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    The Social Harm of Big Tech Platforms

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    The big tech stocks have been firmly establishing themselves in the top 10 holdings of the MSCI World index for the past decade.  This means they are likely to be present in many institutional portfolios, especially those following the cost-conscious trend towards passive index funds.  From an ESG standpoint some of the big players have addressed environmental concerns by sourcing renewable energy for their vast data centres.  However, alarm bells have begun ringing louder and more frequently on the social side.

    Instagram and Pinterest recently found themselves in the headlines being strongly admonished by a coroner in the UK, following the inquest into the tragic death of a 14-year-old girl.  The court had heard that Molly Russell had viewed 2,100 Instagram posts related to self-harm, depression and suicide over the six months leading up to her death.  She had also saved almost 500 such entries on Pinterest.  Meta, the parent company of Instagram and Facebook, came in for very strong criticism over its line of defence.  This had been based on their claim that many of the online posts did not technically breach Meta’s content guidelines for Instagram.  Their lack of action and oversight was exposed during the proceedings, and Meta eventually had to backtrack on those claims.  In the coroner’s words, “Molly Russell died from an act of self-harm while suffering from depression and the negative effects of online content.” 

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    The UK’s National Society for the Prevention of Cruelty to Children (NSPCC) described the outcome as social media’s “big tobacco moment.”  The charity’s Chief Executive Sir Peter Wanless said “the ruling will send shockwaves through Silicon Valley.  Tech companies must expect to be held to account when they put the safety of children second to commercial decisions.  The magnitude of this moment for children everywhere cannot be understated.”  The commercial decisions to which he referred relate to the click and “like” driven algorithms that form the life blood of most social media platforms.  Traffic and activity lead to advertising revenues, often regardless of the nature of the content.

    Of all the big tech stocks in the upper echelons of the MSCI World, Meta/Facebook has seen the most controversies of this type over the last few years.  The company apologised following the Molly Russell case, but in typical style maintained a somewhat defensive stance.  Having also been regularly accused of facilitating the spread of political and medical disinformation, Meta is ducking and diving in a desperate attempt to protect its lucrative operating model.  In the UK, a new Online Safety Bill is currently under consideration and policy makers in the European Union are also attempting to better regulate the big tech companies and their social media platforms.  Meta is indeed flagged as “high risk” by ESG ratings firm Sustainalytics, but sustainable investors with their eye on the “S” should seriously consider the reputational and financial risk posed by the so-far quite unregulated social media platforms.

    Image courtesy of Photo Mix from Pixabay
    Richard Tyszkiewicz
    Richard Tyszkiewicz
    Richard has over 30 years’ experience in the international investment industry. He has worked closely with major Nordic investors on consultancy projects, focusing on the evaluation of external asset managers. While doing so, Richard built up a strong practical understanding of the challenges faced by institutional investors seeking to integrate ESG into their portfolios. Richard has an MA degree in Management and Spanish from St Andrews University, and sustainability qualifications from Cambridge University, PRI and the CFA Institute.

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