January 6, 2021 will go down in American history as one of the most audacious assaults on the very foundations of democratic society. For investors, the fallout from this brief incident may have far-reaching implications for years to come. In an unprecedented move, several private internet platforms took drastic actions to deplatform President Trump and a subset of his supporters to prevent them from further stoking tensions ahead of inauguration day.
Twitter permanently banned Trump’s account, Facebook and YouTube suspended his accounts until at least inauguration day, and Amazon Web Services pulled the plug on Parler, a conservative social media platform used by the rioters to plan their attack and incite violence. These actions were not taken lightly, but nonetheless the risk of serious and unintended consequences for global open internet and free speech is high as the world first looked on in disbelief at the scenes unfolding in/outside the U.S. Capitol, and then in shock at the absolute power exercised by private companies to silence the voice of the elected leader of the United States.
For years leading up to this flashpoint, social media executives—most vocal of which was Mark Zuckerberg—had been calling for greater regulatory oversight of content policies and moderation on social media platforms. Without a catalyst, regulators dragged their feet, and the platforms were largely left to moderate themselves using a mix of AI supported by human moderators. As a result, these platforms have been called out by both sides of the political divide for moderating too harshly or not moderating enough. Not anymore.
In the U.S., the conversation must surely now shift to what this means for free speech and access to the internet. Conservative voices have been growing louder against apparently discriminatory content moderation policies of largely left-leaning social media platforms, and these recent events will only add fuel to the debate. Yet on the other hand, it is also clear that unmoderated speech on a public platform with the reach of Facebook or Twitter is susceptible to manipulation and misinformation. Even worse, the algorithmic content served up by these platforms create filter bubbles that amplify any misinformation – arguably the antithesis of free speech.
The moves by AWS, Apple, Google and Stripe (among others) to suspend service to Parler present another quandary to the open internet. Access to the internet is ideologically open and free to all, yet to actually be on the internet requires using private infrastructure controlled by private companies. Amazon was more than justified in suspending service to Parler given some content hosted on the site breached AWS terms of service, but its actions will be cited by some as setting a precedent of targeting conservative speech generally. Furthermore, the rote big tech antitrust defence that “competition is just a click away” is undermined if the internet’s gatekeepers can just shut off service to or deplatform competitors.
Globally, how are foreign sovereigns to interpret the actions of these global (yet fundamentally American) internet companies? Will dictatorships (benevolent or authoritarian) use this precedent to pressure social media platforms into silencing their political opponents? Will globalization of the internet decelerate or even reverse as governments come to the realization that vast swathes of their digital economies run on infrastructure owned by foreign private companies that may not share their agendas? At the extreme, the global internet could fracture into regional or even national internets, which would certainly truncate the expansion opportunities of big American tech firms.
Ultimately, there is no easy solution to the social and political tensions underlying the events that unfolded since Election Day, nor to the dilemma of regulating digital speech and access to the internet. This blog is intended to highlight some issues that investors should think about. While we don’t have any straightforward solutions to offer, promoting further discourse on this topic may help steer society on a more sustainable path of internet regulation.
Montaka owns shares in Amazon, Alphabet and Apple.
Daniel Wu is a Senior Research Analyst with Montaka Global Investments. To learn more about Montaka, please call +612 7202 0100.