Elon Musk’s takeover of Twitter, and his controversial statements and decisions as its owner, have fueled a new wave of calls for regulating social media companies. Elected officials and policy scholars have argued for years that companies like Twitter and Facebook – now Meta – have immense power over public discussions and can use that power to elevate some views and suppress others. Critics also accuse the companies of failing to protect users’ personal data and downplaying harmful impacts of using social media.
As an economist who studies the regulation of utilities such as electricity, gas and water, I wonder what that regulation would look like. There are many regulatory models in use around the world, but few seem to fit the realities of social media. However, observing how these models work can provide valuable insights.
Families across the U.S. are suing social media companies over policies that they argue affected their children’s mental health.
Not really economic regulation
The central ideas behind economic regulation – safe, reliable service at fair and reasonable rates – have been around for centuries. The U.S. has a rich history of regulation since the turn of the 20th century.
The first federal economic regulator in the U.S. was the Interstate Commerce Commission, which was created by the Interstate Commerce Act of 1887. This law required railroads, which were growing dramatically and becoming a highly influential industry, to operate safely and fairly and to charge reasonable rates for service.
The Interstate Commerce Act reflected concerns that railroads – which were monopolies in the regions that they served and provided an essential service – could behave in any manner they chose and charge any price they wanted. This power threatened people who relied on rail service, such as farmers sending crops to market. Other industries, such as bus transportation and trucking, would later be subjected to similar regulation.
Individual social media companies don’t really fit this traditional mold of economic regulation. They are not monopolies, as we can see from people leaving Twitter and jumping to alternatives like Mastodon and Post.
While internet access is fast becoming an essential service in the information age, it’s debatable whether social media platforms provide essential services. And companies like Facebook and Twitter don’t directly charge people to use their platforms. So the traditional focus of economic regulation – fear of exorbitant rates – doesn’t apply.
Fairness and safety
In my view, a more relevant regulatory model for social media might be the way in which the U.S. regulates electricity grid and pipeline operations. These industries fall under the jurisdiction of the Federal Energy Regulatory Commission and state utility regulators. Like these networks, social media carries a commodity – here…
