Don’t Break Social Media, Fork It By Luigi Zingales



After shattering an existing media oligarchy and increasing people’s freedom of speech, social media is as transformative as print media was 500 years ago. But to ensure that technology does more good than harm, its core functions must be separated from each other.

CHICAGO – After being celebrated for playing a pivotal role in the Arab Spring, social media platforms are now blamed for any outcome mainstream media dislikes – from the Brexit referendum and the election of Donald Trump to political polarization in general. Growing disenchantment with social media has led to increasing demands for regulation. The pressure is now strong enough that Facebook, fearing it would be shackled by the state, has sought to lead the regulatory effort on its own, making numerous advertisements to express its own support for such policies.

But what kind of regulation do we need? To answer this question, we must first appreciate the transformational nature of social media, which is arguably comparable to that of printing in 15th century Europe.

Before the printing press, books were unaffordable and their production had to be subsidized by the Catholic Church, which thus maintained the monopoly of knowledge. But once the printing press arrived, the books became affordable for the merchant class. And because most merchants were not fluent in Latin, the demand for Bibles printed in the vernacular increased.

Printing has thus changed not only the language of books, but also the style and content of debate. If the scholastic debates of the Middle Ages were fierce, they had always been educated and raised in tone. But with the printing press came the Reformation, which involved theological debates full of insults and drama. Then as now, everyone understood that a very charged intellectual struggle would produce greater sales.

The reaction of the Catholic establishment to this new era has been multifaceted, but three of its decisions deserve to be highlighted: power has been refocused in the hands of the Pope; the Index of prohibited books has been created; and the Inquisition was strengthened to protect Catholic souls from preachers from “false knowledge”. It is humbling today to see which books the Catholic Church has banned. In its Index were several of the most important works of Western culture, from Niccolò Machiavelli and René Descartes to Galileo Galilei and Immanuel Kant.

As the printing press broke a monopoly, social media encroached on a comfortable oligopoly. Before social media, everyone was free to talk, but not everyone was entitled to a megaphone. While printing texts was relatively inexpensive, distributing them was not – and distribution was even more expensive, when permitted.

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As a result, access to megaphones was limited to those expressing ideas that advertisers found acceptable. To administer this cozy oligopoly, a new class of journalists has emerged. They chose the topics to discuss, the books to read and the music to listen to. They also shortlisted presidential candidates, helped rock the elections and even advised governments. Elite journalists were the priests of the new order.

When social media broke this clan cartel, the instinctive reaction of the ruling power – as in the 16th century – was to attempt to regain control of information. The general process is the same: some topics are banned on Facebook and other platforms, and some users are disfellowshipped. And yet, we should know from history that this approach does not work. Martyrdom is the best form of publicity; being “canceled” can be a launching pad for even greater success.

To effectively regulate social media, we need to focus on separating the effects of technology, which are here to stay, from the effects of a particular business model, which regulation can change. The problem isn’t that people are allowed to post crazy stuff online; as long as they do not commit any crime, they should be free to speak out. Rather, the problem is the refraction of social media through a business model that maximizes profits by promoting the craziest and most inflammatory ideas.

This model is facilitated by the immunity of social media platforms from legal or reputational consequences. Newspapers have long been held accountable – both legally and in terms of reputation – for what they print. But thanks to Article 230 of the Communications Decency Act of the United States of 1996, social media companies have avoided legal liability for what appears on their platforms. And when they attract reviews for promoting the craziest content, they systematically blame an algorithm (even though they themselves have designed their algorithms to maximize the time users spend on a platform) .

Social media platforms play two roles: they operate networks connecting billions of users, and they decide what content those users see. Newspapers have played this kind of editorial role for centuries, but they have done so in a highly competitive environment. The same cannot be said of the social media environment today. With about 72% In the US social media market, Facebook is effectively a monopoly, with all the negative consequences that monopoly entails.

This is where regulation can help: by separating the “social” from the “media”. In many countries, the electricity grid – a natural monopoly – is separate from electricity production. Likewise, we need to separate the social media networking infrastructure from the editorial role. Network externalities make the first activity a natural monopoly, while the editorial function would benefit from competition. It is important to note that the company managing the virtual grid should not be allowed to enter the publishing industry. This would allow it to kill all competition by subsidizing one activity with the other – exactly the system we have today.

How would these two distinct layers make money? The competitive layer offers many options: Companies can advertise, sell data, or charge customers for content or the privilege of not receiving ads and not selling their data. The virtual network – like any natural monopoly – should charge a regulated price for access to the infrastructure.

These types of changes should not be made through litigation or technocratic regulation, but through legislation. In a democratic society, the main political decisions affecting the flow of information should be taken by elected representatives. No, I am not optimistic that such a law could pass any time soon in the United States. The elected officials who depend on social media for re-election are not going to bite the hand that feeds them. But make no mistake: this is the solution. Everything else is a stopgap or, worse, a way to strengthen the current monopoly.



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