This may be the 'beginning of the end' for big tech following Capitol siege: Scott Galloway

Social media giants are facing backlash following the Capitol siege. NYU Stern Professor of Marketing Scott Galloway joins Yahoo Finance Live to discuss.

Video Transcript

- President Trump is back on Twitter this morning after the platform temporarily blocked his account in response to the Capitol building riots on Wednesday. The president tweeted a video last night ensuring a quote, "smooth, orderly, and seamless transition of power." Facebook, meanwhile, continuing to ban the president from the platform indefinitely. Both social media companies now facing growing backlash over their perceived role in inciting the violence that engulfed Washington.

Let's bring in Scott Galloway. He is a professor of marketing at NYU. Scott, I know you have been looking at this issue for some time. You got a lot to say. Where should the conversation go from here in terms of how Congress and lawmakers move forward on regulation?

SCOTT GALLOWAY: Well, I think a fair question is, how did we get here, when we have essentially a mob Insurrection on our capital, and our lawmakers have to use furniture to secure the doors. And we find that the most meaningful action or what we find the next day is that we're begging 30-something-year-old CEOs of companies to block their account. So you sort of have to wonder, how did we get here?

So, you know, I'd like to think that this is the beginning of the end of big tech as we know it. I think this is another example that when you have algorithms that are profit-driven, and these algorithms are different, and figure out the tribalism, and dividing us, is very profitable. And it ends up in an overrun or a seizure of our capital, I think it's just another data point or another point in the line that moves towards increased scrutiny, increased regulation. But I absolutely think it's coming. And this is just going to put on the exclamation point of the fact that something needs to happen here.

- And Professor, I mean, when we talk about what needs to happen, that seems to be you know one of the key areas around social media. But it's not just social media. When we talk about how we got here, too-- and it's something that a lot of focus has not been on some of the traditional media players-- but you look at the viewership at some of these cable news programs during the Trump administration. I mean, this week, when that siege on Capitol Hill happened, CNN hit record numbers in terms of viewership.

You can make the case that terror, fear, is very good for them. A president rallying his base with lies is very good for them. And you think about advertising around that, it's not just social media. So are you kind of surprised that these companies are getting hit with those questions when maybe perhaps, traditional media outlets are not as much?

SCOTT GALLOWAY: No, that's a fair point. So Facebook and Twitter aren't doing anything that CNN and Fox aren't doing it. They're just doing it at scale using processing power and networking effects. And about 30, 40 years ago, first, CNN, and then mostly, Fox, recognized that news used to be 97% truth in reporting, and 3% novelty and opinion. And they slowly but surely flipped that, recognizing the tribalism and opinion and novelty, which is kind of code for misinformation, drives much more engagement, which leads to more ads.

So I think all of them deserve a certain level of scrutiny. But there's just no doubt about it. And to your point, Facebook and Twitter aren't doing anything new. They're just doing it at a scale that's much more damaging. Instead of a dumpster fire, we have a mushroom cloud. But I think a lot of us are thinking, OK, there needs to be some sense of truth. The truth is a thing, and our media plays such an important role in our society. The question is how do we best-- who is the arbiter of that truth, and how do we best implement and create incentives such that misinformation and divisiveness doesn't result in creating massive wealth for people, which it is done at Facebook and Twitter?

- Scott, you talked about the cable news outlets. But how much of this conversation needs to broaden out to actually, the providers themselves? Those like our parent company, Verizon, who by the way, do show OAN or a Newsmax that have peddled the same conspiracy theories that we've seen on these platforms, too? I mean, is there a broader conversation that needs to happen here? And once again, where do lawmakers start?

SCOTT GALLOWAY: Well, I would argue-- so sure. So is it the content or is it the pipes that ultimately bears responsibility? And I think the answer is yes. And I think that there's probably going to need to be some sort of modifications or carve out to Section 230. There's already a carve out.

And Section 230 briefly protects, quote, unquote, "interactive or nascent interactive platforms that are no longer nascent" from being subject to legal liability if somebody puts content on the platform that inflames, antagonizes, or slanders a party. So they've basically been exonerated from that. And by the way, most traditional outlets are not exonerated or don't have exceptions from that. Just the online platforms.

