Who decides who can speak on social media?
Violent videos like the livestream of last weekend’s mass shooting in Buffalo, N.Y., have long been a problem for social media sites. Such atrocities always stir up national debate about the responsibilities of social media companies to block harmful material. This time, the debate is happening amid a messy fight about free speech that the companies are taking to the Supreme Court.
The tech industry is challenging a Texas law aimed at stopping social media “censorship.” The law, HB 20, which was prompted by complaints from conservatives, requires platforms with at least 50 million users to refrain from removing user posts because they convey a certain viewpoint. It was passed last year but was blocked by a lower court before an appeals court reinstated it last week, allowing it to go into effect immediately. NetChoice, an industry group that includes Facebook, Twitter and TikTok, along with the Computer & Communications Industry Association, is asking the Supreme Court to block the law again while legal challenges are pending. They filed an emergency petition to the high court’s so-called shadow docket, where decisions are made quickly, typically without oral arguments.
The law is so broad that it could prevent platforms from removing the most extreme posts, including the video of the shooting and the suspect’s racist manifesto, said Chris Marchese, policy counsel for NetChoice. Such restrictions violate the companies’ free speech rights, Marchese told DealBook: “The First Amendment is clear.” But some constitutional law experts are a little less certain. Genevieve Lakier, a free speech specialist at the University of Chicago law school, told DealBook that what seemed “patently unconstitutional” just two weeks ago isn’t so clear now.
“Under First Amendment law as it has existed so far, it’s pretty clear that the government can’t ban private platforms from viewpoint discriminating,” she said. This is traditionally a position embraced by conservative justices. But Lakier said that Justice Clarence Thomas has been arguing otherwise, and the appeals court decision to lift the stay on the Texas law suggests that some judges have picked up on the justice’s arguments. “If so, that’s a significant change,” Lakier said.
If the Supreme Court refuses to act, it might signal a sea change in free speech law. That would be “a pretty profound indication” that at least some of the justices believe the government can have much more say in telling private companies what to do, Lakier said. What’s more likely to happen, she believes, is that the Supreme Court will stay the Texas law for now, giving the companies what they want without indicating what could happen later.
A decision on the petition should come quickly, Marchese said, and tech and legal experts are already asking the court for permission to chime in with amicus briefs.
HERE’S WHAT’S HAPPENING
Jerome Powell says the Fed is watching for signs that inflation’s easing. The Fed chair said the central bank was prepared to raise rates more quickly if price pressures persist. If it looks to be abating, then “we can consider moving to a slower pace,” Powell said, speaking on a Wall Street Journal livestream.
Target’s profit falls short of Wall Street expectations. The company said higher freight costs, inventory shortages and lower-than-expected sales had hurt its results. Its shares were down 22 percent in premarket trading. Yesterday, Walmart reported a 25 percent drop in first-quarter profit.
JP Morgan shareholders reject Jamie Dimon’s $52.6 million bonus. The vote, which is not binding, was an unusual signal of disapproval for the C.E.O., and for the stock option award that directors gave him last year to encourage him to stay.
The Justice Department sues Steve Wynn. The government accused the former casino mogul of acting as a foreign agent by serving as a middleman for the Chinese government and lobbying President Trump, without registering as one.
Japan’s economy shrinks. The world’s third-largest economy contracted at an annualized rate of 1 percent in the first quarter, set back by coronavirus restrictions, higher energy prices and supply chain issues. Analysts say growth is likely to bounce back in the second quarter.
Exclusive: Iger invests in a delivery start-up
Gopuff, a quick-delivery company that was a pandemic darling, is now navigating a trickier environment, one that has forced it to delay an I.P.O. and cut jobs. It’s about to get some guidance from an important new friend.
Bob Iger, the former Disney C.E.O., is investing in Gopuff, and will advise its founders, DealBook is first to report. Iger told DealBook that he’s always been interested in using technology to serve consumers. “Gopuff is a great example of this, and I am impressed with its product, strategy and its founders,” he said. “I look forward to advising them as they continue to grow, and I am confident they have the scale and the capital to do so.” Iger and Gopuff did not disclose the size of his investment.
Gopuff, which promises deliveries of food, drinks and other products in 30 minutes or less, soared to a $15 billion valuation last year and operates in 1,200 cities. This year it put off an I.P.O. and, as of last month, was seeking to raise $1 billion in debt that could potentially be turned into stock. It also lowered its drivers’ minimum-pay guarantees in California, and in March it laid off about 450 people, or 3 percent of its workers. Headquartered in Philadelphia, the company was founded in 2013 by Yakir Gola and Rafael Ilishayev, two sophomores at Drexel University who are now its co-C.E.O.s. Gopuff’s investors include Accel, Blackstone, D1 Capital Partners and SoftBank’s Vision Fund, according to Bloomberg.
