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Facebook Stockholders Shouldn’t Be Scared By Section 230 Talk

The potential loss of the company's legal protections shouldn't have a lasting impact on the FB stock price

Avoiding political bias is a core principle for many successful investors. However, it’s important to stay abreast of the political wrangling going on in the world. The impact of this wrangling, for example, has caused concern among some Facebook (NASDAQ:FB) stockholders.

FB Stock Will Power Through Short-Term Headwinds
Source: rvlsoft / Shutterstock.com

In this instance, FB stock price declined on May 28 as President Trump basically declared war on social-media companies.

His ire has primarily been directed at Twitter (NYSE:TWTR), which attached fact-checking notices to some of the president’s tweets. It appears the President wasn’t too pleased when Twitter appended “Get the facts about mail-in ballots” links to a couple of his tweets about that topic.

His response could potentially be law-changing. And, it could impact not only Twitter but also Facebook and its shareholders.

Yet it’s necessary for informed investors to dig deeper and decide whether the imminent legal battle should be cause for concern.

The Crux of the Dispute

At the center of the debate over whether social-media platforms are overstepping their bounds is Section 230 of the 1996 Communication Decency Act. This states, “no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

The primary purpose of Section 230 as it related to social media companies is freeing them from liability for what users post to their sites. And so far, Facebook and Twitter haven’t been treated as “publishers” as defined by Section 230. As a result, they’ve been allowed to censor people’s postings on their platforms as they please.

Some people may feel that Twitter’s attachment of fact-checking notices to the president’s tweets was discriminatory. We’re not going to debate whether this is a valid argument or not. Again, being politically unbiased is a crucial part of making investment decisions.

It’s worth investigating the facts of the matter, though. On the 28th of May, the president issued an executive order that could remove Twitter and Facebook’s legal protections under Section 230. The order uses emphatic phrasing to make its point:

“Section 230 was not intended to allow a handful of companies to grow into titans controlling vital avenues for our national discourse under the guise of promoting open forums for debate, and then to provide those behemoths blanket immunity when they use their power to censor content and silence viewpoints that they dislike.”

After the editorializing comes the legal proposal of the executive order:

“When an interactive computer service provider removes or restricts access to content and its actions do not meet the criteria of [Section 230], it is engaged in editorial conduct. It is the policy of the United States that such a provider should …be exposed to liability like any traditional editor and publisher that is not an online provider.”

The Final Word on FB Stock

Think back to the time, not too long ago, when Zuckerberg was being grilled by Congress. Some lawmakers were concerned that Zuckerberg was trying to turn his Libra project into a bank. They grilled him pretty hard on that topic.

Zuckerberg maintained his composure, and the controversy quickly evaporated. Facebook continued making money and so did FB stockholders. The world didn’t end for Facebook then, and it won’t now.

If the White House insists that Zuckerberg adapt Facebook’s censorship policy, surely he’ll adapt it. The Facebook CEO’s no dummy and his mandate is to make money. FB stockholders needn’t worry too much about this latest round of wrangling, as powerful people will wrangle just as the grass is green.

Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


Article printed from InvestorPlace Media, https://investorplace.com/2020/06/fb-stockholders-dont-need-to-fear-legal-troubles/.

©2020 InvestorPlace Media, LLC