable insights.
not real economic regulation
The core idea behind economic regulation—safe, reliable services at fair and reasonable prices—has been around for centuries. The United States has a long history of regulation, dating back to the early 20th century.
The first federal economic regulatory agency in the United States was the Interstate Commerce Commission, created under the Interstate Commerce Act of 1887. The law requires railroads, which are rapidly growing and becoming a hugely influential industry, to operate safely, fairly and charge reasonable rates for their services.
The Interstate Commerce Act reflected concerns that the railroads — which were monopolies in the areas they served and provided essential services — could do whatever they chose and charge whatever prices they wanted. This power threatens those who depend on rail service, such as farmers who transport their crops to market. Other industries, such as bus transport and trucking, will be similarly regulated later.
Individual social media companies don’t really fit into this traditional model of economic regulation. They’re not a monopoly, as we can see from people leaving Twitter and jumping to alternatives like Mastodon and Post.
While internet access is fast becoming an essential service in the information age, there is still debate about whether social media platforms provide an essential service. Companies like Facebook and Twitter don’t directly charge people for using their platforms. So the traditional focus of economic regulation – worrying about too high interest rates – doesn’t apply.
fairness and safety
In my view, a regulatory model more applicable to social media might be the way the US regulates grid and pipeline operations. These industries fall under the jurisdiction of the Federal Energy Regulatory Commission and state utility regulators.
Like these networks, social media carries a commodity—here, information, not electricity, oil, or gas—and the public’s primary concern is that companies like Meta and Twitter do it safely and fairly.
In this context, regulation means establishing standards of safety and fairness. Companies face fines if they violate these standards. Sounds simple, but it’s much more complicated in practice.
First, establishing these standards requires carefully defining the roles and responsibilities of regulated firms. For example, your local electric company is responsible for safely delivering electricity to your home. Identifying these roles and responsibilities can be challenging as social media companies are constantly adapting to the needs and desires of their users.
Texas is trying to do just that in 2021 with HB 20, a law that prohibits social media companies from banning users based on their political views. The social media trade group sued, saying the measure violated its members’ First Amendment rights. A federal appeals court blocked the law, and the case could go to the Supreme Court.
Setting the appropriate level of fines is also complex. In theory, regulators should try to set fines commensurate with the damage to society caused by violations. From a practical standpoint, however, regulators view fines as a deterrent. If regulators never have to assess fines, it means companies are complying with established standards of safety and fairness.
But laws often prevent agencies from actively policing targeted industries. For example, FERC’s Office of Enforcement is concerned with the safety and security of U.S. energy markets. But under a 2005 law, the office cannot levy more than $1 million in civil penalties per day. By comparison, the estimated cost to customers of the 2000-2001 California power crisis was about $40 billion, due in part to energy market manipulation.
In 2022, the Office of Enforcement resolved eight investigations of violations that occurred between 2017 and 2021 and imposed fines totaling $55.5 million. In addition, it launched 21 new surveys. Clearly, the prospect of fines from regulators is not a sufficient deterrent in all circumstances.
From legislation to regulation
Congress writes the laws that create the regulator and direct its actions, so any move to regulate social media companies will start here. Because the companies are controlled by some of the wealthiest people in the United States, the laws governing social media are likely to face legal challenges, possibly all the way to the Supreme Court. And the current Supreme Court has a strong pro-business record.
If the new laws stand up to legal challenges, regulators such as the FCC or FTC, or possibly new agencies, will have to create regulations that dictate the roles and responsibilities of social media companies. In doing so, regulators need to be mindful that changes in societal preferences and tastes may render these roles meaningless.
Finally, the agency must establish enforcement mechanisms, such as fines or other penalties. That would involve identifying what actions might prevent social media companies from acting in ways the law deems harmful.
In the time it takes to build such a system, we can assume that social media companies will grow rapidly, so regulators may be evaluating a moving target. In my opinion, even with bipartisan support for regulating social media, it is easier said than done. (conversation)
(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)
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