Fake News, the Stock Market and Facebook

Despite its early denials, it has become clear that Facebook (along with other social networks) has been an unwitting purveyor of “fake news.”

Facebook’s quarterly results are not as great as expected; predictions of an unlimited growth in revenue and profits have to be scaled back as frightened markets punish Mark Zuckerberg’s company, and its stock value plunges by 24 percent. After coming under fire for over a year for various scandals and for its cavalier treatment of users’ personal data, the California-based company is in the crosshairs of the United States Congress and the European Parliament, which wonder whether – and how – to regulate its activities aimed at directing, public opinion, in order to prevent free circulation of ideas from turning into manipulation. Despite its early denials, it has become clear that Facebook (along with other social networks) has been an unwitting purveyor of “fake news,” an instrument for misdirection from abroad and the repository for illicit political initiatives that have not only influenced elections in several Western countries, but have also instigated serious unrest in many parts of the world, from Burma to Sri Lanka.

Does the sharp decline of Facebook’s stocks prove that the market can incentivize correct behavior and punish those who make mistakes, without need for political intervention and rules that may stifle business creativity? The markets are an important tool, but Facebook’s setback has also been prompted by the decrease in traffic from Europe as a result of the bottlenecks caused by the European Union’s General Data Protection Regulation, enacted to safeguard personal data. However, markets alone cannot always represent the solution, certainly not in this case. Remember that Facebook’s stock rose by more than 40 percent after the Cambridge Analytica scandal, when everyone believed that the company would take a long time to recover from the blow. Now, it is instead being penalized for the consequences of the more responsible conduct adopted by Zuckerberg’s corporation (“human” filters for content uploaded on the network, greater caution in handling private data, etc.). However, these measures are insufficient given Facebook’s persistent refusal to remove “fake news” from its network, even when the news is certifiably false.

We may all end up paying the price for Zuckerberg’s legitimate wish to avoid ending up in the crossfire of opposing factions, as we grow inured to falsehoods becoming “alternative facts.” When Kellyanne Conway used this expression at the White House a few days after President Donald Trump took office, the whole world laughed. A year and a half later, we are already getting used to it.