The rapid-delivery business is a tough one, with intense competition. Getir, one of the largest companies in the industry, aims to deliver groceries in 10 minutes. There is also the question of which business model will prevail for on-demand shopping: Gopuff’s, in which it owns its inventory and keeps it in neighborhood fulfillment centers, or DoorDash’s third-party delivery model, which has less overhead. And consolidation seems inevitable: Just this week, the German grocery delivery start-up Flink bought a French competitor, Cajoo.
“No country controls the wind and the sun. Let’s make sure that this is the last time that the global economy is held hostage to the hostile actions of those who produce fossil fuels.”
— Janet Yellen, in a speech to the Brussels Economic Forum yesterday, making the case that Russia’s actions are a reminder that countries should not trade security for cheap energy.
Learning from Luna’s collapse
Luna, a cryptocurrency launched by Terraform Labs and its combative 30-year-old founder Do Kwon, traded for $116 in early April. Last week it collapsed. It’s now valued at just under two-hundredths of a cent, meaning it takes more than 50 Lunas to add up to a single penny.
Luna offers a prime view of who gets hurt when cryptocurrencies collapse, and who’s to blame, report The Times’s David Yaffe-Bellany and Erin Griffith. Investors have lost as much as $300 billion in the recent crypto sell-off, which was accelerated by Luna’s failure. “You’ve seen a bunch of people trying to trade in their reputations to make quick bucks,” said Kathleen Breitman, a founder of the crypto platform Tezos. Now, she said, “They’re trying to console people who are seeing their life savings slip out from underneath them. There’s no defense for that.”
Here’s where investors and observers have placed the most blame for Luna’s costly demise:
Do Kwon: He trumpeted Luna’s world-changing potential, rallying a band of investors and supporters he proudly called “Lunatics.” He answered criticism of Luna and its sister currency, TerraUSD, with trash talk, once quipping, “I don’t debate the poor.”
Institutional investors: Terraform touted investments from such high-profile crypto investors as Mike Novogratz. Critics are now accusing those Wall Street veterans of profiting from a cryptocurrency that had raised questions from the beginning. Paul Veradittakit, a partner at Pantera Capital, said in July 2021 that his firm had “long been a supporter” of Kwon, and that it would “continue to support” Terra as it grew. Less than nine months later, Pantera had dumped nearly 80 percent of its stake in Luna, booking a 10,000 percent return on its initial $1.7 million investment. (Veradittakit says his firm sold when Luna’s price spiked above what he thought the currency was worth. Pantera, like other crypto investors, says it sold assets recently to avoid a downturn.)
“Financial innovation”: Part of crypto’s investment appeal is the prospect of owning a new kind of money. Kwon claimed he was creating a “modern financial system” in which users could conduct complicated transactions without relying on banks or other middlemen. TerraUSD was a stablecoin, designed to remain at a value of $1 — but unlike earlier stablecoins, it was backed not by dollars or other traditional assets, but rather a formula linking it to Luna. It didn’t work: The price of a Terra has dropped to $0.13. Nonetheless, investors have put $5 billion into stablecoins that are not backed by actual assets, according to figures from Coinmarketcap.com.
“It’s the cult of personality — the bombastic, arrogant, Do Kwon attitude — that sucks people in,” said Brad Nickel, who hosts “Mission: DeFi,” a cryptocurrency podcast.
THE SPEED READ
Saudi Aramco is said to be considering an I.P.O. of its trading unit, which would be one of the biggest offerings of the year. (Bloomberg)
The European banks Commerzbank and UniCredit reportedly planned merger talks, but were derailed by the invasion of Ukraine. (FT)
In primaries in five states yesterday, Republican voters mostly rewarded candidates who dispute the 2020 election results. Here are five takeaways. (NYT)
The U.S. is set to ease some economic sanctions on Venezuela to encourage political negotiations there. (Axios)
The war is likely to force Russia to retreat across energy markets for years to come. (NYT)
The U.S. is expected to begin blocking Russia from paying American bondholders, raising the prospect of a Russian default. (NYT)
The war in Ukraine and a global tightening of credit have sown misery in low- and middle-income countries. (NYT)
Best of the rest
“Crashing Crypto: Is This Time Different?” (Times Opinion)
“All Those Celebrities Pushing Crypto Are Not So Vocal Now” (NYT)
Apple changed its return-to-office plans because of a rise in Covid cases. (NYT)
“The Economy Is Weird. Two Experts on Where It Goes From Here.” (NYT The Argument)
Grubhub offered New Yorkers a free lunch yesterday. It was kind of a disaster. (BuzzFeed)
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