New Florida Law To Ban Social Media For Kids Under 14, Require ID Checks On All Ages—What's At Stake For Meta, Snap And Tech ETFs
Florida is implementing new measures to keep children and teenagers away from social media.
What Happened: Florida Gov. Ron DeSantis signed a bill Monday that bans the use of social media platforms for children 13 or under. The legislation also requires parental permission for those that are between the ages of 14 and 15.
The bill passed the Florida legislature earlier this month with bipartisan support.
For social media giants like Meta Platforms Inc (NASDAQ:META), parent company of Instagram and Facebook, as well as Beijing-based TikTok owner Bytedance, it’s bad news.
Bytedance is already facing massive scrutiny from the federal government under a bill that could force the company to sell its U.S. operations to a local buyer or face a complete shutdown in the country.
The main argument behind the newly-signed bill is backed by rising levels of anxiety, depression and addiction to social media amongst teenagers, which many commentators have blamed a lack of action by the platforms themselves, and purposely addictive design.
The bill did not clarify which companies will be affected by its language. But, it's expected that Snap Inc (NYSE:SNAP) and X, formerly Twitter, will also be amongst those affected.
The law would go live on Jan. 1, 2025, unless it's stopped by the courts in a likely challenge from social media lobby groups.
If enacted, the bill would automatically delete all accounts of children below the age of 14. For the platforms to fall under the legislation criteria, they must tick the boxes of having "addictive features."
This includes infinite scrolling and push alerts, as well as having a user base of at least 10% under the age of 16 spending at least two hours per day on the platform, reported The Miami Herald.
"A child in their brain development doesn't have the ability to know that they're being sucked into these addictive technologies and to see the harm and step away from it," said Republican Speaker Paul Renner, who spearheaded the bill, during the signing ceremony on Monday at a Jacksonville school.
The bill came to be after DeSantis vetoed a less washed-down version earlier this month, which aimed to ban all social media use for children under the age of 16.
Why It Matters: Critics of the bill note its farther-reaching consequences.
To be able to impose age restrictions, Floridians will have to essentially hold an "I.D. for the Internet.” This forces residents of every age to face identity checks before using any website that the government deems inappropriate.
A court challenge for the bill is widely expected to come from NetChoice, a lobby group composed of Big Tech companies including Meta, TikTok, X (formerly known as Twitter), Amazon.com Inc (NASDAQ:AMZN), eBay Inc (NASDAQ:EBAY), LYFT Inc (NASDAQ:LYFT), PayPal Holdings Inc (NASDAQ:PYPL) and others.
The group is already locked in battle in a high-profile case in the Supreme Court, which is trying to decide whether social media companies should be treated like newspapers or like telecoms companies, ultimately affecting how First Amendment free-speech laws are applied to them.
In a public statement, NetChoice Vice President Carl Szabo called the Florida law "unconstitutional" and said it will protect "exactly zero Floridians."
In Szabo's opinion, HB 3 is a bad policy "because of the data collection on Floridians by online services it will in effect require."
While the group is defending the business interest of social media and other Big Tech companies, Szabo's sentiment echoes those who oppose government intervention in online services and would rather see a more free, less-controlled version of the internet.
"HB 3 forces Floridians to hand over sensitive personal information to websites or lose their access to critical information channels. This infringes on Floridians' First Amendment rights to share and access speech online," he said.
It’s not just Florida
Several other states, including Utah and Arkansas have also passed similar legislation. This could negatively affect social media companies and funds investing in them.
Global X Social Media ETF (NASDAQ:SOCL) is the largest pure-play social media ETF, but other tech ETFs are heavy on social media companies, and include Communication Services Select Sector SPDR Fund (NYSE:XLC), Fidelity MSCI Communication Services Index ETF (NYSE:FENY) and ProShares Ultra Communication Services (NYSE:LTL).
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