Meta, X, TikTok, Snap and Discord face Congress eager for stricter regulation of social media

(L-R) Shou Zi Chew, CEO of TikTok, Linda Yaccarino, CEO of X, and Mark Zuckerberg, CEO of Meta testify before the Senate Judiciary Committee at the Dirksen Senate Office Building on January 31, 2024 in Washington, DC.

Alex Wong | Getty Images

“We could bankrupt you if we wanted to,” said a frustrated Sen. Thom Tillis, R-N.C. said Half CEO Mark Zuckerberg, TikTok CEO Shou Zi Chew, X CEO Linda Yaccarino and other top leaders of social media companies during a Senate hearing Wednesday.

Tillis and other lawmakers accused tech executives of failing to protect children from sexual exploitation on their social media platforms. The hearing before the Senate Judiciary Committee was tense and often emotional, held in a committee room packed with guests, many of them parents of children targeted by online predators.

In one memorable exchange, Sen. Josh Hawley, R-Mo., forced Zuckerberg to stand up and apologize directly to parents who believed Meta’s Facebook and Instagram apps contributed to their children’s deaths.

“No one should have to suffer the things your families have suffered,” Zuckerberg told parents.

However, overall, the hearing was characterized more by raw emotions than impending rulemaking. This reality was visible in the fact that both Meta and Snap shares were relatively stable in after-hours trading on Wednesday, at $391 and $15.94, respectively.

It appears that Wall Street doesn’t expect tech companies to take significant financial hits to their businesses from Congress, at least not yet.

Growing appetite for regulation

To be sure, both Republican and Democratic senators were united in their belief that social media companies are failing the American public and directly harming young people.

However, it takes time for laws to be passed, and all of these social media companies are still criticized for child safety issues, which may keep the topic fresh in politicians’ minds.

Child safety and anti-big tech advocates are optimistic that the Senate hearing will help revive efforts to regulate social media companies through bills such as the Stop CSAM Act and the Kids Online Safety Act, or KOSA.

But lawmakers have grilled tech CEOs in the past over antitrust and data privacy lapses, and have been unable to pass legislation that would change how companies operate.

“I think we need to understand that there should be intrinsic motivation to do it well,” Tillis said. “Or Congress will make a decision that could potentially put you out of business.”

But shortly after mentioning the idea of ​​tough regulation, Tillis pivoted to the pro-business community’s common belief that excessive regulation would benefit foreign companies.

“If we ultimately destroy your ability to create value and put you out of business, those evil people will find another way to get to these children,” Tillis said.

Meta on the hot seat

Lawmakers focused largely on Meta during the hearing, given the company’s huge user base, high-profile data privacy lapses and recent lawsuits, including one recently filed by New Mexico’s attorney general that the profitable company is not adequately protecting its young users from sexual predators.

The penalties for these lawsuits could be steep for the company, depending on their outcome. In fact, the social networking giant paid $725 million in 2022 to settle a class action lawsuit stemming from the Cambridge Analytica scandal. That same year, its shares were in free fall, partly due to a weak economy and the effects of Apple’s iOS privacy update that made it harder for companies to track users on the web.

For now, Meta’s business continues to recover after a disastrous 2022, with its advertising business partially lifted by what the company’s finance chief previously called unnamed “Chinese retailers.”

Experts and advertising analysts believe that among these retailers are fast-rising startups Temu and Shein, two companies that U.S. lawmakers have previously complained are unfairly benefiting from some trade rules because of their links to China.

Lawmakers have increasingly raised alarms about Chinese companies and, during this hearing, peppered TikTok’s Chew with questions about the social network’s Chinese owner, ByteDance.

Sen. Tom Cotton, R-Ark., in particular, questioned Chew about China, even asking the executive whether he had “ever been a member of the Chinese Communist Party.”

“Senator, I am Singaporean,” Chew said.

Clock: Meta CEO Mark Zuckerberg apologizes to parents during Senate hearing on online child safety.

Meta CEO Mark Zuckerberg apologizes to parents during Senate hearing on online child safety

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