June 18, 2020

Social Media in the Era of COVID-19: Evaluating the Role of Companies in Managing Disinformation

Below is an excerpt from ISS ESG’s recently released “Social Media in the Era of COVID-19: Evaluating the Role of Companies in Managing Disinformation.” The full paper is available for download from the Institutional Shareholder Services (ISS) online library.


  • There are a number of serious social concerns associated with social media companies – from failure to protect data privacy to the spreading of fake news and increasing polarization of community attitudes.
  • Regulatory developments in a number of countries suggest companies will be expected to take measures to regulate hate speech, illegal content and political advertising on their platforms, and face close scrutiny by national authorities.
  • This will require a significant increase in investments by social media companies to manage published content. It may also lead to a drop in user base and revenue.


Social media companies have long posed an interesting conundrum for responsible investors. On the one hand, there are clear positives in terms of the role that their platforms play in facilitating communication and information sharing between their users, in a global and a local context. On the other hand, social media has provided a fertile breeding ground for a range of behaviors that would be unacceptable in a normal social context.

These concerns have been magnified in the current COVID-19 pandemic that is sweeping the globe. The positive role that social media platforms can play, e.g., through the distribution of important factual information, risks being obscured by the spread of harmful misinformation and conspiracy theories, calling into question the freedoms that these companies enjoy.

One of the key issues with which commentators have grappled is whether social media companies are publishers of their content, or simply a tabula rasa on which the user projects their own ideas. Worryingly for the sector, it seems increasingly common for regulators to view social media companies as having responsibilities akin to those of traditional publishers. The question of whether authorities will be called on to intervene depends on companies’ willingness, or even capability, to regulate their own actions as well as those of their users.

Major players in the social media space have taken some steps to address these concerns, but to date the results have been mixed. ISS ESG’s ratings services consider how well companies are managing risks in this area, and the general finding is that there is considerably more to be done. Investors should consider the risks that widespread disinformation constitute for their investments in social media companies. While regulatory penalties pose a risk to cash flows, there are also concerns for the underlying business model of social media platforms in a range of areas including expenditure on monitoring of user generated content, and the number of genuine users on platforms.

By: Duncan Paterson, ISS ESG

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