Facebook has had a rough week. Even though its network of apps crashed on Monday, a more existential challenge came Tuesday when a whistleblower, Frances Haugen, testified to Congress about the misaligned incentives of the social media network and the negative effect the decisions of the company has on users, especially young women. However, Congress needs to tread carefully, because an overreaction to the actions of a single company threatens to derail the entire internet ecosystem.

According to testimony from Haugen, Facebook constantly faces conflicts between the health of its users and potential profit from increased engagement, and rarely sides with anything but profit. Unfortunately for the company, these concerns aren’t isolated to this single whistleblower, and pressure continues to mount on Facebook to do more to improve these systems and better account for the harms that their platforms cause. Congress doesn’t appear willing to wait any longer; according to Sen. Amy Klobuchar, “the time for action is now.”

But what kind of action?

In a rush to regulate a specific company, Congress could overstep and obstruct the entire online ecosystem. In the competition space, Congress has recently discussed abandoning the consumer welfare standard, which is designed to protect consumers rather than specific competitors, to try and allow regulators to break up the company successfully—which wouldn’t even address the specific issue with engagement. Economic analysis for the entire economy goes out the window just to target Facebook. Likewise, on privacy, a patchwork of state laws threaten to impose significant costs on all online platforms trying to figure out conflicting standards and comply with them simultaneously. And perhaps most troubling, many look to reforming Section 230 as a means for dictating what types of content a platform should and should not remove, often in blatant violation of the First Amendment.

As one can imagine, solutions that are designed to target Facebook in isolation never stop at the walls in Menlo Park. Instead, the effects bleed down to all players in the ecosystem, and often end up hurting rival platforms more than the intended target. Let’s recall that Facebook has significant resources that others in the space lack and can therefore address regulations and new requirements on its business more easily than competitors. European regulators designed the General Data Protection Regulation (GDPR) to address the largest online platforms, but as a side effect, Facebook was only further entrenched as the dominant platform because they could address the regulatory costs associated with the law while smaller rivals struggled.

Let’s take a closer look at one particular proposal from the whistleblower. Haugen suggests Section 230 should be reformed to not protect decisions regarding content promotion via algorithms. Rightfully, she understands that changing Section 230 to address specific types of content leads to significant problems, and therefore would rather target the promotion mechanics which arguably drive the harms. However, these systems are designed to deliver content that users want to see. Other platforms engage in similar practices: YouTube recommends related videos, Twitter suggests hashtags and promotes tweets you may have missed, and Steam suggests games that the user may like. Without this promotion of content, the functionality of the services go down. While undoubtedly harm can occur from suggested content leading the user down dangerous rabbit holes, promotion of content can allow users to discover new groups, hobbies or interests that they otherwise may have missed and allows them to connect with others across the country. If Congress adopts the proposal, platforms could continue to promote content, but would then be opened up to potential liability for any content that gets suggested to a user. Companies would either provide an unuseful service in an attempt to avoid liability, or be drowned in litigation. The only winner here is Facebook, whose competitors would be unable to differentiate themselves without suffering the financial burden of doing so.

This is the real threat that overreaction presents: in an effort to regulate a specific company, we lose any competitive checks on that behavior as rivals drown in regulatory costs. One of the main reasons Facebook and Instagram have thought about creating Instagram Kids—an experience for kids under the age of 13—is because young adults are constantly moving away from the apps to other social media platforms like TikTok, Reddit or Discord. With growing public pressure against the company, we may expect a market reaction to the details from these reports, and more users will shift to different services. Assuming the whistleblower is correct and Facebook truly puts profit over everything, then it should be expected that either Facebook will improve its internal behaviors, or it will eventually be surpassed like any number of technology services before it. Advertisers will only continue to spend on the platform as users engage with it.

That isn’t to say that there isn’t a role for policymakers to oversee the actions of a company like Facebook. The hearing Tuesday shed significant light on the practices of the company, and the effect that they can have on users. This information will likely shape the decision-making of parents and users of the app, meaning if the numerous benefits that the service provides don’t outweigh these costs, then users will leave. And other, soft law approaches like R Street’s multistakeholder process to develop best practices for content moderation can put additional public pressure on companies like Facebook to improve their practices without over-regulating the entire information ecosystem.

The fact is, Facebook hasn’t always been a good actor in this space, and these types of hearings can provide critical insight into the behavior and decision-making of the company. Unsurprisingly, members of Congress want to put their weight on the scale to address the behavior of the company—some for politically expedient reasons, others for true policy ends. But it is critical to understand that regulations designed for one company often affect much more than the original target and can even end up shielding them. If those rivals are hit with the backfire and struggle to bear the regulatory burdens, Facebook may become the only choice left.

Image credit: kovop58

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