Social media giant Twitter led a plunge in US IT shares on Thursday morning after Facebook and Twitter executives defended their companies before sceptical US politicians.
Twitter shares dropped 6.1 per cent and Facebook shares fell 2.3 per cent as the Nasdaq experienced an overall decline of more than 1 per cent. The Dow, however, eked out a slight gain.
Adding to pressure on technology stocks, the US Justice Department said it would meet state attorneys-general to discuss worries that social media platforms were “intentionally stifling the free exchange of ideas”. Facebook and Twitter were not specifically named.
Top executives from Facebook and Twitter earlier admitted to the US Congress that they took too long to deal with foreign campaigns to influence US politics.
Facebook chief operating officer Sheryl Sandberg, testifying alongside Twitter Chief Executive Jack Dorsey, acknowledged to the Senate Intelligence Committee on Wednesday that the companies were “too slow” to respond to Russian efforts to interfere in the 2016 US election.
“We’ve removed hundreds of pages and accounts involved in coordinated inauthentic behaviour – meaning they misled others about who they were and what they were doing,” Ms Sandberg said in written testimony.
Mr Dorsey said his platform was “unprepared and ill-equipped” for the “weaponisation” of debate.
Facebook, Twitter and other technology firms have been on the defensive for many months over political influence activity on their sites as well as concerns about user privacy.
It followed claims foreign actors spread misinformation and propaganda ahead of the 2016 presidential election through the online platforms.
“With the benefit of hindsight, it is obvious that serious mistakes were made by both Facebook and Twitter,” Democratic senator Mark Warner said.
“You, like the US government, were caught flat-footed by the brazen attacks on our election. Even after the election, you were reluctant to admit there was a problem.”
The era of the wild west in social media is coming to an end. Where we go from here is an open question.”
No representative from Google turned up to the ongoing Senate Intelligence Committee hearing.
Mr Warner said he was “deeply disappointed” that Google “chose not to send its own top corporate leadership”.
Before the hearing, US President Donald Trump, without appearing to offer any evidence, accused the companies themselves of interfering in the upcoming US mid-term elections in November, telling The Daily Caller that social media firms were “super liberal.”
In an interview on Tuesday, Mr Trump told the conservative news outlet that “I think they already have” interfered in the November 6 election. The report gave no other details.
Executives from the companies, which have repeatedly denied any political bias, have travelled to Washington several times to testify in Congress. That includes 10 hours of questioning of Facebook chief executive Mark Zuckerberg over two days in April.
The Senate Intelligence Committee has been looking into Russian efforts to influence US public opinion throughout Mr Trump’s presidency, after US intelligence agencies concluded that entities backed by the Kremlin had sought to boost his chances of winning the White House in 2016.
Moscow denies involvement, and Mr Trump – backed by some of his fellow Republicans in Congress – has repeatedly dismissed investigations as a partisan witch hunt or hoax.
Some Republicans have also charged social media companies with bias against Mr Trump and other conservatives.
Mr Dorsey told the House Energy and Commerce Committee that Twitter “does not use political ideology to make any decisions”.
Mr Trump faulted Twitter on July 26, without citing any evidence, for limiting the visibility of prominent Republicans through a practice known as shadow banning.
Last week, Mr Trump accused Google’s search engine of promoting negative news articles and hiding “fair media” coverage of him, vowing to address the situation without providing evidence or giving details of action he might take.