The US Supreme Court will hear arguments over laws regarding social media. This stems from concerns over state laws enacted by Florida and Texas that would stop social media platforms from supposedly suppressing certain political content. The ruling may have major implications for how state governments may regulate how social media platforms moderate their content.
Sinan Aral, Author of The Hype Machine and Professor at MIT Sloan Management, joins Yahoo Finance to discuss the social media case before the Supreme Court, how it may play out, and the implications of its potential rulings.
When asked how the Supreme Court may lean, Aral says: "I think the justices are skeptical of these laws. I don't imagine that these two laws are going to be upheld in their entirety. I think that either they're going to be overturned or the cases are going to be remanded for further development in the lower courts. And the reason why that would happen is precisely the threading the needle that I discussed earlier, which is that the Supreme Court is likely to want to bound the impact of their decision... You saw them asking questions about exactly what are the boundaries of the scope of these laws and therefore their decisions about these laws. At the end of the day, it's going to be about content moderation and how much of it is the purview of social media companies or not."
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JULIE HYMAN: All right. Today the Supreme Court is hearing arguments that could shape the future of social media. At the center, two laws that seek to limit how social media companies moderate content on their sites. The state laws say companies cannot remove users or posts from platforms.
The companies have argued it's their First Amendment right to do so. With more, we're joined by Sinan Aral, the David Austin professor of management, IT, marketing, and data science at MIT. Sinan, it's good to see you. Thanks for joining us here.
There have been so many attempts to try to figure out how to regulate this. So it's interesting these cases and where they're coming from and the allegations that they are making. Is this the thing that ends up shaping content moderation for these companies?
SINAN ARAL: Julie, great to see you. Thanks for having me. This is indeed an important case. It's important because the legislature can't seem to find unanimity in terms of both sides of the aisle coming together to regulate social media in one direction or another.
And so here, you see some states taking actions that support the more Republican conservative view that social media companies should not be able to moderate content that they deem as being censorship of conservative voices. These are laws, in effect, in Texas and in Florida. And then in other states, you have other kinds of laws that are pushing for more content moderation.
And I think what is important about this case is that it has to thread the needle about, on one side, making sure that the social media companies have the ability to not turn the internet into a cesspool with no content moderation, on one hand. But then, on the other hand, not giving them a blanket immunity from any type of government regulation or legislation. We know that AI is happening right in front of us and right around the corner in terms of legislation. A blanket immunity would also not be good.
JOSH LIPTON: Sinan, I'm interested to get your take to, you know, just for traders, investors who are listening right now, Sinan. What are the possible, as you think through them, business implications if the Florida and Texas laws were indeed upheld here?
SINAN ARAL: Yeah, so that's a really important question. In my mind, there are three possible outcomes of this case. Two of them are much more likely than the third, as far as I could see the questioning of the justices today. I think the justices are skeptical of these laws.
I don't imagine that these two laws are going to be upheld in their entirety. I think that either they're going to be overturned or the cases are going to be remanded for further development in the lower courts. And the reason why that would happen is precisely the threading the needle that I discussed earlier, which is that the Supreme Court is likely to want to bound the impact of their decision.
In other words, is this just about Facebook Blue and the newsfeed on Facebook Blue? Or is it also about Meta's WhatsApp? Is it also about other parts of the internet ecosystem like email? You saw them asking questions about exactly what are the boundaries of the scope of these laws and, therefore, their decisions about these laws.
And at the end of the day, it's going to be about content moderation and how much of it is the purview of social media companies or not. It's a First Amendment case. Obviously, you also have the question of whether the government can pressure social media to censor certain types of content on their platforms.
For instance, COVID misinformation. We know that we have a case in Missouri, that is the Surgeon General against Missouri, that is about whether or not the administration can pressure around COVID-19 misinformation content moderation policies. And so, I believe either these cases are going to be overturned or it's going to be remanded for further development in the lower courts.
And in that case, in either of those two cases, not much is going to change with the social media companies in the short term. To the extent that being remanded and coming back with a different scope creates meaningful, substantive changes in content moderation, then it could have impacts on business policy. But for the moment, I think it's a wait and see for business policy.
JULIE HYMAN: Well, and there is a looming event here in the US that this would be quite pertinent to, the presidential election. But it sounds like you think nothing's going to be resolved before that.
SINAN ARAL: I think it's not going to be resolved in June or July. To the extent that there's going to be a quick development in the lower courts and a comeback, maybe. To the extent that the laws are overturned, then it's status quo, meaning the social media companies will continue to moderate content based on their editorial discretion and their choices.
And that doesn't mean just banning users or banning posts. It means also demoting posts or reducing the amount that they spread on the platforms. That, by the way, is the status quo. So to the extent that that's what we have today, then I could imagine that that remains in effect or that it gets remanded and re-scoped to understand, is this about email?
Is this about private messaging? To what extent should different types of decisions be allowable or not allowable? These are really, really important questions, and I don't expect the Supreme Court to make a hasty decision.
If there is a decision, I believe it will be to overturn these laws and maintain the status quo and try to maintain some consistency across state laws. But I think it's equally likely that the cases will be remanded to the lower courts for further development.
JOSH LIPTON: Big, complex questions and issues. Sinan, thanks as always for helping us walk through them. Appreciate it.
