Content Governance Is Now More Important for Facebook Investors

The latest buzzword in Wall Street investor circles is “content governance.” In other words, social media companies like Facebook are increasingly being held responsible by regulators and lawmakers for how they govern the user-generated content appearing on their platforms. Facebook investors are understandably concerned: content such as hate speech, fake news, sexual harassment, racism – all of it could open up Facebook for significant legal and regulatory risk if things aren’t cleaned up soon.

Facebook investors revolt

Thus, it’s perhaps not surprising that the latest Facebook shareholder meeting has been described by some Facebook investors as “chaotic.” Investors were not at all pleased by all the scandals and controversies surrounding Facebook, and how the leadership team led by Mark Zuckerberg and Sheryl Sandberg seems to be doing or little or nothing to assuage their fears. The latest New York Times story, which showcased how Facebook has data sharing partnerships in place with major device makers, exacerbated matters even more.

One institutional investor at the meeting for Facebook investors, in fact, even went so far as to compare Mark Zuckerberg to Vladimir Putin for what some perceive as Zuckerberg’s authoritarian approach to running Facebook. From this perspective, Zuckerberg has carefully used his huge stake in the company to prevent any institutional investors from mounting a serious challenge to his control of Facebook or from implementing any large-scale changes.

Content governance is the new buzzword for big investors

What’s interesting to note here is that, just two months after Mark Zuckerberg testified in Washington about the company’s data policies – content governance – and not data privacy – seems to be what’s on everyone’s mind these days. Investors with a stake in Facebook, or who control a significant number of shares in Facebook, are apparently more concerned about the content appearing on the social media platform, and less concerned about how the company is using data and information from users. The logic here is simple: if Facebook is fined or penalized by the federal government for user-generated content appearing on its site, it would have significant negative pressure on the company’s stock price.

Maybe this change in thinking has to do with the fact that it’s much easier to wrap one’s head around a topic like “fake news” or “election interference” than it is to wrap one’s head around data privacy. No doubt, some of the institutional investors raising the alarm bells at Facebook are big Facebook users themselves, and may be disturbed by what they see as the proliferation of fake news and hate speech across the social networking platform. Hence, the heightened concern about content governance.

How FOSTA is accelerating fears about content governance

Or maybe it has to do with the fact that data privacy legislation is very much on the long-term horizon, while content governance legislation is already here. The one piece of legislation that has investors spooked is known as the “Allow States and Victims to Fight Online Sex Trafficking Act,” or FOSTA, which recently became law. According to FOSTA, website operators – and that would include Facebook – can be held liable for any user-generated content that “promotes or facilitates prostitution.”

Wait a second, you’re probably wondering. What in the world does prostitution and sex trafficking have to do with Facebook?

Leave a Reply

Please Login to comment
Notify of

Enjoyed the article?

Get notified of new articles and relevant events.

Thank you for being a part of the CPO Magazine community.

Something went wrong.

Before you go ...

How about giving us a follow?

Or let us notify you of new articles and relevant events.

Thank you for being a part of the CPO Magazine community.

Something went wrong.

Follow CPO Magazine