July 17, 2018 / 8:20 PM / 5 months ago

Breakingviews - Investors bet fake-news swamp is left undrained

Facebook CEO Mark Zuckerberg speaks about protecting election integrity, fighting "fake news" and data privacy at Facebook Inc's annual F8 developers conference in San Jose, California, U.S. May 1, 2018. REUTERS/Stephen Lam

NEW YORK (Reuters Breakingviews) - Investors are betting the fake-news swamp is left undrained. U.S. lawmakers on Tuesday grilled executives from Facebook, YouTube and Twitter about how they filter an ocean of content. Both the politicians’ questions and the company’s answers made any plausible bias-free approach seem remote. And the companies’ rising stocks suggest confidence that no serious regulation will follow.

The House Judiciary Committee probed representatives from the social networks about how they identify false posts and what judgement is applied to remove troubling content. Conservative members accused the firms of favoring liberal content, and liberals alleged the opposite.

Providing credible answers is tough, too, for what may be an intractable problem. Silicon Valley is built on applying logic to as much data as possible; caution and nuance clog the machine; and screening is fallible. Twitter’s Nick Pickles noted his firm nabs nearly 10 million shady accounts each week. But anyone who ventures on the platform would hardly notice the difference. Bile and trolling are still commonplace.

Facebook, YouTube and Twitter rely greatly on content in their newsfeeds, video players and streams. They parse information to keep an audience hooked so in turn they can sell advertising to brands enticed by the ability to target ads to the most pertinent users.

Last fall, the companies testified on Capitol Hill about how agents backed by the Kremlin manipulated their feeds aiming to sway the U.S. presidential election. Facebook and others have described what they do to chase down misinformation – but they may never catch up with the tide, and the whole concept of tailoring every individual’s account feeds divisions in society.

Regulators could yet hamstring the companies to some extent by restricting how they use consumers’ data. California has made a move in that direction. That could make ads harder to target, but it’s arguably less of a threat to social networks’ business than a clampdown on the amount and nature of the content against which ads can be sold.

Yet shares of Facebook, YouTube parent Alphabet and Twitter all traded up on Tuesday afternoon. The two giants are up 15 percent or more this year, and Twitter’s stock has almost doubled. Investors don’t seem to think they’re in any danger from Congress.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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