I think the place to start is with breaking these guys up. I think that it's telling that we seem to be always begging the same one or two firms. I think increased competition would be good. I think you're going to need to see regulation. I think we're going to need to have profit incentives more aligned to the externalities, so I think it would be helpful to have a tax on media that's produced by an algorithm, because that is usually where you find the majority of the trouble starts.

And look, at the end of the day, I think when you have a platform that is consistently weaponized and used for organizing and spreading misinformation that results in the overrun of our Capitol and five dead people, I think those individuals should be held accountable. I'm not sure that anything is really going to change here until there's a perp walk.

And that is these individuals have delayed and obfuscated, slow rolled, they've had the ability to identify hate speech, they've had the ability to get in the way or to predict when there was going to be violence. And instead, they put their hands over their eyes and over their ears. So simply put, competition regulation. And if it's needed, criminal prosecution. This has gone so far beyond where we thought we would be.

- Scott. let me press on that point, because you're certainly right about that the scope and scale of these platforms-- and we're talking specifically Facebook and Twitter. But what we also saw in the lead up to these riots were conversations that were popping up outside of those platforms. Some users, of course, who have been kicked off of those platforms now going to a place like Parler. There was a thread that was going on Reddit-- that was taken off. So they started another site, and started the thread there, too. It feels like there's a bit of whack-a-mole that's happening.

SCOTT GALLOWAY: That's right. And it needs-- there needs to be regulation that applies to the existing guys and any new guys that's-- the side that they can profit from this information and pitting Americans against each other. So yeah, if we were just to say-- if we were just to get angry at Facebook and say, all right, you need to shut Trump down, you're going to see Trump just probably could go somewhere else, and his followers.

I don't think that solves the problem. I think it needs to be what I'll call systemic solutions that say, all right, let's be thoughtful around the harm that any media platform, when they knowingly spread misinformation because they know it creates greater engagement and more Nissan ads and more profits-- so they knowingly spread misinformation that results in harm, that they have liability. And that should be spread across-- I don't see why that wouldn't be spread across any media company. So you're right-- just trying to punish one or the other, like you said, it's just going to-- it's just going to pop up somewhere else. Needs to be a systemic solution.

- But Professor, I mean, we've been talking about that for years. At what point does it become, all right, they need to do something about it. It's just not-- it's clearly not working or Congress can't figure it out, because, you know, Cambridge Analytica was years ago. And now, when we're seeing groups kind of-- I guess the main difference would be actually using these platforms to plan things and act on maybe some of the messages we're seeing play out in more traditional media outlets. I mean, at what point do you just say, all right, look, enough is enough, and you have congressmen and women just come out and say, look, we just have to shut it down, because this has gone on too long?

SCOTT GALLOWAY: I love it when someone is more cynical than me. So yeah, you're right, it has been too long. And, I mean, just as an example, Mark Zuckerberg all of a sudden deciding to suspend the president's account-- it wasn't him calling on his better angels. The reason that President Trump was kicked off of Facebook for two weeks was because of Stacey Abrams. And that is Facebook has done the calculus here, and they recognize the people overseeing these committees are going to have a different view on them.

There was an unholy alliance between Zuckerberg and Donald Trump where basically, the deal was you don't break me up, and I'll let you to continue to weaponize and spread misinformation. And that-- that alliance has been broken. So I'm hopeful that there's a new Sheriff in town, and the shadow being cast by the Biden-Harris administration has already resulted in more change at Facebook in the last 10 days than we've seen in the last 10 years.

So I'm hopeful. I've been hopeful for probably too long. I think you're right. There's been-- there's been a total inaction. They have slow rolled the whole thing effectively. But I think that's about to change. I think all of us were really rattled by the events of this week, I think we're fed up. I think we have an administration now that is probably more inclined to do thoughtful action. But there is going to be action. If it doesn't happen at a federal level, it's going to happen at the state level. I think people are fed up and don't like having to beg 30-somethings to save our country.

- Yeah, far be it for me to steal the cynical crowd away from you. But very, very interesting stuff to see it all play out. And obviously, perhaps, convenient that they would have made these moves against President Trump just two weeks before he's now out of office. And of course, we'll see how it all plays out. But Professor Galloway, I love having you on. Appreciate you taking the time today.

SCOTT GALLOWAY: Thanks, guys.