Elon Musk Bought Twitter Just in Time for a Social Media Crackdown
Reading Time: 2 minutesMusk’s Twitter is almost surely anticompetitive—and he could face consequences in the U.S. and EU., Will antitrust regulation target Elon Musk’s Twitter?
Elon Musk’s leadership decisions at Twitter can be described as drastic, uncoordinated, and volatile—and, after the events of last week, anticompetitive. Around Dec. 15, Twitter appeared to block users from sharing Mastodon links, claiming without evidence that its nascent competitor posed safety and malware risks. Soon after, on Dec. 18, the company announced—and then, hours later, retracted—a new policy that would prevent individuals from listing usernames or links to several other social media platforms like Facebook, Instagram, Truth Social, and Mastodon. The second time, Musk openly admitted that his intention behind the move was to block competition (not to promote security), tweeting: ‘No more relentless free advertising of competitors.’
Unfortunately for Musk, the European Union and United States are both undergoing historic efforts to strengthen competition policy, and these are textbook examples of the exact type of behavior that legislators are eager to curb. The Digital Markets Act, or DMA, which the EU signed into law in September, prevents ‘gatekeeper’ platforms from engaging in certain anticompetitive or unfair practices such as restricting interoperability or giving preference to their own services over third-party competitors. The 117th Congress has seriously considered the American Innovation and Choice Online Act, AICOA, a major piece of legislation which similarly proposes to stop dominant ‘covered platforms’ from limiting or blocking third-party businesses from competing on their services. Although it’s unlikely to pass in the final days of the lame-duck session, some form of the measure will probably be reintroduced next year.
There is one snag: Twitter’s size could potentially exempt it from being forced to comply with the DMA—and, if enacted, AICOA. Both measures have been carefully crafted to only affect a handful of large ‘gatekeepers’ or ‘covered platforms,’ which primarily include companies like Amazon, Apple, Google, and Meta. For example, AICOA would generally exclude non-publicly traded platforms with fewer than 50 million U.S. monthly active users or 1 billion users worldwide. Meanwhile, the Digital Markets Act could potentially exempt platforms with a market capitalization of less than €75 billion worldwide or €7.5 billion within the EU. As of Oct. 27, the day it was delisted from the New York Stock Exchange, Twitter’s userbase was estimated at around 41 million in the United States and 238 million worldwide, and its global valuation was approximately $41 billion—likely placing it below the quantitative criteria of both the DMA and AICOA.
Clearly, there are drawbacks to excluding companies that fall below those size requirements from compliance with the DMA or AICOA. Although it makes sense for legislators to target antitrust regulations toward the largest platforms with entrenched market positions, Twitter proves that financial value and number of users are not perfect proxies for a company’s ability to abuse its market position—nor the scale of the consequences of doing so. As Musk and his predecessor Jack Dorsey have both acknowledged, a social media platform’s number of ‘likes’ or users might not reflect the true audience of a tweet—a public post could potentially be visible to anybody on the internet. And even though its market share is smaller than that of Facebook or YouTube, Twitter should still be responsible for any negative externalities that could stem from its decisions, such as impact on competition or the spread of false or harmful content.
But despite possibly falling below the DMA’s and AICOA’s benchmarks, Twitter is by no means safe from antitrust scrutiny. Outside its quantitative bar, the DMA also allows the European Commission to select ‘gatekeepers’ based on more subjective metrics, such as if a platform has ‘a significant impact on the internal market’—although it is not yet clear whether regulators will focus in on Twitter. Back in the U.S., if AICOA does not cross the finish line this year, then it’s possible that it could resurface in the 118th Congress with a lower criterion for ‘covered platforms’ that could include Twitter’s market equity and number of users. It’s also theoretically possible (though seemingly unlikely) for market conditions to shift to make Twitter eligible under the current definition. Furthermore, the Federal Trade Commission currently has the authority to potentially investigate Twitter for engaging in ‘unfair’ or ‘deceptive’ practices.
Outside of antitrust, the company could also land in trouble for its data privacy and content moderation practices. Already, the FTC has reportedly contacted Twitter to ask how the recent leadership transition might affect compliance with its May 2022 consent agreement, which required the company stop the deceptive use of personal data for targeted advertising. Furthermore, the EU’s newly enacted Digital Services Act will require almost all online platforms to allow users to appeal account bans—and if the European Commission decides to designate Twitter as a ‘very large online platform,’ it will also have to regularly assess the platform’s ‘significant systemic risks’ to values like ‘freedom of expression and information,’ ‘respect for private and family life,’ and ‘protection of public health … and civic discourse.’ These provisions could lead to penalties for massive social media platforms that choose, as Twitter has, to arbitrarily suspend prominent journalists, greenlight COVID-19 misinformation, abandon their Trust & Safety Council, and fail to adequately employ content reviewers.
One of the premises behind antitrust law is that companies should get ahead by appealing to consumers and innovating—not by stifling their rivals. Even outside the potential legal or policy consequences of Twitter’s sudden attempts to block alternate social media links, the fact that Musk felt compelled to resort to such methods is not a good sign for the current state of the platform. It is unlikely that the outlook will improve in 2023—a year when the EU will prepare to enforce the DMA and DSA and the U.S. Congress is likely to continue to debate similar measures. Twitter epitomizes the urgent and inevitable need for stricter antitrust, data privacy, and content moderation laws. And even a new CEO, if Musk does indeed step aside, won’t be enough to shake regulatory scrutiny.
Ref: slate