Donald Trump Jr. has joined in his father’s attacks on social media — but with a twist. He told Axios that “if a Trump supporter in the tech world created a conservative, Facebook-like social network, he would urge Trump supporters to switch to it.” But if this is such a good idea, why hasn’t an entrepreneur jumped at the chance? Economics.
Recall back in 2006, conservative activists created online encyclopedia Conservapedia in reaction to allegations of liberal bias on Wikipedia. Conservapedia hasn’t exactly caught on. It’s dominated by fringe religious issues to the point Christian conservative thought leaders like Rod Dreher and Damian Thompson scorn it (Thompson said in his book Counterknowledge that Conservapedia was there to “dress up nonsense as science”). What happened?
A would-be Twitter competitor has fared little better. Gab.ai, a “free speech” alternative to Twitter, does not enforce any form of “community standard.” Checking the site on a recent morning showed stories about a “gay priest later caught in cocaine-fueled orgy,” complaints about Superman being an illegal alien socialist, and “white genocide” in South Africa. If bad speech drives out good in the absence of community standards, most people will not use the platform.
The sites were doomed by three economic forces. The first is a Gresham’s Law of speech. Gresham’s Law is a maxim of monetary economics that states that bad money drives out good. That is, debased or counterfeit money will circulate more than money with a high commodity value such as gold or silver. Its truth has been demonstrated repeatedly. The same effect seems to apply to speech. The bad speech of dubious Christian theories drove out the good speech of science in the case of Conservapedia, making it an unreliable source.
Similar phenomena happen in other fora for speech. Before social media, we can all remember getting chain emails suggesting bizarre things (I remember one that falsely alleged James Carville had been involved in a domestic shooting incident with his wife Mary Matalin), with a request to forward to friends. The spread of such unreliable information was the catalyst for the creation of “fact-checkers” like Snopes.com (which started out concentrating on urban legends and common fallacies).
This is exactly the same phenomenon as happened with the rise of “fake news” — which as originally defined meant utterly untrue, fabricated stories widely shared on social media. It was in reaction to this spread of bad speech that Facebook deprioritized the sharing of news stories on the platform, which led to many organizations that relied on Facebook as the main gateway to their audience losing much of that audience. Many of these groups were conservative, and they have complained about Facebook bias ever since. Yet liberal sites like Upworthy have been hurt just as much by Facebook’s changes over the years.
The second economic reality is the need for income. Social media platforms can only be successful as what economists call “two sided markets” — they have to get income by charging for putting people in touch with each other for economic transactions. In the case of Facebook and Twitter, that means putting their user base in touch with advertisers. If the advertisers do not show up, the business model fails. That means no money for technological research or investment in features that will attract new users and therefore new advertisers. Advertisers will be extremely unlikely to patronize a platform filled with crazy and offensive speech.
The final, related economic issue is on the supply side — costs are low for users of these platforms because firms invest heavily in innovation and research. That is why, contrary to lazy proclamations of “monopoly,” there is fierce competition between the large tech firms in all areas of innovation from search to smartphones. Facebook has been able to become a leader in streaming video and image recognition, for instance. Firms that allow Gresham’s Law of Speech to take hold and lose (or never find) their advertisers will always be playing catch-up. Ironically, they will almost certainly have to rely on the technological innovation of the other tech firms.
None of this is to say that a start-up cannot replace Facebook or Twitter — or even Google or Amazon — if it has the right breakthrough. The underlying architecture of the free and open internet allows for endless possibilities for the right challenger. Just ask where AOL, Yahoo, and MySpace are now. Unfortunately, creating the “conservative Facebook” will be easier said than done — and the laws of free market economics are the main reason why. Conservatives have proven adept at building new media forms in the past — talk radio springs to mind. If they are to build a new platform for their views it will require really innovative thinking. A “conservative Facebook” isn’t innovative, just imitative. If they can find a new model that combines quality, revenue, and continuous innovation, they’ll have the winner they want.
Originally published at The Hill.