Daron Acemoğlu explains how to make social media reliable: 'A ban is not a viable option'

The two economists have proposed a 50 percent flat tax on companies with annual digital advertising revenue exceeding 500 million dollars.

According to Acemoğlu and Johnson, imposing a high tax on digital advertisements could make social media safer.

The idea proposed by the renowned economists regarding digital advertising revenue is based on the fact that while the rate of adults who smoked in the US was over 40 percent in the mid-20th century, this rate is 10 percent in the current period of the first quarter of the 21st century. Although smoking is not banned, there are many factors behind this decline.

"BANNING SOCIAL MEDIA IS NOT A VIABLE OPTION"

According to the report in Ekonomim, MIT's Simon Johnson and Daron Acemoğlu recently published an article in the "Network Law Review." It is stated that companies like Google, Facebook, and X (formerly Twitter) guide users by relying on revenue from digital advertisements and chasing engagement, and that this can lead to the promotion of emotional, provocative, or harmful content.

Acemoğlu and Johnson state, "It is not surprising that social media is a channel for both mental health problems and misinformation," while adding that banning social media is not a viable option.

Proposing a solution similar to the public health fight against smoking, the famous economists state the following regarding "taxes on digital advertising":

"Instead of the current model, which relies heavily on highly individualized, targeted digital advertising, it could encourage alternative business models, such as subscription-based ones."

COULD FUEL THE MENTAL HEALTH CRISIS

According to a report from the MIT Sloan School of Management, Johnson and Acemoğlu, while expressing the harmful paths created by an economy based on digital advertising, first state that it is a business model that "encourages capturing and keeping people's attention at all costs," and that social media fuels the mental health crisis, especially for children, as emphasized in recent hearings in the US Senate.

Warning that business models that facilitate and encourage sensitive material can lead to political radicalization, extremism, and violence, the MIT professors also cite the example of human rights defenders pointing to Facebook for organizing the genocide against the minority Muslim population in Myanmar. Similar concerns are also expressed for Sri Lanka and India.

It is pointed out that artificial intelligence technologies will worsen these concerns by increasing the "target audience" power of advertisers, enabling new ways to create anger and engagement.

Johnson and Acemoğlu point out that questions have arisen regarding the shaping and use of technology due to a few technology firms dominating the market, and state that these firms prioritize monetizing automation, surveillance, addiction, and data collection. These priorities do not encourage the development of technologies that are beneficial to people instead of fueling anger.

50 PERCENT FLAT TAX PROPOSAL

Despite all the concerns, the researchers state that "there is no policy response on the horizon," adding, "Hoping that Meta and other platforms will become more responsible in the future is nothing more than wishful thinking."

Instead of all this, they state that promoting more meaningful content for all types of media firms (social media, search engines, news organizations) would liberate them and move them away from dependence on digital advertising.

According to Johnson and Acemoğlu, while taxation is the most effective and simple method to support a change in media independence, they propose a 50 percent flat tax for companies with annual digital advertising revenue exceeding 500 million dollars.

The global digital advertising space is expected to generate approximately 600 billion dollars in revenue in 2024. It is expected that approximately 42 percent of this revenue will go to Alphabet, 23 percent to Meta, and 9 percent to Amazon.

While digital advertisements account for more than 95 percent of Meta's revenue, this rate is approximately 77 percent for Alphabet.

GOAL IS SAFE AND SUSTAINABLE CONTENT

While it is stated that the 500 million dollar threshold to reach the 50 percent tax is designed to prevent negative effects on digital economy entrepreneurs, it is also acknowledged that it is "very easy" for companies to direct their digital advertising revenue to offshore regions.

The researchers state, "Ultimately, the goal of such taxes is not to generate revenue or have a small impact on ad volume, but to fundamentally change the business model of online platforms," noting that by moving away from advertising, safe, sustainable, and quality content can be offered to users.

While it is stated that this tax is proposed for the US, it is also reminded that it would be ideal for the application to be in other G7 economies (UK, Canada, France, Germany, Italy, and Japan) as well.

Stating that in environments where competition is reduced, economists and regulators tend to prefer competition over taxation, Acemoğlu and Johnson also argue that breaking up Meta (Facebook, WhatsApp, and Instagram) would not work in changing the incentives that support how these companies operate separately, and they convey the following:

"The market will not move in this direction on its own. And no amount of chatter will have the slightest effect. It is time to impose a serious tax on digital advertising."

News Source: 12punto