Imagine if, instead of buying Twitter, Elon Musk had decided to spend $44 billion on purchasing a bank. His investment would have been vetted by regulators, who would ask questions about his track record, his assets and liabilities, and his funding. From then on, Musk would have to make sure his bank had enough capital, and was responsive to customers’ complaints. Its internal processes would be pored over regularly by examiners. Buying banks is hard.
Buying Twitter has been hard too, because Musk made an offer and tried to go back on it. But in regulatory terms, it should be a walk in the park. For the agencies that oversee takeovers, the only question is whether Musk’s ownership of the social network concentrates the market in a way that harms consumers – it clearly doesn’t – or whether owning Twitter will unfairly benefit his other businesses, like carmaker Tesla or satellite firm SpaceX, which it likely won’t. Buying Twitter is financially onerous, too, but compared with buying a bank, it’s pretty simple stuff.
The reason for the difference seems obvious, at first. Banks are complicated and risky, and when they get into trouble, it can quickly become a public problem. They create money and shepherd capital, so without them there’s no commerce. Moreover, American banks are tied to regulators from birth. To exist they must have a charter from a state or federal agency, and the quid pro quo is that they’re subject to elaborate controls and investigations when they want to merge or be acquired. Social media companies, conversely, are a place where people tweet poop emojis and exchange cat GIFs.
If ever there were a case for rethinking this mentality, it’s Musk’s decision to buy Twitter. The social media firm might not manage money, but like a bank, it could cause broad social or economic harm if it finds itself in the hands of an irresponsible owner. Twitter reaches around one-fifth of the U.S. population, or roughly 60 million people. The brainchild of Jack Dorsey, like Meta Platforms’s Instagram and messaging apps like Snap and TikTok, has a direct line into young America’s mental state. Adolescents on average spend 7.7 hours a day in front of screens for non-academic activities.
Musk may be as responsible an owner of Twitter as anyone, but there’s no vetting process taxed with finding out. The Trump administration, in attempting to ban TikTok on the grounds of it being owned by Chinese firm ByteDance, cited its role in disinformation campaigns that appeared to benefit Beijing. Yet TikTok was in the crosshairs because it is not U.S.-owned. There’s no law that prevents Twitter or Facebook from being used in disinformation campaigns by a bad actor, say. Internet firms are regulated when it comes to privacy or false advertising, but they aren’t generally liable when it comes to content.
There are other issues. Musk himself does not have the same national security concerns as a Chinese buyer, but he does have close ties with Beijing. China is the second biggest market for Tesla, in which over $100 billion of his wealth is tied up. Musk has also said he will make a unilateral decision to put former U.S. President Donald Trump back on the platform if he is the owner. That’s as arbitrary as Twitter’s decision to boot Trump off, perhaps. But neither decision offers comfort when considering the amount of influence such platforms have.
Congress isn’t blind to the legal vacuum in which large social media companies operate. Several politicians have challenged the piece of legislation known as Section 230 of the Communications Decency Act that shields companies from liability for content that their users post. But even if the protections the act affords were removed, that could only make stewardship of online content more lax, since a technology firm could potentially sidestep liability by just deciding to forgo moderating altogether.
The idea that change of ownership has consequences for people other than shareholders – and in areas other than banking – isn’t new. After what’s now Kraft Heinz bought UK confectioner Cadbury in 2010 and closed down a key factory, Britain changed its takeover rules to force bidders to explain their plans for employees up-front. There’s also precedent for setting a bar on what kind of buyer is acceptable. Britain’s financial conduct regulators demand “honesty, integrity and reputation.” Broadcasters must be “fit and proper.”
None of that applies to social media in the United States. And it’s not likely to. A divided Congress has so far found it impossible to legislate on the issue, and the activities of technology firms tend to provoke even more political discord than other kinds of business. But while politicians squabble, social media continues to shape society in ways that may only become apparent years later. There’s no free market for controlling banks because if they’re mismanaged it becomes everyone’s problem. It’s not obvious why social media firms should be so different.
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