FTC Inquiry On Censorship Weighs On Social Media Stocks

The Federal Trade Commission (FTC) is seeking public input on how consumers may have been harmed by technology platforms limiting their ability to share ideas and affiliations.

FTC Chairman Andrew Ferguson, appointed by President Donald Trump, is investigating whether Big Tech companies have violated laws by restricting user content.

The move has rattled social media stocks, particularly Reddit, where users have frequently complained about censorship, Barron’s Daily reported.

Last week, Reddit reported slower-than-expected growth in new users, leading to a sharp 7.5% decline in its stock—the steepest one-day drop since March 2024, according to Dow Jones Market Data.

FTC Chairman Andrew Ferguson, appointed by President Donald Trump, is investigating whether Big Tech companies have violated laws by restricting user content.

Other social media stocks also took a hit: Meta Platforms, owner of Facebook and Instagram, closed down 1.3%, Snap fell 0.9%, and Alphabet, the parent company of YouTube, dropped 0.4%.

Meta declined to comment, while the other companies did not respond to requests for statements.

Debate continues over whether removing false or offensive content is a responsibility of social media platforms or an infringement on free speech. Twitter, YouTube, Facebook, and Instagram all banned Trump following the January 6, 2021, attack on the U.S. Capitol but later reinstated him.

Since Trump’s return to office, tech companies have adjusted their policies. Meta, for example, has discontinued fact-checking on Facebook, Instagram, and Threads, replacing it with user-generated Community Notes.

Meanwhile, X owner and Trump advisor Elon Musk has claimed that Community Notes on his platform are being "gamed" by governments and legacy media.

The FTC is encouraging users who have been banned, censored, or restricted from monetizing their content to submit comments. The public comment period runs until May 21.