Economic Analysis of the Responsibility of Social Networks

This research analyzes what are the effects of a stricter intermediary liability standard, where social networks are responsible for user-generated content before a court decision or order. Our estimates show large potential losses of at least BRL 47 million in revenue per year and BRL 23 billion in market value. Furthermore, from the users' point of view, we estimate annual losses in consumer welfare due to a stricter intermediary liability standard of between BRL532 million and BRL4.1 billion. The research concludes that there is no evidence that such a change would improve content removal policies or economic well-being. In fact, this can lead toconsiderable losses for platforms, merchants and consumers alike.