Public Equities

Fixing the Internet, One Tweet at a Time

May, 2022 – 9 min read

The likelihood that the E.U.’s Digital Markets and Digital Services Acts achieve their aims, and significantly alter the status quo for major internet companies, remains low.

April 2022 may very well turn out to have been a pivotal period for the evolution of the internet. During that month, the long running efforts of E.U. regulators to craft a set of rules and regulations that give them a better grip of how the internet operates within Europe reached a crescendo. An agreement was reached on the provisional text for the Digital Markets Act (DMA), while a political agreement on the Digital Services Act (DSA) followed closely behind.1 However, news of these milestones was overshadowed by the announcement that Twitter’s board had agreed to Elon Musk’s bid to take the company private.

In a recent paper on ESG in Technology we looked in depth at a number of social and governance conflicts that exist within the technology sector. As the specifics related to regulating internet platforms are now emerging, we take a closer look at the details and what this means for the shifting regulatory backdrop for the internet in the E.U.—and how it relates to the business models of the largest platforms.

“Elon, there are rules.”2

Musk’s stated ambition is to dramatically reduce restrictions on free speech placed on Twitter’s content by moderators on the platform. The E.U. responded immediately, threatening Musk with the full force of their pending powers to fine companies in breach of its rules up to 6% of their global revenues. En garde!

If Musk can complete the deal to take Twitter private, the duel between the world’s richest man and those tasked with regulating the internet in the E.U. could very well set the tone for the laws and rules applied to online businesses in other democratic societies—as well as shape the long-term financial opportunity for all internet companies, big and small.

1. Source: European Commission. As of April 2022.
2. E.U. Commissioner Thierry Breton warned Elon Musk that Twitter must comply with the E.U.’s rules. As of April 2022.

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Matthew Ward

Head of Global Technology Equities

Colin Moar

Investment Manager, Global Equities—Technology

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