Let the Market Make Corrections and Leave the Red Tape out of It

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YouTube banned anti-vaccine content on its platform, Instagram is accused of being “toxic” for its teen users, and Facebook’s Oversight Board is routinely panned for being funded by its ward. Across these and other tech policy issues, there is little doubt there are problems, but the important question is, what is the best mechanism for solving those problems?

While some from both political parties call for regulations to address each bump along the information superhighway, letting market solutions take shape is the superior approach. Market-generated corrections preserve maximum flexibility for firms, often happen more quickly for consumers, and avoid the political capture that government regulations risk.

YouTube’s recent ban of anti-vaccination content is the company’s legal right; the First Amendment protects YouTube from being forced to carry speech it doesn’t want to on its privately owned platform. Perhaps the platform thinks carrying this content will harm its advertising revenues, a legitimate business concern in light of its paramount obligation to maximize shareholder value. Perhaps YouTube’s leadership sincerely feels the ban is serving a greater good and saving lives. Perhaps executives have more sinister motives. It doesn’t really matter why YouTube made the decision or even, to some extent, the merits of the decision.

That’s because by narrowing the scope of content it carries, YouTube also created a competitive opportunity for other video hosting sites. The decision by the world’s biggest video sharing website to not carry certain content could allow greater market share for smaller competitors, like Rumble or Odysee, if they choose to carry that same content. Even if you think YouTube made a mistake with its ban, that supposed mistake is now a nascent company’s big chance to attract more users.

That’s the market responding, in real time, to what consumers may want. But forcing YouTube to carry content by regulating platforms as common carriers, as some conservatives have suggested, would preempt that market response. It would prevent the differentiation among competing platforms and the potential creative destruction to replace today’s market leaders with nascent challengers. Regulation would also curtail platforms’ freedom and introduce harmful regulatory capture into the most dynamic sector of the U.S. economy.

The politicization of what should remain private business decisions is on full display with Senate hearings about Instagram’s effects on its teenage users. The Wall Street Journal (owned by a competitor of Instagram’s parent company, Facebook) recently published a scathing article about the findings of the picture-sharing platform’s internal research. Attention-hungry politicians on Capitol Hill didn’t let the opportunity to bash “big tech” go to waste and this week’s hearing on the topic won’t be the last.

Whatever the actual findings of the research, the good news is that Facebook bothers to look into the harms at all and adjusts its product accordingly. New technologies and services come with tradeoffs; social media is no exception. Facebook spending time and money to identify problems and how to solve them is evidence of the incentives even market leaders have to improve and innovate. Researching problems in an effort to address them for consumers should be lauded, not investigated. Congressional committees are wasting everyone’s time with political theatre.

Similarly, Facebook established its Oversight Board in an attempt to deal with criticisms of the platform’s content moderation policies and decisions. Many on the political left think it’s dangerous that social media companies leave too much third-party content up. Some on the political right think social media companies take too much conservative third-party content down and that this threatens the success of their policies. The Oversight Board’s website explains, “The Oversight Board was created to help Facebook answer some of the most difficult questions around freedom of expression online: what to take down, what to leave up, and why.” But Oversight Board critics question the usefulness of the entity by pointing out that Facebook itself picked the members and exclusively funded it.

Whatever success or failure the Board has in addressing content moderation problems, the critical point is that it represents a private attempt to solve problems. As such, it can be more easily improved and more quickly altered than an inflexible and often irreversible government regulatory scheme.

These tech platforms and their services represent the American economic frontier. Frontiers are messy, but their chaos is worth the progress they provide. Better to let the markets react and solve problems than stifle innovation and hurt consumers with heavy-handed regulations.