Welcome to "#SocialStocks," The Fly's weekly recap of Wall Street's reactions to social media stock news.
PRESIDENT TRUMP TAKES ACTION AGAINST SOCIAL MEDIA COMPANIES: On May 28, Facebook (FB) CEO Mark Zuckerberg called out Twitter (TWTR) for fact checking a tweet from President Trump, telling Fox News' Dana Perino that privately-owned digital platforms should not act as the "arbiter of truth." "We have a different policy than, I think, Twitter on this," Zuckerberg told "The Daily Briefing" in an interview. "I just believe strongly that Facebook shouldn't be the arbiter of truth of everything that people say online," he added. "Private companies probably shouldn't be, especially these platform companies, shouldn't be in the position of doing that." Later, Twitter CEO Jack Dorsey defended the platform's decision to fact check and place warnings on two of President Trump's tweets. Dorsey said via Twitter: "Fact check: there is someone ultimately accountable for our actions as a company, and that's me. Please leave our employees out of this. We'll continue to point out incorrect or disputed information about elections globally. And we will admit to and own any mistakes we make. This does not make us an 'arbiter of truth.' Our intention is to connect the dots of conflicting statements and show the information in dispute so people can judge for themselves. More transparency from us is critical so folks can clearly see the why behind our actions."
That evening, Reuters quoted U.S. Attorney General Barr as stating that the Trump administration is preparing a legislative proposal on social media companies. Barr said, according to Reuters, that he will seek litigation against social media companies as well as legislation. Following that, the Wall Street Journal’s John D. McKinnon and Rebecca Ballhaus reported President Trump signed an executive order that aims to limit the broad legal protection that federal law currently provides to social media and other online platforms. The new order aimed to make it easier for federal regulators to hold firms such as Twitter and Facebook liable if they are viewed to be unfairly curtailing users' speech by suspending their accounts or deleting their posts, the authors said. The president signed the order after Twitter for the first time applied a fact-checking notice to Trump's tweets on the subject of voter fraud, the authors noted.
On May 29, Twitter said that President Trump's tweet, where he said "These THUGS are dishonoring the memory of George Floyd, and I won't let that happen. Just spoke to Governor Tim Walz and told him that the Military is with him all the way. Any difficulty and we will assume control but, when the looting starts, the shooting starts," violated its policies regarding the glorification of violence "based on the historical context of the last line, its connection to violence, and the risk it could inspire similar actions today." Twitted added, "We've taken action in the interest of preventing others from being inspired to commit violent acts, but have kept the Tweet on Twitter because it is important that the public still be able to see the Tweet given its relevance to ongoing matters of public importance. As is standard with this notice, engagements with the Tweet will be limited. People will be able to Retweet with Comment, but will not be able to Like, Reply or Retweet it."
Following that, President Donald Trump tweeted: "Twitter is doing nothing about all of the lies & propaganda being put out by China or the Radical Left Democrat Party. They have targeted Republicans, Conservatives & the President of the United States. Section 230 should be revoked by Congress. Until then, it will be regulated!"
JPMorgan analyst Doug Anmuth weighed in with President Trump expected to sign an Executive Order that would challenge protections for social media platforms under Section 230 of the Communications Decency Act. While the government could clarify or tighten how Section 230 is applied, substantive changes to the law would require approval from Congress, which would be challenging, Anmuth told investors in a research note. Further, the Executive Order would also likely be swiftly challenged in the courts, which have historically sided with the tech companies in matters related to Section 230, adds the analyst. With that said, Anmuth believes the Executive Order and significant press attention around the matter are negative for big tech, and "could create some overhang in coming months." The analyst adds that over the past few years, both Twitter and Facebook have taken initiatives to reduce fake news/accounts and improve trust and safety on their platforms.
On June 3, the New York Times' Kate Conger reported President Trump's executive order on social media is facing its first legal challenge from the Center for Democracy and Technology, which says in a lawsuit that Trump's attempt to unwind a federal law that grants social media companies discretion over the content they allow on their platforms was retaliatory. Trump's order is "plainly retaliatory," the Center for Democracy and Technology said in a legal filing. "It attacks a private company, Twitter, for exercising its First Amendment right to comment on the president's statements… President Trump - by publicly attacking Twitter and issuing the order - sought to chill future online speech by other speakers," its filing added.
Other companies in this space include Snap (SNAP), Pinterest (PINS), Google's YouTube (GOOG, GOOGL), Amazon's Twitch (AMZN), and Sprout Social (SPT).
Alphabet
-2.45 (-0.17%)
+0.73 (+3.56%)
Snap
-0.55 (-2.78%)
+1.64 (+5.08%)
Ticker changed to META
-2.75 (-1.18%)
Alphabet
-4.79 (-0.33%)
Amazon.com
+10.43 (+0.42%)
Sprout Social
+1.3 (+4.35%)