Social Media Bans Make Good Business Sense

It’s now been pretty much established that Facebook, Twitter and YouTube aren’t committed to the fundamental principle of free speech. All these social media companies have blocked individuals whose opinions offended spokespeople for specific constituencies. But herein lies a paradox: why would any business deliberately reduce its clientele?

In the vast majority of cases, these media giants have responded to complaints by members of minorities—blacks, gays, trans people, Muslims—by instituting bans on popular social media personalities, who have maligned or criticized these groups. Yet shouldn’t business logic dictate that the owners of Facebook, Twitter and YouTube maximize their profits by catering instead to majority opinion?

Most critics of social media censorship have attributed the firms’ actions to their owners’ left-wing or liberal biases. Strictly speaking, however, we do not know whether Mark Zuckerberg, Jack Dorsey, Larry Page, Sergey Brin and Eric Schmidt adhere to any such ideologies. But, even if they do, why would they risk harming their profit margins in the service of their ideologies? After all, one of the moral arguments in favour of capitalism is that the system extracts a cost for bigotry, since bigots are eventually run out of business and hence lose influence.

Applying this principle to social media bans, and assuming that the companies are not, in fact, willing to pay costs for supporting minority against majority censors, the logical inference is that the social media companies have not suffered any financial fallout for banning targeted individuals or groups—at least, not yet.

The first measurement of any such effect would be loss of users. That clearly hasn’t happened, since even the individual commentators and media organizations who have most vehemently criticized the bans have not been outraged enough to deactivate their own Facebook and Twitter accounts. Since this is true of the cohort most concerned about free speech, it must be even truer of people with no particular ideological axe to grind. Most people have ideological preferences—conscious or otherwise—but their decisions to accept, patronize or choose a product or service are rarely dictated by those preferences. This explains why the owners of social media companies, from a purely financial perspective, must give more weight to the opinions of the Social Justice activists. Their business model dictates it.

That model works like a basic political strategy known as bloc voting. In his book The Dictator’s Handbook, Bruce Bueno de Mesquita explains that politicians win and keep power by winning and retaining the support of what he calls the nominal selectorate, the real selectorate, and the winning coalition. “Fundamentally, the nominal selectorate is the pool of potential support for a leader; the real selectorate includes those whose support is truly influential; and the winning coalition extends only to those essential supporters without whom the leader would be finished,” explains de Mesquita. The selectorate are leaders who can dictate how large numbers of their followers will vote: such leaders range from ethnic spokespeople to religious leaders, trade unionists, entrepreneurs and drug lords.

Social media firms operate in a similar fashion. Their body of users is the nominal selectorate, the activists are the real selectorate, and their coalition is the Social Justice activists. From this perspective, the social media companies’ profits do not depend on users per se, but on advertisers, who spend money on social media platforms based on both user numbers and brand image. “A simple way to think of these groups is: interchangeables, influentials and essentials,” writes de Mesquita. Social media users are interchangeable because there are so many of them; Social Justice activists are influential because their tweets and posts are the most numerous on social media platforms; and advertisers are essential because they enabled the social media company founders to become multi-billionaires.

It is the Social Justice activists whom the advertisers are most concerned about. Since the members of this cohort generally come from the higher socio-economic brackets, and are more likely to undertake anti-business protest actions than libertarians or leftist liberals or even right-wing activists, the business risks of placating the Social Justice activists are smaller than the risk of adhering to free speech principles. This is a fundamental reality of marketing: building a good brand takes a long time and maintaining it requires constant care—damaging a brand takes just one tweet. Pandering to the woke crowd is therefore a good business strategy for corporations like Nike and Gillette, even though the data show that majority opinion disapproves of these companies’ new ads.

The social media companies’ supposedly anti-capitalist business model does not apply to traditional media. The Guardian, for example, is perceived as Britain’s most left-wing newspaper, and yet bases its appeal for funding from readers on the fact that it is “free from commercial and political bias and not influenced by billionaire owners or shareholders.” According to a 2017 YouGov poll, the Guardian and the Mirror are seen by Britons as the most left-leaning newspapers, and the Daily Mail and Daily Express as the most right-wing. The Daily Mirror has a circulation of 499,000, while the Guardian has a mere 134,000; the newspapers ranked most right-wing, the Daily Mail and Daily Express, have circulations of 1.1 million and 314,000 respectively. Ironically, this gap has come about in large part because of social media, which have undermined the advertisement-financed business model of print news media, especially broadsheets, by offering the newspapers’ content free online. That is why the Guardian has to appeal for contributions from its readers—its circulation simply isn’t large enough to attract advertisers, so the paper’s left-wing slant may well be the best (or least worst) way to get readers and patrons to make donations.

This also reveals why the telephone company comparison made by critics on both the left and right is specious. That argument holds that the telephone company does not ban users because of what they talk about, so neither should social media companies. But telephone companies make their money from subscribers; social media companies provide their platforms for free. Telephone companies don’t disconnect customers because doing so would mean loss of revenue; social media companies ban some users because not doing so would mean loss of revenue.

The subtitle of de Mesquita’s book is Why Bad Behaviour Is Almost Always Good Politics. In social media, bad behaviour is good business—at least for now. After all, even telephone companies had to change their business models in response to the arrival of the magic jack, Skype and WhatsApp. If the history of firms is any guide to the future, the reigns of Facebook, Twitter and YouTube are also due to be cut short, and the emerging backlash against their bans might well be the first sign of their end times.