Truth Social: Trump’s new social network will benefit from the very law he tried to destroy

Yahoo Finance’s Dan Howley joins the Yahoo Finance Live panel to discuss Trump's new social network.

Video transcript

ZACK GUZMAN: Well, there are some pretty wild swings to address here in the SPAC attached to President Trump's social media push. That would be Digital World Acquisition Corp. seeing a more than 100% pop in its second day of action. At one point earlier in the session today, we saw more than 1,200% improvement over the last two days since that announcement about the merger with President Trump's social media company became public.

For more on that, though, I want to bring on Yahoo Finance's tech editor Dan Howley, who's taking a closer look, Dan, here at maybe some of the irony around President Trump's former stance around Section 230, which protects a lot of these social media companies. And now his new endeavor is to launch his own.

DAN HOWLEY: Yeah, that's right. When President Trump was in office former President Trump was in office, he had a series of ongoing spats with some of the larger social networks, Facebook, Twitter, YouTube, Google. He'd basically gone after big tech in every way because at points, he would post lies or some form of disinformation on Twitter or Facebook related to, say, the coronavirus or the 2020 election.

Or he would post very incendiary things such as when the looting starts, the shooting starts, things along those lines that Twitter and Facebook, Twitter more than Facebook, though, would either put warnings on about violence or put that the information itself was just flat out wrong.

Because of that, President Trump had put out an executive order calling on the FTC to go ahead and-- or sorry, the Trade Commission, yes, to go out and try to revise the rules of a certain internet law. And that's essentially the Communications Decency Act. It's Section 230.

And really, what that does is protects online companies from the kind of speech that third party users post. It also allows them to moderate speech within good faith if they find it to be obscene or anything along those lines. So it gives them both this kind of sword and shield, where it protects them from what people post, but also allows them to take down what people post if it goes against their set guidelines.

Now, because of that, President Trump had signed that executive order. It's since been rescinded by President Biden. But at the time, he was looking for a means to narrow Section 230. And doing so would basically revoke the ability for companies to allow for third party posting. So think Facebook would just either cease to exist, or it would have to let everybody post anything they want without any kind of moderating. So that was really what he was trying to do.

Now, however, because he has this Truth Social experiment going live or in beta next month and then live in the first half of 2022, he is going to need to heavily rely on Section 230 to allow that to continue to operate. And the reason being is because he's posted things like the user page, the kind of guidelines that you need to follow, require users to not disparage the site or its ownership. That would fall under Section 230 because it allows them to moderate content.

It also means that if he doesn't want anything negative showing up or anything that's incendiary, the site would need to moderate it. And that is what Section 230 allows. So it's really interesting to see someone who tried to get rid of Section 230, take it down, now needing to rely on it, though it also benefits him at this point when it didn't benefit him then.

ZACK GUZMAN: Yeah, kind of, if you can't beat them, join them, situation here around Section 230, I suppose, Howley. But when we look into the investor deck here from his company-- and it's sparse in terms of the details. Keep in mind this is a company that, through the merger, might actually come public before the product really gets underway here.

But they highlighted all those issues you're describing in terms of what Parler, another conservative social media site, saw in working with the Facebooks of the world, Amazon in terms of cutting, you know, the cloud server here behind Parler, Apple suspending Parler from the App Store back when there was a controversy around what role that social media site played in terms of the January 6 riots. So I mean, it seems like they're presenting this to investors as an opportunity. You could also look at it as risks because a lot of these tech companies could potentially also do the same to whatever comes from Truth Social as well.

DAN HOWLEY: Yeah, I mean, I don't think that this is going to take off and be something of the scale of a Snap or Twitter or Facebook, not by a long shot. In fact, former President Trump had had his own kind of rolling blog that was sort of like a Twitter news feed, called From the Desk of Donald Trump, that shut down within a month because of lack of visitors. So as much as this is being pushed forward and his investors are seeing this as an opportunity, I don't necessarily think that this is going to last, or if it does last, have nearly as many users as they hope.

Obviously, former President Trump had had something north of 80 million followers on Twitter, but that's because he was the president at that point. And obviously, part of that was because you'd need to follow what the president is talking about or posting. So I'm not necessarily sure that this is going to take off and then as you point out, yeah, there are those third party consequences where a host company, something like AWS or perhaps Google or Microsoft, whatever platform they choose, may not want to be associated with that. So they can pull the plug.

And then also, as you point out, the app stores, if they don't appreciate what is being posted on those sites, they can pull the plug on the app. And that would take a huge number of users offline. And that's what we saw with Parler and with that like. So I think that those are two really big issues that nobody's focusing on or just want to look past at this point because it seems like an interesting prospect for investors. But the long-term viability of this, I think, is still very much up in the air.