There’s a curious thread connecting Robinhood, Facebook, Twitter, and Apple this year: The technology companies are starting to take active responsibility for what happens on their platforms.
From Robinhood Markets Inc. deciding to limit trading of meme stocks, to Facebook Inc. and Twitter Inc. banning then-President Trump’s accounts, to Apple Inc. rolling out tools that make it harder for app makers to hoover up user data from iPhones, the platform operators have taken steps that extend beyond their legal obligations. It’s an effort at accountability they have generally avoided.
Each has its own discrete reasons for doing so, of course. Facebook and Twitter cracked down on Trump after his social media posts riled up the mob that stormed Capitol Hill. Apple, as was chronicled in last week’s edition of this magazine, will make iPhone users opt in to sharing data with app makers, rather than make them search for opt-out settings deep in the bowels of the operating system. And Robinhood curtailed trading of GameStop, Express, Fossil Group, and other stocks after its clearinghouse demanded higher cash deposits.
The conceit of an online platform is that it’s little more than a catalyst—connecting brands with customers, social media users with one another, and investors with stocks—and does nothing to moderate those interactions. The reality has always been different: Apple since Day 1 has imposed somewhat opaque rules on what’s allowed in its App Store, while Facebook and Twitter are constantly scrambling to remove illegal content. The companies’ latest steps are far more forthright.
The Robinhood experience is slightly different and therefore instructive. When the Depository Trust & Clearing Corp. demanded that the trading app pony up greater deposits, it forced the company to tamp down on the wild investments emanating from Reddit’s WallStreetBets forum. The checks and balances in the financial markets that have evolved over the course of a century still seem to work—so far, at least.
Such structures simply do not exist for the tech platforms. They’re instead regulating themselves. Apple is tempering Facebook’s data-grabbing excesses, while the social media platforms are stomping down on disinformation propagators. Perhaps the motivation is to preempt legislation that would take these decisions out of their hands. There are real-world impacts: Where Robinhood trading has wiped out some retail investors’ savings, social media contributed to the deaths on Capitol Hill.
History shows that self-regulation has seldom proved effective. And overzealous regulation comes with its own array of problems. The events of this still-young year heighten the urgency of finding appropriate solutions.
Bloomberg
