Shares of Twitter slumped by some 7% on Monday, which knocks off about $2.5 billion of the market value of the controversial social networking business after it suspended the account of the sitting US President, Donald J Trump.
The slide came as a few Republicans hit over the weekend in the platform for gagging among its most viewed participants, with traders also pointing to signs that the affair was further fuelling calls for greater regulation of Big Tech.
Trump’s account had more than 88 million followers and had been retweeted billions of times.
“Trump has a very high and loyal following and a lot of those eyeballs will go away if Trump is permanently restricted from posting,” said Andrea Cicione, head of strategy at brokerage TS Lombard.
Other social networking platforms, such as Facebook, have been quick to issue related bans on the president a week after the violence at Capitol Hill.
But the fall in Twitter’s stocks in premarket trading has been much heavier compared to some of its peers.
US media also reported San Francisco police were bracing for a potential protest by pro-Trump fans outside Twitter’s headquarters on Monday.
Twitter stated on Friday Trump’s suspension was due to the risk of further violence, after the storming of the US Capitol last Wednesday.
This was the first time the firm had prohibited a head of state and has been accompanied with the suspension of accounts belonging to vitriolic Trump fans.
European Union Commissioner Thierry Breton said the events in the Capitol were likely to herald an era of tougher social media regulation, comparing it to the global crackdown on terrorism after the attacks of Sept. 11, 2001.
“The fact that a CEO can pull the plug on POTUS’s loudspeaker without any checks and balances is perplexing,” he wrote in a column for Politico.
Twitter, Facebook and Google have confronted a surge in the cost of moderating content in their platforms in the last several years, so much redeemed by increases in the revenue they gain from advertisements and other services.
US President-elect Joe Biden was quoted as criticising the “overwhelming arrogance” of the industry’s leaders and analysts expect more legal moves to offset the power of Facebook and others during the next four years.
“Incremental moderation may be welcome, but it’s not cheap and could benefit Facebook, which already employs a moderation army (around six times) larger than Twitter’s workforce,” Bernstein analysts wrote in a note.
The team at Platform Executive hope you have enjoyed this news article. Translation from English to other languages via Google Cloud Translation. Initial reporting via our official content partners at Thomson Reuters. Reporting by Ambar Warrick and Sruthi Shankar in Bengaluru and Thyagaraju Adinarayan and Julien Ponthus in London. Editing by Rachel Armstrong, Kirsten Donovan and Arun Koyyur.
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